UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of report (date of earliest event reported): October 31, 2014
Halyard Health, Inc.
(Exact name of Registrant as specified in its charter)
Delaware | 001-36440 | 46-4987888 | ||
(State of incorporation or organization) |
(Commission file number) |
(I.R.S. employer identification number) |
5405 Windward Parkway Suite 100 South Alpharetta, Georgia |
30004 | |
(Address of principal executive offices) | (Zip code) |
Registrants telephone number, including area code: (678) 425-9273
P. O. Box 619100, Dallas, Texas 75261-9100
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 1.01 Entry into a Material Definitive Agreement.
On October 31, 2014 (the Distribution Date), Kimberly-Clark Corporation (Kimberly-Clark) completed the previously announced spin-off of its health care business, into a stand-alone, publicly traded company named Halyard Health, Inc. (Halyard). To effect the spin-off, Kimberly-Clark distributed to its stockholders one share of Halyard common stock, par value $0.01 per share, for every eight shares of Kimberly-Clark common stock (the Distribution) outstanding as of October 23, 2014, the record date for the Distribution. In lieu of fractional shares, stockholders of Kimberly-Clark will receive cash, which generally will be taxable.
In connection with the Distribution, Halyard entered into definitive agreements with Kimberly-Clark and/or its affiliates that, among other things, set forth the terms and conditions of the Distribution and provide a framework for Halyards relationship with Kimberly-Clark after the Distribution. Descriptions of these definitive agreements entered into in connection with the Distribution are included below.
Distribution Agreement
On October 31, 2014, Halyard entered into a distribution agreement with Kimberly-Clark. The distribution agreement identifies the assets to be transferred, the liabilities to be assumed and the contracts to be assigned to Halyard and Kimberly-Clark as part of the separation of Kimberly-Clarks health care business from its other businesses, and provides for when and how these transfers, assumptions and assignments will occur. With certain exceptions, the distribution agreement provides for a full and complete release and discharge of all liabilities existing before the Distribution Date between Halyard or any of its affiliates, on the one hand, and Kimberly-Clark or any of its affiliates (other than Halyard), on the other hand. The distribution agreement contains cross-indemnification provisions principally designed to place financial responsibility for the obligations and liabilities of Halyard-related businesses with Halyard and financial responsibility for obligations and liabilities of Kimberly-Clark-related businesses with Kimberly-Clark. Subject to certain specified exceptions, the distribution agreement provides that each party will assume the liability for, and control of, all pending or threatened legal matters related to its own business, including liabilities for any claims or legal proceedings related to products that had been part of its business but were discontinued prior to the distribution.
Pursuant to the distribution agreement, immediately prior to the Distribution and subject to a post-closing true-up, Halyard made a cash distribution to Kimberly-Clark equal to $680.0 million.
The foregoing description of the distribution agreement is not complete and is qualified in its entirety by reference to the full text of the distribution agreement, which is filed as Exhibit 2.1 to this Current Report on Form 8-K and incorporated by reference into this Item 1.01.
Transition Services Agreement
On October 31, 2014, Halyard entered into a transition services agreement with Kimberly-Clark pursuant to which Halyard, Kimberly-Clark and each companys respective affiliates will provide to each other various transitional services, including, but not limited to, employee payroll and benefits administration, information technology services, financial and tax services, transportation and logistics, procurement services, order management and processing, regulatory compliance and other support services. The services generally will commence on the Distribution Date and terminate no later than two years thereafter.
Subject to certain exceptions, the liabilities of each party providing services under the transition services agreement will generally be limited to the aggregate charges actually paid to such party by the other party pursuant to the transition services agreement during the twelve months prior to the event giving rise to the liability. The transition services agreement also provides that the provider of a service shall not be liable to the recipient of such service for any special, indirect, incidental or consequential damages, except in connection with certain indemnification matters. The transition services agreement also provides that the party receiving the services will indemnify the service provider for damages except to the extent caused by the gross negligence or willful misconduct of the service provider or damage to the service providers property caused by the service providers conduct in the provision of the services.
The foregoing description of the transition services agreement is not complete and is qualified in its entirety by reference to the full text of the transition services agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated by reference into this Item 1.01.
Tax Matters Agreement
On October 31, 2014, Halyard entered into a tax matters agreement with Kimberly-Clark which generally governs Kimberly-Clarks and Halyards respective future rights, responsibilities and obligations with respect to taxes and tax benefits attributable to Halyards business, as well as any taxes incurred by Kimberly-Clark in the case of the failure of the Distribution to qualify for tax-free treatment under Sections 368(a)(1)(D) or 355 of the Internal Revenue Code of 1986, as amended (the Code). The tax matters agreement also sets forth Kimberly-Clarks and Halyards respective obligations with respect to the filing of tax returns, the administration of tax contests, assistance and cooperation and other tax-related matters.
The foregoing description of the tax matters agreement is not complete and is qualified in its entirety by reference to the full text of the tax matters agreement, which is filed as Exhibit 10.2 to this Current Report on Form 8-K and incorporated by reference into this Item 1.01.
Employee Matters Agreement
On October 31, 2014, Halyard entered into an employee matters agreement with Kimberly-Clark to allocate liabilities and responsibilities relating to employment matters, employee compensation and benefit plans and programs and other related matters. These matters include, but are not limited to, the treatment of outstanding Kimberly-Clark equity awards and certain other outstanding annual and long-term incentive awards, the continued participation of Halyards active employees in the health and welfare benefit plans sponsored by Kimberly-Clark through December 31, 2014, and the participation of Halyards active employees in the Halyard 401(k) retirement benefit plan.
The foregoing description of the employee matters agreement is not complete and is qualified in its entirety by reference to the full text of the employee matters agreement, which is filed as Exhibit 10.3 to this Current Report on Form 8-K and incorporated by reference into this Item 1.01.
Intellectual Property License Agreements
On October 31, 2014, Avent, Inc. (Avent), a wholly-owned subsidiary of Halyard, entered into a patent and know-how license agreement with an affiliate of Kimberly-Clark pursuant to which Kimberly-Clark or such affiliate granted a perpetual, royalty-free license to Halyard to use certain intellectual property rights, including patents related to global non-wovens technology.
In addition, on October 31, 2014, Avent entered into several trademark license agreements with an affiliate of Kimberly-Clark, including (i) a royalty-free, perpetual trademark license agreement pursuant to which Kimberly-Clark or such affiliate granted Halyard a license to use Kimberly-Clarks KIMGUARD and DAISY design marks, (ii) a two-year royalty-bearing trademark license agreement pursuant to which Kimberly-Clark or such affiliate granted Halyard a license to continue to use certain of Kimberly-Clarks other trademarks, trade names and service marks that were used in Halyards business as of the Distribution Date (e.g., KIMBERLY-CLARK and other KIM-formative marks) and (iii) an eight year, royalty-bearing fixed term trademark license agreement, in which Halyard granted Kimberly-Clark licenses to continue to use marks that are now owned by Halyard following the Distribution but are used by Kimberly-Clark in its other business segments, including marks for gloves.
The foregoing description of the intellectual property license agreements is not complete and is qualified in its entirety by reference to the full text of such agreements, which are filed as Exhibits 10.4-10.7 to this Current Report on Form 8-K and incorporated by reference into this Item 1.01.
Credit Agreement
On October 31, 2014, Halyard, as borrower, entered into a credit agreement among Morgan Stanley Senior Funding, Inc., as term loan administrative agent, Citibank, N.A., as revolver administrative agent and swing-line lender and the other parties thereto, establishing credit facilities in aggregate principal amount of $640.0 million, including a five-year senior secured revolving credit facility allowing borrowings of up to $250.0 million, with a letter of credit subfacility in an amount of $75 million and a swingline subfacility in an amount of $25.0 million (the Revolving Credit Facility), and a seven-year senior secured term loan of $390.0 million (the Term Loan Facility).
All obligations under the credit agreement and obligations under certain hedging agreements and cash management arrangements are (i) guaranteed by Halyard and each of its direct and indirect, existing and future, material wholly-owned domestic restricted subsidiaries and (ii) secured by substantially all of Halyards and the guarantors present and after-acquired personal property and material fee-owned real property, subject to certain exceptions.
In addition, the credit agreement contains an accordion feature that will allow Halyard, subject to the satisfaction of certain conditions, including Halyards receipt of increased commitments from existing lenders or new commitments from new lenders, to incur additional term loans under the Term Loan Facility or under new term loan facilities or to increase the amount of the commitments under the Revolving Credit Facility, including through the establishment of one or more tranches under the Revolving Credit Facility, in an aggregate principal amount not to exceed the sum of (i) $255 million, plus (ii) voluntary prepayments of loans under the Term Loan Facility and voluntary commitment reductions under the Revolving Credit Facility, plus (iii) an unlimited amount, so long as Halyards consolidated net secured leverage ratio is equal to or less than 2.50 to 1.00, after giving pro forma effect to the incurrence of any such incremental loans or commitments. The credit agreement contains a feature that allows Halyard, subject to consent of the extending lenders, to extend the maturity of the commitments or loans outstanding under each of the Term Loan Facility and Revolving Credit Facility.
Borrowings under the Term Loan Facility will bear interest, at Halyards option, at either (i) a reserve-adjusted LIBOR rate plus 3.25%, or (ii) a base rate (calculated as the greatest of (1) the prime rate, (2) the U.S. federal funds effective rate plus 0.50% and (3) the one month LIBOR Rate plus 1.00%) plus 2.25%.
Borrowings under the Revolving Credit Facility will bear interest, at Halyards option, at either (i) a reserve-adjusted LIBOR rate, plus a margin initially equal to 2.25% and then, following Halyards delivery under the credit agreement of Halyards financial statements for Halyards fiscal quarter ending March 31, 2015, ranging between 1.75% to 2.50% per annum, depending on Halyards consolidated total leverage ratio, or (ii) the base rate plus a margin initially equal to 1.25% and then, following Halyards delivery of those financial statements, ranging between 0.75% to 1.50% per annum, depending on Halyards consolidated total leverage ratio. The unused portion of Halyards Revolving Credit Facility will be subject to a commitment fee equal to (i) 0.25% per annum, when Halyards consolidated total leverage ratio is less than 2.25 to 1.00 and (ii) 0.40% per annum, otherwise.
The credit agreement contains certain affirmative and negative covenants that Halyard considers usual and customary for an agreement of this type. Such covenants, subject to exceptions, limit Halyards ability and the ability of Halyards restricted subsidiaries to, among other things:
| incur additional indebtedness and guarantee indebtedness; |
| pay dividends or make other distributions or repurchase or redeem Halyards capital stock; |
| prepay, redeem or repurchase subordinated indebtedness or modify the agreements relating thereto; |
| make loans, investments and acquisitions; |
| sell, transfer or otherwise dispose of assets; |
| create or incur liens; |
| enter into certain types of transactions with affiliates; |
| enter into agreements restricting Halyards restricted subsidiaries ability to pay dividends; |
| consolidate, merge or sell all or substantially all of Halyards assets; and |
| create unrestricted subsidiaries. |
In addition, under the Revolving Credit Facility, but not the Term Loan Facility, Halyard is subject to financial covenants restricting Halyards consolidated net secured leverage ratio from exceeding 2.50 to 1.00 and Halyards consolidated interest coverage ratio from being less than 3.00 to 1.00.
Repayment of borrowings under the Term Loan Facility and Revolving Credit Facility will be subject to acceleration upon the occurrence of certain events of default that Halyard considers usual and customary for an agreement of this type, including payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults and cross-acceleration to material indebtedness, certain events of bankruptcy, certain events under ERISA, material judgments, actual or asserted failure of material loan or security documents to be in force and effect, and change of control. Failure to comply with the financial covenants described above will not constitute an event of default under the Term Loan Facility unless and until the Revolving Credit Facility is terminated and accelerated by the requisite lenders thereunder.
The Term Loan Facility requires quarterly amortization payments equal to 0.25% of the aggregate principal amount of the term loans outstanding on the closing date. Halyard is permitted to prepay all or a portion of the term loans and revolving loans under the credit agreement at any time, subject, in the case of the Term Loan Facility, to a 1.00% premium if Halyard effects a repricing transaction in the first year after the closing date. Borrowings under the credit agreement are subject to mandatory prepayments with the net cash proceeds of certain issuances of debt, certain asset sales and other dispositions and certain casualty events, and, starting with the fiscal year ending December 31, 2015, with excess cash flow if Halyards consolidated net secured leverage ratio is not less than 1.00 to 1.00.
The administrative agents and certain of the parties to the credit agreement and certain of their respective affiliates have performed in the past, and may perform in the future, banking, investment banking or other advisory services for Halyard and its affiliates from time to time for which they have received, or will receive, customary fees and expenses.
The foregoing description of the credit agreement is not complete and is qualified in its entirety by reference to the full text of the credit agreement, which is filed as Exhibit 4.1 to this Current Report on Form 8-K and incorporated by reference into this Item 1.01.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information regarding the credit agreement included in Item 1.01 above is incorporated by reference into this Item 2.03.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Departure of Directors; Election of Directors
On October 31, 2014, the Board of Directors of Halyard (the Board) expanded its size from four directors to seven directors, effective as of immediately prior to the Distribution (the Effective Time). Each of Robert E. Abernathy, the Chairman of the Board and Chief Executive Officer of Halyard, Ronald W. Dollens, Lead Director, Dr. Julie Shimer, John P. Byrnes, Patrick J. O Leary, and Gary D. Blackford were elected as a director of Halyard, effective as of the Effective Time. John W. Wesley, Mark Buthman and Nancy Loewe, who had been serving as members of the Board, ceased to be directors of Halyard effective as of the Effective Time. Heidi K. Fields, who had been elected to the Board effective October 21, 2014, remains on the Board and will continue to serve as a director of Halyard following the Distribution. Information regarding each of these directors and the board committees on which they serve is included in the section entitled Management in Halyards Information Statement, filed as Exhibit 99.2 to Halyards Form 8-K (Halyards Information Statement), filed with the Securities and Exchange Commission (the SEC) on October 21, 2014 and is incorporated by reference into this Item 5.02.
The Board has determined that (i) each of Ronald W. Dollens, Heidi K. Fields, Dr. Julie Shimer, John P. Byrnes, Patrick J. O Leary, and Gary D. Blackford qualify as independent directors under the director independence standards set forth in the rules and regulations of the Securities and Exchange Commission (the SEC) and the applicable listing standards of the New York Stock Exchange (the NYSE) and that Ms. Fields satisfies the financial literacy and other requirements to be considered an audit committee financial expert under the rules and regulations of the SEC and the applicable listing standards of the NYSE.
Election of Certain Officers
Effective as of the Effective Time, the following individuals were elected to serve as executive officers of Halyard in their respective positions listed below:
Name |
Position |
|
Robert E. Abernathy | Chairman of the Board and Chief Executive Officer | |
Rhonda D. Gibby | Senior Vice President and Chief Human Resources Officer |
Christopher G. Isenberg | Senior Vice President Global Supply Chain and Procurement | |
Christopher M. Lowery | Senior Vice President and Chief Operating Officer | |
Warren J. Machan | Senior Vice President Business Strategy | |
Steven E. Voskuil | Senior Vice President and Chief Financial Officer | |
John W. Wesley | Senior Vice President, General Counsel and Chief Ethics and Compliance Officer |
Each of Messrs. Voskuil, Lowery and Wesley and Ms. Gibby entered into a letter agreement with Kimberly-Clark that established his or her total compensation as of the Distribution Date and addressed other compensation items following the Distribution Date. Copies of each of the letter agreements were filed as exhibits to Halyards registration statement on Form 10, as amended. Descriptions of the letter agreements are included in the section entitled Executive Compensation in Halyards Information Statement and is incorporated by reference into this Item 5.02.
Additional information regarding each of these executive officers is included in the section entitled Management in Halyards Information Statement and is incorporated by reference into this Item 5.02.
Adoption of the Halyard Equity Participation Plan
On October 7, 2014, the Board adopted the Halyard Health, Inc. Equity Participation Plan (the Employee Plan), which was approved by Kimberly-Clark as Halyards sole stockholder on October 7, 2014 and became effective as of November 1, 2014. The persons who are eligible to receive grants of awards under the Employee Plan are employees (including officers who are employees), advisors and consultants of Halyard or its subsidiaries. Individuals who Halyard expects to become employees, advisors or consultants may also receive grants of awards, subject to the individuals actually becoming employees, advisors or consultants. The Employee Plan will be administered by the Compensation Committee, or other committee appointed by the Board, or the Board itself, although it is expected that the Compensation Committee will generally serve as the administrator. Among other things, the Compensation Committee, in its discretion, selects the awardees to whom awards may be granted, the time or times at which such awards are granted, and the terms of such awards, including the type of award to be granted (including whether the award is intended to qualify as performance-based compensation under Section 162(m) of the Code and the number of shares subject to each award. The Employee Plan provides that the Compensation Committee may award to such eligible recipients as it may determine from time to time the following awards: stock options, stock appreciation rights, restricted stock (and in certain limited cases, unrestricted stock), restricted stock units, performance units and cash awards. Subject to the adjustment clauses in the Employee Plan, the maximum aggregate number of shares of Halyard common stock that may be subject to awards granted under the Employee Plan is 4,500,000.
The foregoing description of the Employee Plan is not complete and is qualified in its entirety by reference to the full text of the Employee Plan and the form of award agreements related to the Employee Plan, which are filed as Exhibit 10.8 and 10.9, respectively, to this Current Report on Form 8-K and incorporated by reference into this Item 5.02.
Adoption of Outside Director Compensation Plan
On October 7, 2014, the Board adopted the Halyard Health, Inc. Outside Directors Compensation Plan (the Director Plan), which was approved by Kimberly-Clark as Halyards sole stockholder on October 7, 2014 and became effective as of November 1, 2014. All outside (non-employee) directors, and persons expected to become outside (non-employee) directors following the grant date of an award, are eligible for grants of awards under the Director Plan. The Director Plan is administered by the Board. Among other things, the Board, in its discretion, selects the awardees to whom awards may be granted, the time or times at which such awards are granted, and the terms of such awards, including the type of award to be granted and the number of shares subject to each award. The Director Plan provides that the Board may award to directors as it may determine from time to time the following awards: stock options, stock appreciation rights, restricted stock (and in certain limited cases, unrestricted stock), restricted stock units, performance units and cash awards. The Director Plan also provides that each directors annual retainer will be paid under the Director Plan, and the director may elect to receive such compensation as a cash award or in the form of stock options. Subject to the adjustment clauses in the Director Plan, the maximum number of shares of Halyard Common Stock that may be subject to awards granted under the Director Plan is 400,000 shares.
The foregoing description of the Director Plan is not complete and is qualified in its entirety by reference to the full text of the Director Plan and the form of terms and conditions for awards under the Director Plan, which are filed as Exhibits 10.10 and 10.11, respectively, to this Current Report on Form 8-K and incorporated by reference into this Item 5.02.
Adoption of Executive Officer Achievement Award Program
On October 7, 2014, the Board adopted the Halyard Health, Inc. Executive Officer Achievement Award Program (the EOAAP), which was approved by Kimberly-Clark as Halyards sole stockholder on October 7, 2014 and became effective as of November 1, 2014. The Chief Executive Officer and other executive officers of Halyard are eligible for grants of awards under the EOAAP. The EOAAP is administered by the Compensation Committee of the Board. Generally, the EOAAP provides that participants in the EOAAP will be entitled to a cash award for each performance year of participation, with the amount of the award determined based on Halyards earnings before unusual items for the performance year, with the maximum award being 2% of earnings before unusual items. The Compensation Committee, in its discretion, may reduce the amount of an award granted under the EOAAP.
The foregoing description of the EOAAP is not complete and is qualified in its entirety by reference to the full text of the EOAAP, which is filed as Exhibit 10.12 to this Current Report on Form 8-K and incorporated by reference into this Item 5.02.
Adoption of Executive Severance Plan
On October 7, 2014, the Board adopted the Halyard Health, Inc. Executive Severance Plan (the Severance Plan), which became effective as of November 1, 2014. The Chief Executive Officer and other executive officers of Halyard may be designated as eligible for severance benefits under the Severance Plan upon certain terminations of employment. The Executive Severance Plan is interpreted by and may be amended or terminated by the Compensation Committee of the Board. Generally, the Severance Plan provides for lump sum cash severance benefits based on an executives base salary and bonus, along with a designated multiplier, and outstanding equity awards, if the executives employment is terminated (i) by Halyard without cause or by the executive for good reason within two years after a change of control or (ii) by Halyard without cause within one year prior to a change of control where the termination of employment is demonstrated to have arisen in connection with or in anticipation of the change of control.
The foregoing description of the Severance Plan is not complete and is qualified in its entirety by reference to the full text of the Severance Plan, which is filed as Exhibit 10.13 to this Current Report on Form 8-K and incorporated by reference into this Item 5.02.
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
Effective as of 4:01 p.m., Eastern Time, on October 31, 2014, Halyard amended and restated its Certificate of Incorporation (the Amended and Restated Certificate of Incorporation) and its By-Laws (the Amended and Restated By-Laws). A description of the material provisions of the Amended and Restated Certificate of Incorporation and the Amended and Restated By-Laws can be found in Halyards Information Statement under the section entitled Description of Halyard Capital Stock, which is incorporated by reference into this Item 5.03.
The description set forth under this Item 5.03 is qualified in its entirety by reference to the full text of the Amended and Restated Certificate of Incorporation and the Amended and Restated By-Laws, which are attached hereto as Exhibits 3.1 and 3.2, respectively.
Item 8.01 Other Events.
On November 3, 2014, Halyard issued a press release announcing completion of the Distribution and the beginning of regular-way trading of Halyard common stock on NYSE, a copy of which is included with this Current Report on Form 8-K as Exhibit 99.1 and incorporated by reference into this Item 8.01.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit Number |
Description | |
2.1 | Distribution Agreement, dated October 31, 2014, by and between Halyard Heath, Inc. and Kimberly-Clark Corporation. ** | |
3.1 | Amended and Restated Certificate of Incorporation of Halyard Health, Inc. | |
3.2 | Amended and Restated By-laws of Halyard Health, Inc. | |
4.1 | Credit Agreement, dated October 31, 2014, by and among Halyard Health, Inc., as borrower, Morgan Stanley Senior Funding, Inc., as administrative agent, Citibank, N.A., as revolver administrative agent and swing-line lender, and the other parties thereto. | |
10.1 | Transition Services Agreement, dated October 31, 2014, by and between Halyard Heath, Inc. and Kimberly-Clark Corporation. | |
10.2 | Tax Matters Agreement, dated October 31, 2014, by and between Halyard Heath, Inc. and Kimberly-Clark Corporation. | |
10.3 | Employee Matters Agreement, dated October 31, 2014, by and between Halyard Heath, Inc. and Kimberly-Clark Corporation. | |
10.4 | Patent and Know-How License Agreement, dated October 31, 2014, between Kimberly-Clark Worldwide, Inc. and Avent, Inc. | |
10.5 | Royalty-Bearing Trademark License Agreement, dated October 31, 2014 between Kimberly-Clark Worldwide, Inc. and Avent, Inc. | |
10.6 | Non Royalty-Bearing Trademark License Agreement, dated October 31, 2014 between Kimberly-Clark Worldwide, Inc. and Avent, Inc. | |
10.7 | Long-term Trademark License Agreement, dated October 31, 2014 between Kimberly-Clark Worldwide, Inc. and Avent, Inc. | |
10.8 | Halyard Health, Inc. Equity Participation Plan, effective as of November 1, 2014. | |
10.9 | Form of Award Agreement related to the Halyard Health, Inc. Equity Participation Plan. | |
10.10 | Halyard Health, Inc. Outside Directors Compensation Plan, effective as of November 1, 2014. | |
10.11 | Form of Terms and Conditions of Awards under the Halyard Health, Inc. Outside Directors Compensation Plan. | |
10.12 | Halyard Health, Inc. Executive Officer Achievement Award Program, effective as of November 1, 2014. | |
10.13 | Halyard Health, Inc. Executive Severance Plan, effective as of November 1, 2014. | |
99.1 | Press Release dated November 3, 2014. |
** | Pursuant to Item 601(b)(2) of Regulation S-K, schedules to this agreement have been omitted because they are not material to an investment decision. Halyard Health, Inc. agrees to furnish supplementally a copy of any ommited schedule to the SEC upon request. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Halyard Health, Inc. | ||||||||
Date: November 4, 2014 | By: |
/s/ John W. Wesley |
||||||
Name: | John W. Wesley | |||||||
Title: | Senior Vice President, General Counsel and Chief Ethics and Compliance Officer |
EXHIBIT INDEX
Exhibit Number |
Description | |
2.1 | Distribution Agreement, dated October 31, 2014, by and between Halyard Health, Inc. and Kimberly-Clark Corporation. ** | |
3.1 | Amended and Restated Certificate of Incorporation of Halyard Health, Inc. | |
3.2 | Amended and Restated By-laws of Halyard Health, Inc. | |
4.1 | Credit Agreement, dated October 31, 2014, by and among Halyard Health, Inc., as borrower, Morgan Stanley Senior Funding, Inc., as administrative agent, Citibank, N.A., as revolver administrative agent and swing-line lender, and the other parties thereto. | |
10.1 | Transition Services Agreement, dated October 31, 2014, by and between Halyard Heath, Inc. and Kimberly-Clark Corporation. | |
10.2 | Tax Matters Agreement, dated October 31, 2014, by and between Halyard Heath, Inc. and Kimberly-Clark Corporation. | |
10.3 | Employee Matters Agreement, dated October 31, 2014, by and between Halyard Heath, Inc. and Kimberly-Clark Corporation. | |
10.4 | Patent and Know-How License Agreement, dated October 31, 2014, between Kimberly-Clark Worldwide, Inc. and Avent, Inc. | |
10.5 | Royalty-Bearing Trademark License Agreement, dated October 31, 2014 between Kimberly-Clark Worldwide, Inc. and Avent, Inc. | |
10.6 | Non Royalty-Bearing Trademark License Agreement, dated October 31, 2014 between Kimberly-Clark Worldwide, Inc. and Avent, Inc. | |
10.7 | Long-term Trademark License Agreement, dated October 31, 2014 between Kimberly-Clark Worldwide, Inc. and Avent, Inc. | |
10.8 | Halyard Health, Inc. Equity Participation Plan, effective as of November 1, 2014. | |
10.9 | Form of Award Agreement related to the Halyard Health, Inc. Equity Participation Plan. | |
10.10 | Halyard Health, Inc. Outside Directors Compensation Plan, effective as of November 1, 2014. | |
10.11 | Form of Terms and Conditions of Awards under the Halyard Health, Inc. Outside Directors Compensation Plan. | |
10.12 | Halyard Health, Inc. Executive Officer Achievement Award Program, effective as of November 1, 2014. | |
10.13 | Halyard Health, Inc. Executive Severance Plan, effective as of November 1, 2014. | |
99.1 | Press Release dated November 3, 2014. |
** | Pursuant to Item 601(b)(2) of Regulation S-K, schedules to this agreement have been omitted because they are not material to an investment decision. Halyard Health, Inc. agrees to furnish supplementally a copy of any ommited schedule to the SEC upon request. |
Exhibit 2.1
Execution Version
Distribution Agreement
Effective as of October 31, 2014
Between
Kimberly-Clark Corporation
and
Halyard Health, Inc.
Table of Contents
Page | ||||||||
ARTICLE I DEFINITIONS |
2 | |||||||
SECTION 1.1 |
Definitions. |
2 | ||||||
SECTION 1.2 |
Interpretation. |
9 | ||||||
ARTICLE II BUSINESS SEPARATION |
10 | |||||||
SECTION 2.1 |
Separation Transactions. |
10 | ||||||
SECTION 2.2 |
Transfer of Healthcare Business. |
11 | ||||||
SECTION 2.3 |
Retained Assets. |
13 | ||||||
SECTION 2.4 |
Assumption of Liabilities. |
14 | ||||||
SECTION 2.5 |
Retained Liabilities. |
15 | ||||||
SECTION 2.6 |
Termination of Existing Intercompany Agreements. |
16 | ||||||
SECTION 2.7 |
Shared Contracts. |
16 | ||||||
SECTION 2.8 |
Related Transactions. |
16 | ||||||
SECTION 2.9 |
Waiver of Bulk-Sale and Bulk-Transfer Laws. |
18 | ||||||
ARTICLE III THE DISTRIBUTION |
18 | |||||||
SECTION 3.1 |
Issuance and Delivery of Halyard Shares. |
18 | ||||||
SECTION 3.2 |
Distribution of Halyard Shares. |
18 | ||||||
SECTION 3.3 |
Treatment of Fractional Shares. |
19 | ||||||
SECTION 3.4 |
Kimberly-Clark Board Action. |
19 | ||||||
SECTION 3.5 |
Additional Approvals. |
19 | ||||||
ARTICLE IV BUSINESS SEPARATION CLOSING MATTERS |
19 | |||||||
SECTION 4.1 |
Delivery of Instruments of Conveyance. |
19 | ||||||
SECTION 4.2 |
Delivery of Other Agreements. |
20 | ||||||
SECTION 4.3 |
Provision of Corporate Records. |
20 | ||||||
ARTICLE V NO REPRESENTATIONS AND WARRANTIES |
20 | |||||||
SECTION 5.1 |
No Kimberly-Clark Representations or Warranties. |
20 | ||||||
ARTICLE VI CERTAIN COVENANTS |
21 | |||||||
SECTION 6.1 |
Material Governmental Approvals and Consents. |
21 | ||||||
SECTION 6.2 |
Non-Assignable Contracts. |
21 | ||||||
SECTION 6.3 |
Novation of Assumed Liabilities; Release of Guarantees. |
21 | ||||||
SECTION 6.4 |
Further Assurances. |
22 | ||||||
SECTION 6.5 |
Collection of Accounts Receivable. |
23 | ||||||
SECTION 6.6 |
Cooperation Regarding Accounts Payable. |
24 | ||||||
SECTION 6.7 |
Election of Halyard Board of Directors. |
25 | ||||||
SECTION 6.8 |
Late Payments. |
25 | ||||||
SECTION 6.9 |
Registration and Listing. |
25 | ||||||
SECTION 6.10 |
No Noncompetition. |
26 | ||||||
SECTION 6.11 |
Litigation. |
27 | ||||||
SECTION 6.12 |
Signs; Use of Company Name. |
27 | ||||||
SECTION 6.13 |
Conduct of Healthcare Business in Ordinary Course. |
28 |
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ARTICLE VII CONDITIONS TO THE DISTRIBUTION |
28 | |||||||
SECTION 7.1 |
Approval by Kimberly-Clark Board of Directors. |
28 | ||||||
SECTION 7.2 |
Receipt of Tax Treatment Opinion. |
28 | ||||||
SECTION 7.3 |
Receipt of Solvency Opinion. |
29 | ||||||
SECTION 7.4 |
Compliance with State and Foreign Securities and Blue Sky Laws. |
29 | ||||||
SECTION 7.5 |
SEC Filings and Approvals. |
29 | ||||||
SECTION 7.6 |
Effectiveness of Form 10; No Stop Order. |
29 | ||||||
SECTION 7.7 |
Dissemination of Information to Kimberly-Clark Stockholders. |
29 | ||||||
SECTION 7.8 |
Approval of NYSE Listing Application. |
29 | ||||||
SECTION 7.9 |
Operating Agreements. |
29 | ||||||
SECTION 7.10 |
Resignations. |
29 | ||||||
SECTION 7.11 |
Consents. |
29 | ||||||
SECTION 7.12 |
No Actions. |
30 | ||||||
SECTION 7.13 |
Consummation of Pre-Distribution Transactions. |
30 | ||||||
SECTION 7.14 |
Pre-Distribution Payment. |
30 | ||||||
SECTION 7.15 |
No Other Events. |
30 | ||||||
SECTION 7.16 |
Satisfaction of Conditions. |
30 | ||||||
SECTION 7.17 |
Employee Consultation. |
30 | ||||||
ARTICLE VIII INSURANCE MATTERS |
30 | |||||||
SECTION 8.1 |
Insurance Prior to the Effective Time. |
30 | ||||||
SECTION 8.2 |
Ownership of Existing Policies and Programs. |
31 | ||||||
SECTION 8.3 |
Maintenance of Insurance for Halyard. |
31 | ||||||
SECTION 8.4 |
Acquisition and Maintenance of Post-Distribution Insurance by Halyard. |
31 | ||||||
SECTION 8.5 |
Property Damage and Business Interruption Insurance Claims Administration for Pre-Distribution Losses. |
31 | ||||||
SECTION 8.6 |
Liability and Workers Compensation Insurance Claims Administration for Pre-Distribution Occurrences. |
32 | ||||||
SECTION 8.7 |
Non-Waiver of Rights to Coverage. |
33 | ||||||
SECTION 8.8 |
Scope of Affected Policies of Insurance. |
33 | ||||||
ARTICLE IX DEBT ISSUANCE COSTS |
34 | |||||||
SECTION 9.1 |
Debt Issuance Costs. |
34 | ||||||
ARTICLE X RELEASES AND INDEMNIFICATION |
34 | |||||||
SECTION 10.1 |
Release of Pre-Distribution Claims. |
34 | ||||||
SECTION 10.2 |
Indemnification by Halyard. |
35 | ||||||
SECTION 10.3 |
Indemnification by Kimberly-Clark. |
36 | ||||||
SECTION 10.4 |
Applicability of and Limitation on Indemnification. |
37 | ||||||
SECTION 10.5 |
Adjustment of Indemnifiable Losses. |
37 | ||||||
SECTION 10.6 |
Procedures for Indemnification of Third Party Claims. |
38 | ||||||
SECTION 10.7 |
Procedures for Indemnification of Direct Claims. |
40 | ||||||
SECTION 10.8 |
Contribution. |
40 |
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SECTION 10.9 |
Remedies Cumulative. |
41 | ||||||
SECTION 10.10 |
Survival. |
41 | ||||||
ARTICLE XI DISPUTE RESOLUTION |
41 | |||||||
SECTION 11.1 |
Escalation and Mediation. |
41 | ||||||
SECTION 11.2 |
Continuity of Service and Performance. |
42 | ||||||
SECTION 11.3 |
Choice of Mediation Forum. |
42 | ||||||
SECTION 11.4 |
Ability to Pursue Other Legal Remedies. |
42 | ||||||
ARTICLE XII ACCESS TO INFORMATION AND SERVICES |
42 | |||||||
SECTION 12.1 |
Agreement for Exchange of Information. |
42 | ||||||
SECTION 12.2 |
Ownership of Information. |
43 | ||||||
SECTION 12.3 |
Compensation for Providing Information. |
43 | ||||||
SECTION 12.4 |
Retention of Records. |
43 | ||||||
SECTION 12.5 |
Limitation of Liability. |
43 | ||||||
SECTION 12.6 |
Production of Witnesses. |
43 | ||||||
SECTION 12.7 |
Confidentiality. |
44 | ||||||
SECTION 12.8 |
Privileged Matters. |
44 | ||||||
SECTION 12.9 |
Financial Information Certifications. |
45 | ||||||
ARTICLE XIII MISCELLANEOUS |
46 | |||||||
SECTION 13.1 |
Entire Agreement. |
46 | ||||||
SECTION 13.2 |
Choice of Law and Forum. |
46 | ||||||
SECTION 13.3 |
Amendment. |
46 | ||||||
SECTION 13.4 |
Waiver. |
46 | ||||||
SECTION 13.5 |
Partial Invalidity. |
47 | ||||||
SECTION 13.6 |
Execution in Counterparts. |
47 | ||||||
SECTION 13.7 |
Successors and Assigns. |
47 | ||||||
SECTION 13.8 |
Third Party Beneficiaries. |
47 | ||||||
SECTION 13.9 |
Notices. |
48 | ||||||
SECTION 13.10 |
Performance. |
48 | ||||||
SECTION 13.11 |
Force Majeure. |
48 | ||||||
SECTION 13.12 |
No Public Announcement. |
48 | ||||||
SECTION 13.13 |
Termination. |
48 | ||||||
SECTION 13.14 |
Conflict. |
49 |
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List of Schedules to this Agreement
Schedule 1.1(a) | Patent License and Transfer Agreements | |
Schedule 1.1(b) | Retained Receivables and Retained Payables | |
Schedule 1.1(c) | Trademark License and Transfer Agreements | |
Schedule 2.1 | Separation Transactions | |
Schedule 2.2(b)(vii) | Advanced Rebates | |
Schedule 2.2(d)(i) | Owned Real Property | |
Schedule 2.2(d)(ii) | Real Estate Leases | |
Schedule 2.2(e) | Personal Property Leases | |
Schedule 2.2(f) | Information Technology Equipment | |
Schedule 2.2(h)(i) | Acquisition or Divestiture Contracts | |
Schedule 2.2(h)(ii) | Supplier Contracts | |
Schedule 2.2(h)(iii) | Services Contracts | |
Schedule 2.2(h)(iv) | Transferred Shared Contracts | |
Schedule 2.2(h)(v) | Other Contracts | |
Schedule 2.3(l) | Other Retained Assets | |
Schedule 2.4(f) | Other Assumed Liabilities | |
Schedule 2.5(e) | Retained Rebate Liabilities | |
Schedule 2.5(f) | Other Retained Liabilities | |
Schedule 2.6 | Retained Intercompany Agreements | |
Schedule 2.7 | Shared Contracts | |
Schedule 6.7 | Nominees to Board of Halyard | |
Schedule 6.11(a) | Assumed and Excluded Actions | |
Schedule 6.11(b) | Transferred Actions | |
Schedule 8.3 | Insurance | |
Schedule 8.6 | K-C Administered Claims | |
Schedule 10.2(i) | Special Indemnification Matters | |
Schedule 10.3 | Suppliers of Information |
iv
DISTRIBUTION AGREEMENT
THIS DISTRIBUTION AGREEMENT is made as of October 31, 2014 by and between Kimberly-Clark Corporation ( Kimberly-Clark ), a Delaware corporation, and Halyard Health, Inc. ( Halyard ), a Delaware corporation, and, as of the date hereof, a wholly-owned subsidiary of Kimberly-Clark.
WHEREAS, Kimberly-Clark, through its health care division and certain subsidiaries and affiliates, is engaged in the Healthcare Business (as defined below);
WHEREAS, the Board of Directors of Kimberly-Clark has determined that it is advisable and in the best interests of Kimberly-Clark and its stockholders for Kimberly-Clark to transfer and assign, or cause to be transferred and assigned, to the Halyard Parties (as defined below), all or substantially all of the business, operations, assets and liabilities primarily related to the Healthcare Business, as well as the Included Non-Woven Business (as defined below);
WHEREAS, Kimberly-Clark has agreed to transfer and assign, or cause to be transferred or assigned, to the Halyard Parties all or substantially all of the business, operations, assets and liabilities primarily related to the Healthcare Business, as well as the Included Non-Woven Business, and Halyard has agreed to the transfer and assignment of such assets and to assume, or cause to be assumed, substantially all of the liabilities and obligations arising out of or relating to the Healthcare Business and the Included Non-Woven Business (the Contribution );
WHEREAS, the Board of Directors of Kimberly-Clark has determined that it is advisable and in the best interests of Kimberly-Clark and its stockholders for Kimberly-Clark to distribute on a pro rata basis to the holders of record of Kimberly-Clarks common stock, par value $1.25 per share ( Kimberly-Clark Common Stock ) as of the Record Date (as defined below), without any consideration being paid by the holders of such Kimberly-Clark Common Stock, all of the outstanding shares of Halyard common stock, par value $0.01 per share (the Halyard Common Stock ), then owned by Kimberly-Clark (the Distribution ), subject to satisfaction or waiver of certain conditions set forth herein;
WHEREAS, for U.S. federal income tax purposes, the Distribution is intended to qualify as a transaction described under Sections 355 and 368(a)(1)(D) of the Internal Revenue Code of 1986, as amended (the Code ); and
WHEREAS, it is appropriate and desirable to set forth the principal transactions required to effect the Contribution and Distribution and certain other agreements that will govern the relationship of Kimberly-Clark and Halyard following the Distribution.
NOW, THEREFORE, in consideration of the mutual promises contained herein, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions . As used in this Agreement, the following terms shall have the meanings set forth in this Section 1.1 .
Actions means any action, claim, demand, suit, arbitration, inquiry, subpoena, discovery request, proceeding or investigation by or before any court or grand jury, any governmental or other regulatory or administrative entity, agency or commission or any arbitration tribunal, domestic or foreign.
Actual Cash Amount has the meaning set forth in Section 2.8(c) .
Actual Distribution Date Working Capital Amount has the meaning set forth in Section 2.8(c) .
Actual Thai Withholding Tax Amount has the meaning set forth in Section 2.8(c) .
Affiliate means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by or is under common control with such Person. For the purpose of this definition, the term control means the power to direct the management of an entity, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the term controlled has the meaning correlative to the foregoing. After the Distribution, Halyard and Kimberly-Clark shall not be deemed to be under common control for purposes hereof due solely to the fact that Halyard and Kimberly-Clark have common stockholders.
Agent means Computershare Investor Services, the distribution agent appointed by Kimberly-Clark to distribute shares of Halyard Common Stock pursuant to the Distribution.
Assumed Actions has the meaning set forth in Section 6.11(a) .
Assumed Liabilities has the meaning set forth in Section 2.4 .
Balance Sheet means the pro forma balance sheet of Halyard as of June 30, 2014, as filed with the Form 10.
Board of Directors of Kimberly-Clark means the Board of Directors of Kimberly-Clark or the Executive Committee thereof.
Brazil Receivable has the meaning set forth in Section 6.5(e) .
Cash Distribution has the meaning set forth in Section 2.8(b) .
Code has the meaning set forth in the Recitals.
Contracts has the meaning set forth in Section 2.2(h) .
Contribution has the meaning set forth in the Recitals.
2
Conveyancing Instruments has the meaning set forth in Section 4.1 .
Copyrights means United States and foreign copyrights, both registered and unregistered, along with the registrations and applications to register any such copyrights.
Credit Facility means, collectively, a $250 million senior secured revolving credit facility, and a $390 million term loan, in each case to be entered into by Halyard.
Debt means the indebtedness evidenced by the Credit Facility and the senior notes due October 15, 2022, issued by Halyard pursuant to the Notes Offering.
Debt Issuance Costs means the fees and expenses incurred in connection with negotiating, documenting and closing the Debt, including the underwriting fees for the notes to be issued by Halyard in the Notes Offering, the legal fees of counsel for the underwriters of the Notes Offering, the fees of Moodys Investor Services and Standard & Poor for establishing an initial debt rating for the notes issued by Halyard in the Notes Offering, the legal fees of counsel for the lenders under the Credit Facility, the legal fees of counsel for Halyard in connection with the issuance of the notes issued by Halyard in the Notes Offering and in connection with the Credit Facility, pre-Distribution expenses incurred by Halyard in connection with meeting with prospective purchasers of the notes to be issued in the Notes Offering, the fees and expenses of the indenture trustee and its counsel in connection with the Notes Offering, printing, reproduction and delivery expenses relating to the Notes Offering (including postage, air freight charges and charges for counting and packaging), authentication, stamp or transfer Taxes and related expenses for the Notes Offering, any federal or state blue sky securities registration fees and expenses (including SEC and state filing fees and the reasonable fees and expenses of counsel relating to such registration) in connection with the Notes Offering, cost of surveys conducted at the lenders request in the United States in connection with the Credit Facility, costs of appraisals and field exams conducted by or at the request of the lenders in connection with the Credit Facility, mortgagee title insurance for the benefit of the lenders under the Credit Facility, and fees relating to the filing and recordation of security interests and mortgages under the Credit Facility, and interest accrued on the Debt prior to the Effective Time.
Distribution has the meaning set forth in the Recitals.
Distribution Date means the date determined by the Board of Directors of Kimberly-Clark as the date on which the Distribution shall be made to holders of Kimberly-Clark Common Stock on the Record Date.
Distribution Date Working Capital Amount has the meaning set forth in Section 2.2(b) .
Effective Time means midnight (i.e., end of day) on the Distribution Date.
Employee Consultation Process has the meaning set forth in Section 6.4(a).
Employee Matters Agreement means the Employee Matters Agreement, dated the date hereof, between Kimberly-Clark and Halyard.
Escalation Notice has the meaning set forth in Section 11.1(b) .
3
Estimated Distribution Date Working Capital Amount has the meaning set forth in Section 2.8(b) .
Exchange Act means the Securities Exchange Act of 1934, as amended.
Excluded Non-Woven Assets means all assets (including intellectual property assets and receivables) of the Kimberly-Clark non-woven business other than those specifically included within the Included Non-Woven Business.
Expenses means any and all expenses incurred in connection with investigating, defending or asserting any claim, action, suit or proceeding incident to any matter indemnified against hereunder (including court filing fees, court costs, arbitration fees or costs, witness fees, and reasonable fees and disbursements of legal counsel, investigators, expert witnesses, consultants, accountants and other professionals).
Foreign Exchange Rate means, with respect to any currency other than United States dollars, as of any date of determination, the rate set forth in the exchange rate section of the Wall Street Journal or, if not published in the Wall Street Journal , then the average of the opening bid and asked rates on such date at which such currency may be exchanged for United States dollars as quoted by JPMorgan Chase Bank, NA (or any successor thereto or other major money center commercial bank agreed to by the Parties).
Form 10 means the registration statement on Form 10 filed by Halyard with the SEC under the Exchange Act in connection with the Distribution, including any amendment or supplement thereto.
Governmental Authority means any foreign, federal, state, local or other government, governmental, statutory or administrative authority, regulatory body or commission or any court, tribunal or judicial or arbitral body.
Halyard has the meaning set forth in the first paragraph of this Agreement.
Halyard Business means (i) at any time prior to the Distribution, the Healthcare Business and the Included Non-Woven Business, and (ii) at any time following the Distribution, all businesses, operations and activities conducted by Halyard or any of its Subsidiaries.
Halyard Common Stock has the meaning set forth in the recitals.
Halyard Distributable Share means, for each holder of record of Kimberly-Clark Common Stock as of the close of business on the Record Date, one share of Halyard Common Stock for every eight shares of Kimberly-Clark Common Stock outstanding and held of record by such holder at such time.
Halyard Indemnified Parties has the meaning set forth in Section 10.3 .
Halyard Parties means Halyard, the Subsidiaries of Halyard as of the date hereof and any Subsidiaries of Halyard formed or acquired after the date hereof.
4
Halyard Retained Cash has the meaning set forth in Section 2.2(b) .
Halyard Share(s) mean(s) each share of Halyard Common Stock.
Healthcare Business means all businesses, operations and activities conducted (whether by Kimberly-Clark or any of its Subsidiaries) within Kimberly-Clarks health care operating segment.
Included Non-Woven Business means those assets and liabilities of the Kimberly-Clark non-woven business that will be contributed by Kimberly-Clark to Halyard North Carolina, Inc., pursuant to the Lexington Contribution Agreement.
Indemnified Party has the meaning set forth in Section 10.5(a) .
Indemnifying Party has the meaning set forth in Section 10.5(a) .
Indemnity Payment has the meaning set forth in Section 10.5(a) .
Information has the meaning set forth in Section 12.1(a) .
Information Statement has the meaning set forth in Section 6.9(a) .
Insurance Charges has the meaning set forth in Section 8.6(d) .
Intercompany Agreements means any Contract between Kimberly-Clark or one of its Subsidiaries, on the one hand, and Halyard or one of its Subsidiaries, on the other hand, entered into prior to the Effective Date, but excluding this Agreement and the Operating Agreements.
IRS means the Internal Revenue Service.
K-C Administered Claims has the meaning set forth in Section 8.6(a) .
KCM Distributor Agreement means that certain Distributor Agreement, dated as of the date hereof, between Kimberly-Clark de Mexico S.A.B. de C.V. and Halyard Sales, LLC.
Kimberly-Clark has the meaning set forth in the first paragraph of this Agreement.
Kimberly-Clark Common Stock has the meaning set forth in the Recitals.
Kimberly-Clark Indemnified Parties has the meaning set forth in Section 10.2 .
Kimberly-Clark Parties means Kimberly-Clark and its Subsidiaries (including those formed or acquired after the date hereof), other than the Halyard Parties.
Kimberly-Clark Policies has the meaning set forth in Section 8.2 .
Kimberly-Clark Retained Cash has the meaning set forth in Section 2.3(a) .
5
Know-How means engineering drawings, technical data, reports, technical knowledge, methods, formulas, patterns, compilations, programs, devices, techniques, tests, drawings, processes, experience, base and analytical science relating to the manufacture, testing, converting, packaging, handling, distributing and supplying of products and is inclusive of any and all Trade Secrets. For purposes of this Agreement, Know How shall expressly exclude Patents, Copyrights and Trademarks.
Lexington Contribution Agreement means that certain Contribution Agreement, dated as of October 27, 2014, between Kimberly-Clark and Halyard North Carolina, Inc.
Liability means any and all debts, liabilities and obligations, absolute or contingent, matured or unmatured, liquidated or unliquidated, accrued or unaccrued, known or unknown, whenever arising (unless otherwise specified in this Agreement), including all costs and expenses relating thereto, and including those debts, liabilities and obligations arising under any law, rule, regulation, Action, threatened Action, order or consent decree of any Governmental Authority or any award of any arbitrator of any kind, and those arising under any contract, commitment or undertaking.
Losses means any and all losses, costs, obligations, liabilities, settlement payments, awards, judgments, fines, penalties, damages, fees, expenses, deficiencies, claims or other charges, absolute or contingent, matured or unmatured, liquidated or unliquidated, accrued or unaccrued, known or unknown (including the costs and expenses of any and all Actions, threatened Actions, demands, assessments, judgments, settlements and compromises relating thereto and attorneys fees and any and all expenses whatsoever reasonably incurred in investigating, preparing or defending against any such Actions or threatened Actions).
Manufacturing and Supply Agreements means those Manufacturing and Supply Agreements, dated as of the date hereof, between Kimberly-Clark or its Affiliates on the one hand, and Halyard or its Affiliates on the other hand.
Material Governmental Approvals and Consents means any material notices, reports or other filings to be made with or to, or any material consents, registrations, approvals, permits, clearances or authorizations to be obtained from, any Governmental Authority.
Non-Competition Agreements means those Non-Competition Agreements, dated as of the date hereof, between Kimberly-Clark and Halyard.
Non-Permitted Names has the meaning set forth in Section 6.12 .
Notes Offering means the offering by Halyard pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended, of senior unsecured notes of Halyard in the aggregate principal amount of up to $250 million (the Original Notes ) and any (a) filing of a registration statement with the SEC with respect to a registered offer to exchange the Original Notes for new notes of Halyard having terms substantially identical in all material respects to the Original Notes and the offering of such new notes in exchange for surrender of the Original Notes, or (b) filing of a shelf registration statement covering resales of the Original Notes.
NYSE means the New York Stock Exchange, Inc.
6
Operating Agreements means the Transition Services Agreement, Tax Matters Agreement, Employee Matters Agreement, Patent License Agreements, Trademark License Agreements, Manufacturing and Supply Agreements, Non-Competition Agreements, KCM Distributor Agreement, YK Distributor Agreement and any other agreement entered into on or before the Distribution Date regarding the ongoing business and service relationships between the Kimberly-Clark Parties and Halyard Parties.
Ordinary Course has the meaning set forth in Section 6.13 .
Owned Real Property has the meaning set forth in Section 2.2(d)(i) .
Party means the Kimberly-Clark Parties or the Halyard Parties.
Patent License Agreements means those patent license agreements between Kimberly-Clark Worldwide, Inc. and Avent, which are identified on Schedule 1.1(a) .
Patent Transfer Agreements means those patent transfer agreements between Kimberly-Clark Worldwide, Inc. and Avent, Inc., which are identified on Schedule 1.1(a) .
Patents means United States and foreign patents and applications for patents, including any continuations, continuations-in-part, divisions, renewals, reissues and extensions thereof.
Person means any individual, corporation, partnership, joint venture, limited liability company, association, joint-stock company, trust, unincorporated organization or Governmental Authority.
Personal Property Leases has the meaning set forth in Section 2.2(e) .
Prime Rate means the rate that JP Morgan Chase Bank, NA (or any successor thereto or other major money center commercial bank agreed to by the Parties) announces from time to time as its prime lending rate, as in effect from time to time.
Privilege has the meaning set forth in Section 12.8(a) .
Privileged Information has the meaning set forth in Section 12.8(a) .
Real Estate Leases has the meaning set forth in Section 2.2(d)(ii) .
Rebates has the meaning set forth in Section 2.4(h) .
Receivables has the meaning set forth in Section 2.2(b)(i) .
Record Date means the date determined by the Board of Directors of Kimberly-Clark as the record date for the Distribution.
Retained Assets has the meaning set forth in Section 2.3 .
Retained Busines s means the business of Kimberly-Clark and its Subsidiaries other than the Halyard Business.
7
Retained Liabilities has the meaning set forth in Section 2.5 .
Retained Payables means the accounts payable primarily related to the Halyard Business and owed by those entities set forth in Schedule 1.1(b) .
Retained Rebate Liabilities has the meaning set forth in Section 2.5(e) .
Retained Receivables means the Brazil Receivable and the accounts receivable primarily related to the Halyard Business and owned by those entities set forth in Schedule 1.1(b) .
SEC means the United States Securities and Exchange Commission.
Shared Contract means a Contract with a third Person that directly benefits both the Kimberly-Clark Parties and the Halyard Parties.
Software means computer software programs, in source code or object code form, including, without limitation, all related source diagrams, flow charts, specifications, documentation and all other materials and documentation necessary to allow a reasonably skilled third party programmer or technician to maintain, support or enhance the Software.
Subsidiary means, when used with reference to any Person, any corporation or other organization whether incorporated or unincorporated of which at least a majority of the securities or interests having by the terms thereof ordinary voting power to elect at least a majority of the board of directors or others performing similar functions with respect to such corporation or other organization is directly or indirectly owned or controlled by such Person or by any one or more of its Subsidiaries, or by such Person and one or more of its Subsidiaries; provided , however , that no Person that is not directly or indirectly wholly-owned by any other Person shall be a Subsidiary of such other Person unless such other Person controls, or has the right, power or ability to control, that Person. After the Distribution, Halyard and Kimberly-Clark shall not be deemed to be under common control for purposes hereof due solely to the fact that Halyard and Kimberly-Clark have common stockholders.
Target Cash Amount has the meaning set forth in Section 2.2(b) .
Tax Matters Agreement means the Tax Matters Agreement, dated as of the date hereof, between Kimberly-Clark and Halyard.
Taxes shall have the meaning set forth in the Tax Matters Agreement.
Thai Withholding Tax Cash has the meaning set forth in Section 2.2(b) .
Third Party Claim has the meaning set forth in Section 10.6(a) .
Third Party Consents has the meaning set forth in Section 6.4(a) .
Trademark License Agreements means those Trademark License Agreements between Kimberly-Clark and Avent which are identified on Schedule 1.1(c) .
8
Trademark Transfer Agreements means those trademark transfer agreements between Kimberly-Clark and Avent which are identified on Schedule 1.1(c).
Trade Secrets means information, including formulas, patterns, compilations, programs, devices, methods, techniques, or processes, that: (i) derive independent economic value from not being generally known to, and not being readily ascertainable by proper means by, other Persons who can obtain economic value from their disclosure or use, and (ii) are the subject of efforts that are reasonable under the circumstances to maintain their secrecy. For purposes of this Agreement, Trade Secrets shall expressly exclude Patents, Copyrights, Trademarks and Know-How.
Trademarks means all United States, state and foreign trademarks, service marks, logos, trade dress and trade names, whether registered or unregistered, including all goodwill associated with the foregoing, and all registrations and pending applications to register the foregoing.
Transferred Actions has the meaning set forth in Section 6.11(b) .
Transferred Assets has the meaning set forth in Section 2.2 .
Transition Services Agreement means the Transition Services Agreement, dated the date hereof, between Kimberly-Clark and Halyard.
Uninsured Claim has the meaning set forth in Section 8.6(c) .
YK Distributor Agreement means that certain Distributor Agreement, dated as of the date hereof, between Yuhan-Kimberly, Limited and Halyard Sales, LLC.
SECTION 1.2 Interpretation .
(a) In this Agreement, unless the context clearly indicates otherwise:
(i) words used in the singular include the plural and words used in the plural include the singular;
(ii) reference to any Person includes such Persons successors and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement;
(iii) reference to any gender includes the other gender;
(iv) the word including means including but not limited to;
(v) reference to any Article, Section, Exhibit or Schedule means such Article or Section of, or such Exhibit or Schedule to, this Agreement, as the case may be, and references in any Section or definition to any clause means such clause of such Section or definition;
(vi) the words herein, hereunder, hereof, hereto and words of similar import shall be deemed references to this Agreement as a whole and not to any particular Section or other provision hereof;
9
(vii) reference to any agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and by this Agreement;
(viii) reference to any law (including statutes and ordinances) means such law (including all rules and regulations promulgated thereunder) as amended, modified, codified or reenacted, in whole or in part, and in effect at the time of determining compliance or applicability;
(ix) relative to the determination of any period of time, from means from and including, to means to but excluding and through means through and including;
(x) accounting terms used herein shall have the meanings historically ascribed to them by Kimberly-Clark and its Subsidiaries based upon Kimberly-Clarks internal financial policies and procedures in effect prior to the date of this Agreement;
(xi) if there is any conflict between the provisions of the body of this Agreement and the Exhibits or Schedules hereto, the provisions of the body of this Agreement shall control unless explicitly stated otherwise in such Exhibit or Schedule;
(xii) the titles to Articles and headings of Sections contained in this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of or to affect the meaning or interpretation of this Agreement;
(xiii) any portion of this Agreement obligating a Party to take any action or refrain from taking any action, as the case may be, shall mean that such Party shall also be obligated to cause its relevant Subsidiaries to take such action or refrain from taking such action, as the case may be; and
(xiv) unless otherwise specified in this Agreement, all references to dollar amounts herein shall be in respect of lawful currency of the United States.
(b) This Agreement was negotiated by the Parties with the benefit of legal representation, and any rule of construction or interpretation otherwise requiring this Agreement to be construed or interpreted against either Party shall not apply to any construction or interpretation hereof.
ARTICLE II
BUSINESS SEPARATION
SECTION 2.1 Separation Transactions . Prior to the Distribution, Kimberly-Clark shall use commercially reasonable efforts to, and shall cause Halyard and each other Subsidiary of Kimberly-Clark to use commercially reasonable efforts to, effect each of the transactions set forth in Schedule 2.1 , which transactions shall be accomplished substantially in the order and utilizing the steps described therein, with such modifications, if any, as Kimberly-Clark shall determine in its sole discretion are necessary or desirable for efficiency or similar purposes. For the avoidance of doubt, some or all of such transactions and the transactions contemplated under this Article II , may have already been implemented prior to the date hereof.
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SECTION 2.2 Transfer of Healthcare Business . As more fully set forth in this Article II and subject to the terms and conditions of this Agreement (including Section 2.1 ) and the Operating Agreements, prior to the Distribution, Kimberly-Clark shall in the manner described in Schedule 2.1 , and shall cause its Subsidiaries to, convey, assign, transfer, contribute and set over, or cause to be conveyed, assigned, transferred, contributed and set over, to the Halyard Parties, and Halyard shall cause the Halyard Parties to accept and receive, all right, title and interest of Kimberly-Clark and its Subsidiaries in and to the tangible and intangible assets primarily related to the Healthcare Business, as well as the tangible and intangible assets included in the Included Non-Woven Business (all of such assets being hereinafter referred to as the Transferred Assets ), including, but not limited to, the following:
(a) Balance Sheet Assets . all assets reflected or disclosed on the Balance Sheet, including all machinery, equipment, furniture and other tangible personal property, whether owned or leased, primarily related to the Healthcare Business, subject to acquisitions, dispositions and adjustments in the ordinary course of the Healthcare Business, consistent with past practice, from the date of the Balance Sheet through the Effective Time;
(b) Cash and Receivables .
(i) Cash in an amount equal to the sum of (A) $40 million (the Target Cash Amount ), (B) $2 million (in settlement of certain pre-existing obligations), and (C) the aggregate net dollar amount of the positive difference, if any, between the Retained Receivables minus the sum of (1) the Retained Payables and (2) the Retained Rebate Liabilities immediately prior to the Distribution (the Distribution Date Working Capital Amount ) (collectively, the Halyard Retained Cash ).
(ii) cash in an amount sufficient to satisfy withholding tax obligations of Safeskin Corporation, Ltd., and Safeskin Medical & Scientific Ltd., relating to a cash distribution made prior to the Effective Time from such entities to Kimberly-Clark in respect of its beneficial ownership of such distributing entities (the Thai Withholding Tax Cash );
(iii) all accounts receivable, notes receivable, lease receivables, prepayments (other than prepaid insurance), advances and other receivables arising out of or produced by the Healthcare Business and owing by any Persons, but in all cases excluding the Retained Receivables (the Receivables );
(iv) all cash payments received after the Effective Time on account of the Receivables;
(v) all manufacturers warranties or guarantees related primarily to the Transferred Assets;
(vi) any and all manufacturers or third party service or replacement programs related primarily to the Transferred Assets; and
(vii) those certain advanced rebates set forth on Schedule 2.2(b)(vii) , which shall in no event be deemed to be included in the Retained Receivables;
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(c) Inventories . all supplies, packaging, raw materials, works in progress, finished goods and other inventories primarily related to the Healthcare Business;
(d) Owned Real Property and Real Estate Leases .
(i) those certain parcels of land described on Schedule 2.2(d)(i) (the Owned Real Property ) and any and all improvements, fixtures, machinery, equipment and other property located on the premises demised under such Owned Real Property; and
(ii) those certain real estate leases set forth on Schedule 2.2(d)(ii) (the Real Estate Leases ) and any and all improvements, fixtures, machinery, equipment and other property located on the premises demised under such Real Estate Leases;
(e) Personal Property Leases . those certain machinery, equipment or other tangible personal property leases (the Personal Property Leases ) set forth on Schedule 2.2(e) ;
(f) Equipment . all manufacturing fixtures, machinery, installations, equipment, computers, furniture, tools, spare parts, supplies, automobiles, trucks, materials, and other personal property primarily related to the Healthcare Business, including those information technology assets set forth on Schedule 2.2(f) ;
(g) Intellectual Property . (i) all Copyrights and Patents set forth on the Patent Transfer Agreements as to be transferred to a Halyard Party; and (ii) all business and technical information, nonpatented inventions, patent disclosures, Trade Secrets, Know-How and invention disclosures set forth on the Patent Transfer Agreements as to be transferred to a Halyard Party;
(h) Contracts . all contracts, agreements, arrangements, leases, manufacturers warranties, memoranda, understandings and offers open for acceptance of any nature, whether written or oral (the Contracts ) set forth below (other than Real Estate Leases, Personal Property Leases and employment contracts):
(i) all Contracts related to acquisitions or divestitures of assets or stock primarily related to the Healthcare Business, including Contracts primarily related to the transactions set forth on Schedule 2.2(h)(i) , except to the extent any such Contracts primarily relate to the Retained Business and except to the extent indicated on Schedule 2.2(h)(i) ;
(ii) all supplier Contracts primarily related to the Healthcare Business relating either to raw materials or distributed products, including those set forth on Schedule 2.2(h)(ii) ;
(iii) all Contracts with third-parties primarily related to the Healthcare Business relating to services provided to, or for the benefit of, Halyard, including those set forth on Schedule 2.2(h)(iii) ;
(iv) the Shared Contracts set forth on Schedule 2.2(h)(iv) ; and
(v) all other Contracts primarily related to the Healthcare Business, including those set forth on Schedule 2.2(h)(v) ;
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(i) Permits and Licenses . all permits, approvals, licenses, franchises, authorizations or other rights granted by any Governmental Authority held or applied for by Kimberly-Clark and its Subsidiaries and that are primarily related to the Healthcare Business or that are primarily related to the Transferred Assets, and all other consents, grants and other rights that are used primarily for the lawful ownership of the Transferred Assets or the operation of the Healthcare Business and that are legally transferable to Halyard;
(j) Claims and Indemnities . all rights, claims, demands, causes of action, judgments, decrees and rights to indemnity or contribution, whether absolute or contingent, contractual or otherwise, in favor of Kimberly-Clark or any of its Subsidiaries primarily related to the Healthcare Business, including the right to sue, recover and retain such recoveries and the right to continue in the name of Kimberly-Clark and its Subsidiaries any pending actions relating to the foregoing, and to recover and retain any damages therefrom;
(k) Books and Records . all books and records (including all records pertaining to customers, suppliers and personnel, and all data, in whatever form), wherever located, that are primarily related to the Healthcare Business;
(l) Supplies . all office supplies, production supplies, spare parts, purchase orders, forms, labels, shipping material, art work, catalogues, sales brochures, operating manuals and advertising and promotional material and all other printed or written material primarily related to the Healthcare Business;
(m) Trademarks . all Trademarks and domain names set forth on the Trademark Transfer Agreements as to be transferred to a Halyard Party;
(n) Tax Credits . any right, title or interest in any Tax refund, credit or benefit to which any of the Halyard Parties is entitled in accordance with the terms of the Tax Matters Agreement;
(o) Lexington Mill Assets . all assets transferred to Halyard North Carolina, Inc. pursuant to the Lexington Contribution Agreement;
(p) Accruals . any amounts accrued on the books and records of Kimberly-Clark or its Subsidiaries with respect to any Transferred Liabilities; and
(q) Other Assets . all other assets, tangible or intangible, including all goodwill, that are primarily related to the Healthcare Business, including, without limitation, domain names and websites, other than email addresses.
SECTION 2.3 Retained Assets . Notwithstanding anything to the contrary herein, the following assets (the Retained Assets ) are not, and shall not be deemed to be, Transferred Assets:
(a) cash and cash equivalents, any cash on hand or in bank accounts, certificates of deposit, commercial paper and similar securities, except for (i) deposits securing bonds, letters of credit, leases and all other obligations primarily related to the Healthcare Business, (ii) petty cash and impressed funds primarily related to the Healthcare Business, (iii) the Halyard Retained Cash, and (iv) the Thai Withholding Tax Cash (such retained cash, the Kimberly-Clark Retained Cash );
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(b) the Retained Receivables;
(c) any right, title or interest in and to any Tax refund, credit or benefit to which any of the Kimberly-Clark Parties is entitled in accordance with the terms of the Tax Matters Agreement;
(d) any amounts accrued on the books and records of Kimberly-Clark or its Subsidiaries with respect to any Retained Liabilities;
(e) any right, title or interest in and to any prepaid insurance premiums for the Kimberly-Clark Policies existing immediately prior to the Distribution;
(f) all Trademarks and domain names other than those set forth on the Trademark Transfer Agreements as to be transferred to a Halyard Party;
(g) all Copyrights and Patents and all business and technical information, nonpatented inventions, patent disclosures, Trade Secrets, Know-How and invention disclosures other than those set forth set forth on the Patent Transfer Agreements as to be transferred to a Halyard Party;
(h) all Shared Contracts not set forth on Schedule 2.2(h)(iv) ;
(i) all information technology assets other than those set forth on Schedule 2.2(f) ;
(j) all Excluded Non-Woven Assets;
(k) all other assets of the Kimberly-Clark Parties other than the Transferred Assets; and
(l) all other assets set forth on Schedule 2.3( l ) .
SECTION 2.4 Assumption of Liabilities . In connection with the transactions contemplated by this Article II , and except as set forth in Section 2.5 , Halyard shall, or shall cause the Halyard Parties to assume, and to pay, comply with and discharge all contractual and other Liabilities in accordance with their terms of Kimberly-Clark or its Subsidiaries arising out of the ownership or use of the Transferred Assets or the operation of the Healthcare Business, whether due or to become due, including:
(a) all Liabilities of Kimberly-Clark and its Subsidiaries that are reflected, disclosed or reserved for on the Balance Sheet, as such Liabilities may be increased or decreased in the operation of the Healthcare Business from the date of the Balance Sheet through the Effective Time;
(b) all Liabilities of Kimberly-Clark and its Subsidiaries under or related to the Real Estate Leases, the Personal Property Leases and the Contracts, such assumption to occur as (i) assignee if such Real Estate Leases, Personal Property Leases and Contracts are assignable and are assigned or otherwise transferred to the Halyard Parties, or (ii) subcontractor, sublessee or sublicensee as provided in Section 6.3 if such assignment of such Real Estate Leases, Personal Property Leases and Contracts and/or proceeds thereof is prohibited by law, by the terms thereof or not permitted by the other contracting party;
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(c) all Liabilities of Kimberly-Clark and its Subsidiaries in connection with claims of past or current directors, officers, employees, agents, consultants, advisors and other representatives of the Healthcare Business, except as otherwise expressly provided in this Agreement or the Employee Matters Agreement;
(d) all Liabilities of Kimberly-Clark and its Subsidiaries related to any and all Actions asserting a violation of any law, rule or regulation arising out of the operations of the Healthcare Business or the ownership or use of the Transferred Assets, whether before or after the Effective Time and all Liabilities relating to Assumed Actions;
(e) all Liabilities for which Halyard is liable in accordance with the terms of the Tax Matters Agreement;
(f) the Liabilities set forth on Schedule 2.4(f) ;
(g) all Liabilities assumed by Halyard North Carolina, Inc. pursuant to the Lexington Contribution Agreement;
(h) all rebate, chargeback or similar Liabilities arising out of the ownership or use of the Transferred Assets or the operation of the Healthcare Business (the Rebates ), other than the Retained Rebate Liabilities;
(i) all customer incentive Liabilities that are accrued by Kimberly-Clark and its Subsidiaries in connection with the ownership or use of the Transferred Assets or the operation of the Healthcare Business; and
(j) all other Liabilities of Kimberly-Clark and its Subsidiaries arising out of the ownership or use of the Transferred Assets or the operation of the Healthcare Business, whether existing on the date hereof or arising at any time or from time to time after the date hereof, and whether based on circumstances, events or actions arising heretofore or hereafter, whether or not such Liabilities shall have been disclosed herein, and whether or not reflected on the books and records of Kimberly-Clark and its Subsidiaries or Halyard and its Subsidiaries or the Balance Sheet.
The Liabilities described in this Section 2.4 are referred to in this Agreement collectively as the Assumed Liabilities .
SECTION 2.5 Retained Liabilities . Notwithstanding anything to the contrary in this Agreement, neither Halyard nor any of the other Halyard Parties shall assume or have any assumed liability for any of the following Liabilities of the Kimberly-Clark Parties (the Retained Liabilities ):
(a) except as provided in the Employee Matters Agreement, the Liabilities under the Kimberly-Clark employee benefit plans;
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(b) all Liabilities for which Kimberly-Clark is liable in accordance with the terms of the Tax Matters Agreement;
(c) all Liabilities arising out of the ownership or use of the Retained Assets or the operation of the Retained Business;
(d) all liabilities relating to the Retained Payables;
(e) the rebate, chargeback or similar Liabilities set forth on Schedule 2.5(e) (the Retained Rebate Liabilities ); and
(f) the Liabilities set forth on Schedule 2.5(f) .
SECTION 2.6 Termination of Existing Intercompany Agreements . Except as otherwise expressly provided in this Agreement, the Operating Agreements or as set forth on Schedule 2.6 and except for all receivables and payables accrued in the ordinary course of business of the Kimberly-Clark Parties and the Halyard Parties, all Intercompany Agreements and all other intercompany arrangements and course of dealings, whether or not in writing and whether or not binding, in effect immediately prior to the Effective Time, shall be terminated and be of no further force and effect from and after the Effective Time.
SECTION 2.7 Shared Contracts .
(a) With respect to Liabilities pursuant to, arising under or relating to any Shared Contract, including those set forth in Schedule 2.7 , such Liabilities shall be allocated between the Kimberly-Clark Parties, on the one hand, and the Halyard Parties on the other hand, as follows:
(i) first, if a Liability is incurred exclusively in respect of a benefit received by one Party, the Party receiving such benefit shall be responsible for such Liability; and
(ii) second, if a Liability cannot be so allocated under clause (i) , such Liability shall be allocated between the Parties based on the relative proportions of total benefit received (over the term of the Shared Contract, measured as of the date of the allocation) under the relevant Shared Contract. Notwithstanding the foregoing, each Party shall be responsible for any and all Liabilities arising out of or resulting from its breach of the relevant Shared Contract.
(b) If any of the Kimberly-Clark Parties, on the one hand, or any of the Halyard Parties, on the other hand, receive any benefit or payment under any Shared Contract that was intended for the other Party, the Party receiving such benefit or payment will use commercially reasonable efforts to deliver, transfer or otherwise afford such benefit or payment to the other Party.
SECTION 2.8 Related Transactions .
(a) On or before the Distribution Date, Halyard shall and shall cause the other Halyard Parties to (i) enter into the Credit Facility and related agreements, (ii) consummate the Notes Offering and (iii) borrow under the Credit Facility such amount, if any, as may be necessary in order to enable Halyard to make the payment described in Section 2.8(b) .
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(b) Immediately prior to the Distribution, Halyard will make a distribution (the Cash Distribution ) to Kimberly-Clark by wire transfer of immediately available funds to an account specified by Kimberly-Clark, in an amount that is equal to (i) the estimated amount of all cash, cash equivalents, certificates of deposit, commercial paper and similar securities held in bank accounts of Halyard or any of its Subsidiaries immediately prior to the Distribution, minus (ii) the sum of (A) the Halyard Retained Cash and (B) the Thai Withholding Tax Cash. For purposes of calculating the amount of the Cash Distribution on the Distribution Date, the Parties will agree upon an estimated amount of the Distribution Date Working Capital Amount (the Estimated Distribution Date Working Capital Amount ). The funds received by Kimberly-Clark under the Cash Distribution (and, without duplication, any cash proceeds from the transfer of Kimberly-Clarks interest in Arabian Medical Products Mfg. Co. to Halyard pursuant to the transactions set forth in Schedule 2.1) , subject to any adjustment pursuant to subsection (c) below, shall be used by Kimberly-Clark solely for purposes of making open market purchases of shares of Kimberly-Clark Common Stock.
(c) Promptly following the Distribution Date, but in no event later than 21 days thereafter, Kimberly-Clark shall determine the actual amounts of (i) the amount actually paid (or, if not paid, determined to be due) to satisfy withholding tax obligations of Safeskin Corporation, Ltd., and Safeskin Medical & Scientific Ltd., relating to the cash distribution made prior to the Effective Time from such entities to Kimberly-Clark in respect of its beneficial ownership of such distributing entities (the Actual Thai Withholding Tax Amount ), (ii) all cash, cash equivalents, certificates of deposit, commercial paper and similar securities that were held in bank accounts of Halyard or any of its Subsidiaries as of the Distribution (after giving effect to the Cash Distribution and excluding the Actual Thai Withholding Tax Amount) (the Actual Cash Amount ), and (iii) the aggregate net dollar amount of the positive difference, if any, between the Retained Receivables minus the sum of (A) the Retained Payables and (B) the Retained Rebate Liabilities as of the Distribution (the Actual Distribution Date Working Capital Amount ), and shall provide a written statement to Halyard, including reasonable back-up information related thereto, setting forth in commercially reasonable detail such amounts and the method of determination. Halyard shall provide Kimberly-Clark with reasonable access to such information as may be required to make such determination. In the event that Halyard disputes the correctness of the determination of the Actual Cash Amount or the Actual Distribution Date Working Capital Amount, Halyard shall notify Kimberly-Clark in writing of its objections within 10 days after receipt of such statement and shall set forth, in reasonable detail, the reasons for Halyards objections. Kimberly-Clark and Halyard shall endeavor in good faith to resolve any disputed matters within 10 days after Kimberly-Clarks receipt of Halyards notice of objections. If Kimberly-Clark and Halyard are unable to resolve the disputed matters, Kimberly-Clark and Halyard shall, as promptly as practicable, mutually select and engage an independent nationally recognized public accounting firm to resolve the matters in dispute, and the determination of such firm in respect of the correctness of each matter remaining in dispute shall be conclusive and binding on Kimberly-Clark and Halyard. The determination of such firm shall be based solely on presentations by Kimberly-Clark and Halyard and shall not be by independent review. In reaching its determination, the only alternatives available to such firm shall be to (i) accept the position of Kimberly-Clark, (ii) accept the position of Halyard or (iii) accept a position between those two positions. The Actual Cash Amount and the Actual Distribution Date Working Capital Amount, as finally determined pursuant to this subsection (c) (whether by failure of Halyard to deliver notice of objection within 10 days after receipt of such statement, by agreement of Kimberly-Clark and Halyard or by determination of the independent accountants selected as set forth above) shall be final, non-appealable and binding on the Parties.
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(d) If, following final determination of the Actual Cash Amount and the Actual Distribution Date Working Capital Amount in accordance with the foregoing, the Actual Cash Amount is less than the sum of (i) $42 million, and (ii) the Actual Distribution Date Working Capital Amount, Kimberly-Clark shall pay to Halyard, by wire transfer of immediately available funds to an account specified by Halyard, the amount of such difference. In the event that the final determination of the Actual Cash Amount and the Actual Distribution Date Working Capital Amount has not been completed within 40 days following the Distribution Date, Kimberly-Clark shall promptly pay to Halyard any amounts due to Halyard based upon Kimberly-Clarks calculation of the Actual Cash Amount and the Actual Distribution Date Working Capital Amount. If the final determination of the Actual Cash Amount and the Actual Distribution Date Working Capital Amount results in any additional amount payable to Halyard beyond the foregoing payment, Kimberly-Clark shall promptly pay such additional amount. For the avoidance of doubt, no payment shall be required by either Party if the Actual Cash Amount is greater than the sum of (x) $42 million and (y) the Actual Distribution Date Working Capital Amount.
(e) Any payments received by Halyard pursuant to Section 2.8(d) shall be treated for all purposes as an additional contribution to the capital of Halyard by Kimberly-Clark without the issuance of additional shares of capital stock and effective immediately prior to the Effective Time.
SECTION 2.9 Waiver of Bulk-Sale and Bulk-Transfer Laws . Kimberly-Clark hereby waives compliance by each and every Kimberly-Clark Party with the requirements and provisions of any bulk-sale or bulk-transfer laws of any jurisdiction that may otherwise be applicable with respect to the transfer of any or all of the Transferred Assets to the Halyard Parties. Halyard hereby waives compliance by each and every Halyard Party with the requirements and provisions of any bulk-sale or bulk-transfer laws of any jurisdiction that may otherwise be applicable with respect to the transfer of any or all of the Transferred Assets to the Halyard Parties.
ARTICLE III
THE DISTRIBUTION
SECTION 3.1 Issuance and Delivery of Halyard Shares . Halyard shall issue to Kimberly-Clark the number of Halyard Shares required so that the total number of Halyard Shares held by Kimberly-Clark immediately prior to the Distribution is equal to the total number of Halyard Shares distributable pursuant to Section 3.2 . Kimberly-Clark shall deliver to the Agent one or more stock certificates representing all Halyard Shares then issued and outstanding, together with one or more stock power(s) endorsed in blank and, with respect to any uncertificated shares to be distributed pursuant to Section 3.2 , shall take such steps as are necessary to permit such shares to be distributed in the manner described in Section 3.2 . Kimberly-Clark and Halyard shall cause the Agent to distribute such shares in the manner described in Section 3.2 .
SECTION 3.2 Distribution of Halyard Shares . Kimberly-Clark shall instruct the Agent to (i) distribute the Halyard Distributable Share to each holder of record of Kimberly-Clark Common Stock at the close of business on the Record Date, and (ii) after completing the
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transactions described in Section 3.3 , deliver to Halyard as a contribution to Halyard, all remaining Halyard Shares, if any, then held by the Agent. Any such returned Halyard Shares shall be immediately cancelled by Halyard and shall not constitute treasury shares. Each distributed Halyard Share shall be validly issued, fully paid and nonassessable and free of preemptive rights. The shares of Halyard Common Stock distributed shall be distributed as uncertificated shares registered in book-entry form through the direct registration system. Except as required by applicable law, no certificates therefor shall be distributed. Halyard shall cause the Agent to deliver an account statement to each holder of Halyard Common Stock reflecting such holders ownership interest in shares of Halyard Common Stock.
SECTION 3.3 Treatment of Fractional Shares . No certificates or scrip representing fractional Halyard Shares shall be issued in the Distribution. In lieu of receiving fractional shares, each holder of Kimberly-Clark Common Stock who would otherwise be entitled to receive a fractional Halyard Share pursuant to the Distribution will receive cash for such fractional share. Kimberly-Clark and Halyard shall instruct the Agent to determine the number of whole Halyard Shares and fractional Halyard Shares allocable to each holder of record of Kimberly-Clark Common Stock as of the close of business on Record Date, to aggregate all such fractional shares into whole shares and sell the whole shares obtained thereby in the open market at the then prevailing prices on behalf of holders who would otherwise be entitled to receive fractional share interests, and to distribute to each such holder such holders ratable share of the total proceeds of such sale after making appropriate deductions of any Taxes required to be withheld with respect to the sale of such fractional share interests.
SECTION 3.4 Kimberly-Clark Board Action . The Kimberly-Clark Board of Directors shall, in its sole discretion, establish the Record Date and the Distribution Date and all appropriate procedures in connection with the Distribution. The Kimberly-Clark Board of Directors also shall have the right, in its sole discretion, to adjust the distribution ratio set forth in the definition of Halyard Distributable Share at any time prior to the Distribution. The consummation of the transactions provided for in this Article III shall only be effected after the Distribution has been declared by the Kimberly-Clark Board of Directors.
SECTION 3.5 Additional Approvals . Kimberly-Clark shall cooperate with Halyard in effecting, and if so requested by Halyard, Kimberly-Clark shall, as the sole stockholder of Halyard prior to the Distribution, ratify any actions which are reasonably necessary or desirable to be taken by Halyard to effectuate the transactions referenced in or contemplated by this Agreement in a manner consistent with the terms hereof, including the preparation and implementation of appropriate plans, agreements and arrangements for employees of the Halyard Business and non-employee members of Halyards Board of Directors.
ARTICLE IV
BUSINESS SEPARATION CLOSING MATTERS
SECTION 4.1 Delivery of Instruments of Conveyance . In order to effectuate the transactions contemplated by Article II , the Parties shall execute and deliver, or cause to be executed and delivered, prior to or as of the Distribution Date such deeds, bills of sale, instruments of assumption, instruments of assignment, stock powers, certificates of title and other instruments of assignment, transfer, assumption and conveyance (collectively, the Conveyancing Instruments ) as the Parties shall reasonably deem necessary or appropriate to effect such transactions.
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SECTION 4.2 Delivery of Other Agreements . Prior to or as of the Distribution Date, the Parties shall execute and deliver, or shall cause to be executed and delivered, each of the Operating Agreements.
SECTION 4.3 Provision of Corporate Records . Prior to or as promptly as practicable after the Distribution, Kimberly-Clark shall deliver to Halyard all corporate books and records of Halyard Parties and copies of all corporate books and records of the Kimberly-Clark Parties primarily relating to the Halyard Business, including in each case all active agreements, litigation files and government filings.
ARTICLE V
NO REPRESENTATIONS AND WARRANTIES
SECTION 5.1 No Kimberly-Clark Representations or Warranties . Except as expressly set forth herein or in any Operating Agreement, Kimberly-Clark does not represent or warrant in any way (i) as to the value or freedom from encumbrance of, or any other matter concerning, any of the Transferred Assets or Assumed Liabilities, (ii) as to the legal sufficiency to convey title to any of the Transferred Assets on the execution, delivery and filing of any Conveyancing Instrument, or (iii) the absence of any defenses or right of setoff or freedom from counterclaim with respect to any Actions, Transferred Assets or Assumed Liabilities, including accounts receivable. ALL SUCH ASSETS ARE BEING TRANSFERRED ON AN AS IS, WHERE IS BASIS WITHOUT ANY REPRESENTATION OR WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, MARKETABILITY, TITLE, VALUE, NON-INFRINGEMENT, PERFORMANCE, FREEDOM FROM ENCUMBRANCE OR ANY OTHER REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, and the Halyard Parties shall bear the economic and legal risks that any conveyances of such assets shall prove to be insufficient or that the Halyard Parties title to any such assets shall be other than good and marketable and free of encumbrances. Except as expressly set forth in this Agreement or in any Operating Agreement, Kimberly-Clark does not represent or warrant that the obtaining of the consents or approvals, the execution and delivery of any amendatory agreements and the making of the filings and applications contemplated by this Agreement shall satisfy the provisions of all applicable agreements or the requirements of all applicable laws or judgments, and, subject to Section 6.4 , the Halyard Parties shall bear the economic and legal risk that any necessary consents or approvals are not obtained or that any requirements of law or judgments are not complied with. Notwithstanding the foregoing, the Parties shall fully cooperate and use commercially reasonable efforts to obtain all consents and approvals, to enter into all amendatory agreements and to make all filings and applications that may be required for the consummation of the transactions contemplated by this Agreement.
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ARTICLE VI
CERTAIN COVENANTS
SECTION 6.1 Material Governmental Approvals and Consents . The Parties will use commercially reasonable efforts to obtain any Material Governmental Approvals and Consents required by the transactions contemplated by this Agreement.
SECTION 6.2 Non-Assignable Contracts . If and to the extent that any Kimberly-Clark Party is unable to obtain any consent, approval or amendment necessary for the transfer or assignment to any Halyard Party of any Contract or other rights relating to the Halyard Business that would otherwise be transferred or assigned to such Halyard Party as contemplated by this Agreement or any other agreement or document contemplated hereby, (i) such Kimberly-Clark Party shall continue to be bound thereby and the purported transfer or assignment to such Halyard Party shall automatically be deemed deferred until such time as all legal impediments are removed and all necessary consents have been obtained, and (ii) unless not permitted by the terms thereof or by law, the Halyard Parties shall pay, perform and discharge fully all of the obligations of the Kimberly-Clark Parties thereunder from and after the Effective Time, or such earlier time as such transfer or assignment would otherwise have taken place, and indemnify the Kimberly-Clark Parties for all indemnifiable Losses arising out of such performance by such Halyard Party. The Kimberly-Clark Parties shall, without further consideration therefor, pay and remit to the applicable Halyard Party promptly all monies, rights and other considerations received in respect of such performance. The Kimberly-Clark Parties shall exercise or exploit their rights and options under all such Contracts and other rights, agreements and documents referred to in this Section 6.2 only as reasonably directed by Halyard and at Halyards expense. If and when any such consent, approval or amendment shall be obtained or such Contract or other right or agreement shall otherwise become transferable or assignable or be able to be novated, the Kimberly-Clark Parties shall promptly assign or transfer and novate (to the extent permissible) all of their rights and obligations thereunder to the applicable Halyard Party without payment of further consideration, and the Halyard Party shall, without the payment of any further consideration therefor, assume such rights and obligations. To the extent that the transfer or assignment of any Contract or other right (or the proceeds thereof) pursuant to this Section 6.2 is prohibited by law or the terms thereof, this Section 6.2 shall operate to create a subcontract with the applicable Halyard Party to perform each relevant Contract or other right, agreement or document at a subcontract price equal to the monies, rights and other considerations received by the Kimberly-Clark Parties with respect to the performance by such Halyard Party.
SECTION 6.3 Novation of Assumed Liabilities; Release of Guarantees .
(a) Except as otherwise specifically provided in Section 2.7 with respect to Shared Contracts and elsewhere in this Agreement, it is expressly understood and agreed to by the Parties that upon the assumption by the Halyard Parties of the Assumed Liabilities, the Kimberly-Clark Parties and their respective officers, directors and employees shall be released unconditionally by the Halyard Parties from any and all Liability, whether joint, several or joint and several, for the discharge, performance or observance of any of the Assumed Liabilities, so that the Halyard Parties will be solely responsible for such Assumed Liabilities.
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(b) The Halyard Parties, at the reasonable request of any Kimberly-Clark Party, shall use commercially reasonable efforts to obtain, or cause to be obtained, any consent, approval, substitution or amendment required to novate (including with respect to any federal government contract) or assign all obligations under the Assumed Liabilities, or to obtain in writing the unconditional release of all parties to such arrangements other than the Halyard Parties.
(c) If a Halyard Party is unable to obtain any such required consent, approval, substitution or amendment, the applicable Kimberly-Clark Party shall continue to be bound by such Assumed Liability and, unless not permitted by law or the terms thereof, the Halyard Parties shall, as agent or subcontractor for the Kimberly-Clark Parties, pay, perform and discharge fully all of the obligations or other Liabilities of the Kimberly-Clark Parties thereunder from and after the date hereof. The Halyard Parties shall indemnify and hold harmless the Kimberly-Clark Parties against any Liabilities arising in connection with such Assumed Liability. Except as otherwise set forth in this Agreement, the Kimberly-Clark Parties shall, without further consideration, pay and remit, or cause to be paid or remitted, to the applicable Halyard Party promptly the after-Tax amount of all money, rights and other consideration received by it in respect of such performance (unless any such consideration is a Retained Asset). If and when any such consent, approval, substitution or amendment shall be obtained or such Assumed Liability shall otherwise become assignable or be able to be novated, the applicable Kimberly-Clark Party shall thereafter assign, or cause to be assigned, all of their rights, obligations and other Liabilities thereunder to the applicable Halyard Party shall, without payment of further consideration, and the Halyard Parties shall, without the payment of any further consideration, assume such rights and obligations.
SECTION 6.4 Further Assurances .
(a) In addition to the actions specifically provided for elsewhere in this Agreement, each of the Parties shall use commercially reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things reasonably necessary, proper or advisable under applicable laws, regulations and agreements to consummate and make effective the Contribution, the Distribution, the Operating Agreements and the other transaction, agreements and documents contemplated hereby, including (i) the obtaining of all necessary actions or non-actions, waivers, consents and approvals from Governmental Authorities and the making of all necessary registrations and filings (including filings with Governmental Authorities) and the taking of all reasonable steps as may be necessary to obtain an approval or waiver from, or to avoid an action or proceeding by, any Governmental Authority, (ii) the defending of any lawsuits or other legal proceedings, whether judicial or administrative, challenging this Agreement or the consummation of the transactions contemplated hereby, including seeking to have any stay or temporary restraining order entered by any court or other Governmental Authority vacated or reversed, (iii) the execution and delivery of any additional instruments necessary to consummate the transactions contemplated by this Agreement, and (iv) to the Parties mutual reasonable satisfaction, the conclusion of any information or consultation obligation owed to employees (or their relevant representatives) in respect of the matters contemplated herein (the Employee Consultation Process ). Without limiting the generality of the foregoing, each Party shall cooperate with the other Party to execute and deliver, or use commercially reasonable efforts to cause to be executed and delivered, all instruments, including instruments of conveyance, assignment and transfer, and to make all filings with, and to obtain all consents, approvals or authorizations of, any
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Governmental Authority or any other Person under any permit, license, Contract or other instrument ( Third Party Consents ), and to take all such other actions as such Party may reasonably be requested to take by the other Party from time to time, consistent with the terms of this Agreement, in order to confirm the title of the Halyard Parties to all of the Transferred Assets, to put the applicable Halyard Party in actual possession and operating control thereof and to permit the applicable Halyard Party to exercise all rights with respect thereto and to effectuate the provisions and purposes of this Agreement and the other agreements and documents contemplated hereby or thereby.
(b) If, as a result of mistake or oversight, any asset reasonably necessary to the conduct of the Halyard Business is not transferred to the applicable Halyard Party, or any asset reasonably necessary to the conduct of the Retained Business is transferred to any Halyard Party, Kimberly-Clark and Halyard shall negotiate in good faith after the Distribution to determine whether such asset should be transferred to a Halyard Party or to a Kimberly-Clark Party, as the case may be, and the terms and conditions upon which such asset shall be made available to a Halyard Party or to a Kimberly-Clark Party, as the case may be. Unless expressly provided to the contrary in this Agreement or any Operating Agreement, if, as a result of mistake or oversight, any Liability arising out of or relating to the Halyard Business is retained by any Kimberly-Clark Party, or any Liability arising out of or relating to the Retained Business is assumed by any Halyard Party, Kimberly-Clark and Halyard shall negotiate in good faith after the Distribution to determine whether such Liability should be transferred to a Halyard Party or a Kimberly-Clark Party, as the case may be, and/or the terms and conditions upon which any such Liability shall be transferred.
(c) In the event that at any time and from time to time after the Effective Time, any Kimberly-Clark Party shall receive from a third party an asset of the Halyard Business (including any remittances from account debtors in respect of the Halyard Business), such Party shall promptly transfer such asset to the appropriate Halyard Party. In the event that at any time and from time to time after the Effective Time, any Halyard Party shall receive from a third party an asset of the Retained Business (including any remittances from account debtors in respect of the Retained Business), such Party shall promptly transfer such asset to the appropriate Kimberly-Clark Party. Each Party shall cooperate with the other Party and use its commercially reasonable efforts to set up procedures and notifications as are reasonably necessary or advisable to effectuate the transfers contemplated by this Section 6.4 .
(d) Kimberly-Clark shall promptly reimburse Halyard for any amount paid by Halyard in respect of any Retained Rebate Liability.
SECTION 6.5 Collection of Accounts Receivable .
(a) Following the Distribution, the Kimberly-Clark Parties shall be entitled to control all collection actions related to the Retained Business and the Halyard Parties shall be entitled to control all collection actions related to the Halyard Business, in each case including the determination of what actions are necessary or appropriate and when and how to take any such action.
(b) If, after the Distribution, any Halyard Party shall receive any remittance from any account debtors with respect to the accounts receivable arising out of the Retained Business or
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other amounts due any Kimberly-Clark Party in respect of services rendered by any Kimberly-Clark Party after the Distribution, or any Kimberly-Clark Party shall receive any remittance from any account debtors with respect to the accounts receivable arising out of the Halyard Business or other amounts due any Halyard Party in respect of services rendered by any Halyard Party after the Distribution, such Party shall receive and deposit such remittance and hold the same for the benefit of the other Party. The Parties shall reconcile any amounts held under this Section 6.5 on a weekly basis, with the difference between the amounts held by each Party for the benefit of the other being settled by a cash payment to be made as soon as practicable following such reconciliation and, in any event, no later than five business days following the completion of such reconciliation.
(c) Each Party shall deliver to the other such schedules and other information with respect to accounts receivable as each shall reasonably request from time to time in order to permit such Parties to reconcile their respective records and to monitor the collection of all accounts receivable. Each Party shall afford the other reasonable access to its books and records relating to any accounts receivable.
(d) Notwithstanding anything to the contrary in this Section 6.5 , but subject to Section 6.5(e) , with respect to the Retained Receivables, the Kimberly-Clark Parties shall process and seek to collect payment on such Retained Receivables in the ordinary course of business, consistent with past practice. If any such Retained Receivable becomes more than 60 days past due, Kimberly-Clark shall provide written notice thereof to Halyard and Halyard shall promptly elect to either (i) purchase such past due Retained Receivable from Kimberly-Clark for a purchase price equal to the full amount of such past due Retained Receivable, or (ii) authorize Kimberly-Clark to undertake formal collection efforts at Kimberly-Clarks expense. Halyard shall provide to Kimberly-Clark written notice of Halyards election under this Section 6.5 within five (5) days following Halyards receipt of the written notice from Kimberly-Clark referenced above. If Halyard fails to timely provide such written notice, it shall be deemed to have elected the option set forth in (d)(ii) above. Halyard shall promptly reimburse Kimberly-Clark for any amount by which the amount paid in respect of any Retained Receivable is reduced by any Rebate.
(e) Notwithstanding the provisions of Section 6.5(d) , Kimberly-Clark shall have the right to factor that certain receivable between Kimberly-Clark Brasil Industria e Comercio de Produtos de Higiene Ltda and CINCO - CONFIANCA INDUSTRIA E COMERCIO LTDA (the Brazil Receivable ). In the event that Kimberly-Clark elects to factor such receivable, the terms of Section 6.5(d) shall not apply to any future collection efforts with respect to such Receivable.
SECTION 6.6 Cooperation Regarding Accounts Payable .
(a) Following the Distribution, the Kimberly-Clark Parties shall be entitled to control the handling and payment of all accounts payable requirements of the Retained Business and the Halyard Parties shall be entitled to control the handling and payment of all accounts payable requirements of the Halyard Business.
(b) If, after the Distribution, any Halyard Party shall receive any invoices from any account creditors with respect to the accounts payable arising out of the Retained Business or other amounts owed by any Kimberly-Clark Party in respect of services rendered thereto after the
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Distribution, or any Kimberly-Clark Party shall receive any invoices from any account creditors with respect to the accounts payable arising out of the Halyard Business or other amounts owed by any Halyard Party in respect of services rendered thereto after the Distribution, such Party shall promptly forward such invoice to the other Party.
(c) Each Party shall deliver to the other such schedules and other information with respect to accounts payable as each shall reasonably request from time to time in order to permit such Parties to reconcile their respective records and to monitor the payment of all accounts payable. Each Party shall afford the other reasonable access to its books and records relating to any accounts payable.
(d) Notwithstanding anything to the contrary in this Section 6.6 , with respect to the Retained Payables, the Kimberly-Clark Parties shall pay such Retained Payables in the ordinary course of business, consistent with past practice. If any such Retained Payables become more than 60 days past due, at Halyards option and upon written notice thereof to Kimberly-Clark, Halyard may pay the applicable creditor the full amount of such past due Retained Payables, and Kimberly-Clark shall reimburse Halyard for the full amount of such payment, together with any late fees or penalties owed to the applicable creditor.
SECTION 6.7 Election of Halyard Board of Directors . Prior to the Distribution, Kimberly-Clark agrees to vote all shares of Halyard Common Stock held by it in favor of the nominees to the Board of Directors of Halyard, as set forth on Schedule 6.7 .
SECTION 6.8 Late Payments . Except as expressly provided to the contrary in this Agreement or in any Operating Agreement, any amount not paid when due pursuant to this Agreement or any Operating Agreement (and any amounts billed or otherwise invoiced or demanded and properly payable that are not paid within 60 days of the date of such bill, invoice or other demand) shall accrue interest at a rate per annum equal to the Prime Rate plus 2%.
SECTION 6.9 Registration and Listing . Prior to the Distribution:
(a) Kimberly-Clark and Halyard shall cooperate with respect to the preparation of the Form 10, to effect the registration of the Halyard Common Stock under the Exchange Act. The Form 10 shall include an information statement to be sent by Kimberly-Clark to its stockholders in connection with the Distribution (the Information Statement ). Halyard and Kimberly-Clark shall use commercially reasonable efforts to cause the Form 10 to become and remain effective under the Exchange Act as soon as reasonably practicable. As soon as practicable after the Record Date is designated, Kimberly-Clark shall mail the Information Statement to the holders of Kimberly-Clark Common Stock as of that Record Date.
(b) The Parties shall use commercially reasonable efforts to take all such action as may be necessary or appropriate under state and foreign securities and Blue Sky laws in connection with the transactions contemplated by this Agreement.
(c) Kimberly-Clark and Halyard shall prepare, and Halyard shall file and seek to make effective, an application for the listing of the Halyard Common Stock on the NYSE, subject to official notice of issuance. Kimberly-Clark shall, to the extent commercially reasonable, give the National Association of Securities Dealers, Inc., notice of the Record Date in compliance with Rule 10b-17 of the Securities Exchange Act of 1934, as amended.
(d) The Parties shall cooperate in preparing, filing with the SEC and causing to become effective any registration statements or amendments thereto that are necessary or appropriate in order to effect the transactions contemplated hereby or to reflect the establishment of, or amendments to, any employee benefit plans contemplated hereby.
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SECTION 6.10 No Noncompetition .
(a) After the Distribution, except as otherwise provided in the Operating Agreements, (i) either Party may engage in the same or similar activities or lines of business as the other Party, (ii) either Party may, do business, or refrain from doing business, with any potential or actual supplier or customer of the other Party, (iii) for a period of 24 months following the Effective Time, Kimberly-Clark shall not, and shall cause its Affiliates to not, take any steps to enforce any non-competition covenant that any such Person may have with any employee or former employee thereof (to the extent that such covenant was in place as of the Effective Time), in connection with such individuals provision of services to a Halyard Party, and (iv) for a period of 24 months following the Effective Time, Halyard shall not, and shall cause its Affiliates to not, take any steps to enforce any non-competition covenant that any such Person may have with any employee or former employee thereof (to the extent that such covenant was in place as of the Effective Time), in connection with such individuals provision of services to a Kimberly-Clark Party.
(b) the Parties shall not, and shall cause their respective Affiliates to not, take any steps to enforce any non-compete covenant any such entity may have with any Business Employee (as that term is used in the Employee Matters Agreement) insofar as such Business Employee may provide services to either a Kimberly-Clark Party or to a Halyard Party.
(c) In the event that Kimberly-Clark or any other Kimberly-Clark Party, or any director or officer of Kimberly-Clark or any other Kimberly-Clark Party, acquires knowledge of a potential transaction or matter that may be a corporate opportunity for both Kimberly-Clark or any other Kimberly-Clark Party and Halyard or any other Halyard Party, neither Kimberly-Clark nor any other Kimberly-Clark Party, nor any director or officer of Kimberly-Clark or any other Kimberly-Clark Party, shall have any duty to communicate or present such corporate opportunity to Halyard or any other Halyard Party and shall not be liable to Halyard or any other Halyard Party or to Halyards stockholders for breach of any fiduciary duty as a stockholder of Halyard or an officer or director thereof by reason of the fact that Kimberly-Clark or any other Kimberly-Clark Party pursues or acquires such corporate opportunity for itself, directs such corporate opportunity to another person or entity, or does not present such corporate opportunity to Halyard or any other Halyard Party.
(d) In the event that Halyard or any other Halyard Party, or any director or officer of Halyard or any other Halyard Party, acquires knowledge of a potential transaction or matter that may be a corporate opportunity for both Kimberly-Clark or any other Kimberly-Clark Party and Halyard or any other Halyard Party, neither Halyard nor any other Halyard Party, nor any director or officer of Halyard or any other Halyard Party, shall have any duty to communicate or present such corporate opportunity to Kimberly-Clark or any other Kimberly-Clark Party and shall not be
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liable to Kimberly-Clark or any other Kimberly-Clark Party or to Kimberly-Clarks stockholders for breach of any fiduciary duty as a stockholder of Kimberly-Clark or an officer or director thereof by reason of the fact that Halyard or any other Halyard Party pursues or acquires such corporate opportunity for itself, directs such corporate opportunity to another person or entity, or does not present such corporate opportunity to Kimberly-Clark or any other Kimberly-Clark Party.
(e) For the avoidance of doubt, to the extent that any person who is a director or officer of Kimberly-Clark or any other Kimberly-Clark Party is also a director or officer of Halyard or any other Halyard Party, such person shall have no duty to communicate or present any corporate opportunity of which he or she acquires knowledge to Halyard or any other Halyard Party and shall not be liable to Halyard or any other Halyard Party or to Halyards stockholders for breach of any fiduciary duty as an officer or director of Halyard by reason of the fact that Kimberly-Clary or any other Kimberly-Clark Party pursues or acquires such corporate opportunity, directs such corporate opportunity to another Person, or does not present such corporate opportunity to Halyard or any other Halyard Party.
SECTION 6.11 Litigation .
(a) Except as provided in Article VIII , as of the Effective Time, the Halyard Parties shall assume and pay all Liabilities that may result from the Assumed Actions and all fees and costs relating to the defense of the Assumed Actions, including attorneys fees and costs incurred after the Effective Time. Assumed Actions means those cases, claims and investigations, whether arising before or after the Effective Time (in which any Kimberly-Clark Party or any Affiliate of a Kimberly-Clark Party, other than Halyard and its Subsidiaries, is a defendant or the party against whom the claim or investigation is directed), primarily related to the Halyard Business, including those listed on Schedule 6.11(a) as assumed actions, but expressly excluding those listed on Schedule 6.11(a) as excluded actions (the Excluded Actions ). Except as provided in Article VIII , the Kimberly-Clark Parties shall retain and pay all Liabilities that may result from the Excluded Actions and all fees and costs relating to the defense of the Excluded Actions, including attorneys fees and costs incurred after the Effective Time.
(b) The Kimberly-Clark Parties shall transfer the Transferred Actions to Halyard, and Halyard shall receive and have the benefit of all of the proceeds of such Transferred Actions. Transferred Actions means those cases and claims pending as of the Effective Time (in which any Kimberly-Clark Party or any of its Affiliates is a plaintiff or claimant), primarily relating to the Halyard Business, including those listed on Schedule 6.11(b) .
(c) Each Party agrees that at all times from and after the Distribution, if an Action is commenced by a third party naming both Parties as defendants thereto and with respect to which one Party is a nominal defendant, then the other Party shall use commercially reasonable efforts to cause such nominal defendant to be removed from such Action.
SECTION 6.12 Signs; Use of Company Name . Prior to March 1, 2015, (i) Halyard shall, at its expense, remove (or, if necessary, on an interim basis cover up) any and all exterior and interior signs and identifiers on the Transferred Assets that refer or pertain to any Kimberly-Clark Party or the Retained Business, and (ii) Kimberly-Clark shall, at its expense remove (or, if necessary, on an interim basis cover up) any and all exterior and interior signs and identifiers on
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the Retained Assets that refer or pertain to any Halyard Party or the Transferred Business. After such period, except as otherwise permitted by the terms of the Operating Agreements (i) the Halyard Parties shall not use or display the name Kimberly-Clark or any variations thereof, or other trademarks, any tradenames, logos or identifiers using any of such names or otherwise owned by or licensed to any Kimberly-Clark Party that have not been assigned or licensed to a Halyard Party, and (ii) the Kimberly-Clark Parties shall not use or display the name Halyard Health or any variations thereof, or other trademarks, tradenames, logos or identifiers using any of such names or otherwise owned by or licensed to any Halyard Party that have not been assigned or licensed to a Kimberly-Clark Party (collectively, the Non-Permitted Names ), without the prior written consent of the other Party; provided , however , that notwithstanding the foregoing, nothing contained in this Agreement shall prevent either Party from using the others name in public filings with Governmental Authorities, materials intended for distribution to either Partys stockholders or any other communication in any medium that describes the relationship between the Parties, including materials distributed to employees relating to the transition of employee benefit plans; and provided further that Halyard shall be permitted to use its inventories of packaging and promotional materials and other supplies existing on the date hereof that bear the Kimberly-Clark name or logo until March 1, 2015; and provided further, nothing in this Section 6.12 shall limit the right of the Halyard Parties to use the Kimberly-Clark name or logo to the extent permitted under the terms of a Trademark License Agreement.
SECTION 6.13 Conduct of Healthcare Business in Ordinary Course . The Parties hereby agree and acknowledge that it is their intent that between May 1, 2014 and the Effective Time the Healthcare Business be operated in the ordinary course of business consistent with past practice, other than such actions (including failures to act) and decisions relating solely to the Distribution and Contribution which were taken (or not taken) or made with the consent of the other Party (such operation of the Healthcare Business is referred to as the Ordinary Course ).
ARTICLE VII
CONDITIONS TO THE DISTRIBUTION
The obligation of Kimberly-Clark to effect the Distribution is subject to the satisfaction or the waiver by Kimberly-Clark of each of the following conditions:
SECTION 7.1 Approval by Kimberly-Clark Board of Directors . This Agreement and the transactions contemplated hereby, including the declaration of the Distribution, shall have been duly approved by the Kimberly-Clark Board of Directors in accordance with applicable law and the Restated Certificate of Incorporation, as amended, and By-Laws, as amended, of Kimberly-Clark.
SECTION 7.2 Receipt of Tax Treatment Opinion . Kimberly-Clark shall have received an opinion of Baker Botts L.L.P., which shall not have been rescinded, to the effect that the Distribution will constitute a reorganization within the meaning of Sections 368(a)(l)(D) and 355 of the Code, and Kimberly-Clark, Halyard Health and Kimberly-Clarks shareholders will not be subject to U.S. tax in respect of the Distribution, other than with respect to (i) cash received by Kimberly-Clarks shareholders in lieu of fractional shares, (ii) any income or gain from or attributable to inter-company transactions or excess loss accounts which are required to be taken into account by Kimberly-Clark in connection with the Distribution under Treasury regulation
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section 1.1502-13 or 1.1502-19, respectively, and (iii) any income or gain resulting from any actual or deemed transfer of property from Halyard Health to Kimberly-Clark as a result of any rights granted by Halyard Health to Kimberly-Clark pursuant to the Patent License Agreements, as a result of any rights granted by Halyard Health to Kimberly-Clark pursuant to the Trademark License Agreements, or otherwise.
SECTION 7.3 Receipt of Solvency Opinion . The Parties shall have received an opinion from Houlihan Lokey Financial Advisors, Inc., which shall not have been rescinded, substantially to the effect that Halyard, following the Contribution and Distribution, will be solvent and sufficiently capitalized to continue operations as a going concern.
SECTION 7.4 Compliance with State and Foreign Securities and Blue Sky Laws . The Parties shall have taken all such action as may be necessary or appropriate under state and foreign securities and blue sky laws in connection with the Distribution.
SECTION 7.5 SEC Filings and Approvals . The Parties shall have prepared and Halyard shall, to the extent required under applicable law, have filed with the SEC any such documentation and no action letter requests that Kimberly-Clark determines are necessary or desirable to effectuate the Distribution, and each Party shall have obtained all necessary approvals or no action letters from the SEC.
SECTION 7.6 Effectiveness of Form 10; No Stop Order . The Form 10 shall have been declared effective by the SEC, and no stop order suspending the effectiveness of the Form 10 shall have been initiated or, to the knowledge of either of the Parties, threatened by the SEC.
SECTION 7.7 Dissemination of Information to Kimberly-Clark Stockholders . Prior to the Distribution, the Parties shall have prepared and mailed to the holders of Kimberly-Clark Common Stock such information concerning Halyard, its business, operations and management, the Distribution and such other matters as Kimberly-Clark shall reasonably determine and as may be required by law.
SECTION 7.8 Approval of NYSE Listing Application . The Halyard Common Stock to be distributed in the Distribution shall have been approved for listing on the New York Stock Exchange, subject to official notice of issuance.
SECTION 7.9 Operating Agreements . Each of the Operating Agreements shall have been executed and delivered, and each of such agreements shall be in full force and effect.
SECTION 7.10 Resignations . Prior to the Distribution, the individuals that were designated by Kimberly-Clark and identified by Halyard shall have resigned or been removed as officers and from all Boards of Directors or similar governing bodies of Halyard and its Subsidiaries.
SECTION 7.11 Consents .
(a) All Material Governmental Approvals and Consents required to permit the valid consummation of the Contribution and the Distribution shall have been obtained without any conditions being imposed that would have a material adverse effect on Kimberly-Clark or Halyard.
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(b) Kimberly-Clark shall have obtained the Third Party Consents that shall be required in connection with the Distribution or Contribution, except those for which the failure to obtain such consents, approvals or waivers would not, in the reasonable opinion of Kimberly-Clark, individually or in the aggregate have a material adverse effect on Kimberly-Clark, Halyard or the consummation of the Contribution or Distribution.
SECTION 7.12 No Actions . No action, suit or proceeding shall have been instituted or threatened by or before any court or quasi-judicial or administrative agency of any federal, state, local or foreign jurisdiction or before any arbitrator to restrain, enjoin or otherwise prevent the Distribution or the other transactions contemplated by this Agreement (including a stop order with respect to the effectiveness of the Form 10), and no order, injunction, judgment, ruling or decree issued by any court of competent jurisdiction shall be in effect restraining the Distribution or such other transactions.
SECTION 7.13 Consummation of Pre-Distribution Transactions . The pre-Distribution transactions contemplated by Sections 2.1 through 2.7 of this Agreement shall have been consummated in all material respects.
SECTION 7.14 Pre-Distribution Payment . The Cash Distribution contemplated by Section 2.8(b) of this Agreement shall have been received by Kimberly-Clark.
SECTION 7.15 No Other Events . No other events or developments shall have occurred that, in the judgment of the Kimberly-Clark Board of Directors made in their sole discretion, would result in the Distribution having a material adverse effect on Kimberly-Clark or its stockholders.
SECTION 7.16 Satisfaction of Conditions . The satisfaction of the foregoing conditions are for the sole benefit of Kimberly-Clark and shall not give rise to or create any duty on the part of Kimberly-Clark or the Kimberly-Clark Board of Directors to waive or not waive any such condition, to effect the Distribution or in any way limit Kimberly-Clarks power of termination set forth in Section 13.13 .
SECTION 7.17 Employee Consultation . The completion, to the reasonable mutual satisfaction of the Parties, of any Employee Consultation Process in any relevant jurisdiction.
ARTICLE VIII
INSURANCE MATTERS
SECTION 8.1 Insurance Prior to the Effective Time . Except as may otherwise be expressly provided in this Article VIII , the Kimberly-Clark Parties shall not have any Liability whatsoever as a result of the insurance policies and practices of Kimberly-Clark in effect at any time prior to the Effective Time, including as a result of the level or scope of any such insurance, the creditworthiness of any insurance carrier, the terms and conditions of any policy and the adequacy or timeliness of any notice to any insurance carrier with respect to any claim or potential claim or otherwise. Notwithstanding the prior sentence, Ridgeway Insurance Company, a
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wholly-owned Subsidiary of Kimberly-Clark, will continue to be responsible for any property damage to the Transferred Assets which occurs prior to October 1, 2014, to the extent that such damage is included in the scope of any property damage reinsurance in effect prior to the Effective Time maintained by Ridgeway Insurance Company.
SECTION 8.2 Ownership of Existing Policies and Programs . Kimberly-Clark or one or more of the other Kimberly-Clark Parties shall continue to own all property damage and business interruption, and liability insurance policies and programs (including primary and excess general liability, director and officer liability, automobile, workers compensation, property damage and business interruption, crime, surety and other similar insurance policies) in effect on or before the Effective Time (collectively, the Kimberly-Clark Policies and individually, a Kimberly-Clark Policy ). Subject to the provisions of this Agreement, the Kimberly-Clark Parties shall retain all of their respective rights, benefits and privileges, if any, under the Kimberly-Clark Policies. Nothing contained herein shall be construed to be an attempted assignment of or a change to any part of the ownership of the Kimberly-Clark Policies, with the exception of adding Halyard as a named insured under I-Flows when-made product liability policy (effective July 1, 2014 through July 1, 2015, and covering any claims made during that period), with Kimberly-Clark having all rights for claims related to I-Flow product liability prior to the Distribution Date. With respect to any claim under the Kimberly-Clark Policies relating to the Halyard Business or the Transferred Assets, Kimberly-Clark shall have sole responsibility for claims administration and financial administration of such policies, and such administration shall be governed solely by the terms of Sections 8.5 and 8.6 . Except as expressly set forth in Sections 8.5 and 8.6 , no Kimberly-Clark Party nor any of its Affiliates shall have any responsibility for, or obligation to, any Halyard Party or any of its Affiliates under the Kimberly-Clark Policies relating to any of the matters, losses or claims covered by or assumed to be covered by the Kimberly-Clark Parties for any period, whether prior to, on or after the Effective Time.
SECTION 8.3 Maintenance of Insurance for Halyard . Until the Effective Time, Kimberly-Clark will maintain in full force and effect its existing insurance to the extent that it applies to the Transferred Assets or the Halyard Business, which insurance policies are set forth on Schedule 8.3 .
SECTION 8.4 Acquisition and Maintenance of Post-Distribution Insurance by Halyard. Commencing on and as of the Effective Time, Halyard shall be responsible for establishing and maintaining separate property damage and business interruption and liability insurance policies and programs (including primary and excess general liability, director and officer liability, automobile, workers compensation, property damage and business interruption, crime, surety and other similar insurance policies) for activities and claims involving any Halyard Party or any of their Affiliates, in each case with commercially reasonable and customary limits and deductibles. Each of the Halyard Parties and each of their Affiliates, as appropriate, shall be responsible for all administrative and financial matters relating to insurance policies established and maintained by the Halyard Parties and each of their Affiliates for claims involving any Halyard Party or any of its Affiliates.
SECTION 8.5 Property Damage and Business Interruption Insurance Claims Administration for Pre-Distribution Losses. For property damage and business interruption losses related to the Transferred Assets or the Halyard Business which occur prior to October 1, 2014,
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Kimberly-Clark shall have the sole right, responsibility and authority to submit and process claims, including claims that are to be paid by the Kimberly-Clark Parties in whole or in part because of insurance or reinsurance in support of property damage and business interruption insurance maintained by any Kimberly-Clark Party prior to the Effective Time. Any amounts received by Kimberly-Clark with respect to (i) any such claims that are resolved prior to the Effective Time shall be retained by Kimberly-Clark, and (ii) any such claims that remain unresolved as of the Effective Time that are settled subsequent to the Effective Time shall be paid to Halyard within 30 business days of receipt thereof by Kimberly-Clark.
SECTION 8.6 Liability and Workers Compensation Insurance Claims Administration for Pre-Distribution Occurrences .
(a) The Kimberly-Clark Parties shall have the sole right, responsibility and authority for the administration of United States workers compensation claims for pre-Distribution occurrences involving employees of the Halyard Business (collectively, the K-C Administered Claims ). Schedule 8.6 identifies the K-C Administered Claims known as of the date of this Agreement, including those claims which are uninsured, where the claim is reasonably expected to result in a charge to Halyard of more than $50,000 (including those for which a reserve has been established). Halyard shall cooperate with Kimberly-Clark in asserting and pursuing coverage and payment for such claim by the appropriate insurance carrier(s).
(b) Upon notification by a Halyard Party or any of its Affiliates of a claim relating to a Halyard Party or any of its Affiliates under one or more of the Kimberly-Clark Policies, Kimberly-Clark shall cooperate with Halyard in asserting and pursuing coverage and payment for such claim by the appropriate insurance carrier(s). In asserting and pursuing such coverage and payment, and subject to Sections 8.6(c) and 10.6 , Kimberly-Clark shall have sole power and authority to make binding decisions, determinations, commitments and stipulations on its own behalf and on behalf of the Halyard Parties and their Affiliates, which decisions, determinations, commitments and stipulations shall be final and conclusive if reasonably made to maximize the overall economic benefit of the Kimberly-Clark Policies.
(c) Kimberly-Clark shall give written notice to Halyard of any pre-Distribution liability or workers compensation claim which is uninsured due to the terms of the Kimberly-Clark Policies to the extent that any such claim is reasonably expected to result in a charge to Halyard (including those for which a reserve has been established) of more than $50,000 (an Uninsured Claim ). With respect to any such Uninsured Claim, Kimberly-Clark shall use commercially reasonable efforts to (i) afford Halyard a reasonable opportunity to inspect and copy any written materials relating to the defense of such claim, (ii) consult with Halyard respecting the strategies for defending such Uninsured Claim, including a reasonable opportunity to review and comment upon any written materials before they are submitted to the claimant or others in defense of such Uninsured Claim, (iii) consult with and afford Halyard a reasonable opportunity to express its views before making or refusing to make any settlement offer to the claimant or before proceeding to trial, and (iv) obtain the consent of Halyard to settle, try or otherwise dispose of any such Uninsured Claim, which consent shall not be unreasonably withheld, conditioned or delayed. Halyard will indemnify and hold Kimberly-Clark harmless from any and all damages and liabilities resulting from or arising out of Halyard unreasonably withholding, conditioning or delaying its consent to settle, try or otherwise dispose of any such Uninsured Claim. Halyard hereby authorizes Kimberly-Clark to communicate solely with its Senior Vice President and General Counsel or Risk Manager (or their delegate) for all matters relating to this Section 8.6 .
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(d) Consistent with past practices and subject to Section 8.6(a) , the Halyard Parties and their Affiliates shall assume responsibility for, and shall pay to the appropriate insurance carriers or otherwise, any premiums, retrospectively-rated premiums, defense costs, indemnity payments, deductibles, retentions or uninsured costs arising from liability or workers compensation losses which are uninsured because of coverage terms or conditions of the policies covering such losses, or other charges (collectively, Insurance Charges ) whenever occurring, which shall become due and payable under the terms and conditions of any applicable Kimberly-Clark Policy in respect of any liabilities, losses, claims or actions attributable to pre-Distribution occurrences, whenever becoming known, arising out of the ownership, use or operation of any of the assets, businesses, operations or liabilities of any Halyard Party or any of its Affiliates, which Insurance Charges are known or become known prior to, on or after the Distribution Date. To the extent that the terms of any applicable Kimberly-Clark Policy provide that any Kimberly-Clark Party shall have an obligation to pay or guarantee the payment of any Insurance Charges relating to any Halyard Party, Kimberly-Clark shall be entitled to demand that Halyard make such payment directly to the Person or entity entitled thereto. In connection with any such demand, Kimberly-Clark shall submit to Halyard a copy of any invoice or listing of claims received by Kimberly-Clark pertaining to such Insurance Charges together with appropriate supporting documentation. In the event that Halyard fails to pay any such Insurance Charges when due and payable, whether at the request of the Person entitled to payment or upon demand by Kimberly-Clark, the Kimberly-Clark Parties may (but shall not be required to) pay such insurance charges for and on behalf of the Halyard Parties and, thereafter, the Halyard Parties shall forthwith reimburse Kimberly-Clark for such payment within 30 days.
SECTION 8.7 Non-Waiver of Rights to Coverage . An insurance carrier that would otherwise be obligated to pay any claim shall not be relieved of the responsibility with respect thereto, or, solely by virtue of the provisions of this Article VIII , have any subrogation rights with respect thereto. It is expressly understood and agreed that no insurance carrier or any third party shall be entitled to a benefit (i.e., a benefit they would not be entitled to receive had no Distribution occurred or in the absence of the provisions of this Article VIII ) by virtue of the provisions hereof.
SECTION 8.8 Scope of Affected Policies of Insurance . The provisions of this Article VIII relate solely to matters involving property, damage and business interruption, and liability insurance policies and programs, including, primary and excess general liability, director and officer liability, automobile, workers compensation, property damage and business interruption, crime, surety and other similar insurance policies, and shall not be construed to affect any obligation of or impose any obligation on the Parties with respect to any life, health and accident, dental or medical or any other insurance policies applicable to any of the officers, directors, employees or other representatives of the Parties or their Affiliates.
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ARTICLE IX
DEBT ISSUANCE COSTS
SECTION 9.1 Debt Issuance Costs .
(a) The parties acknowledge that Halyard has paid the Debt Issuance Costs on or before the Effective Time using cash on hand prior to the determination of Kimberly-Clark Retained Cash. Any Debt Issuance Costs incurred but not paid prior to the Effective Time shall be paid by Kimberly-Clark. Any Debt Issuance Costs incurred after the Effective Time shall be paid by Halyard.
ARTICLE X
RELEASES AND INDEMNIFICATION
SECTION 10.1 Release of Pre-Distribution Claims .
(a) Except as provided in Section 10.1(b) , effective as of the Effective Time, each Party does hereby, on behalf of itself and its respective Subsidiaries and Affiliates, successors and assigns and all Persons who at any time prior to the Effective Time have been shareholders, directors, officers, agents or employees of either Party (in each case, in their respective capacities as such), remise, release and forever discharge the other Party, its respective Subsidiaries and Affiliates, successors and assigns and all Persons who at any time prior to the Effective Time have been shareholders, directors, officers, agents or employees of such Party or such Subsidiaries or Affiliates (in each case, in their respective capacities as such), and their respective heirs, executors, administrators, successors and assigns, from any and all Liabilities whatsoever, whether at law or in equity (including any right of contribution), whether arising under any contract or agreement, by operation of law or otherwise, existing or arising from any acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur or any conditions existing or alleged to have existed on or before the Effective Time, including in connection with the transactions and all other activities to implement the Distribution. In connection with the foregoing, on or before the Distribution Date, Kimberly-Clark, at Kimberly-Clarks expense, shall cause its directors and officers insurance policies existing as of the Distribution Date to extend coverage for the Persons transferring to Halyard that were covered by such policies immediately prior to the Distribution, and for the amounts provided thereby, for a period of at least six years after the Distribution as to all claims based upon occurrences prior to the Distribution that would have been covered by such insurance absent the Distribution.
(b) Nothing contained in Section 10.1(a) shall impair any right of any Person identified in Section 10.1(a) to enforce this Agreement, any Operating Agreement or any agreements, arrangements, commitments or understandings that are specified in Section 2.6 or Schedule 2.6 not to terminate as of the Effective Time, in each case in accordance with its terms. Nothing contained in Section 10.1(a) shall release any Person from:
(i) any Liability provided in or resulting from any agreement of the Parties that is specified in Section 2.6 or Schedule 2.6 as not to terminate as of the Effective Time, or any other intercompany arrangement or course of dealing specified in Section 2.6 or Schedule 2.6 as not to terminate as of the Effective Time;
(ii) any Liability, contingent or otherwise, assumed, transferred, assigned, retained or allocated to a Party, its Subsidiaries or Affiliates in accordance with, or any other Liability of any Party, its Subsidiaries or Affiliates under, this Agreement or the Operating Agreements; or
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(iii) any Liability that any Indemnified Party may have with respect to indemnification or contribution pursuant to this Agreement for claims brought against the Parties or their respective Subsidiaries or Affiliates by third Persons, which Liability shall be governed by the provisions of this Article X and, if applicable, the appropriate provisions of the Operating Agreements.
(c) Neither Party shall make, nor permit any of its Subsidiaries or Affiliates to make, any claim or demand, or commence any Action asserting any claim or demand, including any claim of contribution or indemnification, against the other Party, or any other Person released pursuant to Section 10.1(a) , with respect to any Liability released pursuant to Section 10.1(a) .
(d) It is the intent of each of the Parties by virtue of the provisions of this Section 10.1 to provide for a full and complete release and discharge of all Liabilities existing or arising from all acts and events occurring or failing to occur or alleged to have occurred or to have failed to occur and all conditions existing or alleged to have existed on or before the Effective Time, between the Parties (including any contractual agreements or arrangements existing or alleged to exist between the Parties on or before the Effective Time), except as expressly set forth in Section 10.1(b) . At any time, at the reasonable request of either Party, the other Party shall execute and deliver releases reflecting the provisions hereof.
SECTION 10.2 Indemnification by Halyard . Except as provided in Section 10.5 and except as expressly provided in the Operating Agreements, Halyard shall, and shall cause each of the other Halyard Parties to, indemnify, defend and hold harmless each Kimberly-Clark Party, each of their respective Affiliates, each of the respective directors, officers, employees and agents of any of the foregoing, and each of the respective heirs, executors, successors and assigns of any of the foregoing (collectively, the Kimberly-Clark Indemnified Parties ), from and against any and all Expenses or Losses incurred or suffered by one or more of the Kimberly-Clark Indemnified Parties, in connection with, relating to, arising out of or due to, directly or indirectly, any of the following items:
(a) any claim that the information included in the Form 10 or the Information Statement that was supplied by Halyard, is or was false or misleading with respect to any material fact or omits or omitted to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, regardless of whether the occurrence, action or other event giving rise to the applicable matter took place prior to or subsequent to the Effective Time;
(b) the Halyard Business as conducted by the Kimberly-Clark Parties or their Affiliates or predecessors on or at any time prior to the Effective Time;
(c) the Transferred Assets;
(d) the Assumed Liabilities;
(e) any claim that the information included in the offering memorandum relating to the Notes Offering or the confidential information memorandum relating to the Credit Facility that was supplied by Halyard is or was false or misleading with respect to any material fact or omits or omitted to state any material fact required to be stated therein or necessary in order to make the
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statements therein, in light of the circumstances under which they were made, not misleading, regardless of whether the occurrence, action or other event giving rise to the applicable matter took place prior to or subsequent to the Effective Time;
(f) the Healthcare Business not being operated in the Ordinary Course prior to the Effective Time as a result of any action or failure to act by (i) any Halyard Party, (ii) any person who served or is serving as a director, officer or employee of any Halyard Party after the Effective Time, or (iii) any person whose employment and job responsibilities would have resulted in such person serving as a director, officer or employee of any Halyard Party after the Effective Time had such person not retired or his employment been terminated voluntarily or involuntarily prior to the Effective Time;
(g) the use by any Halyard Party after the Effective Time of the name Kimberly-Clark or any variation thereof, or other Trademarks, tradenames, logos or identifiers using any of such names or otherwise owned by or licensed to any Kimberly-Clark Party;
(h) the breach by any Halyard Party of any covenant or agreement set forth in this Agreement, any Operating Agreement or any Conveyancing Instrument; and
(i) the matters set forth in Schedule 10.2(i) ;
in each case, regardless of when or where the loss, claim, accident, occurrence, event or happening giving rise to the Expense or Loss took place, or whether any such loss, claim, accident, occurrence, event or happening is known or unknown, or reported or unreported.
SECTION 10.3 Indemnification by Kimberly-Clark . Except as provided in Section 10.5 and except as expressly provided in the Operating Agreements, Kimberly-Clark shall indemnify, defend and hold harmless each Halyard Party, each of their respective Affiliates, each of the respective directors, officers, employees and agents of any of the foregoing, and each of the respective heirs, executors, successors and assigns of any of the foregoing (collectively, the Halyard Indemnified Parties ), from and against any and all Expenses or Losses incurred or suffered by one or more of the Halyard Indemnified Parties in connection with, relating to, arising out of or due to, directly or indirectly, any of the following items:
(a) any claim that the information in the Form 10 or the Information Statement that was supplied by Kimberly-Clark, is or was false or misleading with respect to any material fact or omits or omitted to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, regardless of whether the occurrence, action or other event giving rise to the applicable matter took place prior to or subsequent to the Effective Time;
(b) the business (other than the Halyard Business) conducted by the Kimberly-Clark Parties or their Affiliates or predecessors on or at any time prior to the Effective Time;
(c) the assets owned by the Kimberly-Clark Parties, other than the Transferred Assets;
(d) the Liabilities (including the Retained Liabilities) of the Kimberly-Clark Parties, other than the Assumed Liabilities (but excluding the matters set forth in Schedule 10.2(i) );
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(e) any claim that the information included in the offering memorandum relating to the Notes Offering or the confidential information memorandum relating to the Credit Facility that was supplied by Kimberly-Clark is or was false or misleading with respect to any material fact or omits or omitted to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, regardless of whether the occurrence, action or other event giving rise to the applicable matter took place prior to or subsequent to the Effective Time;
(f) the Healthcare Business not being operated in the Ordinary Course prior to the Effective Time as a result of any action or failure to act by any Kimberly-Clark Party or any person who served or is serving as a director, officer or employee of any Kimberly-Clark Party prior to, on or after the Effective Time, other than a person described in Section 10.2(f)(ii) or (iii) ; and
(g) the breach by any Kimberly-Clark Party of any covenant or agreement set forth in this Agreement, any Operating Agreement or any Conveyancing Instrument;
in each case, regardless of when or where the loss, claim, accident, occurrence, event or happening giving rise to the Expense or Loss took place, or whether any such loss, claim, accident, occurrence, event or happening is known or unknown, or reported or unreported.
For purposes of the foregoing, the scope of information in the Form 10, the content of the Information Statement, the offering memorandum relating to the Notes Offering and the confidential information memorandum relating to the Credit Facility that is deemed to have been supplied by Halyard and that is deemed to have been supplied by Kimberly-Clark, in each case is as is set forth on Schedule 10.3 .
SECTION 10.4 Applicability of and Limitation on Indemnification . EXCEPT AS EXPRESSLY PROVIDED HEREIN, THE INDEMNITY OBLIGATIONS OF EACH PARTY UNDER THIS ARTICLE X SHALL APPLY NOTWITHSTANDING ANY INVESTIGATION MADE BY OR ON BEHALF OF ANY INDEMNIFIED PARTY AND SHALL APPLY WITHOUT REGARD TO WHETHER THE LOSS, LIABILITY, CLAIM, DAMAGE, COST OR EXPENSE FOR WHICH INDEMNITY IS CLAIMED HEREUNDER IS BASED ON STRICT LIABILITY, ABSOLUTE LIABILITY, ANY OTHER THEORY OF LIABILITY OR ARISES AS AN OBLIGATION FOR CONTRIBUTION.
SECTION 10.5 Adjustment of Indemnifiable Losses .
(a) The amount that any Party or any of its Affiliates (an Indemnifying Party ) is required to pay to any Person entitled to indemnification hereunder (an Indemnified Party ) shall be reduced by any insurance proceeds and other amounts actually recovered by or on behalf of such Indemnified Party in reduction of the related Expense or Loss. If an Indemnified Party receives a payment (an Indemnity Payment ) required by this Agreement from an Indemnifying Party in respect of any Expense or Loss and subsequently actually receives Insurance Proceeds or other amounts in respect of such Expense or Loss, then such Indemnified Party shall pay to the Indemnifying Party a sum equal to the lesser of (1) the after-tax amount of such Insurance Proceeds or other amounts actually received and (2) the net amount of Indemnity Payments actually received previously. The Indemnified Party agrees that the Indemnifying Party shall be subrogated to such Indemnified Party under any insurance policy.
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(b) An insurer who would otherwise be obligated to pay any claim shall not be relieved of the responsibility with respect thereto, or, solely by virtue of the indemnification provisions hereof, have any subrogation rights with respect thereto, it being expressly understood and agreed that no insurer or any other third party shall be entitled to a windfall (i.e., a benefit he or she would not be entitled to receive in the absence of the indemnification provisions) by virtue of the indemnification provisions hereof.
(c) Indemnity Payments (i) shall not be increased to take into account any Tax costs incurred by the Indemnified Party arising from any Indemnity Payments from the Indemnifying Party and (ii) shall not be reduced to take into account any Tax benefit received by the Indemnified Party arising from the incurrence or payment of any Indemnity Payment. For all Tax purposes, to the extent permitted by applicable Tax laws, the Parties will treat any indemnification or reimbursement payment in respect of a Liability pursuant to this Article X as a capital contribution made by Kimberly-Clark to Halyard or as a distribution made by Halyard to Kimberly-Clark, as the case may be, on the date recited above on which the parties entered into the Agreement.
(d) Amounts paid by Kimberly-Clark to or for the benefit of Halyard, or by Halyard to or for the benefit of Kimberly-Clark, under this Article X (and under other specified provisions of this Agreement) shall be treated by the Parties, for all applicable Tax purposes, as adjustments to the amount of Transferred Assets.
(e) In the event that an Indemnity Payment shall be denominated in a currency other than United States dollars, the amount of such payment shall be translated into United States dollars using the Foreign Exchange Rate for such currency determined in accordance with the following rules:
(i) with respect to an Expense or a Loss arising from payment by a financial institution under a guarantee, comfort letter, letter of credit, foreign exchange contract or similar instrument, the Foreign Exchange Rate for such currency shall be determined as of the date on which such financial institution shall have been reimbursed;
(ii) with respect to an Expense or a Loss covered by insurance, the Foreign Exchange Rate for such currency shall be the Foreign Exchange Rate employed by the insurance company providing such insurance in settling such Expense or Loss with the Indemnifying Party; and
(iii) with respect to an Expense or a Loss not covered by clause (i) or (ii) above, the Foreign Exchange Rate for such currency shall be determined as of the date that notice of the claim with respect to such Expense or Loss shall be given to the Indemnified Party.
SECTION 10.6 Procedures for Indemnification of Third Party Claims .
(a) If any third party shall make any claim or commence any arbitration proceeding or suit (collectively, a Third Party Claim ) against any one or more of the Indemnified Parties with respect to which an Indemnified Party intends to make any claim for indemnification against any
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Halyard Party under Section 10.2 or against Kimberly-Clark under Section 10.3 , such Indemnified Party shall promptly give written notice to the Indemnifying Party describing such Third Party Claim in reasonable detail. Notwithstanding the foregoing, the failure of any Indemnified Party to provide notice in accordance with this Section 10.6(a) shall not relieve the related Indemnifying Party of its obligations under this Article X , except to the extent that such Indemnifying Party is actually prejudiced by such failure to provide notice.
(b) The Indemnifying Party shall have 30 days after receipt of the notice referred to in Section 10.6(a) to notify the Indemnified Party that it elects to conduct and control the defense of such Third Party Claim. If the Indemnifying Party does not give the foregoing notice, the Indemnified Party shall have the right to defend, contest, settle or compromise such Third Party Claim in the exercise of its exclusive discretion subject to the provisions of Section 10.6(c) , and the Indemnifying Party shall, upon request from any of the Indemnified Parties, promptly pay to such Indemnified Parties in accordance with the other terms of this Section 10.6(b) the amount of any Expense or Loss resulting from their liability to the third party claimant. If the Indemnifying Party gives the foregoing notice, the Indemnifying Party shall have the right to undertake, conduct and control, through counsel reasonably acceptable to the Indemnified Party, and at the Indemnifying Partys sole expense, the conduct and settlement of such Third Party Claim, and the Indemnified Party shall cooperate with the Indemnifying Party in connection therewith, provided that (i) the Indemnifying Party shall not thereby permit any lien, encumbrance or other adverse charge to thereafter attach to any asset of any Indemnified Party; (ii) the Indemnifying Party shall not thereby permit any injunction against any Indemnified Party; (iii) the Indemnifying Party shall permit the Indemnified Party and counsel chosen by the Indemnified Party and reasonably acceptable to the Indemnifying Party to monitor such conduct or settlement and shall provide the Indemnified Party and such counsel with such information regarding such Third Party Claim as either of them may reasonably request (which request may be general or specific), but the fees and expenses of such counsel chosen by the Indemnified Party (including allocated costs of in-house counsel and other personnel) shall be borne by the Indemnified Party unless (A) the Indemnifying Party and the Indemnified Party shall have mutually agreed to the retention of such counsel or (B) the named parties to any such Third Party Claim include the Indemnified Party and the Indemnifying Party and in the reasonable opinion of counsel to the Indemnified Party representation of both parties by the same counsel would be inappropriate due to actual or likely conflicts of interest between them, in either of which cases the reasonable fees and disbursements of counsel for such Indemnified Party (including allocated costs of in-house counsel and other personnel) shall be paid by the Indemnifying Party; and (iv) the Indemnifying Party shall agree promptly to reimburse to the extent required under this Article X the Indemnified Party for the full amount of any Expense or Loss resulting from such Third Party Claim and all related expenses incurred by the Indemnified Party. In no event shall the Indemnifying Party, without the prior written consent of the Indemnified Party, settle or compromise any claim or consent to the entry of any judgment that does not include as an unconditional term thereof the giving by the claimant or the plaintiff to the Indemnified Party a release from all liability in respect of such claim.
If the Indemnifying Party shall not have undertaken the conduct and control of the defense of any Third Party Claim as provided above, the Indemnifying Party shall nevertheless be entitled through counsel chosen by the Indemnifying Party and reasonably acceptable to the Indemnified Party to monitor the conduct or settlement of such claim by the Indemnified Party, and the Indemnified Party shall provide the Indemnifying Party and such counsel with such
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information regarding such Third Party Claim as either of them may reasonably request (which request may be general or specific), but all costs and expenses incurred in connection with such monitoring shall be borne by the Indemnifying Party.
(c) So long as the Indemnifying Party is contesting any such Third Party Claim in its reasonable good faith judgment, the Indemnified Party shall not pay or settle any such Third Party Claim. Notwithstanding the foregoing, the Indemnified Party shall have the right to pay or settle any such Third Party Claim, provided that in such event the Indemnified Party shall waive any right to indemnity therefor by the Indemnifying Party, and no amount in respect thereof shall be claimed as an Expense or a Loss under this Article X .
If the Indemnified Party determines in its reasonable good faith judgment that the Indemnifying Party is not contesting such Third Party Claim in good faith, the Indemnified Party shall have the right to undertake control of the defense of such Third Party Claim upon five days written notice to the Indemnifying Party and thereafter to defend, contest, settle or compromise such Third Party Claim in the exercise of its exclusive discretion.
If the Indemnified Party shall have undertaken the conduct and control of the defense of any Third Party Claim as provided above, the Indemnified Party, on not less than 45 days prior written notice to the Indemnifying Party, may make settlement (including payment in full) of such Third Party Claim, and such settlement shall be binding upon the Parties for the purposes hereof, unless within said 45-day period the Indemnifying Party shall have requested the Indemnified Party to contest such Third Party Claim at the expense of the Indemnifying Party. In such event, the Indemnified Party shall promptly comply with such request and the Indemnifying Party shall have the right to direct the defense of such claim or any litigation based thereon subject to all of the conditions of Section 10.6(b) . Notwithstanding anything in this Section 10.6(c) to the contrary, if the Indemnified Party, in the good-faith belief that a claim may materially and adversely affect it other than as a result of money damages or other money payments, advises the Indemnifying Party that it has determined to settle a claim, the Indemnified Party shall have the right to do so at its own cost and expense, without any requirement to contest such claim at the request of the Indemnifying Party, but without any right under the provisions of this Article X for indemnification by the Indemnifying Party.
SECTION 10.7 Procedures for Indemnification of Direct Claims . Any claim for indemnification on account of an Expense or a Loss made directly by the Indemnified Party against the Indemnifying Party and that does not result from a Third Party Claim shall be asserted by written notice from the Indemnified Party to the Indemnifying Party specifically claiming indemnification hereunder. Such Indemnifying Party shall have a period of 45 days after the receipt of such notice within which to respond thereto. If such Indemnifying Party does not respond within such 45-day period, such Indemnifying Party shall be deemed to have accepted responsibility to make payment and shall have no further right to contest the validity of such claim. If such Indemnifying Party does respond within such 45-day period and rejects such claim in whole or in part, such Indemnified Party shall be free to pursue resolution as provided in Article XI .
SECTION 10.8 Contribution . If the indemnification provided for in this Article X is unavailable to an Indemnified Party in respect of any Expense or Loss arising out of or related to
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information contained in the Form 10, the Information Statement or the offering memorandum relating to the Notes Offering, then the Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Expense or Loss in such proportion as is appropriate to reflect the relative fault of the Halyard Indemnified Parties, on the one hand, or the Kimberly-Clark Indemnified Parties, on the other hand, in connection with the statements or omissions that resulted in such Expense or Loss. The relative fault of any Halyard Indemnified Party, on the one hand, and of any Kimberly-Clark Indemnified Party, on the other hand, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission of a material fact relates to information supplied by the Halyard Business or a Halyard Indemnified Party, on the one hand, or by the Retained Business or a Kimberly-Clark Indemnified Party, on the other hand.
SECTION 10.9 Remedies Cumulative . The remedies provided in this Article X shall be cumulative and, subject to the provisions of Article XI , shall not preclude assertion by an Indemnified Party of any other rights or the seeking of any and all other remedies against any Indemnifying Party.
SECTION 10.10 Survival . All covenants and agreements of the Parties contained in this Agreement relating to indemnification shall survive the Effective Time indefinitely, unless a specific survival or other applicable period is expressly set forth herein.
ARTICLE XI
DISPUTE RESOLUTION
SECTION 11.1 Escalation and Mediation .
(a) Except as otherwise provided in each Operating Agreement for purposes of resolving any disputes that arise thereunder, the Parties agree that this Article XI shall serve as the mechanism to resolve all disputes that arise between the Parties under the Agreement or under any Operating Agreement.
(b) The Parties agree to use commercially reasonable efforts to resolve expeditiously any dispute, controversy or claim between them with respect to the matters covered hereby that may arise from time to time on a mutually acceptable negotiated basis. In furtherance of the foregoing, any Party involved in a dispute, controversy or claim may deliver a notice (an Escalation Notice ) demanding an in-person meeting involving representatives of the Parties at a senior level of management of the Parties (or if the Parties agree, of the appropriate strategic business unit or division within such entity). A copy of any such Escalation Notice shall be given to the General Counsel, or like officer or official, of each Party involved in the dispute, controversy or claim (which copy shall state that it is an Escalation Notice pursuant to this Agreement). Any agenda, location or procedures for such discussions or negotiations between the Parties may be established by the Parties from time to time; provided , however , that the Parties shall use commercially reasonable efforts to meet within 30 days of the Escalation Notice.
(c) The Parties may agree to retain a mediator, acceptable to both Parties, to aid the Parties in their discussions and negotiations by informally providing advice to the Parties. Any
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opinion expressed by the mediator shall be strictly advisory and shall not be binding on the Parties, nor shall any opinion expressed by the mediator be admissible in any action or proceeding. The mediator shall be selected by the Party that did not deliver the applicable Escalation Notice from the list of individuals to be supplied to the Parties by JAMS/Endispute, the American Arbitration Association or such entity mutually agreeable to the Parties. Costs of the mediator shall be borne equally by the Parties involved in the matter, except that each Party shall be responsible for its own expenses.
SECTION 11.2 Continuity of Service and Performance . Unless otherwise agreed in writing, the Parties will continue to provide service and honor all other commitments under this Agreement and each Operating Agreement during the course of dispute resolution pursuant to the provisions of this Article XI with respect to all matters not subject to such dispute, controversy or claim.
SECTION 11.3 Choice of Mediation Forum . Any mediation hereunder shall take place in Dallas, Texas, unless otherwise agreed in writing by the Parties.
SECTION 11.4 Ability to Pursue Other Legal Remedies . For the avoidance of doubt and notwithstanding the foregoing, nothing in this Article XI shall prevent any Party from pursuing any and all remedies available to it in connection with a dispute relating to this Agreement or any of the Operating Agreements.
ARTICLE XII
ACCESS TO INFORMATION AND SERVICES
SECTION 12.1 Agreement for Exchange of Information .
(a) At all times from and after the Effective Time for a period of seven years, as soon as reasonably practicable after written request: (i) Kimberly-Clark shall afford to Halyard, its Subsidiaries and their authorized accountants, counsel and other designated representatives reasonable access during normal business hours to, or at Halyards expense, provide copies of, all records, books, contracts, instruments, data, documents and other information (collectively, Information ) in the possession or under the control of Kimberly-Clark immediately following the Effective Time that relates to Halyard, the Halyard Business or the employees of the Halyard Business; and (ii) Halyard shall afford to Kimberly-Clark, its Subsidiaries and their authorized accountants, counsel and other designated representatives reasonable access during normal business hours to, or, at Kimberly-Clarks expense, provide copies of, all Information in the possession or under the control of Halyard immediately following the Effective Time that relates to Kimberly-Clark, the Retained Business or the employees of Kimberly-Clark; provided , however , that in the event that either Party determines that any such provision of or access to Information could be commercially detrimental, violate any law or agreement or waive any attorney-client privilege, the Parties shall take all reasonable measures to permit the compliance with such obligations in a manner that avoids any such harm or consequence.
(b) Either Party may request Information under Section 12.1(a) (i) to comply with reporting, disclosure, filing or other requirements imposed on the requesting party (including under applicable securities laws) by a Governmental Authority having jurisdiction over the
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requesting party, (ii) for use in any other judicial, regulatory, administrative or other proceeding or in order to satisfy audit, accounting, claims defense, regulatory filings, litigation or other similar requirements, (iii) for use in compensation, benefit or welfare plan administration or other bona fide business purposes or (iv) to comply with its obligations under this Agreement or any Operating Agreement.
SECTION 12.2 Ownership of Information . Any Information owned by one Party that is provided to a requesting Party pursuant to Section 12.1 shall be deemed to remain the property of the providing Party. Unless specifically set forth herein, nothing contained in this Agreement shall be construed to grant or confer rights of license or otherwise in any such Information.
SECTION 12.3 Compensation for Providing Information . The Party requesting Information agrees to reimburse the providing Party for the reasonable costs, if any, of creating, gathering and copying such Information, to the extent that such costs are incurred for the benefit of the requesting Party. Except as otherwise specifically provided in this Agreement, such costs shall be computed in accordance with the providing Partys standard methodology and procedures. To the extent that this Section 12.3 conflicts with any services then-being provided under the Transition Services Agreement, the Transition Services Agreement shall control. For the avoidance of doubt, this Section 12.3 shall not apply to the transfer of the books and records primarily related to the Halyard Business that are to be conveyed to Halyard pursuant to Section 2.2(k).
SECTION 12.4 Retention of Records . To facilitate the possible exchange of Information pursuant to this Article XII after the Effective Time, the Parties agree to use commercially reasonable efforts to retain all Information in their respective possession or control as of the Effective Time in accordance with the record retention policies and procedures of Kimberly-Clark as in effect as of the Effective Time or such other procedures as may reasonably be adopted by the applicable Party after the Effective Time; provided , however , that notwithstanding any requirements of any such policies or procedures, no party will be required to retain any Information for longer than seven years. Notwithstanding the foregoing, a Partys obligation to retain any particular Information shall terminate upon such Partys delivery of such Information to the other Party.
SECTION 12.5 Limitation of Liability . No Party shall have any liability to the other Party (i) if any Information exchanged or provided pursuant to this Agreement that is an estimate or forecast, or that is based on an estimate or forecast, is found to be inaccurate, in the absence of gross negligence or willful misconduct by the Party providing such Information, or (ii) if any Information is destroyed after commercially reasonable efforts to comply with the provisions of Section 12.4 .
SECTION 12.6 Production of Witnesses . At all times from and after the Effective Time, each Party shall use commercially reasonable efforts to make available to the other Party (without cost (other than reimbursement of actual out-of-pocket expenses) to, and upon prior written request of, the other Party) its directors, officers, employees and agents as witnesses to the extent that the same may reasonably be required by the other Party in connection with any legal, administrative or other proceeding in which the requesting Party may from time to time be involved with respect to the Halyard Business, the Retained Business or any transactions contemplated hereby.
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SECTION 12.7 Confidentiality .
(a) From and after the Effective Time, each of Kimberly-Clark and Halyard shall hold, and shall cause their respective directors, officers, employees, agents, consultants, advisors and other representatives to hold, in strict confidence, with at least the same degree of care that applies to Kimberly-Clarks confidential and proprietary information pursuant to policies in effect as of the Effective Time or such other procedures as may reasonably be adopted by the applicable Party after the Effective Time, all non-public information concerning or belonging to the other Party or any of its Subsidiaries or Affiliates obtained by it prior to the Effective Time, accessed by it pursuant to Section 12.1 , or furnished to it by the other Party or any of its Subsidiaries or Affiliates pursuant to this Agreement or any agreement or document contemplated hereby, including, without limitation, any Trade Secrets, technology, Know-How and other non-public, proprietary intellectual property rights licensed pursuant to the Patent License Agreements and shall not release or disclose such information to any other Person, except their representatives, who shall be bound by the provisions of this Section 12.7 ; provided , however , that Kimberly-Clark and Halyard and their respective directors, officers, employees, agents, consultants, advisors and other representatives may disclose such information if, and only to the extent that, (i) a disclosure of such information is compelled by judicial or administrative process or, in the opinion of such Partys counsel, by other requirements of law (in which case the disclosing Party will provide, to the extent practicable under the circumstances, advance written notice to the other Party of its intent to make such disclosure), or (ii) such Party can show that such information (A) is published or is or otherwise becomes available to the general public as part of the public domain without breach of this Agreement; (B) has been furnished or made known to the recipient without any obligation to keep it confidential by a third party under circumstances which are not known to the recipient to involve a breach of the third partys obligations to a Party hereto; (C) was developed independently of information furnished to the recipient under this Agreement; or (D) in the case of information furnished after the Effective Time, was not known to the recipient at the time of the Distribution but became known to the recipient prior to the time of receipt thereof from the other Party.
(b) Each Party acknowledges that the other Party would not have an adequate remedy at law for the breach by the acknowledging Party of any one or more of the covenants contained in this Section 12.7 and agrees that, in the event of such breach, the other Party may, in addition to the other remedies that may be available to it, apply to a court for an injunction to prevent breaches of this Section 12.7 and to enforce specifically the terms and provisions of this Section. Notwithstanding any other Section hereof, the provisions of this Section 12.7 shall survive the Effective Time indefinitely.
SECTION 12.8 Privileged Matters .
(a) Each of Kimberly-Clark and Halyard agrees to maintain, preserve and assert all privileges, including, without limitation, privileges arising under or relating to the attorney-client relationship (which shall include without limitation the attorney-client and work product privileges), not heretofore waived, that relate to the Halyard Business and the Transferred Assets
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for any period prior to the Effective Time ( Privilege or Privileges ). Each Party acknowledges and agrees that any costs associated with asserting any Privilege shall be borne by the Party requesting that such privilege be asserted. Each Party agrees that it shall not waive any Privilege that could be asserted under applicable law without the prior written consent of the other Party. The rights and obligations created by this Section 12.8 shall apply to all information relating to the Halyard Business as to which, but for the Distribution, either Party would have been entitled to assert or did assert the protection of a Privilege ( Privileged Information ), including without limitation, (i) any and all information generated prior to the Effective Time but which, after the Distribution, is in the possession of either Party; and (ii) all information generated, received or arising after the Effective Time that refers to or relates to Privileged Information generated, received or arising prior to the Effective Time.
(b) Upon receipt by either Party of any subpoena, discovery or other request that may call for the production or disclosure of Privileged Information or if either Party obtains knowledge that any current or former employee of Kimberly-Clark or Halyard has received any subpoena, discovery or other request that may call for the production or disclosure of Privileged Information, such Party shall notify promptly the other Party of the existence of the request and shall provide the other Party a reasonable opportunity to review the information and to assert any rights it may have under this Section 12.8 or otherwise to prevent the production or disclosure of Privileged Information. Each Party agrees that it will not produce or disclose any information that may be covered by a Privilege under this Section 12.8 unless (i) the other Party has provided its written consent to such production or disclosure (which consent shall not be unreasonably withheld), or (ii) a court of competent jurisdiction has entered a final, nonappealable order finding that the information is not entitled to protection under any applicable Privilege.
(c) Kimberly-Clarks transfer of books and records and other information to Halyard, and Kimberly-Clarks agreement to permit Halyard to possess Privileged Information existing or generated prior to the Effective Time, are made in reliance on Halyards agreement, as set forth in Sections 12.7 and 12.8 , to maintain the confidentiality of Privileged Information and to assert and maintain all applicable Privileges. The access to information being granted pursuant to Section 12.1 , the agreement to provide witnesses and individuals pursuant to Section 12.6 and the transfer of Privileged Information to Halyard pursuant to this Agreement shall not be deemed a waiver of any Privilege that has been or may be asserted under this Section 12.8 or otherwise. Nothing in this Agreement shall operate to reduce, minimize or condition the rights granted to the Parties in, or the obligations imposed upon the Parties by, this Section 12.8 .
SECTION 12.9 Financial Information Certifications .
(a) In order to enable the principal executive officer or officers, principal financial officer or officers and controller or controllers of Kimberly-Clark to make the certifications required of them under Section 302 of the Sarbanes-Oxley Act of 2002, within 30 days following the end of any fiscal quarter during which Halyard is a Subsidiary of Kimberly-Clark, Halyard shall provide a certification statement with respect to such quarter or portion thereof to those certifying officers and employees of Kimberly-Clark, which certification shall be in substantially the same form as had been provided by officers or employees of Halyard in certifications delivered prior to the Effective Time (provided that such certification shall be made by Halyard rather than individual officers or employees), or as otherwise agreed upon between the Parties. Such certification statements shall also reflect any changes in certification statements necessitated by the transactions contemplated by this Agreement.
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(b) In order to enable the principal executive officer or officers, principal financial officer or officers and controller or controllers of Halyard to make the certifications required of them under Section 302 of the Sarbanes-Oxley Act of 2002, within 30 days following the end of any fiscal quarter during which Halyard is a Subsidiary of Kimberly-Clark, Kimberly-Clark shall provide a certification statement with respect to testing of internal controls for corporate and shared services processes for such quarter or portion thereof to those certifying officers and employees of Halyard, which certification shall be in substantially the same form as had been provided by officers or employees of Kimberly-Clark in certifications delivered to its principal executive officer, principal financial officer and controller prior to the Effective Time (provided that such certification shall be made by Kimberly-Clark rather than individual officers or employees,) or as otherwise agreed upon between the Parties. Such certification statements shall also reflect any changes in certification statements necessitated by the transactions contemplated by this Agreement.
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1 Entire Agreement . This Agreement and the Operating Agreements, including the Schedules and Exhibits referred to herein and therein and the documents delivered pursuant hereto and thereto, constitute the entire agreement between the Parties with respect to the subject matter contained herein or therein, and supersede all prior agreements, negotiations, discussions, understandings, writings and commitments between the Parties with respect to such subject matter.
SECTION 13.2 Choice of Law and Forum . This Agreement shall be governed by and construed and enforced in accordance with the substantive laws of the State of Delaware and the federal laws of the United States of America applicable therein, as though all acts and omissions related hereto occurred in Delaware. The Parties hereby irrevocably submit to the non-exclusive jurisdiction of the state and federal courts located in the State of Delaware, and each party hereby irrevocably agrees that all disputes, controversies or claims may be heard and determined in the state and federal courts located in the State of Delaware. The Parties hereby irrevocably waive, to the fullest extent permitted by applicable law, any objection which they may now or hereafter have to the laying of venue of any such dispute brought in such court or any defense of inconvenient forum for the maintenance of such dispute. Each of the Parties hereto agrees that a judgment in any such dispute may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.
SECTION 13.3 Amendment . This Agreement shall not be amended, modified or supplemented except by a written instrument signed by an authorized representative of each of the Parties.
SECTION 13.4 Waiver . Any term or provision of this Agreement may be waived, or the time for its performance may be extended, by the Party or Parties entitled to the benefit thereof. Any such waiver shall be validly and sufficiently given for the purposes of this Agreement if, as to
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any Party, it is in writing signed by an authorized representative of such Party. The failure of any Party to enforce at any time any provision of this Agreement shall not be construed to be a waiver of such provision, or in any way to affect the validity of this Agreement or any part hereof or the right of any Party thereafter to enforce each and every such provision. No waiver of any breach of this Agreement shall be held to constitute a waiver of any other or subsequent breach.
SECTION 13.5 Partial Invalidity . Wherever possible, each provision hereof shall be interpreted in such a manner as to be effective and valid under applicable law, but in case any one or more of the provisions contained herein shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such provision or provisions shall be ineffective to the extent, but only to the extent, of such invalidity, illegality or unenforceability without invalidating the remainder of such provision or provisions or any other provisions hereof, unless such a construction would be unreasonable.
SECTION 13.6 Execution in Counterparts . This Agreement may be executed in one or more counterparts, each of which shall be deemed an original instrument, but all of which shall be considered one and the same agreement, and shall become binding when one or more counterparts have been signed by and delivered to each of the Parties.
SECTION 13.7 Successors and Assigns . This Agreement and each Operating Agreement shall be binding upon and inure to the benefit of the Parties hereto and thereto, respectively, and their successors and permitted assigns; provided , however , that the rights and obligations of either Party under this Agreement and each Operating Agreement shall not be assignable by such Party without the prior written consent of the other Party. The successors and permitted assigns hereunder shall include, without limitation, any permitted assignee as well as the successors in interest to such permitted assignee (whether by merger, liquidation (including successive mergers or liquidations) or otherwise).
SECTION 13.8 Third Party Beneficiaries . Except to the extent otherwise provided in Article X or in any Operating Agreement, the provisions of this Agreement and each Operating Agreement are solely for the benefit of the Parties and their respective Affiliates, successors and permitted assigns and shall not confer upon any third Person any remedy, claim, liability, reimbursement or other right in excess of those existing without reference to this Agreement or any Operating Agreement. Nothing in this Agreement or any Operating Agreement shall obligate Kimberly-Clark or Halyard to assist any Halyard Employee to enforce any rights such employee may have with respect to any of the employee benefits described in this Agreement.
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SECTION 13.9 Notices . All notices, requests, claims, demands and other communications required or permitted hereunder shall be in writing and shall be deemed given or delivered (i) when delivered personally, (ii) if transmitted by facsimile when confirmation of transmission is received, (iii) if sent by registered or certified mail, postage prepaid, return receipt requested, on the third business day after mailing or (iv) if sent by private courier when received; and shall be addressed as follows:
If to Kimberly-Clark, to:
Kimberly-Clark Corporation | ||
351 Phelps Drive | ||
Irving, Texas 75309 | ||
Attention: | General Counsel | |
Facsimile: | 972-281-1492 |
If to Halyard, to:
Halyard Health, Inc. 5405 Windward Parkway Suite 100, South Alpharetta, GA 30004 |
||
Attention: | General Counsel | |
Facsimile: | 770-587-7749 |
or to such other address as such Party may indicate by a notice delivered to the other Party.
SECTION 13.10 Performance . Each Party shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth herein to be performed by any Subsidiary or Affiliate of such Party.
SECTION 13.11 Force Majeure . No Party shall be deemed in default of this Agreement to the extent that any delay or failure in the performance of its obligations under this Agreement results from any cause beyond its reasonable control and without its fault or negligence, including, without limitation, acts of God, acts of civil or military authority, embargoes, epidemics, war, riots, insurrections, fires, explosions, earthquakes, floods, unusually severe weather conditions, labor problems or unavailability of parts, or, in the case of computer systems, any failure in electrical or air conditioning equipment. In the event of any such excused delay, the time for performance shall be extended for a period equal to the time lost by reason of the delay.
SECTION 13.12 No Public Announcement . Neither Kimberly-Clark nor Halyard shall, without the approval of the other, make any press release or other public announcement concerning the transactions contemplated by this Agreement, except as and to the extent that any such Party shall be so obligated by law or the rules of any stock exchange or quotation system, in which case the other Party shall be advised and the Parties shall use commercially reasonable efforts to cause a mutually agreeable release or announcement to be issued; provided , however , that the foregoing shall not preclude communications or disclosures necessary to implement the provisions of this Agreement or to comply with the accounting and SEC disclosure obligations or the rules of any stock exchange.
SECTION 13.13 Termination . Notwithstanding any provisions hereof, this Agreement may be terminated and the Distribution abandoned at any time prior to the Effective Time by and in the sole discretion of the Kimberly-Clark Board of Directors without the prior the approval of any Person. In the event of such termination, this Agreement shall forthwith become void and no Party shall have any liability to any Person by reason of this Agreement, except that Kimberly-Clark shall be liable for any costs and expenses, including reasonable attorneys fees, prior to or arising out of such termination.
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SECTION 13.14 Conflict . In the case of any conflict between this Agreement and the Tax Matters Agreement in relation to any matters addressed by the Tax Matters Agreement, the Tax Matters Agreement shall prevail.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their authorized representatives as of the date first above written.
KIMBERLY-CLARK CORPORATION | ||
By: |
/s/ Mark A. Buthman |
|
Name: | Mark A. Buthman | |
Title: | Chief Financial Officer | |
HALYARD HEALTH, INC. | ||
By: |
/s/ Robert E. Abernathy |
|
Name: | Robert E. Abernathy | |
Title: | President and Chief Executive Officer |
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Exhibit 3.1
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
HALYARD HEALTH, INC.
(Pursuant to Sections 242 and 245 of the
General Corporation Law of the State of Delaware)
Halyard Health, Inc. (the Corporation ), a corporation organized and existing under and by virtue of the provisions of the General Corporation Law of the State of Delaware (the DGCL ), hereby certifies as follows:
1. The name of the Corporation is Halyard Health, Inc. The original certificate of incorporation of the Corporation was filed in accordance with the DGCL on February 25, 2014. The name under which the Corporation was originally incorporated is K-C Healthcare Spin, Inc.
2. This Amended and Restated Certificate of Incorporation (this Amended and Restated Certificate of Incorporation ) amends and restates the provisions of the certificate of incorporation of the Corporation, and has been duly adopted in accordance with the provisions of Sections 242 and 245 of the DGCL to be effective as of 4:01 p.m. Eastern Time on October 31, 2014 (the Effective Time ).
3. The text of the certificate of incorporation of the Corporation is hereby amended and restated to read in full as follows:
ARTICLE I
NAME OF CORPORATION
The name by which the corporation is to be known is Halyard Health, Inc. (the Corporation ).
ARTICLE II
REGISTERED OFFICE; REGISTERED AGENT
The address of the Corporations registered office in the State of Delaware is 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company, 19801. The Corporation may have such other offices, either within or without the State of Delaware, as the Board of Directors of the Corporation (the Board of Directors ) may designate or as the business of the Corporation may from time to time require.
ARTICLE III
PURPOSE
The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware (as from time to time amended, the DGCL ).
ARTICLE IV
CAPITAL STOCK
Section 1. Authorized Stock . The total number of shares of capital stock that the Corporation shall have authority to issue is Three Hundred Twenty Million (320,000,000) shares, consisting of (a) Three Hundred Million (300,000,000) shares of common stock, par value $0.01 per share (the Common Stock ), and (b) Twenty Million (20,000,000) shares of preferred stock, $0.01 par value per share (the Preferred Stock ).
Section 2. Common Stock . Except as may otherwise be provided in this Amended and Restated Certificate of Incorporation, in a Preferred Stock Designation (as defined below), or as required by law, the holders of outstanding shares of Common Stock shall have the right to vote on all questions to the exclusion of all other stockholders, each holder of record of Common Stock being entitled to one vote for each share of Common Stock standing in the name of the stockholder on the books of the Corporation.
Section 3. Preferred Stock . Shares of Preferred Stock may be issued from time to time in one or more series. The Board of Directors (or any committee to which it may duly delegate the authority granted in this Article IV) is hereby empowered to authorize the issuance from time to time of shares of Preferred Stock in one or more series, for such consideration and for such corporate purposes as the Board of Directors (or such committee thereof) may from time to time determine, and by filing a certificate (hereinafter referred to as a Preferred Stock Designation ) pursuant to applicable law of the State of Delaware, as it presently exists or may hereafter be amended, to establish from time to time for each such series the number of shares to be included in each such series and to fix the designations, powers, rights and preferences of the shares of each such series, and the qualifications, limitations and restrictions thereof, to the fullest extent now or hereafter permitted by this Amended and Restated Certificate of Incorporation and the laws of the State of Delaware, including, without limitation, voting rights (if any), dividend rights, dissolution rights, conversion rights, exchange rights, liquidation rights and redemption rights thereof, as shall be stated and expressed in a resolution or resolutions adopted by the Board of Directors (or such committee thereof) providing for the issuance of such series of Preferred Stock. Each series of Preferred Stock shall be distinctly designated. The authority of the Board of Directors (or such committee thereof) with respect to each series of Preferred Stock shall include, but not be limited to, determination of the following:
i. | the designation of the series, which may be by distinguishing number, letter or title; |
ii. | the number of shares of the series, which number the Board of Directors (or such committee thereof) may thereafter (except where otherwise provided in the Preferred Stock Designation) increase or decrease (but not below the number of shares thereof then outstanding); |
iii. | the amounts payable on, and the preferences, if any, of shares of the series in respect of dividends, and whether such dividends, if any, shall be cumulative or noncumulative; |
iv. | dates at which dividends, if any, shall be payable; |
v. | the redemption rights and price or prices, if any, for shares of the series; |
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vi. | the terms and amount of any sinking fund provided for the purchase or redemption of shares of the series; |
vii. | the amounts payable on, and the preferences, if any, of shares of the series in the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation; |
viii. | whether the shares of the series shall be convertible into or exchangeable for shares of any other class or series, or any other security, of the Corporation or any other corporation, and, if so, the specification of such other class or series or such other security, the conversion or exchange price or prices or rate or rates, any adjustments thereof, the date or dates at which such shares shall be convertible or exchangeable and all other terms and conditions upon which such conversion or exchange may be made; |
ix. | restrictions on the issuance of shares of the same series or of any other class or series; and |
x. | the voting rights, if any, of the holders of shares of the series. |
Section 4. Supermajority Voting Requirements . Subject to the rights of holders of any series of Preferred Stock, the following corporate actions shall require the approval, given at a stockholders meeting, of the holders of record of outstanding shares representing two-thirds of the voting power of all of the shares of capital stock of the Corporation then entitled to vote on such matter, voting together as a single class (unless the Board of Directors adopts resolutions declaring any of the following corporate actions to be advisable and waiving the requirements of this Section 4 of Article IV):
i. | the dissolution of the Corporation; |
ii. | the sale, lease, exchange or conveyance of all or substantially all of the property and assets of the Corporation; or |
iii. | the adoption of an agreement of merger or consolidation, but no stockholder approval shall be required for any merger or consolidation which, under the Laws of Delaware, need not be approved by the stockholders of the Corporation. |
ARTICLE V
TERM
The term of existence of the Corporation shall be perpetual.
ARTICLE VI
BOARD OF DIRECTORS
Section 1. Number of Directors . Subject to the rights of the holders of any series of Preferred Stock to elect directors under specified circumstances, the number of directors shall be fixed from time to time exclusively pursuant to a resolution adopted by a majority of the total number of directors that the Corporation would have if there were no vacancies (the Entire Board ).
Section 2. Classes of Directors . Subject to the rights of the holders of any series of Preferred Stock to elect directors under specified circumstances, the directors shall be divided, with respect
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to the time for which they severally hold office, into three classes, as nearly equal in number as is reasonably possible, with the term of office of the first class to expire at the 2015 annual meeting of stockholders, the term of office of the second class to expire at the 2016 annual meeting of stockholders and the term of office of the third class to expire at the 2017 annual meeting of stockholders, with each director to hold office until his or her successor shall have been duly elected and qualified. At each annual meeting of stockholders, commencing with the 2015 annual meeting, directors elected to succeed those directors whose terms then expire shall be elected for a term of office to expire at the third succeeding annual meeting of stockholders after their election, with each director to hold office until his or her successor shall have been duly elected and qualified.
Section 3. Vacancies . Subject to applicable law and the rights of the holders of any series of Preferred Stock, and unless the Board of Directors otherwise determines, vacancies resulting from death, resignation, retirement, disqualification, removal from office or other cause, and newly created directorships resulting from any increase in the authorized number of directors, may be filled only by the affirmative vote of a majority of the remaining directors, though less than a quorum of the Board of Directors, and in the event that there is only one director remaining in office, by such sole remaining director, and directors so chosen shall hold office for a term expiring at the annual meeting of stockholders at which the term of office of the class to which they have been appointed expires and until such directors successor shall have been duly elected and qualified. To the extent that the authorized number of directors is increased pursuant to Section 1 of this Article VI, and the Board of Directors fills any vacancy resulting therefrom pursuant to this Section 3, the Board of Directors shall have full discretion and authority to designate the specific class of directors to which each such newly elected director shall be assigned.
ARTICLE VII
STOCKHOLDER ACTION
Section 1. Stockholder Action Only at Meetings . Subject to the rights of the holders of any series of Preferred Stock, any action required or permitted to be taken by the stockholders of the Corporation must be effected at an annual or special meeting of stockholders of the Corporation and may not be effected by any consent in writing by such stockholders.
Section 2. Special Meetings of Stockholders . Subject to the rights of the holders of any series of Preferred Stock, special meetings of stockholders may only be called by or at the direction of the Chairman of the Board of Directors, the Chief Executive Officer, or the Board of Directors pursuant to a resolution adopted by a majority of the Entire Board, or as otherwise provided in the By-laws of the Corporation. At any special meeting of the stockholders, only such business shall be conducted or considered as shall have been properly brought before the meeting pursuant to the Corporations notice of meeting. To be properly brought before a special meeting, proposals of business must be (a) specified in the Corporations notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, or (b) otherwise properly brought before the special meeting by or at the direction of the Board of Directors.
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ARTICLE VIII
AMENDMENTS TO BY-LAWS
In furtherance and not in limitation of the powers conferred by the laws of the State of Delaware, the By-laws of the Corporation may be altered, amended or repealed, in whole or in part, and new by-laws may be adopted, (i) by the affirmative vote of the holders of record of outstanding shares representing at least eighty-percent (80%) of the voting power of all of the shares of capital stock of the Corporation then entitled to vote generally in the election of directors, voting together as a single class; provided, however, that in the case of any such stockholder action at a meeting of stockholders, notice of the proposed alteration, amendment, repeal or adoption of the new by-law must be contained in the notice of such meeting, or (ii) by action of the Board of Directors; provided, however, that the case of any such action at a meeting of the Board of Directors, notice of the proposed alteration, amendment, repeal or adoption of the new by-law must be given prior to the meeting.
ARTICLE IX
DIRECTOR LIABILITY AND INDEMNIFICATION
Section 1. Director Liability . No director shall be personally liable to the Corporation or its stockholders for monetary damages for any breach of fiduciary duty by such director as a director of the Corporation. Notwithstanding the foregoing, a director shall be liable to the extent provided by applicable law (i) for breach of the directors duty of loyalty to the Corporation or its stockholders; (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; (iii) pursuant to Section 174 of the DGCL; or (iv) for any transaction from which the Director derived an improper personal benefit. If the DGCL is amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the DGCL, as so amended. No amendment to or repeal of these provisions shall apply to or have any effect on the liability or alleged liability of any director of the Corporation for or with respect to any acts or omissions of such director occurring prior to such amendment or repeal.
Section 2. Indemnification . Each person who is, or was, or has agreed to become a director or officer of the Corporation, and each person who is, or was, or has agreed to serve at the Corporations request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise (including the heirs, executor, administrator or estate of such person), shall be indemnified by the Corporation to the fullest extent permitted by the DGCL, or any other applicable law as the same now or hereafter exists; provided, that the Corporation shall not be required to indemnify any such person (or his or her heirs, executors or personal or legal representatives) seeking indemnification in connection with a proceeding (or part thereof) that was initiated by such person unless such proceeding (or part thereof) was authorized or consented to by the Board of Directors. The Corporation shall, to the fullest extent permitted by the DGCL, advance all costs and expenses (including, without limitation, attorneys fees and expenses) incurred by any current or former director or officer within 15 days of presentation of same to the Corporation, with respect to any one or more actions, suits or proceedings, whether civil or criminal, administrative, arbitrative or investigative, so long as the Corporation receives from such current or former director or officer an unsecured undertaking to repay such expenses if it shall ultimately be determined that such director or officer is not entitled to be indemnified by the Corporation under the DGCL. Such obligations to advance costs and expenses shall include, without limitation, costs and expenses incurred in asserting
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affirmative defenses, counterclaims and cross-claims. The Corporation may, by action of the Board of Directors, provide indemnification to other employees and agents of the Corporation with the same scope and effect as the foregoing indemnification of directors and officers. The right of indemnification provided in this Section 2 of Article IX shall not be exclusive of any other rights to which any person seeking indemnification may otherwise be entitled and shall be applicable to matters otherwise within its scope irrespective of whether such matters arose or arise before or after the adoption of this Section 2 of Article IX. Without limiting the generality of the effect of the foregoing, the Corporation may adopt by-laws, or enter into one or more agreements with any person, which provide for indemnification or advancement of expenses greater or different than that provided in this Section 2 of Article IX or the DGCL. Any amendment, repeal or adoption of any provision inconsistent with this Section 2 of Article IX shall not adversely affect any right or protection existing hereunder immediately prior to such amendment, repeal or adoption and no amendment, repeal or adoption will affect the legality, validity or enforceability of any contract entered into or right granted prior to the effective date of such amendment, repeal or adoption.
ARTICLE X
FORUM, VENUE AND SERVICE
Section 1. Forum and Venue . Unless the Corporation consents in writing (following authorization by the Board of Directors) to an alternative forum, the Court of Chancery of the State of Delaware (or, if that court shall not have jurisdiction, the U.S. District Court for the District of Delaware) shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director or officer of the Corporation to the Corporation or the Corporations stockholders, creditors or other constituents, (iii) any action asserting a claim against the Corporation or any director or officer of the Corporation arising pursuant to any provision of the DGCL or the Corporations Amended and Restated Certificate of Incorporation or By-laws (in each case, as they may be amended from time to time), or (iv) any action asserting a claim against the Corporation or any director or officer or employee of the Corporation governed by the internal affairs doctrine.
Section 2. Consent to Jurisdiction and Service . If any action the subject matter of which is within the scope of Section 1 of this Article X is filed in a court other than a court located within the State of Delaware (a Foreign Action ) in the name of any stockholder of the Corporation, such stockholder shall be deemed to have consented to (i) the personal jurisdiction of the state and federal courts located within the State of Delaware in connection with any action brought in any such court to enforce Section 1 of this Article X above (an Enforcement Action ) and (ii) having service of process made upon such stockholder in any such Enforcement Action by service upon such stockholders counsel in the Foreign Action as agent for such stockholder.
Section 3. Notice . Any person or entity owning, purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Article X.
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ARTICLE XI
AMENDMENTS
The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Amended and Restated Certificate of Incorporation in the manner now or hereafter prescribed by law, and all rights and powers conferred herein on stockholders, directors and officers are subject to this reserved power; provided , however , that, notwithstanding the fact that a lesser percentage may be specified by the DGCL, the affirmative vote of the holders of record of outstanding shares representing at least (a) two-thirds of the voting power of all of the shares of capital stock of the Corporation then entitled to vote generally in the election of directors, voting together as a single class, shall be required to amend, alter, change, repeal or adopt any provision or provisions inconsistent with, Sections 3 or 4 of Article IV, Article VI, Article VII, Article IX, Article X or this clause (a) of Article XI of this Amended and Restated Certificate of Incorporation unless such amendment, alteration, change, repeal or adoption of any inconsistent provision or provisions is declared advisable by the Board of Directors in resolutions duly adopted thereby, and (b) eighty percent (80%) of the voting power of all of the shares of capital stock of the Corporation then entitled to vote generally in the election of directors, voting together as a single class, shall be required to amend, alter, change, repeal or adopt any provision or provisions inconsistent with Article VIII or this clause (b) of Article XI of this Amended and Restated Certificate of Incorporation, unless such amendment, alteration, change, repeal or adoption of any inconsistent provision or provisions is declared advisable by the Board of Directors in resolutions duly adopted thereby.
* * *
The foregoing amendment and restatement was approved by the holders of the requisite number of shares of capital stock of the Corporation in accordance with Sections 228, 242 and 245 of the General Corporation Law to be effective as of the Effective Time.
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IN WITNESS WHEREOF, this Amended and Restated Certificate of Incorporation has been executed by a duly authorized officer of the Corporation on this 31st day of October 2014.
Halyard Health, Inc. | ||
By: |
/s/ John W. Wesley |
|
Name: | John W. Wesley | |
Title: | Senior Vice President |
Exhibit 3.2
AMENDED AND RESTATED BY-LAWS
OF
HALYARD HEALTH, INC.
Incorporated under the Laws of the State of Delaware
These Amended and Restated By-laws (the By-laws ) of Halyard Health, Inc., a Delaware corporation (the Corporation ), are effective as of 4:01 p.m., Eastern time, on October 31, 2014 and hereby amend and restate the previous by-laws of the Corporation, which are hereby deleted in their entirety and replaced with the following:
ARTICLE I
OFFICES AND RECORDS
Section 1.1 Delaware Office . The registered office of the Corporation in the State of Delaware shall be located in the City of Wilmington, County of New Castle, and the name and address of its registered agent is The Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware 19904.
Section 1.2 Other Offices . The Corporation may have such other offices, either inside or outside the State of Delaware, as the Board of Directors of the Corporation (the Board of Directors ) may designate or as the business of the Corporation may from time to time require.
Section 1.3 Books and Records . The books and records of the Corporation may be kept inside or outside the State of Delaware at such place or places as may from time to time be designated by the Board of Directors.
ARTICLE II
STOCKHOLDERS
Section 2.1 Annual Meeting . The annual meeting of stockholders of the Corporation shall be held on such date and at such place and time as may be fixed by resolution of the Board of Directors.
Section 2.2 Special Meeting . Subject to the rights of the holders of any series of stock having a preference over the common stock of the Corporation as to dividends, voting or upon liquidation ( Preferred Stock ), special meetings of stockholders may be called only by the Chairman of the Board, the Chief Executive Officer or resolution of the Board of Directors.
Section 2.3 Place of Meeting . The Board of Directors may designate the place of meeting for any annual or special meeting of stockholders. If no designation is so made, the place of meeting shall be the principal corporate office of the Corporation.
Section 2.4 Notice of Meeting . Written or printed notice, stating the place, date and hour of the meeting, the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered by the Corporation not less than ten (10) days nor more than sixty (60) days before the date of the
meeting, either personally, by electronic transmission in the manner provided in Section 232 of the General Corporation Law of the State of Delaware (as it may be amended, the DGCL ) (except to the extent prohibited by Section 232(e) of the DGCL) or by mail, to each stockholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail with postage thereon prepaid, addressed to the stockholder at his or her address as it appears on the stock transfer books of the Corporation. If notice is given by electronic transmission, such notice shall be deemed to be given at the times provided in the DGCL. Such further notice shall be given as may be required by law. Any previously scheduled meeting of stockholders may be postponed, and, unless the Amended and Restated Certificate of Incorporation of the Corporation (the Certificate of Incorporation ) otherwise provides, any special meeting of stockholders may be cancelled, by resolution of the Board of Directors upon public notice given prior to the date previously scheduled for such meeting of stockholders.
Section 2.5 Quorum and Adjournment . Except as otherwise provided by law or by the Certificate of Incorporation, the holders of a majority of the outstanding shares of the Corporation entitled to vote generally in the election of directors (the Voting Stock ), represented in person or by proxy, shall constitute a quorum at a meeting of stockholders, except that when specified business is to be voted on by a class or series of stock voting as a class, the holders of a majority of the shares of such class or series shall constitute a quorum of such class or series for the transaction of such business. The chairman of a meeting of stockholders or the holders of a majority of the shares represented at a meeting of stockholders may adjourn the meeting from time to time, whether or not there is a quorum. No notice of the time and place of adjourned meetings need be given except as required by law. Stockholders present at a duly called meeting of stockholders at which a quorum is present may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum.
Section 2.6 Proxies . At all meetings of stockholders, a stockholder may vote by proxy executed in writing (or in such manner prescribed by the DGCL) by the stockholder, or by his or her duly authorized attorney in fact.
Section 2.7 Order of Business .
(A) Annual Meetings of Stockholders . At any annual meeting of stockholders, only such nominations of persons for election to the Board of Directors shall be made, and only such other business shall be conducted or considered, as shall have been properly brought before the meeting. For nominations to be properly made at an annual meeting, and proposals of other business to be properly brought before an annual meeting, nominations and proposals of other business must be: (a) specified in the Corporations notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (b) otherwise properly made at the annual meeting, by or at the direction of the Board of Directors or (c) otherwise properly requested to be brought before the annual meeting by a stockholder of the Corporation in accordance with these By-laws. For nominations of persons for election to the Board of Directors or proposals of other business to be properly requested by a stockholder to be made at an annual meeting, a stockholder must (i) be a stockholder of record at the time of giving of notice of such
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annual meeting by or at the direction of the Board of Directors and at the time of the annual meeting, (ii) be entitled to vote at such annual meeting and (iii) comply with the procedures set forth in these By-laws as to such nomination or business. The immediately preceding sentence shall be the exclusive means for a stockholder to make nominations or other business proposals (other than matters properly brought under Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the Exchange Act ) and included in the Corporations notice of meeting) before an annual meeting of stockholders.
(B) Special Meetings of Stockholders . At any special meeting of stockholders, only such business shall be conducted or considered as shall have been properly brought before the meeting pursuant to the Corporations notice of meeting. To be properly brought before a special meeting, proposals of business must be (a) specified in the Corporations notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, or (b) otherwise properly brought before the special meeting, by or at the direction of the Board of Directors. Nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected pursuant to the Corporations notice of meeting (a) by or at the direction of the Board of Directors or (b) provided that the Board of Directors has determined that directors shall be elected at such meeting, by any stockholder of the Corporation who (i) is a stockholder of record at the time of giving of notice of such special meeting and at the time of the special meeting, (ii) is entitled to vote at the meeting, and (iii) complies with the procedures set forth in these By-laws as to such nomination. The immediately preceding sentence shall be the exclusive means for a stockholder to make director nominations before a special meeting of stockholders.
(C) General . Except as otherwise provided by law, the Certificate of Incorporation or these By-laws, the Chairman of any annual or special meeting shall have the power to determine whether a nomination or any other business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with these By-laws and, if any proposed nomination or other business is not in compliance with these By-laws, to declare that no action shall be taken on such nomination or other proposal and such nomination or other proposal shall be disregarded.
Section 2.8 Advance Notice of Stockholder Business and Nominations .
(A) Annual Meeting of Stockholders . Without qualification or limitation, subject to Section 2.8(C)(4) of these By-laws, for any nominations or any other business to be properly brought before an annual meeting by a stockholder pursuant to Section 2.7(A) of these By-laws, the stockholder must have given timely notice thereof (including, in the case of nominations, the completed and signed questionnaire, representation and agreement required by Section 2.9 of these By-laws), and timely updates and supplements thereof, in writing to the Secretary, and such other business must otherwise be a proper matter for stockholder action.
To be timely, a stockholders notice shall be delivered to the Secretary at the principal executive offices of the Corporation not earlier than the close of business on the 120th day and not later than the close of business on the 90th day prior to the first anniversary of the preceding years annual meeting; provided , however , that in the event that the date of the annual meeting is
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more than 30 days before or more than 60 days after such anniversary date, notice by the stockholder must be so delivered not earlier than the close of business on the 120th day prior to the date of such annual meeting and not later than the close of business on the later of the 90th day prior to the date of such annual meeting or, if the first public announcement of the date of such annual meeting is less than 100 days prior to the date of such annual meeting, the 10th day following the day on which public announcement of the date of such meeting is first made by the Corporation. In no event shall any adjournment or postponement of an annual meeting, or the public announcement thereof, commence a new time period for the giving of a stockholders notice as described above.
(B) Special Meetings of Stockholders . Subject to Section 2.8(C)(iv) of these By-laws, in the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the Board of Directors, any stockholder may nominate a person or persons (as the case may be) for election to such position(s) as specified in the Corporations notice of meeting, provided that the stockholder gives timely notice thereof (including the completed and signed questionnaire, representation and agreement required by Section 2.9 of these By-laws), and timely updates and supplements thereof, in writing, to the Secretary.
To be timely, a stockholders notice shall be delivered to the Secretary at the principal executive offices of the Corporation not earlier than the close of business on the 120th day prior to the date of such special meeting and not later than the close of business on the later of the 90th day prior to the date of such special meeting or, if the first public announcement of the date of such special meeting is less than 100 days prior to the date of such special meeting, the 10th day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. In no event shall any adjournment or postponement of a special meeting of stockholders, or the public announcement thereof, commence a new time period for the giving of a stockholders notice as described above.
In addition, to be considered timely, a stockholders notice with respect to a special or annual meeting of stockholders shall further be updated and supplemented, if necessary, so that the information provided or required to be provided in such notice shall be true and correct as of the record date for the meeting and as of the date that is ten (10) business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to the Secretary at the principal executive offices of the Corporation not later than five (5) business days after the record date for the meeting in the case of the update and supplement required to be made as of the record date, and not later than eight (8) business days prior to the date for the meeting, any adjournment or postponement thereof in the case of the update and supplement required to be made as of ten (10) business days prior to the meeting or any adjournment or postponement thereof.
(C) Disclosure Requirements .
(i) To be in proper form, a stockholders notice (whether given pursuant to Section 2.7(A) or 2.7(B) of these By-laws) to the Secretary must include the following, as applicable.
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(1) As to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made, a stockholders notice must set forth: (i) the name and address of such stockholder, as they appear on the Corporations books, of such beneficial owner, if any, and of their respective affiliates or associates or others acting in concert therewith, (ii) (A) the class or series and number of shares of the Corporation which are, directly or indirectly, owned beneficially and of record by such stockholder, such beneficial owner and their respective affiliates or associates or others acting in concert therewith, (B) any option, warrant, convertible security, stock appreciation right, or similar right with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any class or series of shares of the Corporation or with a value derived in whole or in part from the value of any class or series of shares of the Corporation, or any derivative or synthetic arrangement having the characteristics of a long position in any class or series of shares of the Corporation, or any contract, derivative, swap or other transaction or series of transactions designed to produce economic benefits and risks that correspond substantially to the ownership of any class or series of shares of the Corporation, including due to the fact that the value of such contract, derivative, swap or other transaction or series of transactions is determined by reference to the price, value or volatility of any class or series of shares of the Corporation, whether or not such instrument, contract or right shall be subject to settlement in the underlying class or series of shares of the Corporation, through the delivery of cash or other property, or otherwise, and without regard to whether the stockholder of record, the beneficial owner, if any, or any affiliates or associates or others acting in concert therewith, may have entered into transactions that hedge or mitigate the economic effect of such instrument, contract or right, or any other direct or indirect opportunity to profit or share in any profit derived from any increase or decrease in the value of shares of the Corporation (any of the foregoing, a Derivative Instrument ) directly or indirectly owned beneficially by such stockholder, the beneficial owner, if any, or any affiliates or associates or others acting in concert therewith, (C) any proxy, contract, arrangement, understanding, or relationship pursuant to which such stockholder has a right to vote any class or series of shares of the Corporation, (D) any agreement, arrangement, understanding, relationship or otherwise, including any repurchase or similar so-called stock borrowing agreement or arrangement, involving such stockholder, directly or indirectly, the purpose or effect of which is to mitigate loss to, reduce the economic risk (of ownership or otherwise) of any class or series of the shares of the Corporation by, manage the risk of share price changes for, or increase or decrease the voting power of, such stockholder with respect to any class or series of the shares of the Corporation, or which provides, directly or indirectly, the opportunity to profit or share in any profit derived from any decrease in the price or value of any class or series of the shares of the Corporation (any of the foregoing, a Short Interest ), (E) any rights to dividends on the shares of the Corporation owned beneficially by such stockholder that are separated or separable from the underlying shares of the Corporation, (F) any proportionate interest in shares of the Corporation or
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Derivative Instruments held, directly or indirectly, by a general or limited partnership in which such stockholder is a general partner or, directly or indirectly, beneficially owns an interest in a general partner of such general or limited partnership, (G) any performance-related fees (other than an asset-based fee) that such stockholder or members of such stockholders immediate family sharing the same household are entitled based on any increase or decrease in the value of shares of the Corporation or Derivative Instruments, if any, (H) any significant equity interests or any Derivative Instruments or Short Interests in any principal competitor of the Corporation held by such stockholder, and (I) any direct or indirect interest of such stockholder in any contract with the Corporation, any affiliate of the Corporation or any principal competitor of the Corporation (including, in any such case, any employment agreement, collective bargaining agreement or consulting agreement), and (iii) any other information relating to such stockholder and beneficial owner, if any, that would be required to be disclosed in a proxy statement and form of proxy or other filings required to be made in connection with solicitations of proxies for, as applicable, the proposal and/or for the election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder;
(2) If the notice relates to any business other than a nomination of a director or directors that the stockholder proposes to bring before the meeting, a stockholders notice must, in addition to the matters set forth in paragraph (a) above, also set forth: (i) a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest of such stockholder and beneficial owner, if any, in such business, (ii) the text of the proposal or business (including the text of any resolutions proposed for consideration and, in the event that such proposal or business includes a proposal to amend these By-laws, the text of the proposed amendment), and (iii) a description of all agreements, arrangements and understandings between such stockholder and beneficial owner, if any, and any other person or persons (including their names) in connection with the proposal of such business by such stockholder;
(3) As to each person, if any, whom the stockholder proposes to nominate for election or reelection to the Board of Directors, a stockholders notice must, in addition to the matters set forth in paragraph (a) above, also set forth: (i) all information relating to such person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder (including such persons written consent to being named in the proxy statement as a nominee and to serving as a director if elected) and (ii) a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three years, and any other material relationships, between or among such stockholder and beneficial owner, if any, and their respective affiliates and associates, or others acting in
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concert therewith, on the one hand, and each proposed nominee, and his or her respective affiliates and associates, or others acting in concert therewith, on the other hand, including, without limitation all information that would be required to be disclosed pursuant to Rule 404 or any successor provision promulgated under Regulation S-K if the stockholder making the nomination and any beneficial owner on whose behalf the nomination is made, if any, or any affiliate or associate thereof or person acting in concert therewith, were the registrant for purposes of such rule and the nominee were a director or executive officer of such registrant; and
(4) With respect to each person, if any, whom the stockholder proposes to nominate for election or reelection to the Board of Directors, a stockholders notice must, in addition to the matters set forth in paragraphs (1) and (3) above, also include a completed and signed questionnaire, representation and agreement required by Section 2.9 of these By-laws. The Corporation may require any proposed nominee to furnish such other information as may reasonably be required by the Corporation to determine the eligibility of such proposed nominee to serve as an independent director of the Corporation or that could be material to a reasonable stockholders understanding of the independence, or lack thereof, of such nominee.
(ii) For purposes of these By-laws, public announcement shall mean disclosure in a press release reported by a national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act and the rules and regulations promulgated thereunder.
(iii) Notwithstanding the provisions of these By-laws, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this By-law; provided , however , that any references in these By-laws to the Exchange Act or the rules promulgated thereunder are not intended to and shall not limit the separate and additional requirements set forth in these By-laws with respect to nominations or proposals as to any other business to be considered pursuant to Section 2.7 of these By-laws and compliance with these By-Laws shall be the exclusive means for a stockholder to make nominations or submit other business (other than matters brought properly under and in compliance with Rule 14a-8 of the Exchange Act, as may be amended from time to time).
(iv) Nothing in these By-laws shall be deemed to affect any rights (a) of stockholders to request inclusion of proposals in the Corporations proxy statement pursuant to Rule 14a-8 under the Exchange Act or (b) of the holders of any series of Preferred Stock if and to the extent provided for under law, the Certificate of Incorporation or these By-laws. Subject to Rule 14a-8 under the Exchange Act, nothing in these By-laws shall be construed to permit any stockholder, or give any stockholder the right, to include or have disseminated or described in the Corporations proxy statement any nomination of director or directors or any other business proposal.
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Section 2.9 Submission of Questionnaire, Representation and Agreement . To be eligible to be a nominee for election or reelection as a director of the Corporation, a person nominated by a stockholder for election or reelection to the Board of Directors must deliver (in accordance with the time periods prescribed for delivery of notice under Section 2.8 of these By-laws) to the Secretary at the principal executive offices of the Corporation a written questionnaire with respect to the background and qualification of such person and the background of any other person or entity on whose behalf the nomination is being made (which questionnaire shall be provided by the Secretary upon written request), and a written representation and agreement (in the form provided by the Secretary upon written request) that such person (A) is not and will not become a party to (1) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such person, if elected as a director of the Corporation, will act or vote on any issue or question (a Voting Commitment ) that has not been disclosed to the Corporation or (2) any Voting Commitment that could limit or interfere with such persons ability to comply, if elected as a director of the Corporation, with such persons fiduciary duties under applicable law, (B) is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been disclosed therein, (C) will comply with the Corporations stock ownership guidelines for directors, if any, and has disclosed therein whether all or any portion of securities of the Corporation were purchased with any financial assistance provided by any other person and whether any other person has any interest in such securities, and (D) in such persons individual capacity and on behalf of any person or entity on whose behalf the nomination is being made, would be in compliance, if elected as a director of the Corporation, and will comply, with all applicable corporate governance, conflict of interest, confidentiality and stock ownership and trading policies and guidelines of the Corporation publicly disclosed from time to time.
Section 2.10 Required Vote for the Election of Directors . At any annual or special meeting of stockholders for the election of one or more directors at which a quorum is present, the election shall be determined by a plurality of the votes cast by holders of Voting Stock.
Section 2.11 Inspectors of Elections; Opening and Closing the Polls .
(A) The Chief Executive Officer shall appoint one or more inspectors, which inspector or inspectors may, but does not need to, include individuals who serve the Corporation in other capacities, including, without limitation, as officers, employees, agents or representatives, to act at the meetings of stockholders and make a written report thereof. One or more persons may be designated as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate has been appointed to act or is able to act at a meeting of stockholders, the chairman of the meeting shall appoint one or more inspectors to act at the meeting. Each inspector, before discharging his or her duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability. The inspectors shall have the duties prescribed by law.
(B) The Chairman of the Board of Directors, or in his absence such other officer as may be designated by the Board of Directors, shall be the chairman of the meeting at
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stockholders meetings. The Secretary of the Corporation shall be the secretary at stockholders meetings but in his absence the chairman of the meeting may appoint a secretary for the meeting. The opening and closing of the polls for matters upon which stockholders will vote at a meeting shall be announced at the meeting by the chairman of the meeting. The Board of Directors may, to the extent not prohibited by law, adopt by resolution such rules and regulations for the conduct of the meeting of stockholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the Board, the chairman of any meeting of stockholders shall have the right and authority to prescribe such rules, regulations or procedures and to do all acts as, in the judgment of the chairman, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board of Directors or prescribed by the chairman of the meeting, may to the extent not prohibited by law include, without limitation, the following: (1) the establishment of an agenda or order of business for the meeting; (2) rules and procedures for maintaining order at the meeting and the safety of those present; (3) limitations on attendance at or participation in the meeting to stockholders of record of the Corporation, their duly authorized and constituted proxies (which shall be reasonable in number) or such other persons as the chairman of the meeting shall determine; (4) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (5) limitations on the time allotted to questions or comments by participants. Any meeting of stockholders may be adjourned by the chairman of the meeting. At any adjourned meeting, the Corporation may transact any business which might have been properly transacted at the original meeting.
Section 2.12 No Stockholder Action by Written Consent . Subject to the rights of the holders of any series of Preferred Stock, any action required or permitted to be taken by stockholders of the Corporation must be effected at an annual or special meeting of stockholders of the Corporation and may not be effected by any consent in writing by such stockholders.
ARTICLE III
BOARD OF DIRECTORS
Section 3.1 General Powers . The business and affairs of the Corporation shall be managed under the direction of the Board of Directors. In addition to the powers and authorities expressly conferred upon it by these By-laws, the Board of Directors may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these By-laws required to be exercised or done by stockholders.
Section 3.2 Number, Tenure and Qualifications . Subject to the rights of the holders of any series of Preferred Stock to elect directors under specified circumstances, the number of directors shall be fixed from time to time exclusively pursuant to a resolution adopted by a majority of the Entire Board. No decrease in the number of authorized directors constituting the Entire Board shall shorten the term of any incumbent director.
Section 3.3 Classes of Directors . The Board of Directors shall be divided into three classes in accordance with Section 2 of Article VI of the Corporations Amended and Restated Certificate of Incorporation.
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Section 3.4 Regular Meetings . A regular meeting of the Board of Directors shall be held without notice other than this By-law immediately after, and at the same place as, the annual meeting of stockholders. The Board of Directors may, by resolution, provide the time and place for the holding of additional regular meetings without notice other than such resolution.
Section 3.5 Special Meetings . Special meetings of the Board of Directors shall be called at the request of the Chairman of the Board of Directors, the Chief Executive Officer or a majority of the Board of Directors then in office. The person or persons authorized to call special meetings of the Board of Directors may fix the place and time of the meetings.
Section 3.6 Notice . Notice of any special meeting of directors shall be given to each director at his or her business or residence in writing by hand delivery, first-class or overnight mail or courier service, telegram, email or facsimile transmission, or orally by telephone. If mailed by first-class mail, such notice shall be deemed adequately delivered when deposited in the United States mails so addressed, with postage thereon prepaid, at least five (5) days before such meeting. If by telegram, overnight mail or courier service, such notice shall be deemed adequately delivered when the telegram is delivered to the telegraph company, or the notice is delivered to the overnight mail or courier service company at least twenty-four (24) hours before such meeting. If by email, facsimile transmission, telephone or by hand, such notice shall be deemed adequately delivered when the notice is transmitted at least twelve (12) hours before such meeting. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice of such meeting, except for amendments to these By-laws, as provided under Section 10.1 of these By-laws. A meeting may be held at any time without notice if all the directors are present or if those not present waive notice of the meeting in accordance with Section 8.4 of these By-laws.
Section 3.7 Action by Consent of Board of Directors . Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if all members of the Board or committee, as the case may be, consent thereto in writing or by email or other electronic transmission, and the writing or writings, email or emails, or electronic transmission or transmissions are filed with the minutes of proceedings of the Board or committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.
Section 3.8 Conference Telephone Meetings . Members of the Board of Directors, or any committee thereof, may participate in a meeting of the Board of Directors or such committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at such meeting.
Section 3.9 Quorum . A number of directors equal to at least a majority of the total number of directors then in office shall constitute a quorum for the transaction of business, but if at any meeting of the Board of Directors there shall be less than a quorum present, a majority of the directors present may adjourn the meeting from time to time without further notice. The act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. The directors present at a duly called meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough directors to leave less than a quorum.
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Section 3.10 Vacancies . Subject to applicable law and the rights of the holders of any series of Preferred Stock, and unless the Board of Directors otherwise determines, vacancies resulting from death, resignation, retirement, disqualification, removal from office or other cause, and newly created directorships resulting from any increase in the authorized number of directors, may be filled only by the affirmative vote of a majority of the remaining directors, though less than a quorum of the Board of Directors, and in the event that there is only one director remaining in office, by such sole remaining director, and directors so chosen shall hold office for a term expiring at the annual meeting of stockholders at which the term of office of the class to which they have been appointed expires and until such directors successor shall have been duly elected and qualified. To the extent that the authorized number of directors is increased pursuant to Section 3.2 above, and the Board of Directors fills any vacancy resulting therefrom pursuant to this Section 3.10, the Board of Directors shall have full discretion and authority to designate the specific class of directors to which each such newly elected director shall be assigned.
Section 3.11 Removal . Subject to the rights of the holders of any series of Preferred Stock, any director, or the entire Board of Directors, may be removed from office at any time, but only for cause and only by the affirmative vote of the holders of two-thirds of the outstanding shares of Voting Stock, voting together as a single class. As used in this Section 3.11, cause for removal of a director shall mean (i) the directors conviction (including a nolo contendere plea) of a felony involving (a) moral turpitude or (b) a violation of federal or state securities laws, but specifically excluding any conviction based entirely on vicarious liability; (ii) the directors commission of any material act of dishonesty (such as embezzlement) resulting or intended to result in material personal gain or enrichment of such director at the expense of the Corporation or any of its subsidiaries and which act, if made the subject of criminal charges, would be reasonably likely to be charged as a felony; or (iii) the director being adjudged legally incompetent by a court of competent jurisdiction.
Section 3.12 Records . The Board of Directors shall cause to be kept a record containing the minutes of the proceedings of the meetings of the Board of Directors and of stockholders, appropriate stock books and registers and such books of records and accounts as may be necessary for the proper conduct of the business of the Corporation.
ARTICLE IV
COMMITTEES
Section 4.1 Appointment . A majority of the Board of Directors may create one or more committees and appoint members of the Board of Directors to serve on the committee or committees. Each committee shall have one or more members, who serve at the pleasure of the Board of Directors. The Board of Directors shall designate one member of each committee to be chairman of the committee. The Board of Directors may designate a secretary of each committee who may be, but need not be, a member of the committee or the Board of Directors. Any committee, to the extent permitted by law and provided in the resolution establishing such committee, shall have and may exercise all the powers and authority of the Board of Directors in
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the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it. Each committee shall keep regular minutes of its proceedings and report to the Board of Directors when required.
Section 4.2 Committee Meetings . A majority of the members of any committee shall constitute a quorum for the transaction of business and the act of the majority of the members of a committee present at a meeting at which a quorum is present shall be the act of such committee. A committee may act by unanimous consent in writing without a meeting. Committee meetings may be called by the Chairman of the Board of Directors, the chairman of the committee, or any two of the committees members. The time and place of committee meetings shall be designated in the notice of such meeting. Notice of each committee meeting shall be given to each committee member.
Section 4.3 Executive Committee . The Board of Directors may appoint an Executive Committee. If appointed, a majority of the members of the Executive Committee shall be selected from those Directors who satisfy the independence requirements of the Corporations Corporate Governance Guidelines. If appointed, the Executive Committee may exercise, subject to provisions of applicable law, all the powers of the Board of Directors in the management of the business and affairs of the Corporation when the Board of Directors is not in session.
Section 4.4 Audit Committee . The Board of Directors shall appoint an Audit Committee. The composition of the members and the duties of such committee shall be as set forth in the Audit Committee Charter approved by the Board of Directors.
Section 4.5 Compensation Committee . The Board of Directors shall appoint a Compensation Committee. The composition of the members and the duties of such committee shall be as set forth in the Compensation Committee Charter approved by the Board of Directors.
Section 4.6 Corporate Governance Committee . The Board of Directors shall appoint a Corporate Governance Committee. The composition of the members and the duties of such committee shall be as set forth in the Corporate Governance Committee Charter approved by the Board of Directors.
ARTICLE V
OFFICERS
Section 5.1 Election and Term of Office . Each year, at the annual Board of Directors meeting, the Board of Directors shall elect a Chairman of the Board, a Chief Executive Officer, a Secretary and a Treasurer. From time to time the Board of Directors may also elect or appoint a President, such Executive, Senior or other Vice Presidents as it may deem appropriate, a Chief Financial Officer, and such other officers, including, without limitation, a Controller, Assistant Vice Presidents, Assistant Secretaries, Assistant Treasurers and Assistant Controllers, as it may deem appropriate. The Chief Executive Officer may appoint any officers of the Corporation not required to be elected by the Board of Directors, as he may deem appropriate. The Chairman of the Board must be a director; no other officer need be a director. Any number of offices may be
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held by the same person. The term of each officer, whenever elected or appointed, shall be until the election or appointment (as the case may be) and qualification of his successor or until his earlier resignation or removal.
Section 5.2 Duties . The officers shall have such powers and perform such duties as are prescribed in these By-laws, or, in the case of an officer whose powers and duties are not so prescribed, as may be assigned by the Board of Directors or delegated by or through the Chief Executive Officer.
Section 5.3 Resignation; Removal; Vacancies . Any officer may resign at any time by giving notice in writing to the Corporation addressed to the Chief Executive Officer or the Secretary. Such resignation shall take effect at the date of the receipt of such notice or at any later time specified therein. Acceptance of a resignation shall not be necessary to make it effective unless otherwise stated in the notice. Any officer may be removed by the Board of Directors at any time with or without cause. Any appointed officer may be removed by the Chief Executive Officer at any time with or without cause. A vacancy in any office may be filled by the Board of Directors, and a vacancy in any appointed office may be filled by the Chief Executive Officer.
Section 5.4. Chairman of the Board of Directors . The Chairman of the Board of Directors shall preside at all meetings of the stockholders and the Board of Directors.
Section 5.5 Chief Executive Officer . The Chief Executive Officer shall have general charge and supervision of the business of the Corporation subject to the direction of the Board of Directors, and shall perform all duties and have all powers that are commonly incident to the office of chief executive or that are delegated to such officer by the Board of Directors.
Section 5.6 President . The President shall perform such duties and possess such powers as may be prescribed by the Board of Directors or the Chief Executive Officer.
Section 5.7 Executive and Senior Vice Presidents . Each Executive or Senior Vice President shall perform such duties and possess such powers as may be prescribed by the Chief Executive Officer, the President or the Board of Directors.
Section 5.8 Vice Presidents . Each of the Vice Presidents shall perform such duties and possess such corporate powers as may be prescribed by an Executive or Senior Vice President, the President, the Chief Executive Officer or the Board of Directors.
Section 5.9 Treasurer and Assistant Treasurers . The Treasurer shall perform such duties and shall have such powers as may from time to time be assigned by the Board of Directors or the Chief Executive Officer. In addition, the Treasurer shall perform such duties and have such powers as are incident to the office of treasurer, including without limitation the duty and power to keep and be responsible for all funds and securities of the Corporation, to deposit funds of the Corporation in depositories selected in accordance with these By-laws, to disburse such funds as ordered by the Board of Directors, to make proper accounts of such funds, and to render, as required by the Board of the Directors, statements of all such transactions and of the financial condition of the Corporation.
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The Assistant Treasurers shall perform such duties and possess such powers as the Board of Directors, the Chief Executive Officer or the Treasurer may from time to time prescribe. In the event of the absence, inability or refusal to act of the Treasurer, the Assistant Treasurer (or if there shall be more than one, the Assistant Treasurers in the order determined by the Board of Directors) shall perform the duties and exercise the powers of the Treasurer.
Section 5.10 Secretary and Assistant Secretaries . The Secretary shall perform such duties and shall have such powers as the Board of Directors or the Chief Executive Officer may from time to time prescribe. In addition, the Secretary shall perform such duties and have such powers as are incident to the office of the secretary, including without limitation the duty and power to give notices of all meetings of stockholders, to attend all meetings of stockholders and the Board of Directors and keep a record of the proceedings, to maintain a stock ledger and prepare lists of stockholders and their addresses as required, to be custodian of corporate records and the corporate seal and to affix and attest to the same on documents.
Any Assistant Secretary shall perform such duties and possess such powers as the Board, the Chief Executive Officer or the Secretary may from time to time prescribe. In the event of the absence, inability or refusal to act of the Secretary, the Assistant Secretary (or if there shall be more than one, the Assistant Secretaries in the order determined by the Board) shall perform the duties and exercise the powers of the Secretary.
In the absence of the Secretary or any Assistant Secretary at any meeting of stockholders or directors, the chairman of the meeting shall designate a temporary secretary to keep a record of the meeting.
Section 5.11 Controller . The Controller will conduct the accounting activities of the Corporation, including the maintenance of the Corporations general and supporting ledgers and books of account, operating budgets, and the preparation and consolidation of financial statements.
Section 5.15 General Powers of Officers . The Chief Executive Officer, the President and any Executive or Senior Vice President, may sign without countersignature any deeds, mortgages, bonds, contracts, reports to public agencies, or other instruments whether or not the Board of Directors has expressly authorized execution of such instruments, except in cases where the signing and execution thereof shall be expressly delegated by the Board of Directors or by these By-laws solely to some other officer or agent of the Corporation, or shall be required by law to be otherwise signed or executed. Any other officer of this Corporation may sign contracts, reports to public agencies, or other instruments which are in the regular course of business and within the scope of his or her authority, except where signing and execution thereof shall be expressly delegated by the Board of Directors or by these By-laws to some other officer or agent of the Corporation, or shall be required by law to be otherwise signed or executed.
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ARTICLE VI
STOCK CERTIFICATES AND TRANSFERS
Section 6.1 Certificated and Uncertificated Stock; Transfers . The interest of each stockholder of the Corporation may be evidenced by certificates for shares of stock, in such form as the appropriate officers of the Corporation may from time to time prescribe, or be uncertificated, as determined by the Board of Directors from time to time.
The shares of the stock of the Corporation shall be transferred on the books of the Corporation, in the case of certificated shares of stock, by the holder thereof in person or by his or her attorney duly authorized in writing, upon surrender for cancellation of certificates for at least the same number of shares, with an assignment and power of transfer endorsed thereon or attached thereto, duly executed, with such proof of the authenticity of the signature as the Corporation or its agents may reasonably require; and, in the case of uncertificated shares of stock, upon receipt of proper transfer instructions from the registered holder of the shares or by such persons attorney duly authorized in writing, and upon compliance with appropriate procedures for transferring shares in uncertificated form. No transfer of stock shall be valid as against the Corporation for any purpose until it shall have been entered in the stock records of the Corporation by an entry showing from and to whom transferred. No stockholder who holds uncertificated shares of stock of the Corporation shall be entitled to demand that such shares be certificated.
The certificates of stock shall be signed, countersigned and registered in such manner as the Board of Directors may by resolution prescribe, which resolution may permit all or any of the signatures on such certificates to be in facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he or she were such officer, transfer agent or registrar at the date of issue.
Notwithstanding anything to the contrary in these By-laws, at all times that the Corporations stock is listed on a stock exchange, the shares of the stock of the Corporation shall comply with all direct registration system eligibility requirements established by such exchange, including any requirement that shares of the Corporations stock be eligible for issue in book-entry form. All issuances and transfers of shares of the Corporations stock shall be entered on the books of the Corporation with all information necessary to comply with such direct registration system eligibility requirements, including the name and address of the person to whom the shares of stock are issued, the number of shares of stock issued and the date of issue. The Board of Directors shall have the power and authority to make such rules and regulations as it may deem necessary or proper concerning the issue, transfer and registration of shares of stock of the Corporation in both the certificated and uncertificated form.
Section 6.2 Lost, Stolen or Destroyed Certificates . No certificate for shares of stock in the Corporation shall be issued in place of any certificate alleged to have been lost, destroyed or stolen, except on production of such evidence of such loss, destruction or theft and on delivery to the Corporation of a bond of indemnity in such amount, upon such terms and secured by such surety, as the Board of Directors or any financial officer may in its or his or her discretion require.
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Section 6.3 Record Owners . The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise required by law.
Section 6.4 Transfer and Registry Agents . The Corporation may from time to time maintain one or more transfer offices or agencies and registry offices or agencies at such place or places as may be determined from time to time by the Board of Directors.
ARTICLE VII
INDEMNIFICATION
Section 7.1 Indemnification of Directors and Officers .
(A) Each person who is, or was, or has agreed to become a director or officer of the Corporation, and each person who is, or was, or has agreed to serve at the Corporations request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise (including the heirs, executor, administrator or estate of such person) and, in either case, who was or is made a party or is threatened to be made a party to or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative, arbitrative or investigative (hereinafter a Proceeding), by reason of the fact that he or she or a person of whom he or she is the legal representative is or was, at any time during which this By-law is in effect (whether or not such person continues to serve in such capacity at the time any indemnification or advancement of expenses pursuant hereto is sought or at the time any Proceeding relating thereto exists or is brought), a director or officer of the Corporation or, while a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise (including the heirs, executor, administrator or estate of such person) (hereinafter, a Covered Person), whether the basis of such Proceeding is alleged action in an official capacity as a director or officer or while serving as director, officer, employee or agent, shall be indemnified by the Corporation to the fullest extent permitted by the DGCL, or any other applicable law as the same now or hereafter exists, against all expense, liability and loss (including attorneys fees, judgments, fines, excise taxes or penalties (including those arising under the Employee Retirement Income Security Act of 1974) and amounts paid or to be paid in settlement) actually and reasonably incurred or suffered by such Covered Person in connection with such Proceeding and such indemnification shall continue as to a person who has ceased to be a director, officer, trustee, employee or agent and shall inure to the benefit of his or her heirs, executors and administrators. The Corporation shall not be required to indemnify any such person (or his or her heirs, executors or personal or legal representatives) seeking indemnification in connection with a Proceeding (or part thereof) that was initiated by such person unless such Proceeding (or part thereof) was authorized or consented to by the Board of Directors.
(B) To obtain indemnification under this By-law, a claimant shall submit to the Corporation a written request, including therein or therewith such documentation and
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information as is reasonably available to the claimant and is reasonably necessary to determine whether and to what extent the claimant is entitled to indemnification. Upon written request by a claimant for indemnification, a determination, if required by applicable law, with respect to the claimants entitlement thereto shall be made as follows: (i) by the Board of Directors by a majority vote of a quorum consisting of Disinterested Directors (as hereinafter defined), or (ii) if a quorum of the Board of Directors consisting of Disinterested Directors is not obtainable or, even if obtainable, such quorum of Disinterested Directors so directs, by Independent Counsel (as hereinafter defined) in a written opinion to the Board of Directors, a copy of which shall be delivered to the claimant, or (iii) if a quorum of Disinterested Directors so directs, by a majority vote of the stockholders of the Corporation. In the event the determination of entitlement to indemnification is to be made by Independent Counsel, the Independent Counsel shall be selected by the Board of Directors unless there shall have occurred within two years prior to the date of the commencement of the Proceeding for which indemnification is claimed a Change of Control as defined in the Halyard Health, Inc. Equity Participation Plan, in which case the Independent Counsel shall be selected by the claimant unless the claimant shall request that such selection be made by the Board of Directors. The Corporation shall pay any and all reasonable fees and expenses of the Independent Counsel incurred in connection with any such determination.
(C) If a Change of Control has occurred within two years prior to the date of the commencement of the Proceeding for which indemnification is claimed, a claimant will be presumed (except as otherwise expressly provided in this Article VII) to be entitled to indemnification under this Article VII upon submission of a written request to the Corporation for indemnification, and thereafter the Corporation will have the burden of proof in reaching a determination contrary to that presumption. The presumption shall be used by Independent Counsel, or such other person or persons determining entitlement to indemnification, as a basis for a determination of entitlement to indemnification hereunder unless the Corporation provides information sufficient to overcome that presumption by clear and convincing evidence, or the investigation, review and analysis of Independent Counsel or such other person or persons convinces them by clear and convincing evidence that the presumption should not apply.
(D) The termination of any Proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act good faith and in a manner which the person reasonably believed to be in or not opposed to the best interests of the Corporation, or that, with respect to any criminal Proceeding, the person had reasonable cause to believe that his or her conduct was unlawful.
(E) If it is determined that the claimant is entitled to indemnification, payment to the claimant shall be made within ten (10) days after such determination.
Section 7.2 Mandatory Advancement of Expenses . To the fullest extent authorized by the DGCL as the same exists or may hereafter be amended or modified from time to time (but, in the case of any such amendment or modification, only to the extent that such amendment or modification permits the Corporation to provide greater rights to advancement of expenses than said law permitted the Corporation to provide prior to such amendment or modification), each Covered Person shall have (and shall be deemed to have a contractual right to have) the right,
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without the need for any action by the Board of Directors, to be paid by the Corporation (and any successor of the Corporation by merger or otherwise) the expenses incurred in connection with any Proceeding in advance of its final disposition, such advances to be paid by the Corporation within fifteen (15) days after the receipt by the Corporation of a statement or statements from the claimant requesting such advance or advances from time to time; provided, however, that if the DGCL requires, the payment of such expenses incurred by a director or officer in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) shall be made only upon delivery to the Corporation of an unsecured written undertaking (hereinafter, the Undertaking ) by or on behalf of such director or officer, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right of appeal (a final disposition ) that such director or officer is not entitled to be indemnified for such expenses under this By-law or otherwise.
Section 7.3 Claims .
(A) (1) If a claim for indemnification under this Article VII is not paid in full by the Corporation within thirty (30) days after a written claim pursuant to Section 7.1(B) of these By-laws has been received by the Corporation, or (2) if a request for advancement of expenses under this Article VII is not paid in full by the Corporation within fifteen (15) days after a statement pursuant to Section 7.2 of these By-laws and the required Undertaking, if any, have been received by the Corporation, the claimant may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim for indemnification or request for advancement of expenses and, if successful in whole or in part, the claimant shall be entitled to be paid also all expenses of prosecuting such claim. It shall be a defense to any such action that, under the DGCL, the claimant has not met the standard of conduct which makes it permissible for the Corporation to indemnify the claimant for the amount claimed or that the claimant is not entitled to the requested advancement of expenses, but (except where the required Undertaking, if any, has not been tendered to the Corporation) the burden of proving the applicability and efficacy of such defense shall be on the Corporation.
(B) Neither the failure of the Corporation (including its Board of Directors, Independent Counsel or stockholders) to have made a determination prior to the commencement of any action brought under paragraph (A) of this Section 7.3 that indemnification of the claimant in such action is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the DGCL, nor an actual determination by the Corporation (including its Board of Directors, Independent Counsel or stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to any action brought under paragraph (A) of this Section 7.3 or create a presumption that the claimant in any such action has not met the applicable standard of conduct.
(C) If a determination shall have been made pursuant to Section 7.1(B) of these By-laws that the claimant is entitled to indemnification, the Corporation shall be bound by such determination in any judicial proceeding commenced pursuant to paragraph (A) of this Section 7.3.
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(D) The Corporation shall be precluded from asserting in any judicial proceeding commenced pursuant to paragraph (A) of this Section 7.3 that the procedures and presumptions of this By-law are not valid, binding and enforceable and shall stipulate in such proceeding that the Corporation is bound by all the provisions of these By-laws, including, but not limited to, Article VII hereof.
Section 7.4 Contract Rights; Amendment and Repeal; Non-exclusivity of Rights .
(A) All of the rights conferred in this Article VII, as to indemnification, advancement of expenses and otherwise, shall be contract rights between the Corporation and each Covered Person to whom such rights are extended that vest at the commencement of such Covered Persons service to or at the request of the Corporation and (x) any amendment or modification of this Article VII that in any way diminishes or adversely affects any such rights shall be prospective only and shall not in any way diminish or adversely affect any such rights with respect to any actual or alleged state of facts, occurrence, action or omission occurring prior to the time of such amendment or modification, or Proceeding previously or thereafter brought or threatened based in whole or in part upon any such actual or alleged state of facts, occurrence, action or omission, and (y) all of such rights shall continue as to any such Covered Person who has ceased to be a director or officer of the Corporation or ceased to serve at the Corporations request as a director, officer, trustee, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, as described herein, and shall inure to the benefit of such Covered Persons heirs, executors and administrators.
(B) All of the rights conferred in this Article VII, as to indemnification, advancement of expenses and otherwise, (i) shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, By-laws, agreement, vote of stockholders or Disinterested Directors or otherwise and (ii) cannot be terminated or amended in a manner adverse to any Covered Person by the Corporation, the Board of Directors or the stockholders of the Corporation without the consent of such Covered Person.
Section 7.5 Insurance, Other Indemnification and Advancement of Expenses .
(A) The Corporation may maintain insurance, at its expense, to protect itself and any current or former director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the DGCL. To the extent that the Corporation maintains any policy or policies providing such insurance, each such current or former director or officer, and each such agent or employee to which rights to indemnification have been granted as provided in paragraph (B) of this Section 7.5, shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage thereunder for any such current or former director, officer, employee or agent.
(B) The Corporation may, to the extent authorized from time to time by the Board of Directors or the Chief Executive Officer, grant rights to indemnification and rights to
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advancement of expenses incurred in connection with any Proceeding in advance of its final disposition, to any current or former employee or agent of the Corporation to the fullest extent of the provisions of this Article VII with respect to the indemnification and advancement of expenses of current or former directors and officers of the Corporation.
Section 7.6 Definitions . For purposes of this Article VII:
(A) Disinterested Director means a director of the Corporation who is not and was not a party to the matter in respect of which indemnification is sought by the claimant.
(B) Independent Counsel means a law firm, a member of a law firm, or an independent practitioner, that is experienced in matters of corporation law and shall include any person who, under the applicable standards of professional conduct then prevailing, would not have a conflict of interest in representing either the Corporation or the claimant in an action to determine the claimants rights under this Article VII.
Section 7.7 Notice . Any notice, request or other communication required or permitted to be given to the Corporation under this Article VII shall be in writing and either delivered in person or sent by telecopy, telex, telegram, overnight mail or courier service, or certified or registered mail, postage prepaid, return receipt requested, to the Secretary of the Corporation and shall be effective only upon receipt by the Secretary.
Section 7.8 Severability . If any provision or provisions of this Article VII shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (1) the validity, legality and enforceability of the remaining provisions of this Article VII (including, without limitation, each portion of any paragraph of this Article VII containing any such provision held to be invalid, illegal or unenforceable, that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; and (2) to the fullest extent possible, the provisions of this Article VII (including, without limitation, each such portion of any paragraph of this Article VII containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.1 Fiscal Year . The fiscal year of the Corporation shall begin on the first day of January and end on the thirty-first day of December of each year.
Section 8.2 Dividends . The Board of Directors may from time to time declare, and the Corporation may pay, dividends on its outstanding shares in the manner and upon the terms and conditions provided by law and the Certificate of Incorporation.
Section 8.3 Seal . The Corporation may adopt a corporate seal. Any corporate seal shall have enscribed thereon the words Corporate Seal, the year of incorporation and around the margin thereof the words Halyard Health, Inc. - Delaware.
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Section 8.4 Waiver of Notice . Whenever any notice is required to be given to any stockholder or director of the Corporation under the provisions of the DGCL or these By-laws, a waiver thereof in writing, signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. Neither the business to be transacted at, nor the purpose of, any annual or special meeting of stockholders or the Board of Directors or committee thereof need be specified in any waiver of notice of such meeting.
Section 8.5 Audits . The accounts, books and records of the Corporation shall be audited upon the conclusion of each fiscal year by an independent certified public accountant selected by the Board of Directors, and it shall be the duty of the Board of Directors to cause such audit to be done annually.
ARTICLE IX
CONTRACTS, PROXIES, ETC.
Section 9.1 Contracts . Except as otherwise required by law, the Certificate of Incorporation or these By-laws, any contracts or other instruments may be executed and delivered in the name and on the behalf of the Corporation by such officer or officers of the Corporation as the Board of Directors may from time to time direct. Such authority may be general or confined to specific instances as the Board may determine. The Chairman of the Board, the Chief Executive Officer, any President, and any Executive, Group or Senior Vice President may execute bonds, contracts, deeds, leases and other instruments to be made or executed for or on behalf of the Corporation. Subject to any restrictions imposed by the Board of Directors or the Chairman of the Board, the President or any Vice President of the Corporation may delegate contractual powers to others under his or her jurisdiction, it being understood, however, that any such delegation of power shall not relieve such officer of responsibility with respect to the exercise of such delegated power.
Section 9.2 Proxies . Unless otherwise provided by resolution adopted by the Board of Directors, the Chairman of the Board, the Chief Executive Officer, a President, an Executive or Senior Vice President may from time to time appoint an attorney or attorneys or agent or agents of the Corporation, in the name and on behalf of the Corporation, to cast the votes which the Corporation may be entitled to cast as the holder of stock or other securities in any other corporation, any of whose stock or other securities may be held by the Corporation, at meetings of the holders of the stock or other securities of such other corporation, or to consent in writing, in the name of the Corporation as such holder, to any action by such other corporation, and may instruct the person or persons so appointed as to the manner of casting such votes or giving such consent, and may execute or cause to be executed in the name and on behalf of the Corporation and under its corporate seal or otherwise, all such written proxies or other instruments as he or she may deem necessary or proper in the premises.
21
ARTICLE X
AMENDMENTS
Section 10.1 Amendments . Subject to the provisions of the Certificate of Incorporation, these By-laws may be altered, amended or repealed by the Board of Directors or by stockholders upon the affirmative vote of the holders of at least eighty percent (80%) of the outstanding Voting Stock, voting together as a single class.
22
Exhibit 4.1
Execution Version
CREDIT AGREEMENT
Dated as of October 31, 2014
among
HALYARD HEALTH, INC.,
as Borrower,
MORGAN STANLEY SENIOR FUNDING, INC.,
as Term Loan Administrative Agent,
CITIBANK, N.A.,
as Revolver Administrative Agent and Swing Line Lender,
THE OTHER LENDERS PARTY HERETO FROM TIME TO TIME,
THE GUARANTORS PARTY HERETO FROM TIME TO TIME
and
MORGAN STANLEY SENIOR FUNDING, INC., CITIGROUP GLOBAL MARKETS INC.,
DEUTSCHE BANK SECURITIES INC. AND RBC CAPITAL MARKETS 1 ,
as Joint Lead Arrangers
BANCO BILBAO VIZCAYA ARGENTARIA, S.A. NEW YORK BRANCH, BMO CAPITAL
MARKETS, U.S. BANK NATIONAL ASSOCIATION AND THE BANK OF TOKYO-MITSUBISHI UFJ, LTD.
as Co-Arrangers
1 | RBC Capital Markets is a brand name for the capital markets activities of Royal Bank of Canada and its affiliates. |
TABLE OF CONTENTS
Page | ||||||
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS |
|
|||||
Section 1.01. |
Defined Terms |
1 | ||||
Section 1.02. |
Other Interpretive Provisions |
60 | ||||
Section 1.03. |
Accounting Terms; GAAP |
60 | ||||
Section 1.04. |
Rounding |
61 | ||||
Section 1.05. |
References to Agreements, Laws, Etc. |
61 | ||||
Section 1.06. |
Times of Day |
61 | ||||
Section 1.07. |
Timing of Payment of Performance |
61 | ||||
Section 1.08. |
Pro Forma and Other Calculations |
62 | ||||
Section 1.09. |
Letter of Credit Amounts |
63 | ||||
ARTICLE II | ||||||
THE COMMITMENTS AND CREDIT EXTENSIONS | ||||||
Section 2.01. |
The Loans |
63 | ||||
Section 2.02. |
Borrowings, Conversions and Continuations of Loans |
64 | ||||
Section 2.03. |
Letters of Credit |
65 | ||||
Section 2.04. |
Swing Line Loans |
77 | ||||
Section 2.05. |
Prepayments |
79 | ||||
Section 2.06. |
Termination or Reduction of Commitments |
84 | ||||
Section 2.07. |
Repayment of Loans |
84 | ||||
Section 2.08. |
Interest |
85 | ||||
Section 2.09. |
Fees |
85 | ||||
Section 2.10. |
Computation of Interest and Fees |
86 | ||||
Section 2.11. |
Evidence of Indebtedness |
86 | ||||
Section 2.12. |
Payments Generally |
87 | ||||
Section 2.13. |
Sharing of Payments |
89 | ||||
Section 2.14. |
Incremental Credit Extensions |
90 | ||||
Section 2.15. |
Refinancing Amendments |
93 | ||||
Section 2.16. |
Extension Offers |
94 | ||||
Section 2.17. |
Defaulting Lenders |
96 | ||||
ARTICLE III | ||||||
TAXES, INCREASED COSTS PROTECTION AND ILLEGALITY | ||||||
Section 3.01. |
Taxes |
97 | ||||
Section 3.02. |
Illegality |
100 | ||||
Section 3.03. |
Inability to Determine Rates |
100 |
i
Section 3.04. |
Increased Cost and Reduced Return; Capital Adequacy; Reserves on Eurodollar Rate Loans |
101 | ||||
Section 3.05. |
Funding Losses |
102 | ||||
Section 3.06. |
Matters Applicable to All Requests for Compensation |
103 | ||||
Section 3.07. |
Replacement of Lenders under Certain Circumstances |
104 | ||||
Section 3.08. |
Survival |
105 | ||||
ARTICLE IV | ||||||
CONDITIONS PRECEDENT TO CREDIT EXTENSIONS | ||||||
Section 4.01. |
Conditions to the Initial Credit Extensions |
105 | ||||
Section 4.02. |
Conditions to All Credit Extensions after the Closing Date |
108 | ||||
Section 4.03. |
Timing of Granting of Liens |
108 | ||||
ARTICLE V | ||||||
REPRESENTATIONS AND WARRANTIES | ||||||
Section 5.01. |
Existence, Qualification and Power; Compliance with Laws |
109 | ||||
Section 5.02. |
Authorization; No Contravention |
109 | ||||
Section 5.03. |
Governmental Authorization; Other Consents |
109 | ||||
Section 5.04. |
Binding Effect |
110 | ||||
Section 5.05. |
Financial Statements; No Material Adverse Effect |
110 | ||||
Section 5.06. |
Litigation |
110 | ||||
Section 5.07. |
[Reserved] |
110 | ||||
Section 5.08. |
Ownership of Property; Liens |
110 | ||||
Section 5.09. |
Environmental Compliance |
111 | ||||
Section 5.10. |
Taxes |
111 | ||||
Section 5.11. |
ERISA Compliance |
112 | ||||
Section 5.12. |
Subsidiaries; Equity Interests |
112 | ||||
Section 5.13. |
Margin Regulations; Investment Company Act |
112 | ||||
Section 5.14. |
Disclosure |
112 | ||||
Section 5.15. |
OFAC and Patriot Act |
113 | ||||
Section 5.16. |
Intellectual Property; Licenses, Etc. |
113 | ||||
Section 5.17. |
Solvency |
114 | ||||
Section 5.18. |
FCPA |
114 | ||||
Section 5.19. |
Security Documents |
114 | ||||
Section 5.20. |
Use of Proceeds |
115 | ||||
ARTICLE VI | ||||||
AFFIRMATIVE COVENANTS | ||||||
Section 6.01. |
Financial Statements |
115 | ||||
Section 6.02. |
Certificates; Other Information |
117 | ||||
Section 6.03. |
Notices |
118 | ||||
Section 6.04. |
Payment of Taxes |
118 | ||||
Section 6.05. |
Preservation of Existence, Etc. |
118 | ||||
Section 6.06. |
Maintenance of Properties |
119 |
ii
Section 6.07. |
Maintenance of Insurance |
119 | ||||
Section 6.08. |
Compliance with Laws and Certain Agreements |
119 | ||||
Section 6.09. |
Books and Records |
119 | ||||
Section 6.10. |
Inspection Rights |
120 | ||||
Section 6.11. |
Additional Collateral; Additional Guarantors |
120 | ||||
Section 6.12. |
Compliance with Environmental Laws |
122 | ||||
Section 6.13. |
Post-Closing Conditions and Further Assurances |
123 | ||||
Section 6.14. |
Designation of Subsidiaries |
123 | ||||
Section 6.15. |
[Reserved] |
124 | ||||
Section 6.16. |
Use of Proceeds |
124 | ||||
Section 6.17. |
Maintenance of Ratings |
124 | ||||
ARTICLE VII | ||||||
NEGATIVE COVENANTS | ||||||
Section 7.01. |
Liens |
124 | ||||
Section 7.02. |
Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock |
129 | ||||
Section 7.03. |
Fundamental Changes |
134 | ||||
Section 7.04. |
Dispositions |
136 | ||||
Section 7.05. |
Restricted Payments |
139 | ||||
Section 7.06. |
Investments |
143 | ||||
Section 7.07. |
Transactions with Affiliates |
143 | ||||
Section 7.08. |
Burdensome Agreements |
146 | ||||
Section 7.09. |
Financial Covenant |
148 | ||||
Section 7.10. |
Accounting Changes |
149 | ||||
Section 7.11. |
Change in Nature of Business |
149 | ||||
Section 7.12. |
Modifications to Documents |
149 | ||||
ARTICLE VIII | ||||||
EVENTS OF DEFAULT AND REMEDIES | ||||||
Section 8.01. |
Events of Default |
149 | ||||
Section 8.02. |
Remedies Upon Event of Default |
152 | ||||
Section 8.03. |
Application of Funds |
152 | ||||
Section 8.04. |
Certain Defaults Not to Result from Transactions |
153 | ||||
ARTICLE IX | ||||||
ADMINISTRATIVE AGENT AND OTHER AGENTS | ||||||
Section 9.01. |
Appointment and Authority |
154 | ||||
Section 9.02. |
Delegation of Duties |
154 | ||||
Section 9.03. |
Exculpatory Provisions |
155 | ||||
Section 9.04. |
Reliance by Administrative Agent |
156 | ||||
Section 9.05. |
Non-Reliance on Administrative Agent and Other Lenders |
156 | ||||
Section 9.06. |
Rights as a Lender |
156 | ||||
Section 9.07. |
Resignation of Administrative Agent |
156 |
iii
Section 9.08. |
Administrative Agent May File Proofs of Claim |
157 | ||||
Section 9.09. |
Collateral and Guaranty Matters |
158 | ||||
Section 9.10. |
No Other Duties, Etc. |
160 | ||||
Section 9.11. |
Treasury Services Agreements and Secured Hedge Agreements |
160 | ||||
Section 9.12. |
Withholding Tax |
160 | ||||
ARTICLE X | ||||||
MISCELLANEOUS | ||||||
Section 10.01. |
Amendments, Etc. |
161 | ||||
Section 10.02. |
Notices; Effectiveness; Electronic Communications |
163 | ||||
Section 10.03. |
No Waiver; Cumulative Remedies; Enforcement |
166 | ||||
Section 10.04. |
Expenses; Indemnity; Damage Waiver |
166 | ||||
Section 10.05. |
Payments Set Aside |
169 | ||||
Section 10.06. |
Successors and Assigns |
169 | ||||
Section 10.07. |
Treatment of Certain Information; Confidentiality |
176 | ||||
Section 10.08. |
Setoff |
177 | ||||
Section 10.09. |
Interest Rate Limitation |
177 | ||||
Section 10.10. |
Counterparts; Effectiveness |
178 | ||||
Section 10.11. |
Integration |
178 | ||||
Section 10.12. |
Survival of Representations and Warranties |
178 | ||||
Section 10.13. |
Replacement of Lenders |
178 | ||||
Section 10.14. |
Severability |
179 | ||||
Section 10.15. |
GOVERNING LAW |
180 | ||||
Section 10.16. |
WAIVER OF RIGHT TO TRIAL BY JURY |
180 | ||||
Section 10.17. |
Binding Effect |
181 | ||||
Section 10.18. |
No Advisory or Fiduciary Responsibility |
181 | ||||
Section 10.19. |
Lender Action |
182 | ||||
Section 10.20. |
USA Patriot Act |
182 | ||||
Section 10.21. |
Electronic Execution of Assignments and Certain Other Documents |
182 | ||||
ARTICLE XI | ||||||
GUARANTEE | ||||||
Section 11.01. |
The Guarantee |
183 | ||||
Section 11.02. |
Obligations Unconditional |
183 | ||||
Section 11.03. |
Reinstatement |
184 | ||||
Section 11.04. |
Subrogation; Subordination |
184 | ||||
Section 11.05. |
Remedies |
185 | ||||
Section 11.06. |
Instrument for the Payment of Money |
185 | ||||
Section 11.07. |
Continuing Guarantee |
185 | ||||
Section 11.08. |
General Limitation on Guarantee Obligations |
185 | ||||
Section 11.09. |
Release of Guarantors |
186 | ||||
Section 11.10. |
Right of Contribution |
186 | ||||
Section 11.11. |
Subject to Intercreditor Agreement |
186 | ||||
Section 11.12. |
Keepwell |
186 |
iv
SCHEDULES
1.01A | Commitments | |
1.01B | Letter of Credit Commitments | |
1.01E | Existing Investments | |
5.08 | Exceptions to Ownership of Property | |
5.12 | Subsidiaries and Other Equity Investments | |
6.13(a) | Certain Collateral Documents | |
7.01(b) | Existing Liens | |
7.02(b) | Existing Indebtedness | |
10.02 | Administrative Agents Office, Certain Addresses for Notices |
EXHIBITS
Form of
A | Committed Loan Notice | |
B | Swing Line Loan Notice | |
C-1 | Term Note | |
C-2 | Revolving Credit Note | |
C-3 | Swing Line Note | |
D | Compliance Certificate | |
E-1 | Assignment and Assumption | |
E-2 | Affiliated Lender Assignment and Assumption | |
F | Security Agreement | |
G-1 | Perfection Certificate | |
G-2 | Perfection Certificate Supplement | |
H | [Reserved] | |
I-1 | Intercreditor Agreement | |
I-2 | Second Lien Intercreditor Agreement | |
J | United States Tax Compliance Certificate | |
K | Solvency Certificate |
v
CREDIT AGREEMENT
This CREDIT AGREEMENT (this Agreement ) is entered into as of October 31, 2014 among Halyard Health, Inc., a Delaware corporation, as borrower (the Borrower ), the other Guarantors party hereto from time to time, Morgan Stanley Senior Funding, Inc. ( MSSF ), as Term Loan Administrative Agent and Collateral Agent, Citibank, N.A. ( Citibank ) as Revolver Administrative Agent, the Swing Line Lender and an L/C Issuer and each lender from time to time party hereto (collectively, the Lenders and individually, a Lender ).
PRELIMINARY STATEMENTS
The Borrower has requested that (i) on the Closing Date, the Term Lenders lend to the Borrower Term Loans in an initial aggregate principal amount of $390 million in order to finance the Transactions and to finance costs and expenses incurred in connection therewith and (ii) from time to time, the Revolving Credit Lenders make Revolving Credit Loans and Swing Line Loans to the Borrower and the L/C Issuers issue on the account of the Borrower and its respective Subsidiaries Letters of Credit.
The applicable Lenders have indicated their willingness to lend, and the L/C Issuers have indicated their willingness to issue Letters of Credit, in each case, on the terms and subject to the conditions set forth herein.
In consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.01. Defined Terms .
As used in this Agreement, the following terms shall have the meanings set forth below:
Accounting Opinion has the meaning set forth in Section 6.01(a) .
Acquired Indebtedness means, with respect to any specified Person,
(a) Indebtedness of any other Person existing at the time such other Person is merged or consolidated with or into or became a Restricted Subsidiary of such specified Person, including Indebtedness incurred in connection with, or in contemplation of, such other Person merging with or into or becoming a Restricted Subsidiary of such specified Person; and
(b) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person.
provided that any Indebtedness of such other Person that is extinguished, redeemed, defeased, retired or otherwise repaid at the time of, or substantially concurrently with, the consummation of the transaction pursuant to which such other Person becomes a Restricted Subsidiary of the specified Person will not be Acquired Indebtedness.
Additional Lender has the meaning set forth in Section 2.14(a) .
Additional Refinancing Lender means, at any time, any bank, financial institution or other institutional lender or investor that, in any case, is not an existing Lender and that agrees to provide any portion of Credit Agreement Refinancing Indebtedness pursuant to a Refinancing Amendment in accordance with Section 2.15 ; provided , that each Additional Refinancing Lender shall be subject to the approval of the Administrative Agent, such approval not to be unreasonably withheld or delayed, solely to the extent that any such consent would be required from the Administrative Agent under Section 10.06(b)(iii)(B) for an assignment of Loans to such Additional Refinancing Lender.
Administrative Agent means MSSF, in its capacity as Term Loan Administrative Agent and Citibank, in its capacity as Revolver Administrative Agent. A reference to the applicable Administrative Agent shall mean (a) the Term Loan Administrative Agent with respect to the Term Lenders and Term Loans and (b) the Revolver Administrative Agent with respect to the Revolving Credit Lenders, the Revolving Credit Loans, the Swing Line Facility and the Letters of Credit.
Administrative Agents Office means with respect to an Administrative Agent, such Administrative Agents address and account as set forth on Schedule 10.02 , or such other address or account as such Administrative Agent may from time to time notify the Borrower and the Lenders.
Administrative Questionnaire means an Administrative Questionnaire in a form supplied by the applicable Administrative Agent.
Affiliate of any specified Person, means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, control (including, with correlative meanings, the terms controlling, controlled by and under common control with), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise. No Person (other than the Borrower or any Subsidiary of the Borrower) in whom a Receivables Subsidiary makes an Investment in connection with a financing of accounts receivable will be deemed to be an Affiliate of the Borrower or any of its Subsidiaries solely by reason of such Investment.
Agent Parties has the meaning set forth in Section 10.02(c) .
Agents means, collectively, the Administrative Agent and the Collateral Agent.
Aggregate Commitments means the Commitments of all the Lenders.
Agreement means this credit agreement, as the same may be amended, restated, amended and restated, supplemented or otherwise modified from time to time.
2
All-In Yield means, at any time, with respect to any Term Loan or other Indebtedness, the weighted average yield to stated maturity of such Term Loan or other Indebtedness based on the interest rate or rates applicable thereto and giving effect to all upfront or similar fees or original issue discount payable to the Lenders or other creditors advancing such Term Loan or other Indebtedness with respect thereto (but not arrangement or underwriting fees paid to an arranger for their account) and to any interest rate floor (with original issue discount and upfront fees, which shall be deemed to constitute like amounts of original issue discount, being equated to interest margins in a manner consistent with generally accepted financial practice based on an assumed four-year life to maturity).
Alternative Currency means euros, Sterling, Yen and Australian Dollars, or any other lawful currency which is freely convertible into Dollars and is freely traded and available in the London interbank eurocurrency market with the consent of the Revolver Administrative Agent and the applicable L/C Issuer.
Anti-Terrorism Laws has the meaning set forth in Section 5.15 .
Applicable Percentage means with respect to any Revolving Credit Lender, the percentage of the total Revolving Credit Commitments represented by such Revolving Credit Lenders Revolving Credit Commitment. If the Revolving Credit Commitments have terminated or expired, the Applicable Percentages shall be determined based upon the Revolving Credit Commitments most recently in effect, giving effect to any assignments.
Applicable Period has the meaning set forth in the definition of Applicable Rate .
Applicable Rate means a percentage per annum equal to:
(a) with respect to Term Loans, 3.25% in the case of Eurodollar Rate Loans and 2.25% in the case of Base Rate Loans.
(b) with respect to Revolving Credit Commitments, (i) 0.25% when Consolidated Total Leverage Ratio is less than 2.25 to 1.00 and (ii) 0.40% otherwise,
(c) with respect to Revolving Credit Loans, (i) until delivery of financial statements for the first full fiscal quarter commencing on or after the Closing Date pursuant to Section 6.01 , (A) for Eurodollar Rate Loans, 2.25%, and (B) for Base Rate Loans, 1.25%, and (ii) thereafter, the following percentages per annum , based upon the Consolidated Total Leverage Ratio as set forth in the most recent Compliance Certificate received by the Administrative Agent pursuant to Section 6.02(a) :
Applicable Rate
Pricing Level |
Consolidated
Total Leverage Ratio |
Eurodollar Rate
and Letter of Credit Fees |
Base Rate | |||||||
1 |
³ 3.00 to 1.00 | 2.50 | % | 1.50 | % | |||||
2 |
³ 2.25 to 1.00 but < 3.00 to 1.00 | 2.25 | % | 1.25 | % | |||||
3 |
³ 1.50 to 1.00 but < 2.25 to 1.00 | 2.00 | % | 1.00 | % | |||||
4 |
< 1.50:1.00 | 1.75 | % | 0.75 | % |
3
Any increase or decrease in the Applicable Rate resulting from a change in the Consolidated Total Leverage Ratio shall become effective as of the first Business Day immediately following the date a Compliance Certificate is delivered pursuant to Section 6.02(a) ; provided , that the highest Pricing Level shall apply as of the first Business Day after the date on which a Compliance Certificate was required to have been delivered but was not delivered, and shall continue to so apply up to and including the date on which such Compliance Certificate is so delivered (and thereafter the Pricing Level otherwise determined in accordance with this definition shall apply).
In the event that any Compliance Certificate is shown by the Administrative Agent to be inaccurate (whether as a result of an inaccuracy in the financial statements on which such Compliance Certificate is based, a mistake in calculating the applicable Consolidated Total Leverage Ratio or otherwise) at any time that this Agreement is in effect and any Loans or Commitments are outstanding such that the Applicable Rate for any period (an Applicable Period ) should have been higher than the Applicable Rate applied for such Applicable Period, then (i) the Borrower shall promptly (and in no event later than five (5) Business Days thereafter) deliver to the Administrative Agent a corrected Compliance Certificate for such Applicable Period; (ii) the Applicable Rate shall be determined by reference to the corrected Compliance Certificate (but in no event shall the Lenders owe any amounts to the Borrower); and (iii) the Borrower shall pay to the Administrative Agent promptly (and in no event later than five (5) Business Days after the date such corrected Compliance Certificate is delivered) any additional interest owing as a result of such increased Applicable Rate for such Applicable Period, which payment shall be promptly applied by the Administrative Agent in accordance with the terms hereof. Notwithstanding anything to the contrary in this Agreement, any nonpayment of such interest as a result of any such inaccuracy shall not constitute a Default (whether retroactively or otherwise), and no such amounts shall be deemed overdue (and no amounts shall accrue interest at the Default Rate), at any time prior to the date that is five (5) Business Days following the date such corrected Compliance Certificate is delivered. The Borrowers Obligations under this paragraph shall survive the termination of the Aggregate Commitments and the repayment of all other Obligations hereunder.
Appropriate Lender means, at any time, (a) with respect to Loans of any Class, the Lenders of such Class, (b) with respect to Letters of Credit, (i) the relevant L/C Issuers and (ii) the Revolving Credit Lenders, and (c) with respect to the Swing Line Facility, (i) the relevant Swing Line Lender and (ii) if any Swing Line Loans are outstanding pursuant to Section 2.04(a) , the Revolving Credit Lenders.
4
Approved Fund means any Fund that is administered, advised or managed by (a) a Lender, (b) an Affiliate of a Lender, or (c) an entity or an Affiliate of an entity that administers, advises or manages a Lender.
Arrangers means MSSF, Citibank and Deutsche Bank Securities LLC and RBC Capital Markets in their capacities as lead arrangers and/or lead bookrunners and Banco Bilbao Vizcaya Argentaria, S.A. New York Branch, BMO Capital Markets, U.S. Bank National Association and The Bank of Tokyo-Mitsubishi UFJ, Ltd. as co-arrangers.
Assignee Group means two or more Eligible Assignees that are Affiliates of one another or two or more Approved Funds managed by the same investment advisor.
Assignment and Assumption means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 10.06(b)(iii) , and accepted by the Administrative Agent, in substantially the form of Exhibit E-1 and Exhibit E-2 hereto or any other form (including electronic documentation generated by any electronic platform) approved by the Administrative Agent.
Attorney Costs means and includes all reasonable and documented fees, expenses and disbursements of any law firm or other external legal counsel.
Attributable Indebtedness means, on any date of determination, in respect of any Sale and Lease-Back Transaction, the present value of the total obligations of the lessee for net rental payments during the remaining term of the lease included in such Sale and Lease-Back Transaction, including any period for which such lease has been extended or may, at the option of the lessor, be extended. In the case of clause (b) , such present value shall be calculated using a discount rate equal to the rate of interest implicit in such transaction, determined in accordance with GAAP.
Audited Financial Statements means the audited combined balance sheet of the healthcare business of Kimberly-Clark as of each of December 31, 2013 and 2012, and the related audited combined statements of income, of invested equity and of cash flows for the healthcare business of Kimberly-Clark for the fiscal years ended December 31, 2013, 2012 and 2011, respectively.
Australian Dollars or AUD means the lawful currency of the Commonwealth of Australia.
Auto-Extension Letter of Credit has the meaning set forth in Section 2.03(b)(iii) .
Available Amount means the sum of
(a) (i) 50% of the Consolidated Net Income of the Borrower for the period (taken as one accounting period) from October 1, 2014 to the end of the Borrowers most recently completed fiscal quarter for which financial statements have been delivered pursuant to Section 6.01 at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit), plus
5
(b) $25 million;
(c) 100% of the aggregate net cash proceeds and the fair market value, as determined in good faith by the Borrower, of marketable securities or other property received by the Borrower since immediately after the Closing Date from the issue or sale of:
(i) Equity Interests of the Borrower, but excluding cash proceeds and the fair market value, as determined in good faith by the Borrower, of marketable securities or other property received from the sale of Equity Interests to officers, directors, employees, managers or consultants of the Borrower after the Closing Date to the extent such amounts have been applied to Restricted Payments made in accordance with Section 7.05 (e) ; and
(ii) Indebtedness or Disqualified Stock of the Borrower or a Restricted Subsidiary that has been converted into or exchanged for Equity Interests of the Borrower;
provided , however , that this clause (c) shall not include the proceeds from (w) the issuance or sale of Equity Interests or the fair market value of any assets received by the Borrower or any Restricted Subsidiary in connection with the Transactions, (x) Refunding Capital Stock, (y) Equity Interests, Indebtedness or Disqualified Stock of the Borrower sold to a Restricted Subsidiary or (z) Disqualified Stock or Indebtedness that has been converted or exchanged into Disqualified Stock; plus
(d) 100% of the aggregate amount of cash and the fair market value, as determined in good faith by the Borrower, of marketable securities or other property contributed to the capital of the Borrower following the Closing Date (other than (i) by a Restricted Subsidiary or the Borrower or (ii) the fair market value of any assets received by the Borrower or any Restricted Subsidiary in connection with the Transactions); plus
(e) 100% of the aggregate amount received in cash and the fair market value of marketable securities or other property received by means of (i) the sale or other disposition (other than to the Borrower or a Restricted Subsidiary) of Restricted Investments made by the Borrower or its Restricted Subsidiaries and repurchases and redemptions of such Restricted Investments from the Borrower or its Restricted Subsidiaries and repayments of loans or advances, and releases of guarantees, which constitute Restricted Investments by the Borrower or its Restricted Subsidiaries, in each case after the Closing Date or (ii) the sale (other than to the Borrower or a Restricted Subsidiary) of the stock of an Unrestricted Subsidiary (other than to the extent the Investment in such Unrestricted Subsidiary constituted a Permitted Investment) or a dividend or distribution from an Unrestricted Subsidiary after the Closing Date (other than to the extent the Investment in such Unrestricted Subsidiary constituted a Permitted Investment), in the case of either clause (i) or (ii) of this clause (e), except to the extent any such amount was already included in the calculation of Consolidated Net Income; plus
(f) in the case of the redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary after the Closing Date, the fair market value of the Investment in such Unrestricted Subsidiary (as determined by the Borrower in good faith) at the time of the
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redesignation of such Unrestricted Subsidiary as a Restricted Subsidiary other than an Unrestricted Subsidiary to the extent the Investment in such Unrestricted Subsidiary constituted a Permitted Investment; plus
(g) all Declined Proceeds.
Base Rate means for any day a fluctuating rate per annum equal to the highest of (a) the Federal Funds Rate plus 1/2 of 1%, (b) the Prime Lending Rate at such time, and (c) the Eurodollar Rate for an Interest Period of one (1) month plus 1.00%; provided , that for purposes of this clause (c) , the Base Rate with respect to Term Loans will be deemed not to be less than 0.75%. Any change in the Base Rate due to a change in the Prime Lending Rate shall take effect at the opening of business on the day of such change.
Base Rate Loan means a Loan that bears interest based on the Base Rate.
Borrower has the meaning assigned to such term in the introductory paragraph to this Agreement.
Borrower Materials has the meaning assigned to such term in Section 6.02 .
Borrowing means a Revolving Credit Borrowing, a Swing Line Borrowing, or a Term Borrowing, as the context may require.
Business Day means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the State of New York; provided that if such day relates to any interest rate settings as to a Eurodollar Rate Loan, any fundings, disbursements, settlements and payments in respect of any such Eurodollar Rate Loan, or any other dealings to be carried out pursuant to this Agreement in respect of any such Eurodollar Rate Loan, the term Business Day shall also exclude any day on which banks are not open for dealings in dollar deposits in the London interbank eurodollar market.
Capital Stock means:
(a) in the case of a corporation, corporate stock;
(b) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock;
(c) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and
(d) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person.
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Capitalized Lease Obligation means, at the time any determination thereof is to be made, the amount of the liability in respect of a Capitalized Lease that would at such time be required to be capitalized and reflected as a liability on a balance sheet (excluding the footnotes thereto) in accordance with GAAP.
Capitalized Leases means all leases that have been or should be, in accordance with GAAP, recorded as capitalized leases.
Cash Collateral has the meaning specified in Section 2.03(g) .
Cash Collateral Account means a blocked account at Citibank or another commercial bank selected in compliance with Section 9.09 ) in the name of the Administrative Agent and under the sole dominion and control of the Administrative Agent, and otherwise established in a manner satisfactory to the Administrative Agent.
Cash Collateralize has the meaning specified in Section 2.03(g) .
Cash Distribution means a cash distribution from the Borrower to Kimberly-Clark, in an amount determined by Kimberly-Clark, that will be funded on or prior to the Distribution Date with (i) the net cash proceeds from the Senior Notes, plus (ii) the net cash proceeds from the term loan portion of the Senior Credit Facilities received by the Borrower on or before such distribution, plus (iii) cash held by the Borrower and its Restricted Subsidiaries on the Distribution Date plus (iv) the net cash proceeds resulting from the settlement of certain intercompany transactions between the Borrower and its Subsidiaries, on the one hand, and Kimberly-Clark and its subsidiaries, on the other hand, minus (v) an amount (to be not less than $40.0 million) determined by Kimberly-Clark to be retained by the Borrower or its Restricted Subsidiaries for working capital and other general corporate purposes of the Borrower and its Subsidiaries.
Cash Equivalents means:
(a) United States dollars;
(b) (A) euro, or any national currency of any member state of the European Union; or
(B) in the case of any Foreign Subsidiary that is a Restricted Subsidiary, such local currencies held by them from time to time in the ordinary course of business;
(c) securities issued or directly and fully and unconditionally guaranteed or insured by (i) the U.S. government or any agency or instrumentality thereof or (ii) any foreign country whose sovereign debt has a rating of at least A1 from Moodys and at least A+ from S&P or any agency or instrumentality of such foreign country, in each case the securities of which are unconditionally guaranteed as a full faith and credit obligation of such government with maturities of twenty four (24) months or less from the date of acquisition;
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(d) certificates of deposit, time deposits and dollar time deposits with maturities of one year or less from the date of acquisition, bankers acceptances with maturities not exceeding one year and overnight bank deposits, in each case with any commercial bank having capital and surplus of not less than $500 million in the case of U.S. banks and $100 million (or the U.S. dollar equivalent as of the date of determination) in the case of non-U.S. banks;
(e) repurchase obligations for underlying securities of the types described in clauses (c) and (d) above and clause (g) below entered into with any financial institution meeting the qualifications specified in clause (d) above;
(f) commercial paper rated at least P-1 by Moodys or at least A-1 by S&P (or if at any time neither Moodys nor S&P shall be rating such obligations, an equivalent rating by another Rating Agency) and in each case maturing within twenty four (24) months after the date of creation thereof;
(g) marketable short-term money market and similar securities having a rating of at least P-2 or A-2 from either Moodys or S&P, respectively (or, if at any time neither Moodys nor S&P shall be rating such obligations, an equivalent rating from another Rating Agency) and in each case maturing within twenty four (24) months after the date of creation thereof;
(h) readily marketable direct obligations issued by any state, commonwealth or territory of the United States or any political subdivision or taxing authority thereof having an Investment Grade Rating from either Moodys or S&P (or if at any time neither Moodys nor S&P shall be rating such obligations, an equivalent rating by another Rating Agency) with maturities of twenty four (24) months or less from the date of acquisition;
(i) Investments with average maturities of twenty four (24) months or less from the date of acquisition in money market funds rated AAA- (or the equivalent thereof) or better by S&P or Aaa3 (or the equivalent thereof) or better by Moodys (or, if at any time neither Moodys nor S&P shall be rating such obligations, an equivalent rating from another Rating Agency); and
(j) securities of, or other evidence of investments in, investment funds investing 95% of their assets in securities of the types described in clauses (a) through (i) above).
In the case of Investments by any Foreign Subsidiary that is a Restricted Subsidiary or Investments made in a country outside the United States, Cash Equivalents shall also include (i) investments of the type and maturity described in clauses (a) through (j) above of foreign obligors, which Investments or obligors (or the parents of such obligors) have ratings described in such clauses or equivalent ratings from comparable foreign rating agencies and (ii) other short-term investments utilized by Foreign Subsidiaries that are Restricted Subsidiaries in accordance with normal investment practices for cash management in investments analogous to the foregoing investments in clauses (a) through (j) and in this paragraph.
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Notwithstanding the foregoing, Cash Equivalents shall include amounts denominated in currencies other than those set forth in clauses (a) and (b) above, provided that such amounts are converted into any currency listed in clauses (a) and (b) as promptly as practicable and in any event within ten (10) Business Days following the receipt of such amounts.
Casualty Event means any event that gives rise to the receipt by the Borrower or any Restricted Subsidiary of any insurance proceeds or condemnation awards in respect of any equipment, fixed assets or real property (including any improvements thereon) to replace or repair such equipment, fixed assets or real property.
CERCLA means the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. § 9601 et seq.), as subsequently amended.
CERCLIS means the Comprehensive Environmental Response, Compensation and Liability Information System maintained by the U.S. Environmental Protection Agency.
CFC means a controlled foreign corporation within the meaning of Section 957 of the Code.
CFC Holdco means a Domestic Subsidiary substantially all of the assets of which consist, directly or indirectly, of Equity Interests in one or more Foreign Subsidiaries that are CFCs.
CGMI means Citigroup Capital Markets, Inc.
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 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, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives 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, in each case pursuant to Basel III, shall in each case be deemed to be a Change in Law , regardless of the date enacted, adopted or issued.
Change of Control means the occurrence of any of the following:
(a) the sale, lease or transfer, in one or a series of related transactions, of all or substantially all of the assets of the Borrower and its Subsidiaries, taken as a whole, to any Person;
(b) the Borrower becomes aware of (by way of a report or any other filing pursuant to Section 13(d) of the Exchange Act, proxy, vote, written notice or otherwise) the acquisition by any Person or group (within the meaning of Section 13(d)(3) or
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Section 14(d)(2) of the Exchange Act), including any group acting for the purpose of acquiring, holding or disposing of securities (within the meaning of Rule 13d-5(b)(1) under the Exchange Act, or any successor provision), in a single transaction or in a related series of transactions, by way of merger, consolidation or other business combination or purchase of beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act, or any successor provision of 50% or more of the total voting power of the Voting Stock of the Borrower (directly or through the acquisition of voting power of Voting Stock of any direct or indirect parent company of the Borrower);
(c) the approval of any plan or proposal for the winding up or liquidation of the Borrower; or
(d) a change of control (or similar event) shall occur under the Senior Notes Indenture or any Indebtedness for borrowed money or any Disqualified Stock, in each case incurred by any Loan Party with an aggregate outstanding principal amount in excess of the Threshold Amount if the effect of such change of control or similar event is to cause, or to permit the holder or holders of such Indebtedness (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice if required, such Indebtedness to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be made or require cash collateralization thereof, prior to its stated maturity.
For purposes of this definition, any direct or indirect holding company of the Borrower shall not itself be considered a Person or group for purposes of clause (b) above; provided , that no Person or group beneficially owns, directly or indirectly, more than a majority of the total voting power of the Voting Stock of such holding company. The Separation and Distribution shall not constitute a Change of Control.
Citibank has the meaning specified in the recital of parties to this Agreement.
Class (a) when used with respect to Lenders, refers to whether such Lenders are Revolving Credit Lenders or Term Lenders, (b) when used with respect to Commitments, refers to whether such Commitments are Revolving Credit Commitments or Term Commitments, and (c) when used with respect to Loans or a Borrowing, refers to whether such Loans, or the Loans comprising such Borrowing, are Revolving Credit Loans or Term Loans.
Closing Date the date on which the conditions precedent set forth in Section 4.01 are satisfied or duly waived.
Closing Date Transaction Expenses means any fees or expenses incurred or paid by the Borrower or any of its respective Subsidiaries in connection with the Transactions (including expenses in connection with hedging transactions), this Agreement and the other Loan Documents and the transactions contemplated hereby and thereby.
Code means the U.S. Internal Revenue Code of 1986, as amended.
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Collateral means the Collateral as defined in the Security Agreement, all the Collateral or Pledged Assets as defined in any other Collateral Document and any other assets a Lien in which is granted or purported to be granted pursuant to any Collateral Documents.
Collateral Agent means MSSF, in its capacity as collateral agent or pledgee in its own name under any of the Loan Documents, or any successor collateral agent.
Collateral Documents means, collectively, the Security Agreement, each of the Mortgages, collateral assignments, security agreements, pledge agreements, the Intellectual Property Security Agreements or other similar agreements delivered to the Administrative Agent and the Lenders pursuant to Section 6.11 or Section 6.13 , and each of the other agreements, instruments or documents that creates or purports to create a Lien securing any of the Obligations in favor of the Collateral Agent for the benefit of the Secured Parties.
Commitment means a Term Commitment or a Revolving Credit Commitment of any Class or of multiple Classes, as the context may require.
Committed Loan Notice means a notice of (a) a Borrowing, (b) a conversion of Loans from one Type to the other, or (c) a continuation of Eurodollar Rate Loans, pursuant to Section 2.02(a) , which shall be substantially in the form of Exhibit A hereto.
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 certificate substantially in the form of Exhibit D hereto.
Consolidated Depreciation and Amortization Expense means, with respect to any Person, for any period, the total amount of depreciation and amortization expense, including the amortization of deferred financing fees of such Person and its Restricted Subsidiaries for such period on a consolidated basis and otherwise determined in accordance with GAAP.
Consolidated Current Assets means all amounts (other than cash and Cash Equivalents) that would, in conformity with GAAP, be set forth opposite the caption total current assets (or any like caption) on a consolidated balance sheet of the Borrower and its Restricted Subsidiaries at such date.
Consolidated Current Liabilities means all amounts that would, in conformity with GAAP, be set forth opposite the caption total current liabilities (or any like caption) on a consolidated balance sheet of the Borrower and its Restricted Subsidiaries on such date, but excluding, without duplication, (a) the current portion of any Consolidated Total Debt of the Borrower and its Restricted Subsidiaries, and (b) all Indebtedness of the Borrower and its Restricted Subsidiaries consisting of revolving loans, swing line loans and letters of credit obligations to the extent otherwise included therein.
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Consolidated EBITDA means, with respect to any Person for any period, the Consolidated Net Income of such Person for such period:
(a) increased to the extent deducted (and not added back) in computing Consolidated Net Income, (without duplication) by:
(A) provision for taxes based on income or profits or capital gains, including, without limitation, federal, state, non-U.S. franchise, excise, value added and similar taxes and foreign withholding taxes of such Person paid or accrued during such period, including any penalties and interest relating to such taxes or arising from any tax examinations; plus
(B) Consolidated Interest Expense of such Person for such period; plus
(C) Consolidated Depreciation and Amortization Expense of such Person for such period; plus
(D) any fees, expenses or charges related to any Equity Offering, Permitted Investment, acquisition, disposition, recapitalization or the incurrence, modification, amendment or repayment of Indebtedness permitted to be incurred in accordance with this Agreement (including a refinancing thereof) (whether or not successful), including (i) such fees, expenses or charges related to the offering of the Senior Notes and the Loan Documents and the other Transactions and any amendment or modification of Indebtedness permitted to be incurred by this Agreement and (ii) commissions, discounts, yield and other fees and charges (including interest expense) related to any Receivables Facility; plus
(E) the amount of any restructuring charge or reserve, including any restructuring costs incurred in connection with acquisitions, mergers or consolidations after the Closing Date and costs related to the closure and/or consolidation of facilities, retention charges, systems establishment costs, excess pension charges and severance costs; plus
(F) any other non-cash charges, including any write offs or write downs and non-cash compensation expenses recorded from grants of stock appreciation or similar rights, stock options, restricted stock or other rights, reducing Consolidated Net Income for such period ( provided , that if any such non-cash charges represent an accrual or reserve for potential cash items in any future period, the cash payment in respect thereof in such future period shall be subtracted from Consolidated EBITDA in such future period to the extent paid, but excluding from this proviso, for the avoidance of doubt, amortization of a prepaid cash item that was paid in a prior period); plus
(G) the amount of any minority interest expense consisting of Subsidiary income attributable to minority equity interests of third parties in any non-Wholly-Owned Subsidiary; plus
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(H) the amount of loss on sale of receivables and related assets to the Receivables Subsidiary in connection with a Receivables Facility; plus
(I) any costs or expense incurred by the Borrower or a Restricted Subsidiary pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or agreement or any stock subscription or shareholder agreement, to the extent that such cost or expenses are funded with cash proceeds contributed to the capital of the Borrower or net cash proceeds of an issuance of Equity Interest of the Borrower (other than Disqualified Stock) solely to the extent that such net cash proceeds are excluded from the calculation of the Available Amount; plus
(J) the amount of cost savings, operating expense reductions, other operating improvements and initiatives and synergies projected by the Borrower in good faith to be reasonably anticipated to be realizable within twelve (12) months of the date of any Investment, acquisition, disposition, merger, consolidation, restructuring, cost-savings initiative or initiative or other action being given pro forma effect (which will be added to Consolidated EBITDA as so projected until fully realized and calculated on a Pro Forma Basis as though such cost savings, operating expense reductions, other operating improvements and initiatives and synergies had been realized on the first day of such period), net of the amount of actual benefits realized during such period from such actions; provided that (x) substantially all steps have been taken or procedures are in place for realizing such cost savings, operating expense reductions, other operating improvements and initiatives and synergies, (y) such cost savings, operating expense reductions, other operating improvements and initiatives and synergies are reasonably identifiable and factually supportable (in the good faith determination of the Borrower) and (z) the aggregate amount of cost savings, operating expense reductions, other operating improvements and initiatives and synergies added back pursuant to this clause (J) in any Test Period shall not exceed the greater of (A) 15.0% of Consolidated EBITDA (prior to giving effect to such addbacks) or (B) $37.5 million;
(b) decreased by (without duplication) non-cash gains increasing Consolidated Net Income of such Person for such period, excluding any non-cash gains to the extent they represent the accrual of revenue in the ordinary course of business or the reversal of an accrual or reserve for a potential cash item that reduced Consolidated EBITDA in any prior period; and
(c) increased or decreased by (without duplication):
(A) any net loss or gain, respectively, resulting in such period from Hedging Obligations and the application of Financial Accounting Codification No. 815-Derivatives and Hedging; plus or minus , as applicable;
(B) any net loss or gain, respectively, resulting in such period from currency translation gains or losses related to currency remeasurements of Indebtedness (including any net loss or gain resulting from hedge agreements for currency exchange risk); and
(C) any adjustment of the nature used in connection with the calculation of Adjusted EBITDA as set forth in footnote 3 to the Summary-Summary Historical and Pro Forma Combined Financial Data in the offering memorandum relating to the Senior Notes.
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Notwithstanding the forgoing and prior to giving effect to any pro forma adjustment, for all purposes of this Agreement, Consolidated EBITDA for (i) the quarter ended December 31, 2013 shall be deemed to be $74,200,000, (ii) the quarter ended March 31, 2014 shall be deemed to be $86,100,000, (iii) for the quarter ended June 30, 2014 shall be $80,700,000 and (iv) the quarter ended September 30, 2014 shall be deemed to be $72,500,000.
Consolidated Indebtedness means, as of any date of determination, the sum, without duplication, of (1) the total amount of (A) Indebtedness for borrowed money, (B) Indebtedness evidenced by bonds, notes (other than notes in favor of trade creditors evidencing trade payables incurred in the ordinary course of business), debentures or other similar instruments for the payment of which such Person is liable (including the Senior Notes), (C) Capitalized Lease Obligations, (D) the Obligations under the Loan Document and (E) Guarantees of the foregoing, in each case, of the Borrower and its Restricted Subsidiaries (excluding (x) Indebtedness in respect of letters of credit and bankers acceptances (or, without duplication, reimbursement agreements in respect thereof), except to the extent of unreimbursed amounts drawn thereunder, (y) intercompany Indebtedness and (z) Indebtedness in respect of Hedging Obligations not yet due and owing), outstanding on such date; plus (2) the greater of (i) the aggregate liquidation value and (ii) maximum fixed repurchase price without regard to any change of control or redemption premiums of all Disqualified Stock of the Borrower and the Guarantors and all Preferred Stock of Restricted Subsidiaries, in each case determined on a consolidated basis in accordance with GAAP. For purposes of this definition, the maximum fixed repurchase price of any Disqualified Stock or Preferred Stock that does not have a fixed repurchase price shall be calculated in accordance with the terms of such Disqualified Stock or Preferred Stock as if such Disqualified Stock or Preferred Stock were purchased on any date on which Consolidated Indebtedness shall be required to be determined pursuant to this Agreement, and if such price is based upon, or measured by, the fair market value of such Disqualified Stock or Preferred Stock, such fair market value shall be the fair market value (as determined in good faith by the Borrower).
Consolidated Interest Coverage Ratio means on any date, the ratio of (a) Consolidated EBITDA to (b) Consolidated Interest Expense, for the period of four consecutive fiscal quarters most recently ended on or prior to such date, taken as one accounting period. The Consolidated Interest Coverage Ratio shall be computed on a Pro Forma Basis.
Consolidated Interest Expense means, with respect to any Person for any period, without duplication, the sum of:
(a) consolidated interest expense of such Person and its Restricted Subsidiaries for such period to the extent such expense was deducted (and not added
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back) in computing Consolidated Net Income (including (i) amortization of original issue discount resulting from the issuance of Indebtedness at less than par, (ii) all commissions, discounts and other fees and charges owed with respect to letters of credit or bankers acceptances, (iii) non-cash interest expense (but excluding any non-cash interest expense attributable to the movement in the mark to market valuation of Hedging Obligations or other derivative instruments pursuant to GAAP), (iv) the interest component of Capitalized Lease Obligations, (v) imputed interest with respect to Attributable Debt, and (vi) net payments, if any, pursuant to interest rate Hedging Obligations with respect to Indebtedness, and excluding (x) amortization of deferred financing fees, debt issuance costs, commissions, fees and expenses, (y) any expensing of bridge, commitment and other financing fees and (z) commissions, discounts, yield and other fees and charges (including any interest expense) related to any Receivables Facility); plus
(b) consolidated capitalized interest of such Person and such Subsidiaries for such period, whether paid or accrued; plus
(c) any interest expense of Indebtedness of another Person Guaranteed by such Person or one or more of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries to the extent such Guarantee or Lien is called upon; plus
(d) whether or not treated as interest expense in accordance with GAAP, all cash dividends or other distributions accrued (excluding dividends payable solely in Equity Interests (other than Disqualified Stock) of the Borrower) on any series of Disqualified Stock or any series of Preferred Stock during such period.
For purposes of this definition, interest on a Capitalized Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by such Person to be the rate of interest implicit in such Capitalized Lease Obligation in accordance with GAAP.
Notwithstanding the forgoing and prior to giving effect to any pro forma adjustment, for all purposes of this Agreement, Consolidated Interest Expense for (i) the quarter ended December 31, 2013 shall be deemed to be $(900,000), (ii) the quarter ended March 31, 2014 shall be deemed to be $(1,000,000), (iii) for the quarter ended June 30, 2014 shall be $(900,000) and (iv) the quarter ended September 30, 2014 shall be deemed to be $(900,000).
Consolidated Net Income means, with respect to any Person for any period, the aggregate Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, and otherwise determined in accordance with GAAP; provided , however , that, without duplication:
(a) any after-tax effect of extraordinary, non-recurring or unusual gains, charges, costs, losses, income or expenses ( less all fees and expenses relating thereto) or expenses (including expenses relating to (i) severance and relocation costs or (ii) any rebranding or corporate name change) shall be excluded;
(b) the Net Income for such period shall not include the cumulative effect of a change in accounting principles during such period;
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(c) any after-tax effect of income (loss) from disposed, abandoned or discontinued operations and any net after-tax gains or losses on disposal of disposed, abandoned or discontinued operations shall be excluded;
(d) any after-tax effect of gains or losses ( less all fees and expenses relating thereto) attributable to asset dispositions other than in the ordinary course of business, as determined in good faith by the Borrower, shall be excluded;
(e) the Net Income for such period of any Person that is not a Subsidiary, or is an Unrestricted Subsidiary, or that is accounted for by the equity method of accounting, shall be excluded; provided , that Consolidated Net Income of the Borrower shall be increased by the amount of dividends or distributions or other payments that are actually paid in cash (or to the extent converted into cash or Cash Equivalents) to the Borrower or a Restricted Subsidiary in respect of such period;
(f) solely for the purposes of determining the amount available for Restricted Payments and Permitted Investments under the Available Amount, the Net Income for such period of any Restricted Subsidiary (other than any Guarantor) shall be excluded if the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of its Net Income is not at the date of determination wholly permitted without any prior governmental approval (which has not been obtained) or, directly or indirectly, by the operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule, or governmental regulation applicable to that Restricted Subsidiary or its stockholders, unless such restriction with respect to the payment of dividends or similar distributions has been legally waived; provided , that Consolidated Net Income of the Borrower will be increased by the amount of dividends or other distributions or other payments actually paid in cash (or to the extent converted into cash or Cash Equivalents) to the Borrower or a Restricted Subsidiary thereof in respect of such period, to the extent not already included therein;
(g) any after-tax effect of income (loss) from the early extinguishment of Indebtedness or Hedging Obligations or other derivative instruments shall be excluded;
(h) any royalties incurred during such period in connection with the Transactions and any fees and expenses incurred during such period, or any amortization thereof for such period, in connection with the Transactions and any acquisition, Investment, Disposition, issuance or repayment of Indebtedness, issuance of Equity Interests, refinancing transaction or amendment or modification of any debt instrument (in each case, including any such transaction consummated prior to the Closing Date and any such transaction undertaken but not completed) and any charges or non-recurring merger costs incurred during such period as a result of any such transaction shall be excluded;
(i) to the extent covered by insurance and actually reimbursed, or, so long as the Issuer has made a determination that there exists reasonable evidence that such amount will in fact be reimbursed by the insurer and only to the extent that such amount is in fact reimbursed within 365 days of the date of such determination (with a deduction
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in the applicable future period for any amount so excluded to the extent not so reimbursed within such 365 day period), expenses, charges or losses with respect to liability or casualty events or business interruption shall be excluded;
(j) any non-cash compensation expense realized from employee benefit plans or other post-employment benefit plans, grants of stock appreciation or similar rights, stock options or other rights to officers, directors and employees of such Person or any of its Restricted Subsidiaries shall be excluded;
(k) any impairment charge or asset write-off, in each case, pursuant to GAAP and the amortization of intangibles arising pursuant to GAAP shall be excluded; and
(l) effects of adjustments in the property and equipment and other intangible assets, deferred revenue and debt line items in such Persons consolidated financial statements pursuant to GAAP resulting from the application of purchase accounting in relation to any consummated acquisition after the Closing Date and any increase in amortization or depreciation or other noncash charges resulting therefrom and any write-off of any amounts thereof, net of taxes, shall be excluded.
Consolidated Net Secured Leverage Ratio means, as of the date of determination, the ratio of (a) the Consolidated Total Net Debt of the Borrower and its Restricted Subsidiaries on such date that is secured by Liens on the assets of the Borrower and its Restricted Subsidiaries, to (b) Consolidated EBITDA of the Borrower and its Restricted Subsidiaries for the most recently ended Test Period.
Consolidated Total Net Debt means, as of any date of determination, the aggregate principal amount of Consolidated Indebtedness of the Borrower and its Restricted Subsidiaries outstanding on such date, less up to $40 million of cash and Cash Equivalents (which are not Restricted Cash) that would be stated on the balance sheet of the Loan Parties as of such date of determination; provided that for purposes of determining the Consolidated Net Secured Leverage Ratio in connection with the incurrence of any Incremental Facilities incurred pursuant to Section 2.14 or any Permitted Debt Offerings incurred pursuant to Section 7.02(b)(20) only, the cash proceeds of such Incremental Facilities and/or Permitted Debt Offering shall not be deemed to be included on the consolidated balance sheet of the Borrower and its Restricted Subsidiaries.
Consolidated Total Debt means, as of any date of determination, the aggregate principal amount of Indebtedness of the Borrower and its Restricted Subsidiaries outstanding on such date, determined on a consolidated basis in accordance with GAAP, consisting of Indebtedness for borrowed money, Capitalized Lease Obligations and Attributable Indebtedness.
Consolidated Total Leverage Ratio means, as of the date of determination, the ratio of (a) the Consolidated Total Net Debt of the Borrower and its Restricted Subsidiaries on such date, to (b) Consolidated EBITDA of the Borrower and its Restricted Subsidiaries for the most recently ended Test Period.
Contingent Obligations means, with respect to any Person, any obligation of such Person guaranteeing any leases, dividends or other obligations that do not constitute
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Indebtedness ( primary obligations ) of any other Person (the primary obligor ) in any manner, whether directly or indirectly, including any obligation of such Person, whether or not contingent:
(a) to purchase any such primary obligation or any property constituting direct or indirect security therefor;
(b) 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; or
(c) to purchase property, 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 against loss in respect thereof.
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 has the meaning specified in the definition of Affiliate .
Credit Agreement Refinancing Indebtedness means any (a) Permitted Pari Passu Secured Refinancing Debt, (b) Permitted Junior Secured Refinancing Debt, (c) Permitted Unsecured Refinancing Debt or (d) Indebtedness incurred hereunder pursuant to a Refinancing Amendment, in each case, issued, incurred or otherwise obtained (including by means of the extension or renewal of existing Indebtedness) in exchange for, or to extend, renew, replace, repurchase, retire or refinance, in whole or part, existing Loans or Commitments hereunder, or any then-existing Credit Agreement Refinancing Indebtedness ( Refinanced Debt ); provided , that (i) such exchanging, extending, renewing, replacing, repurchasing, retiring or refinancing Indebtedness is in an original aggregate principal amount not greater than the aggregate principal amount of the Refinanced Debt except by an amount equal to unpaid accrued interest and premium (including tender premium) and penalties thereon plus reasonable upfront fees and OID on such exchanging, extending, renewing, replacing, repurchasing, retiring or refinancing Indebtedness, plus other reasonable and customary fees and expenses in connection with such exchange, modification, refinancing, refunding, renewal, replacement, repurchase, retirement or extension and (ii) such Refinanced Debt shall be repaid, repurchased, retired, defeased or satisfied and discharged, and all accrued interest, fees, premiums (if any) and penalties in connection therewith shall be paid, substantially concurrently with the date such Credit Agreement Refinancing Indebtedness is issued, incurred or obtained.
Credit Extension means each of the following: (a) a Borrowing and (b) an L/C Credit Extension.
Debtor Relief Laws means the United States Bankruptcy Code and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium,
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rearrangement, receivership, insolvency, reorganization or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.
Declined Proceeds has the meaning set forth in Section 2.05(b)(vi) .
Default means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default.
Default Rate means an interest rate equal to (a) the Base Rate plus (b) the Applicable Rate, if any, applicable to Base Rate Loans plus (c) 2.0% per annum ; provided , that with respect to a Eurodollar Rate Loan, the Default Rate shall be an interest rate equal to the interest rate (including any Applicable Rate) otherwise applicable to such Loan plus 2.0% per annum , in each case, to the fullest extent permitted by applicable Laws.
Defaulting Lender means any Lender that (a) has failed to fund any portion of the Term Loans, Revolving Credit Loans, participations in L/C Obligations or participations in Swing Line Loans required to be funded by it hereunder within two (2) Business Days of the date required to be funded by it hereunder, unless subsequently cured, unless such Lender notifies Administrative Agent and the Borrower in writing that such failure is the result of such Lenders good faith determination that one or more conditions precedent to funding (which conditions precedent, together with the applicable default or breach of a representation, if any, shall be specifically identified in such writing) has not been satisfied, (b) has otherwise failed to pay over to the Administrative Agent or any other Lender any other amount required to be paid by it hereunder within two (2) Business Days of the date when due, unless the subject of a good faith dispute or subsequently cured, (c) has notified the Borrower or the Administrative Agent or an L/C Issuer in writing that it does not intend to comply with its funding obligations or has made a public statement to that effect with respect to its funding obligations hereunder or generally under agreements in which it commits to extend credit, (d) has failed, within three (3) Business Days after written request by the Administrative Agent or the Borrower or, in the case of a Revolving Credit Lender, an L/C Issuer to confirm in a manner satisfactory to the Administrative Agent or the Borrower or, in the case of a Revolving Credit Lender, such L/C Issuer that it will comply with its funding obligations, or (e) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Law, (ii) had a receiver, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or a custodian appointed for it, or (iii) taken any action in furtherance of, or indicated its consent to, approval of or acquiescence in any such proceeding or appointment; provided , that a Lender shall not be a Defaulting Lender solely by virtue of (1) the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority or (2) an Undisclosed Administration.
Designated Jurisdiction means any country or territory to the extent that such country or territory itself is the subject of any Sanction.
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Designated Non-cash Consideration means the fair market value (as determined in good faith by the Borrower) of non-cash consideration received by the Borrower or any of its Restricted Subsidiaries in connection with a Disposition.
Disposition or Dispose means:
(a) the sale, conveyance, transfer or other disposition, whether in a single transaction or a series of related transactions, of property or assets (including by way of a Sale and Lease-Back Transaction) of the Borrower or any of its Restricted Subsidiaries (each referred to in this definition as a disposition ); or
(b) the issuance or sale of Equity Interests (other than directors qualifying shares or shares or interests required to be held by foreign materials or other third parties to the extent required by applicable law) of any Restricted Subsidiary (other than Preferred Stock of Restricted Subsidiaries issued in compliance with Section 7.02 ), whether in a single transaction or a series of related transactions.
Disqualified Lenders means such Persons who are competitors of the Borrower and its Subsidiaries that are identified in writing by the Borrower to the Administrative Agent; provided that any Person that is a Lender and subsequently becomes a Disqualified Lender (but was not a Disqualified Lender on the Closing Date or at the time it became a Lender) shall not retroactively be deemed to be a Disqualified Lender hereunder.
Disqualified Stock means, with respect to any Person, any Capital Stock of such Person which, by its terms, or by the terms of any security into which it is convertible or for which it is putable or exchangeable, or upon the happening of any event, matures or is mandatorily redeemable (other than solely as a result of a change of control or asset sale) pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof (other than solely as a result of a change of control or asset sale), in whole or in part, in each case prior to the date ninety one (91) days after the earlier of the Latest Maturity Date at the time of issuance of such Capital Stock or the date the Loans are no longer outstanding; provided , however , that only the portion of Capital Stock which so matures or is mandatorily redeemable, is so convertible or exchangeable or is so redeemable at the option of the holder thereof prior to such date shall be deemed to be Disqualified Stock; provided , further , however , that if such Capital Stock is issued to any employee or any plan for the benefit of employees of the Borrower or its Subsidiaries or by any such plan to such employees, such Capital Stock shall not constitute Disqualified Stock solely because it may be required to be repurchased by the Borrower or its Subsidiaries in order to satisfy applicable statutory or regulatory obligations or as a result of any such employees termination, death or disability; provided , further , however , that any class of Capital Stock of such Person that by its terms authorizes such Person to satisfy its obligations thereunder by delivery of Capital Stock that is not Disqualified Stock shall not be deemed to be Disqualified Stock.
Distribution means Kimberly-Clarks distribution of the shares of the Borrowers common stock to Kimberly-Clarks stockholders.
Distribution Date means the date on which the Distribution is made.
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Dollar and $ mean lawful money of the United States.
Dollar Equivalent of any amount expressed, at the time of determination thereof, (a) if such amount is expressed in Dollars, such amount, and (b) in any Alternative Currency, means the equivalent amount thereof in Dollars as determined by the applicable L/C Issuer or, in the absence of such determination, the Revolver Administrative Agent at such time on the basis of the Spot Rate (determined as of the most recent Revaluation Date) for the purchase of Dollars with such Alternative Currency.
Domestic Subsidiary means any Subsidiary that is organized under the laws of the United States, any state thereof or the District of Columbia but excluding any such Subsidiary that is a Subsidiary of a Foreign Subsidiary.
Eligible Assignee means and includes a commercial bank, an insurance company, a finance company, a financial institution, any Fund or any other accredited investor (as defined in Regulation D of the Securities Act) but in any event excluding (x) natural persons, (y) any Defaulting Lender and (z) any Disqualified Lender.
Employee Matters Agreement means the Employee Matters Agreement between Kimberly-Clark and the Borrower, to be dated on or prior to the Distribution Date.
EMU means economic and monetary union as contemplated in the Treaty on European Union.
Environment means indoor air, ambient air, surface water, groundwater, drinking water, land surface, subsurface strata, and natural resources such as wetlands, flora and fauna.
Environmental Laws means the common law and any and all Federal, state, local, and foreign statutes, Laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution, the protection of the Environment or, to the extent relating to the handling of or exposure to Hazardous Materials, human health, safety or to the Release or threat of Release of Hazardous Materials into the Environment.
Environmental Liability means any liability, contingent or otherwise (including any liability for damages, costs of investigation and remediation, fines, penalties or indemnities), of the Loan Parties or any Restricted Subsidiary directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the Release or threatened Release of any Hazardous Materials into the Environment, or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.
Environmental Permit means any permit, approval, identification number, license or other authorization required under any Environmental Law.
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Equity Interests means Capital Stock and all warrants, options or other rights to acquire Capital Stock, but excluding any debt security that is convertible into, or exchangeable for, Capital Stock.
Equity Offering means any public or private sale of common stock or Preferred Stock of the Borrower (excluding Disqualified Stock), other than:
(a) public offerings with respect to any such Persons common stock registered on Form S-8;
(b) issuances to any Subsidiary of the Borrower; and
(c) Refunding Capital Stock.
ERISA means the Employee Retirement Income Security Act of 1974, as amended from time to time.
ERISA Affiliate means any trade or business (whether or not incorporated) that is under common control with a Loan Party within the meaning of Section 414 of the Code or Section 4001 of ERISA.
ERISA Event means (a) a Reportable Event with respect to a Pension Plan; (b) with respect to any Pension Plan, the failure to satisfy the minimum funding standards under Section 412 of the Code or Section 302 of ERISA, whether or not waived; (c) a withdrawal by a Loan Party or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (d) a complete or partial withdrawal by a Loan Party or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is insolvent or in reorganization, within the meaning of Title IV of ERISA, or in endangered or critical status, within the meaning of Section 432 of the Code or Section 305 of ERISA; (e) the filing of a notice of intent to terminate, the treatment of a plan amendment as a termination under Sections 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (f) an event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; or (g) the imposition of any liability under Title IV of ERISA by the PBGC, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon a Loan Party or any ERISA Affiliate with respect to any Pension Plan or Multiemployer Plan.
euro means the single currency of participating member states of the EMU.
Eurodollar Rate means:
(a) for any Interest Period with respect to a Eurodollar Rate Loan, the rate per annum equal to the London Interbank Offered Rate ( LIBOR ), or a successor rate which rate is approved by the applicable Administrative Agent, as published on the applicable Reuters screen page (or such other commercially available source providing such quotations as may be reasonably designated by the applicable Administrative Agent
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from time to time) at approximately 11:00 a.m., London time, two (2) Business Days prior to the commencement of such Interest Period, for Dollar deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period; and
(b) for any interest calculation with respect to a Base Rate Loan on any date, the rate per annum equal to LIBOR, at or about 11:00 a.m., London time determined two (2) Business Days prior to such date for U.S. Dollar deposits with a term of one (1) month commencing that day;
provided , that to the extent a comparable or successor rate is approved by the applicable Administrative Agent in connection herewith, the approved rate shall be applied in a manner consistent with market practice; provided , further that to the extent such market practice is not administratively feasible for the applicable Administrative Agent, such approved rate shall be applied in a manner as otherwise reasonably determined by the applicable Administrative Agent; provided , further , that the Eurodollar Rate with respect to Term Loans that bear interest at a rate based on clause (a) of this definition will be deemed not to be less than 0.75% per annum .
Eurodollar Rate Loan means a Loan that bears interest at a rate based on the Eurodollar Rate.
Event of Default has the meaning specified in Section 8.01 .
Exchange Act means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder.
Excess Cash Flow means, for any period that consists of a fiscal year,
(a) the sum of (without duplication):
(i) Consolidated Net Income of the Borrower and its Restricted Subsidiaries for such period, plus
(ii) the aggregate amount of all non-cash charges, expenses and losses deducted in arriving at such Consolidated Net Income, but excluding any such non-cash charges representing an accrual or reserve for potential cash items in any future period and excluding amortization of a prepaid cash item paid in a prior period, plus
(iii) if there was a net increase in Consolidated Current Liabilities (other than the current portion of the obligations due in respect of the Term Loans) of the Borrower and its Restricted Subsidiaries during such period, the amount of such net increase plus
(iv) if there was a net decrease in Consolidated Current Assets (excluding cash and Cash Equivalents) of the Borrower and its Subsidiaries during such period, the amount of such net decrease less
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(b) the sum of (without duplication):
(i) the aggregate amount of all non-cash credits included in arriving at such Consolidated Net Income plus
(ii) if there was a net decrease in Consolidated Current Liabilities (other than the current portion of the obligations due in respect of the Term Loans) of the Borrower and its Subsidiaries during such period, the amount of such net decrease plus
(iii) if there was a net increase in Consolidated Current Assets (excluding cash and Cash Equivalents) of the Borrower and its Restricted Subsidiaries during such period, the amount of such net increase plus
(iv) the aggregate amount of Capital Expenditures of the Borrower and its Restricted Subsidiaries paid in cash during such period, excluding any payment financed by the issuance of Indebtedness or Equity Interests (or equity contribution), plus
(v) the aggregate amount of all regularly scheduled principal payments of Consolidated Total Debt (other than Current Liabilities) made during such period with internally generated funds plus
(vi) the aggregate principal amount of all optional or mandatory prepayments of Consolidated Total Debt (other than Current Liabilities, the Facilities and Indebtedness that is revolving in nature unless such prepayment is accompanied by a permanent commitment reduction in the same amount as such prepayment) made during such period with internally generated funds plus
(vii) the aggregate amount of internally generated cash used to make Permitted Acquisitions and other Permitted Investments made by the Borrower and its Restricted Subsidiaries during such period plus
(viii) to the extent taken into account in calculating such Consolidated Net Income (or loss), the income of any Person which is not a Restricted Subsidiary of Borrower, except to the extent of the amount of dividends or other distributions actually paid to a Borrower or any of its Restricted Subsidiaries in cash by such Person during such period and the payment of dividends or distributions by that Person is not prohibited by operation of the terms of its charter or of any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Person plus
(ix) to the extent taken into account in calculating such Consolidated Net Income (or loss), the income of any Person accrued prior to the date it becomes a Restricted Subsidiary of Borrower or is merged into or consolidated with Borrower or any of its Restricted Subsidiaries or that Persons assets are acquired by Borrower or any of its Restricted Subsidiaries plus
(x) the amount deducted as tax expense in determining Consolidated Net Income actually paid in cash by the Borrower or its Restricted Subsidiaries during such period plus
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(xi) the amount of Restricted Payments made in cash pursuant to Section 7.05 (other than Clauses (a), (c), (d), (f), (k), (l), (o) and (p)) plus
(xii) the amount of Permitted Investments described in clause (q) of the definition of such term and acquisitions made during such period to the extent that such Investments and acquisitions (i) were financed with internally generated cash flow of the Borrower and its Restricted Subsidiaries and (ii) were not investments in the Borrower or any of its Restricted Subsidiaries.
Excluded Asset has the meaning given such term in the Security Agreement.
Excluded Subsidiary means (a) any Subsidiary that is not a Wholly Owned Subsidiary; (b) any Immaterial Subsidiary; (c) any Subsidiary that is prohibited by applicable Law, or by Contractual Obligations existing on the Closing Date (or, in the case of any future acquisition, as of the closing date of such acquisition, so long as such prohibition is not incurred in contemplation of such acquisition), from guaranteeing the Obligations or would require the approval, consent, license or authorization of any Governmental Authority in order to guarantee the Obligations (unless such approval, consent, license or authorization has been received); (d) any other Subsidiary with respect to which, in the reasonable judgment of the Administrative Agent and the Borrower, the cost or other consequences (including any adverse tax consequences) of providing a Guarantee shall be excessive in view of the benefits to be obtained by the Lenders therefrom; (e) any Receivables Subsidiary; (f) any Foreign Subsidiary; (g) any Unrestricted Subsidiary; and (h) any CFC or CFC Holdco.
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 Guarantors 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. If a Swap Obligation arises under a master agreement governing more than one Swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to Swaps for which such Guarantee or security interest is or becomes illegal.
Excluded Taxes means any of the following Taxes imposed on or with respect to any Recipient or required to be withheld or deducted from a payment to or on account of a Recipient, (a) any Taxes imposed on or measured by net income (however denominated) or profits, franchise Taxes or branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized or having its principal office or applicable Lending Office 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, any 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 at the time (i) such Lender becomes a party hereto or acquires such interest in the Loan or Commitment (other than pursuant to the Borrowers request under Section 10.13 ) or (ii) such Lender designates a new Lending Office,
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except to the extent that such Lender (or its assignor, if any) was entitled, immediately prior to the time of designation of a new Lending Office (or assignment), to receive additional amounts from a Loan Party with respect to such Taxes pursuant to Section 3.01(a) or (c) ; (c) any Taxes attributable to such Recipients failure to comply with Section 3.01(d) ; and (d) any U.S. federal withholding Taxes imposed pursuant to FATCA.
Executive Order has the meaning set forth in Section 5.15 .
Extended Letter of Credit has the meaning set forth in Section 2.03(a)(ii)(C) .
Extended Revolving Credit Commitment has the meaning set forth in Section 2.16 .
Extended Term Loan has the meaning set forth in Section 2.16 .
Extending Lender has the meaning set forth in Section 2.16 .
Extension has the meaning set forth in Section 2.16 .
Extension Offer has the meaning set forth in Section 2.16 .
Facility means the Term Loans, the Revolving Credit Facility, the Swing Line Sublimit or the Letter of Credit Sublimit, as the context may require.
FCPA means Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder.
FATCA means Sections 1471 through 1474 of the Code as of the date hereof (and any amended or successor version that is substantively comparable and not materially more onerous to comply with), any intergovernmental agreement for the implementation of Sections 1471 through 1474 of the Code, any agreements entered into pursuant to current Section 1471(b)(1) of the Code (or any amended or successor version described above) and any current or future Treasury regulations or official administrative interpretations thereof.
Federal Funds Rate means, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided , that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to in the case of the Revolving Credit Commitments, Citibank, and, in the case of the Term Loans, MSSF, on such day on such transactions as determined by the Administrative Agent.
Financial Covenant Event of Default has the meaning set forth in Section 8.01(b) .
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Foreign Lender means any Lender that is not a United States person as defined in Section 7701(a)(30) of the Code.
Foreign Plan means any employee benefit plan, program or agreement maintained or contributed to by, or entered into with, the Borrower or any Subsidiary with respect to employees employed outside the United States (other than benefit plans, programs or agreements that are mandated by applicable Laws).
Foreign Subsidiary means (i) any Subsidiary which is not a Domestic Subsidiary or (ii) any direct or indirect Subsidiary of a Subsidiary described in the preceding clause (i) .
Form 10 means the registration statement on Form 10 originally filed by the Borrower with the SEC on May 6, 2014, as amended or supplemented.
FRB means the Board of Governors of the Federal Reserve System of the United States.
Fronting Exposure means, at any time there is a Revolving Credit Lender that is a Defaulting Lender, (a) with respect to any L/C Issuer, such Defaulting Lenders Applicable Percentage of the outstanding L/C Obligations with respect to Letters of Credit issued by such L/C Issuer other than L/C Obligations as to which such Defaulting Lenders participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof and (b) with respect to the Swing Line Lender, such Defaulting Lenders Applicable Percentage of outstanding Swing Line Loans other than Swing Line Loans as to which such Defaulting Lenders participation obligation has been reallocated to Non-Defaulting Lenders.
Fund means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its activities.
GAAP means generally accepted accounting principles in the United States, as in effect from time to time, subject to Section 1.03 .
Governmental Authority means any nation or government, any state, county, provincial or other political subdivision thereof, any agency, authority, instrumentality, regulatory body, court, administrative tribunal, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supranational bodies such as the European Union or the European Central Bank).
Granting Lender has the meaning specified in Section 10.06(g) .
Guarantee means a guarantee (other than by endorsement of negotiable instruments for collection or deposit in the ordinary course of business), direct or indirect, in any manner (including letters of credit and reimbursement agreements in respect thereof), of all or any part of any Indebtedness or other obligations.
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Guaranteed Obligations has the meaning specified in Section 11.01 .
Guarantors means (a) the Subsidiaries of the Borrower party hereto as of the Closing Date and those Restricted Subsidiaries that become Guarantors after the Closing Date pursuant to Section 6.11 , in each case (i) other than any Foreign Subsidiary, any Subsidiary of such Foreign Subsidiary or any CFC or CFC Holdco and/or (ii) until released in accordance with the terms hereof, and (b) with respect to obligations and liabilities owing by any Loan Party (other than the Borrower) in respect of Secured Hedging Agreements or Treasury Services Agreements, the Borrower.
Guaranty means, collectively, the guaranty of the Obligations by the Guarantors pursuant to this Agreement.
Hazardous Materials means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or pollutants or contaminants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, mold, infectious or medical wastes that are regulated pursuant to, or the Release or exposure to which could give rise to liability under, applicable Environmental Law.
Hedge Bank means any Person that is the Administrative Agent, an Arranger or a Lender or an Affiliate of the Administrative Agent, an Arranger, or a Lender on the Closing Date or at the time it enters into a Secured Hedge Agreement or a Treasury Services Agreement, as applicable, in its capacity as a party thereto.
Hedging Obligations means, with respect to any Person, the obligations of such Person under any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, commodity swap agreement, commodity cap agreement, commodity collar agreement, foreign exchange contract, currency swap agreement or similar agreement providing for the transfer or mitigation of interest rate, commodity price or currency risks either generally or under specific contingencies (including indemnity agreements or arrangements in connection with the foregoing).
Hedging Termination Value means, in respect of Hedging Obligations, after taking into account the effect of any legally enforceable netting agreement relating to such Hedge Obligations, (a) for any date on or after the date such Hedge Obligations have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Hedge Obligations, as determined based upon one or more mid-market or other readily available quotations provided by a ny recognized dealer in such Hedge Obligations (which may include a Lender or any Affiliate of a Lender).
Honor Date has the meaning set forth in Section 2.03(c)(i) .
Immaterial Subsidiary means any Subsidiary of the Borrower (x) whose total assets (after intercompany eliminations), together with the total assets of all of its Restricted Subsidiaries, constitute no more than 5% of the Total Assets of the Borrower and its Restricted Subsidiaries and (y) whose total revenue, together with the total revenue of all of its Restricted Subsidiaries, constitutes no more than 5% of the total revenue of the Borrower and its Restricted
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Subsidiaries, in each case as determined as of the date of the most recent financial statements delivered pursuant to Section 6.01(a). Notwithstanding the foregoing, if (i) the total assets of all Immaterial Subsidiaries determined in accordance with the prior sentence would constitute more than 5% of the Total Assets of the Borrower and its Restricted Subsidiaries or (ii) the total revenue of all such Immaterial Subsidiaries determined in accordance with the prior sentence would constitute more than 5% of the total revenue of the Borrower and its Restricted Subsidiaries, in each case as determined as of the date of the most recent financial statements delivered pursuant to Section 6.01(a), then the Borrower shall in a written notice to the Administrative Agents designate one or more of such Subsidiaries to not be Immaterial Subsidiaries for purposes of this Agreement so that the conditions of this sentence shall be satisfied. The Borrower may in a written notice to the Administrative Agents designate as an Immaterial Subsidiary one or more Subsidiaries previously designated not to be Immaterial Subsidiaries pursuant to the preceding sentence so long as immediately after giving effect to such designation the conditions of the preceding sentence would be satisfied.
Incremental Amendment has the meaning set forth in Section 2.14(a) .
Incremental Equivalent Debt means Indebtedness issued in accordance with Section 2.14(g) consisting of one or more series of senior secured, junior lien, unsecured or subordinated notes or loans, in each case issued in a public offering, Rule 144A or other private placement transaction, including without limitation, a bridge facility in lieu of the foregoing, or secured or unsecured mezzanine Indebtedness or debt securities, in each case subject to the terms set forth in Section 2.14(g) .
Incremental Facility has the meaning set forth in Section 2.14(a).
Incremental Revolving Commitment has the meaning set forth in Section 2.14(a) .
Incremental Revolving Credit Facility has the meaning set forth in Section 2.14(a) .
Incremental Term Loans has the meaning set forth in Section 2.14(a) .
Indebtedness means, with respect to any Person, without duplication:
(a) any indebtedness (including principal and premium) of such Person, whether or not contingent:
(i) in respect of borrowed money;
(ii) evidenced by bonds, notes, debentures or similar instruments or letters of credit or bankers acceptances (or, without duplication, reimbursement agreements in respect thereof);
(iii) representing the deferred and unpaid balance of the purchase price of any property or services, except (x) any such balance that constitutes a trade payable or similar obligation to a trade creditor, in each case accrued in the
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ordinary course of business, (y) any earn-out obligations until such obligation becomes due and payable and is not so paid, and (z) liabilities accrued in the ordinary course of business; or
(iv) representing any Hedging Obligations;
if and to the extent that any of the foregoing Indebtedness (other than letters of credit, bankers acceptances (or reimbursement agreements in respect thereof) and Hedging Obligations) would appear as a liability upon a balance sheet (excluding the footnotes thereto) of such Person prepared in accordance with GAAP;
(b) all Attributable Debt and all Capitalized Lease Obligations;
(c) to the extent not otherwise included, any obligation of such Person to be liable for, or to pay, as obligor, guarantor or otherwise, on Indebtedness of the type referred to in clause (a) of a third Person (whether or not such items would appear upon the balance sheet of such obligor or guarantor), other than by endorsement of negotiable instruments for collection in the ordinary course of business; and
(d) to the extent not otherwise included, any Indebtedness of the type referred to in clause (a) of a third Person secured by a Lien on any asset owned by such first Person (other than Liens on Equity Interests of Unrestricted Subsidiaries securing, respectively, Indebtedness of such Unrestricted Subsidiaries), whether or not such Indebtedness is assumed by such first Person; provided , for purposes hereof the amount of such Indebtedness shall be the lesser of the Indebtedness so secured and the fair market value of the assets of the first person securing such Indebtedness;
provided , however , that notwithstanding the foregoing, Indebtedness shall be deemed not to include (a) Contingent Obligations incurred in the ordinary course of business, (b) deferred or prepaid revenues and (c) obligations under or in respect of Receivables Facilities. Furthermore, notwithstanding the foregoing, any Indebtedness that has been defeased in accordance with GAAP or defeased pursuant to the deposit of cash or Cash Equivalents (in an amount sufficient to satisfy all such obligations relating to such Indebtedness at maturity or redemption, as applicable, and all payments of interest and premium, if any) in a trust or account created or pledged for the sole benefit of the holders of such Indebtedness, and subject to no other Liens, and the other applicable terms of the instrument governing such Indebtedness, shall not constitute or be deemed Indebtedness; provided that such defeasance has been made in a manner not prohibited by this Agreement.
Indemnified Taxes means (a) all 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) above, Other Taxes.
Indemnitees has the meaning set forth in Section 10.04 .
Independent Financial Advisor means an accounting, appraisal, investment banking firm or consultant to Persons engaged in Similar Businesses of nationally recognized standing that is, in the good faith judgment of the Borrower, qualified to perform the task for which it has been engaged.
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Information has the meaning set forth in Section 10.07 .
Intellectual Property Security Agreement has the meaning specified in Section 4.01(a)(iii) .
Intellectual Property Agreements means each of the intellectual property license agreement and trademark license agreement between Kimberly-Clark and the Borrower, to be dated on or prior to the Distribution Date.
Intercreditor Agreement means a first lien intercreditor agreement substantially in the form of Exhibit I-1 hereto, among the Administrative Agent, the Collateral Agent and the Representatives for any Additional First Lien Secured Parties (as defined therein) (which agreement in such form or with immaterial changes thereto the Administrative Agent is authorized to enter into) together with any material changes thereto in light of prevailing market conditions, which material changes shall be posted to the Lenders not less than five (5) Business Days before execution thereof and, if the Required Lenders shall not have objected to such changes within five (5) Business Days after posting, then the Required Lenders shall be deemed to have agreed that the Administrative Agents entry into such intercreditor agreement (with such changes) is reasonable and to have consented to such intercreditor agreement (with such changes) and to the Administrative Agents execution thereof.
Interest Payment Date means, (a) as to any Eurodollar Rate Loan, the last day of each Interest Period applicable to such Loan and the Maturity Date of the Facility under which such Loan was made; provided , that if any Interest Period for a Eurodollar Rate Loan exceeds three (3) months, the respective dates that fall every three (3) months after the beginning of such Interest Period shall also be Interest Payment Dates, and (b) as to any Base Rate Loan (including a Swing Line Loan), the last Business Day of each March, June, September and December and the Maturity Date of the Facility under which such Loan was made.
Interest Period means, as to each Eurodollar Rate Loan, the period commencing on the date such Eurodollar Rate Loan is disbursed or converted to or continued as a Eurodollar Rate Loan and ending on the date one (1), three (3) or six (6) months thereafter or, to the extent agreed by each Lender of such Eurodollar Rate Loan, twelve (12) months thereafter, as selected by the Borrower in its Committed Loan Notice; provided , that:
(a) any Interest Period that would otherwise 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;
(b) any 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) shall end on the last Business Day of the calendar month at the end of such Interest Period; and
(c) no Interest Period shall extend beyond the Maturity Date of the Facility under which such Loan was made.
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Investment Grade Rating means a rating equal to or higher than Baa3 (or the equivalent) by Moodys and BBB- (or the equivalent) by S&P, or an equivalent rating by any other Rating Agency, and in each such case with a stable or better outlook.
Investment Grade Securities means:
(a) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof (other than Cash Equivalents);
(b) debt securities or debt instruments with an Investment Grade Rating, but excluding any debt securities or instruments constituting loans or advances among the Borrower and its Subsidiaries;
(c) investments in any fund that invests exclusively in investments of the type described in clauses (a) and (b) which fund may also hold immaterial amounts of cash pending investment or distribution; and
(d) corresponding instruments in countries other than the United States customarily utilized for high quality investments.
Investments means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the form of loans (including guarantees), advances or capital contributions (excluding accounts receivable, trade credit, deposits, advances to customers, dealers, distributors and suppliers, commission, payroll, travel and similar advances to directors, officers and employees, in each case made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities issued by any other Person and investments that are required by GAAP to be classified on the balance sheet (excluding the footnotes) of such Person in the same manner as the other investments included in this definition to the extent such transactions involve the transfer of cash or other property. For purposes of the definition of Unrestricted Subsidiary and Section 7.06 :
(a) Investments shall include the portion (proportionate to the Borrowers direct or indirect equity interest in such Subsidiary) of the fair market value (as determined in good faith by the Borrower) of the net assets of a Subsidiary of the Borrower at the time that such Subsidiary is designated an Unrestricted Subsidiary; provided , however , that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Borrower or applicable Restricted Subsidiary shall be deemed to continue to have a permanent Investment in an Unrestricted Subsidiary in an amount (if positive) equal to:
(A) the Borrowers direct or indirect Investment in such Subsidiary at the time of such redesignation; less
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(B) the portion (proportionate to the Borrowers direct or indirect equity interest in such Subsidiary) of the fair market value (as determined in good faith by the Borrower) of the net assets of such Subsidiary at the time of such redesignation; and
(b) any property transferred to or from an Unrestricted Subsidiary shall be valued at its fair market value at the time of such transfer as determined in good faith by the Borrower.
If the Borrower or any Restricted Subsidiary sells or otherwise disposes of any Equity Interests of any direct or indirect Restricted Subsidiary such that, after giving effect to any such sale or disposition, such Person is no longer a Restricted Subsidiary, the Borrower will be deemed to have made an Investment on the date of any such sale or disposition equal to the fair market value of the Equity Interests of such Restricted Subsidiary not sold or disposed. The acquisition by the Borrower or any Restricted Subsidiary of a Person that holds an Investment in a third Person will be deemed to be an Investment by the Borrower or such Restricted Subsidiary in such third Person in an amount equal to the fair market value of the Investment held by the acquired Person in such third Person.
The amount of any Investment outstanding at any time shall be the original cost of such Investment, without giving effect to subsequent changes in value but reduced by any dividend, distribution, interest payment, return of capital, repayment or other amount received in cash by the Borrower or a Restricted Subsidiary in respect of such Investment.
IP Rights has the meaning set forth in Section 5.16 .
ISP means, with respect to any Letter of Credit, the International Standby Practices 1998 published by the Institute of International Banking Law & Practice, Inc. (or such later version thereof as may be in effect at the time of issuance).
Issuer Documents means with respect to any Letter of Credit, the Letter of Credit Application, and any other document, agreement and instrument entered into by any L/C Issuer and the Borrower (or any Subsidiary) or in favor of such L/C Issuer and relating to such Letter of Credit.
Kimberly-Clark means Kimberly-Clark Corporation, a Delaware corporation.
L/C Advance means, with respect to each Revolving Credit Lender, such Lenders funding of its participation in any L/C Borrowing in accordance with its Pro Rata Share.
L/C Borrowing means an extension of credit resulting from a drawing under any Letter of Credit which has not been timely reimbursed or refinanced as a Revolving Credit Borrowing in accordance with Section 2.03(c) .
L/C Commitment means, with respect to any L/C Issuer, the aggregate face amount of Letters of Credit that such L/C Issuer has committed, in writing, to provide subject to the terms and conditions set forth in this Agreement. The L/C Commitments of the L/C Issuers as of the Closing Date are as set forth on Schedule 1.01B .
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L/C Credit Extension means, with respect to any Letter of Credit, the issuance thereof or extension of the expiry date thereof, or the renewal or increase of the amount thereof.
L/C Issuer means (a) each Person identified on Schedule 1.01B and (b) any other Revolving Credit Lender that becomes an L/C Issuer in accordance with Section 2.03(k) or 10.06(h) following the Closing Date, in each case, in its capacity as an issuer of Letters of Credit hereunder, or any successor issuer of Letters of Credit hereunder and, in the case of clause (b) , subject to such Lenders acceptance of such appointment. Any reference to L/C Issuer herein shall be to the applicable L/C Issuer, as appropriate.
L/C Obligations means, as at any date of determination, the aggregate undrawn amount of all outstanding Letters of Credit (determined, in the case of Letters of Credit denominated in an Alternative Currency, by reference to the Dollar Equivalent on such date of determination) plus the aggregate of all Unreimbursed Amounts, including all L/C Borrowings.
Latest Maturity Date means, at any date of determination, the latest Maturity Date applicable to any Loan or Commitment hereunder at such time, including the latest maturity date of any Incremental Term Loan Commitment, any Other Term Loan Commitment, any Extended Term Loan, any Extended Revolving Credit Commitment, any Incremental Term Loans, any Incremental Revolving Credit Commitments, in each case as extended in accordance with this Agreement from time to time.
Laws means, collectively, all international, foreign, Federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority.
Lender has the meaning specified in the introductory paragraph to this Agreement and, as the context requires, includes an L/C Issuer and a Swing Line Lender, and their respective successors and assigns as permitted hereunder, each of which is referred to herein as a Lender .
Lending Office means, as to any Lender, such office or offices as a Lender may from time to time notify the Borrower and the applicable Administrative Agent.
Letter of Credit means any letter of credit issued hereunder.
Letter of Credit Application means an application and agreement for the issuance or amendment of a Letter of Credit in the form from time to time in use by the relevant L/C Issuer.
Letter of Credit Expiration Date means the day that is five (5) Business Days prior to the scheduled Maturity Date then in effect for the Revolving Credit Facility.
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Letter of Credit Sublimit means an amount equal to the lesser of (a) $75 million and (b) the aggregate amount of the Revolving Credit Commitments. The Letter of Credit Sublimit is part of, and not in addition to, the Revolving Credit Facility.
LIBOR has the meaning specified in the definition of Eurodollar Rate .
Lien means, with respect to any asset, any mortgage, lien (statutory or otherwise), pledge, hypothecation, charge, security interest, preference, priority or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or similar agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction; provided , that in no event shall an operating lease be deemed to constitute a Lien.
Loan means an extension of credit by a Lender to the Borrower under Article II in the form of a Term Loan, a Revolving Credit Loan or a Swing Line Loan.
Loan Documents means, collectively, (a) this Agreement, (b) the Notes, (c) the Collateral Documents, (d) the Intercreditor Agreement (if any), (e) the Second Lien Intercreditor Agreement (if any) and (f) amendments of and joinders to any Loan Documents that are deemed pursuant to their terms to be Loan Documents for purposes hereof.
Loan Extension Agreement means an agreement among the Borrower and one or more Extending Lenders implementing the terms of any applicable Extension Offer pursuant to Section 2.16 .
Loan Parties means, collectively, the Borrower and each Guarantor.
Manufacturing and Supply Agreements means one or more manufacturing and/or supply agreements between Kimberly-Clark and the Borrower (or their respective Affiliates) to be dated on or prior to the Distribution Date.
Margin Stock has the meaning specified in Section 5.13(a) .
Master Agreement has the meaning specified in the definition of Swap Contract .
Material Adverse Effect means a material adverse effect on (a) the business, assets, operations, or financial condition of the Borrower and its Subsidiaries, taken as a whole, (b) the ability of the Borrower and the other Loan Parties, taken as a whole, to perform their obligations under this Agreement, or (c) the material rights and remedies of the Administrative Agent and the Lenders under this Agreement.
Material Subsidiary means any Subsidiary of the Borrower that is not an Immaterial Subsidiary.
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Maturity Date means (a) with respect to the Term Loans, October 31, 2021 and (b) with respect to the Revolving Credit Facility, October 31, 2019; provided , that if either such day is not a Business Day, the Maturity Date shall be the Business Day immediately succeeding such day.
Maximum Incremental Facilities Amount means, at any date of determination, a principal amount of not greater than (a) $255 million plus ( ii) all voluntary prepayments of the Term Loans or Incremental Term Loans and voluntary commitment reductions of the Revolving Credit Facility, plus (b) an unlimited amount, so long as on a Pro Forma Basis after giving effect to the incurrence of any such Incremental Facility or any Permitted Debt Offering (and after giving effect to any acquisition consummated concurrently therewith and calculated as if any Incremental Revolving Increase were fully drawn on the closing date thereof), the Consolidated Net Secured Leverage Ratio is equal to or less than 2.50 to 1.00 for the most recently ended Test Period for which financial statements have been delivered pursuant to Section 6.01 .
Maximum Rate has the meaning specified in Section 10.09 .
Moodys means Moodys Investors Service, Inc. and any successor to its rating agency business.
Mortgage has the meaning specified in Section 6.11(c) .
MSSF has the meaning specified in the recital of parties to this Agreement.
Multiemployer Plan means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which the Borrower, any Subsidiary or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions.
Net Income means, with respect to any Person, the net income (loss) attributable to such Person and its Restricted Subsidiaries, determined in accordance with GAAP and before any reduction in respect of Preferred Stock dividends.
Net Proceeds means:
(a) with respect to any Disposition or Casualty Event, 100% of the cash proceeds actually received by the Borrower or any of its Restricted Subsidiaries from such Disposition or Casualty Event, net of (i) attorneys fees, accountants fees, investment banking fees, survey costs, title insurance premiums, and related search and recording charges, transfer taxes, deed or mortgage recording taxes, required debt payments and required payments of other obligations relating to the applicable asset to the extent such debt or obligations are secured by a Lien permitted hereunder (other than pursuant to the Loan Documents and Credit Agreement Refinancing Indebtedness) on such asset, other customary expenses and brokerage, consultant and other customary fees actually incurred in connection therewith, (ii) Taxes paid or payable as a result thereof, (iii) in the case of any Disposition or Casualty Event by a Restricted Subsidiary that is not a Wholly-Owned Subsidiary, the pro-rata portion of the Net Cash Proceeds thereof
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(calculated without regard to this clause (iii) ) attributable to minority interests and not available for distribution to or for the account of the Borrower or a Restricted Subsidiary that is a Wholly-Owned Subsidiary as a result thereof, and (iv) the amount of any reasonable reserve established in accordance with GAAP against any adjustment to the sale price or any liabilities (other than any taxes deducted pursuant to clause (i) above) (x) related to any of the applicable assets and (y) retained by the Borrower or any of its Restricted Subsidiaries including pension and other post-employment benefit liabilities and liabilities related to environmental matters or against any indemnification obligations (however, the amount of any subsequent reduction of such reserve (other than in connection with a payment in respect of any such liability) shall be deemed to be Net Proceeds of such Disposition or Casualty Event occurring on the date of such reduction); provided , that, if the Borrower intends to use any portion of such proceeds to acquire, maintain, develop, construct, improve, upgrade or repair assets useful in the business of the Borrower or any of its Restricted Subsidiaries or to make Permitted Acquisitions or any acquisition of all or substantially all the assets of, or all the Equity Interests (other than directors qualifying shares) in, a Person or division or line of business of a Person (or any subsequent investment made in a Person, division or line of business previously acquired), in each case within twelve (12) months of such receipt (or eighteen (18) months if the Borrower enters into a Contractual Obligation to so use such portion of such proceeds), such portion of such proceeds shall not constitute Net Proceeds except to the extent not, within twelve (12) months of such receipt (or eighteen (18) months if the Borrower has entered into a Contractual Obligation to so use such proceeds), so used (it being understood that if any portion of such proceeds are not so used within such period, such remaining portion shall constitute Net Proceeds as of the date of such termination or expiry without giving effect to this proviso) and
(b) with respect to any Indebtedness, 100% of the cash proceeds from the incurrence, issuance or sale by the Borrower or any of its Restricted Subsidiaries of such Indebtedness, net of all taxes and fees (including investment banking fees), commissions, costs and other expenses, in each case incurred in connection with such issuance or sale.
For purposes of calculating the amount of Net Proceeds, fees, commissions and other costs and expenses payable to the Borrower or any Affiliate shall be disregarded.
Non-Defaulting Lender means, at any time, each Lender that is not a Defaulting Lender at such time.
Non-Extension Notice Date has the meaning specified in Section 2.03(b)(iii) .
Non-Guarantor Subsidiary means any Subsidiary that is not a Guarantor.
Note means a Term Note, a Revolving Credit Note or a Swing Line Note, as the context may require.
NPL means the National Priorities List under CERCLA.
Obligations means all (a) advances to, and debts, liabilities, obligations, covenants and duties of, any Loan Party arising under any Loan Document or otherwise with
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respect to any Loan or Letter of Credit, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against any Loan Party of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding and (b) obligations of the Borrower or any Restricted Subsidiary arising under any Secured Hedge Agreement or any Treasury Services Agreement, excluding, in the case of clauses (a) and (b) , with respect to any Guarantor at any time, any Excluded Swap Obligations with respect to such Guarantor at such time. Without limiting the generality of the foregoing, the Obligations of the Loan Parties under the Loan Documents include (i) the obligation (including guarantee obligations) to pay principal, interest, Letter of Credit fees, reimbursement obligations, charges, expenses, fees, Attorney Costs, indemnities and other amounts payable by any Loan Party any Loan Document and (ii) the obligation of any Loan Party to reimburse any amount in respect of any of the foregoing that any Lender may elect to pay or advance on behalf of such Loan Party in accordance with this Agreement.
obligations means any principal (including any accretion), interest (including any interest accruing subsequent to the filing of a petition in bankruptcy, reorganization or similar proceeding at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable state, federal or foreign law), penalties, fees, indemnifications, reimbursements (including reimbursement obligations with respect to letters of credit and bankers acceptances), damages and other liabilities, and guarantees of payment of such principal (including any accretion), interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities, payable under the documentation governing any Indebtedness.
OFAC means the Office of Foreign Assets Control of the United States Treasury Department.
Organization Documents means, (a) with respect to any corporation, the certificate, charter 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 and operating agreement or limited liability company agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any 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 and, if applicable, any certificate or articles of formation or organization of such entity.
Other Applicable Indebtedness has the meaning set forth in Section 2.05(b)(i) .
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 any connection 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, and/or enforced, any Loan Documents.
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Other Encumbrances has the meaning specified clause (5) of Section 7.01 .
Other Taxes has the meaning specified in Section 3.01(b) .
Other Term Loan Commitments means one or more Classes of term loan commitments hereunder to fund Other Term Loans of the applicable Refinancing Series hereunder that result from a Refinancing Amendment.
Other Term Loans means one or more Classes of Term Loans that result from a Refinancing Amendment.
Outstanding Amount means (a) with respect to the Term Loans, Revolving Credit Loans and Swing Line Loans on any date, the outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of Term Loans, Revolving Credit Loans (including any refinancing of outstanding unpaid drawings under Letters of Credit or L/C Credit Extensions as a Revolving Credit Borrowing) and Swing Line Loans, as the case may be, occurring on such date; and (b) with respect to any L/C Obligations on any date, the outstanding amount thereof on such date after giving effect to any L/C Credit Extension occurring on such date and any other changes thereto as of such date, including as a result of any reimbursements of outstanding unpaid drawings under any Letters of Credit (including any refinancing of outstanding unpaid drawings under Letters of Credit or L/C Credit Extensions as a Revolving Credit Borrowing) or any reductions in the maximum amount available for drawing under Letters of Credit taking effect on such date.
Participant has the meaning specified in Section 10.06(d) .
Participant Register has the meaning set forth in Section 10.06(d) .
PBGC means the Pension Benefit Guaranty Corporation.
Pension Plan means any employee pension benefit plan (as such term is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or maintained by any Loan Party or any ERISA Affiliate or to which any Loan Party or any ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple employer or other plan described in Section 4064(a) of ERISA, has made contributions at any time during the immediately preceding five (5) plan years.
Perfection Certificate means a certificate in the form of Exhibit G-1 hereto or any other form approved by the Collateral Agent, as the same shall be supplemented from time to time by a Perfection Certificate Supplement or otherwise.
Perfection Certificate Supplement means a certificate supplement in the form of Exhibit G-2 hereto or any other form approved by the Collateral Agent.
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Permitted Acquisition means any Investment permitted under clause (c) of the definition of Permitted Investments.
Permitted Asset Swap means the substantially concurrent purchase and sale or exchange of Related Business Assets or a combination of Related Business Assets and cash and Cash Equivalents between the Borrower or any of its Restricted Subsidiaries and another Person; provided , that any cash and Cash Equivalents received must be applied in accordance with Sections 2.05(b) and 7.04 .
Permitted Debt Offering means any issuance of senior secured or junior secured or unsecured Indebtedness by any Loan Party after the Closing Date through an incurrence of term loans or through a public offering or private issuance of debt securities under Rule 144A or Regulation S under the Securities Act, or otherwise; provided that, (a) such Indebtedness may be secured by a first priority Lien on the Collateral that is pari passu with the Lien securing the Obligations (other than any Permitted Debt Offering Indebtedness incurred in the form of term loans, which shall not be secured by a first priority Lien on the Collateral), or may be secured by a Lien ranking junior to the Lien on the Collateral securing the Obligations or may be unsecured; (b) such Indebtedness is not secured by any collateral other than the Collateral securing the Obligations; (c) such Indebtedness does not mature on or prior to the Latest Maturity Date of, or have a shorter Weighted Average Life to Maturity than, the Term Loans; (d) the covenants and events of default in respect of such Indebtedness, taken as a whole, are substantially similar, or more favorable to the Loan Parties than, those governing the Senior Notes or are otherwise not more restrictive to the Loan Parties in the aggregate than those set forth in this Agreement (it being understood to the extent that any financial maintenance covenant is added for the benefit of any Permitted Debt Offering, no consent shall be required from the Administrative Agent or any Lender to the extent that such financial maintenance covenant is also added for the benefit of any corresponding existing Facility); (e) a certificate of a Responsible Officer of the issuing Loan Party delivered to the Administrative Agent at least three (3) Business Days (or such shorter period as the Administrative Agent may reasonably agree) prior to the incurrence of such Indebtedness, together with a reasonably detailed description of the material terms and conditions of such Indebtedness or drafts of the documentation relating thereto, stating that the issuing Loan Party has determined in good faith that such terms and conditions satisfy the foregoing requirements shall be conclusive evidence that such terms and conditions satisfy the foregoing requirements; and (f) none of the Borrower and its Subsidiaries (other than the Loan Parties) is a guarantor or borrower under such Permitted Debt Offering. Any debt securities (including registered debt securities) issued by any Loan Party in exchange for any Indebtedness issued in connection with a Permitted Debt Offering in accordance with the terms of a registration rights agreement entered into in connection with the issuance of such Permitted Debt Offering Indebtedness shall also be considered a Permitted Debt Offering.
Permitted Investments means:
(a) any Investment in the Borrower or any of its Restricted Subsidiaries; provided , that any Investment by the Loan Parties in Non-Guarantor Subsidiaries (other than Investments resulting from Indebtedness permitted under Section 7.02(b)(7) so long as the aggregate outstanding principal amount of such Indebtedness does not exceed the
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greater of (i) $200 million and (ii) 8% of Total Assets) pursuant to this clause (a) , together with, but without duplication of, Investments made by Loan Parties in Non-Guarantor Subsidiaries pursuant to clause (c) below, shall not exceed an aggregate amount outstanding from time to time equal to the greater of (x) $75 million and (y) 3% of Total Assets at the time of such Investment (with the fair market value of each Investment being measured at the time made and without giving effect to subsequent changes in value);
(b) any Investment in cash, Cash Equivalents or Investment Grade Securities;
(c) any Investment by the Borrower or any of its Restricted Subsidiaries in a Person that is engaged in a Similar Business if as a result of such Investment such Person becomes a Restricted Subsidiary, or such Person, in one transaction or a series of related transactions, is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Borrower or any of its Restricted Subsidiaries; provided :
(i) that any Investment by the Loan Parties in a Person that becomes a Non-Guarantor Subsidiary pursuant to this clause (c) , together with, but without duplication of, Investments made by Loan Parties in Non-Guarantor Subsidiaries pursuant to clause (a) above, shall not exceed an aggregate amount outstanding from time to time equal to the greater of (x) $75 million and (y) 3% of Total Assets at the time of such Investment (with the fair market value of each Investment being measured at the time made and without giving effect to subsequent changes in value);
(ii) no Event of Default shall exist either immediately before or after such Investment; and
(iii) Section 6.11 shall be complied with respect to such newly acquired Restricted Subsidiary and property;
and, in each case, any Investment held by such Person at the time such Person becomes a Restricted Subsidiary; provided , that such Investment was not acquired by such Person in contemplation of such acquisition, merger, consolidation, amalgamation, transfer or conveyance;
(d) any Investment in securities or other assets not constituting cash, Cash Equivalents or Investment Grade Securities and received in connection with a Disposition made pursuant to Section 7.04 or any other disposition of assets not constituting a Disposition;
(e) any Investment (i) existing on the Closing Date or made pursuant to binding commitments in effect on the Closing Date, in each case, as set forth on Schedule 1.01E , or an Investment consisting of any replacement, extension, modification or renewal of any Investment existing on the Closing Date; provided , that the amount of any such Investment may only be increased (x) as required by the terms of such Investment as in existence on the Closing Date or (y) as otherwise permitted under this Agreement or (ii) made or acquired pursuant to the Transaction;
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(f) any Investment acquired by the Borrower or any of its Restricted Subsidiaries:
(i) in exchange for any other Investment or accounts receivable held by the Borrower or any such Restricted Subsidiary in connection with or as a result of a bankruptcy workout, reorganization or recapitalization of the issuer of such other Investment or accounts receivable;
(ii) as a result of a foreclosure by the Borrower or any of its Restricted Subsidiaries with respect to any secured Investment or other transfer of title with respect to any secured Investment in default; or
(iii) as a result of the settlement, compromise or resolution of litigation, arbitration or other disputes or in satisfaction of judgments against other Persons, in each case, with Persons who are not Affiliates of the Borrower;
(g) Hedging Obligations permitted under Section 7.02(b)(9) ;
(h) Investments the payment for which consists of Equity Interests (exclusive of Disqualified Stock) of the Borrower;
(i) guarantees of Indebtedness permitted under Section 7.02 ;
(j) any transaction to the extent it constitutes an Investment that is permitted and made in accordance with the provisions of Section 7.07(b) (except transactions described in clauses (2) , (6) , (8) and (9) thereof);
(k) Investments consisting of (x) purchases and acquisitions of inventory, supplies, material, services or equipment, or other similar assets or purchases of contract rights or licenses or leases of intellectual property, in each case in the ordinary course of business or (y) the leasing or licensing of intellectual property in the ordinary course of business or the leasing, licensing or contribution of intellectual property pursuant to joint marketing arrangements with other Persons;
(l) Investments in an Unrestricted Subsidiary or a joint venture engaged in a Similar Business having an aggregate fair market value (as determined in good faith by the Borrower), taken together with all other Investments made pursuant to this clause (l) that are at that time outstanding, not to exceed the greater of (x) $75 million and (y) 3% of Total Assets at the time of such Investment (with the fair market value of each Investment being measured at the time made and without giving effect to subsequent changes in value);
(m) Investments in a Receivables Subsidiary or any Investment by a Receivables Subsidiary in any Person that, in the good faith determination of the Borrower is necessary or advisable to effect any Receivables Facility or any repurchases in connection therewith;
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(n) advances to, or guarantees of Indebtedness of, officers, directors and employees not in excess of $7.5 million outstanding at any one time, in the aggregate;
(o) loans and advances to officers, directors and employees for business-related travel expenses, moving expenses, payroll expenses and other similar expenses, in each case incurred in the ordinary course of business or consistent with past practices or to fund such Persons purchase of Equity Interests of the Borrower;
(p) any Investment in any Subsidiary or joint venture in connection with intercompany cash management arrangements or related activities arising in the ordinary course of business;
(q) other Investments (including Investments in Unrestricted Subsidiaries and other Persons that do not become Loan Parties) having an aggregate fair market value (as determined in good faith by the Borrower), taken together with all other Investments made pursuant to this clause (q) that are at the time outstanding, not to exceed the greater of (x) $75 million and (y) 3% of Total Assets (with the fair market value of each Investment being measured at the time made and without giving effect to subsequent changes in value);
(r) [Reserved];
(s) advances, guarantees, endorsements for collection or deposit or customary trade arrangements with customers, suppliers, vendors or distributors in the ordinary course of business;
(t) lease, utility and other similar deposits in the ordinary course of business;
(u) guarantees by the Borrower or any of its Restricted Subsidiaries of operating leases or of other obligations that do not constitute Indebtedness, in each case entered into by the Borrower or any Restricted Subsidiary of the Borrower in the ordinary course of business; and
(v) so long as no Event of Default shall have occurred and be continuing or would occur as a consequence thereof and Borrower shall be in Pro Forma Compliance with (i) Section 7.09 and (ii) Consolidated Total Leverage Ratio of not more than 4.25 to 1.00, in each case for the most recently ended Test Period for which financial statements have been delivered pursuant to Section 6.01 , Investments, together with the aggregate amount of all other Investments made pursuant to this clause (v) and Restricted Payments made pursuant to Section 7.05(a) by Borrower and its Restricted Subsidiaries after the Closing Date in an aggregate amount not to exceed the Available Amount.
Permitted Junior Secured Refinancing Debt means any secured Indebtedness (including any Registered Equivalent Notes) incurred by the Borrower in the form of one or more series of second lien (or other junior lien) secured notes or second lien (or other junior lien)
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secured loans; provided , that (a) such Indebtedness is secured by the Collateral on a second priority (or other junior priority) basis to the Liens securing the Obligations and the obligations in respect of any Permitted Pari Passu Secured Refinancing Debt and is not secured by any property or assets of the Borrower or any Restricted Subsidiary other than the Collateral, (b) such Indebtedness may be secured by a Lien on the Collateral that is junior to the Liens securing the Obligations and the obligations in respect of any Permitted Pari Passu Secured Refinancing Debt, notwithstanding any provision to the contrary contained in the definition of Credit Agreement Refinancing Indebtedness, (c) a Representative acting on behalf of the holders of such Indebtedness shall have become party to or otherwise subject to the provisions of a Second Lien Intercreditor Agreement with the Borrower, the Guarantors and the Administrative Agent, and (d) such Indebtedness meets the Permitted Other Debt Conditions. Permitted Junior Secured Refinancing Debt will include any Registered Equivalent Notes issued in exchange therefor.
Permitted Liens has the definition assigned to such term in Section 7.01 .
Permitted Other Debt Conditions means with respect to any given Indebtedness that such Indebtedness (a) does not mature or have scheduled amortization payments of principal or payments of principal and is not subject to mandatory redemption, repurchase, prepayment or sinking fund obligations (other than customary offers to repurchase upon a change of control, asset sale or event of loss and a customary acceleration right after an event of default), in each case prior to the Latest Maturity Date at the time such Indebtedness is incurred, (b) is not at any time guaranteed by any Subsidiaries other than Subsidiaries that are Guarantors, (c) to the extent secured, the security agreements relating to such Indebtedness are substantially the same as or more favorable to the Loan Parties than the Collateral Documents (with such differences as are reasonably satisfactory to the Administrative Agent) and (d) in regard to any Refinancing Notes, the other terms and conditions (excluding pricing and optional prepayment or redemption terms) are substantially identical to or (taken as a whole) less favorable to the investors providing such Refinancing Notes than the those applicable to the Term Loans being refinanced (except for covenants or other provisions applicable only to periods after the latest final maturity date of the Term Loans and it being understood that the terms contained in the Senior Notes Indenture satisfy the requirements of this clause (d) ); provided , that a certificate of a Responsible Officer delivered to the Administrative Agent at least five (5) Business Days prior to the incurrence of the applicable Indebtedness, together with a reasonably detailed description of the material terms and conditions of such Indebtedness and drafts of the documentation relating thereto, stating that the Borrower has determined in good faith that such terms and conditions satisfy the requirements of this clause (d) shall be conclusive evidence that such terms and conditions satisfy such requirements.
Permitted Pari Passu Secured Refinancing Debt means any secured Indebtedness (including any Registered Equivalent Notes) incurred by the Borrower in the form of one or more series of senior secured notes; provided , that (a) such Indebtedness is secured by the Collateral on a pari passu basis (but without regard to the control of remedies) with the Obligations and is not secured by any property or assets of the Borrower or a Restricted Subsidiary other than the Collateral, (b) such Indebtedness is not at any time guaranteed by any Subsidiaries other than Subsidiaries that are Guarantors, (c) such Indebtedness, (i) unless incurred as a term loan under this Agreement, does not mature or have scheduled amortization or payments of principal (other than customary offers to repurchase upon a change of control, asset
45
sale or event of loss and a customary acceleration right after an event of default) prior to the date that is the Latest Maturity Date at the time such Indebtedness is incurred or issued, and (ii) if incurred as a term loan under this Agreement, does not mature earlier than, or have a Weighted Average Life to Maturity shorter than, the applicable Refinanced Debt, (d) the security agreements relating to such Indebtedness (to the extent such Indebtedness is not incurred hereunder) are substantially the same as or more favorable to the Loan Parties than the Collateral Documents (with such differences as are reasonably satisfactory to the Administrative Agent), (e) to the extent such Indebtedness is not incurred hereunder, a Representative acting on behalf of the holders of such Indebtedness shall have become party to or otherwise subject to the provisions of an Intercreditor Agreement with the Administrative Agent and (f) such Indebtedness, if consisting of Refinancing Notes, satisfies clause (d) of the definition of Permitted Other Debt Conditions. Permitted Pari Passu Secured Refinancing Debt will include any Registered Equivalent Notes issued in exchange therefor.
Permitted Unsecured Refinancing Debt means unsecured Indebtedness (including any Registered Equivalent Notes) incurred by the Borrower in the form of one or more series of senior unsecured notes or loans; provided , that (a) such Indebtedness constitutes Credit Agreement Refinancing Indebtedness and (b) meets the Permitted Other Debt Conditions.
Person means any individual, corporation, limited liability company, partnership, joint venture, association, joint stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity.
Plan means any employee benefit plan as such term is defined in Section 3(3) of ERISA established or maintained by any Loan Party or, with respect to any such plan that is subject to Section 412 of the Code or Title IV of ERISA, any ERISA Affiliate.
Platform has the meaning assigned to such term in Section 6.02 .
Preferred Stock means any Equity Interest with preferential rights of payment of dividends or upon liquidation, dissolution, or winding up.
Prepayment Premium has the meaning specified in Section 2.05(a)(iii) .
Prime Lending Rate shall mean the rate which in the case of Revolving Credit Commitments, Citibank, and, in the case of Term Loans, MSSF, announces from time to time as its prime lending rate, the Prime Lending Rate to change when and as such prime lending rate changes. The Prime Lending Rate is a reference rate and does not necessarily represent the lowest or best rate actually charged to any customer by the applicable Administrative Agent, which may make commercial loans or other loans at rates of interest at, above or below the Prime Lending Rate.
Pro Forma Basis and Pro Forma Compliance mean, with respect to compliance with any test or covenant hereunder, that such test or covenant shall have been calculated in accordance with Section 1.08 .
Pro Rata Share means, with respect to each Lender at any time a fraction (expressed as a percentage, carried out to the ninth decimal place), the numerator of which is the
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amount of the Commitments of such Lender under the applicable Facility or Facilities at such time and the denominator of which is the amount of the Aggregate Commitments under the applicable Facility or Facilities at such time; provided , that if such Commitments have been terminated, then the Pro Rata Share of each Lender shall be determined based on the Pro Rata Share of such Lender immediately prior to such termination and after giving effect to any subsequent assignments made pursuant to the terms hereof.
Projections means annual financial projections of the Borrower and its Subsidiaries through 2017, which will be prepared on a pro forma basis after giving effect to the Transactions and will include consolidated income statements (with Consolidated EBITDA clearly noted) and consolidated estimated balance sheets of the Borrower and its Subsidiaries, all of which will be in form substantially consistent with the financial projections supplied by the Borrower in the Private Supplement to the Lenders Presentation conducted on September 18, 2014.
Public Lender has the meaning assigned to such term in Section 6.02 .
Qualified ECP Guarantor means, in respect of any Swap Obligation, each Guarantor that, at the time the relevant Guarantee or grant of the relevant security interest becomes effective with respect to such Swap Obligation, has total assets exceeding $10 million or such other person as constitutes an eligible contract participant under the Commodity Exchange Act or any regulations promulgated thereunder and can cause another person to qualify as an eligible contract participant with respect to such Swap Obligation at such time by entering into a keepwell under Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.
Quarterly Financial Statements means the unaudited combined balance sheet as of December 31, 2013 and June 30, 2014 and combined statements of income and cash flows of the healthcare business of Kimberly-Clark for the six months ended June 30, 2014 and 2013, respectively.
Rating Agencies means Moodys and S&P or if Moodys or S&P or both shall not make a rating on the Facilities publicly available, a nationally recognized statistical rating agency or agencies, as the case may be, selected by the Borrower which shall be substituted for Moodys or S&P or both, as the case may be.
Ratio means each of (a) Consolidated Net Secured Leverage Ratio and (b) Consolidated Total Leverage Ratio.
Real Property means, collectively, all right, title and interest (including any leasehold, mineral or other estate) in and to any and all parcels of or interests in real property owned, leased or operated by any Person, whether by lease, license or other means, together with, in each case, all easements, hereditaments and appurtenances relating thereto, all improvements and appurtenant fixtures and equipment, all general intangibles and contract rights and other property and rights incidental to the ownership, lease or operation thereof.
Receivables Facility means any of one or more securitization or receivables financing facilities as amended, supplemented, modified, extended, renewed, restated or refunded from time to time, the obligations of which are non-recourse (except for customary
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representations, warranties, covenants and indemnities made in connection with such facilities) to the Borrower or any of its Restricted Subsidiaries (other than a Receivables Subsidiary) pursuant to which the Borrower or any of its Restricted Subsidiaries contributes, sells or otherwise conveys its accounts receivable and related assets to either (a) a Person that is not a Restricted Subsidiary or (b) a Receivables Subsidiary that in turn sells, or grants a security interest in, its accounts receivable and related to a Person that is not a Restricted Subsidiary.
Receivables Fees means distributions or payments made directly or by means of discounts with respect to any accounts receivable or participation interest therein issued or sold in connection with, and other fees paid to a Person that is not a Restricted Subsidiary in connection with, any Receivables Facility.
Receivables Subsidiary means any Subsidiary formed for the purpose of, and that solely engages only in one or more Receivables Facilities and other activities reasonably related thereto.
Recipient means the applicable Administrative Agent, any Lender and any L/C Issuer, as applicable.
Refinanced Debt has the meaning set forth in the definition of Credit Agreement Refinancing Indebtedness .
Refinancing Amendment means an amendment to this Agreement executed by each of (a) the Borrower, (b) the applicable Administrative Agent, and (c) each Additional Refinancing Lender and each Lender that agrees to provide any portion of the Other Term Loans or Other Term Loan Commitments incurred pursuant thereto, in accordance with Section 2.15 , and provided , that the Indebtedness pursuant to any such Refinancing Amendment (i) does not mature earlier than, or have a Weighted Average Life to Maturity shorter than, the applicable Refinanced Debt and (ii) is not at any time guaranteed by any Subsidiaries other than Subsidiaries that are Guarantors.
Refinancing Notes means Credit Agreement Refinancing Indebtedness incurred in the form of notes rather than loans.
Refinancing Series means all Other Term Loans or Other Term Loan Commitments that are established pursuant to the same Refinancing Amendment (or any subsequent Refinancing Amendment to the extent such Refinancing Amendment expressly provides that the Other Term Loans or Other Term Loan Commitments provided for therein are intended to be a part of any previously established Refinancing Series) and that provide for the same yield (taking into account any applicable interest rate margin, original issue discount, up-front fees and any LIBOR floor) and amortization schedule (if any).
Refunding Capital Stock has the meaning set forth in Section 7.05(c) .
Register has the meaning set forth in Section 10.06(c) .
Registered Equivalent Notes means, with respect to any notes originally issued in an offering pursuant to Rule 144A under the Securities Act or other private placement
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transaction under the Securities Act, substantially identical notes (having the same guarantees) issued in a dollar-for-dollar exchange therefor pursuant to an exchange offer registered with the SEC.
Rejection Notice has the meaning set forth in Section 2.05(b)(v) .
Related Business Assets means assets (other than Cash Equivalents) used or useful in a Similar Business; provided , that any assets received by the Borrower or a Restricted Subsidiary in exchange for assets transferred by the Borrower or a Restricted Subsidiary shall not be deemed to be Related Business Assets if they consist of securities of a Person, unless upon receipt of the securities of such Person, such Person would be or become a Restricted Subsidiary.
Related Parties means, with respect to any Person, such Persons Affiliates and the partners, directors, officers, employees, agents, trustees and advisors of such Person and of such Persons Affiliates.
Release means any spilling, leaking, seepage, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, disposing, depositing, dispersing or migrating in, into, onto or through the Environment.
Reportable Event means any of the events set forth in Section 4043(c) of ERISA or the regulations issued thereunder, other than events for which the thirty (30) day notice period has been waived.
Representative means, with respect to any Indebtedness, the trustee, administrative agent, collateral agent, security agent or similar agent under the indenture or agreement pursuant to which such Indebtedness is issued, incurred or otherwise obtained, as the case may be, and each of their successors in such capacities.
Repricing Transaction means the prepayment or refinancing of all or a portion of the Term Loans with the incurrence by the Borrower or any of its Subsidiaries of any Indebtedness the primary purpose of which is reducing the effective interest cost or All-In Yield to less than the interest rate for or All-In Yield of the Term Loans, including without limitation, as may be effected through any amendment to or consent or waiver under this Agreement reducing the interest rate for the Term Loans, but which, for the avoidance of doubt, does not include any prepayment or refinancing in connection with a Change of Control or any refinancing that involves an upsizing in connection with a transformative acquisition.
Request for Credit Extension means (a) with respect to a Borrowing, continuation or conversion of Term Loans or Revolving Credit Loans, a Committed Loan Notice, (b) with respect to an L/C Credit Extension, a Letter of Credit Application, and (c) with respect to a Swing Line Loan, a Swing Line Loan Notice.
Required Class Lenders means, as of any date of determination, Lenders of a Class having more than 50% of the sum of (a) the Total Outstandings (with, in the case of the Revolving Credit Facility, the aggregate amount of each Lenders risk participation and funded participation in L/C Obligations and Swing Line Loans being deemed held by such Lender for purposes of this definition) of all Lenders of such Class and (b) the aggregate unused
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Commitments of all Lenders of such Class; provided , that the unused Commitment and the portion of the Total Outstandings of such Class held or deemed held by, any Defaulting Lender of such Class shall be excluded for purposes of making a determination of Required Class Lenders.
Required Lenders means, as of any date of determination, Lenders having more than 50% of the sum of the (a) Total Outstandings (with the aggregate amount of each Lenders risk participation and funded participation in L/C Obligations and Swing Line Loans being deemed held by such Lender for purposes of this definition), (b) aggregate unused Term Commitments, and (c) aggregate unused Revolving Credit Commitments; provided , that the unused Term Commitment and unused Revolving Credit Commitment of, and the portion of the Total Outstandings held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders.
Responsible Officer means the chief executive officer, president, executive vice president, senior vice president, chief financial officer, treasurer or assistant treasurer of a Loan Party and, as to any document delivered on the Closing Date, any secretary or assistant secretary of such Loan Party and, solely for purposes of notices given pursuant to Article II , any other officer or employee of the applicable Loan Party so designated by any of the foregoing officers in a written notice to the Administrative Agent. Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party.
Restricted Cash means cash and Cash Equivalents held by Restricted Subsidiaries that is contractually restricted from being distributed to the Borrower, except for such restrictions that are contained in agreements governing Indebtedness permitted under this Agreement and that is secured by such cash or Cash Equivalents.
Restricted Investment means any Investment other than a Permitted Investment.
Restricted Payment has the meaning set forth in Section 7.05 .
Restricted Subsidiary means, at any time, each direct and indirect Subsidiary of the Borrower (including any Foreign Subsidiary) that is not then an Unrestricted Subsidiary; provided , however , that upon the occurrence of an Unrestricted Subsidiary ceasing to be an Unrestricted Subsidiary, such Subsidiary shall be included in the definition of Restricted Subsidiary .
Revaluation Date means with respect to any Letter of Credit, each of the following: (a) each date of issuance of a Letter of Credit denominated in an Alternative Currency, (b) each date of an amendment or extension of any such Letter of Credit and (c) each date of any payment by the applicable L/C Issuer under any Letter of Credit denominated in an Alternative Currency.
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Revolver Administrative Agent means Citibank, in its capacity as administrative agent under any of the Loan Documents in respect of the Revolving Credit Facility, including any Letters of Credit and the Swing Line Facility, or any successor administrative agent.
Revolving Commitment Increase has the meaning set forth in Section 2.14(a) .
Revolving Commitment Increase Lender has the meaning set forth in Section 2.14(a) .
Revolving Credit Borrowing means a borrowing consisting of simultaneous Revolving Credit Loans of the same Type and Class and, in the case of Eurodollar Rate Loans, having the same Interest Period made by each of the Revolving Credit Lenders of such Class pursuant to Section 2.01(b) .
Revolving Credit Commitment means, as to each Revolving Credit Lender, its obligation to (a) make Revolving Credit Loans to the Borrower pursuant to Section 2.01(b) , (b) purchase participations in L/C Obligations in respect of Letters of Credit, and (c) purchase participations in Swing Line Loans, in an aggregate principal amount at any one time outstanding not to exceed the amount set forth, and opposite such Lenders name on Schedule 1.01A under the caption Revolving Credit Commitment or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement (including Section 2.14 ). The aggregate Revolving Credit Commitments of all Revolving Credit Lenders shall be $250 million on the Closing Date, as such amount may be adjusted from time to time in accordance with the terms of this Agreement.
Revolving Credit Exposure means, as to each Revolving Credit Lender, the sum of the amount of the outstanding principal amount of such Revolving Credit Lenders Revolving Credit Loans and its Pro Rata Share of the amount of the L/C Obligations and the Swing Line Obligations at such time.
Revolving Credit Facility means, at any time, the aggregate amount of the Revolving Credit Lenders Revolving Credit Commitments at such time.
Revolving Credit Lender means, at any time, any Lender that has a Revolving Credit Commitment at such time.
Revolving Credit Loans has the meaning specified in Section 2.01(b) .
Revolving Credit Note means a promissory note of the Borrower payable to any Revolving Credit Lender or its registered assigns, in substantially the form of Exhibit C-2 hereto, evidencing the aggregate Indebtedness of the Borrower to such Revolving Credit Lender resulting from the Revolving Credit Loans made by such Revolving Credit Lender to the Borrower.
Revolving Extension Offers has the meaning specified in Section 2.16(a) .
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S&P means Standard & Poors Financial Services, LLC, a subsidiary of The McGraw-Hill Companies, Inc., and any successor to its rating agency business.
Sale and Lease-Back Transaction means any arrangement providing for the leasing by the Borrower or any of its Restricted Subsidiaries of any real or tangible personal property, which property has been or is to be sold or transferred for value by such Person to a third Person in contemplation of such leasing.
Same Day Funds means immediately available funds.
Sanction or Sanctions means (a) any international economic sanction, administered or enforced by the United States Government (including by OFAC under authority of the International Emergency Economic Powers Act, Trading With the Enemy Act or other authority), the United Nations Security Council, the European Union, Her Majestys Treasury or other applicable sanctions authority and (b) any applicable requirement of Law relating to terrorism or money laundering.
SEC means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.
Second Lien Intercreditor Agreement means an intercreditor agreement substantially in the form of Exhibit I-2 hereto (which agreement in such form or with immaterial changes thereto the Administrative Agent is authorized to enter into) together with any material changes thereto in light of prevailing market conditions, which material changes shall be posted to the Lenders not less than five (5) Business Days before execution thereof and, if the Required Lenders shall not have objected to such changes within five (5) Business Days after posting, then the Required Lenders shall be deemed to have agreed that the Administrative Agents entry into such intercreditor agreement (with such changes) is reasonable and to have consented to such intercreditor agreement (with such changes) and to the Administrative Agents execution thereof.
Secured Hedge Agreement means any Swap Contract permitted under Article VII that is entered into by and between the Borrower or any Restricted Subsidiary and any Hedge Bank other than any such agreement that by its terms, or by the terms of any separate agreement by the parties thereto, does not constitute a Secured Hedge Agreement.
Secured Parties means, collectively, the Administrative Agent, the Collateral Agent, the Lenders, the Hedge Banks and each co-agent or sub-agent appointed by the Administrative Agent or Collateral Agent from time to time pursuant to Section 9.02 .
Securities Act means the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder.
Security Agreement has the meaning specified in Section 4.01(a)(iii) .
Senior Notes means $250,000,000 million in an aggregate principal amount of the Borrowers 6.250% senior unsecured notes due 2022 (and including any Registered Equivalent Notes therefore).
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Senior Notes Indenture means the Indenture for the Senior Notes, dated as of October 17, 2014, between the Borrower as issuer, Deutsche Bank Trust Company Americas, as trustee, and the other entities from time to time party thereto, as the same may be amended, modified, supplemented, replaced or refinanced to the extent not prohibited by this Agreement.
Separation means the series of internal transactions, as a result of which (i) the Borrower will make the Cash Distribution, (ii) the Borrower will acquire and hold the business constituting Kimberly-Clarks healthcare business and (iii) Kimberly-Clark will make the Distribution.
Separation and Distribution Documents means the Distribution Agreement, Transition Services Agreement, Tax Matters Agreement, Employee Matters Agreement, Intellectual Property Agreements, Manufacturing and Supply Agreements and any other instruments, assignments, documents and agreements executed in connection with the implementation of the transactions contemplated by any of the foregoing.
Similar Business means any business conducted or proposed to be conducted by the Borrower and its Restricted Subsidiaries as described in the Form 10 or any business that is similar, reasonably related, complimentary, incidental or ancillary thereto.
Solvent and Solvency mean, with respect to any Person on any date of determination, that on such date (a) the fair value of the property of such Person is greater than the total amount of liabilities, including contingent liabilities, of such Person; (b) the present fair salable value of the assets of such Person is greater than the amount that will be required to pay the probable liability of such Person on the sum of its debts and other liabilities, including contingent liabilities; (c) such Person has not incurred debts or liabilities beyond such Persons ability to pay such debts and liabilities as they become due (whether at maturity or otherwise); and (d) such Person does not have unreasonably small capital with which to conduct the businesses in which it is engaged as such businesses are now conducted and are proposed to be conducted following the Closing Date. The amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.
SPC has the meaning specified in Section 10.06(g) .
Specified Transaction means, with respect to any period, any Investment, Disposition, incurrence or repayment of Indebtedness, Restricted Payment, Subsidiary designation (as Restricted or Unrestricted), merger, amalgamation, consolidation, Incremental Term Loan or Revolving Commitment Increase or any other transaction that by the terms of this Agreement requires Pro Forma Compliance with a test or covenant hereunder or requires such test or covenant to be calculated on a Pro Forma Basis .
Spin-Off Tax Opinion means a legal opinion from Baker Botts L.L.P., which opinion shall be to the effect that (i) certain contributions by Kimberly-Clark to the Borrower, together with the Distribution, will qualify as a reorganization under Sections 368(a)(1)(D) and 355 of the Code and (ii) Kimberly-Clark, the Borrower and Kimberly-Clarks shareholders will not be subject to United States federal income tax in respect of such contributions or the Distribution, other than with respect to certain exceptions as stated therein.
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Spot Rate for a currency means the rate determined by the Revolver Administrative Agent or the applicable L/C Issuer with notice thereof to the Revolver Administrative Agent to be the rate quoted by the Person acting in such capacity as the spot rate for the purchase by such Person of such currency with another currency through its principal foreign exchange trading office at approximately 11:00 a.m. on the date two Business Days prior to the date as of which the foreign exchange computation is made; provided that the Revolver Administrative Agent or the applicable L/C Issuer may obtain such spot rate from another financial institution designated by the Revolver Administrative Agent or such L/C Issuer if the Person acting in such capacity does not have as of the date of determination a spot buying rate for any such currency.
Sterling or £ means lawful money of the United Kingdom of Great Britain and Northern Ireland.
Subordinated Indebtedness means:
(a) any Indebtedness of a Borrower which is by its terms subordinated in right of payment to the Obligations; and
(b) any Indebtedness of a Guarantor which is by its terms subordinated in right of payment to the Guaranty of such Guarantor.
Subsidiary means, with respect to any Person:
(a) any corporation, association, or other business entity (other than a partnership, joint venture, limited liability company or similar entity) of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time of determination owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof; and
(b) any partnership, joint venture, limited liability company or similar entity of which
(A) more than 50% of the voting interests or general partnership interests, as applicable, are owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof whether in the form of membership, general, special or limited partnership or otherwise; and
(B) such Person or any Restricted Subsidiary of such Person is a controlling general partner or otherwise controls such entity.
Successor Company has the meaning specified in Section 7.03(d) .
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Survey means a survey of any Real Property subject to a Mortgage (and all improvements thereon) which is (a) (i) prepared by a surveyor or engineer licensed to perform surveys in the jurisdiction where such Real Property is located, (ii) dated (or redated) not earlier than six (6) months prior to the date of delivery thereof unless there shall have occurred within six (6) months prior to such date of delivery any material change to such Real Property, improvements or any easement, right of way or other interest in the Real Property has been granted or become effective through operation of law or otherwise with respect to such Real Property which, in either case, can be depicted on a survey, in which events, as applicable, such survey shall be dated (or redated) after the completion of such construction or if such construction shall not have been completed as of such date of delivery, not earlier than thirty (30) days prior to such date of delivery, or after the grant or effectiveness of any such easement, right of way or other interest in the subject Real Property, (iii) certified by the surveyor (in a manner reasonably acceptable to the Collateral Agent) to the Collateral Agent and the title company, (iv) complying in all material respects with the minimum detail requirements of the American Land Title Association as such requirements are in effect on the date of preparation of such survey including a survey endorsement, and (v) sufficient for the title company to issue a Title Policy, or (b) otherwise reasonably acceptable to the Collateral Agent.
Swap means any agreement, contract or transaction that constitutes a swap within the meaning of section 1 a(47) of the Commodity Exchange Act.
Swap Contract means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate swaps and options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a Master Agreement ), including any such obligations or liabilities under any Master Agreement.
Swap Obligation means, with respect to any Guarantor, any obligation to pay or perform under any Swap.
Swing Line Borrowing means a borrowing of a Swing Line Loan pursuant to Section 2.04 .
Swing Line Facility means the swing line loan facility made available by the Swing Line Lenders pursuant to Section 2.04 .
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Swing Line Lender means Citibank, in its capacity as provider of Swing Line Loans or any successor or additional swing line lender hereunder.
Swing Line Loan has the meaning specified in Section 2.04(a) .
Swing Line Loan Notice means a notice of a Swing Line Borrowing pursuant to Section 2.04(b) , which, if in writing, shall be substantially in the form of Exhibit B hereto.
Swing Line Note means a promissory note of the Borrower payable to any Swing Line Lender or its registered assigns, in substantially the form of Exhibit C-3 hereto, evidencing the aggregate Indebtedness of the Borrower to such Swing Line Lender resulting from the Swing Line Loans.
Swing Line Obligations means, as at any date of determination, the aggregate principal amount of all Swing Line Loans outstanding.
Swing Line Sublimit means an amount equal to the lesser of (a) $25 million and (b) the aggregate amount of the Revolving Credit Commitments. The Swing Line Sublimit is part of, and not in addition to, the Revolving Credit Commitments.
Taxes means any present or future taxes, duties, levies, imposts, deductions, assessments, fees, withholdings or similar charges imposed by any Governmental Authority, including any interest, additions to tax and penalties applicable thereto.
Tax Group has the meaning specified in Section 7.05(m) .
Tax Matters Agreement means the Tax Matters Agreement between Kimberly-Clark and the Borrower, to be dated on or prior to the Distribution Date.
Term Loan Administrative Agent means MSSF, in its capacity as administrative agent under any of the Loan Documents in respect of the Term Loans, or any successor administrative agent.
Term Borrowing means a borrowing consisting of simultaneous Term Loans of the same Type and, in the case of Eurodollar Rate Loans, having the same Interest Period made by each of the Term Lenders.
Term Commitment means, as to each Term Lender, its obligation to make a Term Loan to the Borrower pursuant to Section 2.01(a) in an aggregate amount not to exceed the amount set forth opposite such Lenders name on Schedule 1.01A under the caption Term Commitment or in the Assignment and Assumption pursuant to which such Term Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement (including Section 2.14 ). The initial aggregate amount of the Term Commitments is $390 million.
Term Lender means, at any time, any Lender that has a Term Commitment or a Term Loan at such time.
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Term Loan means a Loan made pursuant to Section 2.01(a) .
Term Loan Standstill Period has the meaning set forth in Section 8.01(b) .
Term Note means a promissory note of the Borrower payable to any Term Lender or its registered assigns, in substantially the form of Exhibit C-1 hereto, evidencing the aggregate Indebtedness of the Borrower to such Term Lender resulting from the Term Loans made by such Term Lender.
Term Extension Offers has the meaning specified in Section 2.16(a) .
Test Period means, for any date of determination under this Agreement, the four consecutive fiscal quarters of the Borrower then last ended.
Threshold Amount means $25 million (or the equivalent thereof in any foreign currency).
Ticking Fee shall mean, with respect to each Term Lender, if the Closing Date occurs on or after the 31 st day following such allocation of Term Commitments, an amount equal to 100% of the Applicable Rate for Term Loans which are Eurodollar Rate Loans times such Lenders Term Commitment on the Closing Date.
Title Policy means a policy of title insurance (or marked-up title insurance commitment having the effect of a policy of title insurance) insuring the Lien of a Mortgage as a valid mortgage Lien (subject only to Permitted Liens and such other exceptions to title as may be reasonably acceptable to the Collateral Agent) on the mortgaged property and fixtures described therein in the amount equal to no more than the fair market value of such mortgaged property and fixtures, issued by a title company reasonably acceptable to the Collateral Agent which shall (a) to the extent necessary, include such reinsurance arrangements (with provisions for direct access, if necessary) as shall be reasonably acceptable to the Collateral Agent; (b) contain a tie-in or cluster endorsement, if available under applicable law (i.e., policies which insure against losses regardless of location or allocated value of the insured property up to a stated maximum coverage amount); (c) have been supplemented by such endorsements as shall be reasonably requested by the Collateral Agent to the extent such endorsements are available in the jurisdiction in which the Real Property is located at standard rates (including endorsements, if available, on matters relating to usury, first loss, last dollar, zoning, contiguity, revolving credit, doing business, non-imputation, public road access, survey, variable rate, environmental lien, subdivision, mortgage recording tax, separate tax lot, revolving credit and so-called comprehensive coverage over covenants and restrictions, provided that, where the cost of a zoning endorsement is excessive in light of the nature of the transaction, the Collateral Agent shall reasonably consider the Borrowers requests to waive such zoning endorsement and to provide a zoning opinion, report or other letter in form and substance reasonably satisfactory to the Collateral Agent); and (d) affirmatively insure against loss arising out of or contain no exceptions to title other than Liens permitted hereunder.
Total Assets means total assets of the Borrower and its Restricted Subsidiaries on a consolidated basis, shown on the most recent balance sheet of the Borrower and its Restricted Subsidiaries delivered pursuant to Section 6.01 as may be expressly stated without
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giving effect to any amortization of the amount of intangible assets since the Closing Date, with such pro forma adjustments as are appropriate and consistent with the pro forma adjustment provisions set forth in Section 1.08 .
Total Outstandings means the aggregate Outstanding Amount of all Loans and all L/C Obligations.
Transaction Services Agreement means the Transaction Services Agreement between Kimberly-Clark and Issuer, to be dated on or prior to the Distribution Date.
Transactions means a collective reference to (a) the funding of the Loans on the Closing Date and the execution and delivery of Loan Documents to be entered into on the Closing Date, (b) the Separation, (c) the Distribution, (d) the Cash Distribution, (e) any other transactions contemplated by, or pursuant to, the Separation and Distribution Documents or otherwise in connection with the Separation and Distribution (including any cancellation or termination of Indebtedness, agreements, arrangements, commitments or understandings, including intercompany accounts payables, receivables or Indebtedness, between the Borrower or any of its Restricted Subsidiaries, on the one hand, and Kimberly-Clark or any of its other Subsidiaries, on the other hand, and making certain intercompany contributions and dividend payments), (f) any other transactions pursuant to agreements or arrangements in effect on the Distribution Date on substantially the terms described in the Form 10 or any amendment, modification, addition or supplement thereto or replacement thereof, as long as the terms of such agreement or arrangement, as so amended, modified, added, supplemented or replaced are not materially more disadvantageous to the Lenders when taken as a whole compared to the applicable agreements as described in the Form 10 (as determined in good faith by the Borrower), (g) the issuance of the Senior Notes and (h) the payment of the Closing Date Transaction Expenses.
Treasury Services Agreement means any agreement between the Borrower or any Restricted Subsidiary and any Hedge Bank relating to commercial credit or debit card, merchant card, or purchasing card programs (including non-card e-payables services), or treasury, depository, or cash management services (including automatic clearing house transfer of funds, overdraft, controlled disbursement, electronic funds transfer, lockbox, stop payment, return item and wire transfer services) or bilateral Letters of Credit, other than any such agreement that by its terms, or by the terms of any separate agreement by the parties thereto, does not constitute a Treasury Services Agreement.
Type means, with respect to a Loan, its character as a Base Rate Loan or a Eurodollar Rate Loan.
U.S. Lender means any Lender that is a United States person as defined in Section 7701(a)(30) of the Code.
Undisclosed Administration means in relation to a Lender the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official by a supervisory authority or regulator under or based on the law in the country where such Lender is subject to home jurisdiction supervision if applicable law requires that such appointment is not to be publicly disclosed.
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Uniform Commercial Code or UCC means the Uniform Commercial Code as the same may from time to time be in effect in the State of New York or the Uniform Commercial Code (or similar code or statute) of another jurisdiction, to the extent it may be required to apply to any item or items of Collateral.
United States and U.S. mean the United States of America.
United States Tax Compliance Certificate has the meaning set forth in Section 3.01(d) .
Unreimbursed Amount has the meaning set forth in Section 2.03(c)(i) .
Unrestricted Subsidiary means:
(a) | any Subsidiary of the Borrower which at the time of determination is an Unrestricted Subsidiary (as designated by the Borrower, pursuant to Section 6.14) and |
(b) | any Subsidiary of an Unrestricted Subsidiary. |
As of the Closing Date, all of Borrowers Subsidiaries are Restricted Subsidiaries.
USA Patriot Act has the meaning specified in Section 5.15 .
Voting Stock of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the board of directors (or equivalent body) or other governing body of such Person.
Weighted Average Life to Maturity means, when applied to any Indebtedness, Disqualified Stock or Preferred Stock, as the case may be, at any date, the quotient obtained by dividing: (a) the sum of the products of the number of years from the date of determination to the date of each successive scheduled principal payment of such Indebtedness or scheduled redemption or similar payment with respect to such Disqualified Stock or Preferred Stock multiplied by the amount of such payment, by (b) the sum of all such payments; provided , that for purposes of determining the Weighted Average Life to Maturity of any Refinanced Debt or any Indebtedness that is being modified, refinanced, refunded, renewed, replaced or extended, the effects of any amortization or prepayments made on such Indebtedness prior to the date of the applicable modification, refinancing, refunding, renewal, replacement or extension shall be disregarded.
Wholly-Owned Subsidiary of any Person means a Subsidiary of such Person, 100% of the outstanding Equity Interests of which (other than directors qualifying shares and shares required to be held by foreign nationals) shall at the time be owned by such Person or by one or more Wholly-Owned Subsidiaries of such Person.
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Withholding Agent means any Loan Party, the Administrative Agent and, in the case of any U.S. federal withholding Tax, any other applicable withholding agent.
Yen or ¥ mean lawful money of Japan.
Section 1.02. Other Interpretive Provisions .
With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document:
(a) The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms.
(b) The words herein, hereto, hereof and hereunder and words of similar import when used in any Loan Document shall refer to such Loan Document as a whole and not to any particular provision thereof.
(c) Article, Section, Exhibit and Schedule references are to the Loan Document in which such reference appears.
(d) The term including is by way of example and not limitation.
(e) The term documents includes any and all instruments, documents, agreements, certificates, notices, reports, financial statements and other writings, however evidenced, whether in physical or electronic form.
(f) In the computation of periods of time from a specified date to a later specified date, the word from means from and including; the words to and until each mean to but excluding; and the word through means to and including.
(g) Section headings herein and in the other Loan Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Loan Document.
Section 1.03. Accounting Terms; GAAP .
(a) All accounting terms not specifically or completely defined herein shall be construed in conformity with GAAP, except as otherwise specifically prescribed herein.
(b) Notwithstanding anything to the contrary herein, for purposes of this Agreement (including in determining compliance with any test or covenant contained herein) with respect to (i) any Test Period during which any Specified Transaction occurs, the applicable Ratio shall be calculated with respect to such Test Period and such Specified Transaction on a Pro Forma Basis and (ii) any Test Period with respect to which testing is based on a Specified Transaction happening after the end of such Test Period, the applicable Ratio shall be calculated as if such Specified Transaction had taken place on the first day of such Test Period.
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(c) If the Borrower notifies the Administrative Agent that the Borrower wishes to amend any provision hereof to eliminate the effect of any change in GAAP (or in the application thereof) occurring after the Closing Date on the operation of such provision (or if the Administrative Agent notifies the Borrower that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then the compliance of the Borrower and its Subsidiaries with such provision shall be determined on the basis of GAAP as in effect (and as applied) immediately before the relevant change became effective, until either such notice is withdrawn or such provision is amended in a manner satisfactory to the Borrower and the Required Lenders. Until such notice is withdrawn or the relevant provision is so amended, the Borrower shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement setting forth a reconciliation between calculations made with respect to the relevant provision before and after giving effect to such change in GAAP. Notwithstanding any other provision of this agreement, in no event shall a lease obligation that does not constitute a Capitalized Lease Obligation under GAAP as in effect on the date hereof be treated as a Capitalized Lease Obligation for any purpose hereof.
Section 1.04. Rounding .
Any financial ratios required to be maintained by the Borrower pursuant to this Agreement (or required to be satisfied in order for a specific action to be permitted under this Agreement) shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding up if there is no nearest number).
Section 1.05. References to Agreements, Laws, Etc.
Unless otherwise expressly provided herein, (a) references to Organization Documents, agreements (including the Loan Documents) and other contractual instruments shall be deemed to include all subsequent amendments, restatements, extensions, supplements and other modifications thereto, but only to the extent that such amendments, restatements, extensions, supplements and other modifications are permitted by the Loan Documents, and (b) references to any Law shall include all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting such Law.
Section 1.06. Times of Day .
Unless otherwise specified, all references herein to times of day shall be references to Eastern time (daylight or standard, as applicable).
Section 1.07. Timing of Payment of Performance .
When the payment of any obligation or the performance of any covenant, duty or obligation is stated to be due or performance required on a day which is not a Business Day, the date of such payment (other than as described in the definition of Interest Period) or performance shall extend to the immediately succeeding Business Day.
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Section 1.08. Pro Forma and Other Calculations .
(a) Notwithstanding anything to the contrary herein, financial ratios and tests, including the Ratios, shall be calculated in the manner prescribed by this Section 1.08 ; provided , that notwithstanding anything to the contrary in clauses (b) , (c) , (d) or (e) of this Section 1.08 , when calculating any Ratio for purposes of (i) the definition of Applicable Rate and (ii) Section 7.09 (other than for the purpose of determining Pro Forma Compliance with Section 7.09 ), the events described in this Section 1.08 that occurred subsequent to the end of the applicable Test Period shall not be given pro forma effect.
(b) In the event that the Borrower or any of its Restricted Subsidiaries incurs, assumes, guarantees, redeems, retires or extinguishes any Indebtedness or issues or redeems Disqualified Stock or Preferred Stock subsequent to the Test Period for which any Ratio is being calculated but prior to or simultaneously with the event for which the calculation of the applicable Ratio is made (the Ratio Calculation Date ), then the applicable Ratio shall be calculated giving pro forma effect to such incurrence, assumption, guarantee, redemption, retirement or extinguishment of Indebtedness, or such issuance or redemption of Disqualified Stock or Preferred Stock, as if the same had occurred on the last day of the applicable Test Period; provided , however , that, for purposes of any pro forma calculation of the Total Leverage Ratio on such determination date pursuant to the provisions described in Section 7.02(a) , the pro forma calculation shall not give effect to any Indebtedness incurred on such determination date pursuant to the provisions described under Section 7.02(b) .
(c) For purposes of making the computation referred to above, Investments, acquisitions, Dispositions, mergers, amalgamations and consolidations (as determined in accordance with GAAP) and operational changes, in each case with respect to a business, a company, a segment, an operating division or unit or line of business that the Borrower, or any of its Restricted Subsidiaries has determined to make and/or made during the Test Period or subsequent to such Test Period and on or prior to or simultaneously with the Ratio Calculation Date shall be calculated on a pro forma basis assuming that all such Investments, acquisitions, Dispositions, mergers, amalgamations and consolidations and operational changes (and the change in any associated fixed charge obligations and the change in Consolidated EBITDA resulting therefrom, subject to any limitations set forth in clause (a)(J) of the definition thereof, to the extent applicable) had occurred on the first day of the Test Period. If since the beginning of such Test Period any Person that subsequently became a Restricted Subsidiary or was merged with or into the Borrower or any of its Restricted Subsidiaries since the beginning of such Test Period shall have made any Investment, acquisition, disposition, merger, amalgamation and consolidation and operational changes, in each case with respect to a business, a company, a segment, an operating division or unit or line of business that would have required adjustment pursuant to this Section 1.08 , then the applicable Ratio shall be calculated giving pro forma effect thereto for such Test Period as if such Investment, acquisition, disposition, merger and consolidation and operational changes had occurred at the beginning of the applicable Test Period.
(d) For purposes of making the computation referred to above, whenever pro forma effect is to be given to a transaction, the pro forma calculations shall be made in good faith by a responsible financial or accounting officer of the Borrower. Any such pro forma
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calculation may include adjustments appropriate, in the reasonable determination of the Borrower as set forth in an officers certificate, to reflect reasonably identifiable and factually supportable cost-savings, operating expense reductions, restructuring charges and expense and other operating improvements or synergies reasonably expected to result from any action taken or expected to be taken within twelve (12) months after the date of any acquisition, amalgamation or merger (subject to any limitations set forth in clause (a)(J) of the definition of Consolidated EBITDA, to the extent applicable); provided , that no such amounts shall be included pursuant to this paragraph to the extent duplicative of any amounts that are otherwise added back in computing Consolidated EBITDA with respect to such period.
(e) For purposes of calculation of any Ratio, any amount in a currency other than Dollars will be converted to Dollars in a manner consistent with that used by the Borrower when preparing its financial statements in accordance with GAAP.
Section 1.09. Letter of Credit Amounts .
Unless otherwise specified herein, the amount of a Letter of Credit at any time shall be deemed to be the stated amount of such Letter of Credit in effect at such time (in the case of any Letter of Credit denominated in an Alternative Currency, the Dollar Equivalent thereof at such time); provided , however , that with respect to any Letter of Credit that, by its terms or the terms of any Issuer Document related thereto, provides for one or more automatic increases in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be the maximum stated amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effect at such time.
ARTICLE II
THE COMMITMENTS AND CREDIT EXTENSIONS
Section 2.01. The Loans .
(a) The Term Borrowings . Subject to the terms and conditions set forth herein, each Term Lender severally agrees to make to the Borrower on the Closing Date, a Loan denominated in Dollars in an aggregate amount equal to the amount of such Term Lenders Term Commitment. Amounts borrowed under this Section 2.01(a) and repaid or prepaid may not be reborrowed. Term Loans may be Base Rate Loans or Eurodollar Rate Loans, as further provided herein.
(b) The Revolving Credit Borrowings . Subject to the terms and conditions set forth herein, each Revolving Credit Lender severally agrees to make Revolving Credit Loans denominated in Dollars to the Borrower from its applicable Lending Office (each such loan, a Revolving Credit Loan ) from time to time, on any Business Day during the period from the Closing Date until the Business Day preceding the Maturity Date for the Revolving Credit Facility, in an aggregate principal amount not to exceed at any time outstanding the amount of such Lenders Revolving Credit Commitment; provided , that after giving effect to any Revolving Credit Borrowing, the aggregate Outstanding Amount of the Revolving Credit Loans of any Lender, plus such Lenders Pro Rata Share of the Outstanding Amount of all L/C Obligations, plus such Lenders Pro Rata Share of the Outstanding Amount of all Swing Line Loans, shall not
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exceed such Lenders Revolving Credit Commitment; and provided , further , that on the Closing Date, any Revolving Credit Borrowings shall be limited to (i) an amount equal to Closing Date Transaction Expenses and other expenses relating to the Transactions plus (ii) an amount not to exceed $5 million for working capital and general corporate purposes. Within the limits of each Lenders Revolving Credit Commitment, and subject to the other terms and conditions hereof, the Borrower may borrow under this Section 2.01(b) , prepay under Section 2.05 , and reborrow under this Section 2.01(b) . Revolving Credit Loans may be Base Rate Loans or Eurodollar Rate Loans, as further provided herein.
Section 2.02. Borrowings, Conversions and Continuations of Loans .
(a) Each Term Borrowing, each Revolving Credit Borrowing, each conversion of Term Loans or Revolving Credit Loans from one Type to the other, and each continuation of Eurodollar Rate Loans shall be made upon the Borrowers irrevocable notice in writing to the applicable Administrative Agent. Each such notice must be received by the applicable Administrative Agent not later than 11:00 a.m. (i) three (3) Business Days (or in the case of the Term Loans to be made on the Closing Date, such shorter period of time as may be acceptable to the applicable Administrative Agent) prior to the requested date of any Borrowing or continuation of Eurodollar Rate Loans or any conversion of Base Rate Loans to Eurodollar Rate Loans, and (ii) one (1) Business Day before the requested date of any Borrowing of Base Rate Loans. Except as provided in Section 2.14(a) , each Borrowing of, conversion to or continuation of Eurodollar Rate Loans shall be in a minimum principal amount of $5 million, or a whole multiple of $1 million, in excess thereof. Except as provided in Section 2.03(c) , 2.04(c) , 2.14(a) or the last sentence of this paragraph, each Borrowing of or conversion to Base Rate Loans shall be in a minimum principal amount of $1 million or a whole multiple of $500,000 in excess thereof. Each Committed Loan Notice (whether telephonic or written) shall specify (i) whether the Borrower is requesting a Term Borrowing, a Revolving Credit Borrowing, a conversion of Term Loans or Revolving Credit Loans from one Type to the other, or a continuation of Eurodollar Rate Loans, (ii) the requested date of the Borrowing, conversion or continuation, as the case may be (which shall be a Business Day), (iii) the principal amount of Loans to be borrowed, converted or continued, (iv) the Type of Loans to be borrowed or to which existing Term Loans or Revolving Credit Loans are to be converted, and (v) if applicable, the duration of the Interest Period with respect thereto. If the Borrower fails to specify a Type of Loan in a Committed Loan Notice or fails to give a timely notice requesting a conversion or continuation, then the applicable Term Loans or Revolving Credit Loans shall be made as, or converted to, Base Rate Loans. Any such automatic conversion to Base Rate Loans shall be effective as of the last day of the Interest Period then in effect with respect to the applicable Eurodollar Rate Loans. If the Borrower requests a Borrowing of, conversion to, or continuation of Eurodollar Rate Loans in any such Committed Loan Notice, but fails to specify an Interest Period, it will be deemed to have specified an Interest Period of one (1) month.
(b) Following receipt of a Committed Loan Notice with respect to a Class of Loans, the applicable Administrative Agent shall promptly notify each Appropriate Lender of the amount of its Pro Rata Share of the applicable Class of Loans, and if no timely notice of a conversion or continuation is provided by the Borrower, the applicable Administrative Agent shall notify each Appropriate Lender of the details of any automatic conversion to Base Rate Loans or continuation described in Section 2.02(a) . In the case of each Borrowing, each
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Appropriate Lender shall make the amount of its Loan available to the applicable Administrative Agent in Same Day Funds at such Administrative Agents Office not later than 1:00 p.m. (or 11:00 a.m. in the case of Loans being made on the Closing Date) on the Business Day specified in the applicable Committed Loan Notice. Upon satisfaction of the applicable conditions set forth in Section 4.02 (and, if such Borrowing is the initial Credit Extension, Section 4.01 ), the applicable Administrative Agent shall make all funds so received available to the Borrower in like funds as received by such Administrative Agent either by (i) crediting the account of the Borrower on the books of Citibank with the amount of such funds or (ii) wire transfer of such funds, in each case in accordance with instructions provided to (and reasonably acceptable to) such Administrative Agent by the Borrower; provided , that if, on the date the Committed Loan Notice with respect to a Revolving Credit Borrowing is given by the Borrower, there are Swing Line Loans or L/C Borrowings outstanding, then the proceeds of such Borrowing shall be applied, first , to the payment in full of any such L/C Borrowing, second , to the payment in full of any such Swing Line Loans, and third , to the Borrower as provided above.
(c) Except as otherwise provided herein, a Eurodollar Rate Loan may be continued or converted only on the last day of an Interest Period for such Eurodollar Rate Loan unless the Borrower pays the amount due, if any, under Section 3.05 in connection therewith. During the existence of an Event of Default, the applicable Administrative Agent (in the case of an Event of Default under Section 8.01(a) or (f)) or the Required Lenders (in the case of any other Event of Default) may by written notice to the Borrower require that no Loans may be converted to or continued as Eurodollar Rate Loans.
(d) The applicable Administrative Agent shall promptly notify the Borrower and the Appropriate Lenders of the interest rate applicable to any Interest Period for Eurodollar Rate Loans upon determination of such interest rate. The determination of the Eurodollar Rate by an Administrative Agent shall be conclusive in the absence of manifest error. At any time that Base Rate Loans are outstanding, the applicable Administrative Agent shall notify the Borrower and the Appropriate Lenders of any change in the Prime Lending Rate used in determining the Base Rate promptly following the public announcement of such change.
(e) After giving effect to all Term Borrowings, all Revolving Credit Borrowings, all conversions of Term Loans or Revolving Credit Loans from one Type to the other, and all continuations of Term Loans or Revolving Credit Loans as the same Type, there shall not be more than (i) four (4) Interest Periods in effect for any Class of Term Loans and (ii) eight (8) for any Class of Revolving Credit Loans.
(f) The failure of any Lender to make the Loan to be made by it as part of any Borrowing shall not relieve any other Lender of its obligation, if any, hereunder to make its Loan on the date of such Borrowing, but no Lender shall be responsible for the failure of any other Lender to make the Loan to be made by such other Lender on the date of any Borrowing.
Section 2.03. Letters of Credit .
(a) The Letter of Credit Commitment . (a) Subject to Section 4.02 and all of the other terms and conditions set forth herein, (A) each L/C Issuer agrees, in reliance upon the agreements of the other Revolving Credit Lenders set forth in this Section 2.03 , (1) from time to
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time on any Business Day during the period from the Closing Date to the date that is thirty (30) days prior to the Letter of Credit Expiration Date, to issue Letters of Credit denominated in Dollars, or in the sole discretion of such L/C Issuer in an Alternative Currency, for the account of the Borrower or a Subsidiary ( provided , that the Borrower is liable for any Letter of Credit issued to a Subsidiary) and to amend, extend or renew Letters of Credit previously issued by it, in accordance with Section 2.03(b) , and (2) to honor compliant drafts under the Letters of Credit and (B) the Revolving Credit Lenders severally agree to participate in Letters of Credit issued pursuant to this Section 2.03 ; provided , that no L/C Issuer shall be obligated to make any L/C Credit Extension with respect to any Letter of Credit, and no Revolving Credit Lender shall be obligated to participate in any Letter of Credit if as of the date of such L/C Credit Extension, (x) the Revolving Credit Exposure of any Revolving Credit Lender would exceed such Lenders Revolving Credit Commitment, (y) the Outstanding Amount of the L/C Obligations would exceed the Letter of Credit Sublimit or (z) the Dollar Equivalent of the Outstanding Amount of L/C Obligations in respect of Letters of Credit denominated in an Alternative Currency would exceed $25 million. Within the foregoing limits, and subject to the terms and conditions hereof, the Borrowers ability to obtain Letters of Credit shall be fully revolving, and accordingly the Borrower may, during the foregoing period, obtain Letters of Credit to replace Letters of Credit that have expired or that have been drawn upon and reimbursed.
(i) An L/C Issuer shall be under no obligation to issue any Letter of Credit if:
(A) any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain such L/C Issuer from issuing the Letter of Credit, or any Law applicable to such L/C Issuer or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over such L/C Issuer shall prohibit, or request that such L/C Issuer refrain from, the issuance of letters of credit generally or the Letter of Credit in particular or shall impose upon such L/C Issuer with respect to the Letter of Credit any restriction, reserve or capital requirement (for which such L/C Issuer is not otherwise entitled to be compensated hereunder) not in effect on the Closing Date, or shall impose upon such L/C Issuer any unreimbursed loss, cost or expense which was not applicable on the Closing Date and which such L/C Issuer in good faith deems material to it (for which such L/C Issuer is not otherwise entitled to be compensated hereunder);
(B) the expiry date of such requested Letter of Credit (or the initial expiry date of an Auto-Extension Letter of Credit) would occur more than twelve (12) months after the date of issuance or last extension, unless the Required Class Lenders for the Revolving Credit Facility have approved of such expiration date;
(C) the expiry date of such requested Letter of Credit would occur after the Letter of Credit Expiration Date, unless the applicable L/C Issuer has approved of such expiration date (in which case, such Letter of Credit shall be an Extended Letter of Credit ), it being acknowledged and
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agreed that each such Extended Letter of Credit shall be Cash Collateralized in accordance with Section 2.03(p) and that participation obligations of the Revolving Credit Lenders under this Section 2.03 shall terminate on the Letter of Credit Expiration Date;
(D) the issuance of such Letter of Credit would violate any Laws binding upon such L/C Issuer;
(E) the issuance of the Letter of Credit would violate one or more policies of such L/C Issuer applicable to letters of credit generally;
(F) the Letter of Credit is to be denominated in a currency other than Dollars;
(G) after giving effect to such issuance, the aggregate face amount of Letters of Credit issued by such L/C Issuer would exceed such L/C Issuers L/C Commitment; or
(H) after giving effect to such issuance, the Dollar Equivalent of the Outstanding Amount of L/C Obligations in respect of Letters of Credit denominated in any Alternative Currency would exceed $25 million in the aggregate.
(ii) An L/C Issuer shall be under no obligation to amend any Letter of Credit if (A) such L/C Issuer would have no obligation at such time to issue such Letter of Credit in its amended form under the terms hereof, or (B) the beneficiary of such Letter of Credit does not accept the proposed amendment to such Letter of Credit.
(iii) Each L/C Issuer shall act on behalf of the Revolving Credit Lenders with respect to any Letters of Credit issued by it and the documents associated therewith, and such L/C Issuer shall have all of the benefits and immunities (A) provided to an Administrative Agent in Article IX with respect to any acts taken or omissions suffered by such L/C Issuer in connection with Letters of Credit issued by it or proposed to be issued by it and Issuer Documents pertaining to such Letters of Credit as fully as if the term Administrative Agent as used in Article IX included such L/C Issuer with respect to such acts or omissions, and (B) as additionally provided herein with respect to such L/C Issuer.
(b) Procedures for Issuance and Amendment of Letters of Credit; Auto-Extension Letters of Credit . (b) Subject to Section 4.02 , each Letter of Credit shall be issued or amended, as the case may be, upon the request of the Borrower delivered to an L/C Issuer during the period specified in Section 2.03(a) (with a copy to the Revolver Administrative Agent) in the form of a Letter of Credit Application, appropriately completed and signed by a Responsible Officer of the Borrower. Such Letter of Credit Application must be received by the relevant L/C Issuer and the Revolver Administrative Agent not later than 11:00 a.m. at least three (3) Business Days prior to the proposed issuance date or date of amendment, as the case may be; or, in each case, such shorter period of time as the relevant L/C Issuer may agree in a particular instance in its sole discretion. In the case of a request for an initial issuance of a Letter
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of Credit, such Letter of Credit Application shall specify in form and detail reasonably satisfactory to the relevant L/C Issuer: (a) the proposed issuance date of the requested Letter of Credit (which shall be a Business Day); (b) the amount thereof; (c) the expiry date thereof; (d) the name and address of the beneficiary thereof; and (e) such other matters as the relevant L/C Issuer may reasonably request (which may include the form of the requested Letter of Credit). In the case of a request for an amendment of any outstanding Letter of Credit, such Letter of Credit Application shall specify in form and detail reasonably satisfactory to the relevant L/C Issuer (1) the Letter of Credit to be amended; (2) the proposed date of amendment thereof (which shall be a Business Day); (3) the nature of the proposed amendment; and (4) such other matters as the relevant L/C Issuer may reasonably request. Additionally, the Borrower shall furnish to each L/C Issuer and the Revolver Administrative Agent such other documents and information pertaining to such requested Letter of Credit issuance or amendment, including any Issuer Documents, as such L/C Issuer or the Revolver Administrative Agent may reasonably require.
(i) Promptly after receipt of any Letter of Credit Application, the relevant L/C Issuer will confirm with the Revolver Administrative Agent (by telephone or in writing) that the Revolver Administrative Agent has received a copy of such Letter of Credit Application from the Borrower and, if not, such L/C Issuer will provide the Revolver Administrative Agent with a copy thereof. Unless the relevant L/C Issuer has received written notice from any Revolving Credit Lender, the Revolver Administrative Agent or any Loan Party, at least one Business Day prior to the requested date of issuance or amendment of the applicable Letter of Credit, that one or more applicable conditions contained in Article IV shall not then be satisfied, then, subject to the terms and conditions hereof, the relevant L/C Issuer shall, on the requested date, issue a Letter of Credit for the account of the Borrower or applicable Subsidiary, as the case may be, or enter into the applicable amendment, as the case may be, in each case in accordance with the relevant L/C Issuers usual and customary business practices. Immediately upon the issuance of each Letter of Credit, each Revolving Credit Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to (regardless of whether the conditions set forth in Section 4.02 have been satisfied), purchase from the relevant L/C Issuer without recourse or warranty a risk participation in such Letter of Credit in an amount equal to the product of such Lenders Pro Rata Share of the Revolving Credit Facility times the amount of such Letter of Credit.
(ii) If the Borrower so requests in any applicable Letter of Credit Application, the relevant L/C Issuer may, in its discretion, agree to issue a Letter of Credit that has automatic extension provisions (each, an Auto-Extension Letter of Credit ); provided , that any such Auto-Extension Letter of Credit must permit the relevant L/C Issuer to prevent any such extension at least once in each twelve (12) month period (commencing with the date of issuance of such Letter of Credit) by giving prior notice to the beneficiary thereof not later than a day (the Non-Extension Notice Date ) in each such twelve (12) month period to be agreed upon at the time such Letter of Credit is issued. Once an Auto-Extension Letter of Credit has been issued, unless otherwise directed by the relevant L/C Issuer, the Borrower shall not be required to make a specific request to the relevant L/C Issuer for any such extension.
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Once an Auto-Extension Letter of Credit has been issued, the Revolving Credit Lenders shall be deemed to have authorized (but may not require) the relevant L/C Issuer to permit the extension of such Letter of Credit at any time to an expiry date not later than the Letter of Credit Expiration Date (or with respect to an Extended Letter with Credit, the expiry date set forth in such Extended Letter of Credit); provided , that the relevant L/C Issuer shall not permit any such extension if (A) the relevant L/C Issuer has determined that it would have no obligation at such time to issue such Letter of Credit in its extended form under the terms hereof (by reason of the provisions of Section 2.03(a)(ii) or otherwise), or (B) it has received notice (which may be by telephone or in writing) on or before the day that is five (5) Business Days before the Non-Extension Notice Date from the Revolver Administrative Agent, any Revolving Credit Lender or the Borrower that one or more of the applicable conditions specified in Section 4.02 is not then satisfied.
(iii) Promptly after its delivery of any Letter of Credit or any amendment to a Letter of Credit to an advising bank with respect thereto or to the beneficiary thereof, the relevant L/C Issuer will also deliver to the Borrower and the Revolver Administrative Agent a true and complete copy of such Letter of Credit or amendment.
(c) Drawings and Reimbursements; Funding of Participations . (i) Upon receipt from the beneficiary of any Letter of Credit of any complaint notice of a drawing under such Letter of Credit, the relevant L/C Issuer shall notify promptly the Borrower and the Revolver Administrative Agent thereof. Not later than 3:00 p.m. on the Business Day immediately following any payment by an L/C Issuer under a Letter of Credit with notice to the Borrower (each such date, an Honor Date ), the Borrower shall reimburse, such L/C Issuer through the Revolver Administrative Agent (or directly to such L/C Issuer with a written notice to the Revolver Administrative Agent) in an amount equal to the amount of such drawing in (x) with respect to any Letter of Credit issued in Dollars, in Dollars or (y) with respect to any Letter of Credit issued in an Alternative Currency, in such Alternative Currency (or if requested by the applicable L/C Issuer, the Dollar Equivalent thereof in Dollars). If the Borrower fails to so reimburse such L/C Issuer by such time, the L/C Issuer shall notify the Revolver Administrative Agent and the Revolver Administrative Agent shall promptly notify each Revolving Credit Lender of the Honor Date, the amount of the unreimbursed drawing (the Unreimbursed Amount ) , and the amount of such Revolving Credit Lenders Pro Rata Share thereof. In such event, the Borrower shall be deemed to have requested a Revolving Credit Borrowing of Base Rate Loans to be disbursed on the Honor Date in an amount equal to the Unreimbursed Amount, without regard to the minimum and multiples specified in Section 2.02 for the principal amount of Base Rate Loans but subject to the amount of the unutilized portion of the Revolving Credit Commitments of the Revolving Credit Lenders and the conditions set forth in Section 4.02 (other than the delivery of a Committed Loan Notice). The Borrowers failure to reimburse an L/C Issuer shall not constitute a Default so long as such L/C Issuer is repaid with proceeds of Loans as provided in this Section 2.01(c) . Any notice given by an L/C Issuer or the Revolver Administrative Agent pursuant to this Section 2.03(c)(i) may be given by telephone if immediately confirmed in writing; provided , that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice.
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(ii) Each Revolving Credit Lender shall upon any notice pursuant to Section 2.03(c)(i) make funds available in Dollars (which in the case of any Letters of Credit denominated in an Alternative Currency shall be based on the Dollar Equivalent of the Unreimbursed Amount thereof) (and the Revolver Administrative Agent may apply Cash Collateral provided for this purpose) for the account of the relevant L/C Issuer at the Revolver Administrative Agents Office for payments in an amount equal to its Pro Rata Share of the Unreimbursed Amount promptly following receipt of such notice by the Revolver Administrative Agent, whereupon, subject to the provisions of Section 2.03(c)(iii) , each Revolving Credit Lender that so makes funds available shall be deemed to have made a Base Rate Loan to the Borrower in such amount. The Administrative Agent shall remit the funds so received to the relevant L/C Issuer.
(iii) With respect to any Unreimbursed Amount that is not fully refinanced by a Revolving Credit Borrowing of Base Rate Loans because the conditions set forth in Section 4.02 cannot be satisfied or for any other reason, the Borrower shall be deemed to have incurred from the relevant L/C Issuer an L/C Borrowing in the amount of the Unreimbursed Amount that is not so refinanced, which L/C Borrowing shall be due and payable on demand (together with interest) and shall bear interest at the Default Rate. In such event, each Revolving Credit Lenders payment to the Revolver Administrative Agent for the account of the relevant L/C Issuer pursuant to Section 2.03(c)(ii) shall be deemed payment in respect of its participation in such L/C Borrowing and shall constitute an L/C Advance from such Lender in satisfaction of its participation obligation under this Section 2.03 .
(iv) Until a Revolving Credit Lender funds its Revolving Credit Loan or L/C Advance pursuant to this Section 2.03(c) to reimburse the relevant L/C Issuer for any amount drawn under any Letter of Credit, interest in respect of such Lenders Pro Rata Share of such amount shall be solely for the account of the relevant L/C Issuer.
(v) Each Revolving Credit Lenders obligation to make Revolving Credit Loans or L/C Advances to reimburse an L/C Issuer for amounts drawn under Letters of Credit, as contemplated by this Section 2.03(c) , shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other right which such Lender may have against the relevant L/C Issuer, the Borrower or any other Person for any reason whatsoever; (B) the occurrence or continuance of a Default; (C) the form, validity, sufficiency, accuracy, genuineness or legal effect of any Letter of Credit or any document submitted by any party in connection with the application for and issuance of a Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged; (D) failure of the beneficiary to comply fully with conditions required in order to demand payment under a Letter of Credit; or (E) any other occurrence, event or condition, whether or not similar to any of the foregoing, including without limitation, any of the events specified in Section 2.03(e); provided , that each Revolving Credit Lenders obligation to make Revolving Credit Loans pursuant to this Section 2.03(c) is subject to the conditions set forth in Section 4.02 (other than delivery by the Borrower of a Committed Loan Notice). No
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such making of an L/C Advance shall relieve or otherwise impair the obligation of the Borrower to reimburse the relevant L/C Issuer for the amount of any payment made by such L/C Issuer under any Letter of Credit, together with interest as provided herein.
(vi) If any Revolving Credit Lender fails to make available to the Revolver Administrative Agent for the account of the relevant L/C Issuer any amount required to be paid by such Lender pursuant to the foregoing provisions of this Section 2.03(c) by the time specified in Section 2.03(c)(ii) , then, without limiting the other provisions of this agreement, such L/C Issuer shall be entitled to recover from such Lender (acting through the Revolver Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to such L/C Issuer at a rate per annum equal to the greater of the Federal Funds Rate and a rate determined by the applicable L/C Issuer in accordance with banking industry rules on interbank compensation, plus any administrative, processing or similar fees customarily charged by such L/C Issuer in connection with the foregoing. If such Lender pays such amount (with interest and fees as aforesaid), the amount so paid shall constitute such Lenders Loan included in the relevant Borrowing or L/C Advance in respect of the relevant L/C Borrowing, as the case may be. A certificate of the relevant L/C Issuer submitted to any Revolving Credit Lender (through the Revolver Administrative Agent) with respect to any amounts owing under this Section 2.03(c)(vi) shall be conclusive absent manifest error.
(d) Repayment of Participations . (i) If, at any time after an L/C Issuer has made a payment under any Letter of Credit and has received from any Revolving Credit Lender such Lenders L/C Advance in respect of such payment in accordance with Section 2.03(c) , the Revolver Administrative Agent receives for the account of such L/C Issuer any payment in respect of the related Unreimbursed Amount or interest thereon (whether directly from the Borrower or otherwise, including proceeds of Cash Collateral applied thereto by the Revolver Administrative Agent), the Revolver Administrative Agent will distribute to such Lender its Pro Rata Share thereof (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lenders L/C Advance was outstanding) in the same funds as those received by the Revolver Administrative Agent.
(i) If any payment received by the Revolver Administrative Agent for the account of an L/C Issuer pursuant to Section 2.03(c)(i) is required to be returned under any of the circumstances described in Section 10.05 (including pursuant to any settlement entered into by such L/C Issuer in its discretion), each Revolving Credit Lender shall pay to the Revolver Administrative Agent for the account of such L/C Issuer its Pro Rata Share thereof on demand of the Revolver Administrative Agent, plus interest thereon from the date of such demand to the date such amount is returned by such Lender, at a rate per annum equal to the applicable Federal Funds Rate from time to time in effect. The obligations of the Lenders under this clause (ii) shall survive the payment in full of the Obligations and the termination of this Agreement.
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(e) Obligations Absolute . The obligation of the Borrower to reimburse the relevant L/C Issuer for each drawing under each Letter of Credit issued by it and to repay each L/C Borrowing shall be absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including the following:
(i) any lack of validity or enforceability of such Letter of Credit, this Agreement, or any other agreement or instrument relating thereto;
(ii) the existence of any claim, counterclaim, setoff, defense or other right that any Loan Party may have at any time against any beneficiary or any transferee of such Letter of Credit (or any Person for whom any such beneficiary or any such transferee may be acting), the relevant L/C Issuer or any other Person, whether in connection with this Agreement, the transactions contemplated hereby or by such Letter of Credit or any agreement or instrument relating thereto, or any unrelated transaction;
(iii) any draft, demand, certificate or other document presented under such Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect;
(iv) any payment by the relevant L/C Issuer under such Letter of Credit against presentation of a draft or certificate that does not strictly comply with the terms of such Letter of Credit; or any payment made by the relevant L/C Issuer under such Letter of Credit to any Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or other representative of or successor to any beneficiary or any transferee of such Letter of Credit, including any arising in connection with any proceeding under any Debtor Relief Law;
(v) any amendment or waiver of or any consent to departure from all or any of the provisions of the Loan Documents;
(vi) any adverse change in the business, operations, properties, assets, condition (financial or otherwise) or prospects of the Borrower or any of its Subsidiaries; or
(vii) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other circumstance that might otherwise constitute a defense available to, or a discharge of, any Loan Party.
The Borrower shall promptly examine a copy of each Letter of Credit and each amendment thereto that is delivered to it by an L/C Issuer prior to the issuance of such Letter of Credit or amendment and, in the event of any claim of noncompliance with the Borrowers instructions or other irregularity, the Borrower will promptly notify the applicable L/C Issuer. The Borrower shall be conclusively deemed to have waived any such claim against such L/C Issuer and its correspondents unless such notice is given as aforesaid prior to the issuance of such Letter of Credit or amendment thereto.
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(f) Role of L/C Issuers . Each Lender and the Borrower agree that, in paying any drawing under a Letter of Credit, the relevant L/C Issuer shall not have any responsibility to obtain any document (other than all documents expressly required by the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing or delivering any such document. None of the L/C Issuers, any Related Parties nor any of the respective correspondents, participants or assignees of any L/C Issuer shall be liable to any Lender for (i) any action taken or omitted in connection herewith at the request or with the approval of the Lenders holding a majority of the Revolving Credit Commitments; (ii) any action taken or omitted in the absence of bad faith, gross negligence or willful misconduct; or (iii) the due execution, effectiveness, validity or enforceability of any document or instrument related to any Letter of Credit or Letter of Credit Application. The Borrower hereby assumes all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit; provided , that this assumption is not intended to, and shall not, preclude the Borrowers pursuing such rights and remedies as it may have against the beneficiary or transferee at law or under any other agreement. None of the L/C Issuers, any Related Parties, nor any of the respective correspondents, participants or assignees of any L/C Issuer, shall be liable or responsible for any of the matters described in clauses (i) through (v) of Section 2.03(e) ; provided , that anything in such clauses to the contrary notwithstanding, the Borrower may have a claim against an L/C Issuer, and such L/C Issuer may be liable to the Borrower, to the extent, but only to the extent, of any direct, as opposed to consequential or exemplary, damages suffered by the Borrower which were caused by such L/C Issuers willful misconduct, bad faith or gross negligence, in each case, as determined in a final judgment by a court of competent jurisdiction. In furtherance and not in limitation of the foregoing, each L/C Issuer may accept documents that appear on their face to be in order, without responsibility for further investigation, and no L/C Issuer shall be responsible for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason. Notwithstanding anything to the contrary contained in this Section 2.03(f) , the Borrower shall retain any and all rights it may have against any L/C Issuer for any liability arising out of the bad faith, gross negligence or willful misconduct of such L/C Issuer.
(g) Cash Collateral . (i) If an L/C Issuer has honored any full or partial drawing request under any Letter of Credit and such drawing has resulted in an L/C Borrowing that has not been repaid and the conditions set forth in Section 4.02 to a Revolving Credit Borrowing cannot then be met, (ii) if, as of the Letter of Credit Expiration Date, any Letter of Credit (other than an Extended Letter of Credit that has been Cash Collateralized in accordance with Section 2.03(p)) for any reason remains outstanding and partially or wholly undrawn (and arrangements that are reasonably satisfactory to the applicable L/C Issuer have not otherwise been made), (iii) if any Event of Default occurs and is continuing and the Revolving Administrative Agent or the Lenders holding a majority of the Revolving Credit Commitments, as applicable, require the Borrower to Cash Collateralize the L/C Obligations pursuant to Section 8.02 , (iv) if, after the issuance of any Letter of Credit, any Revolving Credit Lender becomes a Defaulting Lender or (v) an Event of Default set forth under Section 8.01(f) occurs and is continuing, then the Borrower shall Cash Collateralize the then Outstanding Amount of (A) the applicable L/C Borrowing, in the case of the preceding clause (i) , (B) all L/C Obligations, in the case of the preceding clauses (ii), (iii) and (v), or (C) such L/C Issuers Fronting Exposure with respect to such Defaulting Lender that has not been re-allocated to
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Non-Defaulting Lenders in accordance with Section 2.17(a) in the case of the preceding clause (iv) , and shall do so not later than 4:00 p.m., on (x) in the case of the immediately preceding clauses (i) through (iv) , (1) the Business Day that the Borrower receives notice thereof, if such notice is received on such day prior to 12:00 Noon, or (2) if clause (1) above does not apply, the Business Day immediately following the day that the Borrower receives such notice and (y) in the case of the immediately preceding clause (v) , the Business Day on which an Event of Default set forth under Section 8.01(f) occurs or, if such day is not a Business Day, the Business Day immediately succeeding such day. For purposes hereof, Cash Collateralize means to pledge and deposit with or deliver to the Revolver Administrative Agent, for the benefit of the relevant L/C Issuer and the Revolving Credit Lenders, as collateral for the L/C Obligations, cash or deposit account balances, or subject to the approval of the relevant L/C Issuer, other credit support ( Cash Collateral ) pursuant to documentation in form and substance reasonably satisfactory to the Administrative Agent and the relevant L/C Issuer (which documents are hereby consented to by the Lenders). Derivatives of such term have corresponding meanings. The Borrower hereby grants to the Revolver Administrative Agent, for the benefit of the L/C Issuers and the Revolving Credit Lenders, a security interest in all such cash, deposit accounts and all balances therein, other credit support and all proceeds of the foregoing. Cash Collateral, as appropriate, shall be maintained in blocked accounts at commercial banks acceptable to the Revolver Administrative Agent and may be invested in readily available Cash Equivalents. If at any time the Revolver Administrative Agent determines that any funds held as Cash Collateral are subject to any right or claim of any Person other than the Revolver Administrative Agent (on behalf of the relevant L/C Issuers and Revolving Credit Lenders) or that the total amount of such funds is less than the aggregate Outstanding Amount of all L/C Obligations then required to be Cash Collateralized, the Borrower will, forthwith upon demand by the Revolver Administrative Agent, pay to the Revolver Administrative Agent, as additional funds to be deposited and held in the deposit accounts at the Revolver Administrative Agent as aforesaid, an amount equal to the excess of (a) such aggregate Outstanding Amount over (b) the total amount of funds, if any, then held as Cash Collateral that the Administrative Agent reasonably determines to be free and clear of any such right and claim. Upon the drawing of any Letter of Credit for which funds are on deposit as Cash Collateral, such funds shall be applied, to the extent permitted under applicable Law, to reimburse the relevant L/C Issuer. To the extent the amount of any Cash Collateral exceeds the then Outstanding Amount of such L/C Obligations then required to be Cash Collateralized and so long as no Event of Default has occurred and is continuing, the excess shall be refunded to the Borrower.
(h) Letter of Credit Fees . The Borrower shall pay to the Revolver Administrative Agent for the account of each Revolving Credit Lender in accordance with its Pro Rata Share a Letter of Credit fee for each Letter of Credit outstanding pursuant to this Agreement equal to the Applicable Rate per annum times the daily maximum amount available to be drawn under such Letter of Credit; provided, that any such fees otherwise payable for the account of a Defaulting Lender with respect to any Letter of Credit as to which such Defaulting Lender has not provided Cash Collateral satisfactory to the applicable L/C Issuer shall be payable, to the maximum extent permitted by applicable Law, to the other Revolving Credit Lenders in accordance with the upward adjustments in their respective Applicable Percentages allocable to such Letter of Credit pursuant to Section 2.17(a) , with the balance of such fee, if any, payable to the applicable L/C Issuer for its own account. For purposes of computing the daily amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be
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determined in accordance with Section 1.09 . Such letter of credit fees shall be due and payable in arrears in Dollars on the last Business Day of each March, June, September and December, commencing with the first such date to occur after the issuance of such Letter of Credit, on the Letter of Credit Expiration Date and thereafter on demand. If there is any change in the Applicable Rate during any quarter, the daily maximum amount of each Letter of Credit shall be computed and multiplied by the Applicable Rate separately for each period during such quarter that such Applicable Rate was in effect.
(i) Fronting Fee and Documentary and Processing Charges Payable to L/C Issuers . The Borrower shall pay directly to each L/C Issuer for its own account a fronting fee with respect to each Letter of Credit issued by it to the applicable Borrower or Subsidiary equal to 0.125% per annum of the daily maximum amount available to be drawn under such Letter of Credit. For purposes of computing the daily amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.09 . Such fronting fees shall be due and payable in arrears on the last Business Day of the end of each March, June, September and December, commencing with the first such date to occur after the issuance of such Letter of Credit, on the Letter of Credit Expiration Date and thereafter on demand. In addition, the Borrower shall pay directly to each L/C Issuer for its own account with respect to each Letter of Credit issued to the Borrower or a Subsidiary thereof the customary issuance, presentation, amendment and other processing fees, and other standard costs and charges, of such L/C Issuer relating to letters of credit as from time to time in effect. Such customary fees and standard costs and charges are due and payable within ten (10) Business Days of demand and are nonrefundable.
(j) Conflict with Issuer Documents . Notwithstanding anything else to the contrary in this Agreement, in the event of any conflict between the terms hereof and the terms of any Issuer Document, the terms hereof shall control.
(k) Addition of an L/C Issuer . A Revolving Credit Lender may become an additional L/C Issuer hereunder pursuant to a written agreement among the Borrower, the Revolver Administrative Agent and such Revolving Credit Lender and such agreement shall specify such additional L/C Issuers L/C Commitment. The Revolver Administrative Agent shall notify the Revolving Credit Lenders of any such additional L/C Issuer.
(l) Applicability of ISP ; Limitation of Liability . Unless otherwise expressly agreed by the applicable L/C Issuer and the Borrower when a Letter of Credit is issued, the rules of the ISP and, as to all matters not covered thereby, the laws of the State of New York shall apply to each standby Letter of Credit. Notwithstanding the foregoing but subject to Section 2.03(f) , the applicable L/C Issuer shall not be responsible to the Borrower (or any other Person) for, and such L/C Issuers rights and remedies against the Borrower shall not be impaired by, any action or inaction of such L/C Issuer required or permitted under any law, order, or practice that is required or permitted to be applied to any Letter of Credit or this Agreement, including the Law or any order of a jurisdiction where such L/C Issuer or the beneficiary is located, the practice stated in the ISP, or in the decisions, opinions, practice statements, or official commentary of the ICC Banking Commission, the Bankers Association for Finance and Trade - International Financial Services Association (BAFT-IFSA), or the Institute of International Banking Law & Practice, whether or not any Letter of Credit chooses such law or practice.
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(m) Letters of Credit Issued for Subsidiaries . Notwithstanding that a Letter of Credit issued or outstanding hereunder is in support of any obligations of, or is for the account of, the Borrower or a Subsidiary thereof, the Borrower shall be obligated to reimburse the applicable L/C Issuer hereunder for any and all drawings under such Letter of Credit. The Borrower hereby acknowledges that the issuance of Letters of Credit for the account of any such Subsidiary inures to the benefit of the Borrower, and that the Borrowers business derives substantial benefits from the businesses of such Subsidiaries.
(n) Reporting of Letter of Credit Information . At any time that any Revolving Credit Lender other than the Person serving as the Revolver Administrative Agent is an L/C Issuer, then (i) on the last Business Day of each calendar month, such L/C Issuer shall deliver to the Revolver Administrative Agent a report setting forth in form and detail reasonably satisfactory to the Revolver Administrative Agent information (including any reimbursement, Cash Collateral, or termination in respect of Letters of Credit issued by such L/C Issuer) with respect to each Letter of Credit issued by such L/C Issuer that is outstanding hereunder, including any auto-renewal or termination of auto-renewal provisions in such Letter of Credit. No failure on the part of any L/C Issuer to provide such information pursuant to this Section 2.03(n) shall limit the obligation of the Borrower or any Revolving Credit Lender hereunder with respect to its reimbursement and participation obligations, respectively, pursuant to this Section 2.03 .
(o) Deemed Issuance . Subject to the terms, conditions and limitations set forth in this Section 2.03 , the Borrower may designate letters of credit not otherwise constituting Letters of Credit hereunder issued by any L/C Issuer to be Letters of Credit hereunder by written notice to the applicable L/C Issuer and the Revolver Administrative Agent. Following such designation, such letter of credit shall be deemed to be a Letter of Credit hereunder for all purposes and any fees relating to such letter of credit shall be payable as set forth herein (in substitution for any fees set forth in the applicable letter of credit reimbursement agreements or applications relating to such letters of credit).
(p) Extended Letters of Credit . The Borrower shall provide Cash Collateral in an amount equal to the Outstanding Amount of each Extended Letter of Credit to each applicable L/C Issuer with respect to each Extended Letter of Credit issued by such L/C Issuer by the date 5 Business Days prior to the Letter of Credit Expiration Date; provided that if the Borrower fails to provide Cash Collateral with respect to any such Extended Letter of Credit by such time, such event shall be treated as a drawing under such Extended Letter of Credit (in an amount equal to the Outstanding Amount of each such Letter of Credit), which shall be reimbursed (or participations therein funded) in accordance with Section 2.03(c) , with the proceeds being utilized to provide Cash Collateral for such Letter of Credit. Upon the termination of this Agreement, the pricing and fees applicable to any Extended Letter of Credit shall be as separately agreed between the Borrower and the applicable L/C Issuer and the participation obligations of the Revolving Credit Lenders with respect to any Extended Letter of Credit under this Section 2.03(p) shall terminate on the Letter of Credit Expiration Date.
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Section 2.04. Swing Line Loans .
(a) The Swing Line . Subject to the terms and conditions set forth herein, the Swing Line Lender, in reliance upon the agreements of the other Revolving Credit Lenders set forth in this Section 2.04 , agrees to make loans to the Borrower (each such loan, a Swing Line Loan ) from time to time on any Business Day (other than the Closing Date) until the Maturity Date for the Revolving Credit Facility in an aggregate amount not to exceed at any time the amount of the Swing Line Sublimit, notwithstanding the fact that such Swing Line Loans, when aggregated with the Pro Rata Share of the Outstanding Amount of Revolving Credit Loans and L/C Obligations of the Lender acting as Swing Line Lender, may exceed the amount of such Swing Line Lenders Revolving Credit Commitment; provided , that, after giving effect to any Swing Line Loan, (i) the Revolving Credit Exposure shall not exceed the aggregate Revolving Credit Commitment and (ii) the aggregate Outstanding Amount of the Revolving Credit Loans of any Lender (other than the relevant Swing Line Lender), plus such Lenders Pro Rata Share of the Outstanding Amount of all L/C Obligations, plus such Lenders Pro Rata Share of the Outstanding Amount of all Swing Line Loans shall not exceed such Lenders Revolving Credit Commitment then in effect; provided , further , that the Borrower shall not use the proceeds of any Swing Line Loan to refinance any outstanding Swing Line Loan. Within the foregoing limits, and subject to the other terms and conditions hereof, the Borrower may borrow under this Section 2.04 , prepay under Section 2.05 , and reborrow under this Section 2.04 . Each Swing Line Loan shall be a Base Rate Loan. Immediately upon the making of a Swing Line Loan, each Revolving Credit Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the Swing Line Lender a risk participation in such Swing Line Loan in an amount equal to the product of such Lenders Pro Rata Share times the amount of such Swing Line Loan.
(b) Borrowing Procedures . Each Swing Line Borrowing shall be made upon the Borrowers irrevocable written notice to the Swing Line Lender and the Revolver Administrative Agent. Each such notice must be received by the Swing Line Lender and the Revolver Administrative Agent not later than 11:00 a.m. on the requested borrowing date, and shall specify (i) the amount to be borrowed, which shall be a minimum of $100,000 and (ii) the requested borrowing date, which shall be a Business Day. Promptly after receipt by the Swing Line Lender of any Swing Line Loan Notice (by telephone or in writing), such Swing Line Lender will confirm with the Revolver Administrative Agent (by telephone or in writing) that the Revolver Administrative Agent has also received such Swing Line Loan Notice and, if not, the Swing Line Lender will notify the Revolver Administrative Agent (by telephone or in writing) of the contents thereof. Unless the Swing Line Lender has received notice (by telephone or in writing) from the Revolver Administrative Agent (including at the request of any Revolving Credit Lender) prior to the funding of the proposed Swing Line Borrowing (A) directing the Swing Line Lender not to make such Swing Line Loan as a result of the limitations set forth in the first proviso to the first sentence of Section 2.04(a) , or (B) that one or more of the applicable conditions specified in Section 4.02 is not then satisfied, then, subject to the terms and conditions hereof, the Swing Line Lender will, not later than 4:00 p.m. on the borrowing date specified in such Swing Line Loan Notice, make the amount of its Swing Line Loan available to the Borrower.
(c) Refinancing of Swing Line Loans . (i) The Swing Line Lender at any time in its sole and absolute discretion may request, on behalf of the Borrower (which hereby irrevocably authorize such Swing Line Lender to so request on its behalf), that each Revolving
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Credit Lender make a Base Rate Loan in an amount equal to such Lenders Pro Rata Share of the amount of Swing Line Loans then outstanding. Such request shall be made in writing (which written request shall be deemed to be a Committed Loan Notice for purposes hereof) and in accordance with the requirements of Section 2.02 , without regard to the minimum and multiples specified therein for the principal amount of Base Rate Loans, but subject to the unutilized portion of the aggregate Revolving Credit Commitments and the conditions set forth in Section 4.02 . The relevant Swing Line Lender shall furnish the Borrower with a copy of the applicable Committed Loan Notice promptly after delivering such notice to the Revolver Administrative Agent. Each Revolving Credit Lender shall make an amount equal to its Pro Rata Share of the amount specified in such Committed Loan Notice available to the Revolver Administrative Agent in Same Day Funds for the account of the Swing Line Lender at the Revolver Administrative Agents Office not later than 4:00 p.m. on the day specified in such Committed Loan Notice, whereupon, subject to Section 2.04(c)(ii) , each Revolving Credit Lender that so makes funds available shall be deemed to have made a Base Rate Loan, as applicable, to the Borrower in such amount. The Revolver Administrative Agent shall remit the funds so received to the Swing Line Lender.
(i) If for any reason any Swing Line Loan cannot be refinanced by such a Revolving Credit Borrowing in accordance with this Section 2.04(c)(i) , the request for Base Rate Loans submitted by the Swing Line Lender as set forth herein shall be deemed to be a request by the Swing Line Lender that each of the Revolving Credit Lenders fund its risk participation in the relevant Swing Line Loan and each Revolving Credit Lenders payment to the Revolver Administrative Agent for the account of the Swing Line Lender pursuant to this Section 2.04(c)(i) shall be deemed payment in respect of such participation.
(ii) If any Revolving Credit Lender fails to make available to the Revolver Administrative Agent for the account of the Swing Line Lender any amount required to be paid by such Lender pursuant to the foregoing provisions of this Section 2.04(c) by the time specified in Section 2.04(c)(i) , the Swing Line Lender shall be entitled to recover from such Lender (acting through the Revolver Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the Swing Line Lender at a rate per annum equal to the applicable Federal Funds Rate from time to time in effect. A certificate of the Swing Line Lender submitted to any Revolving Credit Lender (through the Administrative Agent) with respect to any amounts owing under this clause (ii) shall be conclusive absent manifest error.
(iii) Each Revolving Credit Lenders obligation to make Revolving Credit Loans or to purchase and fund risk participations in Swing Line Loans pursuant to this Section 2.04(c) shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other right which such Lender may have against the Swing Line Lender, the Borrower or any other Person for any reason whatsoever, (B) the occurrence or continuance of a Default, or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing; provided , that each Revolving Credit Lenders obligation to make
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Revolving Credit Loans pursuant to this Section 2.04(c) (but not to purchase and fund risk participations in Swing Line Loans) is subject to the conditions set forth in Section 4.02 . No such funding of risk participations shall relieve or otherwise impair the obligation of the Borrower to repay Swing Line Loans, together with interest as provided herein.
(d) Repayment of Participations . (ii) At any time after any Revolving Credit Lender has purchased and funded a risk participation in a Swing Line Loan, if the Swing Line Lender receives any payment on account of such Swing Line Loan, the Swing Line Lender will distribute to such Lender its Pro Rata Share of such payment (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lenders risk participation was funded) in the same funds as those received by the Swing Line Lender.
(i) If any payment received by the Swing Line Lender in respect of principal or interest on any Swing Line Loan is required to be returned by the Swing Line Lender under any of the circumstances described in Section 10.05 (including pursuant to any settlement entered into by the Swing Line Lender in its discretion), each Revolving Credit Lender shall pay to the Swing Line Lender its Pro Rata Share thereof on demand of the Revolver Administrative Agent, plus interest thereon from the date of such demand to the date such amount is returned, at a rate per annum equal to the applicable Federal Funds Rate. The Revolver Administrative Agent will make such demand upon the request of a Swing Line Lender.
(e) Interest for Account of Swing Line Lender . The Swing Line Lender shall be responsible for invoicing the Borrower for interest on the Swing Line Loans. Until each Revolving Credit Lender funds its Base Rate Loan or risk participation pursuant to this Section 2.04 to refinance such Lenders Pro Rata Share of any Swing Line Loan, interest in respect of such Pro Rata Share shall be solely for the account of the Swing Line Lender.
(f) Payments Directly to Swing Line Lender . The Borrower shall make all payments of principal and interest in respect of the Swing Line Loans directly to the Swing Line Lender.
Section 2.05. Prepayments .
(a) Optional. (i) Borrower may, upon notice to the Administrative Agent, at any time or from time to time elect to voluntarily prepay Term Loans and Revolving Credit Loans in whole or in part without premium or penalty (except as provided in clause (iii) below); provided , that (1) such notice must be received by the Administrative Agent not later than 11:00 a.m. (A) three (3) Business Days prior to any date of prepayment of Eurodollar Rate Loans and (B) on the date of prepayment of Base Rate Loans; (2) any prepayment of Eurodollar Rate Loans shall be in a principal amount of $5 million or a whole multiple of $1 million in excess thereof; and (3) any prepayment of Base Rate Loans shall be in a principal amount of $1,000,000 or a whole multiple of $100,000 in excess thereof or, in each case, if less, the entire principal amount of the Loans being prepaid then outstanding. Each such notice shall specify the date and amount of such prepayment and the Class (or Classes) and Type (or Types) of Loans and the order of Borrowing (or Borrowings) to be prepaid. The applicable Administrative Agent will promptly
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notify each Appropriate Lender of its receipt of each such notice, and of the amount of such Lenders Pro Rata Share of such prepayment. If such notice is given by the Borrower, the Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein; provided , that the Borrower may rescind any notice of prepayment under this Section 2.05(a) if such prepayment would have resulted from a refinancing or other repayment of all of a Facility or other transaction, which refinancing or transaction shall not be consummated or shall otherwise be delayed. Any prepayment of a Eurodollar Rate Loan shall be accompanied by all accrued interest thereon, together with any additional amounts required pursuant to Section 3.05 . In the case of each prepayment of the Loans pursuant to this Section 2.05(a)(i) , the Borrower may in its sole discretion select the Borrowing or Borrowings to be repaid, and such payment shall be paid to the Appropriate Lenders in accordance with their respective Pro Rata Shares.
(ii) The Borrower may, upon notice to the Swing Line Lender (with a copy to the Revolver Administrative Agent), at any time or from time to time, elect to voluntarily prepay Swing Line Loans in whole or in part without premium or penalty; provided , that (1) such notice must be received by the Swing Line Lender and the Administrative Agent not later than 1:00 p.m. on the date of the prepayment, and (2) any such prepayment shall be in a minimum principal amount of $100,000 or a whole multiple of $100,000 in excess thereof (or such other amounts as may be acceptable to the Swing Line Lender) or, if less, the entire principal amount of Swing Line Loans then outstanding. Each such notice shall specify the date and amount of such prepayment. If such notice is given by the Borrower, the Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein; provided , that the Borrower may rescind any notice of prepayment under this Section 2.05(a)(ii) if such prepayment would have resulted from a refinancing of the Facility or other transaction, which refinancing or transaction shall not be consummated or shall otherwise be delayed.
(iii) In the event that, on or prior to the date that is twelve (12) months following the Closing Date, the Borrower shall (x) make any prepayment of Term Loans in connection with any Repricing Transaction, or (y) effect any amendment of this Agreement resulting in a Repricing Transaction, the Borrower shall pay to the Term Loan Administrative Agent, for the ratable account of each Term Lender, (I) in the case of clause (x) , a prepayment premium of 1% of the principal amount of the Term Loans being prepaid and (II) in the case of clause (y) , a payment equal to 1% of the aggregate principal amount of the Term Loans outstanding immediately prior to such amendment that have been repriced (in each case, the Prepayment Premium ). Such amounts shall be due and payable on the date of effectiveness of such Repricing Transaction.
(b) Mandatory.
(i) If (1) the Borrower or any Restricted Subsidiary Disposes of any property or assets (other than any Disposition of any property or assets permitted by Section 7.04 (excluding dispositions permitted by Section 7.04(v) ); (2) any Casualty Event occurs, that results in the realization or receipt by the Borrower or such
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Restricted Subsidiary of Net Proceeds in excess of $10 million, the Borrower shall cause to be prepaid on or prior to the date which is ten (10) Business Days after the date of the realization or receipt by the Borrower or Restricted Subsidiary of such Net Proceeds an aggregate principal amount of Loans in an amount equal to 100% of all Net Proceeds received in order of application set forth in Section 2.05(b)(v) below; provided , that if at the time that any such prepayment would be required, the Borrower (or any Restricted Subsidiary) is required to offer to repurchase Permitted Pari Passu Secured Refinancing Debt (or any Refinancing Indebtedness in respect thereof that is secured on a pari passu basis with the Obligations) pursuant to the terms of the documentation governing such Indebtedness with the net proceeds of such Disposition or Casualty Event (such Permitted Pari Passu Secured Refinancing Debt (or any Refinancing Indebtedness in respect thereof) required to be offered to be so repurchased, Other Applicable Indebtedness ), then the Borrower (or any Restricted Subsidiary) may apply such Net Proceeds on a pro rata basis (determined on the basis of the aggregate outstanding principal amount of the Loans and Other Applicable Indebtedness at such time; provided , that the portion of such net proceeds allocated to the Other Applicable Indebtedness shall not exceed the amount of such net proceeds required to be allocated to the Other Applicable Indebtedness pursuant to the terms thereof, and the remaining amount, if any, of such net proceeds shall be allocated to the Loans in accordance with the terms hereof) to the prepayment of the Loans and to the repurchase or prepayment of Other Applicable Indebtedness, and the amount of prepayment of the Loans that would have otherwise been required pursuant to this Section 2.05(b)(i) shall be reduced accordingly; provided , further , that to the extent the holders of Other Applicable Indebtedness decline to have such indebtedness repurchased or prepaid (after giving effect to any requirement that the declined amounts be offered to other holders of such Other Applicable Indebtedness), the declined amount shall promptly (and in any event within ten (10) Business Days after the date of such rejection) be applied to prepay the Loans in accordance with the terms hereof; provided , further , that no prepayment shall be required pursuant to this Section 2.05(b)(i) with respect to such portion of such Net Proceeds that the Borrower or the relevant Restricted Subsidiary shall have reinvested or entered into a binding commitment to reinvest or otherwise determined to reinvest (as set forth in a notice from the Borrower to the Administrative Agent to be delivered on or prior to the date which is ten (10) Business Days after the date of receipt of the applicable Net Proceeds), in each case in accordance with the definition of Net Proceeds and within the timeframe contemplated thereby.
(ii) If any Loan Party or any Restricted Subsidiary of a Loan Party incurs or issues any Indebtedness after the Closing Date (other than, in the case of the of any Loan Party or any Restricted Subsidiary, Indebtedness not prohibited under Section 7.02 , but including Credit Agreement Refinancing Indebtedness), the Borrower shall cause to be prepaid an aggregate principal amount of Loans in an amount equal to 100% of all Net Proceeds received therefrom, in the order of application set forth in the Section 2.05(b)(v) below, on or prior to the date which is five (5) Business Days after the receipt by such Loan Party or Restricted Subsidiary of such Net Proceeds.
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(iii) Commencing with respect to the fiscal year ending December 31, 2015 no later than ten (10) Business Days after the date on which the Borrowers required to deliver financial statements with respect to the end of the applicable fiscal year under Section 6.01(a) , the Borrower shall prepay (i) the Loans in an amount equal to 50% of the Excess Cash Flow for such fiscal year (such percentage reducing to (x) 25% if as at the end of such fiscal year the Consolidated Net Secured Leverage Ratio is less than 1.25:1.00 but greater than or equal to 1.00:1.00 and (y) 0% if as at the end of such fiscal year the Consolidated Net Secured Leverage Ratio is less than 1.00:1.00), minus (ii) to the extent not financed with the proceeds of Indebtedness, the amount of any voluntary prepayments during such fiscal year of Term Loans and Revolving Credit Loans (to the extent such prepayment of Revolving Credit Loans is accompanied by a permanent reduction in the Revolving Credit Commitments).
(iv) If for any reason, other than currency fluctuations, the aggregate Revolving Credit Exposure at any time exceeds the aggregate Revolving Credit Commitments then in effect, the Borrower shall promptly prepay or cause to be promptly prepaid Revolving Credit Loans and Swing Line Loans and/or Cash Collateralize the L/C Obligations in an aggregate amount equal to such excess. If the total Revolving Credit Exposure on the last day of any month shall exceed 105% of the total Revolving Credit Commitments, then the Borrower shall, not later than the next Business Day, prepay Revolving Credit Loans and Swing Line Loans and/or Cash Collateralize the L/C Obligations in the amount necessary to eliminate such excess.
(v) Each prepayment of Loans pursuant to this Section 2.05(b) shall be applied first ratably to the Term Loans and to the scheduled amortization payments in direct order of maturity, second ratably to the Other Term Loans and to the scheduled amortization payments in direct order of maturity and third ratably to the Revolving Credit Facility (and to the permanent reduction of Revolving Credit Commitments) to the Lenders in accordance with their respective Pro Rata Shares ( provided , that any prepayment of Term Loans with the Net Proceeds of Credit Agreement Refinancing Indebtedness shall be applied solely to each applicable Class (or Classes) of Refinanced Debt), subject to clause (v) of this Section 2.05(b) ; provided that the Revolving Credit Facility shall only be prepaid pursuant to this Section 2.05(b) if there are not currently any outstanding Term Loans or Other Term Loans at the time the Borrower is required to make such prepayment.
(vi) The Borrower shall notify the Administrative Agent in writing of any mandatory prepayment of Loans (and/or Cash Collateralization of L/C Obligations) required to be made pursuant to clauses (i) through (iii) of this Section 2.05(b) promptly, and in no event more than three (3) Business Days, following the event giving rise to such mandatory prepayment. Each such notice shall specify the date of such prepayment and provide a reasonably detailed calculation of the amount of such prepayment. The Administrative Agent will promptly notify each Appropriate Lender of the contents of the Borrowers prepayment notice and of such Appropriate Lenders Pro Rata Share of the prepayment. Each Term Lender may reject all or a portion of its Pro Rata Share of any mandatory prepayment (such
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declined amounts, the Declined Proceeds ) of Term Loans required to be made pursuant to any of clauses (i) through (iii) of this Section 2.05(b) by providing written notice (each, a Rejection Notice ) to the Term Loan Administrative Agent and the Borrower no later than 5:00 p.m. one (1) Business Day prior to the proposed date of such prepayment. Each Rejection Notice from a given Lender shall specify the principal amount of the mandatory repayment of Term Loans to be rejected by such Lender. If a Term Lender fails to deliver a Rejection Notice to the Term Loan Administrative Agent within the time frame specified above or such Rejection Notice fails to specify the principal amount of the Term Loans to be rejected, any such failure will be deemed an acceptance of the total amount of such mandatory prepayment of Term Loans. Any Declined Proceeds remaining thereafter may be retained by the Borrower and/or applied for any purpose not otherwise prohibited by this Agreement.
(vii) Funding Losses , Etc . All prepayments under this Section 2.05 shall be made together with, in the case of any such prepayment of a Eurodollar Rate Loan on a date other than the last day of an Interest Period therefor, any amounts owing in respect of such Eurodollar Rate Loan pursuant to Section 3.05 . Notwithstanding any of the other provisions of this Section 2.05(b) , so long as no Event of Default shall have occurred and be continuing, if any prepayment of Eurodollar Rate Loans is required to be made under this Section 2.05(b) , other than on the last day of the Interest Period therefor, the Borrower may, in its sole discretion, deposit the amount of any such prepayment otherwise required to be made thereunder into a Cash Collateral Account until the last day of such Interest Period, at which time the Administrative Agent shall be authorized (without any further action by or notice to or from the Borrower or any other Loan Party) to apply such amount to the prepayment of such Loans in accordance with this Section 2.05(b) . Upon the occurrence and during the continuance of any Event of Default, the Administrative Agent shall also be authorized (without any further action by or notice to or from the Borrower or any other Loan Party) to apply such amount to the prepayment of the outstanding Loans in accordance with this Section 2.05(b) .
(viii) Foreign Dispositions . Notwithstanding any other provisions of this Section 2.05(b) , (x) to the extent that any of or all the Net Proceeds of any Disposition by a Foreign Subsidiary ( Foreign Disposition ) or the Net Proceeds of any Casualty Event from a Foreign Subsidiary (a Foreign Casualty Event ) are prohibited or delayed by applicable local law from being repatriated to the United States, the portion of such Net Proceeds so affected will not be required to be applied to repay Loans at the times provided in this Section 2.05(b) but may be retained by the applicable Foreign Subsidiary so long, but only so long, as the applicable local law will not permit repatriation to the United States, and once such repatriation of any of such affected Net Proceeds is permitted under the applicable local law, such repatriation will be promptly effected and an amount equal to such repatriated Net Proceeds will be promptly applied (net of additional taxes payable or reserved against as a result thereof) to the repayment of the Loans pursuant to this Section 2.05(b) to the extent provided herein and (y) to the extent that the Borrower has determined in good faith that repatriation of any of or all the Net Proceeds of any Foreign Disposition or any Foreign Casualty Event would have material adverse tax
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consequences with respect to such Net Proceeds, such Net Cash Proceeds so affected will not be required to be applied to repay Term Loans at the times provided in this Section 2.05(b) but may be retained by the applicable Foreign Subsidiary.
Section 2.06. Termination or Reduction of Commitments .
(a) Optional . The Borrower may, upon notice to the Revolver Administrative Agent, elect to terminate the Revolving Credit Facility, the Letter of Credit Sublimit or the Swing Line Sublimit, or from time to time permanently reduce the Revolving Credit Facility, the Letter of Credit Sublimit or the Swing Line Sublimit; provided , that (i) any such notice shall be received by the Revolver Administrative Agent not later than 11:00 a.m. three (3) Business Days prior to the date of termination or reduction, (ii) any such partial reduction shall be in an aggregate amount of $5 million or any whole multiple of $1 million in excess thereof and (iii) the Borrower shall not elect to terminate or reduce (A) the Revolving Credit Facility if, after giving effect thereto and to any concurrent prepayments hereunder, the Total Revolving Credit Outstandings would exceed the Revolving Credit Facility, (B) the Letter of Credit Sublimit if, after giving effect thereto, the Outstanding Amount of L/C Obligations not fully Cash Collateralized hereunder would exceed the Letter of Credit Sublimit, or (C) the Swing Line Sublimit if, after giving effect thereto and to any concurrent prepayments hereunder, the Outstanding Amount of Swing Line Loans would exceed the Letter of Credit Sublimit.
(b) Mandatory . At any time that Revolving Credit Loans are required to be prepaid pursuant to Section 2.05(b)(v) , the Revolving Credit Facility shall be reduced by an amount equal to the prepayment applicable to the Revolving Credit Facility.
(c) Application of Commitment Reductions; Payment of Fees . The Revolver Administrative Agent will promptly notify the Appropriate Lenders of any termination or reduction of unused portions of the Letter of Credit Sublimit or the Swing Line Sublimit or the unused Commitments of any Class under this Section 2.06 . Upon any reduction of unused Commitments of any Class, the Commitment of each Lender of such Class shall be reduced by such Lenders Pro Rata Share of the amount by which such Commitments are reduced (other than the termination of the Commitment of any Lender as provided in Section 10.13 ). All commitment fees accrued until the effective date of any termination of the Aggregate Commitments shall be paid on the effective date of such termination.
Section 2.07. Repayment of Loans .
(a) Term Loans . The Borrower shall repay to the Term Loan Administrative Agent for the ratable account of the Term Lenders (a) on the last Business Day of each March, June, September and December (commencing March 31, 2015), an aggregate principal amount equal to 0.25% of the aggregate principal amount of all Term Loans outstanding on the Closing Date and (b) on the Maturity Date for the Term Loans, the aggregate principal amount of all Term Loans outstanding on such date.
(b) Revolving Credit Loans . The Borrower shall repay to the Revolver Administrative Agent for the ratable account of the Appropriate Lenders on the Maturity Date for the Revolving Credit Facility the aggregate principal amount of all of the Borrowers Revolving Credit Loans outstanding on such date.
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(c) Swing Line Loans . The Borrower shall repay the aggregate principal amount of its Swing Line Loans on the earlier to occur of (i) the date five (5) Business Days after such Loan is made and (ii) the Maturity Date for the Revolving Credit Facility. Failure of the Borrower to repay a Swing Line Loan when due as provided under the preceding clause (i) shall not constitute a Default if such Swing Line Loan is refinanced with proceeds of Base Rate Loans pursuant to Section 2.04(c) .
Section 2.08. Interest .
(a) Subject to the provisions of Section 2.08(b) , (i) each Eurodollar Rate Loan shall bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to the Eurodollar Rate for such Interest Period plus the Applicable Rate; (ii) each Base Rate Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate plus the Applicable Rate; and (iii) each Swing Line Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate plus the Applicable Rate for Revolving Credit Loans.
(b) (c) If any amount of principal of any Loan is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, such overdue amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.
(i) If any amount (other than principal of any Loan) payable by the Borrower under any Loan Document is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, then such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.
(ii) Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable upon demand.
(c) Interest on each Loan shall be due and payable in arrears on each Interest Payment Date applicable thereto and at such other times as may be specified herein. Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law.
Section 2.09. Fees .
In addition to certain fees described in Sections 2.03(h) and (i) :
(a) Commitment Fee . The Borrower agrees to pay to the Revolver Administrative Agent for the account of each Revolving Credit Lender in accordance
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with its Pro Rata Share, a commitment fee equal to the Applicable Rate multiplied by the actual daily amount by which the aggregate Revolving Credit Commitments exceed the sum of (A) the Outstanding Amount of Revolving Credit Loans and (B) the Outstanding Amount of L/C Obligations; provided , that any commitment fee accrued with respect to any of the Commitments of a Defaulting Lender during the period prior to the time such Lender became a Defaulting Lender and unpaid at such time shall not be payable by the Borrower so long as such Lender shall be a Defaulting Lender except to the extent that such commitment fee shall otherwise have been due and payable by the Borrower prior to such time; and provided , further , that no commitment fee shall accrue on any of the Commitments of a Defaulting Lender so long as such Lender shall be a Defaulting Lender. The commitment fee on the Revolving Credit Facility shall accrue at all times from the Closing Date until the Maturity Date for the Revolving Credit Facility, including at any time during which one or more of the conditions in Article IV is not met, and shall be due and payable quarterly in arrears on the last Business Day of each March, June, September and December, commencing with the first such date to occur after the Closing Date, and on the Maturity Date for the Revolving Credit Facility. The commitment fee shall be calculated quarterly in arrears, and if there is any change in the Applicable Rate during any quarter, the actual daily amount shall be computed and multiplied by the Applicable Rate separately for each period during such quarter that such Applicable Rate was in effect. For the avoidance of doubt, the Outstanding Amount of Swing Line Loans shall not be counted towards or considered usage of the Aggregate Commitments for purposes of determining the commitment fee.
(b) Other Fees . The Borrower shall pay to the Agents such fees as shall have been separately agreed upon in writing in the amounts and at the times so specified. Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever (except as expressly agreed between the Borrower and the applicable Agent).
Section 2.10. Computation of Interest and Fees .
All computations of interest for Base Rate Loans (including Base Rate Loans determined by reference to the Eurodollar Rate) shall be made on the basis of a year of three hundred and sixty five (365) or three hundred and sixty-six (366) days, as the case may be, and actual days elapsed. All other computations of fees and interest shall be made on the basis of a three hundred and sixty (360) day year and actual days elapsed (which results in more fees or interest, as applicable, being paid than if computed on the basis of a 365-day year). Interest shall accrue on each Loan for the day on which the Loan is made, and shall not accrue on a Loan, or any portion thereof, for the day on which the Loan or such portion is paid; provided , that any Loan that is repaid on the same day on which it is made shall, subject to Section 2.12(a) , bear interest for one day. Each determination by the Administrative Agent of an interest rate or fee hereunder shall be conclusive and binding for all purposes, absent manifest error.
Section 2.11. Evidence of Indebtedness .
(a) The Credit Extensions made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and by the Administrative Agent in the ordinary course of business. The accounts or records maintained by the Administrative Agent
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and each Lender shall be conclusive absent manifest error of the amount of the Credit Extensions made by the Lenders to the Borrower and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrower hereunder to pay any amount owing with respect to the Obligations. In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error. Upon the request of any Lender made through the Administrative Agent, the Borrower shall execute and deliver to such Lender (through the Administrative Agent) a Note, which shall evidence such Lenders Loans in addition to such accounts or records. Each Lender may attach schedules to its Note and endorse thereon the date, Type (if applicable), amount and maturity of its Loans and payments with respect thereto.
(b) In addition to the accounts and records referred to in Section 2.11(a) , each Revolving Credit Lender and the Revolver Administrative Agent shall maintain in accordance with its usual practice accounts or records evidencing the purchases and sales by such Lender of participations in Letters of Credit and Swing Line Loans. In the event of any conflict between the accounts and records maintained by the Revolver Administrative Agent and the accounts and records of any Revolving Credit Lender in respect of such matters, the accounts and records of the Revolver Administrative Agent shall control in the absence of manifest error.
Section 2.12. Payments Generally .
(a) Except as otherwise required by Section 3.01 , all payments to be made by the Borrower shall be made without condition or deduction for any counterclaim, defense, recoupment or setoff. Except as otherwise expressly provided herein, all payments by the Borrower hereunder shall be made to the applicable Administrative Agent, for the account of the respective Lenders to which such payment is owed, at the applicable Administrative Agents Office in Dollars and in Same Day Funds not later than 3:00 p.m. on the date specified herein. The applicable Administrative Agent will promptly distribute to each Appropriate Lender its Pro Rata Share (or other applicable share as provided herein) of such payment in like funds as received by wire transfer to such Lenders applicable Lending Office. All payments received by the Administrative Agent after 3:00 p.m., shall in each case be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue.
(b) If any payment to be made by the Borrower shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be; provided that, if such extension would cause payment of interest on or principal of Eurodollar Rate Loans to be made in the next succeeding calendar month, such payment shall be made on the immediately preceding Business Day.
(c) (i) Unless the applicable Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make available to such Administrative Agent such Lenders share of such Borrowing, such Administrative Agent may assume that such Lender has made such share available on such date in accordance with Section 2.02 and may, in reliance upon such assumption, make available to
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the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the applicable Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to such Administrative Agent forthwith on demand such corresponding amount in immediately available funds with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the applicable Administrative Agent, at (A) in the case of a payment to be made by such Lender, the greater of the Federal Funds Rate and a rate determined by the applicable Administrative Agent in accordance with banking industry rules on interbank compensation, plus any administrative, processing or similar fees customarily charged by such Administrative Agent in connection with the foregoing, and (B) in the case of a payment to be made by the Borrower, the interest rate applicable to Base Rate Loans. If the Borrower and such Lender shall pay such interest to the applicable Administrative Agent for the same or an overlapping period, such Administrative Agent shall promptly remit to Borrower the amount of such interest paid by the Borrower for such period. If such Lender pays its share of the applicable Borrowing to the applicable Administrative Agent, then the amount so paid shall constitute such Lenders Loan included in such Borrowing. Any payment by the Borrower shall be without prejudice to any claim the Borrower may have against a Lender that shall have failed to make such payment to the Administrative Agent.
(i) Unless the applicable Administrative Agent shall have received notice from the Borrower prior to the time at which any payment is due to such Administrative Agent for the account of the Lenders or an L/C Issuer hereunder that the Borrower will not make such payment, such Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Appropriate Lenders or the applicable L/C Issuers, as the case may be, the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Appropriate Lenders or the applicable L/C Issuers, as the case may be, severally agrees to repay to the applicable Administrative Agent forthwith on demand the amount so distributed to such Lender or such L/C Issuer, in immediately available funds with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to such Administrative Agent, at the greater of the Federal Funds Rate and a rate determined by such Administrative Agent in accordance with banking industry rules on interbank compensation.
A notice of the Administrative Agent to any Lender or the Borrower with respect to any amount owing under this clause (c) shall be conclusive, absent manifest error.
(d) If any Lender makes available to the applicable Administrative Agent funds for any Loan to be made by such Lender as provided in the foregoing provisions of this Article II , and such funds are not made available to the Borrower by such Administrative Agent because the conditions to the applicable Credit Extension set forth in Article IV are not satisfied or waived in accordance with the terms hereof, such Administrative Agent shall return such funds (in like funds as received from such Lender) to such Lender, without interest.
(e) The obligations of the Lenders hereunder to make Loans, to fund participations in Letters of Credit and Swing Line Loans and to make payments pursuant to
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Section 10.04(c) are several and not joint. The failure of any Lender to make any Loan, to fund any such participation or to make any payment under Section 10.04(c) on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Loan, purchase its participation or to make its payment under Section 10.04(c) .
(f) Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Loan in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for any Loan in any particular place or manner.
(g) Except as otherwise provided herein, whenever any payment received by the Administrative Agent under this Agreement or any of the other Loan Documents is insufficient to pay in full all amounts due and payable to the Administrative Agent and the Lenders under or in respect of this Agreement and the other Loan Documents on any date, such payment shall be distributed by the Administrative Agent and applied by the Administrative Agent and the Lenders in the order of priority set forth in Section 8.03 . If the Administrative Agent receives funds for application to the Obligations of the Loan Parties under or in respect of the Loan Documents under circumstances for which the Loan Documents do not specify the manner in which such funds are to be applied, the Administrative Agent may (to the fullest extent permitted by mandatory provisions of applicable Law), but shall not be obligated to, elect to distribute such funds to each of the Lenders in accordance with such Lenders Pro Rata Share of the sum of (a) the Outstanding Amount of all Loans outstanding at such time and (b) the Outstanding Amount of all L/C Obligations outstanding at such time, in repayment or prepayment of such of the outstanding Loans or other Obligations then owing to such Lender.
Section 2.13. Sharing of Payments .
Subject to Section 2.05(b)(v) , if any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of (a) Obligations due and payable to such Lender hereunder and under the other Loan Documents at such time in excess of its ratable share (according to the proportion of (i) the amount of such Obligations due and payable to such Lender at such time to (ii) the aggregate amount of the Obligations due and payable to all Lenders hereunder and under the other Loan Documents at such time) of payments on account of the Obligations due and payable to all Lenders hereunder and under the other Loan Documents at such time obtained by all the Lenders at such time or (b) Obligations owing (but not due and payable) to such Lender hereunder and under the other Loan Documents at such time in excess of its ratable share (according to the proportion of (i) the amount of such Obligations owing (but not due and payable) to such Lender at such time to (ii) the aggregate amount of the Obligations owing (but not due and payable) to all Lenders hereunder and under the other Loan Parties at such time) of payment on account of the Obligations owing (but not due and payable) to all Lenders hereunder and under the other Loan Documents at such time obtained by all of the Lenders at such time then the Lender receiving such greater proportion shall (a) notify the Administrative Agent of such fact, and (b) purchase (for cash at face value) participations in the Loans and subparticipations in L/C Obligations and Swing Line Loans of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of Obligations then due and payable to the Lenders or owing (but not due and payable) to the Lenders, as the case may be; provided that:
(i) if any such participations or subparticipations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations or subparticipations shall be rescinded and the purchase price restored to the extent of such recovery, without interest; and
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(ii) the provisions of this Section shall not be construed to apply to (x) any payment made by or on behalf of the Borrower 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), (y) the application of Cash Collateral provided for in Section 2.17 , or (z) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or subparticipations in L/C Obligations or Swing Line Loans to any assignee or participant, other than an assignment (other than an assignment in accordance with Section 10.06 ) to the Borrower or any of its respective Subsidiaries (as to which the provisions of this Section shall apply).
Each Loan Party consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against such Loan Party rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of such Loan Party in the amount of such participation.
Section 2.14. Incremental Credit Extensions .
(a) The Borrower may, at any time and from time to time after the Closing Date, by notice to the Administrative Agent (whereupon the Administrative Agent shall promptly deliver a copy to each of the Lenders), request (a) one or more additional tranches of term loans or increases in existing tranches of term loans (the Incremental Term Loans ), (b) one or more increases in the amount of the Revolving Credit Commitments of any Facility (each such increase, a Revolving Commitment Increase ) or (c) one or more additional tranches of Revolving Credit Commitments (each such commitment, together with the Revolving Commitment Increases, an Incremental Revolving Credit Facility ; together with a Revolving Commitment Increase, an Incremental Revolving Commitment ; and together with Incremental Term Loans and Revolving Commitment Increases, Incremental Facilities ); provided , that upon the effectiveness of any Incremental Amendment referred to below and at the time that any such Incremental Term Loan is made (and after giving effect thereto), subject to Section 2.14(e) , (i) no Event of Default shall exist and (ii) the Borrower shall be in Pro Forma Compliance with Section 7.09 for the most recently ended Test Period for which financial statements have been delivered pursuant to Section 6.01 . Each tranche of Incremental Term Loans, each Revolving Commitment Increase and each Incremental Revolving Credit Facility shall be in an aggregate principal amount that is not less than $50 million ( provided , that such amount may be less than $50 million if such amount represents all remaining availability under the limit set forth in the next sentence). Notwithstanding anything to the contrary herein, the aggregate amount of the Incremental Term Loans, the Revolving Commitment Increases and
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each Incremental Revolving Credit Facility (other than, for the avoidance of doubt, those established in respect of Extended Term Loans or Extended Revolving Credit Commitments pursuant to Section 2.16 ) shall not exceed the Maximum Incremental Facilities Amount.
(b) Any Revolving Commitment Increase shall be on the same terms as the Revolving Credit Facility and any Incremental Revolving Credit Facility shall be pursuant to the same documentation applicable to the Revolving Credit Facility (including (solely in the case of a Revolving Commitment Increase) the maturity date in respect thereof but excluding up-front commitment or similar fees); provided , the Applicable Rate with respect to the Revolving Credit Facility may be increased if necessary to be consistent with that required by the lenders providing the Revolving Commitment Increase. The Incremental Term Loans (i) shall rank pari passu or junior in right of payment and of security with the Revolving Credit Loans and the Term Loans, (ii) shall not mature earlier than the Maturity Date with respect to the Term Loans, (iii) shall not have a shorter Weighted Average Life to Maturity than the remaining Weighted Average Life to Maturity of the Term Loans, (iv) shall be entitled to share in mandatory and voluntary prepayments on a ratable (or less than ratable, but in no event greater than ratable) basis with the Term Loans, and (v) shall bear interest at rates and be entitled to upfront fees as shall be determined by the Borrower and the applicable new Lenders; provided , however , that if the All-In Yield for the Incremental Term Loans shall exceed the All-In Yield with respect to the Term Loans by more than 50 basis points, then the interest rate margins applicable to the Term Loans shall be increased so that such excess shall be only 50 basis points. The Incremental Term Loans shall otherwise be on terms and pursuant to documentation to be determined by the Borrower; provided that, to the extent such terms and documentation are not consistent with the Term Loans with respect to periods prior to the Latest Maturity Date for the Term Loans (except to the extent permitted by clauses (i) through (v) above), they shall be reasonably satisfactory to the Term Loan Administrative Agent (it being understood to the extent that any financial maintenance covenant is added or a restrictive covenant is made more restrictive for the benefit of any Incremental Facility, no consent shall be required from any Administrative Agent or any Lender to the extent that such financial maintenance covenant is also added or the corresponding restrictive covenant is made similarly more restrictive for the benefit of any corresponding existing Term Loans) and subject to clauses (ii) and (iii) above, the amortization schedule (if any) applicable to the Incremental Term Loans shall be determined by the Borrower and the Lenders thereof.
(c) Each notice from the Borrower pursuant to this Section 2.14 shall set forth the requested amount and proposed terms of the relevant Incremental Term Loans or Incremental Revolving Commitments. Incremental Term Loans may be made, and Incremental Revolving Commitments may be provided, by any existing Lender or by any other bank or other financial institution (any such other bank or other financial institution being called an Additional Lender ); provided , that the Administrative Agent, each Swing Line Lender and each L/C Issuer shall have consented (not to be unreasonably withheld) to such Lenders or Additional Lenders making such Incremental Term Loans or providing such Incremental Revolving Commitments if such consent would be required under Section 10.06(b) for an assignment of Loans or Revolving Credit Commitments, as applicable, to such Lender or Additional Lender. Commitments in respect of Incremental Term Loans and Incremental Revolving Commitments shall become Commitments (or in the case of a Revolving Commitment Increase to be provided by an existing Revolving Credit Lender, an increase in such Lenders applicable Revolving Credit
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Commitment) under this Agreement pursuant to an amendment (an Incremental Amendment ) to this Agreement and, as appropriate, the other Loan Documents, executed by the Borrower, each Lender agreeing to provide such Commitment, if any, each Additional Lender, if any, and the Administrative Agent. The Incremental Amendment shall, without the consent of the Agents or the Lenders, effect such amendments to this Agreement and the other Loan Documents as may be necessary or appropriate, in the reasonable opinion of the Administrative Agent and the Borrower to effect the provisions of this Section 2.14 , including without limitation to incorporate the applicable lenders in respect of Incremental Term Loans as Lenders, and the Incremental Term Loans as Loans and/or Term Loans, for all applicable purposes hereunder, including the definitions of Required Lenders and Required Class Lenders and to establish any tranche of Incremental Term Loans or any Incremental Revolving Credit Facility as an independent Class or Facility, as applicable. The effectiveness of any Incremental Amendment shall be subject to such further conditions as the Borrower and the applicable Lenders and Additional Lenders shall agree. The Borrower may use the proceeds of the Incremental Term Loans and Incremental Revolving Commitments for any purpose not prohibited by this Agreement. No Lender shall be obligated to provide any Incremental Term Loans or Incremental Revolving Commitments, unless it so agrees.
(d) Upon each increase in the Revolving Credit Commitments pursuant to this Section 2.14 , (a) each Revolving Credit Lender immediately prior to such increase will automatically and without further act be deemed to have assigned to each Lender providing a portion of the Revolving Commitment Increase (each a Revolving Commitment Increase Lender ), and each such Revolving Commitment Increase Lender will automatically and without further act be deemed to have assumed (in the case of an increase to the Revolving Credit Facility only), a portion of such Revolving Credit Lenders participations hereunder in outstanding Letters of Credit and Swing Line Loans such that, after giving effect to each such deemed assignment and assumption of participations, the percentage of the aggregate outstanding (i) participations hereunder in Letters of Credit and (ii) participations hereunder in Swing Line Loans held by each Revolving Credit Lender (including each such Revolving Commitment Increase Lender) will equal the percentage of the aggregate Revolving Credit Commitments of all Revolving Credit Lenders represented by such Revolving Credit Lenders Revolving Credit Commitment and (b) if, on the date of such increase, there are any Revolving Credit Loans under the applicable Facility outstanding, such Revolving Credit Loans shall on or prior to the effectiveness of such Revolving Commitment Increase be prepaid from the proceeds of additional Revolving Credit Loans under the applicable Facility made hereunder (reflecting such increase in Revolving Credit Commitments), which prepayment shall be accompanied by accrued interest on the Revolving Credit Loans being prepaid and any reasonable and documented out-of-pocket costs incurred by any Lender in accordance with Section 3.05 . The Administrative Agent and the Lenders hereby agree that the minimum borrowing, pro rata borrowing and pro rata payment requirements contained elsewhere in this Agreement shall not apply to the transactions effected pursuant to the immediately preceding sentence.
(e) Notwithstanding anything to the contrary in this Section 2.14 or in Article IV or otherwise in this Agreement, so long as no Event of Default has occurred pursuant to Section 8.01(a) or (f) , the lenders providing any Incremental Term Loans in connection with a Permitted Acquisition or Investment may agree to modify the conditionality with respect to such Incremental Term Loans such that the Permitted Acquisition or Investment may be consummated on a certain funds basis.
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(f) The effectiveness of any Incremental Amendment shall be subject to, if requested by the Administrative Agent, receipt by the Administrative Agent of (i) customary legal opinions, board resolutions and officers certificates consistent with those delivered on the Closing Date (conformed as appropriate, including to reflect any Incremental Term Loans provided on a certain funds basis) and (ii) reaffirmation agreements and/or such amendments to the Collateral Documents as may be reasonably requested by the Collateral Agent in order to ensure that such Incremental Term Loans or Incremental Credit Increase is provided with the benefit of the applicable Loan Documents.
(g) At any time and from time to time, subject to the terms and conditions set forth herein, the Borrower may issue one or more series of Incremental Equivalent Debt in an aggregate amount not to exceed, as of the date of and after giving effect to the issuance of any such Incremental Equivalent Debt, the aggregate amount of Incremental Facilities permitted to be incurred under this Section 2.14 , provided that the incurrence of any Incremental Equivalent Debt shall reduce, on a dollar-for-dollar basis, the aggregate amount of Incremental Facilities permitted to be incurred under this Section 2.14 .
(h) The issuance of any Incremental Equivalent Debt pursuant to this Section 2.14 shall (i) in all cases be subject to the terms and conditions set forth in Section 2.14(a) , 2.14(b)(i) , 2.14(b)(ii) , 2.14(b)(iii) , 2.14(b)(iv) , and 2.14(b)(v) (other than the proviso) and (ii) the covenants, events of default, guarantees, and other terms of such Incremental Equivalent Debt shall not be materially more restrictive, taken as a whole and as determined by the Borrower in good faith, to the Borrower and the Restricted Subsidiaries than those set forth in this Agreement (other than with respect to interest rate and redemption provisions), except for covenants or other provisions applicable only to periods after the Latest Maturity Date at the time of issuance.
(i) This Section 2.14 shall supersede any provisions in Section 2.13 or 10.01 to the contrary.
Section 2.15. Refinancing Amendments .
(a) On one or more occasions after the Closing Date, the Borrower may obtain, from any Lender or any Additional Refinancing Lender, Credit Agreement Refinancing Indebtedness in respect of all or any portion of the Term Loans then outstanding under this Agreement, in the form of Other Term Loans or Other Term Loan Commitments, pursuant to a Refinancing Amendment. The effectiveness of any Refinancing Amendment shall be subject to the satisfaction on the date thereof of each of the conditions set forth in Section 4.02 (which, for the avoidance of doubt, shall not require compliance with Section 7.09 for any incurrence of Other Term Loans) and, to the extent reasonably requested by the Administrative Agent, receipt by the Administrative Agent of (i) customary legal opinions, board resolutions and officers certificates consistent with those delivered on the Closing Date (conformed as appropriate) and (ii) reaffirmation agreements and/or such amendments to the Collateral Documents as may be reasonably requested by the Administrative Agent in order to ensure that such Credit Agreement Refinancing Indebtedness is provided with the benefit of the applicable Loan Documents.
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(b) Each issuance of Credit Agreement Refinancing Indebtedness under Section 2.15(a) shall be in an aggregate principal amount that is (x) $25 million or (y) an integral multiple of $5 million in excess thereof, unless the Administrative Agent shall otherwise agree in its discretion.
(c) Each of the parties hereto hereby agrees that this Agreement and the other Loan Documents may be amended pursuant to a Refinancing Amendment, without the consent of any other Lenders, to the extent (but only to the extent) necessary to (i) reflect the existence and terms of the Credit Agreement Refinancing Indebtedness incurred pursuant thereto, including without limitation to incorporate the applicable lenders in respect of Other Term Loans as Lenders, and the Other Term Loans as Loans and/or Term Loans, for all applicable purposes hereunder, including the definitions of Required Lenders and Required Class Lenders and to establish any tranche of Other Term Loans an independent Class or Facility, as applicable, and (ii) effect such other amendments to this Agreement and the other Loan Documents as may be necessary or appropriate, in the reasonable opinion of the Administrative Agent and the Borrower, to effect the provisions of this Section 2.15 , and the Lenders hereby expressly authorize the Administrative Agent to enter into any such Refinancing Amendment, which shall not, for the avoidance of doubt be subject to Section 10.01 .
Section 2.16. Extension Offers .
(a) Pursuant to one or more offers made from time to time by the Borrower to all Term Lenders of a particular Class by notice to the Administrative Agent, on a pro rata basis (based on the aggregate outstanding Term Loans of such Class) and on the same terms ( Term Extension Offers ), the Borrower is hereby permitted to consummate transactions with individual Term Lenders from time to time to extend the maturity date of such Lenders Term Loans and to otherwise modify the terms of such Lenders Term Loans pursuant to the terms of the relevant Term Extension Offer (including increasing the interest rate or fees payable in respect of such Lenders Term Loans and/or modifying the amortization schedule (if any) in respect of such Lenders Term Loans). Pursuant to one or more offers made from time to time by the Borrower to all Revolving Credit Lenders by notice to the Administrative Agent, on a pro rata basis (based on the aggregate outstanding Revolving Credit Commitments) and on the same terms ( Revolving Extension Offers and, together with Term Extension Offers, Extension Offers ), the Borrower is hereby permitted to consummate transactions with individual Revolving Credit Lenders from time to time to extend the maturity date of such Lenders Revolving Credit Commitments and to otherwise modify the terms of such Lenders Revolving Credit Commitments pursuant to the terms of the relevant Revolving Extension Offer (including increasing the interest rate or fees payable in respect of such Lenders Revolving Credit Commitments). For the avoidance of doubt, the reference to on the same terms in the preceding sentences shall mean, (i) when comparing Term Extension Offers, that the Term Loans are offered to be extended for the same amount of time and that the interest rate changes and fees payable in respect thereto are the same and (ii) when comparing Revolving Extension Offers, that the Revolving Credit Commitments are offered to be extended for the same amount of time and that the interest rate changes and fees payable in respect thereto are the same. Any
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such extension (an Extension ) agreed to between the Borrower and any such Lender (an Extending Lender ) will be established under this Agreement pursuant to a Loan Extension Agreement (any such extended Term Loan, an Extended Term Loan and any such extended Revolving Credit Commitment, an Extended Revolving Credit Commitment ).
(b) The Borrower and each Extending Lender shall execute and deliver to the applicable Administrative Agent a Loan Extension Agreement and such other documentation as such Administrative Agent shall reasonably specify to evidence the Extended Term Loans and/or Extended Revolving Credit Commitments of such Extending Lender. Each Loan Extension Agreement shall specify the terms of the applicable Extended Term Loans and/or Extended Revolving Credit Commitments; provided , that (i) except as to interest rates, fees, amortization, final maturity date, collateral arrangements and voluntary and mandatory prepayment arrangements (which shall, subject to clauses (ii) and (iii) of this proviso, be determined by the Borrower and set forth in the Extension Offer), the Extended Term Loans shall have (x) the same terms as the Term Loans being extended, or (y) such other terms as shall be reasonably satisfactory to the Term Loan Administrative Agent, (ii) the final maturity date of any Extended Term Loans shall be no earlier than the Maturity Date for the Term Loans being extended, (iii) the Weighted Average Life to Maturity of any Extended Term Loans shall be no shorter than the remaining Weighted Average Life to Maturity of the Term Loans being extended and (iv) except as to interest rates, fees, final maturity, collateral arrangements and voluntary and mandatory prepayment arrangements, any Extended Revolving Credit Commitment shall be a Revolving Credit Commitment with the same terms as the Revolving Credit Commitments being extended. Upon the effectiveness of any Loan Extension Agreement, this Agreement shall be amended to the extent necessary to reflect the existence and terms of the Extended Term Loans and/or Extended Revolving Credit Commitments evidenced thereby and other changes necessary to preserve the intent of this Agreement without the consent of any other Lender and without regard to Section 10.01 , including without limitation to incorporate the Extending Lenders as Lenders, and the Extended Term Loans and Extended Revolving Commitments as Loans and/or Term Loans and/or Commitments, for all applicable purposes hereunder, including the definitions of Required Lenders and Required Class Lenders and to establish any tranche of Extended Term Loans or Extended Revolving Commitments as an independent Class or Facility, as applicable. Any such deemed amendment may, at the Borrower or the applicable Administrative Agents request, be memorialized in writing by such Administrative Agent and the Borrower and furnished to the other parties hereto.
(c) Upon the effectiveness of any such Extension, the applicable Extending Lenders Term Loan will be automatically designated an Extended Term Loan and/or such Extending Lenders Revolving Credit Commitment will be automatically designated an Extended Revolving Credit Commitment. For the avoidance of doubt, the commitments and obligations of the Swing Line Lender or any L/C Issuer can only be extended pursuant to an Extension or otherwise with such Persons consent.
(d) Notwithstanding anything to the contrary set forth in this Agreement or any other Loan Document (including this Section 2.16 ), (i) no Extended Term Loan or Extended Revolving Credit Commitment is required to be in any minimum amount or any minimum increment; provided , that the aggregate amount of Extended Term Loans or Extended Revolving Credit Commitment for any new Class of Term Loans or Revolving Credit Commitments made
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in connection with any Extension Offer shall be at least $50 million, (ii) any Extending Lender may extend all or any portion of its Term Loans and/or Revolving Credit Commitment pursuant to one or more Extension Offers (subject to applicable proration in the case of over participation) (including the extension of any Extended Term Loan and/or Extended Revolving Credit Commitment), (iii) there shall be no condition to any Extension of any Loan or Revolving Credit Commitment at any time or from time to time other than notice to the applicable Administrative Agent of such Extension and the terms of the Extended Term Loan or Extended Revolving Credit Commitment implemented thereby, (iv) the interest rate limitations referred to in the proviso to clause (e) of Section 2.14(b) shall not be implicated by any Extension and (v) all Extended Term Loans, Extended Revolving Credit Commitments and all obligations in respect thereof shall be Obligations under this Agreement and the other Loan Documents that are secured by the Collateral on a pari passu basis with all other Obligations under this Agreement and the other Loan Documents.
(e) Each extension shall be consummated pursuant to procedures set forth in the associated Extension Offer; provided , that the Borrower shall cooperate with the applicable Administrative Agent prior to making any Extension Offer to establish reasonable procedures with respect to mechanical provisions relating to such Extension, including timing, rounding and other adjustments.
Section 2.17. Defaulting Lenders .
(a) Reallocation of Participations to Reduce Fronting Exposure . All or any part of a Defaulting Lenders participation in L/C Obligations and Swing Line Loans shall be reallocated among the Non-Defaulting Lenders that are Revolving Credit Lenders in accordance with their respective Applicable Percentages (calculated without regard to such Defaulting Lenders Revolving Credit Commitment) but only to the extent that such reallocation does not cause the aggregate Revolving Credit Exposure of any Non-Defaulting Lender that are Revolving Credit Lenders to exceed such Non-Defaulting Lenders Revolving Commitment. No reallocation hereunder shall constitute a waiver or release of any claim of any party hereunder against a Defaulting Lender arising from that Lender having become a Defaulting Lender, including any claim of a Non-Defaulting Lender as a result of such Non-Defaulting Lenders increased exposure following such reallocation.
(b) Cash Collateral, Repayment of Swing Line Loans . If the reallocation described in Section 2.17(a) cannot, or can only partially, be effected, the Borrower shall and without prejudice to any right or remedy available to it hereunder or under Law, (x) first , prepay Swing Line Loans in an amount equal to the Swing Line Lenders Fronting Exposure and (y) second , Cash Collateralize the L/C Issuers Fronting Exposure in accordance with the procedures set forth in Section 2.03(g) .
(c) New Swing Line Loans/Letters of Credit . Notwithstanding anything in this Agreement to the contrary, so long as any Lender is a Defaulting Lender, (i) the Swing Line Lender shall not be required to fund any Swing Line Loans unless it is satisfied that it will have no Fronting Exposure after giving effect to such Swing Line Loan and (ii) no L/C Issuer shall be required to issue, extend, renew or increase any Letter of Credit unless it is satisfied that it will have no Fronting Exposure after giving effect thereto.
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ARTICLE III
TAXES, INCREASED COSTS PROTECTION AND ILLEGALITY
Section 3.01. Taxes .
(a) Any and all payments by any Loan Party to or for the account of any Recipient under any Loan Document shall be made free and clear of and without deduction for any Taxes, except as required by applicable Law. If any Withholding Agent shall be required by any Laws to deduct any Taxes from or in respect of any such payment, (i) the applicable Withholding Agent shall be entitled to make such deductions, (ii) the applicable Withholding Agent shall pay the full amount so deducted to the relevant Governmental Authority in accordance with applicable Laws, (iii) as soon as practicable after the date of such payment, the Borrower shall furnish to the Administrative Agent the original or a copy of a receipt evidencing payment thereof, a copy of the tax return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent, and (iv) if the Tax in question is an Indemnified Tax, the sum payable by the applicable Loan Party shall be increased as necessary so that after all required deductions have been made (including deductions applicable to additional sums payable under this Section 3.01(a) ), the applicable Recipient receives an amount equal to the sum it would have received had no such deductions been made.
(b) In addition, the Borrower and Guarantors agree to pay any and all present or future stamp, court or documentary, intangible, mortgage recording or similar Taxes which arise from any payment made under any Loan Document or from the execution, delivery, performance, enforcement or registration of, or otherwise with respect to, any Loan Document, excluding any such Taxes imposed as a result of an assignment by a Lender (other than an assignment made pursuant to Section 10.13 ) that are Other Connection Taxes (hereinafter referred to as Other Taxes ).
(c) The Borrower and each Guarantor agrees to indemnify each Recipient, within ten (10) days after written demand therefor, for (i) the full amount of any Indemnified Taxes (including Indemnified Taxes imposed on or attributable to amounts payable under this Section 3.01 ) payable by such Recipient, whether or not such Taxes were correctly or legally imposed or asserted by the Governmental Authority. A certificate as to the amount of such payment or liability prepared in good faith and delivered to the Borrower by a Lender or by the Administrative Agent on its own behalf or on behalf of a Lender shall be conclusive absent manifest error.
(d) Status of Lenders . Each Lender shall, at such times as are reasonably requested by the Borrower or the Administrative Agent, provide the Borrower and the Administrative Agent with such properly completed and executed documentation prescribed by any Laws or reasonably requested by the Borrower or the Administrative Agent certifying as to any entitlement of such Lender to an exemption from, or reduction in the rate of, any applicable withholding Tax with respect to any payments to be made to such Lender under any Loan Document. In addition, any Lender, if reasonably requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by any Laws or reasonably requested by the Borrower or the Administrative Agent as will enable the Loan Parties or the Administrative Agent to determine whether or not such Lender is subject to backup
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withholding or information reporting requirements. Each Lender shall, whenever any such documentation (including any specific documentation required below in this Section 3.01(d) ) becomes obsolete, expired or inaccurate in any respect, deliver promptly to the Borrower and the Administrative Agent updated or other appropriate documentation (including any new documentation reasonably requested by the Borrower or the Administrative Agent) or promptly notify the Borrower and the Administrative Agent in writing of its legal ineligibility to do so.
Without limiting the generality of the foregoing:
(1) Each U.S. Lender shall deliver to the Borrower and the Administrative Agent on or before the date on which it becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent) two (2) properly completed and duly executed copies of IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding;
(2) Each 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 requested by the Borrower or Administrative Agent) on or before the date on which it 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:
(A) two (2) properly completed and duly executed copies of IRS Form W-8BEN or W- 8BEN-E (or any successor form) claiming eligibility for the benefits of an income tax treaty to which the United States is a party,
(B) two (2) properly completed and duly executed copies of IRS Form W-8ECI (or any successor form),
(C) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 871(h) or Section 881(c) of the Code, (A) two (2) properly completed and duly executed certificates substantially in the form of Exhibit J-1 (any such certificate, a United States Tax Compliance Certificate ) and (B) two (2) properly completed and duly executed copies of IRS Form W-8BEN or W- 8BEN-E (or any successor form), or
(D) to the extent a Foreign Lender is not the beneficial owner (for example, where the Foreign Lender is a partnership or a participating Lender), two (2) properly completed and duly executed copies of IRS Form W-8IMY (or any successor form), accompanied by IRS Form W-8ECI, IRS Form W-8BEN, IRS Form W- 8BEN-E, United States Tax Compliance Certificate substantially in the form of Exhibit J-2 or Exhibit J-3, IRS Form W-9, IRS Form W-8IMY (or any successor form) and/or any other required information, certification or documentation from each beneficial owner, as applicable ( provided , that if the Foreign Lender is a partnership (and not a participating Lender) and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a United States Tax Compliance Certificate substantially in the form of Exhibit J-4 on behalf of such direct or indirect partner (or partners));
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(3) 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 requested by the Borrower or the Administrative Agent) 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), two (2) properly completed and duly executed copies of any other form prescribed by applicable Laws (including the Treasury Regulations) as a basis for claiming a complete exemption from, or a reduction in, United States federal withholding tax on any payments to such Lender under the Loan Documents, together with such supplementary documentation as may be prescribed by applicable Law (including the Treasury Regulations) to permit any Loan Party or the Administrative Agent to determine the withholding or deduction required to be made; and
(4) 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 or be deemed to comply with the applicable reporting requirements of FATCA (including those contained in Sections 1471(b) or 1472(b) of the 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 Code, if applicable) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for any Loan Party and the Administrative Agent to comply with their obligations under FATCA, to determine whether such Lender has or has not complied (or whether such Lender is deemed to have complied)with such Lenders obligations under FATCA or to determine the amount, if any, to deduct and withhold from such payment. For purposes of this clause (4) , FATCA shall include any amendments made to FATCA after the date of this Agreement and any intergovernmental agreement or similar agreement intended to facilitate compliance with, or otherwise related to FATCA.
(e) Any Lender claiming any additional amounts payable pursuant to this Section 3.01 shall use its reasonable efforts to change the jurisdiction of its Lending Office if such a change would reduce any such additional amounts in the future and would not, in the sole good faith determination of such Lender, result in any unreimbursed cost or expense or be otherwise materially disadvantageous to such Lender.
(f) If any Recipient determines, in its sole discretion exercised in good faith that it has received a refund in respect of any Taxes as to which indemnification or additional amounts have been paid to it pursuant to this Section 3.01 , it shall promptly remit to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made or additional amounts paid under this Section 3.01 with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses of such Recipient (including any Taxes imposed with respect to such refund) and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided , that such
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indemnifying party, upon the request of such Recipient, agrees to promptly repay to such Recipient the amount paid over to it pursuant to the above provisions of this Section 3.01(f) ( plus any penalties, interest or other charges imposed by the relevant Governmental Authority), in the event such Recipient is required to repay such refund to the relevant Governmental Authority. This Section 3.01(f) shall not be construed to require any Lender or Agent to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to any Loan Party or any other Person.
(g) For the avoidance of doubt, the term Lender shall, for purposes of this Section 3.01 , include any Swing Line Lender and any L/C Issuer.
Section 3.02. Illegality .
If any Lender determines in good faith in its reasonable discretion that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to make, maintain or fund Loans whose interest is determined by reference to the Eurodollar Rate, or to determine or charge interest rates based upon the Eurodollar Rate, or any Governmental Authority has imposed material restrictions on the authority of such Lender to purchase or sell, or to take deposits of, Dollars in the London interbank market, then, on notice thereof by such Lender to the Borrower through the Administrative Agent, (i) any obligation of such Lender to make or continue Eurodollar Rate Loans or to convert Base Rate Loans to Eurodollar Rate Loans shall be suspended, and (ii) if such notice asserts the illegality of such Lender making or maintaining Base Rate Loans the interest rate on which is determined by reference to the Eurodollar Rate component of the Base Rate, the interest rate on which Base Rate Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the Eurodollar Rate component of the Base Rate, in each case until such Lender notifies the Administrative Agent and the Borrower that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice, (x) the Borrower shall, upon demand from such Lender (with a copy to the Administrative Agent), prepay or, if applicable, convert all Eurodollar Rate Loans of such Lender to Base Rate Loans (the interest rate on which Base Rate Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the Eurodollar Rate component of the Base Rate), either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such Eurodollar Rate Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such Eurodollar Rate Loans and (y) if such notice asserts the illegality of such Lender determining or charging interest rates based upon the Eurodollar Rate, the Administrative Agent shall during the period of such suspension compute the Base Rate applicable to such Lender without reference to the Eurodollar Rate component thereof until the Administrative Agent is advised in writing by such Lender that it is no longer illegal for such Lender to determine or charge interest rates based upon the Eurodollar Rate. Upon any such prepayment or conversion, the Borrower shall also pay accrued interest on the amount so prepaid or converted.
Section 3.03. Inability to Determine Rates .
If in connection with any request for a Eurodollar Rate Loan or a conversion to or continuation thereof that (a) the Administrative Agent determines that (i) Dollar deposits are not
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being offered to banks in the London interbank eurodollar market for the applicable amount and Interest Period of such Eurodollar Rate Loan or (ii) adequate and reasonable means do not exist for determining the Eurodollar Rate for any requested Interest Period with respect to a proposed Eurodollar Rate Loan or in connection with an existing or proposed Base Rate Loan, or (b) the Required Lenders determine that for any reason the Eurodollar Rate for any requested Interest Period with respect to a proposed Eurodollar Rate Loan does not adequately and fairly reflect the cost to such Lenders of funding such Loan, the Administrative Agent will promptly so notify the Borrower and each Lender. Thereafter, (x) the obligation of the Lenders to make or maintain Eurodollar Rate Loans shall be suspended (to the extent of the affected Eurodollar Rate Loans or Interest Periods), and (y) in the event of a determination described in the preceding sentence with respect to the Eurodollar Rate component of the Base Rate, the utilization of the Eurodollar Rate component in determining the Base Rate shall be suspended, in each case until the Administrative Agent (upon the instruction of the Required Lenders) revokes such notice. Upon receipt of such notice, the Borrower may revoke any pending request for a Borrowing of, conversion to or continuation of Eurodollar Rate Loans (to the extent of the affected Eurodollar Rate Loans or Interest Periods) or, failing that, will be deemed to have converted such request into a request for a committed Borrowing of Base Rate Loans in the amount specified therein.
Section 3.04. Increased Cost and Reduced Return; Capital Adequacy; Reserves on Eurodollar Rate Loans .
(a) Increased Costs Generally . If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any reserve requirement contemplated by Section 3.04(d) ) or any L/C Issuer;
(ii) subject any Lender or any L/C Issuer to any Tax of any kind whatsoever with respect to this Agreement, any Letter of Credit, any participation in a Letter of Credit or any Loan made by it, or change the basis of taxation of payments to such Lender or such L/C Issuer in respect thereof (except for (i) Indemnified Taxes indemnifiable under Section 3.01 and (ii) Excluded Taxes); or
(iii) impose on any Lender or any L/C Issuer or the London interbank market any other condition, cost or expense (other than Taxes) affecting this Agreement or Eurodollar Rate Loans made by such Lender or any Letter of Credit or participation therein;
and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Loan the interest on which is determined by reference to the Eurodollar Rate (or, in the case of clause (ii) above, any Loan), or of maintaining its obligation to make any such Loan, or to increase the cost to such Lender or such L/C Issuer of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the amount of any sum received or receivable by such Lender or such L/C Issuer hereunder (whether of principal, interest or any other amount) then, upon request of such Lender or such L/C Issuer, the Borrower will pay to such Lender or such L/C Issuer, as
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the case may be, such additional amount or amounts as will compensate such Lender or such L/C Issuer, as the case may be, for such additional costs incurred or reduction suffered, to the extent such compensation is sought from similarly situated borrowers.
(b) Capital Requirements . If any Lender or any L/C Issuer determines in good faith in its reasonable discretion that any Change in Law affecting such Lender or any L/C Issuer or any Lending Office of such Lender or such Lenders or such L/C Issuers holding company, if any, regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on such Lenders or such L/C Issuers capital or on the capital of such Lenders or such L/C Issuers holding company, if any, as a consequence of this Agreement, the Commitments of such Lender or the Loans made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by such L/C Issuer, to a level below that which such Lender or such L/C Issuer or such Lenders or such L/C Issuers holding company could have achieved but for such Change in Law (taking into consideration such Lenders or such L/C Issuers policies and the policies of such Lenders or such L/C Issuers holding company with respect to capital adequacy or liquidity), then, to the extent such compensation is sought from similarly situated borrowers, the Borrower, upon request of such Lender or such L/C Issuer, as the case may be, will pay to such Lender or such L/C Issuer such additional amount or amounts as will compensate such Lender or such L/C Issuer or such Lenders or such L/C Issuers holding company for any such reduction suffered.
(c) Reserves on Eurodollar Rate Loans . The Borrower shall pay to each Lender, as long as such Lender shall be required to maintain reserves with respect to liabilities or assets consisting of or including Eurocurrency funds or deposits (currently known as Eurocurrency liabilities), additional interest on the unpaid principal amount of each Eurodollar Rate Loan equal to the actual costs of such reserves allocated to such Loan by such Lender (as determined by such Lender in good faith, which determination shall be conclusive absent manifest error), which shall be due and payable on each date on which interest is payable on such Loan; provided the Borrower shall have received at least ten (10) days prior notice (with a copy to the Administrative Agent) of such additional interest from such Lender. If a Lender fails to give notice ten (10) days prior to the relevant Interest Payment Date, such additional interest shall be due and payable ten (10) days from receipt of such notice.
Section 3.05. Funding Losses .
Upon demand of any Lender (with a copy to the Administrative Agent) from time to time, the Borrower shall promptly compensate such Lender for and hold such Lender harmless from any loss, cost or expense (other than loss of margin) actually incurred by it as a result of:
(a) any continuation, conversion, payment or prepayment of any Eurodollar Rate Loan of the Borrower on a day other than the last day of the Interest Period for such Loan;
(b) any failure by the Borrower (for a reason other than the failure of such Lender to make a Loan) to prepay, borrow, continue or convert any Eurodollar Rate Loan of the Borrower on the date or in the amount notified by the Borrower; or
(c) any assignment of a Eurodollar Rate Loan on a day other than the last day of the Interest Period therefor as a result of a request by the Borrower pursuant to Section 10.13 ;
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including any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain such Loan or from fees payable to terminate the deposits from which such funds were obtained. The Borrower shall also pay any customary administrative fees charged by such Lender in connection with the foregoing.
Section 3.06. Matters Applicable to All Requests for Compensation .
(a) Except with respect to any requests for compensation or indemnification under Section 3.01 (requests for which shall be governed by Section 3.01(c) ), any Agent or any Lender claiming compensation under this Article III shall deliver a certificate to the Borrower setting forth the additional amount or amounts to be paid to it hereunder which shall be conclusive in the absence of manifest error. In determining such amount, such Agent or such Lender may use any reasonable averaging and attribution methods.
(b) Failure or delay on the part of any Lender or any L/C Issuer to demand compensation pursuant to Section 3.01 , 3.02 , 3.03 or 3.04 shall not constitute a waiver of such Lenders or any L/C Issuers right to demand such compensation; provided , that the Borrower shall not be required to compensate such Lender for any amount incurred more than one hundred and eighty (180) days prior to the date that such Lender notifies the Borrower of the event that gives rise to such claim; provided that, if the circumstance giving rise to such claim is retroactive, then such one hundred and eighty (180) day period referred to above shall be extended to include the period of retroactive effect thereof. If any Lender requests compensation by the Borrower under Section 3.04 , the Borrower may, by notice to such Lender (with a copy to the Administrative Agent), suspend the obligation of such Lender to make or continue from one Interest Period to another applicable Eurodollar Rate Loans, or, if applicable, to convert Base Rate Loans into Eurodollar Rate Loans, until the event or condition giving rise to such request ceases to be in effect (in which case the provisions of Section 3.06(c) shall be applicable); provided , that such suspension shall not affect the right of such Lender to receive the compensation so requested.
(c) If the obligation of any Lender to make or continue any Eurodollar Rate Loan, or to convert Base Rate Loans into Eurodollar Rate Loans shall be suspended pursuant to Section 3.06(b) hereof, such Lenders applicable Eurodollar Rate Loans shall be automatically converted into Base Rate Loans (or, if such conversion is not possible, repaid) on the last day (or days) of the then current Interest Period (or Interest Periods) for such Eurodollar Rate Loans (or, in the case of an immediate conversion required by Section 3.02 , on such earlier date as required by Law) and, unless and until such Lender gives notice as provided below that the circumstances specified in Section 3.01 , 3.02 , 3.03 or 3.04 hereof that gave rise to such conversion no longer exist:
(i) to the extent that such Lenders Eurodollar Rate Loans have been so converted, all payments and prepayments of principal that would otherwise be applied to such Lenders applicable Eurodollar Rate Loans shall be applied instead to its Base Rate Loans; and
(ii) all Loans that would otherwise be made or continued from one Interest Period to another by such Lender as Eurodollar Rate Loans shall be made or continued instead as Base Rate Loans (if possible), and all Base Rate Loans of such Lender that would otherwise be converted into Eurodollar Rate Loans shall remain as Base Rate Loans.
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(d) If any Lender gives notice to the Borrower (with a copy to the Administrative Agent) that the circumstances specified in Section 3.01 , 3.02 , 3.03 or 3.04 hereof that gave rise to the conversion of any of such Lenders Eurodollar Rate Loans pursuant to this Section 3.06 no longer exist (which such Lender agrees to do promptly upon such circumstances ceasing to exist) at a time when Eurodollar Rate Loans made by other Lenders under the applicable Facility are outstanding, if applicable, such Lenders Base Rate Loans shall be automatically converted, on the first day (or days) of the next succeeding Interest Period (or Interest Periods) for such outstanding Eurodollar Rate Loans, to the extent necessary so that, after giving effect thereto, all Loans held by the Lenders holding Eurodollar Rate Loans under such Facility and by such Lender are held pro rata (as to principal amounts, interest rate basis, and Interest Periods) in accordance with their respective Commitments for the applicable Facility.
Section 3.07. Replacement of Lenders under Certain Circumstances .
(a) Designation of a Different Lending Office . If any Lender requests compensation under Section 3.04 , or the Borrower is required to pay any additional amount to any Lender, any L/C Issuer, or any Governmental Authority for the account of any Lender or any L/C Issuer pursuant to Section 3.01 , or if any Lender gives a notice pursuant to Section 3.02 , then such Lender or such L/C Issuer shall, as applicable, 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 reasonable judgment of such Lender or such L/C Issuer, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 3.01 or 3.04 , as the case may be, in the future, or eliminate the need for the notice pursuant to Section 3.02 , as applicable, and (ii) in each case, would not subject such Lender or such L/C Issuer, as the case may be, to any unreimbursed cost or expense and would not otherwise be materially disadvantageous to such Lender or such L/C Issuer, as the case may be. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender or any L/C Issuer in connection with any such designation or assignment.
(b) Replacement of Lenders . If any Lender gives a notice under Section 3.02 or requests compensation under Section 3.04 , or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.01 , the Borrower may replace such Lender in accordance with Section 10.13 .
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Section 3.08. Survival .
All of the Borrowers obligations under this Article III shall survive termination of the Aggregate Commitments, repayment of all other Obligations hereunder, resignation of the Administrative Agent and any assignment of rights by, or replacement of, a Lender or L/C Issuer.
ARTICLE IV
CONDITIONS PRECEDENT TO CREDIT EXTENSIONS
Section 4.01. Conditions to the Initial Credit Extensions .
The obligation of each L/C Issuer and each Lender to make its initial Credit Extension hereunder is subject to satisfaction or waiver of the following conditions precedent:
(a) The Administrative Agents receipt of the following, each properly executed by a Responsible Officer of the signing Loan Party, each dated the Closing Date (or, in the case of certificates of governmental officials, a recent date before the Closing Date) and each in form and substance reasonably satisfactory to the Administrative Agent:
(i) executed counterparts of this Agreement;
(ii) an original Note executed by the Borrower in favor of each Lender that requested a Note at least two Business Days prior to the Closing Date;
(iii) a security agreement, in substantially the form of Exhibit F hereto (together with each security agreement supplement delivered after the Closing Date pursuant to Section 6.11 , in each case as amended, the Security Agreement ), duly executed by each Loan Party, together with the following (except as otherwise provided in Section 6.13):
(A) certificates and instruments representing the applicable Collateral referred to therein (to the extent required by the terms of the Security Agreement to be delivered to the Collateral Agent) accompanied by undated stock powers or instruments of transfer executed in blank,
(B) financing statements in form appropriate for filing under the Uniform Commercial Code of all jurisdictions that the Collateral Agent may deem necessary or desirable in order to perfect the Liens created under the Security Agreement, covering the Collateral described in the Security Agreement,
(C) copies of UCC, United States Patent and Trademark Office and United States Copyright Office, tax and judgment lien searches, or equivalent reports or searches, each of a recent date listing all effective financing statements, lien notices or comparable documents (together with copies of such financing statements and documents) that name any Loan Party as debtor and that are filed in those state and county jurisdictions in which any Loan Party is organized or maintains its principal place of
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business and such other searches that are required by the Perfection Certificate or that the Collateral Agent reasonably deems necessary or appropriate, none of which encumber the Collateral covered or intended to be covered by the Collateral Documents (other than Permitted Liens and those evidencing Liens to be terminated on or before the Closing Date),
(D) a Perfection Certificate duly executed by each of the Loan Parties, and
(E) a Copyright Security Agreement, Patent Security Agreement and Trademark Security Agreement (as each such term is defined in the Security Agreement and to the extent applicable) (together with each other intellectual property security agreement delivered pursuant to Section 6.11 , in each case as amended or supplemented, the Intellectual Property Security Agreement ), duly executed by each applicable Loan Party;
(iv) such certifications of resolutions or other action and incumbency certificates of Responsible Officers of each Loan Party as the Administrative Agent may reasonably require evidencing the identity, authority and capacity of each Responsible Officer authorized to act as a Responsible Officer in connection with this Agreement and the other Loan Documents to which such Loan Party is a party or is to be a party;
(v) such documents and certifications as the Administrative Agent may reasonably require to evidence that each Loan Party is duly organized or formed;
(vi) a favorable opinion of Alston & Bird LLP, counsel to the Loan Parties, addressed to the Administrative Agent and each Lender, in a form reasonably satisfactory to the Administrative Agent and the Arrangers;
(vii) a certificate signed by a Responsible Officer of the Borrower certifying that the representations and warranties of the Loan Parties set forth in Sections 5.01(a) , 5.01(b)(ii) , 5.02 , 5.03 , 5.04 , 5.13 , 5.15 , 5.17 and 5.18 shall be true and correct in all material respects on an as of the Closing Date (except to the extent that such representations and warranties specifically refer to an earlier date, they shall be true and correct as of such earlier date); provided , that, to the extent that such representations and warranties are qualified by materiality, material adverse effect or similar language, they shall be true and correct in all respects;
(viii) (A) the Audited Financial Statements; (B) the Quarterly Financial Statements; and (C) the Projections;
(ix) a certificate attesting to the Solvency of the Borrower and its Subsidiaries on a consolidated basis after giving effect to the Transactions, from the Borrowers chief financial officer, substantially in the form of Exhibit K hereto; and
(x) at least three (3) Business Days prior to the Closing Date, all documentation and other information required by regulatory authorities with respect to the Loan Parties reasonably requested by the Lenders at least ten (10) Business Days prior to such date under applicable know your customer and anti-money laundering rules and regulations, including the USA Patriot Act;
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(b) (i) all fees required to be paid to the Administrative Agent and each Arranger on or before the Closing Date shall have been (or, substantially concurrently with the funding of the Loans to be made on the Closing Date, will be) paid; (ii) all fees (including the Ticking Fee) required to be paid to the Lenders on or before the Closing Date shall have been (or, substantially concurrently with the funding of the Loans to be made on the Closing Date, will be) paid and (iii) all reasonable fees, charges and disbursements of counsel to the Administrative Agent shall have been (or, substantially concurrently with the funding of the Loans to be made on the Closing Date, will be) paid, to the extent invoiced at least two Business Days prior to the Closing Date;
(c) the Administrative Agents receipt of a certificate of a Responsible Officer of the Borrower certifying that all conditions precedent to consummation of the Separation set forth in the separation agreement therefor and the Distribution set forth in the distribution agreement therefor have been satisfied or waived, other than:
(i) the release of the proceeds of the Senior Notes from escrow and the release of other debt proceeds necessary to fund the Distribution; and
(ii) the Borrowers common stock having been approved for listing on the New York Stock Exchange;
(d) the Arrangers receipt of a certificate signed by a responsible officer of Kimberly-Clark certifying that Kimberly-Clark has received final executed copies of the Spin-Off Tax Opinions and such Spin-Off Tax Opinions have not been withdrawn; and
(e) the Administrative Agents receipt of a certificate signed by a Responsible Officer of Borrower certifying that any actions relating to the Separation taken by the Borrower or any of its Subsidiaries are in all material respects consistent with the representations described in or relied upon by the Spin-Off Tax Opinions.
Without limiting the generality of the provisions of Section 9.03(e) , for purposes of determining compliance with the conditions specified in this Section 4.01 , each of the Lenders and the Administrative Agent that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the proposed Closing Date specifying its objection thereto.
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Section 4.02. Conditions to All Credit Extensions after the Closing Date .
Following the Closing Date, the obligation of each Lender to honor any Request for Credit Extension (other than a Committed Loan Notice requesting only a conversion of Loans to the other Type, or a continuation of Eurodollar Rate Loans) is subject to the following conditions precedent (subject to the limitations set forth in Section 2.14(e) ):
(a) The representations and warranties of each Loan Party contained in Article V or any other Loan Document shall be true and correct in all material respects on and as of the date of such Credit Extension (except to the extent that such representations and warranties specifically refer to an earlier date, they shall be true and correct as of such earlier date); provided , that, to the extent that such representations and warranties are qualified by materiality, material adverse effect or similar language, they shall be true and correct in all respects.
(b) No Default or Event of Default shall exist or would result from such proposed Credit Extension or from the application of the proceeds therefrom.
(c) The Administrative Agent and, if applicable, the relevant L/C Issuer or the relevant Swing Line Lender shall have received a Request for Credit Extension in accordance with the requirements hereof.
Each Request for Credit Extension (other than a Committed Loan Notice requesting only a conversion of Loans to the other Type, or a continuation of Eurodollar Rate Loans) submitted by the Borrower shall be deemed to be a representation and warranty that the conditions specified in Sections 4.02(a) and (b) have been satisfied on and as of the date of the applicable Credit Extension. Notwithstanding anything to the contrary in this Section 4.02 or in Section 2.14 , so long as no Event of Default has occurred pursuant to Section 8.01(a) or (f) , the Lenders providing any Incremental Term Loans in connection with a Permitted Acquisition may agree to modify the conditionality with respect to such Incremental Term Loans such that the Permitted Acquisition may be consummated on a certain funds basis.
Section 4.03. Timing of Granting of Liens .
Notwithstanding anything to the contrary in the Collateral Documents or any of the other Loan Documents, the parties hereto agree that no Lien purported to be granted under any Collateral Document shall be deemed to be granted, attached or perfected until immediately following the occurrence of the Separation and the Distribution regardless of the fact that proceeds of any of the Loans were made available to the Borrower prior to the occurrence of the Separation and the Distribution.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
Each Loan Party represents and warrants to the Agents and the Lenders that:
Section 5.01. Existence, Qualification and Power; Compliance with Laws .
Each Loan Party (a) is a Person duly (i) organized or formed, (ii) validly existing and (iii) in good standing (where relevant) under the Laws of the jurisdiction of its organization or formation, (b) has all requisite power and authority to (i) own or lease its assets and carry on its business as currently conducted and (ii) execute, deliver and perform its obligations under the Loan Documents to which it is a party, (c) is duly qualified and in good standing (where relevant) under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification, (d) is in compliance with all Laws, orders, writs and injunctions and (e) has all requisite governmental licenses, authorizations, consents and approvals to operate its business as currently conducted; except in each case referred to in clause (a)(iii), (b)(i) , (c) , (d) or (e) , to the extent that failure to do so would not reasonably be expected to have a Material Adverse Effect.
Section 5.02. Authorization; No Contravention .
The execution, delivery and performance by each Loan Party of each Loan Document to which such Person is a party, and the consummation of the Transactions, (a) are within such Loan Partys corporate or other powers, (b) have been duly authorized by all necessary corporate or other organizational action and (c) do not and will not (i) contravene the terms of any of such Persons Organization Documents, (ii) conflict with or result in any breach or contravention of, or the creation of any Lien under (other than as permitted by Section 7.01 ) (x) any material order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Person or its property is subject or (y) any material agreement to which such Person is a party; or (iii) violate any material Law; except with respect to any conflict, breach, violation or contravention referred to in clause (ii) or (iii) , to the extent that such conflict, breach, violation or contravention would not reasonably be expected to have a Material Adverse Effect.
Section 5.03. Governmental Authorization; Other Consents .
No material approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority is necessary or required in connection with (a) the execution, delivery or performance by any Loan Party of this Agreement or any other Loan Document to which it is a party, or for the consummation of the Transactions, (b) the grant by any Loan Party of the Liens granted by it pursuant to the Collateral Documents, or (c) the perfection or maintenance of the Liens created under the Collateral Documents (including the priority thereof), except for (i) filings and registrations necessary to perfect the Liens on the Collateral granted by the Loan Parties in favor of the Collateral Agent for its benefit and the benefit of the Secured Parties, (ii) the approvals, consents, exemptions, authorizations, actions, notices and filings which have been duly obtained, taken, given or made and are in full force and effect (or, with respect to consummation of the Transactions, will be duly obtained, taken, given or made and will be in full force and effect, in each case within the time period required to be so obtained, taken, given or made) and (iii) those approvals, consents, exemptions, authorizations or other actions, notices or filings, the failure of which to obtain or make would not reasonably be expected to have a Material Adverse Effect.
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Section 5.04. Binding Effect .
This Agreement and each other Loan Document has been duly executed and delivered by each Loan Party that is a party thereto. This Agreement and each other Loan Document constitutes, a legal, valid and binding obligation of such Loan Party, enforceable against each Loan Party that is a party thereto in accordance with its terms, except as such enforceability may be limited by (a) Debtor Relief Laws and by general principles of equity, (b) the need for filings and registrations necessary to perfect the Liens on the Collateral granted by the Loan Parties in favor of the Collateral Agent for its benefit and the benefit of the Secured Parties and (c) the effect of foreign Laws, rules and regulations as they relate to pledges of Equity Interests in Foreign Subsidiaries.
Section 5.05. Financial Statements; No Material Adverse Effect .
(a) The Audited Financial Statements and the Quarterly Financial Statements fairly present in all material respects the financial condition of the health care business of Kimberly-Clark as of the dates thereof and their results of operations for the period covered thereby in accordance with GAAP consistently applied throughout the periods covered thereby, (i) except as otherwise expressly noted therein and (ii) subject, in the case of the Quarterly Financial Statements, to changes resulting from normal year-end adjustments and the absence of footnotes.
(b) Since the Closing Date, there has been no event or circumstance, either individually or in the aggregate, that has had or would reasonably be expected to have a Material Adverse Effect.
Section 5.06. Litigation .
There are no actions, suits, proceedings, claims or disputes pending or, to the knowledge of the Borrower, threatened in writing, at law, in equity, in arbitration or before any Governmental Authority, against any Loan Party or any of its Subsidiaries or against any of their properties or revenues (other than actions, suits, proceedings and claims in connection with the Transactions) that either individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.
Section 5.07. [Reserved]
Section 5.08. Ownership of Property; Liens .
After giving effect to any part of the Transactions that is consummated on or prior to the Closing Date, each Loan Party and each of its Restricted Subsidiaries has good record title to, or valid leasehold interests in, or easements or other limited property interests in, all Real Property necessary in the ordinary conduct of its business, free and clear of all Liens except (i) as set forth on Schedule 5.08 , (ii) minor defects in title that do not materially interfere with its ability to conduct its business or to utilize such assets for their intended purposes, (iii) Liens permitted by Section 7.01 or (iv) where the failure to so have would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
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Section 5.09. Environmental Compliance . Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect:
(a) There are no claims, actions, suits, or proceedings against the Borrower or any of its Subsidiaries alleging liability or responsibility for violation of, or otherwise relating to, any Environmental Law.
(b) Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, (i) none of the properties currently or, to the knowledge of the Loan Parties and their Subsidiaries, formerly owned, leased or operated by any Loan Party or any of its Subsidiaries is listed or proposed for listing on the NPL or on the CERCLIS or any analogous foreign, state or local list or is adjacent to any such property; (ii) there are no and never have been any underground or aboveground storage tanks or any surface impoundments, septic tanks, pits, sumps or lagoons in which Hazardous Materials are being or have been treated, stored or disposed on any property currently owned, leased or operated by any Loan Party or any of its Subsidiaries or, to its knowledge, on any property formerly owned or operated by any Loan Party or any of its Subsidiaries, except in compliance with Environmental Law; and (iii) Hazardous Materials have not been Released by any Person on any property currently or, to the knowledge of the Loan Parties and their Subsidiaries, formerly owned, leased or operated by any Loan Party or any of its Subsidiaries; (iii) there is no asbestos or asbestos containing material on any property currently owned or operated by any Loan Party or any of its Subsidiaries except as is present and in a condition that accords with Environmental Law; and (iv) Hazardous Materials have not otherwise been Released by any Loan Party or any of its Subsidiaries at any other location, except in accordance with Environmental Laws.
(c) The properties owned, leased or operated by the Loan Parties and their Subsidiaries do not contain any Hazardous Materials in amounts or concentrations which (i) constitute a violation of; (ii) require remedial action under; or (iii) could give rise to liability under, Environmental Laws.
(d) All Hazardous Materials generated, used, treated, handled or stored at, or transported to or from, any property currently or formerly owned or operated by any Loan Party or any of its Subsidiaries have been disposed of in a manner that would not reasonably be expected to result in any liability.
(e) None of the Loan Parties or any of their Subsidiaries has contractually assumed any liability or obligation under or relating to any Environmental Law.
Section 5.10. Taxes .
Except as would not reasonably be expected to result, individually or in the aggregate, in a Material Adverse Effect, each of the Loan Parties and each of their Restricted Subsidiaries has filed all Tax returns required to be filed, and has paid all Taxes required to be paid by it, that are due and payable, except those Taxes which are being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves have been made in accordance with GAAP.
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Section 5.11. ERISA Compliance .
(a) Except as would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, each Plan is in compliance with the applicable provisions of ERISA, the Code and other Federal or state Laws.
(b) (i) No ERISA Event has occurred or is reasonably expected to occur with respect to any Pension Plan or Multiemployer Plan; (ii) neither any Loan Party nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Sections 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (iii) neither any Loan Party nor any ERISA Affiliate has engaged in a transaction that would reasonably be expected to be subject to Sections 4069 or 4212(c) of ERISA, except, with respect to each of the foregoing clauses of this Section 5.11(b) , as would not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.
(c) The Foreign Plans of the Loan Parties and the Subsidiaries are in compliance with the requirements of any Law applicable in the jurisdiction in which the relevant Foreign Plan is maintained, in each case, except as would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.
Section 5.12. Subsidiaries; Equity Interests .
As of the Closing Date (after giving effect to any part of the Transactions that is consummated on or prior to the Closing Date), no Loan Party has any material Subsidiaries other than those disclosed in Schedule 5.12 , and all of the outstanding Equity Interests owned by the Loan Parties in such material Subsidiaries have been validly issued and, in the case of a Subsidiary that is a corporation, are fully paid, and all Equity Interests owned by a Loan Party in such material Subsidiaries are owned free and clear of all Liens except (a) those created under the Collateral Documents; and (b) any Lien that is permitted under Section 7.01 .
Section 5.13. Margin Regulations; Investment Company Act .
(a) No Loan Party is engaged in, nor will it engage, principally or as one of its important activities, in the business of purchasing or carrying margin stock (within the meaning of Regulation U issued by the FRB ( Margin Stock )), or extending credit for the purpose of purchasing or carrying Margin Stock, and no proceeds of any Borrowings or drawings under any Letter of Credit will be used for the purpose of purchasing or carrying Margin Stock or any purpose that violates Regulation U; provided , that the Borrower may use proceeds of the Loans to purchase the Borrowers common stock so long as such common stock is immediately retired.
(b) None of the Loan Parties or any of the Subsidiaries of the Loan Parties is or is required to be registered as an investment company under the Investment Company Act of 1940.
Section 5.14. Disclosure .
The written information, documents and data (other than as set forth below and other than information of a general economic or industry nature) furnished by or on behalf of any Loan Party to any Agent or any Lender in connection with the Transactions and the negotiation
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of this Agreement or delivered hereunder or under any other Loan Document (as modified or supplemented by other information so furnished), when taken as a whole, do not contain any material misstatement of fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not materially misleading; provided , that, with respect to projected financial information, financial estimates, forecasts and other forward-looking information (collectively, Projected Information ), the Borrower represents only that such Projected Information was prepared in good faith based upon assumptions believed to be reasonable at the time of preparation; it being understood that Projected Information as it relates to future events is not to be viewed as fact, that Projected Information is subject to significant uncertainties and contingencies, many of which are beyond the control of the Borrower and its Subsidiaries, that no assurance can be given that any particular Projection Information will be realized, that actual results may differ and that such differences may be material.
Section 5.15. OFAC and Patriot Act .
(a) None of the Borrower, any of its Subsidiaries, or any of the Borrowers directors or officers, nor, to the knowledge of the Borrower or any of its Subsidiaries, any directors or officers of any of the Borrowers Subsidiaries, is (i) listed on the List of Specially Designated Nationals and Blocked Persons ( SDN List ) or Sectoral Sanctions Identifications List ( SSI List ) maintained by OFAC or 50% or greater owned by any person or entity on the SDN List or SSI List, (ii) otherwise the target of Sanctions or (iii) in violation of any applicable requirement of Law relating to Sanctions.
(b) Each of the Borrower and its Subsidiaries, and, to the knowledge of the Borrower, all of its Subsidiaries, its directors and officers and the directors and officers of each of its Subsidiaries is in compliance with any applicable provisions of the United and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56 (the USA Patriot Act ).
Section 5.16. Intellectual Property; Licenses, Etc.
After giving effect to any part of the Transactions that is consummated on or prior to the Closing Date, to the Loan Parties knowledge, each of the Loan Parties and their Subsidiaries owns, licenses or possesses the right to use, all of the trademarks, service marks, trade names, domain names, copyrights, patents, patent rights, technology, software, know-how database rights, design rights and other intellectual property rights (collectively, IP Rights ) that are used or held for use in connection with and reasonably necessary for the operation of their respective businesses as currently conducted, except where the failure to so own, license or possess the right to use any such IP Rights would not reasonably be expected to have a Material Adverse Effect. To the Loan Parties knowledge, no IP Rights, advertising, product, process, method, substance, part or other material, in each case used by any Loan Party or any of its Subsidiaries in the operation of their respective businesses as currently conducted infringes upon any rights held by any other Person except for such infringements, individually or in the aggregate, which would not reasonably be expected to have a Material Adverse Effect. No claim or litigation regarding any of the IP Rights, is pending or, to the knowledge of the Borrower, has been threatened in writing in the three (3) years prior to the Closing Date against any Loan Party or any of its Subsidiaries, which, either individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.
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Section 5.17. Solvency .
On the Closing Date after giving effect to the Transactions (including, without limitation, the Separation and the Distribution), the Borrower and its Subsidiaries, on a consolidated basis taken as a whole, are Solvent.
Section 5.18. FCPA .
No Loan Party, none of its Subsidiaries nor, to the knowledge of the Borrower, any director, officer, agent or employee of the Borrower or any of its Subsidiaries acting in his/her capacity as such, has taken any action, directly or indirectly, that would result in a violation by such persons of the FCPA, including making use of the mails or any means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to pay or authorization of the payment of any money, or other property, gift, promise to give, or authorization of the giving of anything of value to any foreign official (as such term is defined in the FCPA) or any foreign political party or official thereof or any candidate for foreign political office, in contravention of the FCPA. The Borrower and its Subsidiaries have conducted their businesses in compliance with the FCPA and have instituted and maintain policies and procedures designed to ensure, and which are reasonably expected to continue to ensure, continued compliance therewith.
Section 5.19. Security Documents .
(a) Security Agreement . Subject to Section 4.03, the Collateral Documents are effective to create in favor of the Collateral Agent for the benefit of the Secured Parties, legal, valid and enforceable Liens on, and security interests in, the Collateral described therein to the extent intended to be created thereby and (i) when financing statements and other filings in appropriate form are filed in the offices required by the applicable provision of the Collateral Documents and (ii) upon the taking of possession or control by the Collateral Agent of such Collateral with respect to which a security interest may be perfected only by possession or control (which possession or control shall be given to the Collateral Agent to the extent required by the Security Agreement or the Intercreditor Agreement (if in effect)), the Liens created by the Collateral Documents shall constitute fully perfected Liens on, and security interests in (to the extent intended to be created thereby), all right, title and interest of the grantors in such Collateral to the extent perfection can be obtained by filing financing statements or taking possession or control, in each case subject to no Liens other than Liens permitted hereunder.
(b) PTO Filing; Copyright Office Filing . In addition to the actions taken pursuant to Section 5.20(a)(i) , when the Security Agreement or a short form thereof (including any Intellectual Property Security Agreement) is properly filed in the United States Patent and Trademark Office and the United States Copyright Office, the Liens created by such Security Agreement (or Intellectual Property Security Agreement) shall constitute fully perfected Liens on, and security interests in, all right, title and interest of the grantors (to the extent intended to be created thereby) in Patents and Trademarks (as defined in the Security Agreement) registered
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or applied for with the United States Patent and Trademark Office or Copyrights (as defined in such Security Agreement) registered or applied for with the United States Copyright Office, as the case may be, in each case subject to no Liens other than Liens permitted under the Loan Documents (it being understood that subsequent recordings in the United States Patent and Trademark Office and the United States Copyright Office may be necessary to perfect a Lien on registered or applied-for Trademarks, Patents and Copyrights acquired by the grantors thereof after the Closing Date).
(c) Notwithstanding anything herein (including this Section 5.20 ) or in any other Loan Document to the contrary, neither the Borrower nor any other Loan Party makes any representation or warranty as to the effects of perfection or non-perfection, the priority or the enforceability of any pledge of or security interest (other than with respect to those pledges and security interests made under the Laws of the jurisdiction of formation of the applicable Foreign Subsidiary) in any Equity Interests of any Foreign Subsidiary, or as to the rights and remedies of the Agents or any Lender with respect thereto, under foreign Law.
Section 5.20. Use of Proceeds .
(a) The Borrower will use the proceeds of the Loans solely for the following purposes: (i) for the Separation and related transactions; and/or (ii) to fund working capital and general corporate purposes of the Borrower and the Restricted Subsidiaries, including the Closing Date Transaction Expenses and other expenses relating to the Transactions.
(b) No proceeds of the Loans will be used in violation of OFAC or other Sanctions (i) by the Borrower or any of its Restricted Subsidiaries or (ii) to the knowledge of the Borrower, any director, officer, agent or employee of the Borrower or any of its Restricted Subsidiaries.
ARTICLE VI
AFFIRMATIVE COVENANTS
So long as any Lender shall have any Commitment hereunder, any Loan or other Obligation hereunder which is accrued and payable remains unpaid or unsatisfied, or any Letter of Credit shall remain outstanding (and not Cash Collateralized), each of the Loan Parties shall, and shall cause each of their Restricted Subsidiaries to:
Section 6.01. Financial Statements .
(a) Deliver to the Administrative Agent for prompt further distribution to each Lender within ninety (90) days after the end of each fiscal year of the Borrower (or, with respect to fiscal year 2014, within ninety-five (95) days after the end of such fiscal year) beginning with the 2014 fiscal year, a consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal year, and the related consolidated statements of income or operations, stockholders equity and cash flows for such fiscal year, setting forth in each case (other than for the 2014 fiscal year) in comparative form the figures for the previous fiscal year, all in reasonable detail and prepared in accordance with GAAP, audited and accompanied by a report and opinion of Deloitte & Touche LLP or any other independent registered public accounting firm of nationally recognized standing, which report and opinion shall be prepared in accordance
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with generally accepted auditing standards and shall not be subject to any going concern or like qualification or exception or any qualification or exception as to the scope of such audit (other than any qualification or exception that is solely with respect to, or resulting solely from, (i) an upcoming maturity date of any Facility; or (ii) any potential inability to satisfy a financial maintenance covenant on a future date or in a future period) (an Accounting Opinion ); and
(b) Deliver to the Administrative Agent for prompt further distribution to each Lender within forty-five (45) days after the end of each of the first three (3) fiscal quarters of each fiscal year of the Borrower (or, with respect to fiscal year 2014, within fifty (50) days after the end of any fiscal quarter in such fiscal year), a consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal quarter and the related (i) consolidated statements of income or operations for such fiscal quarter and for the portion of the fiscal year then ended, and (ii) consolidated statements of cash flows for the portion of the fiscal year then ended, setting forth in each case in comparative form the figures for the corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the previous fiscal year (except to the extent there is no such corresponding fiscal quarter of a previous fiscal year or corresponding portion of a previous fiscal year), all in reasonable detail and certified by a Responsible Officer of the Borrower as fairly presenting in all material respects the financial condition, results of operations, stockholders equity and cash flows of the Borrower and its Subsidiaries in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes.
Notwithstanding the foregoing, the obligations in clauses (a) and (b) of this Section 6.01 may be satisfied with respect to financial information of the Borrower and its Subsidiaries by furnishing the Borrowers Form 10-K or 10-Q, as applicable, filed with the SEC; provided , that, to the extent such information is in lieu of information required to be provided under Section 6.01(a) , such materials are accompanied by an Accounting Opinion. The information delivery requirements set forth in this Section 6.01 for the applicable period may be satisfied by the Borrower prior to the commencement of the exchange offer or the effectiveness of the shelf registration statement with respect to the Senior Notes by (i) the posting of such information on the Borrowers public website (which may include a press release of the Borrower), or (ii) the filing with the SEC of such exchange offer registration statement and/or shelf registration statement, and any amendments thereto, with such information.
Documents required to be delivered pursuant to Section 6.01 and Section 6.02(b) and (c) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which the Borrower (or any direct or indirect parent of the Borrower, if any) posts such documents, or provides a link thereto, at the website address listed on Schedule 10.02 ; or (ii) on which such documents are posted on the Borrowers behalf on IntraLinks/IntraAgency or another relevant website (including without limitation the EDGAR website of the SEC), if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent).
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Section 6.02. Certificates; Other Information .
Deliver to the Administrative Agent for prompt further distribution to each Lender:
(a) no later than five (5) Business Days after the delivery of the financial statements referred to in Section 6.01(a) and (b) , a duly completed Compliance Certificate signed by a Responsible Officer of the Borrower;
(b) promptly after the same are publicly available, copies of all annual, regular, periodic and special reports and registration statements which the Borrower or any Subsidiary files with the SEC (other than amendments to any registration statement (to the extent such registration statement, in the form it became effective, is delivered), exhibits to any registration statement and, if applicable, any registration statement on Form S-8) and in any case not otherwise required to be delivered to the Administrative Agent pursuant hereto;
(c) together with the delivery of each Compliance Certificate pursuant to Section 6.02(a) (but only together with the delivery of a Compliance Certificate in connection with financial statements delivered pursuant to Section 6.01(a) ), (i) a report setting forth the information required by a Perfection Certificate Supplement or confirming that there has been no change in such information since the Closing Date or the date of the last such report ( provided that no such Perfection Certificate Supplement or confirmation shall be required in connection with the Compliance Certificate to be delivered for the financial statements relating to the fiscal year ended December 31, 2014) and (ii) a list of the Subsidiaries of the Borrower that identifies each Subsidiary as a Restricted or an Unrestricted Subsidiary as of the date of delivery of such Compliance Certificate; and
(d) promptly, such additional information regarding the business, legal, financial or corporate affairs of the Loan Parties or any of their respective Subsidiaries, or compliance with the terms of the Loan Documents, as the Administrative Agent or any Lender through the Administrative Agent may from time to time reasonably request.
The Loan Parties hereby acknowledge that (a) the Administrative Agent and/or each Arranger will make available to the Lenders and the L/C Issuers materials and/or information provided by or on behalf of the Borrower hereunder (collectively, Borrower Materials ) by posting the Borrower Materials on IntraLinks or another similar electronic system (the Platform ) and (b) certain of the Lenders (each, a Public Lender ) may have personnel who do not wish to receive material non-public information with respect to the Borrower or its Affiliates, or the respective securities of any of the foregoing, and who may be engaged in investment and other market-related activities with respect to such Persons securities. The Loan Parties hereby agree that so long as the Borrower is the issuer of any outstanding debt or equity securities that are registered or issued pursuant to a private offering or is actively contemplating issuing any such securities it will use commercially reasonable efforts to identify that portion of the Borrower Materials that may be distributed to the Public Lenders and that (w) all such Borrower Materials shall be clearly and conspicuously marked PUBLIC
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which, at a minimum, shall mean that the word PUBLIC shall appear prominently on the first page thereof; (x) by marking Borrower Materials PUBLIC, the Borrower shall be deemed to have authorized the Administrative Agent, the Arrangers, the L/C Issuers and the Lenders to treat such Borrower Materials as not containing any material non-public information (although it may be sensitive and proprietary) with respect to the Borrower or its securities for purposes of United States Federal and state securities laws ( provided , however , that to the extent such Borrower Materials constitute Information, they shall be treated as set forth in Section 10.07 ); (y) all Borrower Materials marked PUBLIC are permitted to be made available through a portion of the Platform designated Public Side Information; and (z) the Administrative Agent and each Arranger shall be entitled to treat any Borrower Materials that are not marked PUBLIC as being suitable only for posting on a portion of the Platform not designated Public Side Information. Notwithstanding the foregoing, the Borrower shall be under no obligation to mark any Borrower Materials PUBLIC.
Section 6.03. Notices .
Promptly after a Responsible Officer of the Borrower has obtained actual knowledge thereof, notify the Administrative Agent:
(a) of the occurrence of any Default;
(b) of the occurrence of any ERISA Event; and
(c) of any matter (including in regard to any court suit or action) that has resulted, or would reasonably be expected to result, in a Material Adverse Effect.
Each notice pursuant to this Section shall be accompanied by a written statement of a Responsible Officer of the Borrower setting forth details of the occurrence referred to therein and stating what action the Loan Parties have taken and propose to take with respect thereto and shall be made available to the Lenders by the Administrative Agent.
Section 6.04. Payment of Taxes .
Pay, discharge or otherwise satisfy as the same shall become due and payable, all its obligations and liabilities in respect of Taxes imposed upon it (including in its capacity as withholding agent) or upon its income or profits or in respect of its property, except, in each case, (a) to the extent the failure to pay or discharge the same would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, or (b) which are being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves have been made to the extent required by GAAP.
Section 6.05. Preservation of Existence, Etc.
(a) Preserve, renew and maintain in full force and effect its legal existence under the Laws of the jurisdiction of its organization or formation except in a transaction permitted by Section 7.03 or 7.04 and (b) take all reasonable action to maintain all rights, privileges (including its good standing where applicable in the relevant jurisdiction), permits, licenses and franchises necessary or desirable in the normal conduct of its business, except (i) to
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the extent that failure to do so would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect or (ii) pursuant to a transaction permitted by Section 7.03 or 7.04 .
Section 6.06. Maintenance of Properties .
Except if the failure to do so would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, maintain, preserve and protect all of its material tangible properties and equipment necessary in the operation of its business in good working order, repair and condition, ordinary wear and tear excepted and casualty or condemnation excepted.
Section 6.07. Maintenance of Insurance .
Maintain with financially sound and reputable insurance companies, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business, of such types and in such amounts (after giving effect to any self-insurance reasonable and customary for similarly situated Persons engaged in the same or similar businesses as the Borrower and the Restricted Subsidiaries) as are customarily carried under similar circumstances by such other Persons. Subject to Section 6.13(a) , all such liability insurance policies of the Loan Parties (other than officer and director liability, workers compensation and other insurance policies for which endorsements are not customary or available) shall, as appropriate, name the Collateral Agent as additional insured (solely in the case of liability insurance) or loss payee (solely in the case of property insurance with respect to any Collateral), as applicable. With respect to each parcel of Real Property that is subject to a Mortgage, obtain flood insurance in such total amount (no greater than the lesser of (i) the fair market value of the improvements on such parcel as reasonably determined by the Borrower in good faith and (ii) the maximum amount of such insurance available under a policy issued through the National Flood Insurance Program) as the Collateral Agent may from time to time reasonably require, if at any time the area in which any improvements on such Real Property are located is designated a flood hazard area in any Flood Insurance Rate Map published by the Federal Emergency Management Agency (or any successor agency), and otherwise comply with the National Flood Insurance Program as set forth in the Flood Disaster Protection Act of 1973, as amended from time to time.
Section 6.08. Compliance with Laws and Certain Agreements .
Comply in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its business or property, and all Separation and Distribution Documents, except if the failure to comply therewith would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
Section 6.09. Books and Records .
Maintain proper books of record and account, in which entries are full, true and correct in all material respects and are in conformity in all material respects with GAAP consistently applied and which reflect all material financial transactions and matters involving the business of the Loan Parties or a Restricted Subsidiary, as the case may be.
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Section 6.10. Inspection Rights .
Permit representatives and independent contractors of the Administrative Agent and each Lender to visit and inspect any of its properties, to examine its corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with its senior officers, and independent public accountants (subject to such accountants customary policies and procedures), all at reasonable times during normal business hours, upon reasonable advance notice to the Borrower; provided , however , (a) unless an Event of Default exists, only the Administrative Agent on behalf of the Lenders may exercise the rights of the Administrative Agent and the Lenders under this Section 6.10 and the Administrative Agent shall not exercise such rights more often than two (2) times during any period of 12 consecutive months and no such exercise shall be at the Borrowers expense, (b) if an Event of Default exists and an individual Lender elects to exercise rights under this Section 6.10 , (x) such Lender shall coordinate with the Administrative Agent and any other Lender electing to exercise such rights and shall share the results of such inspection with the Administrative Agent on behalf of the Lenders and (y) the number of visits and expense associated with such individual Lender inspections must be reasonable, and (c) the Borrower shall have the opportunity to participate in any discussions with the Borrowers independent public accountants. Notwithstanding anything to the contrary in this Section 6.10 , none of the Borrower or any of the Restricted Subsidiaries will be required to disclose, permit the inspection, examination or making copies or abstracts of, or discussion of, any document, information or other matter that (a) in respect of which disclosure to the Administrative Agent or any Lender (or their respective representatives or contractors) is prohibited by Law or any bona fide arms length third party contract or (b) is subject to attorney-client or similar privilege or constitutes attorney work product.
Section 6.11. Additional Collateral; Additional Guarantors .
(a) Subject to this Section 6.11 and Section 6.13(b) , with respect to any property acquired after the Closing Date by any Loan Party that is required to be subject to the Lien created by any of the Collateral Documents but is not so subject, promptly (and in any event within sixty (60) days after the acquisition thereof (or, with respect to intellectual property, in any event on a quarterly basis) (or such later date as the Collateral Agent may agree)) (i) execute and deliver to the Collateral Agent such amendments or supplements to the relevant Collateral Documents or such other documents as the Collateral Agent shall reasonably request to grant to the Collateral Agent, for its benefit and for the benefit of the other Secured Parties, a Lien on such property subject to no Liens other than Liens permitted under the Loan Documents; and (ii) take all actions reasonably necessary or advisable to cause such Lien to be duly perfected within the United States to the extent required by such Collateral Document in accordance with all applicable Law, including the filing of financing statements in such jurisdictions within the United States as may be reasonably requested by the Collateral Agent. The Borrower shall otherwise take such actions and execute and/or deliver to the Collateral Agent such documents as the Collateral Agent shall reasonably require to confirm the validity, perfection and priority of the Lien of the Collateral Documents on such after-acquired properties.
(b) With respect to any Person that is or becomes a direct Subsidiary of a Loan Party after the Closing Date or ceases to be an Excluded Subsidiary, promptly (and in any
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event within sixty (60) days after the later of (I) the date such Person becomes a Subsidiary or (II) the date the Borrower delivers to the Administrative Agent financial statements by which it is determined that such Person ceased to be an Excluded Subsidiary (or in the case of each of clauses (I) and (II) , such later date as the Collateral Agent may agree)) (i) deliver to the Collateral Agent the certificates, if any, representing all of the Equity Interests of such Subsidiary owned by such Loan Party, together with undated stock powers or other appropriate instruments of transfer executed and delivered in blank by a duly authorized officer of the holder (or holders) of such Equity Interests, and all written intercompany notes, if any, representing Indebtedness owing from such Subsidiary to any Loan Party together with instruments of transfer executed and delivered in blank by a duly authorized officer of such Loan Party (in each case, with respect to Foreign Subsidiaries, to the extent applicable and permitted under foreign laws, rules or regulations) or, if necessary to perfect a Lien under applicable Law, by means of an applicable Collateral Document, to create a Lien on such Equity Interests and intercompany notes in favor of the Collateral Agent on behalf of the Secured Parties and (ii) cause any such Subsidiary (A) to execute a joinder agreement reasonably acceptable to the Collateral Agent or such comparable documentation to become a Guarantor and a joinder agreement to the applicable Collateral Documents (including the Security Agreement), substantially in the form annexed thereto, and (B) to take all other actions reasonably requested by the Collateral Agent to cause the Lien created by the applicable Collateral Documents (including the Security Agreement) to be duly perfected within the United States to the extent required by such agreement in accordance with all applicable Law, including the filing of financing statements in such jurisdictions within the United States as may be reasonably requested by the Collateral Agent. Notwithstanding the foregoing, (1) the Equity Interests required to be delivered to the Collateral Agent, or on which a Lien is required to be created, pursuant to clause (i) of this Section 6.11(b) shall not include any Equity Interests of a Subsidiary that is an Excluded Subsidiary by reason of clauses (a) , (b) , (d) , (e) or (g) of the definition of Excluded Subsidiary, (2) no Excluded Subsidiary shall be required to become a Guarantor or otherwise take the actions specified in clause (ii) of this Section 6.11(b) , (3) no more than (A) 65% of the total voting power of all outstanding voting stock and (B) 100% of the Equity Interests not constituting voting stock of any CFC or CFC Holdco (except that any such Equity Interests constituting stock entitled to vote within the meaning of Treasury Regulation Section 1.956-2(c)(2) shall be treated as voting stock for purposes of this Section 6.11(b) ) shall be required to be pledged and (4) no Equity Interests in any Person held by a Foreign Subsidiary shall be required to be pledged.
(c) Each Loan Party shall grant to the Collateral Agent, within ninety (90) days of the acquisition thereof (or such later date as the Administrative Agent may agree), a security interest in and mortgage in a form reasonably satisfactory to the Collateral Agent (a Mortgage ) on each parcel of Real Property located in the United States and owned in fee by such Loan Party as is acquired by such Loan Party after the Closing Date and that, together with any improvements thereon, individually has a fair market value of at least $10 million as additional security for the Obligations (unless the subject property is already mortgaged to a third party to the extent permitted hereunder). Such Mortgages shall be granted pursuant to documentation reasonably satisfactory in form and substance to the Collateral Agent and shall constitute valid and enforceable perfected Liens subject only to Liens permitted under the Loan Documents. The Mortgages or instruments related thereto shall be duly recorded or filed in such manner and in such places as are required by Law to establish, perfect, preserve and protect the
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Liens in favor of the Collateral Agent required to be granted pursuant to the Mortgages and all taxes, fees and other charges payable in connection therewith shall be paid in full. Such Loan Party shall otherwise take such actions and execute and/or deliver to the Collateral Agent such documents as the Collateral Agent shall reasonably require to confirm the validity, perfection and priority of the Lien of any existing Mortgage or new Mortgage against such after-acquired Real Property (including, to the extent so required, a Title Policy, a Survey (but only if necessary to permit the issuer of the Title Policy to omit a survey exception or issue any survey dependent endorsements reasonably requested by the Collateral Agent), local counsel opinion (in form and substance reasonably satisfactory to the Collateral Agent) and a completed Life-of-Loan Federal Emergency Management Agency standard flood hazard determination, together with a notice executed by such Loan Party about special flood hazard area status, if applicable, in respect of such Mortgage).
(d) The foregoing clauses (a) through (c) shall not require the creation or perfection of pledges of or security interests in, mortgages on, or the obtaining of Title Policies or Surveys with respect to, particular assets if and for so long as (i) in the reasonable judgment of the Collateral Agent and the Borrower, the cost of creating or perfecting such pledges or security interests in, or Mortgages on, such assets or obtaining Title Policies or Surveys in respect of such assets shall be excessive in view of the benefits to be obtained by the Lenders therefrom or (ii) such asset constitutes an Excluded Asset. In addition, the foregoing will not require actions under this Section 6.11 by a Person if and to the extent that such action would (a) go beyond the corporate or other powers of the Person concerned (and then only as such corporate or other power cannot be modified or excluded to allow such action); or (b) unavoidably result in material issues of directors or officers personal liability, breach of fiduciary duty or criminal liability. The Collateral Agent may grant extensions of time for the perfection of security interests in, or Mortgages on, or the obtaining of Title Policies or Surveys with respect to particular assets (including extensions beyond the Closing Date for the perfection of security interests in the assets of the Loan Parties on such date) where it reasonably determines, in consultation with the Borrower, that perfection cannot be accomplished without undue effort or expense by the time or times at which it would otherwise be required by this Agreement or the Collateral Documents.
(e) Notwithstanding the foregoing provisions of this Section 6.11 or anything in this Agreement or any other Loan Document to the contrary, Liens required to be granted from time to time pursuant to this Section 6.11 shall be subject to exceptions and limitations set forth herein, in the Collateral Documents and, to the extent appropriate in the applicable jurisdiction, as agreed between the Collateral Agent and the Borrower. Notwithstanding the foregoing provisions of this Section 6.11 or anything in this Agreement or any other Loan Document to the contrary, any Subsidiary of the Borrower that Guarantees the Senior Notes shall be a Guarantor hereunder for so long as it Guarantees the Senior Notes.
Section 6.12. Compliance with Environmental Laws .
Except to the extent that the failure to do so would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, (a) comply, and take all reasonable actions to cause all lessees and other Persons operating or occupying its properties to comply with all applicable Environmental Laws and Environmental Permits, (b) obtain and
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renew all Environmental Permits necessary for its operations and properties, and (c) to the extent the Loan Parties are required by Environmental Laws, conduct any investigation, study, sampling and testing, and undertake any cleanup, removal, remedial or other action necessary to remove and clean up all Hazardous Materials from any affected property, in accordance with the requirements of all Environmental Laws.
Section 6.13. Post-Closing Conditions and Further Assurances .
(a) Within ninety (90) days after the Closing Date (subject to extension by the Collateral Agent in its discretion), deliver each Collateral Document or other deliverable set forth on Schedule 6.13(a) , duly executed by each Loan Party that is a party thereto, together with all documents and instruments required to perfect the security interest of the Administrative Agent in the Collateral (if any) free of any other Lien except Liens permitted under the Loan Documents.
(b) Promptly upon request by the Collateral Agent (i) correct any material defect or error that may be discovered in the execution, acknowledgment, filing or recordation of any Collateral Document or other document or instrument relating to any Collateral, and (ii) do, execute, acknowledge, deliver, record, re-record, file, re-file, register and re-register any and all such further acts, deeds, certificates, assurances and other instruments as the Collateral Agent may reasonably request from time to time in order to carry out more effectively the purposes of the Collateral Documents. If the Collateral Agent reasonably determines that the Required Lenders are required by applicable Law to have appraisals prepared in respect of the Real Property of any Loan Party constituting Collateral, the Borrower shall cooperate with the Collateral Agent in obtaining appraisals that satisfy the applicable requirements of the Real Estate Appraisal Reform Amendments of FIRREA and are otherwise in form and substance reasonably satisfactory to the Collateral Agent.
Section 6.14. Designation of Subsidiaries .
(a) After the Closing Date, the Borrower may from time to time designate any of its Subsidiaries (including any existing Subsidiary and any newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns any Equity Interests or Indebtedness of, or owns or holds any Lien on, any property of, the Borrower or any Restricted Subsidiary of the Borrower (other than solely any Subsidiary of the Subsidiary to be so designated); provided , that no Default or Event of Default shall have occurred and be continuing and the Borrower and its Restricted Subsidiaries shall be in Pro Forma Compliance with Section 7.09 for the most recently ended Test Period for which financial statements have been delivered pursuant to Section 6.01 and provided , further that (a) such designation complies with Section 7.06 ; and (b) each of the Subsidiary to be so designated and its Subsidiaries has not at the time of designation, and does not thereafter, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable with respect to any Indebtedness pursuant to which the lender has recourse to any of the assets of any Loan Party or any Restricted Subsidiary.
(b) The Borrower may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided , that, immediately before and after giving effect to such
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designation, no Default or Event of Default shall have occurred and be continuing and the Borrower and its Restricted Subsidiaries shall be in Pro Forma Compliance with Section 7.09 for the most recently ended Test Period for which financial statements have been delivered pursuant to Section 6.01 ; provided , further , that any Indebtedness of the applicable Subsidiary and any Liens encumbering its property existing as of the time of such designation shall be deemed incurred or established, as applicable at such time.
(c) Any such designation by the Borrower shall be notified by the Borrower to the Administrative Agent by promptly delivering to the Administrative Agent a certificate of a Responsible Officer of the Borrower certifying that such designation complied with the foregoing provision. The Borrower shall not be permitted to designate any Subsidiary as an Unrestricted Subsidiary if such Subsidiary is not designated as an Unrestricted Subsidiary (or equivalent term) in the documentation relating to any other Indebtedness of the Loan Parties in excess of the Threshold Amount (to the extent permissible under such Indebtedness).
Section 6.15. [Reserved]
Section 6.16. Use of Proceeds .
Use the proceeds of the Credit Extensions (including any issued Letters of Credit) not in contravention of any Law (including the Sanctions, OFAC, and the FCPA) or of any Loan Document.
Section 6.17. Maintenance of Ratings .
Use commercially reasonable efforts to (a) cause each Facility to be continuously rated (but not any specific rating) by S&P and Moodys and (b) maintain a public corporate rating (but not any specific rating) from S&P and a public corporate family rating (but not any specific rating) from Moodys, in each case for the Borrower.
ARTICLE VII
NEGATIVE COVENANTS
So long as any Lender shall have any Commitment hereunder, any Loan or other Obligation hereunder which is accrued and payable shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding (and not Cash Collateralized):
Section 7.01. Liens .
The Borrower will not, and will not permit any Restricted Subsidiary to, directly or indirectly, create, incur, assume or suffer to exist any Lien that secures any obligation or any related guarantee, on any asset or property of the Borrower or any of its Restricted Subsidiaries, or any income or profits therefrom, other than the following ( Permitted Liens ):
(1) pledges, deposits or security by such Person under workmens compensation laws, unemployment insurance, employers health tax, and other social security laws or similar legislation, or other insurance related obligations (including, but not limited to, in respect of deductibles, self-insured retention amounts and premiums and
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adjustments thereto) or indemnification obligations of (including obligations in respect of letters of credit or bank guarantees for the benefit of) insurance carriers providing property, casualty or liability insurance, or good faith deposits in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which such Person is a party, or deposits to secure public or statutory obligations of such Person or deposits of cash or U.S. government bonds to secure surety, stay, customs or appeal bonds to which such Person is a party, or deposits as security for contested taxes or import duties or for the payment of rent, performance and return of money bonds and other similar obligations (including letters of credit issued in lieu of any such bonds or to support the issuance thereof and including those to secure health, safety and environmental obligations), in each case incurred in the ordinary course of business;
(2) Liens imposed by law or regulation, such as carriers, warehousemens and mechanics Liens, in each case for sums not yet overdue for a period of more than thirty (30) days or being contested in good faith by appropriate proceedings or other Liens arising out of judgments or awards against such Person with respect to which such Person shall then be proceeding with an appeal or other proceedings for review if adequate reserves with respect thereto are maintained on the books of such Person in accordance with GAAP;
(3) Liens for Taxes, assessments or other governmental charges not yet overdue for a period of more than thirty (30) days or which are being contested in good faith by appropriate proceedings, if adequate reserves with respect thereto are maintained on the books of such Person in accordance with GAAP;
(4) Liens in favor of issuers of performance, surety bonds or bid, indemnity, warranty, release, appeal or similar bonds or with respect to other regulatory requirements or letters of credit issued pursuant to the request of and for the account of such Person in the ordinary course of its business;
(5) survey exceptions, encumbrances, easements or reservations of, or rights of others for, licenses, rights-of-way, sewers, electric lines, telegraph and telephone lines, utilities and other similar purposes, or zoning or other restrictions as to the use of real properties or Liens incidental to the conduct of the business of such Person or to the ownership of its properties which were not incurred in connection with Indebtedness or other covenants, conditions, restrictions and minor defects or irregularities in title ( Other Encumbrances ), in each case which Liens and Other Encumbrances do not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of such Person;
(6) Liens securing Indebtedness permitted to be incurred pursuant to clause (4) or (16) of Section 7.02(b) ; provided , that (x) such Liens securing Indebtedness permitted to be incurred pursuant to Section 7.02(b)(4) extend only to the assets and/or Capital Stock, the acquisition, lease, construction, repair, replacement or improvement of which is financed thereby and any replacements, additions or accessions thereto and any income or profits therefrom and (y) Liens securing Indebtedness permitted to be incurred pursuant to Section 7.02(b)(16) extend only to the assets of Non-Guarantor Subsidiaries;
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(7) Liens existing on the Closing Date and listed on Schedule 7.01(b) or incurred in connection with the Transactions;
(8) Liens on property or shares of stock of a Person at the time such Person becomes a Subsidiary; provided , however , such Liens are not created or incurred in connection with, or in contemplation of, such other Person becoming such a Subsidiary; provided , further , however , that such Liens may not extend to any other property owned by the Borrower or any of its Restricted Subsidiaries;
(9) Liens on property at the time the Borrower or a Restricted Subsidiary acquired the property, including any acquisition by means of a merger or consolidation with or into the Borrower or a Restricted Subsidiary; provided , however , that such Liens are not created or incurred in connection with, or in contemplation of, such acquisition, merger or consolidation; provided , further , however , that the Liens may not extend to any other property owned by the Borrower or any of its Restricted Subsidiaries;
(10) Liens securing Indebtedness or other obligations of a Restricted Subsidiary owing to the Borrower or another Restricted Subsidiary permitted to be incurred under Section 7.02 ;
(11) Liens securing Hedging Obligations so long as, in the case of Hedging Obligations related to interest, the related Indebtedness is, and is permitted to be under this Agreement, secured by a Lien on the same property securing such Hedging Obligations;
(12) Liens on specific items of inventory or other goods and proceeds of any Person securing such Persons obligations in respect of bankers acceptances or trade letters of credit issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods;
(13) (a) leases, subleases, licenses or sublicenses (including of real property and intellectual property) granted to others in the ordinary course of business and (b) with respect to any leasehold interest held by the Borrower or any of its Subsidiaries, the terms of the leases granting such leasehold interest and the rights of lessors thereunder, in the case of each of (a) and (b) which do not materially interfere with the ordinary conduct of the business of the Borrower or any of its Restricted Subsidiaries and do not secure any Indebtedness;
(14) Liens arising from Uniform Commercial Code (or equivalent statute) financing statement filings regarding operating leases entered into by the Borrower and its Restricted Subsidiaries in the ordinary course of business;
(15) Liens in favor of the Loan Parties;
(16) Liens on equipment of the Borrower or any of its Restricted Subsidiaries granted in the ordinary course of business;
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(17) Liens on accounts receivable and related assets incurred in connection with a Receivables Facility permitted to be incurred pursuant to Section 7.02(b)(19) ;
(18) Liens to secure any refinancing, refunding, extension, renewal or replacement (or successive refinancings, refundings, extensions, renewals or replacements) as a whole, or in part, of any Indebtedness secured by any Lien referred to in the foregoing clauses (6) , (7) , (8) , (9) and this clause (18) ; provided , however , that (a) such new Lien shall be limited to all or part of the same property that secured the original Lien ( plus improvements on such property), and (b) the Indebtedness secured by such Lien at such time is not increased to any amount greater than the sum of (i) the outstanding principal amount or, if greater, committed amount of the Indebtedness described under clauses (6) , (7) , (8) , (9) and this clause (18) at the time the original Lien became a Permitted Lien under this Agreement, and (ii) an amount necessary to pay any fees and expenses, including premiums, and accrued and unpaid interest related to such refinancing, refunding, extension, renewal or replacement;
(19) Liens on insurance policies and proceeds thereof, or other deposits, to secure insurance premium financings in each case, made in the ordinary course of business;
(20) other Liens securing obligations which at any one time outstanding do not exceed the greater of (x) $35 million in aggregate principal amount and (y) 1.5% of Total Assets in aggregate principal amount determined at the time of incurrence;
(21) Liens securing judgments for the payment of money not constituting an Event of Default under Section 8.01(g) so long as such Liens are adequately bonded and any appropriate legal proceedings that may have been duly initiated for the review of such judgment have not been finally terminated or the period within which such proceedings may be initiated has not expired;
(22) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods;
(23) Liens (i) of a collection bank arising under Section 4-210 of the Uniform Commercial Code or any comparable or successor provision on items in the course of collection, (ii) attaching to commodity trading accounts or other commodity brokerage accounts incurred in the ordinary course of business, and (iii) in favor of banking or other financial institutions arising as a matter of law or pursuant to customary depositary terms encumbering deposits (including the right of set-off) and which are within the general parameters customary in the banking industry;
(24) Liens deemed to exist in connection with Investments in repurchase agreements permitted pursuant to Section 7.02 ; provided , that such Liens do not extend to any assets other than those that are the subject of such repurchase agreement;
(25) Liens encumbering reasonable customary initial deposits and margin deposits and similar Liens attaching to commodity trading accounts or other brokerage accounts incurred in the ordinary course of business and not for speculative purposes;
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(26) bankers liens, Liens that are statutory, common law or contractual rights of set-off and other similar Liens, in each case (i) relating to the establishment of depository relations with banks not given in connection with the issuance of Indebtedness, (ii) relating to pooled deposit or sweep accounts of the Borrower or any of its Restricted Subsidiaries to permit satisfaction of overdraft or similar obligations incurred in the ordinary course of business of the Borrower or any of its Restricted Subsidiaries or (iii) relating to purchase orders and other agreements entered into with customers of the Borrower or any of its Restricted Subsidiaries in the ordinary course of business;
(27) Liens pursuant to any Loan Document;
(28) Liens on Collateral securing Indebtedness incurred pursuant to Section 7.02(b)(20) (without duplication of any amounts that are secured pursuant to the Loan Documents), and 7.02(b)(21) , in each case so long as such Indebtedness is subject to an Intercreditor Agreement (or Second Lien Intercreditor Agreement in the case of Permitted Junior Secured Refinancing Debt and such other Indebtedness pursuant to such sections as shall be intended to be secured on a second-lien basis);
(29) Liens on the Equity Interests of Unrestricted Subsidiaries that secure Indebtedness of such Unrestricted Subsidiaries;
(30) any encumbrance or restriction (including put and call arrangements) with respect to Capital Stock of any joint venture or similar arrangement pursuant to any joint venture or similar agreement;
(31) Liens on property or assets used to defease or to irrevocably satisfy and discharge Indebtedness; provided , that such defeasance or satisfaction and discharge is not prohibited by this Agreement;
(32) Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale of goods entered into in the ordinary course of business;
(33) Liens incurred to secure cash management services or to implement cash pooling arrangements in the ordinary course of business;
(34) Liens solely on any cash earnest money deposits made by the Borrower or any of its Restricted Subsidiaries in connection with any letter of intent or purchase agreement in respect of any Investment permitted under this Agreement;
(35) additional Liens securing Indebtedness of the Borrower and its Restricted Subsidiaries permitted pursuant to Section 7.02 , so long as at the time of the incurrence of such Indebtedness on a Pro Forma Basis after giving effect to the incurrence of such Indebtedness, the Borrowers Consolidated Net Secured Leverage Ratio is less than or equal to 2.50 to 1.00 for the most recently ended Test Period for which financial statements have been delivered pursuant to Section 6.01 ; provided , that (x) any Liens on the Collateral incurred pursuant to this clause (35) shall be subject to an Intercreditor Agreement or a Second Lien Intercreditor Agreement, as applicable and (y) any
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Indebtedness secured by Liens that are pari passu with the Obligations that is in the form of a loan shall be subject to the provisions of Section 2.14(b)(v) (including the proviso thereto); and
(36) Liens on assets of Non-Guarantor Subsidiaries securing Indebtedness of such Non-Guarantor Subsidiaries permitted pursuant to Section 7.02 .
For purposes of this Section 7.01 , the term Indebtedness shall be deemed to include interest on and the costs in respect of such Indebtedness.
Section 7.02. Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock .
(a) the Borrower will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently, or otherwise (collectively, incur and collectively, an incurrence ) with respect to any Indebtedness (including Acquired Indebtedness) and the Borrower will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or Preferred Stock; provided , however , that the Borrower may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of Preferred Stock, if the Consolidated Total Leverage Ratio for the most recently ended Test Period for which financial statements have been delivered pursuant to Section 6.01 preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or Preferred Stock is issued would not have been greater than 4.25 to 1.00, determined on a Pro Forma Basis (including a pro forma application of the net proceeds therefrom); provided , further , however , that Non-Guarantor Subsidiaries may not incur Indebtedness or issue Disqualified Stock or Preferred Stock pursuant to this Section 7.02(a) if, after giving pro forma effect to such incurrence or issuance, more than the greater of (x) $25 million and (y) 1% of Total Assets of Indebtedness or Disqualified Stock or Preferred Stock of Non-Guarantor Subsidiaries is outstanding pursuant to this paragraph.
(b) The provisions of Section 7.02(a) hereof shall not apply to:
(1) Indebtedness of any Loan Party under the Loan Documents;
(2) the incurrence by a Loan Party of Indebtedness represented by the Senior Notes (including any guarantee thereof);
(3) Indebtedness of the Borrower and its Restricted Subsidiaries in existence on the Closing Date (other than Indebtedness described in clauses (1) and (2) ) and listed on Schedule 7.02(b) ;
(4) Indebtedness (including Capitalized Lease Obligations and Attributable Indebtedness), Disqualified Stock and Preferred Stock incurred or issued by the Borrower or any of its Restricted Subsidiaries, to finance the purchase, lease, construction, repair, or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the
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Capital Stock of any Person owning such assets, and any Indebtedness incurred to refinance any such Indebtedness, in an aggregate principal amount or liquidation preference which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and Preferred Stock then outstanding under this clause (4) , does not exceed the greater of (x) $50 million and (y) 2% of the Total Assets determined at the time of incurrence;
(5) Indebtedness incurred by the Borrower or any of its Restricted Subsidiaries constituting reimbursement obligations with respect to letters of credit, bankers acceptances, bank guarantees, warehouse receipts or similar facilities issued or entered into in the ordinary course of business, including letters of credit in respect of workers compensation claims, performance or surety bonds, health, disability social security, or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement type obligations regarding workers compensation claims, performance or surety bonds, health, disability, social security, or other employee benefits or property, casualty or liability insurance or self-insurance;
(6) Indebtedness arising from agreements of the Borrower or any of its Restricted Subsidiaries providing for indemnification, holdback, adjustment of purchase price or similar obligations, in each case, incurred or assumed in connection with the acquisition or Disposition of any business, assets or a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(7) Indebtedness of the Borrower to a Restricted Subsidiary or of a Restricted Subsidiary to the Borrower or another Restricted Subsidiary; provided , that (i) any such Indebtedness (other than such as may arise from ordinary course intercompany cash management obligations) owing by the Borrower or a Guarantor to a Non-Guarantor Subsidiary is expressly subordinated in right of payment to the Obligations and (ii) any such Indebtedness (other than such as may arise from ordinary course intercompany cash management obligations) owing by a Non-Guarantor Subsidiary to the Borrower or a Guarantor is pledged to the Collateral Agent pursuant to the terms of the Collateral Documents to the extent required thereby; provided , further , that any subsequent issuance or transfer of any Capital Stock or any other event which results in any Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such Indebtedness (except to the Borrower or another Restricted Subsidiary or any pledge of such Indebtedness constituting a Permitted Lien) shall be deemed, in each case, to be an incurrence of such Indebtedness not permitted by this clause (7) ;
(8) shares of Preferred Stock of a Restricted Subsidiary issued to the Borrower or another Restricted Subsidiary; provided , that any subsequent issuance or transfer of any Capital Stock or any other event which results in such Preferred Stock being beneficially owned by a Person other than the Borrower or any Restricted Subsidiary or any other subsequent transfer of any such shares of Preferred Stock (except to the Borrower or another of its Restricted Subsidiaries) shall be deemed in each case to be an issuance of such shares of Preferred Stock not permitted by this clause (8) ;
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(9) Hedging Obligations incurred in the ordinary course of business (excluding Hedging Obligations entered into for speculative purposes);
(10) obligations in respect of performance, bid, appeal, custom and surety bonds and completion guarantees and similar obligations provided by the Borrower or any of its Restricted Subsidiaries or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case in the ordinary course of business or consistent with past practice;
(11) Indebtedness, Disqualified Stock or Preferred Stock of the Borrower or any other Guarantor not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the outstanding principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and Preferred Stock then outstanding and incurred pursuant to this clause (11) , does not at any one time outstanding exceed the greater of (x) $50 million and (y) 2% of Total Assets determined at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or Preferred Stock incurred pursuant to this clause (11) shall cease to be deemed incurred or outstanding for purposes of this clause (11) but shall be deemed incurred under Section 7.02(a) from and after the first date on which the Borrower or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or Preferred Stock under Section 7.02(a) without reliance on this clause (11) );
(12) the incurrence by the Borrower or any Restricted Subsidiary of Indebtedness, Disqualified Stock or Preferred Stock which serves to refund, refinance, extend, renew or replace any Indebtedness, Disqualified Stock or Preferred Stock incurred or issued under clause (a) of this Section 7.02 and clauses (2) , (3) , this clause (12) , and clauses (13) of this Section 7.02(b) , including, in each case, additional Indebtedness, Disqualified Stock or Preferred Stock incurred to pay premiums (including tender premiums), accrued interest, defeasance costs and reasonable fees and expenses in connection therewith (collectively, the Refinancing Indebtedness ); provided , however , that such Refinancing Indebtedness:
(A) has a Weighted Average Life to Maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining Weighted Average Life to Maturity of the Indebtedness, Disqualified Stock or Preferred Stock being refunded or refinanced,
(B) to the extent such Refinancing Indebtedness refinances (i) Indebtedness subordinated or pari passu to the Obligations, such Refinancing Indebtedness is subordinated or pari passu, as the case may be, to the Obligations at least to the same extent as the Indebtedness being refinanced or refunded or (ii) Disqualified Stock or Preferred Stock, such Refinancing Indebtedness must be Disqualified Stock or Preferred Stock, respectively, and
(C) shall not include Indebtedness, Disqualified Stock or Preferred Stock of a Non-Guarantor Subsidiary that refinances Indebtedness, Disqualified Stock or Preferred Stock of the Borrower or a Guarantor.
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(13) Indebtedness, Disqualified Stock or Preferred Stock of (x) the Borrower or a Restricted Subsidiary incurred to finance an acquisition or (y) Persons that are acquired by the Borrower or any Restricted Subsidiary or merged into or consolidated with the Borrower or a Restricted in accordance with the terms of this Agreement; provided that, after giving effect to such acquisition, merger or consolidation, either:
(A) the Borrower would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Consolidated Total Leverage Ratio test set forth in Section 7.02(a) , or
(B) the Consolidated Total Leverage Ratio is less than or equal to the Consolidated Total Leverage Ratio immediately prior to such acquisition, merger or consolidation;
(14) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business or other cash management services in the ordinary course of business, provided , that such Indebtedness is extinguished within ten (10) Business Days of notice of its incurrence;
(15) (A) any guarantee by the Borrower or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted Subsidiary so long as the incurrence of such Indebtedness incurred by such Restricted Subsidiary is permitted under the terms of this Agreement and, in the case of the guarantee by a Loan Party of Indebtedness of Non-Guarantor Subsidiary, only to the extent that the related Investment is permitted, or (B) any guarantee by a Restricted Subsidiary of Indebtedness of the Borrower;
(16) Indebtedness of Non-Guarantor Subsidiaries in an aggregate principal amount, which at any one time outstanding does not exceed the greater of (x) $25 million and (y) 1% of Total Assets determined at the time of incurrence (it being understood that any Indebtedness, Disqualified Stock or Preferred Stock incurred pursuant to this clause (16) shall cease to be deemed incurred or outstanding for purposes of this clause (16) but shall be deemed incurred under Section 7.02(a) from and after the first date on which the Borrower or such Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock or Preferred Stock under Section 7.02(a) without reliance on this clause (16) );
(17) Indebtedness of the Borrower or any of its Restricted Subsidiaries consisting of (i) the financing of insurance premiums or (ii) take-or-pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business;
(18) Indebtedness consisting of Indebtedness issued by the Borrower or any of its Restricted Subsidiaries to current or former employees, officers, managers,
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directors and consultants thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of the Borrower permitted under Section 7.05(e) ;
(19) Indebtedness incurred pursuant to any Receivable Facilities in an outstanding principal amount not to exceed $75 million;
(20) Indebtedness incurred pursuant to a Permitted Debt Offering so long as, at the time of the incurrence thereof, after giving effect thereto, the aggregate principal amount of such Indebtedness does not exceed the Maximum Incremental Facilities Amount;
(21) Credit Agreement Refinancing Indebtedness;
(22) Indebtedness of the Borrower or any of its Restricted Subsidiaries undertaken in connection with cash management, overdraft protection and related activities with respect to any Subsidiary or joint venture in the ordinary course of business;
(23) Indebtedness of the Borrower or any of its Restricted Subsidiaries supported by a letter of credit or bank guarantee issued pursuant to this Agreement, in a principal amount not in excess of the stated amount of such letter of credit or bank guarantee; and
(24) guarantees incurred in the ordinary course of business in respect of obligations of (or to) suppliers, customers, lessors and licensees that, in each case, are non-Affiliates.
(c) For purposes of determining compliance with this Section 7.02 , in the event that an item of Indebtedness, Disqualified Stock or Preferred Stock (or any portion thereof) meets the criteria of more than one of the categories of permitted Indebtedness, Disqualified Stock or Preferred Stock described in any of the clauses of Section 7.02(b) above or is permitted to be incurred pursuant to Section 7.02(a) hereof, the Borrower, in its sole discretion, may divide and/or classify on the date of incurrence and may later redivide and/or reclassify such item of Indebtedness, Disqualified Stock or Preferred Stock (or any portion thereof) and will only be required to include the amount and type of such Indebtedness, Disqualified Stock or Preferred Stock in one of the above clauses or such paragraph.
Accrual of interest or dividends, the accretion of accreted value and the payment of interest in the form of additional indebtedness with the same terms, the payment of dividends in the form of additional shares of Disqualified Stock or Preferred Stock, as applicable, of the same class, and accretion of original issue discount or liquidation preference will not be deemed to be an incurrence of Indebtedness, Disqualified Stock or Preferred Stock for purposes of this Section 7.02 . Guarantees of, or obligations in respect of letters of credit relating to, Indebtedness which is otherwise included in the determination of a particular amount of Indebtedness shall not be included in the determination of such amount of Indebtedness; provided that the Incurrence of the Indebtedness represented by such guarantee or letter of credit, as the case may be, was in compliance with this Section 7.02 .
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For purposes of determining compliance with any U.S. dollar-denominated restriction on the incurrence of Indebtedness, the U.S. dollar-equivalent principal amount of Indebtedness denominated in a foreign currency shall be calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was incurred, in the case of term debt, or first committed or first incurred (whichever is lower), in the case of revolving credit debt; provided , that if such Indebtedness is incurred to refinance other Indebtedness denominated in a foreign currency, and such refinancing would cause the applicable U.S. dollar-denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such refinancing, such U.S. dollar-denominated restriction shall be deemed not to have been exceeded so long as the principal amount of such refinancing Indebtedness does not exceed the principal amount of such Indebtedness being refinanced plus the amount of any reasonable premium (including reasonable tender premiums), defeasance costs and any reasonable fees and expenses incurred in connection with the issuance of such Indebtedness. For the avoidance of doubt and notwithstanding any other provision of this covenant, the maximum amount of Indebtedness that may be incurred pursuant to this Section 7.02 shall not be deemed to be exceeded solely as a result of fluctuations in the exchange rate of currencies.
The principal amount of any Indebtedness incurred to refinance other Indebtedness, if incurred in a different currency from the Indebtedness being refinanced, shall be calculated based on the currency exchange rate applicable to the currencies in which such respective Indebtedness is denominated that is in effect on the date of such refinancing. The principal amount of any non-interest bearing Indebtedness or other discount security consisting of Indebtedness at any date shall be the principal amount thereof that would be shown on a balance sheet of the Borrower dated such date prepared in accordance with GAAP.
Notwithstanding anything to the contrary contained in this Section 7.02 , the Borrower will not, and will not permit any other Loan Party to, directly or indirectly, incur any Indebtedness (including Acquired Indebtedness) that is contractually subordinated or junior in right of payment to any Indebtedness of such Loan Party, as the case may be, unless such Indebtedness is contractually subordinated in right of payment to the Obligations to the extent and in the same manner as such Indebtedness is subordinated to other Indebtedness of the applicable Loan Party.
For the purposes of this Agreement, (a) Indebtedness that is unsecured is not deemed to be subordinated or junior to secured Indebtedness merely because it is unsecured, and (b) Indebtedness is not deemed to be subordinated or junior to any other Indebtedness merely because it has a junior priority with respect to the same collateral.
Section 7.03. Fundamental Changes .
Neither the Borrower nor any of its Restricted Subsidiaries shall merge, dissolve, liquidate, consolidate with or into another Person, or Dispose of (whether in one transaction or in a series of related transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to or in favor of any Person, except that:
(a) any Restricted Subsidiary may merge or consolidate with (i) the Borrower (including a merger, the purpose of which is to reorganize the Borrower into a new
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jurisdiction); provided , that the Borrower shall be the continuing or surviving Person; or (ii) one or more other Restricted Subsidiaries; provided , that when any Person that is a Loan Party is merging with a Restricted Subsidiary under this clause (a)(ii) , a Loan Party shall be the continuing or surviving Person;
(b) (i) any Subsidiary that is not a Loan Party may merge or consolidate with or into any other Subsidiary that is not a Loan Party; and (ii) any Subsidiary may liquidate or dissolve into its parent if the Borrower determines in good faith that such action is in the best interest of the Borrower and its Subsidiaries as a whole and is not materially disadvantageous to the Lenders;
(c) the Borrower or any Restricted Subsidiary may Dispose of all or substantially all of its assets (upon voluntary liquidation or otherwise) to the Borrower or any Restricted Subsidiary; provided , that if the transferor in such a transaction is the Borrower or a Guarantor, then the transferee must be the Borrower a Guarantor and; provided , further , that at the Borrower shall remain after such transaction; and
(d) so long as no Default exists or would result therefrom, the Borrower may merge or consolidate with any other Person that is not a Restricted Subsidiary; provided , that (i) the Borrower shall be the continuing or surviving corporation or (ii) if the Person formed by or surviving any such merger or consolidation (any such Person, the Successor Company ) is not the Borrower, (A) the Successor Company shall be an entity organized or existing under the laws of the United States, any state or commonwealth thereof, the District of Columbia or any territory thereof, (B) the Successor Company shall expressly assume all the obligations of the Borrower under this Agreement and the other Loan Documents to which the Borrower is a party pursuant to a supplement hereto or thereto in form reasonably satisfactory to the Administrative Agent, (C) in the case of a Successor Company for the Borrower, each Guarantor, unless it is the other party to such merger or consolidation, shall have confirmed that its Guarantee of the Guaranteed Obligations and its pledges and other obligations under the Collateral Documents to which it is a party shall apply to the Successor Companys obligations under the Loan Documents, including, to the extent reasonably requested by the Administrative Agent, by executing amendments or supplements to the Security Agreement, any Mortgage and any other Collateral Documents to which such Guarantor is a party, and (D) the Borrower shall have delivered to the Administrative Agent (i) an officers certificate stating that such merger or consolidation and such supplement to this Agreement or any Collateral Document comply with this Agreement and (ii) such other certificates and other documentation as reasonably requested by the Administrative Agent; provided , further , that if the foregoing are satisfied, the Successor Company will succeed to, and be substituted for, the Borrower under this Agreement;
(e) so long as no Default exists or would result therefrom, a Guarantor may merge or consolidate with any other Person that is not a Restricted Subsidiary; provided , that (i) such Guarantor shall be the continuing or surviving corporation or (ii) if the Successor Company is not such Guarantor, (A) the Successor Company shall be an entity organized or existing under the laws of the United States, any state or commonwealth thereof, the District of Columbia or any territory thereof, (B) the Successor Company
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shall expressly assume all the obligations of such Guarantor under this Agreement and the other Loan Documents to which such Guarantor is a party pursuant to a supplement hereto or thereto in form reasonably satisfactory to the Administrative Agent, and (C) such Guarantor shall have delivered to the Administrative Agent an officers certificate stating that such merger or consolidation and such supplement to this Agreement or any Collateral Document comply with this Agreement; provided , further , that if the foregoing are satisfied, the Successor Company will succeed to, and be substituted for, such Guarantor under this Agreement;
(f) so long as no Default exists or would result therefrom, the Borrower or any Restricted Subsidiary may merge or consolidate with any other Person in order to effect an Investment permitted pursuant to Section 7.06 ; and
(g) so long as no Default exists or would result therefrom, the Borrower or any Restricted Subsidiary may consummate a merger, dissolution, liquidation, consolidation or Disposition, the purpose of which is to effect a Disposition permitted pursuant to Section 7.04 .
Section 7.04. Dispositions .
The Borrower shall not, and shall not permit any of its Restricted Subsidiaries to, consummate any Disposition, except:
(a) any disposition of cash, Cash Equivalents or Investment Grade Securities or damaged, obsolete, unsuitable or worn out equipment or other assets, or assets no longer used or useful in the business of the Borrower and the Restricted Subsidiaries in the reasonable opinion of the Borrower, or any sale or disposition of property or assets in connection with scheduled turnarounds or maintenance, in each case in the ordinary course of business, or any disposition of inventory, services or goods (or other assets) held for sale in the ordinary course of business;
(b) the Disposition of all or substantially all of the assets of the Borrower or a Restricted Subsidiary in a manner permitted pursuant to Section 7.03 (other than clause (g) thereof);
(c) the making of any Restricted Payment that is permitted to be made, and is made, under Section 7.05 or any Permitted Investment;
(d) any Disposition of assets or issuance or sale of Equity Interests of any Restricted Subsidiary in any transaction or series of transactions with an aggregate fair market value (as determined in good faith by the Borrower) not to exceed $10 million;
(e) any Disposition of property or assets or issuance of securities by a Restricted Subsidiary to the Borrower or by the Borrower or a Restricted Subsidiary to another Restricted Subsidiary; provided , that any transfer from a Loan Party shall be to another Loan Party;
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(f) to the extent allowable under Section 1031 of the Code, or any comparable or successor provision, any exchange of like property (excluding any boot thereon) for use in a Similar Business;
(g) the lease, assignment or sub-lease of any real or personal property in the ordinary course of business;
(h) any Disposition of Equity Interests in, or Indebtedness or other securities of, an Unrestricted Subsidiary;
(i) foreclosures, condemnations or similar actions on assets (including transfers of property subject to casualty proceedings) or Dispositions of asset required by Law, governmental regulation or any Governmental Authority;
(j) sales of accounts receivable, or participations therein, and related assets in connection with any Receivables Facility or similar factoring arrangements;
(k) any financing transaction (excluding by way of a Sale and Lease-Back Transaction) with respect to property constructed, acquired, replaced, repaired or improved by the Borrower, or any of its Restricted Subsidiaries after the Closing Date;
(l) the licensing or sub-licensing of intellectual property or other general intangible assets in the ordinary course of business;
(m) sales, transfers and other Dispositions of Investments in joint ventures to the extent required by, or made pursuant to, customary buy/sell arrangements or rights of first refusal between the joint venture parties set forth in joint venture arrangements and similar binding arrangements;
(n) the lapse or abandonment of intellectual property rights in the ordinary course of business which, in the reasonable good faith determination of the Borrower, is not material to the conduct of the business of the Borrower and its Restricted Subsidiaries taken as a whole;
(o) an issuance of Equity Interests pursuant to benefit plans, employment agreements, equity plans, stock subscription or shareholder agreements, stock ownership plans and other similar plans, policies, contracts or arrangements established in the ordinary course of business or approved by the Borrower in good faith;
(p) any surrender or waiver of contract rights or the settlement, release, recovery on or surrender of contract, tort or other claims of any kind;
(q) Dispositions of receivables in connection with the compromise, settlement or collection thereof in the ordinary course of business or in bankruptcy or similar proceedings and exclusive of factoring or similar arrangements;
(r) Dispositions of leasehold improvements or leased assets in connection with the termination of any operating lease;
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(s) the unwinding or termination of any Hedging Obligations;
(t) the granting of Liens not prohibited by this Agreement;
(u) Dispositions of Investments in and the property of joint ventures (to the extent any such joint venture constitutes a Restricted Subsidiary) so long as the aggregate fair market value (determined in good faith by the Borrower with respect to each such Disposition, as of the time of such Disposition) of all such Dispositions does not exceed $10 million; and
(v) Dispositions (including by way of any Sale and Lease-Back Transaction) with respect to which (1) the Borrower or any Restricted Subsidiary, as the case may be, receives consideration at the time of such Disposition at least equal to the fair market value (as determined in good faith by the Borrower) of the assets sold or otherwise Disposed of; and (2) except in the case of a Permitted Asset Swap, at least 75% of the consideration therefor received by the Borrower or such Restricted Subsidiary, as the case may be, is in the form of cash or Cash Equivalents; provided , that the amount of:
(i) any liabilities (as shown on the Borrowers most recent consolidated balance sheet or in the footnotes thereto or if incurred or accrued subsequent to the date of such balance sheet, such liabilities that would have been reflected on the Borrowers consolidated balance sheet or in the footnotes thereto if such incurrence or accrual had taken place on or prior to the date of such balance sheet, as determined in good faith by the Borrower) of the Borrower or such Restricted Subsidiary, other than liabilities that are by their terms subordinated to the Obligations, that are assumed by the transferee of any such assets (or are otherwise extinguished by the transferee in connection with the transactions relating to such Disposition) and for which the Borrower and all such Restricted Subsidiaries have been released,
(ii) any notes or other obligations or securities received by the Borrower or any such Restricted Subsidiary from such transferee that are converted by the Borrower or any such Restricted Subsidiary into cash or Cash Equivalents, or by their terms are required to be satisfied for cash or Cash Equivalents (to the extent of the cash or Cash Equivalents received), in each case, within one hundred and eighty (180) days following the receipt thereof, and
(iii) any Designated Non-cash Consideration received by the Borrower or such Restricted Subsidiary in such Disposition having an aggregate fair market value (as determined in good faith by the Borrower), taken together with all other Designated Non-cash Consideration received pursuant to this clause (iii) that is at that time outstanding (but, to the extent that any such Designated Non-Cash Consideration is sold or otherwise liquidated for cash, minus the lesser of (a) the amount of the cash received (less the cost of disposition, if any) and (b) the initial amount of such Designated Non-Cash Consideration) not to exceed the greater of (x) $25 million and (y) 1% of Total Assets, with the fair market value (as determined in good faith by the Borrower) of each item of Designated Non-cash Consideration being measured at the time received and without giving effect to subsequent changes in value
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shall be deemed to be cash for purposes of this clause (v) and for no other purpose; and
(w) any other Disposition pursuant to the Transactions.
Section 7.05. Restricted Payments .
The Borrower will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, (i) declare or pay any dividend or make any payment or distribution on account of the Borrowers or any of its Restricted Subsidiaries Equity Interests, including any dividend or distribution payable in connection with any merger or consolidation, other than (x) dividends, payments or distributions payable in Equity Interests (other than Disqualified Stock) of the Borrower, or (y) dividends, payments or distributions by a Restricted Subsidiary so long as, in the case of any dividend, payment or distribution payable on or in respect of any class or series of securities issued by a Restricted Subsidiary other than a Wholly-Owned Subsidiary, the Borrower or a Restricted Subsidiary receives at least its pro rata share of such dividend, payment or distribution in accordance with its Equity Interests in such class or series of securities; (ii) purchase, redeem, defease or otherwise acquire or retire for value any Equity Interests of the Borrower, including in connection with any merger or consolidation; (iii) make any principal payment on, or redeem, purchase, repurchase, defease or otherwise acquire or retire for value, in each case, prior to any scheduled repayment, sinking fund payment or maturity, any Subordinated Indebtedness other than the payment, redemption, repurchase, defeasance, acquisition or retirement of: (x) Indebtedness permitted under Section 7.02(b)(7) ; or (y) the purchase, repurchase or other acquisition of Subordinated Indebtedness purchased in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of purchase, repurchase or acquisition (all such payments and other actions set forth in clauses (i) through (iii) above being collectively referred to as Restricted Payments ), except as follows:
(a) so long as (i) no Event of Default shall have occurred and be continuing or would occur as a consequence thereof (ii) the Borrower shall be in Pro Forma Compliance with Section 7.09 and (iii) Consolidated Total Leverage Ratio is not more than 4.25 to 1.00 on a Pro Forma Basis, in the case of each of (ii) and (iii) for the most recently ended Test Period for which financial statements have been delivered pursuant to Section 6.01 , Restricted Payments, together with the aggregate amount of all other Restricted Payments pursuant to this Section 7.05(a) and Investments pursuant to clause (v) of the definition of Permitted Investments made by Borrower and its Restricted Subsidiaries after the Closing Date, in an aggregate amount not to exceed the Available Amount;
(b) the payment of any dividend or distribution or the consummation of any irrevocable redemption within sixty (60) days after the date of declaration thereof or the giving of such irrevocable notice, as applicable, if at the date of declaration or the giving of such notice such payment would have complied with the provisions of this Agreement as if it were and is deemed at such time to be a Restricted Payment at the time of such declaration or notice;
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(c) the purchase, redemption, defeasance, repurchase, retirement or other acquisition of any Equity Interests of the Borrower, or of Subordinated Indebtedness of any Loan Party, in exchange for, or out of the proceeds of the substantially concurrent issuance or sale (other than to a Restricted Subsidiary or to an employee stock ownership plan or any trust established by the Borrower or any Restricted Subsidiary) of, Equity Interests of the Borrower (other than Disqualified Stock) (collectively, the Refunding Capital Stock );
(d) the purchase, redemption, defeasance, repurchase or other acquisition or retirement of (x) Subordinated Indebtedness of the Borrower or a Guarantor made in exchange for, or out of the proceeds of the substantially concurrent incurrence of, new Indebtedness of a Borrower or a Guarantor, as the case may be, or (y) Disqualified Stock of any Loan Party in exchange for, or out of the proceeds of the substantially concurrent issuance of Disqualified Stock of any Loan Party, in each case which is incurred or issued in compliance with Section 7.02 so long as:
(i) the principal amount of (or accreted value, if applicable) such new Indebtedness or the liquidation preference of such new Disqualified Stock does not exceed the principal amount of (or accreted value, if applicable), plus any accrued and unpaid interest on, the Subordinated Indebtedness or the liquidation preference of, plus any accrued and unpaid dividends on, the Disqualified Stock, as applicable, being so purchased, redeemed, defeased, repurchased, acquired or retired, plus the amount of any premium required to be paid under the terms of the instrument governing the Subordinated Indebtedness or Disqualified Stock being so purchased, redeemed, defeased, repurchased, acquired or retired and any fees and expenses incurred in connection with the issuance of such new Indebtedness or Disqualified Stock;
(ii) such new Indebtedness is subordinated to the Loans or the applicable Guarantee at least to the same extent as such Subordinated Indebtedness so purchased, exchanged, redeemed, defeased, repurchased, acquired or retired for value;
(iii) such new Indebtedness or Disqualified Stock has a final scheduled maturity date equal to or later than (x) the final scheduled maturity date of the Subordinated Indebtedness or Disqualified Stock being so purchased, redeemed, defeased, repurchased, acquired or retired or (y) the date six months after the Maturity Date of the Term Loans; and
(iv) such new Indebtedness or Disqualified Stock has a Weighted Average Life to Maturity equal to or greater than the remaining Weighted Average Life to Maturity of the Subordinated Indebtedness or Disqualified Stock being so purchased, redeemed, defeased, repurchased, acquired or retired;
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(e) a Restricted Payment to pay for the purchase, repurchase, retirement or other acquisition or retirement for value of Equity Interests (other than Disqualified Stock) of the Borrower held by any future, present or former employee, officer, manager, director or consultant of the Borrower or any of its Subsidiaries pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or agreement, or any stock subscription or shareholder agreement; provided , however , that the aggregate Restricted Payments made under this Section 7.05(e) do not exceed in any calendar year $15 million (with unused amounts in any calendar year being carried over for one additional calendar year); provided , further , that such amount in any calendar year may be increased by an amount not to exceed:
(i) the cash proceeds from the sale of Equity Interests (other than Disqualified Stock) of the Borrower to employees, officers, managers, directors or consultants of the Borrower or any of its Subsidiaries that occurs after the Closing Date, to the extent the cash proceeds from the sale of such Equity Interests have not otherwise been applied to the payment of Restricted Payments by virtue of the Available Amount; plus
(ii) the cash proceeds of key man life insurance policies received by the Borrower or any Restricted Subsidiary after the Closing Date; less
(iii) the amount of any Restricted Payments previously made with the cash proceeds described in clauses (i) and (ii) of this Section 7.05(e) ;
and provided , further that cancellation of Indebtedness owing to the Borrower or any Restricted Subsidiary from employees, officers, managers, directors or consultants of the Borrower or any of the Borrowers Restricted Subsidiaries in connection with a repurchase of Equity Interests of the Borrower will not be deemed to constitute a Restricted Payment for purposes of this covenant or any other provision of this Agreement;
(f) purchases, redemptions, defeasances, repurchases or other acquisitions of Equity Interests deemed to occur (i) upon exercise of stock options, stock appreciation rights, or warrants or similar rights if such Equity Interests represent a portion of the exercise price of such options, stock appreciation rights or warrants or (ii) for purposes of satisfying any federal, state or local income tax obligation (including any required tax withholding obligation) upon the exercise or vesting of a grant or award that was granted or awarded to an employee;
(g) so long as no Event of Default shall have occurred and be continuing or would occur as a consequence thereof, Restricted Payments in an aggregate amount, taken together with all other Restricted Payments made pursuant to this Section 7.05(g) , not to exceed the greater of (x) $100 million and (y) 4% of Total Assets;
(h) so long as no Event of Default shall have occurred and be continuing or would occur as a consequence thereof and the Consolidated Total Leverage Ratio, on a Pro Forma Basis, for the most recently ended Test Period for which financial statements have been delivered pursuant to Section 6.01 shall not exceed 1.50 to 1.00, the Borrower may make Restricted Payments;
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(i) distributions or payments of Receivables Fees;
(j) the Cash Distribution and any Restricted Payment used to fund and effect the Transactions;
(k) the repurchase, redemption or other acquisition for value of Equity Interests of the Borrower deemed to occur in connection with paying cash in lieu of fractional shares of such Equity Interests in connection with a share dividend, distribution, share split, reverse share split, merger, consolidation, amalgamation or other business combination of the Borrower or its Subsidiaries, in each case, permitted under this Agreement;
(l) so long as no Event of Default shall have occurred and be continuing or would occur as a consequence thereof, the distribution, by dividend or otherwise, of shares of Capital Stock of, or Indebtedness owed to the Borrower or a Restricted Subsidiary by Unrestricted Subsidiaries (other than Unrestricted Subsidiaries, the primary assets of which are cash and/or Cash Equivalents);
(m) for any taxable period in which the taxable income of the Borrower and/or any of its Subsidiaries is included in a consolidated, combined or similar income tax group of which a direct or indirect parent of the Borrower is the common parent (a Tax Group ), an amount not to exceed the tax liabilities that the Borrower and the applicable Subsidiaries, in the aggregate, would have been required to pay in respect of such taxable income if such entities were a standalone group of corporations separate from such Tax Group (it being understood and agreed that, if the Borrower or any Subsidiary pays any portion of such tax liabilities directly to any taxing authority, a Restricted Payment in duplication of such amount shall not be permitted to be made pursuant to this clause (m) ); provided , that, from and after the execution of the Tax Matters Agreement and while such agreement remains in effect, payments in respect of any taxes pursuant to this clause (m) shall not exceed the amounts required to be paid in respect of such taxes pursuant to such agreement;
(n) the declaration and payment of regularly scheduled or accrued dividends to holders of any class or series of Disqualified Stock of the Borrower or any Restricted Subsidiary or Preferred Stock of any Restricted Subsidiaries issued or incurred in accordance with Section 7.02 ;
(o) payments of cash, or dividends, distributions or advances by the Borrower or any Restricted Subsidiary to allow the payment of cash in lieu of the issuance of fractional shares upon the exercise of options or warrants or upon the conversion or exchange of Capital Stock of any such Person;
(p) mandatory redemptions or repurchases of Disqualified Stock the issuance of which itself constituted a Restricted Payment or Permitted Investment otherwise permissible hereunder;
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(q) the purchase, repurchase or other acquisition of Subordinated Indebtedness or unsecured Indebtedness in an amount not to exceed the greater of (x) $25 million and (y) 1% of Total Assets; and
(r) the declaration and payment of dividends to holders of common Equity Interests of the Borrower in an aggregate amount to not exceed $30 million in any calendar year.
Section 7.06. Investments .
(a) the Borrower shall not, nor shall the Borrower permit any of its Restricted Subsidiaries to, directly or indirectly make an Investment other than any Permitted Investment.
(b) the Borrower will not permit any Unrestricted Subsidiary to become a Restricted Subsidiary other than as permitted pursuant to Section 6.14 . For purposes of designating any Restricted Subsidiary as an Unrestricted Subsidiary, all outstanding Investments by the Borrower and its Restricted Subsidiaries (except to the extent repaid) in the Subsidiary so designated will be deemed to be Investments in an amount determined as set forth in the last sentence of the definition of Investment . Such designation will be permitted only if an Investment in such amount would be permitted at such time, pursuant to the definition of Permitted Investments , and if such Subsidiary otherwise meets the definition of an Unrestricted Subsidiary .
Section 7.07. Transactions with Affiliates .
(a) the Borrower shall not, and shall not permit any Restricted Subsidiary to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate of the Borrower (each of the foregoing, an Affiliate Transaction ) involving aggregate payments or consideration in excess of $10 million unless: (i) such Affiliate Transaction is on terms, taken as a whole, that are not materially less favorable to the Borrower or such Restricted Subsidiary than those that would have been obtained in a comparable transaction by such Person with an unrelated Person on an arms-length basis; and (ii) any Affiliate Transaction or series of related Affiliate Transactions involving aggregate payments or consideration in excess of $50 million is approved by a majority of the disinterested members of the board of directors (or equivalent body) of the Borrower.
(b) The foregoing provisions will not apply to the following:
(1) transactions between or among the Borrower or any Restricted Subsidiary;
(2) Restricted Payments permitted to be made pursuant to Section 7.05 and Investments permitted to be made pursuant to Section 7.06 ;
(3) the payment of customary fees and compensation paid to, and indemnities and reimbursements and employment and severance arrangements and agreements provided on behalf of, or entered into with, officers, directors, employees or consultants of the Borrower or any of its Restricted Subsidiaries;
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(4) any agreement, instrument or arrangement (i) as in effect as of the Closing Date, (ii) any other agreements, instruments or arrangements (or transactions pursuant thereto) as in effect on the Distribution Date (including the Separation and Distribution Documents or in connection with the Separation and Distribution Documents (including the Transactions) or (iii) any amendment, modification or supplement to the agreements referenced in clause (i) or (ii) above or any replacement thereof, as long as the terms of such agreement or arrangement, as so amended, modified, supplemented or replaced are not materially more disadvantageous to the Lenders when taken as a whole as compared to the applicable agreements, instruments or arrangements as in effect on the Closing Date or as described in the Form 10, as determined in good faith by the Borrower;
(5) the Transactions and the payment of all fees and expenses related to the Transactions;
(6) transactions with customers (including leases and other arrangements for the use of advertising space), clients, suppliers, or purchasers or sellers of goods or services, or transactions otherwise relating to the purchase or sale of goods or services in each case in the ordinary course of business and otherwise in compliance with the terms of this Agreement which are fair to the Borrower and its Restricted Subsidiaries, in the reasonable determination of the board of directors (or equivalent body) of the Borrower or the senior management thereof, or are on terms at least as favorable as might reasonably have been obtained at such time from an unaffiliated party;
(7) the issuance or transfer of Equity Interests (other than Disqualified Stock) of the Borrower and the granting of registration and other customary rights in connection therewith;
(8) sales of accounts receivable, or participations therein, and any related assets in connection with any Receivables Facility and any other customary transaction effected in connection therewith;
(9) payments, loans, advances or guarantees (or cancellation of payments, loans, advances or guarantees) to employees, directors or consultants of the Borrower or any of its Restricted Subsidiaries and employment agreements, benefit plans, equity plans, stock option and stock ownership plans and other similar arrangements with such employees, directors or consultants which, in each case, are approved by the Borrower in good faith;
(10) transactions with joint ventures or Unrestricted Subsidiaries for the purchase or sale of goods, equipment and services entered into in the ordinary course of business;
(11) transactions with respect to which the Borrower or any Restricted Subsidiary, as the case may be, has obtained a letter from an Independent Financial Advisor stating that such transaction is fair to the Borrower or such Restricted Subsidiary from a financial point of view or meets the requirements of Section 7.07(a)(i) ;
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(12) the issuances of securities or other payments, loans (or cancellation of loans) awards or grants in cash, securities or otherwise pursuant to, or the funding of, employment arrangements, benefit plans, equity plans, stock option and stock ownership plans or similar employee benefit plans approved by the board of directors (or equivalent body) of the Borrower in good faith;
(13) any contribution to the capital of the Borrower (other than in consideration of Disqualified Stock);
(14) the provision to Unrestricted Subsidiaries of cash management, accounting and other overhead services in the ordinary course of business undertaken in good faith and not for the purpose of circumventing any covenant set forth in this Agreement;
(15) any transaction with a Person (other than an Unrestricted Subsidiary) that would constitute an Affiliate Transaction solely because the Borrower or any of its Restricted Subsidiaries owns an Equity Interest in or otherwise controls such Person;
(16) any transaction in which the only consideration paid by the Borrower or any of its Restricted Subsidiaries is in the form of Equity Interests (other than Disqualified Stock) of the Borrower to Affiliates of the Borrower or any contribution to the capital of the Borrower or any Restricted Subsidiary (other than in consideration of Disqualified Stock);
(17) intellectual property licenses in the ordinary course of business;
(18) transactions between the Borrower or any of its Restricted Subsidiaries and any Person that would constitute an Affiliate Transaction solely because a director of which is also a director of the Borrower or any other direct or indirect parent of the Borrower; provided , however , that such director abstains from voting as a director of the Borrower or such direct or indirect parent of the Borrower, as the case may be, on any matter involving such other Person;
(19) (i) the guarantee by the Borrower or any Restricted Subsidiary of the Indebtedness of any parent company of the Borrower that becomes the parent company of the Borrower in a Change of Control transaction consummated in accordance with this Agreement, or of any Indebtedness of Subsidiaries of such parent company; provided that such guarantee was permitted by the terms of this Agreement to be incurred and (ii) the granting by the Borrower or any of its Restricted Subsidiaries of any Liens to secure such Indebtedness or such guarantee; provided that such Liens are permitted to be incurred under this Agreement;
(20) any non-recourse pledge of Equity Interests of an Unrestricted Subsidiary to support the Indebtedness of such Unrestricted Subsidiary; and
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(21) prior to the Separation and Distribution, (A) any cash management transactions or related transactions between or among the Borrower or any of its Restricted Subsidiaries, on the one hand, and Kimberly-Clark or any of its other Subsidiaries, on the other hand, (B) any cancellation of Indebtedness, intercompany accounts, balances, credits or debits between or among the Borrower or any of its Restricted Subsidiaries, on the one hand, and Kimberly-Clark or any of its other Subsidiaries, on the other hand, and (C) any other transactions between or among the Borrower or any of its Restricted Subsidiaries, on the one hand, and Kimberly-Clark or any of its other Subsidiaries, on the other hand, in each case under this clause (C) in the ordinary course of business.
Section 7.08. Burdensome Agreements .
The Borrower shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or consensual restriction on the ability of any such Restricted Subsidiary to:
(1) (a) pay dividends or make any other distributions to the Borrower or any of its Restricted Subsidiaries on its Capital Stock or with respect to any other interest or participation in, or measured by, its profits, or (b) pay any Indebtedness owed to the Borrower or any Restricted Subsidiary;
(2) make loans or advances to the Borrower or any Restricted Subsidiary; or
(3) sell, lease or transfer any of its properties or assets to the Borrower or any Restricted Subsidiary
except (in each case) for such encumbrances or restrictions existing under or by reason of:
(a) contractual encumbrances or restrictions (i) in effect on the Closing Date or in the Senior Notes Indenture or (ii) if not in effect on the Closing Date, in any other agreement governing Indebtedness permitted hereunder; provided that the provisions relating to restrictions of the type described in clauses (1) through (3) above contained in such agreement, taken as a whole, are not materially more restrictive than the provisions contained in the Loan Documents or the Senior Notes Indenture, in each case as in effect when initially executed;
(b) the Loan Documents and related Hedging Obligations;
(c) purchase money obligations for property acquired in the ordinary course of business and Capitalized Lease Obligations that impose restrictions of the nature described in clause (3) above on the property so acquired or leased;
(d) applicable law or any applicable rule, regulation or order;
(e) any agreement or other instrument of a Person (including an Unrestricted Subsidiary that becomes a Restricted Subsidiary) acquired by or
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merged or consolidated with or into the Borrower or any Restricted Subsidiary in existence at the time of such transaction (but not created in contemplation thereof), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person and its Subsidiaries, or the property or assets of the Person and its Subsidiaries, so acquired;
(f) contracts for the sale of assets (including Capital Stock of a Subsidiary), including customary restrictions with respect to a Subsidiary of the Borrower, that impose restrictions solely on the assets to be sold;
(g) Secured Indebtedness otherwise permitted to be incurred under Sections 7.01 and 7.02 that limit the right of the debtor to dispose of the assets securing such Indebtedness or places any restriction on the Borrowers or its Restricted Subsidiaries use of the assets securing such Indebtedness;
(h) restrictions on cash or other deposits or net worth imposed by customers, suppliers, utilities or landlords or required by insurance, surety or bonding companies, in each case under contracts entered into in the ordinary course of business;
(i) other Indebtedness, Disqualified Stock or Preferred Stock of Non-Guarantor Subsidiaries permitted to be incurred subsequent to the Closing Date under Section 7.02 ;
(j) customary provisions limiting the disposition or distribution of assets or property in partnership and joint venture agreements or arrangements, operating agreements, stock sale agreements, sale and leaseback agreements and other similar agreements or arrangements (including agreements entered into in connection with a Restricted Investment) entered into in the ordinary course of business or which limitation is applicable only to the assets that are the subject of such agreements;
(k) customary provisions contained in leases, sub-leases, licenses or sub-licenses and other agreements, in each case, entered into in the ordinary course of business;
(l) restrictions created in connection with any Receivables Facility that, in the good faith determination of the Borrower, are necessary or advisable to effect such Receivables Facility; provided that such restrictions apply only to the applicable Receivables Subsidiary;
(m) other encumbrances and restrictions in the ordinary course of business, not relating to any Indebtedness, and that do not, individually or in the aggregate, detract from the value of property or assets of the Borrower or any Restricted Subsidiary thereof in any manner material to the Borrower or any Restricted Subsidiary thereof;
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(n) any other agreement or instrument governing any Indebtedness, Disqualified Stock, or Preferred Stock permitted to be incurred or issued pursuant to Section 7.02 entered into after the Closing Date that contains encumbrances and other restrictions that either (x) are no more restrictive in any material respect taken as a whole with respect to any Restricted Subsidiary than (i) the restrictions contained in this Agreement as of the Closing Date or (ii) those encumbrances and other restrictions that are in effect on the Closing Date with respect to that Restricted Subsidiary pursuant to agreements in effect on the Closing Date, (y) are not materially more disadvantageous, taken as a whole, to the Lenders than is customary in comparable financings for similarly situated borrowers or (z) will not otherwise materially impair the Borrowers ability to make payments on the Obligations when due, in each case in the good faith judgment of the Borrower; and
(o) any encumbrances or restrictions of the type referred to in clauses (1) , (2) and (3) above imposed by any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of the contracts, instruments or obligations referred to in clauses (a) through (n) above; provided , that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are, in the good faith judgment of the Borrower, no more restrictive in any material respect with respect to such encumbrance and other restrictions taken as a whole than those prior to such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing.
For purposes of determining compliance with this Section 7.08, (i) the priority of any Preferred Stock in receiving dividends or liquidating distributions prior to dividends or liquidating distributions being paid on common stock shall not be deemed a restriction on the ability to make distributions on Capital Stock and (ii) the subordination of loans or advances made to the Borrower or a Restricted Subsidiary to other Indebtedness incurred by the Borrower or any such Restricted Subsidiary shall not be deemed a restriction on the ability to make loans or advances.
Section 7.09. Financial Covenant .
The Borrower shall not permit the Consolidated Net Secured Leverage Ratio as of the last day of any Test Period to be higher than 2.50 to 1.00 and the Consolidated Interest Coverage Ratio to be less than 3.0 to 1.00.
The provisions of this Section 7.09 are for the benefit of the Revolving Credit Lenders only and the Required Class Lenders for the Revolving Credit Facility may amend, waive or otherwise modify this Section 7.09 or the defined terms used for purposes of this Section 7.09 (but solely for such purposes) or waive any Default resulting from a breach of this Section 7.09 without the consent of any Lenders other than the Required Class Lenders for the Revolving Credit Facility in accordance with the provisions of clause (v) of the second proviso of Section 10.01 .
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Section 7.10. Accounting Changes .
The Borrower shall not make any change in its fiscal year; provided , however , that the Borrower may, upon written notice to the Administrative Agent, change its fiscal year to any other fiscal year reasonably acceptable to the Administrative Agent, in which case, the Borrower and the Administrative Agent will, and are hereby authorized by the Lenders to, make any adjustments to this Agreement that are necessary to reflect such change in fiscal year.
Section 7.11. Change in Nature of Business .
The Borrower shall not, nor shall the Borrower permit any of its Restricted Subsidiaries to, engage in any business other than Similar Businesses, except as would not be material to the Borrower and its Restricted Subsidiaries taken as a whole.
Section 7.12. Modifications to Documents .
The Borrower will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, amend, modify or change in any manner materially adverse to the interests of the Lenders any term or condition of any documentation for any Subordinated Indebtedness in excess of the Threshold Amount without the consent of the Administrative Agent.
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
Section 8.01. Events of Default .
Any of the following shall constitute an event of default (an Event of Default ):
(a) Non-Payment . Any Loan Party fails to pay or cause to be paid (i) when and as required to be paid herein, any amount of principal of any Loan, (ii) within three (3) Business Days after the same becomes due, any interest on any Loan or (iii) within five (5) Business Days after the same becomes due, any other amount payable hereunder or under any other Loan Document; or
(b) Specific Covenants . The Borrower fails to perform or observe any term, covenant or agreement contained in any of Sections 6.03(a) or 6.05(a) (solely with respect to the Borrower), Section 6.16 , or Article VII ; provided , that a Default as a result of a breach of Section 7.09 (a Financial Covenant Event of Default ) shall not constitute a Default with respect to any Term Loans, Incremental Term Loans or Extended Term Loans unless and until the Revolving Credit Lenders holding more than 50% of the Revolving Credit Loans and/or Revolving Credit Commitments terminate the Revolving Credit Commitments and accelerate the Revolving Credit Loans (the Term Loan Standstill Period ); or
(c) Other Defaults . Any Loan Party fails to perform or observe any other covenant or agreement (not specified in Section 8.01(a) or (b) above) contained in any Loan Document on its part to be performed or observed and such failure continues for thirty (30) days (or five (5) Business Days in the case of such failure to perform or observe any covenant or agreement contained in Section 6.01) following the date a Responsible Officer of the Borrower becomes aware of such failure; or
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(d) Representations and Warranties . Any representation, warranty or certification made or deemed made by or on behalf of the Borrower or any other Loan Party herein, in any other Loan Document, or in any document required to be delivered in connection herewith or therewith shall be incorrect in any material respect when made or deemed made; or
(e) Cross-Default . The Borrower or any Restricted Subsidiary (i) fails to make any payment beyond the applicable grace period with respect thereto, if any (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness (including any outstanding letters of credit thereunder, but other than Indebtedness hereunder) having an aggregate principal amount (or with respect to any Hedging Obligation, the Hedging Termination Value) of not less than the Threshold Amount, or (ii) fails to observe or perform any other agreement or condition relating to any such Indebtedness, or any other event occurs that would constitute a default under such Indebtedness (other than, with respect to Indebtedness consisting of Swap Contracts, termination events or equivalent events pursuant to the terms of such Swap Contracts), the effect of which default is to cause, or to permit the holder or holders of such Indebtedness (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice if required, such Indebtedness to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be made or require cash collateralization thereof, prior to its stated maturity; provided , that this clause (e)(ii) shall not apply to secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness, if such sale or transfer is permitted hereunder and under the documents providing for such Indebtedness; provided , further , that such failure is unremedied and not waived by the holders of such Indebtedness prior to the termination of the Aggregate Commitments or acceleration of the Loans pursuant to Section 8.02 ; or
(f) Insolvency Proceedings , Etc . Any Loan Party or any Material Subsidiary institutes or consents to the institution of any proceeding under any Debtor Relief Law, or makes an assignment for the benefit of creditors; or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator, administrator, administrative receiver or similar officer for it or for all or any material part of its property; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator, administrator, administrative receiver or similar officer is appointed without the application or consent of such Loan Party or Material Subsidiary and the appointment continues undischarged or unstayed for sixty (60) calendar days; or any proceeding under any Debtor Relief Law relating to any Loan Party or Material Subsidiary or to all or any material part of its property is instituted without the consent of such Person and continues undismissed or unstayed for sixty (60) calendar days, or an order for relief is entered in any such proceeding; or any Loan Party or any Material Subsidiary becomes unable or fails generally to pay its debts as they become due; or
(g) Judgments; Attachments . (i) There is entered against any Loan Party or any Material Subsidiary a final judgment or order for the payment of money in an aggregate amount exceeding the Threshold Amount (to the extent not covered by
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independent third-party insurance as to which the insurer has been notified of such judgment or order and has not disputed coverage) and such judgment or order shall not have been satisfied, vacated, discharged or stayed or bonded pending an appeal for a period of sixty (60) consecutive days; or (ii) in respect of an obligation in excess of the Threshold Amount, any writ or warrant of attachment or execution or similar process is otherwise issued or levied against all or any material part of the property of the Loan Parties and any Material Subsidiary, taken as a whole, and is not released, vacated or fully bonded within sixty (60) days after its issue or levy; or
(h) Invalidity of Loan Documents . Any material provision of any Loan Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder (including as a result of a transaction permitted under Section 7.03 or 7.04 ) or as a result of acts or omissions by the Administrative Agent or Collateral Agent or any Lender or the satisfaction in full of all the Obligations, ceases to be in full force and effect; or any Loan Party contests in writing the validity or enforceability of any provision of any Loan Document or the validity or priority of a Lien as required by the Collateral Documents on a material portion of the Collateral; or any Loan Party denies in writing that it has any or further liability or obligation under any Loan Document (other than as a result of repayment in full of the Obligations and termination of the Aggregate Commitments), or purports in writing to revoke or rescind any Loan Document; or
(i) Change of Control . There occurs any Change of Control; or
(j) Collateral Documents . Any Collateral Document after delivery thereof, including any Collateral Document delivered pursuant to Section 6.11 or 6.13 , shall for any reason (other than pursuant to the terms thereof including as a result of a transaction not prohibited under this Agreement) cease to create a valid and perfected Lien, with the priority required by the Collateral Documents on and security interest in any material portion of the Collateral purported to be covered thereby, subject to Liens permitted under Section 7.01 , (i) except to the extent that any such loss of perfection or priority results from the failure of the Administrative Agent or the Collateral Agent to maintain possession of certificates actually delivered to it representing securities pledged under the Collateral Documents or to properly file Uniform Commercial Code financing or continuation statements and (ii) except for any failure due to foreign Laws, rules and regulations as they relate to pledges of Equity Interests in Foreign Subsidiaries; or
(k) ERISA . (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or would reasonably be expected to result in liability of a Loan Party, a Restricted Subsidiary or any ERISA Affiliate under Title IV of ERISA in an aggregate amount which would reasonably be expected to result in a Material Adverse Effect, (ii) a Loan Party, any Restricted Subsidiary or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount which would reasonably be expected to result in a Material Adverse Effect, or (iii) with respect to any Foreign Plan, a termination, withdrawal or noncompliance with applicable Law or plan terms, except as would not reasonably be expected to have a Material Adverse Effect.
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Section 8.02. Remedies Upon Event of Default .
If any Event of Default occurs and is continuing, the Administrative Agent may and, at the request of the Required Lenders, shall take any or all of the following actions (or, to the extent such Event of Default solely comprises a Financial Covenant Event of Default, prior to the expiration of the Term Loan Standstill Period, at the request of the Required Class Lenders with respect to the Revolving Credit Facility only, and in such case only with respect to the Revolving Credit Loans, Revolving Credit Commitments, Swing Line Loans, and any Letters of Credit):
(a) declare the commitment of each Lender to make Loans and any obligation of the L/C Issuers to make L/C Credit Extensions to be terminated, whereupon such commitments and obligation shall be terminated;
(b) declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Loan Parties;
(c) require that the Borrower Cash Collateralize the L/C Obligations (in an amount equal to the then Outstanding Amount thereof); and
(d) exercise on behalf of itself and the Lenders all rights and remedies available to it and the Lenders under the Loan Documents or applicable Law;
provided , that upon the entry of an order for relief with respect to the Borrower or any Material Subsidiary under Debtor Relief Laws, the obligation of each Lender to make Loans and any obligation of the L/C Issuers to make L/C Credit Extensions shall automatically terminate, the unpaid principal amount of all outstanding Loans and all interest and other amounts as aforesaid shall automatically become due and payable and the obligation of the Borrower to Cash Collateralize the L/C Obligations as aforesaid shall automatically become effective, in each case without further act of the Administrative Agent or any Lender, as further described in Section 8.01(f) .
Section 8.03. Application of Funds .
After the exercise of remedies provided for in Section 8.02 (or after the Loans have automatically become immediately due and payable and the L/C Obligations have automatically been required to be Cash Collateralized as set forth in the proviso to Section 8.02 ), any amounts received on account of the Obligations shall be applied by the Administrative Agent in the following order (to the fullest extent permitted by applicable Law):
First , to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (other than principal and interest, but including
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Attorney Costs payable under Section 10.04 and amounts payable under Article III ) payable to the Administrative Agent or the Collateral Agent in its capacity as such;
Second , to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal and interest) payable to the Lenders (including Attorney Costs payable under Section 10.04 and amounts payable under Article III ), ratably among them in proportion to the amounts described in this clause Second payable to them;
Third , to payment of that portion of the Obligations constituting accrued and unpaid interest on the Loans and L/C Borrowings, and any fees, premiums and scheduled periodic payments due under Treasury Services Agreements or Secured Hedge Agreements, ratably among the Secured Parties in proportion to the respective amounts described in this clause Third payable to them;
Fourth , to payment of that portion of the Obligations constituting unpaid principal of the Loans and L/C Borrowings (including to Cash Collateralize that portion of L/C Obligations comprised of the aggregate undrawn amount of Letters of Credit), and any breakage, termination or other payments under Treasury Services Agreements or Secured Hedge Agreements, ratably among the Secured Parties in proportion to the respective amounts described in this clause Fourth held by them;
Fifth , to the payment of all other Obligations of the Borrower that are due and payable to the Administrative Agent and the other Secured Parties on such date, ratably based upon the respective aggregate amounts of all such Obligations owing to the Administrative Agent and the other Secured Parties on such date; and
Last , the balance, if any, after all of the Obligations have been paid in full, as directed by the Borrower or as otherwise required by Law.
Subject to Section 2.03(c) , amounts used to Cash Collateralize the aggregate undrawn amount of Letters of Credit pursuant to clause Fourth above shall be applied to satisfy drawings under such Letters of Credit as they occur. If any amount remains on deposit as Cash Collateral after all Letters of Credit have either been fully drawn or expired, such remaining amount shall be applied to the other Obligations, if any, in the order set forth above and, if no Obligations remain outstanding, as directed by the Borrower.
Section 8.04. Certain Defaults Not to Result from Transactions .
Notwithstanding anything to the contrary set forth herein, no provision of any of the Loan Documents shall prevent the completion of any of the Transactions, nor shall the Transactions give rise to any Default or impair or reduce the availability or constitute the utilization of any basket or other exceptions (other than any such baskets or other exceptions that expressly refer to the Transactions or the Separation and Distribution) in the covenants under this Agreement or any of the other Loan Documents and no provision of any of the Loan Documents
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shall restrict the transactions described in clauses (A) and (B) of Section 7.07(b)(21), provided that in each case, nothing in this Section 8.04 shall limit the conditions precedent to any Credit Extension on the Closing Date as set forth in Article IV.
ARTICLE IX
ADMINISTRATIVE AGENT AND OTHER AGENTS
Section 9.01. Appointment and Authority .
(a) (i) Each of the Term Lenders hereby irrevocably appoints MSSF to act on its behalf as the Term Loan Administrative Agent with respect to the Term Loans and (ii) each of the Revolving Credit Lenders and the L/C Issuers hereby irrevocably appoints Citibank to act on its behalf as the Revolver Administrative Agent with respect to the Revolving Credit Loans, hereunder and under the other Loan Documents and authorizes such Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to such Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto. The provisions of this Article (other than Section 9.07 and 9.09 ) are solely for the benefit of such Administrative Agent, the Collateral Agent, the Lenders and the L/C Issuers, and neither the Borrower nor any other Loan Party shall have rights as a third party beneficiary of any of such provisions.
(b) Each of the Lenders (including in its capacity as a potential Hedge Bank) and the L/C Issuers hereby irrevocably appoints and authorizes the Collateral Agent to act as the agent of such Lender and such L/C Issuer 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, together with such powers and discretion as are reasonably incidental thereto. In this connection, the Collateral Agent and any co-agents, sub-agents and attorneys-in-fact appointed by the Collateral Agent pursuant to Section 9.02 for purposes of holding or enforcing any Lien on the Collateral (or any portion thereof) granted under the Collateral Documents, or for exercising any rights and remedies thereunder at the direction of the Administrative Agent), shall be entitled to the benefits of all provisions of this Article IX and Article X (including Section 10.04(c) , as though such co-agents, sub-agents and attorneys-in-fact were the Collateral Agent under the Loan Documents) as if set forth in full herein with respect thereto.
Section 9.02. Delegation of Duties .
The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Article shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent.
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Section 9.03. Exculpatory Provisions .
The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents. Without limiting the generality of the foregoing, the Administrative Agent:
(a) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;
(b) shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent is required to exercise as directed in writing by 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); provided , that the Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Loan Document or applicable law; and
(c) shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Affiliates that is communicated to or obtained by the Person serving as the Administrative Agent or any of its Affiliates in any capacity.
(d) The Administrative Agent shall not be liable for any action taken or not taken by it with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 10.01 and 8.02 ), in each case in the absence of its own bad faith, gross negligence or willful misconduct. The Administrative Agent shall be deemed not to have knowledge of any Default unless and until notice describing such Default is given to the Administrative Agent by the Borrower, a Lender or an L/C Issuer.
(e) The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document, or the creation, perfection or priority of any Lien purported to be created by the Collateral Documents, (v) the value or the sufficiency of any Collateral, or (v) the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.
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Section 9.04. Reliance by Administrative Agent .
The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) reasonably believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and reasonably believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan, or the issuance of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or an L/C Issuer, the Administrative Agent may presume that such condition is satisfactory to such Lender or such L/C Issuer unless the Administrative Agent shall have received notice to the contrary from such Lender or an L/C Issuer prior to the making of such Loan or the issuance of such Letter of Credit. The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.
Section 9.05. Non-Reliance on Administrative Agent and Other Lenders .
Each Lender and L/C Issuer acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender and L/C Issuer also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.
Section 9.06. Rights as a Lender .
The Person serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent and the term Lender or Lenders shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Administrative Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, lend money to, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders.
Section 9.07. Resignation of Administrative Agent .
The Administrative Agent for a given Facility may at any time give notice of its resignation to the Lenders, the L/C Issuers and the Borrower. Upon receipt of any such notice of resignation, the Required Class Lenders for such Facility shall have the right, with the Borrowers consent (which consent shall not be unreasonably withheld) so long as no Event of
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Default under Section 8.01(a) or (f) shall exist, to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States. If no such successor shall have been so appointed by the Required Class Lenders and shall have accepted such appointment within thirty (30) days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may (with the Borrowers consent as provided above) on behalf of the Appropriate Lenders and the L/C Issuers in the case of the Revolving Credit Facility, appoint a successor Administrative Agent meeting the qualifications set forth above; provided , that if the Administrative Agent shall notify the Borrower and the Lenders that no qualifying Person has accepted such appointment, then such resignation shall nonetheless become effective in accordance with such notice and (a) the retiring Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except that in the case of any collateral security held by the Administrative Agent on behalf of the Lenders or the L/C Issuers under any of the Loan Documents, the retiring Administrative Agent shall continue to hold such collateral security until such time as a successor Administrative Agent is appointed) and (b) all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender and the L/C Issuers directly, until such time as the Required Class Lenders appoint a successor Administrative Agent as provided for above in this Section. Upon the acceptance of a successors appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or retired) Administrative Agent, and the retiring Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as provided above in this Section). The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the retiring Administrative Agents resignation hereunder and under the other Loan Documents, the provisions of this Article and Section 10.04 shall continue in effect for the benefit of such retiring Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Administrative Agent was acting as Administrative Agent.
Any resignation by MSSF or Citibank as Administrative Agent, as applicable, pursuant to this Section 9.07 shall also constitute its resignation as L/C Issuer and Swing Line Lender, as applicable. Upon the acceptance of a successors appointment as Administrative Agent hereunder, (i) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring L/C Issuer and Swing Line Lender, (ii) the retiring L/C Issuer and Swing Line Lender shall be discharged from all of their respective duties and obligations hereunder or under the other Loan Documents, and (iii) the successor L/C Issuer shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to the retiring L/C Issuer to effectively assume the obligations of the retiring L/C Issuer with respect to such Letters of Credit.
Section 9.08. Administrative 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 Administrative Agent (irrespective of
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whether the principal of any Loan or L/C Obligation shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered, 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, L/C Obligations 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 Lenders, the L/C Issuers and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders, the L/C Issuers and the Administrative Agent and their respective agents and counsel and all other amounts to the extent due to the Lenders, the L/C Issuers and the Administrative Agent under Sections 2.03(h) and (i) , 2.09 and 10.04 ) 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 Lender and L/C Issuer to make such payments to the Administrative Agent and, if the Administrative Agent shall consent to the making of such payments directly to the Lenders and the L/C Issuers, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due to the Administrative Agent under Sections 2.09 and 10.04 .
Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender or any L/C Issuer any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or any L/C Issuer to authorize the Administrative Agent to vote in respect of the claim of any Lender or any L/C Issuer or in any such proceeding.
Section 9.09. Collateral and Guaranty Matters .
Each of the Lenders (including in its capacity as a potential Hedge Bank) and each L/C Issuer irrevocably authorize the Collateral Agent:
(a) to release any Lien on any property granted to or held by the Administrative Agent under any Loan Document (i) upon termination of the Aggregate Commitments and payment in full of all Obligations (other than (A) contingent indemnification obligations and (B) obligations and liabilities under Treasury Services Agreements and Secured Hedge Agreements, except as to amounts that are due and payable thereunder for which the Administrative Agent has received a written notice from the applicable Hedge Bank) and the expiration or termination of all Letters of Credit (other than Letters of Credit that have been Cash Collateralized or back-stopped by a letter of credit reasonably satisfactory to the applicable L/C Issuer), (ii) that is sold or to be sold as part of or in connection with any sale permitted hereunder or under any other
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Loan Document to a Person that is not a Loan Party, (iii) that constitutes Excluded Assets (as such term is defined in the Security Agreement), (iv) if approved, authorized or ratified in writing in accordance with Section 10.01 , (v) if the property subject to such Lien is owned by a Guarantor, upon release of such Guarantor from its obligations under its Guaranty pursuant to clause (b) below or (vi) upon the terms of the Collateral Documents or the Intercreditor Agreement (if in effect), Second Lien Intercreditor Agreement (if in effect), or any other intercreditor agreement entered into pursuant hereto;
(b) to release any Guarantor from its obligations under the Guaranty (i) if such Person ceases to be a Subsidiary as a result of a transaction permitted hereunder, or becomes an Excluded Subsidiary or an Unrestricted Subsidiary or (ii) upon termination of the Aggregate Commitments and payment in full of all Obligations (other than (A) contingent indemnification obligations and (B) obligations and liabilities under Treasury Services Agreements and Secured Hedge Agreements, except as to amounts that are due and payable thereunder for which the Administrative Agent has received a written notice from the applicable Hedge Bank) and the expiration or termination of all Letters of Credit (other than Letters of Credit that have been Cash Collateralized or back-stopped by a letter of credit reasonably satisfactory to the applicable L/C Issuer); and
(c) to subordinate any Lien on any property granted to or held by the Administrative Agent or Collateral Agent under any Loan Document to the holder of any Lien on such property that is permitted by Section 7.01(6) (but solely in the case of Indebtedness incurred pursuant to clause (4) of Section 7.02(b) ).
Upon request by the Administrative Agent or the Collateral Agent at any time, the Lenders will confirm in writing the Collateral Agents authority to release or subordinate its interest in particular types or items of property, or to release any Guarantor from its obligations under the Guaranty pursuant to this Section 9.09 . The Administrative Agent or the Collateral Agent, as applicable, will, at the Borrowers expense, execute and deliver to the Borrower such documents as the Borrower may reasonably request to evidence the release of any item of Collateral from the assignment and security interest granted under the Collateral Documents or to subordinate its interest in such item, or to release any Loan Party from its obligations under the Guaranty, in each case in accordance with the terms of the Loan Documents and this Section 9.09 .
Notwithstanding the foregoing, if, in compliance with the terms and provisions of Section 7.04 hereof, any portion of the Collateral is sold or otherwise transferred to a Person or Persons, none of which is a Loan Party, then (i) such portion of the Collateral shall, upon the consummation of such sale or transfer, be automatically released from the Lien of the Collateral Agent pursuant to any Collateral Document and (ii) if the aggregate fair market value of the portion of the Collateral so sold or otherwise transferred exceeds $25 million, the Borrower will promptly deliver to the Collateral Agent a notice of the consummation of such sale or other transfer, certifying that such sale was made in compliance with Section 7.04 hereof.
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The Lenders hereby authorize the Administrative Agent and Collateral Agent, as applicable, to enter into any Intercreditor Agreement, any Second Lien Intercreditor Agreement or other intercreditor agreement or arrangement permitted under this Agreement and the Lenders acknowledge that any such intercreditor agreement shall be binding upon the Lenders. The Administrative Agent and Collateral Agent, as applicable, agree, upon the request of the Borrower and at the Borrowers expense, to negotiate in good faith and enter into any Intercreditor Agreement, any Second Lien Intercreditor Agreement or other intercreditor agreement or arrangement permitted under this Agreement.
Section 9.10. No Other Duties, Etc.
Anything herein to the contrary notwithstanding, none of the joint bookrunners or joint lead arrangers listed on the cover page hereof shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the Administrative Agent, a Lender or an L/C Issuer hereunder.
Section 9.11. Treasury Services Agreements and Secured Hedge Agreements .
No Hedge Bank that obtains the benefits of Section 8.03 , the Guaranty or any Collateral by virtue of the provisions hereof or of the Guaranty or any Collateral Document shall have any right to notice of any action or to consent to, direct or object to any action hereunder or under any other Loan Document or otherwise in respect of the Collateral (including the release or impairment of any Collateral) other than in its capacity as a Lender and, in such case, only to the extent expressly provided in the Loan Documents. Notwithstanding any other provision of this Article IX to the contrary, the Administrative Agent shall not be required to verify the payment of, or that other satisfactory arrangements have been made with respect to, Obligations arising under Treasury Services Agreements and Secured Hedge Agreements unless the Administrative Agent has received written notice of such Obligations, together with such supporting documentation as the Administrative Agent may request, from the applicable Hedge Bank, as the case may be.
Section 9.12. Withholding Tax .
To the extent required by any applicable Laws (as determined in good faith by the Administrative Agent), the Administrative Agent may withhold from any payment to any Lender under any Loan Document an amount equivalent to any applicable withholding Tax. Without limiting or expanding the provisions of Section 3.01 , each Lender shall indemnify and hold harmless the Administrative Agent against, and shall make payable in respect thereof within ten (10) days after demand therefor, any and all Taxes and any and all related losses, claims, liabilities and expenses (including fees, charges and disbursements of any counsel for the Administrative Agent) incurred by or asserted against the Administrative Agent by the IRS or any other Governmental Authority as a result of the failure of the Administrative Agent to properly withhold Tax from amounts paid to or for the account of such Lender for any reason (including because the appropriate form was not delivered or not properly executed, or because such Lender failed to notify the Administrative Agent of a change in circumstance that rendered the exemption from, or reduction of withholding Tax ineffective). A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be
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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 this Agreement or any other Loan Document against any amount due the Administrative Agent under this Section 9.12 . The agreements in this Section 9.12 shall survive the resignation and/or replacement of the Administrative Agent, any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all other Obligations. For the avoidance of doubt, the term Lender shall, for purposes of this Section 9.12 , include any Swing Line Lender and any L/C Issuer.
ARTICLE X
MISCELLANEOUS
Section 10.01. Amendments, Etc.
Except as otherwise set forth in this Agreement, no amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent to any departure by any Loan Party therefrom, shall be effective unless in writing signed by the Required Lenders and such Loan Party, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided , that, no such amendment, waiver or consent shall:
(a) extend or increase the Commitment of any Lender without the written consent of such Lender (it being understood that a waiver of any condition precedent or of any Default, Event of Default, mandatory prepayment or mandatory reduction of the Commitments shall not constitute an extension or increase of any Commitment of any Lender);
(b) postpone any date scheduled for, or reduce or forgive the amount of, any scheduled payment of principal or interest under Section 2.07 or 2.08 without the written consent of each Lender holding the applicable Obligation (it being understood that the waiver of (or amendment to the terms of) any mandatory prepayment of the Loans shall not constitute a postponement of any date scheduled for the payment of principal or interest);
(c) reduce or forgive the principal of, or reduce the rate of interest specified herein on, any Loan, or L/C Borrowing, or (subject to clause (iii) of the second proviso to this Section 10.01 ) any fees or other amounts payable hereunder or under any other Loan Document (or change the timing of payments of such fees or other amounts) without the written consent of each Lender holding such Loan or L/C Borrowing or to whom such fee or other amount is owed; provided , that only the consent of the Required Lenders shall be necessary to amend the definition of Default Rate or to waive any obligation of the Borrower to pay interest at the Default Rate;
(d) subject to the third paragraph of this Section 10.01 , change any provision of this Section 10.01 , the definition of Required Lenders or Pro Rata Share or Section 2.06(b) , 2.13 , 8.03 or 10.06 (with respect to assignments by the Borrower), without the written consent of each Lender;
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(e) change the definition of Required Class Lenders with respect to a Class of Lenders without the written consent of each Lender in the affected Class;
(f) other than in connection with a transaction permitted under Section 7.03 or 7.04 , release all or substantially all of the Collateral in any transaction or series of related transactions, without the written consent of each Lender;
(g) other than in connection with a transaction permitted under Section 7.03 or 7.04 , release all or substantially all of the aggregate value of the Guaranty, without the written consent of each Lender;
(h) without the written consent of the Required Class Lenders, adversely affect the rights of a Class in respect of payments or Collateral in a manner different to the effect of such amendment, waiver or consent on any other Class, or
and provided , further , that (i) no amendment, waiver or consent shall, unless in writing and signed by an L/C Issuer in addition to the Lenders required above, affect the rights or duties of such L/C Issuer under this Agreement or any Letter of Credit Application relating to any Letter of Credit issued or to be issued by it; (ii) no amendment, waiver or consent shall, unless in writing and signed by a Swing Line Lender in addition to the Lenders required above, affect the rights or duties of such Swing Line Lender under this Agreement; (iii) no amendment, waiver or consent shall, unless in writing and signed by the applicable Administrative Agent or the Collateral Agent, as applicable, in addition to the Lenders required above, affect the rights or duties of, or any fees or other amounts payable to, such Administrative Agent or the Collateral Agent, as applicable, under this Agreement or any other Loan Document; (iv) Section 10.06(g) may not be amended, waived or otherwise modified without the consent of each Granting Lender all or any part of whose Loans are being funded by an SPC at the time of such amendment, waiver or other modification; and (v) no amendment, waiver or consent shall be made to modify Section 7.09 or any definition related thereto (as any such definition is used for purposes of Section 7.09 ) or waive any Default or Event of Default resulting from a failure to perform or observe the requirements of Section 7.09 without the written consent of the Required Class Lenders under the Revolving Credit Facility; provided , however , that the waivers described in this clause (v) shall not require the consent of any Lenders other than the Required Class Lenders under the Revolving Credit Facility; and provided , further , that (A) the Borrower and the Administrative Agent shall be permitted to enter into an amendment, supplement, modification, consent or waiver to cure any ambiguity, omission, defect, mistake or inconsistency in any Loan Document without the prior written consent of the Required Lenders and (B) guarantees and collateral security documents and related documents executed by the Loan Parties in connection with this Agreement may be amended, restated, amended and restated, supplemented or waived without the consent of any Lender if such amendment, restatement, amendment and restatement, supplement or waiver is delivered in order to (1) comply with local law or advice of local counsel, (2) cure ambiguities, omissions, mistakes, defects or inconsistencies or (3) cause such guarantee, collateral security document or other document to be consistent with this Agreement and the other Loan Documents.
Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder, except that
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(i) a Commitment of such Lender may not be increased or extended, (ii) the maturity date of any Loan held by such Lender may not be extended and (iii) the principal or interest in respect of any Loans held by such Lender shall not be reduced or forgiven, in each case without the consent of such Lender (it being understood that any Commitments or Loans held or deemed held by any Defaulting Lender shall be excluded for a vote of the Lenders hereunder requiring any consent of the Lenders).
Notwithstanding the foregoing, this Agreement may be amended (or amended and restated) with only the written consent of the applicable Administrative Agent and the Borrower (a) to add one or more additional credit facilities to this Agreement and to permit the extensions of credit from time to time outstanding thereunder and the accrued interest and fees in respect thereof to share ratably in the benefits of this Agreement and the other Loan Documents with the Term Loans and the Revolving Credit Loans and the accrued interest and fees in respect thereof and (b) to include appropriately the Lenders holding such credit facilities in any determination of the Required Lenders or Required Class Lenders. Notwithstanding the foregoing, this Agreement may be amended to adjust the borrowing mechanics related to Swing Line Loans with only the written consent of the Revolver Administrative Agent, the Swing Line Lender and the Borrower so long as the Obligations of the Revolving Credit Lenders are not affected thereby. Notwithstanding anything to the contrary herein, this Agreement and the other Loan Documents may be amended as set forth in Section 2.14 , Section 2.15 and Section 2.16 . Furthermore, this Agreement may be amended to extend commitments and/or loans outstanding under the Term Loans and the Revolving Credit Facility pursuant to one or more tranches with only the consent of the Borrower, the applicable Administrative Agent and the respective extending Lenders and without the consent of any other Lender, it being understood that each Lender under the applicable tranche of the Credit Facilities shall be offered the opportunity to participate in such extension on the same terms and conditions as each other Lender under such tranche of the applicable Credit Facility.
If any Lender does not consent to a proposed amendment, waiver, consent or release with respect to any Loan Document that requires the consent of such Lender or each adversely affected Lender and that has been approved by the Required Lenders or Required Class Lenders, as applicable, the Borrower may replace such non-consenting Lender in accordance with Section 10.13 ; provided , that such amendment, waiver, consent or release can be effected as a result of the assignment contemplated by such Section (together with all other such assignments required by the Borrower to be made pursuant to this paragraph).
Section 10.02. Notices; Effectiveness; Electronic Communications .
(a) Notices Generally . Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in clause (b) below), all notices and other communications provided for herein shall be in writing (including by electronic communication) and shall be delivered as follows, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:
(i) if to the Borrower or the Administrative Agent, to the address, telecopier number, electronic mail address or telephone number specified for such Person on Schedule 10.02 ; and
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(ii) if to any Lender or L/C Issuer, to the address, telecopier number, electronic mail address or telephone number specified in its Administrative Questionnaire (including, as appropriate, notices delivered solely to the Person designated by a Lender or L/C Issuer on its Administrative Questionnaire then in effect for the delivery of notices that may contain material non-public information relating to the Borrower).
Notices and other communications sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices and other communications sent by telecopier 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). Notices and other communications delivered through electronic communications to the extent provided in clause (b) below shall be effective as provided in such clause (b) .
(b) Electronic Communications . Notices and other communications to the Lenders and the L/C Issuers hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent; provided , that the foregoing shall not apply to notices to any Lender or any L/C Issuer pursuant to Article II if such Lender or such L/C Issuer, as applicable, has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication. The Administrative Agent or the 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.
Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the senders 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); provided , that if such notice 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, and (ii) 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 (i) of notification that such notice or communication is available and identifying the website address therefor.
(c) The Platform . THE PLATFORM IS PROVIDED AS IS AND AS AVAILABLE. THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY
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OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM. In no event shall the Administrative Agent or any of its Related Parties (collectively, the Agent Parties ) have any liability to the Borrower, any Lender, any L/C Issuer or any other Person for losses, claims, damages, liabilities or expenses of any kind (whether in tort, contract or otherwise) arising out of the Borrowers or the Administrative Agents transmission of Borrower Materials through the Internet, except to the extent that such losses, claims, damages, liabilities or expenses are determined by a court of competent jurisdiction by a final and nonappealable judgment to have resulted from the bad faith, gross negligence or willful misconduct of such Agent Party; provided , however , that in no event shall any Agent Party have any liability to the Borrower, any Lender, any L/C Issuer or any other Person for indirect, special, incidental, consequential or punitive damages (as opposed to direct or actual damages).
(d) Change of Address , Etc . Each of the Borrower or the Administrative Agent may change its address, telecopier or telephone number for notices and other communications hereunder by notice to (i) the Administrative Agent, in the case of the Borrower or (ii) the other parties hereto in the case of the Administrative Agent. Each Lender and L/C Issuer may change its address, telecopier or telephone number for notices and other communications hereunder by notice to the Borrower and the Administrative Agent. In addition, each Lender agrees to notify the Administrative Agent from time to time to ensure that the Administrative Agent has on record (i) an effective address, contact name, telephone number, telecopier number and electronic mail address to which notices and other communications may be sent and (ii) accurate wire instructions for such Lender. Furthermore, each Public Lender agrees to cause at least one individual at or on behalf of such Public Lender to at all times have selected the Private Side Information or similar designation on the content declaration screen of the Platform in order to enable such Public Lender or its delegate, in accordance with such Public Lenders compliance procedures and applicable Law, including United States Federal and state securities Laws, to make reference to Borrower Materials that are not made available through the Public Side Information portion of the Platform and that may contain material non-public information with respect to the Borrower or its securities for purposes of United States Federal or state securities laws.
(e) Reliance by the Agents , L/C Issuer and Lenders . The Administrative Agent, the Collateral Agent, the L/C Issuers and the Lenders shall be entitled to rely and act upon any notices (including telephonic Committed Loan Notices and Swing Line Loan Notices) purportedly given by or on behalf of the Borrower even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. The Borrower shall indemnify the Administrative Agent, the Collateral Agent, each L/C Issuer, each Lender and the Related Parties of each of them from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of the Borrower in the absence of bad faith, gross negligence or willful misconduct by such Person. All telephonic notices to and other telephonic communications with the Administrative Agent or the Collateral Agent, may be recorded by the Administrative Agent or the Collateral Agent, and each of the parties hereto hereby consents to such recording.
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Section 10.03. No Waiver; Cumulative Remedies; Enforcement .
No failure by any Lender or the Administrative Agent or the Collateral Agent to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder or under any other Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided, and provided under each other Loan Document, are cumulative and not exclusive of any rights, remedies, powers and privileges provided by Law.
Notwithstanding anything to the contrary contained herein or in any other Loan Document, the authority to enforce rights and remedies hereunder and under the other Loan Documents against the Loan Parties or any of them shall be vested exclusively in, and all actions and proceedings at law in connection with such enforcement shall be instituted and maintained exclusively by, the Administrative Agent in accordance with Section 8.02 for the benefit of all the Lenders and the L/C Issuers; provided , however , that the foregoing shall not prohibit (a) the Administrative Agent from exercising on its own behalf the rights and remedies that inure to its benefit (solely in its capacity as Administrative Agent) hereunder and under the other Loan Documents, (b) any L/C Issuer or the Swing Line Lender from exercising the rights and remedies that inure to its benefit (solely in its capacity as L/C Issuer or Swing Line Lender, as the case may be) hereunder and under the other Loan Documents, (c) any Lender from exercising setoff rights in accordance with Section 10.08 (subject to the terms of Section 2.13 ), or (d) any Lender from filing proofs of claim or appearing and filing pleadings on its own behalf during the pendency of a proceeding relative to any Loan Party under any Debtor Relief Law; and provided , further , that if at any time there is no Person acting as Administrative Agent hereunder and under the other Loan Documents, then (i) the Required Lenders shall have the rights otherwise ascribed to the Administrative Agent pursuant to Section 8.02 and (ii) in addition to the matters set forth in clauses (b) , (c) and (d) of the preceding proviso and subject to Section 2.13 , any Lender may, with the consent of the Required Lenders, enforce any rights and remedies available to it and as authorized by the Required Lenders.
Section 10.04. Expenses; Indemnity; Damage Waiver .
(a) Costs and Expenses . The Borrower shall pay (i) all reasonable and documented out-of-pocket expenses incurred by the Administrative Agent and its Affiliates (including the reasonable and documented out-of-pocket fees, charges and disbursements of a single firm of counsel for the Administrative Agent), in connection with the syndication of the credit facilities provided for herein, the preparation, negotiation, execution, and delivery of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated); (ii) all reasonable and documented out-of-pocket expenses incurred by an L/C Issuer in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder; and (iii) after the occurrence and during the
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continuance of an Event of Default, all reasonable and documented out-of-pocket expenses incurred by the Administrative Agent, any Lender or any L/C Issuer (including the reasonable and documented out-of-pocket fees, charges and disbursements of any counsel for the Administrative Agent, any Lender or any L/C Issuer) in connection with the enforcement or protection of its rights in connection with this Agreement and the Loans made or Letters of Credit issued hereunder, including all out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit; provided that reasonable fees, disbursements and other charges of outside counsel shall be limited to (x) one primary counsel for the Administrative Agent and the Lenders and, if reasonably required by the Administrative Agent, local or specialist counsel and (y) one additional counsel for the Lenders (unless there is an actual or perceived conflict of interest that requires separate representation for any Lender, in which case those Lenders similarly affected shall, as a whole, be entitled to one separate counsel) and, to the extent reasonably necessary, local or specialist counsel.
(b) Indemnification by the Borrower . The Borrower shall indemnify the Administrative Agent (and any sub-agent thereof), each Lender, each Agent and each L/C Issuer, and each Related Party of any of the foregoing Persons (each such Person being called an Indemnitee ) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including the reasonable and documented out-of-pocket fees, charges and disbursements of (x) one primary counsel for the Indemnitees taken as a whole (unless there is an actual or perceived conflict of interest that requires separate representation for any Indemnitee, in which case those Indemnitees similarly affected shall, as a while, be entitled to one separate counsel) and, if reasonably necessary, local or special counsel), incurred by any Indemnitee or asserted against any Indemnitee by any third party or by the Borrower or any other Loan Party arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby, or, in the case of the Administrative Agent (and any sub-agent thereof) and its Related Parties only, the administration of this Agreement and the other Loan Documents; (ii) any Loan or Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by any L/C Issuer to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit); (iii) any actual or alleged presence or Release of Hazardous Materials at, on, under or emanating from any property owned, leased or operated by the Borrower or any of its Subsidiaries, or any Environmental Liability related in any way to the Borrower or any of its Subsidiaries; or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by the Borrower or any other Loan Party or any of the Borrowers or such Loan Partys directors, shareholders or creditors, and regardless of whether any Indemnitee is a party thereto; provided , that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from (A) the bad faith, gross negligence or willful misconduct of such Indemnitee or any of its Related Parties or (B) any material breach of the obligations of such Indemnitee or any of its Related Parties under the Loan Documents, or (y) any proceeding that does not involve an act or omission by the Borrower or any Restricted Subsidiary and that is
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brought by an Indemnitee against another Indemnitee (other than disputes involving claims against any Agent in its capacity as such). This Section 10.04(b) shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim.
(c) Reimbursement by Lenders . To the extent that the Borrower for any reason fails to indefeasibly pay any amount required under clause (a) or (b) of this Section to be paid by it to the Administrative Agent (or any sub-agent thereof), any L/C Issuer or any Related Party of any of the foregoing (and without limiting its obligation to do so), (i) each Revolving Credit Lender severally agrees to pay to the Revolver Administrative Agent (or any such sub-agent), any L/C Issuer or such Related Party, and (ii) each Term Loan Lender severally agrees to pay to the Term Loan Administrative Agent (or any such sub-agent) or such Related Party as the case may be, such Lenders Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided , that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent (or any such sub-agent) or any L/C Issuer in its capacity as such, or against any Related Party of any of the foregoing acting for the Administrative Agent (or any such sub-agent) or L/C Issuer in connection with such capacity. The obligations of the Lenders under this clause (c) are subject to the provisions of Section 2.12(e) .
(d) Waiver of Consequential Damages, Etc. To the fullest extent permitted by applicable law, the Borrower shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or Letter of Credit or the use of the proceeds thereof. No Indemnitee referred to in clause (b) above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed to such unintended recipients by such Indemnitee through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby other than for direct or actual damages resulting from the bad faith, gross negligence or willful misconduct of such Indemnitee or any of its Related Parties as determined by a final and nonappealable judgment of a court of competent jurisdiction.
(e) Payments . All amounts due under this Section shall be payable not later than ten (10) Business Days after demand therefor.
(f) Survival . The agreements in this Section shall survive the resignation of the Administrative Agent, any L/C Issuer and the Swing Line Lender, the replacement of any Lender, the termination of the Aggregate Commitments and the repayment, satisfaction or discharge of all the other Obligations.
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Section 10.05. Payments Set Aside .
To the extent that any payment by or on behalf of the Borrower is made to any Agent or any Lender, or any Agent or any Lender exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by such Agent or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall, to the fullest extent possible under provisions of applicable Law, be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred; and (b) each Lender severally agrees to pay to the Administrative Agent upon demand its applicable share of any amount so recovered from or repaid by any Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the applicable Federal Funds Rate from time to time in effect.
Section 10.06. Successors and Assigns .
(a) Successors and Assigns Generally . The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that (other than as permitted pursuant to Section 7.03 ), neither the Borrower nor any other Loan Party may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent and each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an Eligible Assignee in accordance with the provisions of Section 10.06(b) ; (ii) by way of participation in accordance with the provisions of Section 10.06(d) ; or (iii) by way of pledge or assignment of a security interest subject to the restrictions of Section 10.06(f) or (iv) to an SPC in accordance with the provisions of Section 10.06(g) (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than (i) the parties hereto, (ii) their respective successors and assigns permitted hereby, (iii) Participants to the extent provided in clause (d) of this Section and, (iv) to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the L/C Issuers and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.
(b) Assignments by Lenders. Any Lender may at any time assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment (or Commitments) and the Loans (including for purposes of this Section 10.06(b), participations in L/C Obligations and in Swing Line Loans) at the time owing to it); provided , that any such assignment shall be subject to the following conditions:
(i) Minimum Amounts .
(A) in the case of an assignment of the entire remaining amount of the assigning Lenders Commitment under any Facility and the Loans at the time owing to it under such Facility or in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; and
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(B) in any case not described in clause (b)(i)(A) of this Section, the aggregate amount of the Commitment (which for this purpose includes Loans outstanding thereunder) or, if the Commitment is not then in effect, the principal outstanding balance of the Loans of the assigning Lender subject to each such assignment, determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if Trade Date is specified in the Assignment and Assumption, as of the Trade Date, shall not be less than $5 million, in the case of any assignment in respect of the Revolving Credit Facility, or $1 million, in the case of any assignment in respect of Term Loans, unless each of the Administrative Agent and, so long as no Event of Default under Section 8.01(a) or (f) has occurred and is continuing, the Borrower otherwise consents; provided , however , that concurrent assignments to members of an Assignee Group and concurrent assignments from members of an Assignee Group to a single Eligible Assignee (or to an Eligible Assignee and members of its Assignee Group) will be treated as a single assignment for purposes of determining whether such minimum amount has been met;
(ii) Proportionate Amounts . Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lenders rights and obligations under each applicable Facility, except that this clause (ii) shall not (A) apply to the Swing Line Lenders rights and obligations in respect of Swing Line Loans or (B) prohibit any Lender from assigning all or a portion of its rights and obligations under one Facility on a non- pro rata basis relative to its rights and obligations under another Facility;
(iii) Required Consents . No consent shall be required for any assignment except to the extent required by clause (b)(i)(B) of this Section and, in addition:
(A) the consent of the Borrower (such consent not to be unreasonably withheld or delayed) shall be required unless (1) an Event of Default under Section 8.01(a) or (f) has occurred and is continuing at the time of such assignment or (2) such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund (which, in the case of an assignment in respect of the Revolving Credit Facility, shall be a Revolving Credit Lender, an Affiliate of a Revolving Credit Lender or an Approved Fund with respect to a Revolving Credit Lender); provided , that the Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within ten (10) Business Days after having received notice thereof;
(B) the consent of the applicable Administrative Agent (such consent not to be unreasonably withheld or delayed) shall be required for
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assignments in respect of (1) any Term Commitment or Revolving Credit Commitment (and associated Revolving Credit Loans and participations in L/C Obligations and in Swing Line Loans) if such assignment is to a Person that is not a Lender with a Commitment in respect of the applicable Facility, an Affiliate of such Lender or an Approved Fund with respect to such Lender or (2) any Term Loan to a Person that is not a Lender, an Affiliate of a Lender or an Approved Fund;
(C) the consent of the L/C Issuers and the Swing Line Lender (each such consent not to be unreasonably withheld or delayed) shall be required for any assignment in respect of the Revolving Credit Facility if such assignment is to a Person that is not a Lender with a Revolving Credit Commitment, an Affiliate of such a Lender or an Approved Fund with respect to such a Lender.
(iv) Assignment and Assumption . The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee in the amount of $3,500; provided , however , that the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment. The assignee, if it is not a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.
(v) No Assignment to Certain Persons . No such assignment shall be made (A) to the Borrower or any of the Borrowers Affiliates or Subsidiaries, unless such Term Loans acquired by the Borrower or any of its Subsidiaries shall be retired and cancelled promptly upon acquisition thereof, (B) to any Defaulting Lender or any of its Subsidiaries, or any Person who, upon becoming a Lender hereunder, would constitute any of the foregoing Persons described in this clause (B) , or (C) to a natural person.
(vi) Notwithstanding anything else to the contrary contained in this Agreement, any Lender may assign all or a portion of its Term Loans to the Borrower in accordance with Section 10.06(a) (which assignment, if to the Borrower, will not constitute a prepayment of Loans for any purposes of this Agreement and the other Loan Documents) through (x) open market purchases on a non-pro rata basis or (y) a Dutch auction open to all Lenders of the applicable Class on a pro rata basis; provided that:
(A) with respect to any assignment to the Borrower, no Event of Default has occurred or is continuing or would result therefrom;
(B) [reserved];
(C) the assigning Lender and the Borrower purchasing such Lenders Term Loans shall execute and deliver to the Administrative Agent an assignment agreement substantially in the form of Exhibit E-2 in lieu of an Assignment and Assumption;
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(D) for the avoidance of doubt, Lenders shall not be permitted to assign Revolving Credit Commitments or Revolving Credit Loans to the Borrower;
(E) any Term Loans assigned to the Borrower shall be automatically and permanently cancelled upon the effectiveness of such assignment and will thereafter no longer be outstanding for any purpose hereunder (it being understood that any gains or losses by the Borrower upon purchase or acquisition and cancellation of such Term Loans shall not be taken into account in the calculation of Excess Cash Flow, Consolidated Net Income and Consolidated EBITDA);
(F) the Borrower may not use the proceeds from Revolving Credit Loans or Swing Line Loans to purchase any Term Loans;
(G) any purchases (or assignments) of Loans by the Borrower made through Dutch auctions shall be conducted pursuant to procedures to be established by the Administrative Agent that are consistent with this Section 10.06(b)(vi) and are otherwise reasonably acceptable to the Borrower and (ii) require that such Person clearly identify itself as the Borrower in any assignment and assumption agreement executed in connection with such purchases or assignments;
(H) neither the Administrative Agent nor any Arranger will have any obligation to participate in, arrange, sell or otherwise facilitate, and will have no liability in connection with, any open market purchases (or assignments) of Loans by the Borrower.
(vii) Certain Additional Payments . In connection with any assignment of rights and obligations of any Defaulting Lender hereunder, no such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall make such additional payments to the Administrative Agent in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations or subparticipations, or other compensating actions, including funding, with the consent of the Borrower and the Administrative Agent, the applicable pro rata share of Loans previously requested but not funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent), to (x) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Administrative Agent or any Lender hereunder (and interest accrued thereon) and (y) acquire (and fund as appropriate) its full pro rata share of all Loans and participations in Letters of Credit and Swing Line Loans in accordance with its Applicable Percentage. Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under applicable Law without compliance with the provisions of this paragraph, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.
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Subject to acceptance and recording thereof by the Administrative Agent pursuant to clause (c) of this Section, from and after the effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lenders rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of (and subject to the obligations and limitations of) Sections 3.01 , 3.04 , 3.05 and 10.04 with respect to amounts payable thereunder and accruing for such Lenders benefit but not paid prior to the effective date of such assignment. Upon request, the Borrower (at its expense) shall execute and deliver a Note to the assignee Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with Section 10.06(d) .
(c) Register . The Administrative Agent, acting solely for this purpose as a non-fiduciary agent of the Borrower, shall maintain at the Administrative Agents Office a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts (and related interest amounts) of the Loans and L/C Obligations owing to, each Lender pursuant to the terms hereof from time to time (the Register ). The entries in the Register shall be conclusive absent manifest error and the Borrower, the Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower and any Lender (with respect to its own interests only), at any reasonable time and from time to time upon reasonable prior notice.
(d) Participations . Any Lender may at any time, without the consent of, or notice to, the Borrower or the Administrative Agent, sell participations to any Eligible Assignee (each, a Participant ) in all or a portion of such Lenders rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans (including such Lenders participations in L/C Obligations and/or Swing Line Loans) owing to it); provided , that (i) such Lenders obligations under this Agreement shall remain unchanged; (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations; and (iii) the Borrower, the Administrative Agent, the Lenders and the L/C Issuers shall continue to deal solely and directly with such Lender in connection with such Lenders rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided , that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification described in the first proviso to Section 10.01 that adversely affects such Participant. Subject to clause (e) of this Section, the Borrower agree that each Participant shall be entitled to the benefits of Sections 3.01 , 3.04 and 3.05 (subject to the requirements and limitations of such Sections and Section 10.13 and the Participants compliance with
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Section 3.01(d) ) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to Section 10.06(b) . To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 10.08 as though it were a Lender; provided such Participant agrees to be subject to Section 2.13 as though it were a Lender.
Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and related interest amounts) of each Participants interest in the Loans or other obligations under this Agreement (the Participant Register ) . The entries in the Participant Register shall be conclusive, absent manifest error, and the Borrower 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; provided , that no Lender shall have the obligation to disclose all or a portion of the Participant Register (including the identity of the Participant or any information relating to a Participants interest in any Loans or other obligations under any Loan Document) to any Person except to the extent that (x) Borrower reasonably determines that Borrower requires access to the Participant Register or a portion thereof in order to permit Borrower to satisfy its reporting and withholding obligations under FATCA, in which case only the portion of the Participant Register Borrower requires for its satisfaction of such obligations will be disclosed to Borrower or (y) such disclosure is necessary to establish that any loans are in registered form for U.S. federal income tax purposes.
(e) Limitations upon Participant Rights . A Participant shall not be entitled to receive any greater payment under Section 3.01 or 3.04 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, except to the extent such entitlement to receive a greater payment results in a Change in Law that occurs after the Participant acquired the applicable participation.
(f) Certain Pledges . Any Lender may at any time, without consent or notice, pledge or assign a security interest in all or any portion of its rights under this Agreement (including under its Note, if any) to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank or any central bank having jurisdiction over such Lender; 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.
(g) Special Purpose Funding Vehicles . Notwithstanding anything to the contrary contained herein, any Lender (a Granting Lender ) may grant to a special purpose funding vehicle identified as such in writing from time to time by the Granting Lender to the Administrative Agent and the Borrower (an SPC ) the option to provide all or any part of any Loan that such Granting Lender would otherwise be obligated to make pursuant to this Agreement; provided , that (i) nothing herein shall constitute a commitment by any SPC to fund any Loan; (ii) any grant of such an option to any SPC shall not constitute a novation, if an SPC elects not to exercise such option or otherwise fails to make all or any part of such Loan, the Granting Lender shall be obligated to make such Loan pursuant to the terms hereof, and in no event shall any Granting Lender be released from its obligations hereunder. Each party hereto hereby agrees that (i) each SPC shall be entitled to the benefits of Sections 3.01 , 3.04 and 3.05
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(subject to the requirements and limitations of such Sections and Section 10.13 ) to the same extent as if it were a Granting Lender and had acquired its interest by assignment pursuant to Section 10.06(b) ; provided , that an SPC shall not be entitled to receive any greater payment under Section 3.01 or 3.04 than the applicable Granting Lender would have been entitled to receive with respect to the SPC granted to such SPC, (ii) no SPC shall be liable for any indemnity or similar payment obligation under this Agreement for which a Lender would be liable; and (iii) the Granting Lender shall for all purposes, including the approval of any amendment, waiver or other modification of any provision of any Loan Document, remain the lender of record hereunder. The making of a Loan by an SPC hereunder shall utilize the Commitment of the Granting Lender to the same extent, and as if, such Loan were made by such Granting Lender. In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the date that is one year and one day after the payment in full of all outstanding commercial paper or other senior debt of any SPC, it will not institute against, or join any other Person in instituting against, such SPC any bankruptcy, reorganization, arrangement, insolvency, or liquidation proceeding under the laws of the United States or any State thereof. Notwithstanding anything to the contrary contained herein, any SPC may (i) with notice to, but without prior consent of the Borrower and the Administrative Agent and with the payment of a processing fee in the amount of $3,500 (which processing fee may be waived by the Administrative Agent in its sole discretion), assign all or any portion of its right to receive payment with respect to any Loan to the related Granting Lender; and (ii) disclose on a confidential basis any non-public information relating to its funding of Loans to any rating agency, commercial paper dealer or provider of any surety or Guarantee or credit or liquidity enhancement to such SPC.
(h) Resignation as L/C Issuer after Assignment . Notwithstanding anything to the contrary contained herein, if at any time any L/C Issuer assigns all of its Revolving Credit Commitment and Revolving Credit Loans pursuant to Section 10.06(b) , such L/C Issuer may, (i) subject to the remainder of this paragraph, upon thirty (30) days notice to the Borrower and the Lenders, resign as L/C Issuer. In the event of any such resignation as L/C Issuer, the Borrower shall be entitled to appoint from among the Lenders a successor L/C Issuer hereunder; provided , however , that no failure by the Borrower to appoint any such successor shall affect the resignation of such L/C Issuer. If any L/C Issuer resigns as L/C Issuer, it shall retain all the rights, powers, privileges and duties of such L/C Issuer hereunder with respect to all Letters of Credit outstanding as of the effective date of its resignation as L/C Issuer and all L/C Obligations with respect thereto (including the right to require the Lenders to make Base Rate Loans or fund risk participations in Unreimbursed Amounts pursuant to Section 2.03(c) ). Upon the appointment of a successor L/C Issuer, (a) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring L/C Issuer and (b) the successor L/C Issuer shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to the retiring L/C Issuer to effectively assume the obligations of such L/C Issuer with respect to such Letters of Credit
(i) Resignation as Swing Line Lender after Assignment . Notwithstanding anything to the contrary contained herein, if at any time Citibank assigns all of its Revolving Credit Commitment and Revolving Credit Loans pursuant to Section 10.06(b) , Citibank may, (i) subject to the remainder of this paragraph, upon thirty (30) days notice to the Borrower and
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the Lenders, resign as Swing Line Lender. In the event of any such resignation as Swing Line Lender, the Borrower shall be entitled to appoint from among the Lenders a Swing Line Lender hereunder; provided , however , that no failure by the Borrower to appoint any such successor shall affect the resignation of Citibank as Swing Line Lender. If Citibank resigns as Swing Line Lender, it shall retain all the rights of the Swing Line Lender provided for hereunder with respect to Swing Line Loans made by it and outstanding as of the effective date of such resignation, including the right to require the Lenders to make Base Rate Loans or fund risk participations in outstanding Swing Line Loans pursuant to Section 2.04(c) . Upon the appointment of a successor Swing Line Lender, (a) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring Swing Line Lender.
Section 10.07. Treatment of Certain Information; Confidentiality .
Each of the Administrative Agent, the Lenders and the L/C Issuers agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates and to its and its Affiliates respective partners, directors, officers, employees, agents, trustees, advisors and representatives (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential and that the disclosing party shall be liable for the failure of any such Persons to adhere to the requirements of this Section 10.07 ); (b) to the extent requested by any regulatory authority purporting to have jurisdiction over it (including any self-regulatory authority, such as the National Association of Insurance Commissioners); (c) to the extent required by applicable Laws or regulations or by any subpoena or similar legal process; (d) to any other party hereto; (e) 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; (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement; or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower and its obligations; (g) with the consent of the Borrower; (h) on a confidential basis to the CUSIP Service Bureau or any similar agency in connection with the issuance and monitoring of CUSIP numbers or other market identifiers with respect to the credit facilities provided hereunder; and (i) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to the Administrative Agent, any Lender, any L/C Issuer or any of their respective Affiliates on a non-confidential basis from a source other than the Borrower that is not itself, to the knowledge of such Person, in breach of a confidentiality obligation to the Borrower or any Subsidiary in connection with the disclosure of such Information.
For purposes of this Section, Information means all information received from the Borrower or any Subsidiary relating to the Borrower or any Subsidiary or any of their respective businesses, other than any such information that is available to the Administrative Agent, any Lender or any L/C Issuer on a non-confidential basis prior to disclosure by the Borrower or any Subsidiary. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.
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Each of the Administrative Agent, the Lenders and the L/C Issuers acknowledges that (a) the Information may include material non-public information concerning the Borrower or a Subsidiary, as the case may be, and (b) it has developed compliance procedures regarding the use of material non-public information.
Section 10.08. Setoff .
In addition to any rights and remedies of the Lenders provided by Law, upon the occurrence and during the continuance of any Event of Default, each Lender and its Affiliates (and the Collateral Agent, in respect of any unpaid fees, costs and expenses payable hereunder) is authorized at any time and from time to time, without prior notice to the Borrower, any such notice being waived by the Borrower (on its own behalf and on behalf of each Loan Party and each of its Subsidiaries) to the fullest extent permitted by applicable Law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held by, and other Indebtedness at any time owing by, such Lender and its Affiliates or the Collateral Agent to or for the credit or the account of the respective Loan Parties and their Subsidiaries against any and all Obligations owing to such Lender and its Affiliates or the Collateral Agent hereunder or under any other Loan Document, now or hereafter existing, irrespective of whether or not such Agent or such Lender or Affiliate shall have made demand under this Agreement or any other Loan Document and although such Obligations may be contingent or unmatured or denominated in a currency different from that of the applicable deposit or Indebtedness. Each Lender agrees promptly to notify the Borrower and the Administrative Agent after any such set off and application made by such Lender; provided , that the failure to give such notice shall not affect the validity of such setoff and application. The rights of the Administrative Agent, the Collateral Agent and each Lender under this Section 10.08 are in addition to other rights and remedies (including other rights of setoff) that the Administrative Agent, the Collateral Agent and such Lender may have.
Section 10.09. Interest Rate Limitation .
Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable Law (the Maximum Rate ). If any Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to the Borrower. In determining whether the interest contracted for, charged, or received by an Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable Law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest; (b) exclude voluntary prepayments and the effects thereof; and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder.
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Section 10.10. Counterparts; Effectiveness .
This Agreement and each other Loan Document may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Delivery by telecopier or email pdf of an executed counterpart of a signature page to this Agreement and each other Loan Document shall be effective as delivery of an original executed counterpart of this Agreement and such other Loan Document. The Agents may also require that any such documents and signatures delivered by telecopier or email pdf be confirmed by a manually signed original thereof; provided , that the failure to request or deliver the same shall not limit the effectiveness of any document or signature delivered by telecopier or email pdf. Except as provided in Section 4.01 , this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto.
Section 10.11. Integration .
This Agreement, together with the other Loan Documents, comprises the complete and integrated agreement of the parties on the subject matter hereof and thereof and supersedes all prior agreements, written or oral, on such subject matter. In the event of any conflict between the provisions of this Agreement and those of any other Loan Document, the provisions of this Agreement shall control; provided , that the inclusion of supplemental rights or remedies in favor of the Agents or the Lenders in any other Loan Document shall not be deemed a conflict with this Agreement. Each Loan Document was drafted with the joint participation of the respective parties thereto and shall be construed neither against nor in favor of any party, but rather in accordance with the fair meaning thereof.
Section 10.12. Survival of Representations and Warranties .
All representations and warranties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof. Such representations and warranties have been or will be relied upon by the Administrative Agent and each Lender, regardless of any investigation made by the Administrative Agent or any Lender or on their behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default at the time of any Credit Extension, and shall continue in full force and effect as long as any Loan or any other Obligation hereunder shall remain unpaid or unsatisfied or any Letter of Credit shall remain outstanding.
Section 10.13. Replacement of Lenders .
If any Lender gives notice under Section 3.02 or requests compensation under Section 3.04 , if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.01 , if any Lender is a Defaulting Lender, if any Lender shall fail to consent to any amendment or waiver requested by the Borrower in accordance with the last paragraph of Section 10.01 or if any other circumstance exists hereunder that gives the Borrower the right to replace a Lender as a party hereto, then the 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
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accordance with and subject to the restrictions contained in, and consents required by, Section 10.06 ), all of its interests, rights and obligations under this Agreement and the related Loan Documents to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that:
(a) the Administrative Agent shall have received the assignment fee specified in Section 10.06(b) unless waived;
(b) such Lender shall have received payment of an amount equal to 100% of the outstanding principal of its Loans and L/C Advances and, other than in the case of a Defaulting Lender, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents, any premium thereon (assuming for this purpose that the Loans of such Lender were being prepaid) from the assignee and any amounts payable by the Borrower then due pursuant to Section 3.01 , 3.04 or 3.05 from the Borrower (it being understood that the Assignment and Assumption relating to such assignment shall provide that any interest and fees that accrued prior to the effective date of the assignment shall be for the account of the replaced Lender and such amounts that accrue on and after the effective date of the assignment shall be for the account of the replacement Lender);
(c) in the case of any such assignment resulting from a claim for compensation under Section 3.04 or payments required to be made pursuant to Section 3.01 , such assignment will result in a reduction in such compensation or payments thereafter; and
(d) such assignment does not conflict with applicable Laws.
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 Borrower to require such assignment and delegation cease to apply. Each Lender agrees that, if the Borrower elects to replace such Lender in accordance with this Section 10.13 , it shall promptly execute and deliver to the Administrative Agent an Assignment and Assumption to evidence the assignment and shall deliver to the Administrative Agent any Note (if Notes have been issued in respect of such Lenders Loans) subject to such Assignment and Assumption; provided , that the failure of any such Lender to execute an Assignment and Assumption shall not render such assignment invalid and such assignment shall be recorded in the Register.
Notwithstanding the foregoing, if the Borrower elects to replace a Lender in connection with a Repricing Transaction, such Lender shall be entitled to the Prepayment Premium paid in accordance with Section 2.05(a)(iii) .
Section 10.14. Severability .
If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired thereby; and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close
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as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Without limiting the foregoing provisions of this Section 10.14 , if and to the extent that the enforceability of any provisions in this Agreement relating to Defaulting Lenders shall be limited by Debtor Relief Laws, as determined in good faith by the Borrower and the Administrative Agent, the applicable L/C Issuer or the Swing Line Lender, as applicable, then such provisions shall be deemed to be in effect only to the extent not so limited.
Section 10.15. GOVERNING LAW .
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ANY CONFLICTS PROVISIONS THAT WOULD RESULT IN THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.
(a) ANY LEGAL ACTION OR PROCEEDING ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, SHALL BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK LOCATED IN THE BOROUGH OF MANHATTAN OR ANY APPELLATE COURT FROM ANY SUCH COURT, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH LOAN PARTY, EACH AGENT, EACH LENDER AND EACH L/C ISSUER CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH LOAN PARTY, EACH AGENT, EACH AND EACH L/C ISSUER LENDER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS , WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF ANY LOAN DOCUMENT OR OTHER DOCUMENT RELATED THERETO. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS IN THE MANNER PROVIDED FOR NOTICES (OTHER THAN TELECOPIER) IN SECTION 10.02. NOTHING IN THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.
Section 10.16. WAIVER OF RIGHT TO TRIAL BY JURY .
EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY
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HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
Section 10.17. Binding Effect .
This Agreement shall become effective when it shall have been executed by the Loan Parties and the Administrative Agent shall have been notified by each Lender, the Swing Line Lenders and L/C Issuer that each such Lender, Swing Line Lender and L/C Issuer has executed it and thereafter shall be binding upon and inure to the benefit of the Loan Parties, each Agent and each Lender and their respective successors and assigns, in each case in accordance with Section 10.06 (if applicable) and except that no Loan Party shall have the right to assign its rights hereunder or any interest herein without the prior written consent of the Lenders except as permitted by Section 7.03 .
Section 10.18. No Advisory or Fiduciary Responsibility .
In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document), each of the Borrower and the other Loan Parties acknowledges and agrees, and acknowledges its Affiliates understanding, that: (a) (i) the arranging and other services regarding this Agreement provided by the Administrative Agent, the Arrangers and the Lenders, are arms-length commercial transactions between the Borrower, the other Loan Parties their respective Affiliates, on the one hand, and the Administrative Agent, the Arrangers and the Lenders, on the other hand, (ii) each of the Borrower and the other Loan Parties has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (iii) each of the Borrower and each of the other Loan Parties are capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents; (b) (i) the Administrative Agent, the Arrangers and the Lenders each is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for the Borrower, the other Loan Parties or any of their respective Affiliates, or any other Person; and (ii) neither the Administrative Agent, the Arrangers nor the Lenders have any obligation to the Borrower, the other Loan Parties or any of their respective Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; and (c) the Administrative Agent, the Arrangers, the Lenders and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Borrower, the other Loan Parties and their respective Affiliates, and neither the Administrative Agent, the Arrangers nor the Lenders have any obligation to disclose any of such interests to the Borrower, the other Loan Parties or any of their respective Affiliates. To the fullest extent permitted by law, each of the Borrower and each of the other Loan Parties hereby waive and release any claims that it may have against the Administrative Agent, the Arrangers and the Lenders with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby.
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Section 10.19. Lender Action .
Each Lender agrees that it shall not take or institute any actions or proceedings, judicial or otherwise, for any right or remedy against any Loan Party or any other obligor under any of the Loan Documents, the Secured Hedge Agreements or the Treasury Services Agreements, or institute any actions or proceedings, or otherwise commence any remedial procedures, with respect to any Collateral or any other property of any such Loan Party (other than with respect to exercise of any right of setoff or filing of any relevant proof of claim in any bankruptcy court), without the prior written consent of the Administrative Agent. The provision of this Section 10.19 are for the sole benefit of the Lenders and shall not afford any right to, or constitute a defense available to, any Loan Party.
Section 10.20. USA Patriot Act .
Each Lender that is subject to the USA Patriot Act and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Loan Parties that pursuant to the requirements of the USA Patriot Act, it is required to obtain, verify and record information that identifies the Loan Parties, which information includes the name, address and tax identification number of each Loan Party and other information regarding each Loan Party that will allow such Lender or the Administrative Agent, as applicable, to identify each Loan Party in accordance with the USA Patriot Act. This notice is given in accordance with the requirements of the USA Patriot Act and is effective as to the Lenders and the Administrative Agent. the Borrower shall, promptly following a request by the Administrative Agent or any Lender, provide all documentation and other information that the Administrative Agent or such Lender requests in order to comply with its ongoing obligations under applicable know your customer and anti-money laundering rules and regulations, including the USA Patriot Act.
Section 10.21. Electronic Execution of Assignments and Certain Other Documents .
The words execution, signed, signature, and words of like import in any Assignment and Assumption or in any amendment or other modification hereof (including waivers and consents) shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.
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ARTICLE XI
GUARANTEE
Section 11.01. The Guarantee .
Each Guarantor hereby jointly and severally with the other Guarantors guarantees, as a primary obligor and not as a surety, to each Secured Party and their respective successors and assigns, the prompt payment in full when due (whether at stated maturity, by required prepayment, declaration, demand, by acceleration or otherwise) of the principal of and interest (including any interest that would accrue but for the provisions of (i) the Title 11 of the United States Code after any bankruptcy or insolvency petition under Title 11 of the United States Code and (ii) any other Debtor Relief Laws) on the Loans made by the Lenders to, and the Notes held by each Lender of, the Borrower (other than such Guarantor), and all other Obligations from time to time owing to the Secured Parties by any Loan Party under any Loan Document or any Secured Hedge Agreement or any Treasury Services Agreement, in each case strictly in accordance with the terms thereof, excluding, with respect to any Guarantor at any time, Excluded Swap Obligations with respect to such Guarantor at such time (such obligations being herein collectively called the Guaranteed Obligations ). The Guarantors hereby jointly and severally agree that if the Borrower shall fail to pay in full when due (whether at stated maturity, by acceleration or otherwise) any of the Guaranteed Obligations, the Guarantors will promptly pay the same in cash, without any demand or notice whatsoever, and that in the case of any extension of time of payment or renewal of any of the Guaranteed Obligations, the same will be promptly paid in full when due (whether at extended maturity, by acceleration or otherwise) in accordance with the terms of such extension or renewal. Notwithstanding anything to the contrary, this Section 11.01 shall not require or result in the application of any amount received from any Loan Party to any Excluded Swap Obligation of such Loan Party.
Section 11.02. Obligations Unconditional .
The obligations of the Guarantors under Section 11.01 shall constitute a guaranty of payment and to the fullest extent permitted by applicable Law, are absolute, irrevocable and unconditional, joint and several, irrespective of the value, genuineness, validity, regularity or enforceability of the Guaranteed Obligations of the Borrower under this Agreement, the Notes, if any, or any other agreement or instrument referred to herein or therein, or any substitution, release or exchange of any other guarantee of or security for any of the Guaranteed Obligations, and, irrespective of any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or defense of a surety or Guarantor (except for payment in full). Without limiting the generality of the foregoing, it is agreed that the occurrence of any one or more of the following shall not alter or impair the liability of the Guarantors hereunder which shall remain absolute, irrevocable and unconditional under any and all circumstances as described above:
(a) at any time or from time to time, without notice to the Guarantors, the time for any performance of or compliance with any of the Guaranteed Obligations shall be extended, or such performance or compliance shall be waived;
(b) any of the acts mentioned in any of the provisions of this Agreement or the Notes, if any, or any other agreement or instrument referred to herein or therein shall be done or omitted;
(c) the maturity of any of the Guaranteed Obligations shall be accelerated, or any of the Guaranteed Obligations shall be amended in any respect, or any right under the Loan Documents or any other agreement or instrument referred to herein or therein shall
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be amended or waived in any respect or any other guarantee of any of the Guaranteed Obligations or any security therefor shall be released or exchanged in whole or in part or otherwise dealt with;
(d) any Lien or security interest granted to, or in favor of, an L/C Issuer or any Lender or Agent as security for any of the Guaranteed Obligations shall fail to be perfected;
(e) the release of any other Guarantor pursuant to Section 11.09 ; or
(f) the expiration of any statute of limitations.
The Guarantors hereby expressly waive diligence, presentment, demand of payment, protest and all notices whatsoever, and any requirement that any Secured Party exhaust any right, power or remedy or proceed against the Borrower under this Agreement or the Notes, if any, or any other agreement or instrument referred to herein or therein, or against any other person under any other guarantee of, or security for, any of the Guaranteed Obligations. The Guarantors waive any and all notice of the creation, renewal, extension, waiver, termination or accrual of any of the Guaranteed Obligations and notice of or proof of reliance by any Secured Party upon this Guarantee or acceptance of this Guarantee, and the Guaranteed Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred in reliance upon this Guarantee, and all dealings between the Borrower and the Secured Parties shall likewise be conclusively presumed to have been had or consummated in reliance upon this Guarantee. This Guarantee shall be construed as a continuing, absolute, irrevocable and unconditional guarantee of payment without regard to any right of offset with respect to the Guaranteed Obligations at any time or from time to time held by Secured Parties, and the obligations and liabilities of the Guarantors hereunder shall not be conditioned or contingent upon the pursuit by the Secured Parties or any other person at any time of any right or remedy against the Borrower or against any other person which may be or become liable in respect of all or any part of the Guaranteed Obligations or against any collateral security or guarantee therefor or right of offset with respect thereto. This Guarantee shall remain in full force and effect and be binding in accordance with and to the extent of its terms upon the Guarantors and the successors and assigns thereof, and shall inure to the benefit of the Lenders, and their respective successors and assigns, notwithstanding that from time to time during the term of this Agreement there may be no Guaranteed Obligations outstanding.
Section 11.03. Reinstatement .
The obligations of the Guarantors under this Article XI shall be automatically reinstated if and to the extent that for any reason any payment by or on behalf of the Borrower or other Loan Party in respect of the Guaranteed Obligations is rescinded or must be otherwise restored by any holder of any of the Guaranteed Obligations, whether as a result of any proceedings in bankruptcy or reorganization or otherwise.
Section 11.04. Subrogation; Subordination .
Each Guarantor hereby agrees that until the payment and satisfaction in full in cash of all Guaranteed Obligations and the expiration and termination of the Commitments of the
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Lenders under this Agreement it shall waive any claim and shall not exercise any right or remedy, direct or indirect, arising by reason of any performance by it of its guarantee in Section 11.01 , whether by subrogation or otherwise, against the Borrower or any other Guarantor of any of the Guaranteed Obligations or any security for any of the Guaranteed Obligations.
Section 11.05. Remedies .
The Guarantors jointly and severally agree that, as between the Guarantors and the Lenders, the obligations of the Borrower under this Agreement and the Notes, if any, may be declared to be forthwith due and payable as provided in Section 8.02 (and shall be deemed to have become automatically due and payable in the circumstances provided in Section 8.02 ) for purposes of Section 11.01 , notwithstanding any stay, injunction or other prohibition preventing such declaration (or such obligations from becoming automatically due and payable) as against the Borrower and that, in the event of such declaration (or such obligations being deemed to have become automatically due and payable), such obligations (whether or not due and payable by the Borrower) shall forthwith become due and payable by the Guarantors for purposes of Section 11.01 .
Section 11.06. Instrument for the Payment of Money .
Each Guarantor hereby acknowledges that the guarantee in this Article XI constitutes an instrument for the payment of money, and consents and agrees that any Lender or Agent, at its sole option, in the event of a dispute by such Guarantor in the payment of any moneys due hereunder, shall have the right to bring a motion-action under New York CPLR Section 3213.
Section 11.07. Continuing Guarantee .
The guarantee in this Article XI is a continuing guarantee of payment, and shall apply to all Guaranteed Obligations whenever arising.
Section 11.08. General Limitation on Guarantee Obligations .
In any action or proceeding involving any state corporate limited partnership or limited liability company law, or any applicable state, federal or foreign bankruptcy, insolvency, reorganization or other Law affecting the rights of creditors generally, if the obligations of any Guarantor under Section 11.01 would otherwise be held or determined to be void, voidable, invalid or unenforceable, or subordinated to the claims of any other creditors, on account of the amount of its liability under Section 11.01 , then, notwithstanding any other provision to the contrary, the amount of such liability shall, without any further action by such Guarantor, any Loan Party or any other person, be automatically limited and reduced to the highest amount (after giving effect to the right of contribution established in Section 11.10 ) that is valid and enforceable and not subordinated to the claims of other creditors as determined in such action or proceeding.
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Section 11.09. Release of Guarantors .
If, in compliance with the terms and provisions of the Loan Documents, any portion of the Equity Interests or all or substantially all property of any Guarantor is sold or otherwise transferred to a Person or Persons, none of which is a Loan Party, or if any Guarantor shall be designated an Unrestricted Subsidiary or otherwise not be required to remain a Guarantor hereunder, then such Guarantor shall, upon the consummation of such sale or transfer, designation or other circumstance, be automatically released from its obligations under this Agreement (including under Section 10.04 hereof) and its obligations to pledge and grant any Collateral owned by it (and all security interests actually granted in such Collateral) pursuant to any Collateral Document and, in the case of a sale of all or substantially all of the Equity Interests of such Guarantor, the pledge of such Equity Interests to the Collateral Agent pursuant to the Collateral Documents shall be automatically released, and, so long as the Borrower shall have provided the Agents such certifications or documents as any Agent shall reasonably request, the Collateral Agent shall take such actions as are necessary to effect each release described in this sentence.
Section 11.10. Right of Contribution .
Each Guarantor hereby agrees that to the extent that a Guarantor shall have paid more than its proportionate share of any payment made hereunder, such Guarantor shall be entitled to seek and receive contribution from and against any other Guarantor hereunder which has not paid its proportionate share of such payment. Each Guarantors right of contribution shall be subject to the terms and conditions of Section 11.04 . The provisions of this Section 11.10 shall in no respect limit the obligations and liabilities of any Guarantor to the Administrative Agent, the L/C Issuers, the Swing Line Lenders and the Lenders, and each Guarantor shall remain liable to the Administrative Agent, the L/C Issuers, the Swing Line Lenders and the Lenders for the full amount guaranteed by such Guarantor hereunder.
Section 11.11. Subject to Intercreditor Agreement .
Notwithstanding anything herein to the contrary, (i) the liens and security interests granted to the Collateral Agent pursuant to the Collateral Documents are expressly subject to the Intercreditor Agreement (if in effect), the Second Lien Intercreditor Agreement (if in effect) and any other intercreditor agreement entered into pursuant hereto and (ii) the exercise of any right or remedy by the Administrative Agent and Collateral Agent hereunder or under the Intercreditor Agreement (if in effect), the Second Lien Intercreditor Agreement (if in effect) and any other intercreditor agreement entered into pursuant hereto is subject to the limitations and provisions of the Intercreditor Agreement (if in effect), the Second Lien Intercreditor Agreement (if in effect) and such other intercreditor agreement entered into pursuant hereto. In the event of any conflict between the terms of the Intercreditor Agreement (if in effect), the Second Lien Intercreditor Agreement (if in effect) or any other such intercreditor and terms of this Agreement, the terms of the Intercreditor Agreement (if in effect), the Second Lien Intercreditor Agreement (if in effect) or such other intercreditor agreement, as applicable, shall govern.
Section 11.12. Keepwell .
Each Qualified ECP Guarantor hereby jointly and severally absolutely, unconditionally and irrevocably undertakes to provide such funds or other support as may be
186
needed from time to time by each other Guarantor to honor all of its obligations under this Guaranty in respect of Swap Obligations ( provided , however , that each Qualified ECP Guarantor shall only be liable under this Section 11.12 for the maximum amount of such liability that can be hereby incurred without rendering its obligations under this Section 11.12 , or otherwise under this Guaranty, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount). The obligations of each Qualified ECP Guarantor under this Section 11.12 shall remain in full force and effect until the release of this Guaranty under Section 9.09(b)(ii) . Each Qualified ECP Guarantor intends that this Section 11.12 constitute, and this Section 11.12 shall be deemed to constitute, a keepwell, support, or other agreement for the benefit of each other Guarantor for all purposes of Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.
187
IN WITNESS WHEREOF , the parties hereto have caused this Agreement to be duly executed as of the date first above written.
HALYARD HEALTH, INC., as Borrower | ||
By: |
/s/ Robert E. Abernathy |
|
Name: Robert E. Abernathy | ||
Title: President and Chief Executive Officer | ||
AVENT, INC., as Guarantor | ||
HALYARD SALES, LLC, as Guarantor | ||
HALYARD HEALTHCARE, INC., as Guarantor | ||
HALYARD NORTH CAROLINA, INC., as Guarantor | ||
By: |
/s/ Robert E. Abernathy |
|
Name: Robert E. Abernathy | ||
Title: President | ||
MORGAN STANLEY SENIOR FUNDING, INC., as Term Loan Administrative Agent and Lender | ||
By: |
/s/ Pramod Raju |
|
Name: Pramod Raju | ||
Title: Authorized Signatory | ||
CITIBANK, N.A., as Revolver Administrative Agent, Swing Line Lender, L/C Issuer and Lender |
||
By: |
/s/ Laura Fogerty |
|
Name: Laura Fogerty | ||
Title: Vice President |
[CREDIT AGREEMENT SIGNATURE PAGE]
DEUTSCHE BANK SECURITIES INC., as Arranger and Lender |
||
By: |
/s/ Michael Winters |
|
Name: Michael Winters | ||
Title: Vice President | ||
By: |
/s/ Michael Shannon |
|
Name: Michael Shannon | ||
Title: Vice President | ||
ROYAL BANK OF CANADA, as Arranger and Lender |
||
By: |
/s/ Scott MacVicor |
|
Name: Scott MacVicor | ||
Title: Authorized Signatory | ||
BANCO BILBAO VIZCAYA ARGENTARIA, S.A. NEW YORK BRANCH, as Arranger and Lender |
||
By: |
/s/ Mauricio Benitez |
|
Name: Mauricio Benitez | ||
Title: Vice President | ||
By: |
/s/ Norys Maleki |
|
Name: Norys Maleki | ||
Title: Director |
[CREDIT AGREEMENT SIGNATURE PAGE]
BMO CAPITAL MARKETS CORP, | ||
as Arranger and Lender | ||
By: |
/s/ Bryan J. Rolfe |
|
Name: Bryan J. Rolfe | ||
Title: Managing Director | ||
BMO HARRIS BANK, N.A. as a Lender | ||
By: |
/s/ Eric Oppenheimer |
|
Name: Eric Oppenheimer | ||
Title: Director | ||
U.S. BANK NATIONAL ASSOCIATION, as Arranger and Lender |
||
By: |
/s/ John M. Lagenderfer |
|
Name: John M. Lagenderfer | ||
Title: Senior Vice President | ||
THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., as Arranger and Lender |
||
By: |
/s/ Tenta Ghilaga |
|
Name: Tenta Ghilaga | ||
Title: Director |
[CREDIT AGREEMENT SIGNATURE PAGE]
SCHEDULE 1.01A
COMMITMENTS
TERM LOAN COMMITMENT
Lender | Commitment | |||
Morgan Stanley Senior Funding, Inc. |
$ | 390,000,000 |
REVOLVING CREDIT COMMITMENTS
Lender | Commitment | |||
Citibank, N.A. |
$ | 41,250,000 | ||
Morgan Stanley Bank, N.A. |
$ | 41,250,000 | ||
Deutsche Bank AG New York Branch |
$ | 41,250,000 | ||
Royal Bank of Canada |
$ | 41,250,000 | ||
BMO Harris Bank, N.A. |
$ | 21,250,000 | ||
The Bank of Tokyo-Mitsubishi UFJ, Ltd. |
$ | 21,250,000 | ||
U.S. Bank National Association |
$ | 21,250,000 | ||
Banco Bilbao Vizcaya Argentaria, S.A. New York Branch |
$ | 21,250,000 |
SCHEDULE 1.01B
LETTER OF CREDIT COMMITMENTS
Lender | Commitment | |||
Citibank, N.A. |
$ | 50,000,000 |
SCHEDULE 1.01E
EXISTING INVESTMENTS
1. | Guarantees: |
Cash Pool Agreement dated as of August 27, 2014, by and among Halyard Health, Inc., Halyard Nederland B.V., and Bank Mendes Gans N.V.
2. | Loans: |
Lender |
Borrower | Currency |
Principal
Amount (USD) 1 |
Date of
Issuance |
Maturity
Date |
|||||||||||
Avent, Inc. |
Halyard Health, Inc. | USD | $ | 250,000,000 | 10/13/14 | 10/13/24 | ||||||||||
Halyard Sales, LLC |
Halyard Health, Inc. | USD | $ | 50,000,000 | 10/28/14 | 10/28/24 | ||||||||||
Halyard Health, Inc. |
Halyard North Carolina, Inc. | USD | $ | 10,000,000 | 10/28/14 | 10/28/24 | ||||||||||
Halyard Health, Inc. |
Halyard Healthcare, Inc. | USD | $ | 1,000,000 | 10/28/14 | 10/28/24 | ||||||||||
Halyard Health, Inc. |
Safeskin Corporation Thailand Ltd. | USD | $ | 41,000,000 | 10/21/14 | 10/21/24 | ||||||||||
Halyard Health, Inc. |
Halyard Health South Africa Pty. Ltd. | USD | $ | 3,000,000 | 10/27/14 | 10/27/24 | ||||||||||
Halyard Health, Inc. |
Avent S. de R.L. de C.V | USD | $ | 7,000,000 | 10/24/14 | 10/24/24 | ||||||||||
Halyard Health, Inc. |
Halyard Belgium BVBA | EUR | $ | 12,760,000 | 10/27/14 | 10/27/24 | ||||||||||
Halyard Health, Inc. |
Halyard Health Canada, LLC | CAD | $ | 5,386,480 | 10/29/14 | 10/29/24 | ||||||||||
Halyard Health, Inc. |
La Ada de Acuna, S. de R.L. de C.V. | USD | $ | 2,000,000 | 10/24/14 | 10/24/24 | ||||||||||
Halyard Health, Inc. |
Avent Honduras, S.A. de C.V. | USD | $ | 2,000,000 | 10/24/14 | 10/24/24 | ||||||||||
Halyard Health, Inc. |
Halyard Nederland B.V. | EUR | $ | 8,294,000 | 10/29/14 | 10/29/24 | ||||||||||
Halyard Health, Inc. |
Halyard Deutschland GmbH | EUR | $ | 6,380,000 | 10/29/14 | 10/29/24 | ||||||||||
Halyard Health, Inc. |
Halyard Health UK Limited | GBP | $ | 2,422,650 | 10/29/14 | 10/29/24 |
1 | Non-USD Loans have their principal amounts converted based on 10/29/14 exchange rates |
Lender |
Borrower | Currency |
Principal
Amount (USD) 1 |
Date of
Issuance |
Maturity
Date |
|||||||||||
Halyard Health, Inc. |
Halyard France SAS | EUR | $ | 1,273,635 | 10/29/14 | 10/29/24 | ||||||||||
Halyard Health, Inc. |
Microcuff GmbH | EUR | $ | 5,104,000 | 10/29/14 | 10/29/24 | ||||||||||
Halyard Health, Inc. |
Halyard Australia Pty Limited | AUD | $ | 5,339,400 | 10/29/14 | 10/29/24 | ||||||||||
Halyard Health, Inc. |
Halyard Singapore Pte. Ltd. | SGD | $ | 3,999,040 | 10/29/14 | 10/29/24 |
3. | Other Investments: |
Investments set forth on Schedule 5.12 .
Equity Interests held by the Borrower in Arabian Medical Products Mft. Co., a Saudi Arabian entity, representing approximately 19% of the ownership of such entity.
Equity Interests held by Avent Holdings, LLC in La Ada de Acuna, S. de R.L. de C.V., a Mexican entity, representing approximately 4% of the ownership of such entity.
Equity Interests held by I-Flow Holdings, LLC in Avent S. de R.L. de C.V., a Mexican entity, representing approximately 30% of the ownership of such entity.
Halyard Health India Private Ltd., an Indian entity (the Indian Subsidiary ), was to be a Subsidiary of the Borrower immediately following the Separation and Distribution. However, the transfer of ownership of the Indian Subsidiary to the Borrower requires the approval of certain Governmental Authorities in India. Until such approval has been obtained, ownership of the Indian Subsidiary will be held by certain employees of the Borrower. Once the approval has been obtained (as of the Closing Date, anticipated to be in April 2015) ownership will be transferred to the Borrower
SCHEDULE 5.08
EXCEPTIONS TO OWNERSHIP OF PROPERTY
None.
SCHEDULE 5.12
SUBSIDIARIES
Subsidiary |
Holder | % Ownership | ||||
Halyard Deutschland GmbH |
Halyard Health, Inc. | 100 | % | |||
Halyard Health UK Limited |
Halyard Health, Inc. | 100 | % | |||
Halyard Belgium BVBA |
Halyard Health, Inc. | 100 | % | |||
Halyard Nederland B.V. |
Halyard Health, Inc. | 100 | % | |||
Halyard Australia Pty Limited |
Halyard Health, Inc. | 100 | % | |||
Halyard France SAS |
Halyard Health, Inc. | 100 | % | |||
Halyard Health South Africa Pty Ltd. |
Halyard Health, Inc. | 100 | % | |||
Halyard Singapore, Pte. Ltd. |
Halyard Health, Inc. | 100 | % | |||
Avent, Inc. |
Halyard Health, Inc. | 100 | % | |||
Halyard Sales, LLC |
Halyard Health, Inc. | 100 | % | |||
Halyard Healthcare, Inc. |
Halyard Health, Inc. | 100 | % | |||
Microcuff GmbH |
Avent, Inc. | 100 | % | |||
Halyard North Carolina, Inc. |
Avent, Inc. | 100 | % | |||
Safeskin BVI Ltd. |
Avent, Inc. | 100 | % | |||
Halyard Health Canada, Inc. |
Avent, Inc. | 100 | % | |||
I-Flow Holdings, LLC* |
Avent, Inc. | 100 | % | |||
Halyard International, Inc. * |
Avent, Inc. | 100 | % | |||
Avent Holdings, LLC* |
Avent, Inc. | 100 | % | |||
Avent de Honduras SA de C.V. |
Avent, Inc. | 98.4 | % | |||
Avent S. de R.L. de C.V. |
Avent, Inc. | 70 | % | |||
La Ada de Acuna, S. de R.L. de C.V. |
Avent, Inc. | 96 | % | |||
Safeskin Corporation Thailand Ltd. |
Safeskin BVI Ltd. | 100 | % | |||
Safeskin Medical & Scientific (Thailand) Ltd. |
Safeskin BVI Ltd. | 100 | % |
* | This entity is an Immaterial Subsidiary. |
SCHEDULE 6.13(a)
CERTAIN COLLATERAL DOCUMENTS
Items required under Section 6.13(c) of the Credit Agreement with respect to Halyard North Carolina, Inc.s property located at 389 Clyde Fitzgerald Rd., Linwood, North Carolina 27299.
Intellectual Property Security Agreements, covering any owned United States Patents, Trademarks and Copyrights, as applicable, executed by the Borrower and the Guarantors, as applicable.
Stock certificate number 3 representing 325 shares of the Capital Stock of Halyard Health South Africa Pte. Ltd.
Promissory notes evidencing the loans set forth under Item 2 on Schedule 1.01E , to the extent pledged pursuant to the Security Agreement
SCHEDULE 7.01(b)
EXISTING LIENS
Cash Pool Agreement dated as of August 27, 2014, by and among Halyard Health, Inc., Halyard Nederland B.V., and Bank Mendes Gans N.V.
SCHEDULE 7.02(b)
EXISTING INDEBTEDNESS
Investments constituting Indebtedness set forth under item 2 on Schedule 1.01E .
SCHEDULE 10.02
ADDRESSES FOR NOTICES
To Term Loan Administrative Agent:
Morgan Stanley Senior Funding, Inc.
1585 Broadway
New York, New York 10036
Email: AGENCY.BORROWERS@morganstanley.com
Tel: (917) 260-0588
Fax: (212) 507-6680
To Collateral Agent:
Morgan Stanley Senior Funding, Inc.
1300 Thames Street, 4th Floor
Thames Street Wharf
Baltimore, MD 21231
Email: DOCS4LOANS@morganstanley.com
To Revolver Administrative Agent:
1615 Brett Road, Ops III
New Castle, DE 19720
Tel: 302-894-6010
Fax: 646-274-5080
Email: Global.Loans.Support@Citi.com
To Swingline Lender:
1615 Brett Road, Ops III
New Castle, DE 19720
Tel: 302-894-6010
Fax: 646-274-5080
Email: Global.Loans.Support@Citi.com
To L/C Issuer:
Citibank, N.A.
c/o Citicorp North America, Inc.
Bldg B, 3rd Floor
3800 Citibank Center
Tampa, FL 33610
Attn: U.S. Standby Unit
Tel: 1-866-945-6284
Fax: 1-813-604-7187
Email: leveragedfinance.middleoffice@citi.com
To Borrower:
Halyard Health, Inc.
1400 Holcomb Bridge Road
Roswell, Georgia 30076
Attn: Treasurer
Phone: (770) 587-8938
fax: (678) 254-0352.
e-mail: dave.crawford@hyh.com
EXHIBIT A
[FORM OF]
COMMITTED LOAN NOTICE
To: | [Morgan Stanley Senior Funding, Inc., as Term Loan Administrative Agent] |
[Citibank N.A., as Revolver Administrative Agent] 1
[Date]
Ladies and Gentlemen:
Reference is made to the Credit Agreement, dated as of October 31, 2014 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the Credit Agreement ), among Halyard Health, Inc., a Delaware corporation, as borrower (the Borrower ), the Guarantors from time to time party thereto, Morgan Stanley Senior Funding, Inc., as Term Loan Administrative Agent and Collateral Agent, Citibank, N.A., as Revolver Administrative Agent, Swing Line Lender and an L/C Issuer, and each lender from time to time party thereto. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement.
The Borrower hereby requests (select one):
¨ | A Borrowing of new Loans | |||
¨ | A conversion of Loans made on | |||
¨ | A continuation of Loans made on |
to be made on the terms set forth below:
(A) | Class of Borrowing 2 | |||
(B) | Date of Borrowing, conversion or continuation (which is a Business Day) | |||
(C) | Principal amount 3 | |||
(D) |
Borrower |
1 | To be addressed to applicable Administrative Agent |
2 | Term or Revolving Credit. |
3 | Eurodollar Rate borrowing minimum of $5 million, and borrowings also allowed in whole multiples of $1 million in excess thereof. Base Rate borrowing minimum of $1 million and borrowings also allowed in whole multiples of $500,000 in excess thereof. |
A-1
(G) | Type of Loan 4 | |||||
(H) | Interest Period and the last day thereof 5 | |||||
(I) | Location and number of Borrowers account to which proceeds of Borrowings are to be disbursed: |
[The Borrower hereby represents and warrants to the Administrative Agent and the Lenders that, on and as of the date of the Borrowing contemplated by this Committed Loan Notice, the conditions to lending specified in Section 4.02(a) and (b) of the Credit Agreement shall have been satisfied.] 6
HALYARD HEALTH, INC. | ||
By: | ||
Name: | ||
Title: |
4 | Specify Eurodollar Rate or Base Rate. |
5 | Applicable for Eurodollar Rate Borrowings/Loans only. Select an Interest Period of one (1), three (3) or six (6) months or, to the extent agreed by each Lender of such Eurodollar Rate Loan, twelve (12) months. |
6 | Insert bracketed language if Borrower is requesting a Borrowing of new Loans after the Closing Date. |
A-2
EXHIBIT B
[FORM OF]
SWING LINE LOAN NOTICE
To: | Citibank, N.A., as Swing Line Lender and Revolver Administrative Agent |
[Date]
Ladies and Gentlemen:
Reference is made to the Credit Agreement, dated as of October 31, 2014 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the Credit Agreement ), among Halyard Health, Inc., a Delaware corporation, as borrower (the Borrower ), the Guarantors from time to time party thereto, Morgan Stanley Senior Funding, Inc., as Term Loan Administrative Agent and Collateral Agent, Citibank, N.A., as Revolver Administrative Agent, Swing Line Lender and an L/C Issuer, and each lender from time to time party thereto. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement. The Borrower hereby gives you notice pursuant to Section 2.04(b) of the Credit Agreement that it requests a Swing Line Borrowing under the Credit Agreement, and in that connection sets forth below the terms on which such Swing Line Borrowing is requested to be made:
(A) | Principal amount 1 | |||||
(B) | Date of Borrowing (which is a Business Day) |
The Borrower hereby represents and warrants to the Revolver Administrative Agent and the Swing Line Lender that, on and as of the date of the Swing Line Borrowing contemplated by this Swing Line Loan Notice, the conditions to lending specified in Section 4.02(a) and (b) of the Credit Agreement have been satisfied.
HALYARD HEALTH, INC. | ||
By: | ||
Name: | ||
Title: |
1 | Shall be a minimum of $100,000. |
B-1
EXHIBIT C-1
LENDER: []
PRINCIPAL AMOUNT: $[]
[FORM OF] TERM NOTE
New York, New York
[Date]
FOR VALUE RECEIVED, the undersigned, Halyard Health, Inc., a Delaware corporation, as borrower (the Borrower ), hereby promises to pay to the Lender set forth above (the Lender ) or its registered assigns, in accordance with the provisions of the Credit Agreement (as defined below), in lawful money of the United States of America in immediately available funds to the Term Loan Administrative Agent for the benefit of the Lender at the Administrative Agents Office (such term, and each other capitalized term used but not otherwise defined herein, having the meaning assigned to it in the Credit Agreement, dated as of October 31, 2014 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the Credit Agreement ), among the Borrower, the Guarantors from time to time party thereto, Morgan Stanley Senior Funding, Inc., as Term Loan Administrative Agent and Collateral Agent, Citibank, N.A., as Revolver Administrative Agent, Swing Line Lender and an L/C Issuer, and each lender from time to time party thereto) (i) on the dates set forth in the Credit Agreement, the principal installment amounts set forth in the Credit Agreement with respect to Term Loans made by the Lender to the Borrower pursuant to the Credit Agreement and (ii) on each Interest Payment Date, interest at the rate or rates per annum as provided in the Credit Agreement on the unpaid principal amount of all Term Loans made by the Lender to the Borrower pursuant to the Credit Agreement.
The Borrower promises to pay interest, on demand, on any overdue principal and, to the extent permitted by law, overdue interest from their due dates at the rate or rates provided in (and to the extent required by) the Credit Agreement.
The Borrower hereby waives diligence, presentment, demand, protest and notice of any kind whatsoever. The nonexercise by the holder hereof of any of its rights hereunder in any particular instance shall not constitute a waiver thereof in that or any subsequent instance.
All borrowings evidenced by this note and all payments and prepayments of the principal hereof and interest hereon and the respective dates thereof shall be endorsed by the holder hereof on the schedule attached hereto and made a part hereof or on a continuation thereof which shall be attached hereto and made a part hereof, or otherwise recorded by such holder in its internal records; provided , however , that the failure of the holder hereof to make such a notation or any error in such notation shall not affect the obligations of the Borrower under this note.
This note is one of the Term Notes referred to in the Credit Agreement that, among other things, contains provisions for the acceleration of the maturity hereof upon the happening of certain events, for optional and mandatory prepayment of the principal hereof prior to the maturity hereof and for the amendment or waiver of certain provisions of the Credit Agreement, all upon the terms and conditions therein specified.
THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS OF THE CREDIT AGREEMENT.
C-1-1
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ANY CONFLICTS OF LAWS PROVISIONS THAT WOULD RESULT IN THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
C-1-2
HALYARD HEALTH, INC. | ||
By: | ||
Name: | ||
Title: |
C-1-3
LOANS AND PAYMENTS
Date |
Amount of Loan |
Maturity
Date |
Payments of
Principal/Interest |
Principal
Balance of Note |
Name of
Person Making the Notation |
C-1-4
EXHIBIT C-2
LENDER: []
PRINCIPAL AMOUNT: $[]
[FORM OF] REVOLVING CREDIT NOTE
New York, New York
[Date]
FOR VALUE RECEIVED, the undersigned, Halyard Health, Inc., a Delaware corporation, as borrower (the Borrower ), hereby promises to pay to the Lender set forth above (the Lender ) or its registered assigns, in accordance with the provisions of the Credit Agreement (as defined below), in lawful money of the United States of America in immediately available funds to the Revolver Administrative Agent for the benefit of the Lender at the Administrative Agents Office (such term, and each other capitalized term used but not otherwise defined herein, having the meaning assigned to it in the Credit Agreement, dated as of October 31, 2014 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the Credit Agreement ), among the Borrower, the Guarantors from time to time party thereto, Morgan Stanley Senior Funding, Inc., as Term Loan Administrative Agent and Collateral Agent, Citibank, N.A., as Revolver Administrative Agent, Swing Line Lender and an L/C Issuer, and each lender from time to time party thereto) (A) on the dates set forth in the Credit Agreement, the lesser of (i) the principal amount set forth above and (ii) the aggregate unpaid principal amount of all Revolving Credit Loans made by the Lender to the Borrower pursuant to the Credit Agreement, and (B) interest from the date hereof on the principal amount from time to time outstanding on each such Revolving Credit Loan at the rate or rates per annum and payable on such dates, as provided in the Credit Agreement.
The Borrower promises to pay interest, on demand, on any overdue principal and, to the extent permitted by law, overdue interest from their due dates at a rate or rates provided in (and to the extent required by) the Credit Agreement.
The Borrower hereby waives diligence, presentment, demand, protest and notice of any kind whatsoever. The nonexercise by the holder hereof of any of its rights hereunder in any particular instance shall not constitute a waiver thereof in that or any subsequent instance.
All borrowings evidenced by this note and all payments and prepayments of the principal hereof and interest hereon and the respective dates thereof shall be endorsed by the holder hereof on the schedule attached hereto and made a part hereof or on a continuation thereof which shall be attached hereto and made a part hereof, or otherwise recorded by such holder in its internal records; provided , however , that the failure of the holder hereof to make such a notation or any error in such notation shall not affect the obligations of the Borrower under this note.
This note is one of the Revolving Credit Notes referred to in the Credit Agreement that, among other things, contains provisions for the acceleration of the maturity hereof upon the happening of certain events, for optional and mandatory prepayment of the principal hereof prior to the maturity hereof and for the amendment or waiver of certain provisions of the Credit Agreement, all upon the terms and conditions therein specified.
THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS OF THE CREDIT AGREEMENT.
C-2-1
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ANY CONFLICTS OF LAWS PROVISIONS THAT WOULD RESULT IN THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
C-2-2
HALYARD HEALTH, INC. | ||
By: | ||
Name: | ||
Title: |
C-2-3
LOANS AND PAYMENTS
Date |
Amount of Loan |
Maturity
Date |
Payments of
Principal/Interest |
Principal
Balance of Note |
Name of
Person Making the Notation |
C-2-4
EXHIBIT C-3
LENDER: []
PRINCIPAL AMOUNT: $[]
[FORM OF] SWING LINE NOTE
New York, New York
[Date]
FOR VALUE RECEIVED, the undersigned, Halyard Health, Inc., a Delaware corporation, as borrower (the Borrower ), hereby promises to pay to the Lender set forth above (the Lender ) or its registered assigns, in accordance with the provisions of the Credit Agreement (as defined below), in lawful money of the United States of America in immediately available funds to the Revolver Administrative Agent for the benefit of the Lender at the Administrative Agents Office (such term, and each other capitalized term used but not otherwise defined herein, having the meaning assigned to it in the Credit Agreement, dated as of October 31, 2014 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the Credit Agreement ), among the Borrower, the Guarantors from time to time party thereto, Morgan Stanley Senior Funding, Inc., as Term Loan Administrative Agent and Collateral Agent, Citibank, N.A., as Revolver Administrative Agent, Swing Line Lender and an L/C Issuer, and each lender from time to time party thereto) (A) on the dates set forth in the Credit Agreement, the lesser of (i) the principal amount set forth above and (ii) the aggregate unpaid principal amount of all Swing Line Loans made by the Lender to the Borrower pursuant to the Credit Agreement, and (B) interest from the date hereof on the principal amount from time to time outstanding on each such Swing Line Loan at the rate or rates per annum and payable on such dates as provided in the Credit Agreement.
The Borrower promises to pay interest, on demand, on any overdue principal and, to the extent permitted by law, overdue interest from their due dates at a rate or rates provided in (and to the extent required by) the Credit Agreement.
The Borrower hereby waives diligence, presentment, demand, protest and notice of any kind whatsoever. The nonexercise by the holder hereof of any of its rights hereunder in any particular instance shall not constitute a waiver thereof in that or any subsequent instance.
All borrowings evidenced by this note and all payments and prepayments of the principal hereof and interest hereon and the respective dates thereof shall be endorsed by the holder hereof on the schedule attached hereto and made a part hereof or on a continuation thereof which shall be attached hereto and made a part hereof, or otherwise recorded by such holder in its internal records; provided , however , that the failure of the holder hereof to make such a notation or any error in such notation shall not affect the obligations of the Borrower under this note.
This note is one of the Swing Line Notes referred to in the Credit Agreement that, among other things, contains provisions for the acceleration of the maturity hereof upon the happening of certain events, for optional and mandatory prepayment of the principal hereof prior to the maturity hereof and for the amendment or waiver of certain provisions of the Credit Agreement, all upon the terms and conditions therein specified.
THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS OF THE CREDIT AGREEMENT.
C-3-1
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ANY CONFLICTS OF LAWS PROVISIONS THAT WOULD RESULT IN THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
C-3-2
HALYARD HEALTH, INC. | ||
By: | ||
Name: | ||
Title: |
C-3-3
LOANS AND PAYMENTS
Date |
Amount of Loan |
Maturity
Date |
Payments of
Principal/Interest |
Principal
Balance of Note |
Name of
Person Making the Notation |
C-3-4
EXHIBIT D
[FORM OF]
COMPLIANCE CERTIFICATE
[Date]
Reference is made to the Credit Agreement dated as of October 31, 2014 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the Credit Agreement ), among Halyard Health, Inc., a Delaware corporation (the Borrower ), the Guarantors from time to time party thereto, Morgan Stanley Senior Funding, Inc., as Term Loan Administrative Agent and Collateral Agent, Citibank, N.A., as Revolver Administrative Agent, Swing Line Lender and an L/C Issuer and each lender from time to time party thereto (capitalized terms used herein have the meanings attributed thereto in the Credit Agreement unless otherwise defined herein). Pursuant to Section 6.02(a) of the Credit Agreement, the undersigned, in his/her capacity as a Responsible Officer of the Borrower, certifies as follows:
1. | [The consolidated balance sheet of the Borrower and its Subsidiaries as of December 31, 20[] and related consolidated statements of income or operations, stockholders equity and cash flows for the fiscal year then ended, [setting forth in each case in comparative form the figures for the previous fiscal year] 1 , all in reasonable detail and prepared in accordance with GAAP, have been filed with the SEC as part of the Borrowers Form 10-K and are available via the EDGAR website of the SEC. Such financial statements have been audited by [ ], whose report and opinion are attached thereto, and have been prepared in accordance with generally accepted auditing standards and not subject to any going concern or like qualification or exception or any qualification or exception as to the scope of such audit (other than any qualification that is expressly solely with respect to, or expressly resulting solely from, (A) an upcoming maturity date of any Facility or (B) any potential inability to satisfy a financial maintenance covenant on a future date or in a future period).] 2 |
2. | [The consolidated balance sheet of the Borrower and its Subsidiaries as of [] and the related (i) consolidated statements of income or operations for such fiscal quarter and for the portion of the fiscal year then ended and (ii) consolidated statements of cash flows for the portion of the fiscal year then ended, setting forth in each case in comparative form the figures for the corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the previous fiscal year (except to the extent there is no such corresponding fiscal quarter of the previous fiscal year or such corresponding portion of the previous fiscal year), all in reasonable detail have been filed with the SEC as part of the Borrowers Form 10-Q and are available via the EDGAR website of the SEC. These present fairly in all material respects the financial condition, results of operations, stockholders equity and cash flows of the Borrower and its Subsidiaries in accordance |
1 | Not to be included for 2014 fiscal year. |
2 |
To be included if delivered in connection with annual financial statements only. |
D-1
with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes.] 3 |
3. | To my knowledge, except as otherwise disclosed to the Administrative Agent pursuant to the Credit Agreement, no Default has occurred. [If unable to provide the foregoing certification, fully describe the reasons therefor and circumstances thereof and any action taken or proposed to be taken with respect thereto on Annex A attached hereto.] |
4. | The following represent true and accurate calculations, as of [], to be used to determine compliance with the covenants set forth in Section 7.09 of the Credit Agreement: |
Consolidated Net Secured Leverage Ratio: | ||||||
Consolidated Total Net Debt that is secured by Liens= | [] | |||||
Consolidated EBITDA= | [] | |||||
Actual Ratio= | [] to 1.00 | |||||
Maximum Ratio= | 2.50 to 1.00 |
Consolidated Interest Coverage Ratio: | ||||||
Consolidated EBITDA= | [] | |||||
Consolidated Interest Expense= | [] | |||||
Actual Ratio= | [] to 1.00 | |||||
Maximum Ratio= | 3.0 to 1.00 |
Supporting detail showing the calculation of the Consolidated Net Secured Leverage Ratio and the Consolidated Interest Coverage Ratio is attached hereto as Schedule 1.
5. | [Attached hereto is the information required by Section 6.02(c) of the Credit Agreement.] 4 |
3 | To be included if delivered in connection with quarterly financial statements only. |
4 | To be included only in annual compliance certificate. |
D-2
SCHEDULE 1
(A) Consolidated Net Secured Leverage Ratio: Consolidated Total Net Debt that is secured by liens, to Consolidated EBITDA for the most recently ended Test Period 1 . |
||
(1) Consolidated Total Net Debt that is secured by Liens as of [], 20[]: |
||
(a) the aggregate principal amount of Consolidated Indebtedness of the Borrower and its Restricted Subsidiaries outstanding on such date that is secured by a Lien on the assets of the Borrower and its Restricted Subsidiaries, |
____________ | |
(b) less up to $40 million of cash and Cash Equivalents (which are not Restricted Cash) that would be stated on the balance sheet of the Loan Parties as of such date of determination, |
____________ | |
Consolidated Total Net Debt that is secured by Liens |
____________ | |
(2) Consolidated EBITDA: |
||
(a) Consolidated Net Income: |
||
(i) the aggregate Net Income of the Borrower and its Restricted Subsidiaries for such period, on a consolidated basis, and otherwise determined in accordance with GAAP; provided, however , that, without duplication: |
____________ |
1 | This section to track language agreed to in the Credit Agreement |
D-4
(A) any after-tax effect of extraordinary, non-recurring or unusual gains, charges, costs, losses, income or expenses ( less all fees and expenses relating thereto) or expenses (including expenses relating to (i) severance and relocation costs, or (ii) any rebranding or corporate name change) shall be excluded, |
____________ | |
(B) the Net Income for such period shall not include the cumulative effect of a change in accounting principles during such period, |
____________ | |
(C) any after-tax effect of income (loss) from disposed, abandoned or discontinued operations and any net after-tax gains or losses on disposal of disposed, abandoned or discontinued operations shall be excluded, |
____________ | |
(D) any after-tax effect of gains or losses ( less all fees and expenses relating thereto) attributable to asset dispositions other than in the ordinary course of business, as determined in good faith by the Borrower shall be excluded, |
____________ | |
(E) the Net Income for such period of any Person that is not a Subsidiary, or is an Unrestricted Subsidiary, or that is accounted for by the equity method of accounting, shall be excluded; provided, that Consolidated Net Income of the Borrower shall be increased by the amount of dividends or distributions or other payments that are actually paid in cash (or to the extent converted into cash or Cash Equivalents) to the Borrower or a Restricted Subsidiary in respect of such period, |
____________ |
D-5
(F) Solely for the purposes of determining the amount available for Restricted Payments and Permitted Investments under the Available Amount, the Net Income for such period of any Restricted Subsidiary (other than any Guarantor) shall be excluded if the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of its Net Income is not at the date of determination wholly permitted without any prior governmental approval (which has not been obtained) or, directly or indirectly, by the operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule, or governmental regulation applicable to that Restricted Subsidiary or its stockholders, unless such restriction with respect to the payment of dividends or similar distributions has been legally waived; provided , that Consolidated Net Income of the Borrower will be increased by the amount of dividends or other distributions or other payments actually paid in cash (or to the extent converted into cash or Cash Equivalents) to the Borrower or a Restricted Subsidiary thereof in respect of such period, to the extent not already included therein, |
____________ | |
(G) any after-tax effect of income (loss) from the early extinguishment of Indebtedness or Hedging Obligations or other derivative instruments shall be excluded, |
____________ |
D-6
(H) any royalties incurred during such period in connection with the Transaction and any fees and expenses incurred during such period, or any amortization thereof for such period, in connection with the Transactions and any acquisition, Investment, Disposition, issuance or repayment of Indebtedness, issuance of Equity Interests, refinancing transaction or amendment or modification of any debt instrument (in each case, including any such transaction consummated prior to the Closing Date and any such transaction undertaken but not completed) and any charges or non-recurring merger costs incurred during such period as a result of any such transaction shall be excluded,
(I) to the extent covered by insurance and actually reimbursed, or, so long as the Issuer has made a determination that there exists reasonable evidence that such amount will in fact be reimbursed by the insurer and only to the extent that such amount is in fact reimbursed within 365 days of the date of such determination (with a deduction in the applicable future period for any amount so excluded to the extent not so reimbursed within such 365 day period), expenses, charges or losses with respect to liability or casualty events or business interruption shall be excluded,
(J) any non-cash compensation expense realized from employee benefit plans or other post-employment benefit plans, grants of stock appreciation or similar rights, stock options or other rights to officers, directors and employees of such Person or any of its Restricted Subsidiaries shall be excluded,
(K) any impairment charge or asset write-off, in each case, pursuant to GAAP and the amortization of intangibles arising pursuant to GAAP shall be excluded, and |
____________ |
D-7
D-8
(v) the amount of any restructuring charge or reserve, including any restructuring costs incurred in connection with acquisitions, mergers or consolidations after the Closing Date and costs related to the closure and/or consolidation of facilities, retention charges, systems establishment costs, excess pension charges and severance costs, |
____________ | |
(vi) any other non-cash charges, including any write offs or write downs and non-cash compensation expenses recorded from grants of stock appreciation or similar rights, stock options, restricted stock or other rights, reducing Consolidated Net Income for such period ( provided , that if any such non-cash charges represent an accrual or reserve for potential cash items in any future period, the cash payment in respect thereof in such future period shall be subtracted from Consolidated EBITDA in such future period to the extent paid, but excluding from this proviso, for the avoidance of doubt, amortization of a prepaid cash item that was paid in a prior period), |
____________ | |
(vii) the amount of any minority interest expense consisting of Subsidiary income attributable to minority equity interests of third parties in any non-Wholly-Owned Subsidiary, |
____________ | |
(viii) the amount of loss on sale of receivables and related assets to the Receivables Subsidiary in connection with a Receivables Facility, |
____________ | |
(ix) any costs or expense incurred by the Borrower or a Restricted Subsidiary pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or agreement or any stock subscription or shareholder agreement, to the extent that such cost or expenses are funded with cash proceeds contributed to the capital of the Borrower or net cash proceeds of an issuance of Equity Interest of the Borrower (other than Disqualified Stock) solely to the extent that such net cash proceeds are excluded from the calculation of the Available Amount, and |
____________ |
D-9
(x) the amount of cost savings, operating expense reductions, other operating improvements and initiatives and synergies projected by the Borrower in good faith to be reasonably anticipated to be realizable within twelve (12) months of the date of any Investment, acquisition, disposition, merger, consolidation, restructuring, cost-savings initiative or initiative or other action being given pro forma effect (which will be added to Consolidated EBITDA as so projected until fully realized and calculated on a Pro Forma Basis as though such cost savings, operating expense reductions, other operating improvements and initiatives and synergies had been realized on the first day of such period), net of the amount of actual benefits realized during such period from such actions; provided that (i) substantially all steps have been taken or procedures are in place for realizing such cost savings, operating expense reductions, other operating improvements and initiatives and synergies, (ii) such cost savings, operating expense reductions, other operating improvements and initiatives and synergies are reasonably identifiable and factually supportable (in the good faith determination of the Borrower) and (iii) the aggregate amount of cost savings, operating expense reductions, other operating improvements and initiatives and synergies added back pursuant to this clause (x) in any Test Period shall not exceed the greater of (A) 15.0% of Consolidated EBITDA (prior to giving effect to such addbacks) or (B) $37.5 million. |
____________ | |
(c) minus (without duplication) non-cash gains increasing Consolidated Net Income of such Person for such period, excluding any non-cash gains to the extent they represent the accrual of revenue in the ordinary course of business or the reversal of an accrual or reserve for a potential cash item that reduced Consolidated EBITDA in any prior period, and |
____________ |
D-10
D-11
1 | For purposes of this definition, interest on a Capitalized Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by such Person to be the rate of interest implicit in such Capitalized Lease Obligation in accordance with GAAP. |
D-12
D-13
IN WITNESS WHEREOF, the undersigned, in his/her capacity as a Responsible Officer of the Borrower, has executed this certificate for and on behalf of Borrower and has caused this certificate to be delivered as of the first date written above.
HALYARD HEALTH, INC. | ||
By: | ||
Name: | ||
Title: |
D-14
EXHIBIT E-1
[FORM OF]
ASSIGNMENT AND ASSUMPTION
This Assignment and Assumption (this Assignment and Assumption ) is dated as of the Effective Date set forth below and is entered into by and between [the][each] 1 Assignor identified in item 1 below ([the][each, an] Assignor ) and [the][each] 2 Assignee identified in item 2 below ([the][each, an] Assignee ). [It is understood and agreed that the rights and obligations of [the Assignors][the Assignees] 3 hereunder are several and not joint.] 4 Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (the Credit Agreement ), receipt of a copy of which is hereby acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.
For an agreed consideration, [the][each] Assignor hereby irrevocably sells and assigns to [the Assignee][the respective Assignees], and [the][each] Assignee hereby irrevocably purchases and assumes from [the Assignor][the respective Assignors], subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below (i) all of [the Assignors][the respective Assignors] rights and obligations in [its capacity as a Lender][their respective capacities as Lenders] under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of [the Assignor][the respective Assignors] under the respective facilities identified below [(including, without limitation, the Letters of Credit and the Swing Line Loans included in such facilities)] 5 and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of [the Assignor (in its capacity as a Lender)][the respective Assignors (in their respective capacities as Lenders)] against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned by [the][any] Assignor to [the][any] Assignee pursuant to clauses (i) and (ii) above being referred to herein collectively as [the][an] Assigned Interest ). Each such sale and assignment is without recourse to
1 | For bracketed language here and elsewhere in this form relating to the Assignor(s), if the assignment is from a single Assignor, choose the first bracketed language. If the assignment is from multiple Assignors, choose the second bracketed language. |
2 | For bracketed language here and elsewhere in this form relating to the Assignee(s), if the assignment is to a single Assignee, choose the first bracketed language. If the assignment is to multiple Assignees, choose the second bracketed language. |
3 | Select as appropriate. |
4 | Include bracketed language if there are either multiple Assignors or multiple Assignees. |
5 | Include bracketed language for assignments of the Revolving Credit Facility. |
E-1-1
[the][any] Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by [the][any] Assignor.
1. | Assignor[s]: |
|
||||||
|
||||||||
2. | Assignee[s]: |
|
||||||
|
[for each Assignee, indicate [Affiliate][Approved Fund] of [ identify Lender ]] 6
3. | Borrower: Halyard Health, Inc. |
4. | Administrative Agent: Morgan Stanley Senior Funding, Inc., as Term Loan Administrative Agent and Citibank, N.A., as Revolver Administrative Agent under the Credit Agreement |
5. | Credit Agreement: Credit Agreement, dated as of October 31, 2014 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time), among the Borrower, the Guarantors from time to time party thereto, Morgan Stanley Senior Funding, Inc., as Term Loan Administrative Agent and Collateral Agent, Citibank, N.A., as Revolver Administrative Agent, Swing Line Lender and an L/C Issuer, and each lender from time to time party thereto. |
6 | Include bracketed language if any Assignee is an Affiliate or Approved Fund of an existing Lender. |
E-1-2
6. | Assigned Interest: |
Assignor[s] 7 |
Assignee[s] 8 |
Facility
Assigned 9 |
Aggregate
Amount of Commitment/Loans for all Lenders 10 |
Amount of
Commitment/Loans Assigned |
Percentage
Assigned of Commitment/ Loans 11 |
CUSIP
Number |
||||||||||||
$ | $ | % | ||||||||||||||||
$ | $ | % | ||||||||||||||||
$ | $ | % |
[7. | Trade Date: ] 12 |
Effective Date: , 20 [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]
7 | List each Assignor, as appropriate. |
8 | List each Assignee, as appropriate. |
9 | Fill in the appropriate terminology for the types of facilities under the Credit Agreement that are being assigned under this Assignment (e.g. Revolving Credit Commitment, Term Loan, etc.). |
10 | Amounts in this column and in the column immediately to the right to be adjusted by the counterparties to take into account any payments or prepayments made between the Trade Date and the Effective Date. |
11 | Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders thereunder. |
12 | To be completed if the Assignor and the Assignee intend that the minimum assignment amount is to be determined as of the Trade Date. |
E-1-3
The terms set forth in this Assignment and Assumption are hereby agreed to:
[NAME OF ASSIGNOR], as Assignor |
||
By: | ||
Name: | ||
Title: | ||
[NAME OF ASSIGNEE], as Assignee |
||
By: | ||
Name: | ||
Title: |
E-1-4
[Consented to and] 13 Accepted:
[MORGAN STANLEY SENIOR FUNDING, INC., as
Term Loan Administrative Agent
By: | ||
Name: | ||
Title:] |
[CITIBANK, N.A., as
Revolver Administrative Agent
By: | ||
Name: | ||
Title:] 14 |
[Consented to:
HALYARD HEALTH, INC., as
Borrower
By: | ||
Name: | ||
Title:] 15 |
[Consented to:] 16
By: | ||
Name: | ||
Title: |
13 | To be added only if the consent of the Administrative Agent is required by the terms of the Credit Agreement. |
14 | To be consented to by the applicable Administrative Agent |
15 | To be added only if the consent of the Borrower is required by the terms of the Credit Agreement. |
16 | To be added only if the consent of other parties (e.g. Swing Line Lender, L/C Issuer) is required by the terms of the Credit Agreement. |
E-1-5
Annex 1
STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION
Representations and Warranties.
1.1. Assignor. [The][Each] Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of [the][[the relevant] Assigned Interest, (ii) [the][such] Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.
1.2. Assignee. [The][Each] Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it meets all the requirements to be an assignee under Section 10.06 of the Credit Agreement (subject to such consents, if any, as may be required under Section 10.06(b)(i)(B) or 10.06(b)(iii) of the Credit Agreement), (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of [the][the relevant] Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it is sophisticated with respect to decisions to acquire assets of the type represented by [the][such] Assigned Interest and either it, or the Person exercising discretion in making its decision to acquire [the][such] Assigned Interest, is experienced in acquiring assets of such type, (v) it has received a copy of the Credit Agreement, and has received or has been accorded the opportunity to receive copies of the most recent financial statements delivered pursuant to Section 6.01 thereof, as applicable, and such other documents and information as it deems appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase [the][such] Assigned Interest, (vi) it has, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Assignment and Assumption and to purchase [the][such] Assigned Interest, and (vii) if it is a Foreign Lender, attached hereto is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by [the][such] Assignee; and (b) agrees that (i) it will, independently and without reliance upon the Administrative Agent, [the][any] Assignor or any other 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 the Loan Documents, and (ii) it will be bound by the terms of the Credit Agreement and 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 including its obligations under Section 3.01(d) of the Credit Agreement.
E-1-6
2. Payments. From and after the Effective Date, the Administrative Agent shall make all payments in respect of [the][each] Assigned Interest (including payments of principal, interest, fees and other amounts) to [the][the relevant] Assignor for amounts which have accrued to but excluding the Effective Date and to [the][the relevant] Assignee for amounts which have accrued from and after the Effective Date.
3. General Provisions. This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment and Assumption by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption. This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of New York without giving effect to any conflicts of laws provisions that would result in the application of the laws of another jurisdiction.
E-1-7
EXHIBIT E-2
[FORM OF]
AFFILIATED LENDER ASSIGNMENT AND ASSUMPTION
This Assignment and Assumption (this Assignment and Assumption ) is dated as of the Effective Date set forth below and is entered into by and between [the][each] 1 Assignor identified in item 1 below ([the][each, an] Assignor ) and the Assignee identified in item 2 below (the Assignee ). [It is understood and agreed that the rights and obligations of the Assignors hereunder are several and not joint.] 2 Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (the Credit Agreement ), receipt of a copy of which is hereby acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.
For an agreed consideration, [the][each] Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from [the Assignor][the respective Assignors], subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Term Loan Administrative Agent as contemplated below (i) all of [the Assignors][the respective Assignors] rights and obligations in [its capacity as a Term Lender][their respective capacities as Term Lenders] under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of [the Assignor][the respective Assignors] under the Term Loans and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of [the Assignor (in its capacity as a Term Lender)][the respective Assignors (in their respective capacities as Term Lenders)] against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the Term Loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned by [the][any] Assignor to the Assignee pursuant to clauses (i) and (ii) above being referred to herein collectively as [the][an] Assigned Interest ). Each such sale and assignment is without recourse to [the][any] Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by [the][any] Assignor.
1 | For bracketed language here and elsewhere in this form relating to the Assignor(s), if the assignment is from a single Assignor, choose the first bracketed language. If the assignment is from multiple Assignors, choose the second bracketed language. |
2 | Include bracketed language if there are multiple Assignors. |
E-2-1
1. | Assignor[s]: |
|
||||
|
||||||
2. | Assignee: | Borrower | ||||
3. | Borrower: | Halyard Health, Inc. | ||||
4. | Term Loan Administrative Agent: Morgan Stanley Senior Funding, Inc. | |||||
5. | Credit Agreement: Credit Agreement, dated as of October 31, 2014 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time), among the Borrower, the Guarantors from time to time party thereto, Morgan Stanley Senior Funding, Inc., as Term Loan Administrative Agent and Collateral Agent, Citibank, N.A., as Revolver Administrative Agent, Swing Line Lender and an L/C Issuer, and each lender from time to time party thereto. |
E-2-3
6. | Assigned Interest: |
Assignor[s] 3 |
Assignee |
Aggregate
Amount of Term Commitments/Term Loans for all Term Lenders 4 |
Amount of
Term Commitments/ Term Loans Assigned |
Percentage
Assigned of Term Commitment/ Term Loans 5 |
CUSIP
Number |
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[7. | Trade Date: ] 6 |
Effective Date: , 20 [TO BE INSERTED BY TERM LOAN ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]
3 | List each Assignor, as appropriate. |
4 | Amounts in this column and in the column immediately to the right to be adjusted by the counterparties to take into account any payments or prepayments of the Term Loans made between the Trade Date and the Effective Date. |
5 | Set forth, to at least 9 decimals, as a percentage of the Term Commitments/Term Loans of all Term Lenders thereunder. |
6 | To be completed if the Assignor[s] and the Assignee intend that the minimum assignment amount is to be determined as of the Trade Date. |
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The terms set forth in this Assignment and Assumption are hereby agreed to:
[NAME OF ASSIGNOR], as Assignor |
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By: | ||
Name: | ||
Title: |
[NAME OF ASSIGNEE], as Assignee |
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By: | ||
Name: | ||
Title: |
E-2-4
[Consented to and] 1 Accepted: | ||
[MORGAN STANLEY SENIOR FUNDING, INC., as Term Loan Administrative Agent | ||
By: |
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Name: | ||
Title:] |
[Consented to: | ||
HALYARD HEALTH, INC., as Borrower |
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By: |
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Name: | ||
Title:] 2 |
[Consented to:] 3 | ||
By: |
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Name: | ||
Title: |
1 | To be added only if the consent of the Term Loan Administrative Agent is required by the terms of the Credit Agreement. |
2 | To be added only if the consent of the Borrower is required by the terms of the Credit Agreement. |
3 | To be added only if the consent of other parties is required by the terms of the Credit Agreement. |
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STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION
Representations and Warranties.
1.1. Assignor. [The][Each] Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of [the][[the relevant] Assigned Interest, (ii) [the][such] Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.
1.2. Assignee. The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it meets all the requirements to be an assignee under Section 10.06 of the Credit Agreement (subject to (A) such consents, if any, as may be required under Section 10.06(b)(i)(B) or 10.06(b)(iii) of the Credit Agreement and (B) compliance with all procedures set out in Section 10.06(b)(vi)(G) of the Credit Agreement (if applicable)), (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of [the][the relevant] Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it is sophisticated with respect to decisions to acquire assets of the type represented by [the][such] Assigned Interest and either it, or the Person exercising discretion in making its decision to acquire [the][such] Assigned Interest, is experienced in acquiring assets of such type, (v) it has received a copy of the Credit Agreement, and has received or has been accorded the opportunity to receive copies of the most recent financial statements delivered pursuant to Section 6.01 thereof, as applicable, and such other documents and information as it deems appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase [the][such] Assigned Interest, and (vi) it has, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Assignment and Assumption and to purchase [the][such] Assigned Interest; and (b) agrees that (i) it will, independently and without reliance upon the Administrative Agent, [the][any] Assignor or any other 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 the Loan Documents, and (ii) it will be bound by the terms of the Credit Agreement and 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 Term Lender including its obligations under Section 3.01(d) of the Credit Agreement.
2. | Payments. From and after the Effective Date, the Term Loan Administrative |
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Agent shall make all payments in respect of [the][each] Assigned Interest (including payments of principal, interest, fees and other amounts) to [the][the relevant] Assignor for amounts which have accrued to but excluding the Effective Date and to the Assignee for amounts which have accrued from and after the Effective Date.
3. General Provisions. This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment and Assumption by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption. This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of New York without giving effect to any conflicts of laws provisions that would result in the application of the laws of another jurisdiction.
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EXHIBIT F
[FORM OF] SECURITY AGREEMENT
F-1
EXHIBIT G-1
[FORM OF] PERFECTION CERTIFICATE
(See Attached)
G-1-1
EXHIBIT G-2
[FORM OF] PERFECTION CERTIFICATE SUPPLEMENT
This Perfection Certificate Supplement, dated as of [] is delivered pursuant to Section 6.02(c) of that certain Credit Agreement dated as of October 31, 2014 (the Credit Agreement ) among Halyard Health, Inc., as borrower (the Borrower ), the Guarantors from time to time party thereto, the lenders and other parties thereto from time to time and Morgan Stanley Senior Funding, Inc., as Term Loan Administrative Agent and Collateral Agent, Citibank, N.A., as Revolver Administrative Agent, Swing Line Lender and an L/C Issuer, and each lender from time to time party thereto. Capitalized terms used but not defined herein have the meanings assigned in the Credit Agreement.
The undersigned hereby certifies (in my capacity as [] of the Borrower and not in my individual capacity) to the Collateral Agent and each of the other Secured Parties that, as of the date hereof, there has been no change in the information described in the Perfection Certificate delivered on the Closing Date (as supplemented by any perfection certificate supplements delivered prior to the date hereof, the Prior Perfection Certificate ), other than as follows:
[The Remainder of this Page has been intentionally left blank]
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IN WITNESS WHEREOF , the undersigned has hereunto signed this Perfection Certificate Supplement as of the date first written above.
HALYARD HEALTH, INC., as Borrower | ||
By: |
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Name: | ||
Title: |
G-2-2
EXHIBIT H-1
[RESERVED]
H-1-1
EXHIBIT I-1
[FORM OF]
FIRST LIEN INTERCREDITOR AGREEMENT
I-1-1
EXHIBIT I-2
[FORM OF]
SECOND LIEN INTERCREDITOR AGREEMENT
I-2-1
EXHIBIT J-1
FORM OF UNITED STATES TAX COMPLIANCE CERTIFICATE
(For Foreign Lenders That Are Not Treated As Partnerships For
U.S. Federal Income Tax Purposes)
Reference is made to the Credit Agreement dated as of October 31, 2014 (as amended, supplemented or otherwise modified from time to time) (the Credit Agreement ), among Halyard Health, Inc. (the Borrower ), the Guarantors from time to time party thereto, Morgan Stanley Senior Funding, Inc., as Term Loan Administrative Agent and Collateral Agent, Citibank, N.A., as Revolver Administrative Agent, Swing Line Lender and an L/C Issuer, and each lender from time to time party thereto. Capitalized terms used but not otherwise defined herein shall have the meanings assigned to them in the Credit Agreement.
Pursuant to the provisions of Section 3.01(d) of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) 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 Code, (iii) it is not a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code, (iv) it is not a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code, and (v) no payments in connection with any Loan Document are effectively connected with the undersigneds conduct of a U.S. trade or business.
The undersigned has furnished the Administrative Agent and the Borrower with a certificate of its non-U.S. person status on IRS Form W-8BEN or 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 Borrower and the Administrative Agent in writing and (2) the undersigned shall furnish the Borrower and the Administrative Agent a properly completed and currently effective certificate in either the calendar year in which payment is to be made by the Borrower or the Administrative Agent to the undersigned, or in either of the two calendar years preceding each such payment.
[Signature Page Follows]
J-1-1
[Foreign Lender] | ||
By: | ||
Name: | ||
Title: | ||
[Address] |
Dated: , 20[]
J-1-2
EXHIBIT J-2
FORM OF UNITED STATES TAX COMPLIANCE CERTIFICATE
(For Foreign Participants That Are Not Treated As Partnerships For
U.S. Federal Income Tax Purposes)
Reference is made to the Credit Agreement dated as of October 31, 2014 (as amended, supplemented or otherwise modified from time to time) (the Credit Agreement ), among Halyard Health, Inc. (the Borrower ), the Guarantors from time to time party thereto, Morgan Stanley Senior Funding, Inc., as Term Loan Administrative Agent and Collateral Agent, Citibank, N.A., as Revolver Administrative Agent, Swing Line Lender and an L/C Issuer and each lender from time to time party thereto. Capitalized terms used but not otherwise defined herein shall have the meanings assigned to them in the Credit Agreement.
Pursuant to the provisions of Section 3.01(d) and 10.06(d) of the Credit 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 Code, (iii) it is not a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code, (iv) it is not a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code, and (v) no payments in connection with any Loan Document are effectively connected with the undersigneds conduct of a U.S. trade or business.
The undersigned has furnished its participating Lender with a certificate of its non-U.S. person status on IRS Form W-8BEN or 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 each such payment.
[Signature Page Follows]
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[Foreign Participant] | ||
By: | ||
Name: | ||
Title: | ||
[Address] |
Dated: , 20[] |
J-2-2
EXHIBIT J-3
FORM OF UNITED STATES TAX COMPLIANCE CERTIFICATE
(For Foreign Participants That Are Treated As Partnerships For
U.S. Federal Income Tax Purposes)
Reference is made to the Credit Agreement dated as of October 31, 2014 (as amended, supplemented or otherwise modified from time to time) (the Credit Agreement ), among Halyard Health, Inc. (the Borrower ), the Guarantors from time to time party thereto, Morgan Stanley Senior Funding, Inc., as Term Loan Administrative Agent and Collateral Agent, Citibank, N.A., as Revolver Administrative Agent, Swing Line Lender and an L/C Issuer and each lender from time to time party thereto. Capitalized terms used but not otherwise defined herein shall have the meanings assigned to them in the Credit Agreement.
Pursuant to the provisions of Section 3.01(d) and 10.06(d) of the Credit 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/members are the sole beneficial owners of such participation, (iii) neither the undersigned nor any of its direct or indirect partners/members is a bank within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct or indirect partners/members is a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code, (v) none of its direct or indirect partners/members is a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code, and (vi) no payments in connection with any Loan Document are effectively connected with the undersigneds or its direct or indirect partners/members conduct of a U.S. trade or business.
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 claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or W-8BEN-E or (ii) and IRS Form W-8IMY accompanied by an IRS Form W-8BEN or W-8BEN-E from each of such partners/members 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 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 each such payment.
[Signature Page Follows]
J-3-1
[Foreign Participant] | ||
By: | ||
Name: | ||
Title: | ||
[Address] |
Dated: , 20[] |
J-3-2
EXHIBIT J-4
FORM OF UNITED STATES TAX COMPLIANCE CERTIFICATE
(For Foreign Lenders That Are Treated As Partnerships For
U.S. Federal Income Tax Purposes)
Reference is made to the Credit Agreement dated as of October 31, 2014 (as amended, supplemented or otherwise modified from time to time) (the Credit Agreement ), among Halyard Health, Inc. (the Borrower ), the Guarantors from time to time party thereto, Morgan Stanley Senior Funding, Inc., as Term Loan Administrative Agent and Collateral Agent, Citibank, N.A., as Revolver Administrative Agent, Swing Line Lender and an L/C Issuer and each lender from time to time party thereto. Capitalized terms used but not otherwise defined herein shall have the meanings assigned to them in the Credit Agreement.
Pursuant to the provisions of Section 3.01(d) of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such Loan(s) (as well as any Note(s) evidencing such Loan(s)), (iii) neither the undersigned nor any of direct or indirect its partners/members is a bank within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct or indirect partners/members is a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code, (v) none of its direct or indirect partners/members is a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code, and (vi) no payments in connection with any Loan Document are effectively connected with the undersigneds or its direct or indirect partners/members conduct of a U.S. trade or business.
The undersigned has furnished the Administrative Agent and the Borrower with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or W-8BEN-E or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN or W-8BEN-E from each of such partners/members 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 Borrower and the Administrative Agent in writing and (2) the undersigned shall have at all times furnished the 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 each such payment.
[Signature Page Follows]
J-4-1
[Foreign Lender] | ||
By: | ||
Name: | ||
Title: | ||
[Address] |
Dated: , 20[] |
J-4-2
EXHIBIT K
[FORM OF] SOLVENCY CERTIFICATE
[ ], 2014
The undersigned, [], the Chief Financial Officer of Halyard Health, Inc (the Borrower ), is familiar with the properties, businesses, assets and liabilities of the Borrower and its Subsidiaries and is duly authorized to execute this certificate (this Solvency Certificate ) on behalf of the Borrower.
This Solvency Certificate is delivered pursuant to Section 4.01(a)(ix) of the Credit Agreement, dated as of October 31, 2014 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the Credit Agreement ), among the Borrower, the Guarantors from time to time party thereto, Morgan Stanley Senior Funding, Inc., as Term Loan Administrative Agent and Collateral Agent, Citibank, N.A., as Revolver Administrative Agent, Swing Line Lender and an L/C Issuer and each lender from time to time party thereto (the Lenders ). Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement.
As used herein, Company means the Borrower and its Subsidiaries on a consolidated basis.
1. The undersigned certifies, on behalf of the Borrower and not in his individual capacity, that he has made such investigation and inquiries as to the financial condition of the Borrower and its Subsidiaries as the undersigned deems necessary and prudent for the purposes of providing this Solvency Certificate. The undersigned acknowledges that the Administrative Agent and the Lenders are relying on this Solvency Certificate in connection with the making of Loans under the Credit Agreement.
2. The undersigned certifies, on behalf of the Borrower and not in his individual capacity, that (a) the financial information, projections and assumptions which underlie and form the basis for the representations made in this Solvency Certificate were made in good faith and were based on assumptions believed by the Borrower to be reasonable in light of the circumstances existing at the time made; and (b) for purposes of providing this Solvency Certificate, the amount of contingent liabilities has been computed as the amount that, in the light of all the facts and circumstances existing as of the date hereof, represents the amount that can reasonably be expected to become an actual and matured liability.
BASED ON THE FOREGOING, the undersigned certifies, on behalf of the Borrower and not in his individual capacity, that, on the date hereof, after giving effect to the Transactions (including, without limitation, the Separation, the Distribution and the Loans made or to be made and other obligations incurred or to be incurred on the Closing Date):
(i) the fair value of the property of the Company is greater than the total amount of liabilities, including contingent liabilities, of the Company;
(ii) the present fair salable value of the assets of the Company is greater than the amount that will be required to pay the probable liability of the Company on the sum of its debts and other liabilities, including contingent liabilities;
K-1
(iii) the Company has not incurred debts or liabilities beyond the Companys ability to pay such debts and liabilities as they become due (whether at maturity or otherwise); and
(iv) the Company does not have unreasonably small capital with which to conduct the businesses in which it is engaged as such businesses are now conducted and are proposed to be conducted following the Closing Date.
K-2
IN WITNESS WHEREOF, the undersigned has executed this Solvency Certificate as of the first date written above, solely in his capacity as the Chief Financial Officer of the Borrower and not in his individual capacity.
HALYARD HEALTH, INC. | ||
By: | ||
Name: | ||
Title: Chief Financial Officer |
K-3
Exhibit 10.1
Execution Version
TRANSITION SERVICES AGREEMENT
This TRANSITION SERVICES AGREEMENT (this Agreement ) is entered into as of October 31, 2014 between Kimberly-Clark Corporation, a Delaware corporation ( Kimberly-Clark ), and Halyard Health, Inc., a Delaware corporation ( Halyard ). Kimberly-Clark and Halyard are sometimes hereinafter collectively referred to as the Parties and each individually as a Party .
WHEREAS, Kimberly-Clark, acting through its direct and indirect Subsidiaries, owns and conducts the Retained Business and the Healthcare Business;
WHEREAS, the Board of Directors of Kimberly-Clark has determined that it would be advisable and in the best interests of Kimberly-Clark and its stockholders for Kimberly-Clark to distribute on a pro rata basis to the holders of Kimberly-Clarks common stock all of the outstanding shares of Halyard common stock owned by Kimberly-Clark (the Distribution );
WHEREAS, Kimberly-Clark and Halyard have entered into a Distribution Agreement, dated as of the date hereof (the Distribution Agreement ), in order to carry out, effect and consummate the Distribution and related matters;
WHEREAS, in order to effect an orderly separation and transition under the Distribution Agreement, the Parties have agreed that (a) Kimberly-Clark will provide or cause to be provided to Halyard (and/or its Affiliates) certain services and other assistance on a transitional basis during the transition period and (b) Halyard will provide or cause to be provided to Kimberly-Clark (and/or its Affiliates) certain services and other assistance on a transitional basis during the transition period, in each case in accordance with the terms and subject to the conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and the agreements set forth in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound hereby, agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions . Capitalized terms used but not otherwise defined elsewhere in this Agreement shall have the respective meanings given to such terms in the Distribution Agreement. The following terms shall have the meaning ascribed thereto for purposes of this Agreement, including all Schedules hereto:
Business Day means any day, other than a Saturday, Sunday or a day on which banking institutions located in New York, New York shall be authorized or required by any Government Requirement to close.
Damages means any and all liability, demands, claims, actions or causes of action, assessments, losses, damages, fines, penalties, costs and expenses (including reasonable attorneys fees and expenses).
Governmental Requirement means at any time (i) any law, statute, code, ordinance, order, rule, regulation, judgment, decree, injunction, writ, edict, award, authorization or other requirement of any Governmental Authority in effect at that time or (ii) any obligation included in any certificate, certification, franchise, permit or license issued by any Governmental Authority or resulting from binding arbitration, including any requirement under common law.
Gross Negligence means a negligent act or negligent failure to act (whether sole, joint or concurrent) by any person, which act or failure to act is more fundamental than a failure to exercise proper skill and/or care and would reasonably be perceived as entailing an extreme degree of risk of injury to a Person or physical loss of or damage to property (considering the probability and magnitude of the potential injury, loss or damage), coupled with the persons actual awareness of and indifference to such extreme risk.
Halyard Group means Halyard and each direct or indirect Subsidiary of Halyard (other than Kimberly-Clark and any Subsidiary of Kimberly-Clark).
Kimberly-Clark Group means Kimberly-Clark and each direct or indirect Subsidiary of Kimberly-Clark (other than Halyard and any Subsidiary of Halyard).
Regardless of Cause means, whether or not any Damages are asserted to have been caused or arisen by virtue of tort (including negligence and gross negligence), breach of statutory duty, breach of common law duty (including fiduciary duties), breach of contract (including breach of condition) or quasi-contract, strict liability, misrepresentation, breach of any laws, regulations, rules or orders of any Governmental Requirements or otherwise, on the part of the Party or other Person seeking indemnity (or exclusion or limitation of liability).
Service Provider means the Party (or its Subsidiary or Affiliate) providing a Service under this Agreement.
Service Receiver means the Party (or its Subsidiary or Affiliate) to whom a Service is being provided under this Agreement.
Service Receiver Group means the applicable Halyard Group or Kimberly-Clark Group receiving the Services from the Service Provider.
Willful Misconduct any intentional wrongful act or intentional wrongful failure to act (whether sole, joint or concurrent) with actual knowledge that such act (or failure to act) is wrongful and with the intention to cause injury to a person, physical loss of or damage to property, breach of a contract or quasi-contract, or breach of any Government Requirement.
ARTICLE II
SERVICES
Section 2.1 Services . Subject to the terms and conditions of this Agreement, (a) Kimberly-Clark, acting through its own or procured through other members of the Kimberly-Clark Group and their respective employees, agents, contractors or independent third parties, agrees to provide or cause to be provided to Halyard and the other members of the Halyard Group (solely with respect to that portion of the Halyard Business arising out of the Healthcare
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Business and the Included Non-Woven Business) the services set forth in Schedules A -[ ] to A -[ ] hereto and any additional services provided to Halyard or the other members of the Halyard Group pursuant to Section 2.3 of this Agreement (the Kimberly-Clark Services ), and (b) Halyard, acting through its own or procured through other members of the Halyard Group and their respective employees, agents, contractors or independent third parties, agrees to provide or cause to be provided to Kimberly-Clark and the other members of the Kimberly-Clark Group (solely with respect to the Retained Business) the services set forth in Schedules B -[ ] to B -[ ] hereto and any additional services provided to Kimberly-Clark or the other members of the Kimberly-Clark Group pursuant to Section 2.3 of this Agreement (the Halyard Services and, collectively with the Kimberly-Clark Services, the Services ). At all times during the performance of the Services, all Persons performing such Services (including agents, temporary employees, independent third parties and consultants of the Service Provider, collectively, the Service Provider Group ) shall be construed as being independent from the Service Receiver Group, and no such Person shall be considered or deemed to be an employee of any member of the Service Receiver Group nor entitled to any employee benefits of the Service Receiver as a result of this Agreement.
The Service Receiver acknowledges and agrees that, except as may be expressly set forth herein as a Service (including additional Services to be provided pursuant to Section 2.3 below), no member of the Service Provider Group shall be obligated to provide, or cause to be provided, any service to any member of the Service Receiver Group.
Section 2.2 Service Coordinators . Each of Kimberly-Clark and Halyard will nominate a representative to act as the primary contact with respect to the provision of the Services as contemplated by this Agreement (the Service Coordinators ). The initial Service Coordinators shall be Gene Bernier for Kimberly-Clark and Warren Machan for Halyard. Unless Kimberly-Clark and Halyard otherwise agree, Kimberly-Clark and Halyard agree that all notices and communications relating to this Agreement, other than those day-to-day communications and billings relating to the actual provision of the Services, shall be directed to the Service Coordinators in accordance with Section 11.10 hereof. The Service Coordinators shall meet as expeditiously as possible to resolve any dispute hereunder, and any dispute that is not resolved by the Service Coordinators within thirty (30) calendar days after their first meeting with respect to such dispute shall be resolved in accordance with the dispute resolution procedures set forth in Section 11.3 . Each of Kimberly-Clark and Halyard may treat an act of a Service Coordinator of the other Party which is consistent with the provisions of this Agreement as being authorized by such other Party without inquiring behind such act or ascertaining whether such Service Coordinator had authority to so act; provided , however , that no such Service Coordinator shall have authority to amend this Agreement. Unless otherwise provided herein, Kimberly-Clark and Halyard shall advise each other promptly (in any case no more than three Business Days) in writing of any change in their respective Service Coordinators, setting forth the name of the replacement, and stating that the replacement Service Coordinator is authorized to act for such Party in accordance with this Section 2.2 .
Section 2.3 Additional Services . During the period (the Transition Period ) from the Distribution Date until the second anniversary of the Distribution Date, Kimberly-Clark and Halyard may, each acting in its sole discretion, mutually agree that each Party, in its capacity as a Service Provider, will provide additional Services to the other Party, in its capacity as a Service
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Receiver. Upon the mutual written agreement as to the nature, cost, duration and scope of such additional Services, the Parties shall supplement in writing the Schedules hereto to include such additional Services.
Notwithstanding anything to the contrary herein or in any current or supplemental Schedule hereto, no additional Services shall extend or be provided past the end of the Transition Period.
Section 2.4 Third-Party Services . Each Party, in its capacity as a Service Provider, shall have the right, whenever it deems necessary or advisable, to hire third-party subcontractors or acquire rights from third parties to provide all or part of any applicable Service hereunder; provided, however, that prior to any such hire or acquisition of rights, the Service Provider shall provide the Service Receiver with written notice thereof, which notice shall include the identity of such third party, and to permit the Service Receiver with an opportunity to indicate any concerns therewith (it being understood that the Service Receiver shall not have the right of approval). The Service Provider will provide to the Service Receiver all reasonably requested information regarding such third-party subcontractors.
Section 2.5 Standard of Performance . The Services to be provided hereunder shall be performed with the same general degree of care as the Service Provider and its Affiliates performs such services within the Service Provider organization. It is understood and agreed that the employees of the Service Provider and the other members of the Service Provider Group performing the Services are not professional providers to third parties of the types of services included in the Services and that some or all of the Service Provider Group employees performing Services may have other responsibilities and may not be dedicated full-time to performing Services hereunder. EXCEPT AS EXPRESSLY SET FORTH IN THIS SECTION 2.5, NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED (INCLUDING THE WARRANTIES OF NON-INFRINGEMENT, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR CONFORMITY TO ANY REPRESENTATION, SPECIFICATION OR DESCRIPTION), ARE MADE BY THE APPLICABLE SERVICE PROVIDER OR ANY MEMBER OF THE APPLICABLE SERVICE PROVIDER GROUP WITH RESPECT TO THE SERVICES UNDER THIS AGREEMENT AND, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ALL SUCH REPRESENTATIONS OR WARRANTIES ARE HEREBY WAIVED AND DISCLAIMED, REGARDLESS OF CAUSE, BY THE APPLICABLE SERVICE PROVIDER.
Section 2.6 Service Boundaries and Scope . Except as otherwise provided in this Agreement or a Schedule for a specific Service: (a) the Service Provider shall be required to provide, or cause to be provided, the Services only to the extent and only at the locations such Services are being provided by any member of the Service Provider Group for the applicable Business immediately prior to the Distribution Date; and (b) the Services shall be available only for purposes of conducting the applicable Business substantially in the manner it was conducted immediately prior to the Distribution Date; provided, however, that the Service Receiver shall be entitled to request changes to the Services locations and/or purposes, and the Service Provider shall consider all such requests in good faith, it being understood that the Service Provider shall be permitted to reject any such request for any reason if such change would be reasonably likely to increase the volume of Services provided hereunder by more than 2%. Except as otherwise
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provided in this Agreement or a Schedule for a specific Service, in providing, or causing to be provided, the Services, the Service Provider shall not be obligated to: (i) maintain the employment of any specific employee or hire additional employees or third-party service providers; (ii) purchase, lease or license any additional equipment (including computer equipment, furniture, furnishings, fixtures, machinery, vehicles, tools and other tangible personal property), software or other assets, rights or properties; (iii) make modifications to its existing systems or software; (iv) provide any member of the Service Receiver Group with access to any systems or software; (v) provide or cause to be provided any training, licensing or similar services to any person; (vi) provide any marketing, promotional, bid inquiry or similar services; (vii) provide any transportation services; or (viii) pay any costs related to the transfer or conversion of data of any member of the Service Receiver Group. Each Party in its capacity as a Service Receiver acknowledges (on its own behalf and on behalf of the other members of its respective Group) that the employees of the Service Provider or any other members of the Service Provider Group who may be assisting in the provision of Services hereunder are or may be at-will employees and, in any event, may terminate or be terminated from employment with the Service Provider or any of the other members of the Service Provider Group providing Services hereunder at any time for any reason. For the avoidance of doubt, the Services do not include any services required for or as the result of any business acquisitions, divestitures, start-ups or terminations by the Service Receiver or any other member of the Service Receiver Group, or any similar transactions, in each case to the extent consummated after the Distribution Date.
Section 2.7 Kimberly-Clark Documents and Other Information .
(a) Except for software licensed from third parties that are not Affiliates of Kimberly-Clark, all software used in or in connection with any part of the Retained Business (the Kimberly-Clark Software ), is proprietary to Kimberly-Clark or its Affiliates and, to the extent it is necessary to license or sublicense such software to Halyard in order for Kimberly-Clark to provide the Kimberly-Clark Services, such software is hereby licensed or sublicensed non-exclusively, royalty-free to Halyard solely for use in connection with the Halyard Business and the Included Non-Woven Business and only until the earlier of the termination of this Agreement or the time at which the Service to which such Kimberly-Clark Software relates terminates or ceases to be provided under this Agreement. Halyard agrees not to use the licensed or sublicensed Kimberly-Clark Software or related documentation (other than in connection with that portion of the Halyard Business that arose out of the Healthcare Business and the Included Non-Woven Business during the term of this Agreement) or to copy, modify, reverse engineer, reverse compile, or reverse assemble it. Irrespective of any terms to the contrary in this Agreement, any and all such licenses and sublicenses shall terminate as of the termination of this Agreement.
(b) As a result of the provision of Kimberly-Clark Services, certain employees of Halyard may receive access to computer, communications or information networks or systems of Kimberly-Clark or its Affiliates, and any related documentation (collectively, Kimberly-Clark Systems ). Halyard shall access and use only those Kimberly-Clark Systems for which it has been granted the right to access and use. Halyards right to access and use is provided for the limited purpose of supporting the Services provided hereunder. Individual access to such Kimberly-Clark Systems is strictly limited to those employees of Halyard approved in advance by Kimberly-Clark. With respect to all Kimberly-Clark Systems to which any employee of
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Halyard has access as a result of the Services being provided, Halyard (i) shall use such Kimberly-Clark Systems internally and for their intended purpose only, shall not distribute, publish, transfer, sublicense or in any manner make such Kimberly-Clark Systems available to other organizations or persons, and shall not act as a service bureau or consultant in connection with such Kimberly-Clark Systems; (ii) shall comply with all of Kimberly-Clarks system security policies, procedures and requirements that are provided to Halyard from time to time ( Kimberly-Clark Security Regulations ); and (iii) shall not tamper with, compromise or circumvent any security or audit measures employed by Kimberly-Clark. Halyard shall ensure that only those employees acting on its behalf who are specifically authorized to have access to Kimberly-Clark Systems gain such access and prevent unauthorized access, use, destruction, alteration or loss of information contained therein, including notifying its employees who might have access to such Kimberly-Clark Systems of the restrictions set forth in this Agreement and of the Kimberly-Clark Security Regulations.
(c) If, at any time, (i) any employee of the Halyard Group or other Person acting on its behalf seeks to circumvent, or circumvents, the Kimberly-Clark Security Regulations, (ii) any unauthorized employee of the Halyard Group or Person acting on its behalf accesses Kimberly-Clark Systems, or (iii) any employee or representative of the Halyard Group engages in activities that may lead to the unauthorized access, use, destruction, alteration or loss of data, information or software of Kimberly-Clark, Halyard shall promptly terminate any such employees or Persons access to Kimberly-Clark Systems and immediately notify Kimberly-Clark. In addition, Kimberly-Clark shall have the right to deny any employee of the Halyard Group or other Person acting on the Halyard Groups behalf access to Kimberly-Clark Systems in the event that Kimberly-Clark reasonably believes that such employee has engaged in any of the activities set forth above in this Section 2.7 or otherwise poses a security concern. Halyard shall cooperate with Kimberly-Clark in investigating any apparent unauthorized access to Kimberly-Clark Systems.
(d) Without limiting the generality of any other provision hereof, the Halyard Group shall have responsibility under this Agreement for the actions and omissions of both its employees and any other Person acting on its behalf.
(e) To the extent Halyard no longer requires access to Kimberly-Clark Systems with respect to specific software, functions, systems or services, Halyards access will be terminated.
Section 2.8 Halyard Documents and Other Information .
(a) Except for software licensed from third parties that are not Affiliates of Halyard, all software used in or in connection with any portion of the Halyard Business or the Included Non-Woven Business (the Halyard Software ), is proprietary to Halyard or its Affiliates and, to the extent it is necessary to license or sublicense such software to Kimberly-Clark in order for Halyard to provide the Halyard Services, such software is hereby licensed or sublicensed non-exclusively, royalty-free to Kimberly-Clark solely for use in connection with the Kimberly-Clark Business and only until the earlier of the termination of this Agreement or the time at which the Service to which such Halyard Software relates terminates or ceases to be provided under this Agreement. Kimberly-Clark agrees not to use the licensed or sublicensed
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Halyard Software or related documentation (other than in connection with the Kimberly-Clark Business during the term of this Agreement) or to copy, modify, reverse engineer, reverse compile, or reverse assemble it. Irrespective of any terms to the contrary in this Agreement, any and all such licenses and sublicenses shall terminate as of the termination of this Agreement.
(b) As a result of the provision of Halyard Services, certain employees of Kimberly-Clark may receive access to computer, communications or information networks or systems of Halyard or its Affiliates, and any related documentation (collectively, Halyard Systems ). Kimberly-Clark shall access and use only those Halyard Systems for which it has been granted the right to access and use. Kimberly-Clarks right to access and use is provided for the limited purpose of supporting the Services provided hereunder. Individual access to such Halyard Systems is strictly limited to those employees of Kimberly-Clark approved in advance by Halyard. With respect to all Halyard Systems to which any employee of Kimberly-Clark has access as a result of the Services being provided, Kimberly-Clark (i) shall use such Halyard Systems internally and for their intended purpose only, shall not distribute, publish, transfer, sublicense or in any manner make such Halyard Systems available to other organizations or persons, and shall not act as a service bureau or consultant in connection with such Halyard Systems; (ii) shall comply with all of Halyards system security policies, procedures and requirements that are provided to Kimberly-Clark from time to time ( Halyard Security Regulations ); and (iii) shall not tamper with, compromise or circumvent any security or audit measures employed by Halyard. Kimberly-Clark shall ensure that only those employees acting on its behalf who are specifically authorized to have access to Halyard Systems gain such access and prevent unauthorized access, use, destruction, alteration or loss of information contained therein, including notifying its employees who might have access to such Halyard Systems of the restrictions set forth in this Agreement and of the Halyard Security Regulations.
(c) If, at any time, (i) any employee of the Kimberly-Clark Group or other Person acting on its behalf seeks to circumvent, or circumvents, the Halyard Security Regulations, (ii) any unauthorized employee of the Kimberly-Clark Group or Person acting on its behalf accesses Halyard Systems, or (iii) any employee or representative of the Kimberly-Clark Group engages in activities that may lead to the unauthorized access, use, destruction, alteration or loss of data, information or software of Halyard, Kimberly-Clark shall promptly terminate any such employees or Persons access to Halyard Systems and immediately notify Halyard. In addition, Halyard shall have the right to deny any employee of the Kimberly-Clark Group or other Person acting on the Kimberly-Clark Groups behalf access to Halyard Systems in the event that Halyard reasonably believes that such employee has engaged in any of the activities set forth above in this Section 2.8 or otherwise poses a security concern. Kimberly-Clark shall cooperate with Halyard in investigating any apparent unauthorized access to Halyard Systems.
(d) Without limiting the generality of any other provision hereof, the Kimberly-Clark Group shall have responsibility under this Agreement for the actions and omissions of both its employees and any other Person acting on its behalf.
(e) To the extent Kimberly-Clark no longer requires access to Halyard Systems with respect to specific software, functions, systems or services, Kimberly-Clarks access will be terminated.
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Section 2.9 Conflict with Laws; Business Ethics . Notwithstanding anything in this Agreement to the contrary, (a) no Service Provider nor any of its Affiliates shall be required to undertake any actions that would or may place such Service Provider in violation of any Governmental Requirements and (b) each of the Parties agrees that the other Party shall not be required to take any actions that would place such Party or any other member of such Partys Group in violation of its Business Code of Conduct, as they may be amended from time to time. Each Party shall promptly notify the other Party of any Service or action relating to a Service that cannot be performed without violating the Partys Business Code of Conduct. The Party who gives such notice shall use commercially reasonable efforts to provide such Services or take such actions in such a way and to such an extent as will not cause it to violate its Business Code of Conduct.
Section 2.10 Local Implementing Agreements; Access . The Parties recognize and agree that there may be a need to document the Services provided hereunder in various countries from time to time. Consequently, the Parties shall enter into, or cause their respective Subsidiaries to enter into, local implementing agreements ( Local Agreements ) for Services to be provided hereunder in such countries or geographical regions as either Kimberly-Clark or Halyard may reasonably request from time to time; provided , however , that the execution or performance of any such Local Agreement shall in no way alter or modify any term or condition hereof nor the effect thereof. Without limiting the generality of the foregoing, should there be any conflict between any term or condition of a Local Agreement and this Agreement, the terms and conditions of this Agreement shall prevail.
During the term of this Agreement and for so long as any Services are being provided, the Kimberly-Clark Group will provide the Halyard Group and its authorized representatives such access to Kimberly-Clark and any other member of the Kimberly-Clark Group and their respective employees, representatives, facilities, premises and other equipment and books and records (including electronic data) as Halyard and its representatives may reasonably require in order to perform the Services or fulfill their respective obligations hereunder. During the term of this Agreement and for so long as any Services are being provided, the Halyard Group will provide the Kimberly-Clark Group and its authorized representatives such access to Halyard and any other member of the Halyard Group and their respective employees, representatives, facilities, premises and other equipment and books and records (including electronic data) as Kimberly-Clark and its representatives may reasonably require in order to perform the Services or fulfill their respective obligations hereunder.
ARTICLE III
CHARGES
Section 3.1 Charges . Each Service will be provided at the price indicated in the corresponding Schedule hereto.
ARTICLE IV
PAYMENT
Section 4.1 Payment . Charges for Services shall be invoiced monthly or at such other times as provided in the applicable Schedules hereunder in one or more statements (the Monthly
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Statements ) prepared by the applicable Service Provider or one or more of its Affiliates and in the form set forth in Exhibit A hereto (with Kimberly-Clark as Service Provider) or Exhibit B hereto (with Halyard as Service Provider). The recipient of such invoice shall make the corresponding payment no later than sixty (60) calendar days after receipt of the Monthly Statement. Each Monthly Statement shall be directed to the applicable Service Coordinator or such other person designated in writing from time to time by such Service Coordinator. The Monthly Statement shall set forth in reasonable detail, for the period covered by such Monthly Statement: (i) the Services rendered and (ii) the basis for the calculation of the charges as set forth in Section 3.1 . In the event there is any dispute with respect to a Monthly Statement, the Service Receiver shall make the payment for all non-disputed portions in accordance herewith. In the event it is determined that the Service Receiver is entitled to a refund of amounts actually paid by the Service Receiver hereunder, the Service Provider or its Affiliate (as applicable) shall pay the Service Receiver such overpaid amount.
The Service Receiver shall be responsible for all transfer taxes, excises, fees or other charges (including any sales, use, goods and services, value added or similar taxes) imposed or assessed on the Service Provider or its Affiliates as a result of the provision of Services under this Agreement. The Service Receiver shall be entitled to deduct and withhold taxes required by any Governmental Requirements to be withheld on payments made pursuant to this Agreement. To the extent any amounts are so withheld, the Service Receiver shall (i) pay such deducted and withheld amount to the proper Governmental Authority, and (ii) promptly provide to the Service Provider evidence of such payment to such Governmental Authority.
ARTICLE V
TERM
Section 5.1 Term . The term of this Agreement shall commence on the Distribution Date and shall continue in force until the termination of all Services in accordance with the duration of such Services set forth in the Schedules hereto or as otherwise set forth herein, but in no event beyond the October 31, 2016. Except as otherwise provided in a Schedule with respect to a specific Service, all Services shall terminate at the end of the Transition period.
ARTICLE VI
EXTENSION AND DISCONTINUATION OF SERVICES
Section 6.1 Extension and Discontinuation of Services . Except as otherwise provided in the applicable Schedule, the Service Receiver may elect to extend or discontinue its receipt of any individual Service from time to time or all of the Services that it receives under this Agreement in its entirety, by providing to the Service Provider the required advance written notice, if any, set forth in the applicable Schedule in respect of the Service that is to be extended or discontinued; provided , however , that any (i) discontinuation of any Service will not affect the amounts payable to the Service Provider hereunder in respect of the Services not so discontinued, and (ii) extension shall be at the amounts payable in respect thereof during the month immediately prior to such extended period. The Service Receiver shall be liable to the Service Provider for all charges payable under this Agreement in respect of such discontinued Services that are delivered prior to the effective date of such discontinuation, and for all charges payable under this Agreement in respect of any extended Services.
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ARTICLE VII
DEFAULT
Section 7.1 Termination for Default . Either Party may, by giving written notice to the other Party identifying the basis for such notice, terminate this Agreement as of the date specified in the notice of termination, if such other Party commits a material breach of this Agreement, which breach is not cured within thirty (30) days after receipt from the non-breaching Party of written notice of the breach specifying in reasonable detail the nature of the breach.
Section 7.2 Termination for Bankruptcy . In the event that a Party shall (i) file a petition in bankruptcy, (ii) become or be declared insolvent, or become the subject of any proceedings (not dismissed within sixty (60) calendar days) related to its liquidation, insolvency or the appointment of a receiver, (iii) make an assignment on behalf of all or substantially all of its creditors, or (iv) take any corporate action for its winding up or dissolution, then the other Party shall have the right to terminate this Agreement by providing written notice in accordance with Section 11.4 .
ARTICLE VIII
INDEMNIFICATION
Section 8.1 Liabilities and Indemnities .
(a) Failure to Perform .
(i) In the event Kimberly-Clark fails to provide the Kimberly-Clark Services (or a portion thereof) in accordance herewith, the sole and exclusive remedy of Halyard shall be, at Halyards election, (A) to make a claim for indemnification pursuant to Section 8.1(b) (if available); (B) to require Kimberly-Clark to reperform the applicable Service (or relevant portion), without additional charge; (C) to withhold payment for such Service; provided, that if payment for such Service has already been made, Halyard shall be entitled, at its election, to a refund of the amount of such payment or to offset the amount of such payment against payments for other Services hereunder; (D) to the extent applicable, to have the right to terminate the Agreement under Section 7.1 ; or (E) to pursue its rights under Section 11.14 .
(ii) In the event Halyard fails to provide the Halyard Services (or a portion thereof) in accordance herewith, the sole and exclusive remedy of Kimberly-Clark shall be, at Kimberly-Clarks election, (A) to make a claim for indemnification pursuant to Section 8.1(b) (if available), (B) to require Halyard to reperform the applicable Service (or relevant portion) without additional charge, (C) to withhold payment for such Service; provided, that if payment for such Service has already been made, Kimberly-Clark shall be entitled, at its election, to a refund of the amount of such payment or to offset the amount of such payment against payments for other Services hereunder, (D) to the extent applicable, to have the right to terminate the Agreement under Section 7.1 ; or (E) to pursue its rights under Section 11.14 .
(iii) Each Party may pursue more than one remedy at the same time but ultimately may not recover more than once. Such rights are the Parties sole remedy for any non-performance, inadequate performance, faulty performance or other failure or breach by a Party in its capacity as a Service Provider under or relating to this Agreement.
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(b) Indemnity by the Service Provider . Each party in its capacity as a Service Provider shall fully indemnify, defend and hold harmless the other Party in its capacity as a Service Receiver, and its Affiliates and their respective directors, officers, employees and agents, from and against any and all Damages, but only to the extent that such Damages relate to, arise out of, or result from (i) the Service Providers intentional cessation or suspension of, or refusal to provide, a material portion of the applicable Services as required hereunder (an Abandonment ) or (ii) the Gross Negligence or Willful Misconduct of the Service Provider or its Affiliates in the performance of Service Providers obligations hereunder.
(c) Indemnity by the Service Receiver . Each party in its capacity as a Service Recipient shall fully indemnify, defend and hold harmless the other Party in its capacity as a Service Provider, and its Affiliates and their respective directors, officers, employees and agents, from and against any and all Damages incurred thereby relating to, arising out of, or resulting from the Service Providers provision of the applicable Services (including, for the avoidance of doubt, such Damages that arise out of the Service Providers or its Affiliates negligence or their breach of this Agreement), but in all cases excluding such Damages that relate to, arise out of, or result from (i) an Abandonment or (ii) the Gross Negligence or Willful Misconduct of the Service Provider or its Affiliates in the performance of Service Providers obligations hereunder. The foregoing indemnity shall not apply to Damages incurred directly by the Service Provider, including without limitation Damages to Service Providers real or tangible or intangible personal property and injury to the employees or agents of the Service Provider, but only to the extent that such Damages arise out of the acts or omissions of Service Provider or its Affiliates or agents (it being understood that this sentence shall not apply to Damages arising out of Claims (as defined below)).
(d) Survival . The provisions in this Section 8.1 shall survive and continue in full force and effect notwithstanding the expiration or termination of this Agreement for any reason whatsoever.
(e) Indemnification Procedures .
(i) Third-Party Claim . The indemnification obligation pursuant to Section 8.1(b) for each Party in its capacity as a Service Provider and the indemnification obligation pursuant to Section 8.1(c) for each party in its capacity as a Service Receiver, in each case, with respect to Damages claimed or asserted against a person claiming indemnification under this Agreement (an Indemnified Party ) by a third party (that third-party claim or assertion, a Claim ), are subject to the following terms and conditions:
(1) The Indemnified Party shall, with reasonable promptness after the Indemnified Party has notice of a Claim, (A) notify the Party from whom indemnification is sought (the Indemnifying Party ) of the existence of that Claim and (B) transmit to the Indemnifying Party a notice (a Claim Notice ) describing, in reasonable detail, the nature of the Claim, and copies of any papers served with respect to such Claim. Within fifteen (15) calendar days following receipt of notice from the Indemnified Party relating to any Claim, but no later than five (5) calendar days before the date on which any response to a
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complaint or summons is due if the Indemnifying Party has received notice from the Indemnified Party relating to any Claim at least five (5) days before that date, the Indemnifying Party shall notify the Indemnified Party that the Indemnifying Party will assume control of the defense and settlement of such claim (a Notice of Assumption ).
(2) If the Indemnifying Party delivers a Notice of Assumption within the required notice period, the Indemnifying Party shall assume control (subject to Indemnified Partys right to participate at its own expense) over the defense and settlement of the claim and diligently defend the claim; provided , however , that (i) the Indemnifying Party shall keep the Indemnified Party fully apprised as to the status of the defense, and (ii) the Indemnifying Party shall obtain the prior written approval of the Indemnified Party before entering into any settlement of such claim asserting any liability against the Indemnified Party, imposing any obligations or restrictions on the Indemnified Party, ceasing to defend against such claim or otherwise adversely impacting the Indemnified Party. The Indemnifying Party shall not be liable for any legal fees or expenses incurred by the Indemnified Party following the delivery of a Notice of Assumption; provided , however , that the Indemnified Party shall be entitled to employ counsel at its own expense to participate in the handling of the claim. The Indemnifying Party shall not be obligated to indemnify the Indemnified Party for any amount paid or payable by such Indemnified Party in the settlement of any claim if (x) the Indemnifying Party has delivered a timely Notice of Assumption and such amount was agreed to without the written consent of the Indemnifying Party, (y) the Indemnified Party has not provided the Indemnifying Party with notice of such claim and a reasonable opportunity to respond thereto, or (z) the time period within which to deliver a Notice of Assumption has not yet expired.
(3) If the Indemnifying Party does not deliver a Notice of Assumption relating to any claim within the required notice period, the Indemnified Party shall have the right to defend the claim in such manner as it may deem appropriate. The Indemnifying Party shall promptly reimburse the Indemnified Party for all reasonable costs and expenses incurred by Indemnified Party, including attorneys fees, in connection therewith to the extent it is a claim for which the Indemnifying Party is obligated to indemnify under this Agreement.
(ii) No Third-Party Claim . In the event any Indemnified Party claims indemnification against any Indemnifying Party under this Agreement but that claim for indemnification does not involve a Claim, the Indemnified Party shall (A) notify the Indemnifying Party and (B) transmit to the Indemnifying Party a notice (an Indemnity Notice ) describing, in reasonable detail, the nature of the claim. Within thirty (30) calendar days after receipt of any Indemnity Notice, the Indemnifying Party shall notify the Indemnified Party whether the Indemnifying Party disputes its potential liability to the Indemnified Party under this Article VIII . If the Indemnifying Party does not notify the Indemnified Party within such thirty (30)-day period that the Indemnifying Party disputes its potential liability with respect to the claim described in such Indemnity Notice, any Damages resulting from such claim shall be payable by the Indemnifying Party under this Agreement.
(iii) The provisions of this Section 8.1(e) are in all cases subject to the limitations set forth in Sections 8.1 and 8.2 and elsewhere in this Agreement.
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Section 8.2 Limitations on Damages .
(a) SUBJECT TO THE REPERFORMANCE OBLIGATIONS IN SECTION 8.1(a)(i)(B) AND 8.1(a)(ii)(B), NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, IN NO EVENT (REGARDLESS OF CAUSE) SHALL A PARTY IN ITS CAPACITY AS A SERVICE PROVIDER BE LIABLE TO A PARTY IN ITS CAPACITY AS SERVICE RECEIVER AND ITS AFFILIATES WITH RESPECT TO CLAIMS ARISING OUT OF THIS AGREEMENT, WHETHER UNDER THIS ARTICLE VIII OR OTHERWISE, FOR AMOUNTS IN THE AGGREGATE EXCEEDING THE AGGREGATE SERVICE CHARGES PAID TO THE APPLICABLE PARTY IN ITS CAPACITY AS A SERVICE PROVIDER UNDER THIS AGREEMENT IN THE TWELVE-MONTH PERIOD PRIOR TO THE OCCURRENCE GIVING RISE TO THE DAMAGES (SUCH AMOUNT, THE CAP ); PROVIDED , HOWEVER , THAT DURING THE SIX MONTH PERIOD IMMEDIATELY FOLLOWING THE EFFECTIVE TIME, THE CAP SHALL BE EQUAL TO THE TOTAL SERVICE CHARGES PAYABLE TO THE APPLICABLE PARTY IN ITS CAPACITY AS A SERVICE PROVIDER UNDER THIS AGREEMENT OVER SUCH SIX MONTH PERIOD, CALCULATED AS THOUGH THE FULL SCOPE OF SUCH SERVICES WILL BE DELIVERED WITHOUT EARLY TERMINATION OR SUSPENSION.
(b) NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, IN NO EVENT SHALL EITHER PARTY, THEIR RESPECTIVE AFFILIATES OR THEIR RESPECTIVE DIRECTORS, OFFICERS AND EMPLOYEES BE LIABLE UNDER THIS AGREEMENT FOR ANY CONSEQUENTIAL DAMAGES, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY (INCLUDING NEGLIGENCE) ARISING IN ANY WAY OUT OF ANY PROVISION OF THIS AGREEMENT, WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES; PROVIDED , HOWEVER , THAT THE FOREGOING LIMITATIONS SHALL NOT LIMIT AN INDEMNIFYING PARTYS INDEMNIFICATION OBLIGATIONS HEREUNDER FOR LIABILITIES ANY INDEMNIFIED PARTY MAY HAVE TO THIRD PARTIES FOR ANY CONSEQUENTIAL DAMAGES ARISING OUT OF THE CLAIM THAT IS THE SUBJECT OF SUCH INDEMNIFICATION. FOR PURPOSES OF THIS ARTICLE VIII , CONSEQUENTIAL DAMAGES MEAN ANY EXEMPLARY, PUNITIVE, SPECIAL, INDIRECT, CONSEQUENTIAL, REMOTE OR SPECULATIVE DAMAGES (INCLUDING IN RESPECT OF LOST PROFITS OR REVENUES).
(c) To the extent that an Indemnified Party has incurred Damages that are subject to indemnification under this Article VIII for which (i) insurance coverages may be available or (ii) claims may be available against a third party in respect thereof, such Indemnified Party shall, to the extent possible, undertake good faith efforts to recover against such coverages and/or pursue such available third party claim. To the extent that an Indemnified Party obtains insurance proceeds or third party recoveries in respect of such Damages, such Indemnified Party shall use the funds actually received in connection with such insurance recovery or third party claim (in lieu of funds provided by the Indemnifying Party pursuant to the indemnification provisions of this Article VIII ) to pay or otherwise satisfy such Damages, and the amount of any Damages for which indemnification is available under this Article VIII shall be reduced by the amount of such insurance or third party claim proceeds paid in cash to the Indemnified Party net of all out-of-pocket costs and expenses. If, after the making of any payment to an Indemnified Party of Damages under this Article VIII , the amount of Damages to which such payment relates is reduced by actual recovery, settlement or otherwise by the Indemnified Party under any
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insurance coverage or against any third parties, the amount of such reduction will promptly be repaid by the Indemnified Party to the Indemnifying Party, net of all out-of-pocket costs and expenses.
(d) In the event that a Service Recipient incurs any Damages relating to, arising out of, or resulting from the Service Providers provision of the applicable Services (including, for the avoidance of doubt, such Damages that arise out of the Service Providers or its Affiliates negligence or breach of this Agreement) for which (i) insurance coverages may be available to Service Provider or (ii) claims may be available to Service Provider against a third party in respect thereof (including any agents used by Service Provider in providing the Services), Service Provider shall, to the extent possible, at the Service Recipients expense, either (x) undertake good faith efforts to recover against such coverages and/or pursue such available third party claim or (y) take such action as shall be necessary for the Service Recipient to be subrogated, to the extent possible, to the rights of the Service Provider with respect thereto. To the extent that the Service Provider obtains insurance proceeds or third party recoveries in respect of such Damages, the Service Provider shall pay the funds actually received in connection with such insurance recovery or third party claim to the Service Recipient, net of all out-of-pocket costs and expenses incurred by Service Provider in connection therewith, notwithstanding any of the limitations in this Section 8.2.
Section 8.3 Limited Recourse . EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, (A) NO AFFILIATE OF ANY PARTY WILL HAVE ANY LIABILITY OR RESPONSIBILITY FOR, RELATING TO OR IN CONNECTION WITH A PARTYS FAILURE TO PERFORM ANY TERM, COVENANT, CONDITION OR PROVISION OF THIS AGREEMENT AND (B) IN PURSUING ANY REMEDY FOR ANY PARTYS BREACH OF ANY TERM, COVENANT, CONDITION OR PROVISION OF THIS AGREEMENT OR OF ANY DUTY OR STANDARD OF CONDUCT BASED ON NEGLIGENCE, GROSS NEGLIGENCE, STRICT LIABILITY OR PERSONAL INJURY OR OTHER TORT OR VIOLATION OF APPLICABLE GOVERNMENTAL REQUIREMENTS, OR OTHERWISE, THE OTHER PARTY WILL NOT HAVE RECOURSE AGAINST ANY PERSON OTHER THAN THE DEFAULTING OR BREACHING PARTY ITSELF NOR AGAINST ANY ASSETS OTHER THAN THE ASSETS OF THE DEFAULTING OR BREACHING PARTY ITSELF.
Section 8.4 Limitation on Remedies .
(a) EXCEPT AS SET FORTH IN SECTION 8.1 and 8.2(d) , EACH PARTY HEREBY EXPRESSLY WAIVES ANY RIGHT IT MAY OTHERWISE HAVE TO CLAIM, COLLECT OR RECEIVE DAMAGES, TO ENFORCE SPECIFIC PERFORMANCE OR TO PURSUE ANY OTHER REMEDY AVAILABLE IN CONTRACT, AT LAW OR IN EQUITY IN THE EVENT OF ANY NON-PERFORMANCE, INADEQUATE PERFORMANCE, FAULTY PERFORMANCE OR OTHER FAILURE OR BREACH BY THE OTHER PARTY IN ITS CAPACITY AS A SERVICE PROVIDER UNDER THIS AGREEMENT, REGARDLESS OF CAUSE EXCEPT ONLY TO THE EXTENT CAUSED BY THE WILLFUL MISCONDUCT OF SUCH SERVICE PROVIDER OR ITS AFFILIATES.
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(b) Without limiting the generality of any other provision hereof, it is not the intent of either Party (or their Affiliates) in its capacity as a Service Provider to render professional advice or opinions, whether with regard to tax, legal, treasury, finance, intellectual property, employment or other matters; no Party in its capacity as a Service Receiver shall rely on any Service rendered by or on behalf of the Service Provider or its Affiliates for such professional advice or opinions; and notwithstanding the Service Receivers receipt of any proposal, recommendation or suggestion in any way relating to tax, legal, treasury, finance, intellectual property, employment or any other subject matter, the Service Receiver shall seek all third-party professional advice and opinions as it may desire or need; and, with respect to any software or documentation provided in connection with the Services, the Service Receiver shall use such software and documentation internally and for their intended purpose only, shall not distribute, publish, transfer, sublicense or in any manner make such software or documentation available to other organizations or persons, and shall not act as a service bureau or consultant in connection with such software.
(c) A material inducement to the provision of the Kimberly-Clark Services is the limitation of liability, damages and recourse set forth herein and the release and indemnity provided by Halyard. A material inducement to the provision of the Halyard Services is the limitation of liability, damages and recourse set forth herein and the release and indemnity provided by Kimberly-Clark.
(d) Without limiting the generality of any other provision hereof, (i) none of Kimberly-Clark nor its Affiliates shall have any liability or responsibility for any loss of or Damage to any equipment related to the Halyard Business or the Included Non-Woven Business, which such liability, responsibility and risk shall be for the account of Halyard and its Affiliates, Regardless of Cause, and (ii) none of Halyard nor its Affiliates shall have any liability or responsibility for any loss of or Damage to any equipment related to the Retained Business, which such liability, responsibility and risk shall be for the account of Kimberly-Clark and its Affiliates, Regardless of Cause.
Section 8.5 Express Negligence . EXCEPT AS OTHERWISE EXPRESSED THEREIN, THE INDEMNITY, RELEASES AND LIMITATIONS ON DAMAGES, RECOURSE AND LIABILITIES IN THIS AGREEMENT (INCLUDING ARTICLES II AND VIII ) ARE INTENDED TO BE ENFORCEABLE AGAINST THE PARTIES IN ACCORDANCE WITH THE EXPRESS TERMS AND SCOPE THEREOF, REGARDLESS OF CAUSE.
ARTICLE IX
CONFIDENTIALITY
Section 9.1 Confidentiality . The Parties each acknowledge and agree that the terms of the Distribution Agreement shall apply to information, documents, plans and other data made available or disclosed by one Party to the other in connection with this Agreement, including any such information Halyard may gain from access to the Kimberly-Clark Systems or that Kimberly-Clark may gain from access to the Halyard Systems.
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ARTICLE X
FORCE MAJEURE
Section 10.1 Effect and Definition . No failure or omission by either Party to perform or carry out its obligations in accordance with this Agreement (other than the obligation to make payment) shall give rise to any claim by the other Party or be deemed a breach of this Agreement if such failure or omission arises from a Force Majeure Event. Force Majeure Event shall mean any event or circumstance that is beyond the reasonable control of the Party affected thereby, including lightning, earthquakes, tornadoes, hurricanes, floods, wash outs, storms, fires, explosions, epidemics, acts of God, other natural disasters, acts of the public enemy, computer crimes, cyber terrorism, actions by any Governmental Authority or other governmental interference, insurrections, riots, civil disturbance, sabotage, terrorism, threats of sabotage or terrorism, vandalism, wars and war like actions (whether declared or undeclared and whether actual, pending or expected), confiscation, seizure, arrests or other restraints by a Governmental Authority, blockades, embargoes, boycotts, strikes, lockouts, labor unrest and other labor disputes, and any shortage of adequate power or transportation facilities.
Section 10.2 Notification Requirements . The Party claiming to be affected by a Force Majeure Event shall, as soon as reasonably practicable, notify the other Party of the beginning and end of any event claimed to be a Force Majeure Event and use commercially reasonable efforts to resume performance in accordance with this Agreement as soon as is reasonably practicable after the end of the Force Majeure Event.
Section 10.3 Cooperation . The Parties shall cooperate in reasonable respects with each other to find alternative means and methods for the provision of any suspended Service with respect to a Force Majeure Event.
ARTICLE XI
MISCELLANEOUS
Section 11.1 Construction Rules .
(a) A reference to an Article, Section or Schedule shall mean an Article or Section of, or a Schedule to, this Agreement unless otherwise explicitly set forth. The titles and headings herein are for reference purposes only and shall not in any manner limit the construction of this Agreement which shall be considered as a whole.
(b) The words include, includes and including when used in this Agreement shall be deemed in each case to be followed by the words without limitation.
(c) The words hereof, herein and herewith and words of similar import will, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement.
(d) The word or when used in this Agreement will not be exclusive.
(e) Words in the singular when used in this Agreement will be held to include the plural.
(f) Unless specifically stated otherwise, all dollar amounts referred to in this Agreement or required to be paid pursuant to this Agreement are expressed in and shall be paid in United States Dollar funds.
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Section 11.2 Entire Agreement . This Agreement and the Schedules and Exhibits referred to herein, and the documents delivered pursuant hereto, together with the other Operating Agreements, constitute the entire agreement between the Parties with respect to the subject matter contained herein, and supersede all prior agreements, negotiations, discussions, understandings, writings and commitments between the Parties with respect to such subject matter; provided that, in the event of any conflict between this Agreement and any other Operating Agreement, this Agreement shall control with respect to the subject matter herein.
Section 11.3 Choice of Law; Dispute Resolution .
(a) This Agreement shall be governed by and construed and enforced in accordance with the substantive laws of the State of Delaware and the federal laws of the United States of America applicable therein, without regard to any principles of conflicts of laws therein that would cause the laws of any other jurisdiction to apply.
(b) In respect of any dispute hereunder, the Service Coordinators shall first attempt to resolve such dispute in accordance with Section 2.2 . If the Service Coordinators are unable to resolve any such dispute within the timeframes set forth therein, either Party may refer the dispute for resolution pursuant to Article XI of the Distribution Agreement.
Section 11.4 Amendment . This Agreement shall not be amended, modified or supplemented except by a written instrument signed by an authorized representative of each of the Parties.
Section 11.5 Waiver . Any term or provision of this Agreement may be waived, or the time for its performance may be extended, by the Party or Parties entitled to the benefit thereof. Any such waiver shall be validly and sufficiently given for the purposes of this Agreement if, as to any Party, it is in writing signed by an authorized representative of such Party. The failure of any Party to enforce at any time any provision of this Agreement shall not be construed to be a waiver of such provision, or in any way to affect the validity of this Agreement or any part hereof or the right of any Party thereafter to enforce each and every such provision. No waiver of any breach of this Agreement shall be held to constitute a waiver of any other or subsequent breach.
Section 11.6 Partial Invalidity . Wherever possible, each provision hereof shall be interpreted in such a manner as to be effective and valid under applicable law, but in case any one or more of the provisions contained herein shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such provision or provisions shall be ineffective to the extent, but only to the extent, of such invalidity, illegality or unenforceability without invalidating the remainder of such provision or provisions or any other provisions hereof, unless such a construction would be unreasonable.
Section 11.7 Execution in Counterparts . This Agreement may be executed in one or more counterparts, each of which shall be deemed an original instrument, but all of which shall be considered one and the same agreement, and shall become binding when one or more counterparts have been signed by and delivered to each of the Parties.
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Section 11.8 Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of the Parties and their successors and permitted assigns; provided , however , that the rights and obligations of either Party under this Agreement shall not be assignable by such Party without the prior written consent of the other Party. The successors and permitted assigns hereunder shall include, without limitation, any permitted assignee as well as the successors in interest to such permitted assignee (whether by merger, liquidation (including successive mergers or liquidations) or otherwise).
Section 11.9 Third Party Beneficiaries . Except to the extent otherwise provided herein, the provisions of this Agreement are solely for the benefit of the Parties and their respective Affiliates, successors and permitted assigns and shall not confer upon any third Person any remedy, claim, liability, reimbursement or other right in excess of those existing without reference to this Agreement.
Section 11.10 Notices . All notices, requests, claims, demands and other communications required or permitted hereunder shall be in writing and shall be deemed given or delivered (i) when delivered personally, (ii) if transmitted by facsimile when confirmation of transmission is received, (iii) if sent by registered or certified mail, postage prepaid, return receipt requested, on the third Business Day after mailing or (iv) if sent by private courier when received; and shall be addressed as follows:
If to Kimberly-Clark, to:
Kimberly-Clark Corporation 351 Phelps Drive Irving, Texas 75309 |
||
Attention: | General Counsel | |
Facsimile: | 972-281-1492 |
If to Halyard, to:
Halyard Health, Inc. 5405 Windward Parkway Suite 100, South Alpharetta, GA 30004 |
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Attention: | General Counsel | |
Facsimile: | 770-587-7749 |
or to such other address as such Party may indicate by a notice delivered to the other Party.
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Section 11.11 Performance . Each Party shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth herein to be performed by any Subsidiary or Affiliate of such Party.
Section 11.12 No Public Announcement. Neither Kimberly-Clark nor Halyard shall, without the approval of the other, make any press release or other public announcement concerning the transactions contemplated by this Agreement, except as and to the extent that any such Party shall be so obligated by law or the rules of any stock exchange or quotation system, in which case the other Party shall be advised and the Parties shall use commercially reasonable efforts to cause a mutually agreeable release or announcement to be issued; provided , however , that the foregoing shall not preclude communications or disclosures necessary to implement the provisions of this Agreement or to comply with the accounting and SEC disclosure obligations or the rules of any stock exchange.
Section 11.13 Authority . Each of the Parties represents to the other that (a) it has the corporate or other requisite power and authority to execute, deliver and perform this Agreement, (b) the execution, delivery and performance of this Agreement by it have been duly authorized by all necessary corporate or other actions, (c) it has duly and validly executed and delivered this Agreement, and (d) this Agreement is a legal, valid and binding obligation, enforceable against it in accordance with their respective terms subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors rights generally and general equity principles.
Section 11.14 Specific Performance . In the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement, the Party or the Parties who are or are to be thereby aggrieved shall have the right to specific performance and injunctive or other equitable relief of their rights under this Agreement, in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative. The Parties agree that the remedies at law for any breach or threatened breach, including monetary damages, are inadequate compensation for any loss and that any defense in any action for specific performance that a remedy at law would be adequate is waived. Any requirements for the securing or posting of any bond with such remedy are waived.
Section 11.15 Construction . This Agreement shall be construed as if jointly drafted by Kimberly-Clark and Halyard and no rule of construction or strict interpretation shall be applied against any Party.
Section 11.16 Exclusivity of Tax Matters . Subject to the second paragraph of Section 4.1, but notwithstanding any other provision of this Agreement, the provisions of the Tax Matters Agreement shall exclusively govern all matters related to Taxes.
Section 11.17 Relationship of Parties . Each Party in its capacity as a Service Receiver understands and agrees that the Service Providers relationship to such Party as a Service Receiver under this Agreement is strictly a contractual arrangement on the terms and conditions set forth in this Agreement, that no fiduciary, trust, partnership, joint venture, agency or advisory relationship exists between either Party as a Service Provider and the other Party as a Service Receiver, that all Services are provided by the Service Provider as an independent contractor and
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that each Party in its capacity as a Service Receiver hereby waives any and all rights that it may otherwise have under applicable Governmental Requirements to make any claims or take any action against the other Party (or any of its Affiliates) as a Service Provider based on any theory of agency, fiduciary duty, relationship of trust or other special standard of care. Without limiting the generality of the foregoing, each Party acknowledges and agrees that the other Party owes no duties, fiduciary or otherwise, to such Party other than those expressly set forth in this Agreement.
Section 11.18 Further Assurances . From time to time, each Party agrees to execute and deliver such additional documents, and will provide such additional information and assistance as either Party may reasonably require to carry out the terms of this Agreement.
Section 11.19 Survival . The Parties agree that Articles IV , VIII , IX , and XI and any limitations on liability or responsibility and any exculpatory, disclaimer, waiver or similar provisions will survive the termination of this Agreement and that any such termination shall not affect any obligation for the payment of Services rendered or any other amounts due to a Party under this Agreement prior to termination.
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written above.
KIMBERLY-CLARK CORPORATION | ||
By: |
/s/ Mark A. Buthman |
|
Name: | Mark A. Buthman | |
Title: | Chief Financial Officer | |
HALYARD HEALTH, INC. | ||
By: |
/s/ Steven E. Voskuil |
|
Name: |
Steven E. Voskuil |
|
Title: | Senior Vice President and Chief Financial Officer |
Signature Page to Transition Services Agreement
Project Byrd
Transition Services Agreement (TSA) Schedule of Services
Kimberly-Clark
10/31/14
Table of Contents
Table of Contents |
1 | |||
Transition Services |
||||
Information Technology |
3 | |||
Facilities / Real Estate |
23 | |||
Procurement |
25 | |||
North Am. Shared Service Center (SSC) |
33 | |||
Europe, Middle-East and Africa (EMEA) |
37 | |||
Corporate Reporting |
53 | |||
Transportation |
57 | |||
Human Resources |
60 | |||
Latin American Operations (LAO) |
64 | |||
Research and Engineering (R&E) |
70 | |||
Regulatory and Quality (R&Q) |
74 | |||
Ops Separation (OTC, FTS, Dist.) |
77 | |||
Global Nonwovens (GNW) |
82 | |||
Asia-Pacific (APAC) |
90 | |||
Legal |
101 | |||
Reverse Transition Services |
||||
Chargeback, Membership, Contracts |
105 | |||
Facilities - AFC Nogales (Reverse Transition Service) |
108 | |||
Appendix |
||||
Appendix I: Resource Rate Cards |
111 | |||
Appendix II: (Non-SAP Applications) |
112 | |||
Appendix III: New Projects |
122 |
1
Transition Services
2
Transition Services Agreement (TSA) Schedule of Services for:
INFORMATION TECHNOLOGY
Schedule A-1: | Information Technology | |
Provider: | Kimberly-Clark Corporation and its applicable affiliates (K-C) | |
Provider Contact: | Jonathan Landon [905-277-6565; jlandon@kcc.com] | |
Recipient: | Halyard Health, Inc. and its applicable affiliates (Halyard) | |
Recipient Contact: | Cindy Breshears [770-587-7399; cindy.breshears@hyh.com] | |
Geographic Scope: | Global | |
Overview of Services: |
K-C will provide IT transition services to Halyard under four separate Schedules: the Global ITS Schedule (Schedule A-1) and three regional Schedules: APAC (Schedule A-14, EMEA (Schedule A-5), and LAO (Schedule A-9). The vast majority of IT Services and charges are part of the Global ITS Schedule. Exhibit 1 below provides an overview of the services provided in each of the four Schedules.
In no event shall K-C be financially responsible for the cost of any assets, hardware and other similar items that will be retained by Halyard following the completion of these Services. |
|
Schedule of Service Specific Terms: |
1. For any particular Service set forth in this Schedule A-1, the following terms (the Service Phases) shall govern K-Cs responsibilities in respect thereof:
Pre-Migration means K-C supports and maintains such Service as described herein and will perform such remediation services as are required to cause such Service to operate in substantially the same manner as immediately prior to the Distribution Date or such other standard as agreed between the parties. Prior to completion of Pre-Migration, Halyard will define and document their end-state operating model and procedures relevant for each Service Category.
Migration means K-C provides primary support and maintenance of such Service, while Halyard or Halyards designated third party provider gains expertise in such Service prior to such Service being actively migrated to Halyard or such third party. Additionally, K-C will be responsible for providing the services required by the applicable third party services providers (as provided in the agreement between Halyard and such third party, but excluding any payment obligations therein) to be able to take over hosting, support and management of such Services until such time as such migration is complete. Such third party service providers and any agreements between Halyard and such third party shall be reasonably acceptable to K-C.
KT/Support means that Halyard or Halyards designated third-party provider delivers primary hosting, support and maintenance in respect of such Service, while K-C continues to provide knowledge transfer services to Halyard and that third party provider, and plays a secondary supporting role to such third party service provider. K-Cs responsibilities are limited to various knowledge management and transition services (i.e., not the services listed in the schedules).
Steady State means K-C no longer has any responsibilities in respect of such Service. |
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2. At the beginning of each Service Phase, the parties will cooperate in good faith to determine the specific milestones and deliverables to be completed during that Service Phase. Such milestones and deliverables will be consistent with the work plan reviewed and agreed by the parties prior to the Effective Time and updated by the parties as required. In so far as the parties are unable to agree to the specific milestones and deliverables to be completed during a Service Phase within 30 days of the commencement of such Service Phase, either Party may refer the issue to dispute resolution pursuant to clause 11.3(b) of this Agreement.
3. Neither party shall have a unilateral right of termination or extension in respect of the services provided in this Schedule A-1. If the actual duration of a particular service within a Service Phase (whether a Pre-Migration, Migration or KT/Support service) exceeds the Anticipated Duration (as set forth in IT.1 through IT.4 below) (a Delay Period), the cost per month for such service shall be the same during the Delay Period as it was during the month immediately preceding the Delay Period. If, in either partys reasonable judgment there will be a Delay Period, such party shall provide written notice to the other party describing the potential delay, the cause of the delay, and the anticipated duration of the delay as soon as practical after the likelihood or existence of such Delay Period has become known to the party. Neither party can assert a Delay Period for convenience. If, and to the extent that, the Delay Period (or combination of multiple Delay Periods) for any Service Category (as set forth in IT.1 through IT.4 below) results in an extension of the total duration of such Service Category by more than one month, such Delay Period will be subject to mutual agreement between the parties. If any service is not complete by the end of the Delay Period, both parties will negotiate in good faith with respect to the completion of such service upon commercially reasonable terms; provided, however, that under no circumstances will K-C have an obligation to continue delivering services to Halyard under this agreement more than 24 months after the effective date of the agreement.
4. Except as otherwise expressly set forth in this Schedule A-1, all applications and related or required technology and infrastructure are in place as of the Distribution Date, or will be in place no later than the go-live date which is expected to be November 4, 2014, and these Services shall not be deemed to include the development or initial implementation of any such application, technology or infrastructure.
5. K-Cs provision of the Services in this Schedule A-1 is dependent upon Halyards (i) reasonable cooperation with K-Cs efforts to provide such Services, (ii) procurement and provision in a timely fashion of Halyard hardware, software and services, to the extent required, (iii) Halyards entry into contracts with the applicable third party service providers and causing such service providers to cooperate with, and provide reasonably required access to, K-C, (iv) providing reasonable access to Halyard facilities and personnel to the extent required for the provision of the subject Services (including, but not limited to, personnel to receive knowledge transfer), (v) acceptance of reasonable maintenance windows on the production systems, and (vi) participation in governance activities and decisions.
6. Halyard will reimburse K-C for all reasonable travel costs incurred in the delivery of the services described in IT.1 IT.4 herein, subject to a total reimbursement cap of $500,000. For the avoidance of doubt, any reasonable travel costs incurred in the delivery of services under IT.5 will be reimbursed by Halyard and will not be subject to such total reimbursement cap. |
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Start of Activity: | Distribution Date (as defined in the Transition Services Agreement), unless otherwise provided herein | |
End Date: | As specified in the accompanying Schedule of Services; not to exceed 2 years after the Distribution Date (as defined in the Transition Services Agreement) |
The services described in this Schedule of Services shall be provided subject to the terms described in the Transition Services Agreement between K-C and Halyard dated as of October 31, 2014 (the Transition Services Agreement). Where there is a conflict between the Transition Services Agreement and this Schedule of Services, the Transition Services Agreement shall govern, except where the Transition Services Agreement specifically allows for superseding language to be provided in a Schedule of Services, and such additional or alternate guidance has been provided below.
All values are in USD, unless otherwise noted.
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The following three Exhibits are intended to provide background information and a conceptual overview of the IT Services. They shall in no event be deemed to set forth the specific scope of IT Services, as that is provided in the tables of Services immediately following such Exhibits. In the event of any conflict between the table of Services and Exhibits 1, 2 and/or 3, the table of Services shall control.
Exhibit 1
A High-Level Overview of Global and Regional ITS Services Provided |
||||||||||||
Core Services |
Global ITS Services |
APAC Services |
EMEA Services |
LAO Services |
||||||||
Service Clusters: Operations and Stabilization | SAP Support |
|
Support for the majority of global SAP applications in line with services offered today |
Limited support for incident management in line with services offered today in regions (e.g., batch file errors) |
No regional support |
|||||||
Non-SAP Support |
|
Support for global non-SAP applications listed in Appendix 1 in line with services offered today |
Support for locally hosted applications (Comet, KCP quoting tool and Umbraco in EMEA) |
No regional support |
||||||||
End-User Infrastructure |
|
Support for the majority of global end-user services in line with services offered today, including:
Personal computer and mobile device support
Service delivery management
Video/voice for shared sites
SharePoint/workflow support
Messaging management |
Onsite support (PC, mobile, voice, conferencing) for various shared offices
Select network, voice communication links
Coverage of maintenance costs for IT hardware as sets in select locations |
Onsite support for shared offices
Local help desk
IT asset management
Physical network management in select offices
Messaging management |
||||||||
Network |
|
Global network management |
Local network support, including:
LAN and WAN management in select sites
Hardware configuration |
Regional network management |
||||||||
Other Charged Services | Migration |
|
The scope of support varies by service, depending on third-party contracts (migration support costs included in SAP and Non-SAP Support) | |||||||||
Facility Occupancy |
|
Provide Kimberly-Clark required office space and related services at the Neenah, Knoxville, and Brighton sites |
||||||||||
Projects |
Projects / Improvements |
|
Completion of Halyard projects by K-C will be priced and executed on an à la carte basis upon mutual agreement between K-C and Halyard |
5
The Global ITS Schedule is divided into two parts: Operations, Migration, and Stabilization Services (for which scope and charges have been determined) and a New Capability Service (for which scope and charges will be determined on an as-needed basis). Exhibit 2 below outlines the two parts of the Global ITS Schedule.
Exhibit 2
The Two Parts of the Global ITS Schedule of Services |
||
|
|
|
K-C will support in scope services for Halyards Day 1 environment with similar service levels as today
K-C will provide primary support and services during Halyards migration to a steady state
K-C will support the transfer of services to Halyard staff and appropriate third parties |
The Global ITS schedule of services will include a rate card (see Appendix I)
K-C and Halyard will agree on project needs and mandatory remediation for migration (billed à la carte)
SCAN Replacement to be completed on Time and Materials (separately billed) basis
Additional items to be determined |
Given the large scope and complexity of the Global ITS services, K-C and Halyard have aligned on a number of key principles. These principles are intended to provide transparency with respect to the key assumptions of the services and improve the overall alignment between the two parties for planning and service delivery purposes. Exhibit 3 below describes key principles.
Exhibit 3
The Key Agreed-Upon Principles for the Global ITS Schedule of Services |
||||||||||
Category |
Items |
Operations, Migration, and Stabilization |
New Projects |
|||||||
Services in Scope |
Services in Scope |
|
Fully managed support, as currently provided for the following services:
SAP applications
Non-SAP applications (listed in Appendix 1)
End-user infrastructure
Network |
| To be determined mutually by K-C and Halyard | |||||
Scope of Support |
Type of Support Provided |
|
Mandatory maintenance (e.g., bug fix, patching) and primary support |
| Mutually agreed upon capability improvements delivered by K-C to be billed on a project-by-project basis | |||||
| Transition of services to Halyard/third party, including knowledge transfer and secondary support in order to facilitate stabilization | |||||||||
Limitations in Support |
|
The TSA only covers support for services delivered from K-C locations or through K-C contracted vendors (support does not cover the management of Halyard HP data centers) |
|
As described in the scope of each specific request |
||||||
Pricing |
Service Costs |
|
Costs allocated to Halyard today plus the cost to provide expanded services (e.g., hosting) minus the cost of services K-C is no longer supporting (e.g., voice) |
|
Billed à la carte based on the hours of labor required |
|||||
|
Incremental costs incurred by K-C in its support of the migration to Halyard |
|||||||||
Pricing Structure |
|
Services grouped into four clusters (SAP support, Non-SAP support, end-user infrastructure, and network), with charges identified for services within each cluster |
|
Billed via an ITS rate card (see Appendix I) |
||||||
|
When services are transitioned to Halyard, the ongoing TSA charges will drop by identified amounts |
|||||||||
|
If select services within a cluster transition earlier, K-C will offer a good faith charge reduction based on cost true-up post-migration |
|||||||||
Duration |
Schedule Duration |
| 13-15 months and not to extend past 21 months |
|
Handled on a case-by-case basis up to 21 months |
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8
9
10
11
ID |
Description of Service |
Service Category |
Fees Per Month |
Anticipated Duration |
Performance Exceptions |
Time Period for Termination or Extension |
||||||||||||
5. | Web Services support of the external facing Halyard websites and two Halyard mobile native apps. Major services to be provided include: | |||||||||||||||||
a. |
UI adaptive design; |
|||||||||||||||||
b. | website build and deployment (list and timing of those is set forth below); | |||||||||||||||||
c. | mobile native app development; | |||||||||||||||||
d. | responsive design; | |||||||||||||||||
e. | content localization; | |||||||||||||||||
f. | tagging / measuring / reporting; and | |||||||||||||||||
g. | web page optimization. | |||||||||||||||||
Websites to be delivered on 11/17/14: eu.halyardhealth.com, halyardhealth.co.uk, halyardhealth.fr, halyardhealth.de and halyardhealth.nl |
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Websites to be delivered on 12/1/14: lao.halyardhealth.com, es.halyardhealth.com and pt.halyardhealth.com |
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IT.2 (contd) |
Websites to be delivered on 12/31/14: www.competency.ap.hcus.corp , aph.hcuc.corp and aph.hcus.corp/aus/vendormaster/index.aspx |
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Websites to be delivered during 1Q 2015: halyardhealth.com/es and halyardhealth.br |
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Websites to be delivered on 4/1/15: halyardhealth.in |
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Websites to be delivered on a date that is to be agreed by the parties: preventinfections.com |
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6. | Management of security roles and IDs for non-SAP applications, including mobile devices. | |||||||||||||||||
7. | Management of governance to internal control and regulatory rules and standards. |
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ID |
Description of Service |
Service Category |
Fees Per Month |
Anticipated Duration |
Performance Exceptions |
Time Period for Termination or Extension |
||||||||||||
8. | Information management, including the following: | |||||||||||||||||
a. | ITAS-EBI Business Intelligence applications support; | |||||||||||||||||
b. | IT application support for the following systems: Hyperion Financial Management (HFM), SG&A, and BOBJ-BI; | |||||||||||||||||
c. | IT application support of the following systems: Master Data Management (MDM), Master Reference Client (MRC), GDS (Global Data Sync), EDM Vendor Master, NA SRM; | |||||||||||||||||
d. | IT application support for the SAP BOBJ-data services (DS); and | |||||||||||||||||
e. | IT application support for MS BI. | |||||||||||||||||
Service Phases | ||||||||||||||||||
In respect of the Non-SAP Support Services set forth above, K-C shall provide Pre-Migration services commencing on or around November 4, 2014, for the monthly fees set forth in the column to the right. | $415,000 | 3 months | ||||||||||||||||
Upon the completion of the Pre-Migration services as provided above, K-C shall provide Migration services in respect thereof at a decreasing cost per month as set forth in the column to the right, beginning with $415,000 during month 1 and ending with $124,000 during month 7. | $415,000; $373,000; $290,000; $249,000; $166,000 | 1 month for each monthly fee level (5 months total) | ||||||||||||||||
$124,000 | 2 months (Migration) | |||||||||||||||||
Upon the completion of the Migration services as provided above, K-C shall provide KT/Support services in respect thereof, for the monthly fees set forth in the column to the right. | $62,000 | 2 months (KT/Support) | ||||||||||||||||
Upon the completion of the KT/Support services as provided above, such Services shall be deemed to be in Steady State, and K-C shall have no further responsibilities in respect thereof. | $0 | |||||||||||||||||
Non-SAP Hosting | Non-SAP Hosting | |||||||||||||||||
During the time period over which K-C will be providing any portion of the Non-SAP Support Services set forth above (i.e., for all phases other than Steady State), K-C will host such subject applications in a K-C provided data center, for the monthly fees set forth to the right. |
$346,000 (Pre-Migration) $346,000 (Migration) |
1 month 10 months |
||||||||||||||||
Non-SAP Overhead |
Non-SAP Overhead |
|||||||||||||||||
For a period of 12 months from the effective date of the transition service agreement, K-C will provide required ancillary supporting services that are |
$118,000 |
12 months |
13
14
15
16
17
ID |
Description of Service |
Service Category |
Fees Per Month |
Anticipated Duration |
Performance Exceptions |
Time Period for Termination or Extension |
||||||||||||
2. |
manage the purchasing and configuration of necessary K-C hardware (i.e. K-C hardware at K-C locations); |
|||||||||||||||||
3. |
management and engineering of K-C LAN and WAN; |
|||||||||||||||||
4. |
install and decommission K-C equipment; |
|||||||||||||||||
5. |
manage K-C network administration tools; and |
|||||||||||||||||
6. |
Management of firewalls, internet access, risk assessments and website security. |
|||||||||||||||||
Incremental Migration Charges (FTE and other) | ||||||||||||||||||
K-C will provide required ancillary and incremental migration services that are reasonably required to enable the foregoing services (e.g., project management, personnel management and similar overhead services). | ||||||||||||||||||
Service Phases | ||||||||||||||||||
In respect of the Network Connectivity Services set forth above, K-C shall provide Pre-Migration services commencing on or around November 4, 2014, for the monthly fees set forth in the column to the right. | ||||||||||||||||||
1. |
Network Connectivity |
$197,000 |
5 months |
|||||||||||||||
2. |
Incremental Migration Charges (commencing on or around November 4, 2014) |
N/A |
N/A |
|||||||||||||||
Upon the completion of the Pre-Migration services as provided above, K-C shall provide Migration services in respect thereof, for the monthly fees set forth in the column to the right. | ||||||||||||||||||
1. |
Network Connectivity |
$95,000 |
7 months |
|||||||||||||||
2. |
Incremental Migration Charges |
$29,000 |
10 months (starting in January 2015) |
|||||||||||||||
Upon the completion of the Migration services as provided above, such Services shall be deemed to be in Steady State, and K-C shall have no further responsibilities in respect thereof. | $0 |
18
ID |
Description of Service |
Service Category |
Fees Per Month |
Anticipated Duration |
Performance Exceptions |
Time Period for Termination or Extension |
||||||||||
IT.5 |
New Projects
|
Time and Materials - See Appendix 1: Resource Rate Cards |
No unilateral right of termination or extension for any IT Services | |||||||||||||
1. | Any ITS-related service requests from Halyard not described in IT.1, IT.2, IT.3, or IT.4 or otherwise reasonably required to deliver such services would be defined as a New Project. | |||||||||||||||
2. |
Any request for a New Project will require agreement between the parties on the expected scope, duration, and resourcing of the project. |
|||||||||||||||
3. |
K-C at its discretion may decline or approve any New Project request. |
|||||||||||||||
4. |
New Projects will be priced on a time and materials (T&M) basis according to the information technology rate card. |
|||||||||||||||
5. |
K-C and Halyard have agreed to the New Projects listed on Appendix III, subject to final agreement on project scope. |
|||||||||||||||
IT.6 |
Facility Occupancy | $94,151* | 12 months | |||||||||||||
1. |
K-C will provide office space and related services (e.g., security and cleaning) at the Neenah, Knoxville, and Brighton sites for use by K-C employees in the delivery of the Services described herein for the monthly fees set forth in the column to the right. |
* Occupancy cost to be reduced proportionally to IT service cost reductions over time (e.g., a 10% reduction in IT services shall reduce monthly facility occupancy cost by 10%). |
||||||||||||||
2. |
Any occupancy costs for sites not listed above shall be included in the Facilities / Real Estate services. |
19
Artifact I Migration Timeline and Cost
The chart below is to be used for reference purposes only and depicts the cost and the expected duration of services provided within this Agreement. Actual cost and expected duration of the Services are as set forth on Schedule A-1, Items IT.1 through IT.5. Color coding is used to refer to different phases in the migration of services. The proposed migration schedule is dependent on multiple factors including, but not limited to, 3 rd party vendor performance and Halyard organization ramp up.
20
Artifact II Monthly Allocation Schedule
The chart below is to be used for reference purposes only and depicts the expected duration of services and the percentage of the allocated cost provided within this Agreement. Color coding is used to refer to different phases in the migration of services. Proposed migration schedule and costs are dependent on multiple factors including but not limited to, 3 rd party vendor performance and Halyard organization ramp up.
21
Artifact III Incident Impact Urgency Priority
High Priority criteria item falls in Priority 1 or 2 from below table:
22
Transition Services Agreement (TSA) Schedule of Services for:
FACILITIES / REAL ESTATE
Schedule A-2: | Facilities / Real Estate | |
Provider: | Kimberly-Clark Corporation and its applicable affiliates (K-C) | |
Provider Contact: | Susan Leadbeater [920-721-7258; susan.wood.leadbeater@kcc.com] | |
Recipient: | Halyard Health, Inc. and its applicable affiliates (Halyard) | |
Recipient Contact: | Chris Isenberg [770-587-7437; chris.isenberg@hyh.com] | |
Geographic Scope: | U.S. and Europe Sites | |
Overview of Services: |
The Facilities / Real Estate Services include on-going use of K-C facilities in the U.S. and Europe, along with real estate transaction support. The facilities in scope are Roswell, GA and Nanterre, France. Facility services for the Neenah, WI, Knoxville, TN, and Brighton, UK sites are included within the IT, Procurement, Shared Services, and Transportation schedules.
In no event shall K-C be financially responsible for the cost of any assets, hardware and other similar items that will be retained by Halyard following the completion of these Services. |
|
Schedule of Service Specific Terms: |
K-Cs provision of the Services in this Schedule A-2 is dependent upon Halyards (i) reasonable cooperation with K-Cs efforts to provide such Services, (ii) Halyards entry into contracts with the applicable third party service providers and causing such service providers to cooperate with, and provide reasonably required access to, K-C, and (iii) providing reasonable access to Halyard facilities and personnel to the extent required for the provision of the subject Services.
Any extensions of the duration of Services, and any early termination of Services, for the Services in this Schedule A-2 are subject to the notification periods below. Extensions of services may not exceed an overall duration of 21 months after the Distribution Date (as defined in the Transition Services Agreement). |
Anticipated Duration of Service |
Notification Required to Terminate or Extend the Service |
Maximum Extension of Service |
||
0 months - 5 months | 1 month | 1 month | ||
6 months - 11 months | 2 months | 2 months | ||
12 months - 18 months | 3 months | 3 months |
Start of Activity: | Distribution Date (as defined in the Transition Services Agreement) | |
End Date: | As specified in the accompanying Schedule of Services; not to exceed 2 years after the Distribution Date (as defined in the Transition Services Agreement) |
The services described in this Schedule of Services shall be provided subject to the terms described in the Transition Services Agreement between K-C and Halyard dated as of October 31, 2014 (the Transition Services Agreement). Where there is a conflict between the Transition Services Agreement and this Schedule of Services, the Transition Services Agreement shall govern, except where the Transition Services Agreement specifically allows for superseding language to be provided in a Schedule of Services, and such additional or alternate guidance has been provided below. All values in USD, unless otherwise noted.
23
24
Transition Services Agreement (TSA) Schedule of Services for:
PROCUREMENT
Schedule A-3: | Procurement | |
Provider: | Kimberly-Clark Corporation and its applicable affiliates (K-C) | |
Provider Contact: | Zvety Karadgiov [678 352-6756; zvetanka.karadgiov@kcc.com] | |
Recipient: | Halyard Health, Inc. and its applicable affiliates (Halyard) | |
Recipient Contact: | Sukh Sandhu [678-352-6362; sukh.sandhu@hyh.com] | |
Geographic Scope: | U.S. | |
Overview of Services: |
The Procurement services defined below have been developed in coordination with Halyard to determine the required support levels over the service duration. In particular, Items PCM.1 PCM.3 involve reductions in service support over time and may require adjustments (per the early termination and extension notification requirements) to align with Halyards organizational hiring plan.
In no event shall K-C be financially responsible for the cost of any assets, hardware and other similar items that will be retained by Halyard following the completion of these Services. |
|
Schedule of Service Specific Terms: |
K-Cs provision of the Services in this Schedule A-3 is dependent upon Halyards (i) reasonable cooperation with K-Cs efforts to provide such Services, (ii) procurement and provision of Halyard hardware, to the extent required, (iii) Halyards entry into contracts with the applicable third party service providers and causing such service providers to cooperate with, and provide reasonably required access to, K-C, and (iv) providing reasonable access to Halyard facilities, systems and personnel to the extent required for the provision of the subject Services (including, but not limited to, personnel to receive knowledge transfer).
Any extensions of the duration of Services, and any early termination of Services, for the Services in this Schedule A-3 are subject to the notification periods below. Extensions of Services may not exceed an overall duration of 21 months after the Distribution Date (as defined in the Transition Services Agreement). Notwithstanding the foregoing, Services under this Schedule A-3 may be terminated on an FTE by FTE basis upon 60 days written notice to terminate any FTE. |
Anticipated Duration of Service |
Notification Required to Terminate or Extend the Service |
Maximum Extension of Service |
||
0 months - 5 months | 1 month | 1 month | ||
6 months - 11 months | 2 months | 2 months | ||
12 months - 18 months | 3 months | 3 months |
Start of Activity: | Distribution Date (as defined in the Transition Services Agreement) | |
End Date: | As specified in the accompanying Schedule of Services; not to exceed 2 years after the Distribution Date (as defined in the Transition Services Agreement) |
The services described in this Schedule of Services shall be provided subject to the terms described in the Transition Services Agreement between K-C and Halyard dated as of October 31, 2014 (the Transition Services Agreement). Where there is a conflict between the Transition Services Agreement and this Schedule of Services, the Transition Services Agreement shall govern, except where the Transition Services Agreement specifically allows for superseding language to be provided in a Schedule of Services, and such additional or alternate guidance has been provided below. All values in USD, unless otherwise noted.
25
26
ID |
Description of Service |
Fees Per Month |
Anticipated Duration |
Performance Exceptions |
Time Period for
Extension |
|||||||||||
Strategic Sourcing and Supplier Management |
$145,000 per month for the provision of 12 FTEs during the 3 months immediately following the distribution; thereafter, the fees and FTEs will be reduced as follows:
months 4 - 6: 10 FTEs at $119,000 per month;
months 7- 9; 8 FTEs at $87,000 per month;
months 10-12: 1 FTE at $13,000 month.
The specific roles of the FTEs are described in Exhibit 2.
Plus $21,000 per month for 9 months to reimburse 50% of the estimated costs for the Procurement TSA Leader.
Plus pass-through travel expenses
Time will not be tracked. The amount set forth above is a fixed amount and will be billed for making FTEs available. |
12 Months | 3 months | |||||||||||||
PCM.2 | ||||||||||||||||
1. | K-C shall make FTEs available to provide strategic procurement services (e.g., category strategy management, supplier management) through a structured sourcing process in accordance with corporate policies and procedures to handle sourcing of a complex mix of goods and services and associated contract negotiations while working closely with business partners to meet stakeholder needs. For the avoidance of doubt, neither K-C nor any FTEs provided by K-C will have the power to bind Halyard to any contracts related to the procurement services in this PCM.2. Such contracts must be executed by an authorized representative of Halyard. | |||||||||||||||
a. |
Service is provided by a combined staff of K-C employees and 3 rd party outsourced providers (GEP). |
|||||||||||||||
b. |
See below Headcount Transition Schedule for additional detail. |
|||||||||||||||
2. |
Services provided by the FTEs utilize current K-C processes, except in instances where an exception to the current process has been agreed upon. K-C Procurement to provide documentation of current K-C processes. FTEs from K-C Procurement shall perform services in accordance with current processes and any changes requested by Halyard are subject to K-C review and approval. |
|||||||||||||||
3. |
The service duration includes a 3-month onboarding / training plan, whereby K-C employees will provide necessary onboarding / training of Halyard resources. |
|||||||||||||||
4. |
The services described above shall be performed by the resources and durations defined in Exhibit 2. Service transition is dependent upon Halyards hiring of resources to transition management of each category. In the event Halyard requires the service duration to be extended or shortened, a request for such modification must be initiated per the early termination and extension terms. |
|||||||||||||||
5. |
Travel for training during the transition period will be charged as a pass-through cost with location and timing to be determined. |
27
ID |
Description of Service |
Fees Per Month |
Anticipated Duration |
Performance Exceptions |
Time Period for Termination or Extension |
|||||||||||
6. | Included in PCM.2 is 50% of the pass-through cost for the Procurement TSA Leader. | |||||||||||||||
7. | Services may be terminated on an FTE by FTE basis, with 60 days notice to terminate any FTE. | |||||||||||||||
Project management, training and analytics support |
$29,000 per month for the provision of 2 FTEs during the 3 months immediately following the Distribution; thereafter, the fees and FTEs will be reduced to $13,000 for the provision of 1 FTE as per Exhibit 3.
Plus pass-through travel expenses
Time will not be tracked. The amount set forth above is a fixed amount and will be billed for making FTEs available. |
6 months | 2 months | |||||||||||||
PCM.3 | ||||||||||||||||
1. | K-C shall make FTEs available to provide support for control, sustainability, training, analytics, process and project management, continuous improvement/Lean support, and administrative services, in each case relating to the Services to be provided under this Schedule of Services. | |||||||||||||||
a. |
See below Headcount Transition Schedule for additional detail |
|||||||||||||||
2. |
The service duration includes a 3-month onboarding / training plan, whereby K-C employees will provide necessary onboarding / training of Halyard resources. |
|||||||||||||||
3. |
The services described above shall be performed by the resources and durations defined in Exhibit 3. Service transition is dependent upon Halyards hiring of resources to transition management of each category. In the event Halyard requires the service duration to be extended or shortened, a request for such modification must be initiated per the early termination and extension terms. |
|||||||||||||||
4. |
Rate differences for the two positions are based on averages of employees currently doing the work. |
|||||||||||||||
5. |
Travel for training during the transition period will be charged as a pass-through cost with location and timing of training to be determined. |
|||||||||||||||
6. |
Services may be terminated on an FTE by FTE basis, with 60 days notice to terminate any FTE. |
28
ID |
Description of Service |
Fees Per Month |
Anticipated Duration |
Performance Exceptions |
Time Period for Termination or Extension |
|||||||||||||
Temporary labor for contract setup | Cost plus 4% | 9 months | 2 months | |||||||||||||||
PCM.4 | ||||||||||||||||||
1. | K-C shall provide contract labor required to complete spin-off related work for separating Healthcare Business contracts and agreements, including: | |||||||||||||||||
a. | two IT procurement contractors for North America to assist current IT procurement and IT PMO team members on approximately 550 supplier engagements; | |||||||||||||||||
b. | one procurement contractor for other North America services to assist procurement team members on approximately 400 supplier engagements; and | |||||||||||||||||
c. | one procurement contractor to assist the European procurement services team on approximately 50 supplier engagements. | |||||||||||||||||
Organization support for systems changes | Cost plus 4% | 6 months | 2 months | |||||||||||||||
PCM.5 | ||||||||||||||||||
1. | K-C shall provide additional resources to support system and procurement process changes. This support shall include set-up and assignment of roles in SAP as directed by Halyard. The following incremental support is required to revert to manual processing formerly built into the SAP MDM (Master Data Management) process that is not being utilized by Halyard until such time that Halyard takes over responsibility for this work (currently estimated in Q2 2015): | |||||||||||||||||
a. | 1 FTE to support the material creation process; | |||||||||||||||||
b. | 1 FTE to support manual POA and supplier decommissioning due to manual process replacing Ariba; and | |||||||||||||||||
c. | travel for training during the transition period will be charged as a pass-through cost with location and timing of training to be determined. | |||||||||||||||||
Additional training for system changes | ||||||||||||||||||
1. | Time required to develop training materials and approach for changes to systems and procurement processes, | |||||||||||||||||
2. | For PO&SS currently estimated at 8 hrs/week to cover known system changes (ex: developing materials) and 3 FTEs for 1 1 ⁄ 2 weeks to provide the training. Timing is TBD. | |||||||||||||||||
Facility Occupancy | $37,582 per month* | 12 months | 3 months | |||||||||||||||
PCM.6 | ||||||||||||||||||
1. | Provide office space and related services (e.g., security, cleaning) at the Neenah facility for use by K-C employees in the delivery of the Services described herein for the monthly fees set forth in the column to the right. |
* Occupancy cost to be reduced proportionally to procurement service cost reductions over time |
29
ID |
Description of Service |
Fees Per Month |
Anticipated Duration |
Performance Exceptions |
Time Period for Termination or Extension |
|||||||||||
2. | Any occupancy costs for sites not listed above shall be included in the Facilities / Real Estate service. | (e.g., 10% reduction in procurement services shall reduce monthly facility occupancy cost by 10%). |
30
Exhibit 1: Headcount transition schedule for PCM.1 (procurement operations and tactical services)
PCM.1 Support Requirements |
November 1, 2014
April 30, 2015 |
May 1, 2015
July 31, 2015 |
||||||
K-C Transactional Support |
||||||||
Number of Resources |
4 | 0 | ||||||
Cost/month |
$ | 20,000 | $ | 0 | ||||
GEP Support |
||||||||
Number of Resources |
1 | 1 | ||||||
Cost/month |
$ | 7,000 | $ | 7,000 | ||||
K-C Systems Support |
||||||||
Number of Resources |
1 | 0 | ||||||
Cost/month |
$ | 6,000 | $ | 0 | ||||
K-C Stores/DTR Support |
||||||||
Number of Resources |
1 | 1 | ||||||
Cost/month |
$ | 9,000 | $ | 9,000 | ||||
PCM.1 Total |
||||||||
Number of Resources |
7 | 2 | ||||||
|
|
|
|
|||||
Cost/month |
$ | 42,000 | $ | 16,000 | ||||
|
|
|
|
31
Exhibit 2: Headcount transition schedule for PCM.2 (strategic sourcing and supplier management)
PCM.2 Support Requirements |
November 1, 2014
January 31, 2015 |
February 1, 2015
April 30, 2015 |
May 1, 2015
July 31, 2015 |
August 1, 2015
October 31, 2015 |
||||||||||||
K-C North America Strategic Sourcing Support |
||||||||||||||||
Number of Resources |
7 | 5 | 3 | 1 | ||||||||||||
Cost/month |
$ | 100,000 | $ | 74,000 | $ | 42,000 | $ | 13,000 | ||||||||
K-C China Strategic Sourcing Support |
||||||||||||||||
Number of Resources * |
3 | 3 | 3 | 0 | ||||||||||||
Cost/month |
$ | 23,000 | $ | 23,000 | $ | 23,000 | $ | 0 | ||||||||
GEP Strategic Sourcing Support |
||||||||||||||||
Number of Resources |
2 | 2 | 2 | 0 | ||||||||||||
Cost/month |
$ | 22,000 | $ | 22,000 | $ | 22,000 | $ | 0 | ||||||||
PCM.2 Total |
||||||||||||||||
Number of Resources |
12 | 10 | 8 | 1 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Cost/month |
$ | 145,000 | $ | 119,000 | $ | 87,000 | $ | 13,000 | ||||||||
|
|
|
|
|
|
|
|
* | Duration for China headcount dependent upon the timing to establish the China legal entity, currently estimated at Q 2 2015 |
Exhibit 3: Headcount transition schedule for PCM.3 (project management, training and analytics support)
32
Transition Services Agreement (TSA) Schedule of Services for:
NORTH AMERICA SHARED SERVICES
Schedule A-4: | North America Shared Services | |
Provider: | Kimberly-Clark Corporation and its applicable affiliates (K-C) | |
Provider Contact: |
Mike Stohr [865-541-7275; mstohr@kcc.com]; Ted Banker [865-541-7602; tcbanker@kcc.com]; Michael Fox [+44 (1732) 594092; mfox@kcc.com] |
|
Recipient: | Halyard Health, Inc. and its applicable affiliates (Halyard) | |
Recipient Contact: |
Dave Crawford [770-587-8938; dave.crawford@hyh.com]; Steve Linville [770-587-8452; steve.linville@hyh.com]; Renato Negro [770-587-7174; renato.negro@hyh.com] |
|
Geographic Scope: | U.S., Canada, and Mexico | |
Overview of Services: |
The North America Shared Services Center TSA Services are composed of the six following areas: Accounting to Reporting, Capital Accounting / Research & Engineering Expense, Management Information Delivery, Vendor and Employee Financial Services, Supply Chain Accounting and Customer Financial Services. Note that Process Development Support (PDS) and Shared Services Management costs are embedded in the costs of the other six Services.
In no event shall K-C be financially responsible for the cost of any assets, hardware and other similar items that will be retained by Halyard following the completion of these Services. |
|
Schedule of Service Specific Terms: |
K-Cs provision of the Services in this Schedule A-4 is dependent upon Halyards (i) reasonable cooperation with K-Cs efforts to provide such Services, (ii) procurement and provision of Halyard hardware, to the extent required, (iii) Halyards entry into contracts with the applicable third party service providers and causing such service providers to cooperate with, and provide reasonably required access to, K-C, (iv) providing reasonable access to Halyard facilities and personnel to the extent required for the provision of the subject Services (including, but not limited to, personnel to receive knowledge transfer) and (v) Halyards maintaining of a properly functioning IT system.
Provision of services in this schedule may require, as directed by Halyard, K-C to set-up and assign roles in SAP including changes to such roles required by enhancements in SAP.
Any extensions of the duration of Services, and any early termination of Services, for the Services in this Schedule A-4 are subject to a 3 month notification requirement. Extensions of Services which increase the duration of the Services by more than 3 months are subject to mutual agreement between the parties. |
|
Start of Activity: | Distribution Date (as defined in the Transition Services Agreement) | |
End Date: | As specified in the accompanying Schedule of Services; not to exceed 2 years after the Distribution Date (as defined in the Transition Services Agreement) |
33
The Services described in this Schedule of Services shall be provided subject to the terms described in the Transition Services Agreement between K-C and Halyard dated as of October 31, 2014 (the Transition Services Agreement). Where there is a conflict between the Transition Services Agreement and this Schedule of Services, the Transition Services Agreement shall govern, except where the Transition Services Agreement specifically allows for superseding language to be provided in a Schedule of Services, and such additional or alternate guidance has been provided below. All values in USD, unless otherwise noted.
34
35
36
Transition Services Agreement (TSA) Schedule of Services for:
EUROPE, MIDDLE-EAST AND AFRICA (EMEA)
Schedule A-5: | Europe (Shared Services, Human Resources, Information Technology) | |
Provider: | Kimberly-Clark Corporation and its applicable affiliates (K-C) | |
Provider Contact: | Leroy Burnett [+44 (1273) 853661; lburnet2@kcc.com] | |
Recipient: | Halyard Health, Inc. and its applicable affiliates (Halyard) | |
Recipient Contact: | Pierre Deschamps [+33 141 919 703; pierre.deschamps@hyh.com] | |
Geographic Scope: | Europe, Middle-East, and Africa | |
Overview of Services: |
The Europe, Middle-East and Africa (EMEA) TSA Services are composed of the following areas: Shared Services, Human Resources and Regional IT Services.
In no event shall K-C be financially responsible for the cost of any assets, hardware and other similar items that will be retained by Halyard following the completion of these Services. |
|
Schedule of Service Specific Terms: |
For Services described in 14(a) through 14(g) herein, neither party shall have the unilateral right of termination or extension in respect of such Services. If the actual duration of a particular Service exceeds the Anticipated Duration as set forth below on this Schedule A-5 (a Delay Period), the cost per month for the Services shall be the same during the Delay Period as it was during the month immediately preceding the Delay Period. If in K-Cs reasonable judgment there will be a Delay Period, K-C shall provide written notice to Halyard regarding the likelihood or existence of such Delay Period [ten] days prior to the start of such Delay Period. If and to the extent that the Delay Period will exceed three months, such Delay Period will be subject to Halyards approval, which approval shall not be unreasonably withheld.
K-Cs provision of the Services in this Schedule A-5 is dependent upon Halyards (i) reasonable cooperation with K-Cs efforts to provide such Services, (ii) procurement and provision of Halyard hardware, to the extent required, (iii) Halyards entry into contracts with the applicable third party service providers and causing such service providers to cooperate with, and provide reasonably required access to, K-C, and (iv) providing reasonable access to Halyard facilities and personnel to the extent required for the provision of the subject Services (including, but not limited to, personnel to receive knowledge transfer).
Any extensions of the duration of Services, and any early termination of Services, for the Services in this Schedule A-5 are subject to the notification periods below. Extensions of Services may not exceed an overall duration of 21 months after the Distribution Date (as defined in the Transition Services Agreement). |
Anticipated Duration of Service |
Notification Required to Terminate or Extend the Service |
Maximum Extension of Service |
||
0 months - 5 months |
1 month | 1 month | ||
6 months - 11 months |
2 months | 2 months | ||
12 months - 18 months |
3 months | 3 months |
37
Start of Activity: | Distribution Date (as defined in the Transition Services Agreement) | |
End Date: | As specified in the accompanying Schedule of Services; not to exceed 2 years after the Distribution Date (as defined in the Transition Services Agreement) |
The Services described in this Schedule of Services shall be provided subject to the terms described in the Transition Services Agreement between K-C and Halyard dated as of October 31, 2014 (the Transition Services Agreement). Where there is a conflict between the Transition Services Agreement and this Schedule of Services, the Transition Services Agreement shall govern, except where the Transition Services Agreement specifically allows for superseding language to be provided in a Schedule of Services, and such additional or alternate guidance has been provided below. All values in USD, unless otherwise noted.
38
ID |
Description of Service |
Fees Per Month |
Anticipated Duration |
Performance Exceptions |
Time Period for Termination or Extension |
|||||||||
EUR.1 |
In-House Banking
K-C shall provide or perform the following: |
|||||||||||||
1. |
Providing post go-live on site training and assisting Halyard team member with resolution and escalation of issues post spin date. |
$728 per month |
14 weeks |
1 month |
||||||||||
2. |
Treasury support for South Africa: daily extract of bank accounts, daily manual payment runs, weekly AP payment runs, bank account funding, bank account maintenance, administration of all SA Reserve Bank applications and compliance, inter-company loan maintenance, accounts reconciliation. |
$4,500 per month |
6 months |
2 months |
||||||||||
EUR.2 |
Procure-to-Pay (P2P) | $19,760 per month | 12 months | 3 months | ||||||||||
K-C shall provide or perform the following: |
||||||||||||||
1. |
Paper invoices received in Brighton will be sent to an external provider (Doc Options) to be scanned and uploaded into SAP. |
|||||||||||||
2. |
Electronic invoices require manual uploading and Genpact Bucharest will load them into SAP. |
|||||||||||||
3. |
Process vendor invoices for goods, services, and distribution (via Genpact); covers vendor query resolution and vendor statement reconciliation. |
|||||||||||||
4. |
Execute and approve payment runs (performed by Accounts Payable Genpact). |
|||||||||||||
5. |
A/P auditor activities: confirmation of vendor changes, auditing of invoices, reporting, and goods receipt / invoice receipt (GR/IR) maintenance. |
|||||||||||||
6. |
Prevention of duplicates payments by A/P auditors and A/P team members using APEX FirstStrike tool. |
|||||||||||||
7. |
A/P oversight control of Genpact A/P activities. |
|||||||||||||
8. |
Receipt of intercompany invoices via Electronic Data Interchange (EDI) or OAWD transaction in SAP for South Africa. |
|||||||||||||
9. |
Processing of intercompany invoices against Halyard plants in South Africa. |
39
ID |
Description of Service |
Fees Per Month |
Anticipated Duration |
Performance Exceptions |
Time Period for Termination or Extension |
|||||||||
EUR.2 (contd) |
10. |
Processing of South Africa intercompany payments (currently done by netting). |
||||||||||||
11. |
Creation of new vendors and changes to existing ones performed by the Master Data Services team. |
|||||||||||||
12. |
Setup and maintenance of PO outputs and monitoring activities. |
|||||||||||||
13. |
Maintenance of approval tables and resolution of workflow items. |
|||||||||||||
14. |
Check, validation and set-up of approval limits. |
|||||||||||||
15. |
Buying center support (conversion of requisitions into POs, maintenance of PIRs, process support and troubleshooting, new starters/leavers/training). |
|||||||||||||
16. |
Check time and expense (T&E) claims for Europe and Middle East, Africa (MEA) to ensure compliance with policy prior to releasing for payment. |
|||||||||||||
17. |
Administration of all Citi card related activity: new cards, terminations, late fees, personal fees and fraudulent items (Europe and MEA). |
|||||||||||||
18. |
Administration of concur: support, config changes, VAT changes, general reporting. |
|||||||||||||
19. |
P2P process development and support activities related to monitoring systems and processes. |
|||||||||||||
20. |
Training and knowledge transfer procure-to-pay activities and processes. |
|||||||||||||
Note: Geographic scope for these services is Europe and South Africa |
||||||||||||||
EUR.3 |
Order-to-Cash (OTC)
K-C shall provide or perform the following: |
$16,463 per month | 12 months | 3 months | ||||||||||
1. |
Credit analysis (cash collection, statements of accounts, remittance advice management, unallocated cash reports, risk management processes, blocked order release process, customer credit review, credit limit exceeded report, credit limits creation in CIC (customer interaction center) and SAP, and month end processes). |
40
41
42
43
44
45
ID |
Description of Service |
Fees Per Month |
Anticipated Duration |
Performance Exceptions |
Time Period for Termination or Extension |
|||||||||||
Includes Germany, France, Belgium, Netherlands, UK, and South Africa, Slovakia, Switzerland, Portugal, Italy, Russia, Saudi Arabia (Olayan joint venture) GCC, Sweden |
||||||||||||||||
Payroll Year-End Reconciliation and Consolidation |
$1,675 per month |
6 months |
2 months |
|||||||||||||
EUR.10 | ||||||||||||||||
K-C shall provide or perform the following: |
||||||||||||||||
1. | Year-end consolidation process: process employee payroll and taxes for Halyards full and hourly staff at frequencies established at the time of the transaction. | |||||||||||||||
2. | Prepare pre-processing and post-processing reconciliation of payroll data. | |||||||||||||||
3. | Audit payroll exceptions and check distribution for completeness and accuracy. | |||||||||||||||
Ad-hoc HR Consulting | $1,675 per month | 6 months | 2 months | |||||||||||||
EUR.11 | ||||||||||||||||
K-C shall provide or perform the following: | ||||||||||||||||
1. | Europe based HR Business Partners to provide country-specific, as-needed support for Human Resources related questions (i.e. share tax authority contacts, provide information for social security audits if needed, be a single point of contact for historic data and information) | |||||||||||||||
Payroll Data Entry and Service Support | $4,185 per month | 6 months | 2 months | |||||||||||||
EUR.12 | ||||||||||||||||
K-C shall provide or perform the following: | ||||||||||||||||
1. | Data entry for South Africa and UK and maintenance support in all other European countries. | |||||||||||||||
Note: Geographic scope for these services is Europe and South Africa |
46
47
48
49
ID |
Description of Service |
Fees Per Month |
Anticipated Duration |
Performance
|
Time Period for Termination or Extension |
|||||||||||||||
6. | For telecom infrastructure: | |||||||||||||||||||
a. | voice services: voice solution, internal calls, external calls, programmable desk phone options such as call forwarding, voice mail and call center | |||||||||||||||||||
b. | video services: Management of Enterprise Video solution with key functionality: peer-to-peer call, conference scheduling and bridging of multipoint videoconferences | |||||||||||||||||||
Network Cluster | $11,000 per month | 10 months | No unilateral right of termination or extension for any IT Services | |||||||||||||||||
EUR.14d | ||||||||||||||||||||
K-C, in cooperation with TCS, shall provide support and maintenance for the following infrastructure, applications and processes: | ||||||||||||||||||||
1. |
Management of applications on network and network performance and ability for K-C /Halyard network interaction throughout TSA period. |
|||||||||||||||||||
2. | Purchasing and configuration of necessary K-C hardware. | |||||||||||||||||||
3. | Manage K-C LAN and WAN. | |||||||||||||||||||
4. | Install and decommission K-C equipment. | |||||||||||||||||||
5. | Manage K-C network administration tools. | |||||||||||||||||||
6. | Management of firewalls, internet access, risk assessments, and website security. | |||||||||||||||||||
Business Partner |
$5,583 per month |
12 months |
No unilateral right of termination or extension for any IT Services |
|||||||||||||||||
EUR.14e | ||||||||||||||||||||
K-C shall provide or perform the following: | ||||||||||||||||||||
1. |
Business relationship management, driving joint IT and business strategy, investment strategy, capability roadmap development, communications, business enablement activities (consultation, program leadership, problem solving), proposal and business case development, and technology innovation |
50
ID |
Description of Service |
Fees Per Month |
Anticipated Duration |
Performance
|
Time Period for Termination or Extension |
|||||||||||||||
Project Management Office | $3,542 per month |
12 months |
No unilateral right of termination or extension for any IT Services |
|||||||||||||||||
EUR.14f |
||||||||||||||||||||
K-C shall provide or perform the following: |
||||||||||||||||||||
1. |
Information technology services (ITS) methodology and metrics defining, governing, and continuously improving global core ITS methodologies (project management, portfolio management, etc.), continuous improvement management system consulting, metrics consulting. |
|||||||||||||||||||
2. |
ITS marketing and communications project and organizational communication review and execution, ITS incident management for high threshold of criticality, marketing ITS services and success stories. |
|||||||||||||||||||
3. |
ITS portfolio management (centralized ITS project budget maintenance, facilitate project prioritization, process project change requests, facilitate ITS resource management). |
|||||||||||||||||||
4. |
Project related PO processing, Clarity Master Data maintenance. |
|||||||||||||||||||
Systems Migration |
$50,000 per month |
12 months | No unilateral right of termination or extension for any IT Services | |||||||||||||||||
EUR.14g | ||||||||||||||||||||
K-C shall provide or perform the following: |
Based on approximately 6 FTEs dedicated to systems migration |
|||||||||||||||||||
1. |
Complete Wave 1,2,3 on the schedule mutually agreed by the parties. |
|||||||||||||||||||
2. |
HCEMEA desktop rollout, migration of users start Q1 2015. |
|||||||||||||||||||
3. |
Infrastructure move from TCC to hosted environment. |
|||||||||||||||||||
4. |
Other outstanding work such as EDI customers. |
|||||||||||||||||||
5. |
Setting up appropriate authorizations and owners in Halyard systems including Service-Now, SAP roles, Group Manager and IDM. |
|||||||||||||||||||
6. |
Transition of knowledge to Halyard ITS department and outsourced partner minimal system documentation exists in EMEA today. |
|||||||||||||||||||
7. |
Untrusting networks. |
|||||||||||||||||||
EUR.14h |
Business Partner Resource |
$6,000 per month plus pass-through of all travel expenses |
5 months commencing on December 1, 2014 |
1 month |
||||||||||||||||
K-C will provide one ITS Business Partner resource in Europe (to be based in Kings Hill) to: |
||||||||||||||||||||
1. |
Provide partnership, direction, and guidance to the Halyard business community relating to the provision of technology solutions and services; |
51
ID |
Description of Service |
Fees Per Month |
Anticipated Duration |
Performance Exceptions |
Time Period for
Extension |
|||||||||||||
2. | Act as a single point of contact to the business and escalate any issues as appropriate; and | |||||||||||||||||
3. | Manage the demand for IT services to ensure appropriate prioritization. | |||||||||||||||||
EUR.15 |
Services Provided to Halyard in Europe, Middle East, and Africa (EMEA) | Variable (pass-through of all employment and associated costs, estimated at $184,200 per month) | 6 months | 2 months | ||||||||||||||
K-C shall designate, as appropriate, specific personnel (Designated Personnel) to provide or perform the following: |
||||||||||||||||||
1. |
General services, including support of the quality, regulatory, operations and procurement services delivered by EMEA-based employees. |
|||||||||||||||||
2. |
Sales services, including services in support of the sales and business development services delivered by EMEA-based employees
The number of Designated Personnel to be supported by country are as follows: |
|||||||||||||||||
a. | Bahrain: one | |||||||||||||||||
b. | Italy: one | |||||||||||||||||
c. | Portugal: one | |||||||||||||||||
d. | Russian Federation: one | |||||||||||||||||
e. | Saudi Arabia: one | |||||||||||||||||
f. | Slovakia: two | |||||||||||||||||
g. | Sweden: two | |||||||||||||||||
h. | Switzerland: one | |||||||||||||||||
EUR.16 |
Facility Occupancy | $9,175 per month* | 12 months | 3 months | ||||||||||||||
1. |
Provide office space and related services (e.g., security, cleaning) at the Brighton site for use by K-C employees in the delivery of the Services described herein for the monthly fees set forth in the column to the right. |
* Occupancy cost to be reduced proportionally to Europe SSC service cost (EUR.1-7) reductions over time (e.g., 10% reduction in Europe SSC TSA services shall reduce monthly facility occupancy cost by 10%).
Fees for the South Africa site are $215 per month |
||||||||||||||||
2. |
Any occupancy costs for sites not listed above shall be included in the Facilities / Real Estate service. |
|||||||||||||||||
3. |
Provide office space and related services (security, cleaning, building occupancy costs, etc.) at the South Africa site, in each case substantially similar in size and quality to that occupied by or received by the Healthcare business immediately prior to the Distribution. |
|||||||||||||||||
52
Transition Services Agreement (TSA) Schedule of Services for:
CORPORATE REPORTING
Schedule A-6: | Corporate Reporting | |||||
Provider: | Kimberly-Clark Corporation and its applicable affiliates (K-C) | |||||
Provider Contact: | Karen Gilbert [972-281-1344; karen.gilbert@kcc.com] | |||||
Recipient: | Halyard Health, Inc. and its applicable affiliates (Halyard) | |||||
Recipient Contact: | Renato Negro [+1 (770) 587-7174; renato.negro@hyh.com] | |||||
Geographic Scope: | Global (consolidation) | |||||
Overview of Services: |
The Corporate Reporting services defined below are consultative in nature and no deliverables will be provided, except where specifically stated in CRP.4
In no event shall K-C be financially responsible for the cost of any assets, hardware and other similar items that will be retained by Halyard following the completion of these Services. |
|||||
Schedule of Service Specific Terms: |
K-Cs provision of the Services in this Schedule A-6 is dependent upon Halyards (i) reasonable cooperation with K-Cs efforts to provide such Services, (ii) procurement and provision of Halyard hardware, to the extent required, (iii) Halyards entry into contracts with the applicable third party service providers and causing such service providers to cooperate with, and provide reasonably required access to, K-C, and (iv) providing reasonable access to Halyard facilities and personnel to the extent required for the provision of the subject Services (including, but not limited to, personnel to receive knowledge transfer).
Any extensions of the duration of Services, and any early termination of Services, for the Services in this Schedule A-6 are subject to the notification periods below. Extensions of Services may not exceed an overall duration of 21 months after the Distribution Date (as defined in the Transition Services Agreement).
|
|||||
Anticipated Duration of
|
Notification Required to Terminate
|
Maximum Extension of Service |
||||
0 months -5 months | 1 month | 1 month | ||||
6 months -11 months | 2 months | 2 months | ||||
12 months -18 months | 3 months | 3 months | ||||
Start of Activity: | Distribution Date (as defined in the Transition Services Agreement) | |||||
End Date: | As specified in the accompanying Schedule of Services; not to exceed 2 years after the Distribution Date (as defined in the Transition Services Agreement) |
53
The services described in this Schedule of Services shall be provided subject to the terms described in the Transition Services Agreement between K-C and Halyard as of October 31, 2014 (the Transition Services Agreement). Where there is a conflict between the Transition Services Agreement and this Schedule of Services, the Transition Services Agreement shall govern, except where the Transition Services Agreement specifically allows for superseding language to be provided in a Schedule of Services, and such additional or alternate guidance has been provided below. All values in USD, unless otherwise noted.
54
ID |
Description of Service |
Fees Per Month |
Anticipated Duration |
Performance Exceptions |
Time Period for Termination or Extension |
|||||||||
Corporate Reporting | $9,500 per month | 4 months | 1 month | |||||||||||
CRP.1 | ||||||||||||||
K-C shall provide or perform the following: | ||||||||||||||
1. | With Halyard management, develop close calendar, deliverables, and standard procedures for consolidation and external financial reporting (i.e., SEC periodic and other filings). | |||||||||||||
2. | Provide consultation on drafts of periodic reports and earnings release materials, including drafting documents as requested. | |||||||||||||
3. | Record consolidation and other entries, at the direction and with approval of Halyard management, to generate consolidated financial statements. | |||||||||||||
4. | Provide financial data as necessary to support consolidation and external financial reporting needs. | |||||||||||||
5. | Train stakeholders on financial information available and discussion and narrative requirements. | |||||||||||||
6. | Provide knowledge transfer and consultative services relating to internal controls | |||||||||||||
Note: Services are consultative in nature and no deliverables will be provided | ||||||||||||||
CRP.2 | Securities and Exchange Commission (SEC) Reporting and Segregation of Duty (SOD) Consulting | $2,558 per month | 4 months | 1 month | ||||||||||
K-C shall provide or perform the following: | ||||||||||||||
1. | Provide accounting and reporting consultation services. | |||||||||||||
2. | Provide reasonable assistance to auditors as needed. | |||||||||||||
CRP.3 | Technical Accounting, Public Accounting Oversight Board (PCAOB) and Financial Accounting Standards Board (FASB) Support | $1,785 per month | 4 months | 1 month | ||||||||||
K-C shall provide or perform the following: | ||||||||||||||
1. | Provide accounting/audit support as reasonably requested for knowledge transfer. |
55
ID |
Description of Service |
Fees Per Month |
Anticipated Duration |
Performance Exceptions |
Time Period for Termination or Extension |
|||||||||
CRP.4 | Monthly Close Process | $17,500 per month | 2 months commencing on December 1, 2014 |
The following schedules will be delivered by workday 12:
Intercompany elimination report
LIFO calculation
Profit in inventory calculation
Weighted average shares calculation
Other income and expense analysis
The following schedules will be delivered by workday 16:
Investment elimination reconciliation
Reconciliation of shareholders equity |
No unilateral right of termination or extension | |||||||||
K-C shall provide the following schedules for the November and December month-end consolidation: |
||||||||||||||
1. |
Intercompany elimination report |
|||||||||||||
2. |
LIFO calculation |
|||||||||||||
3. |
Profit in inventory calculation |
|||||||||||||
4. |
Investment elimination reconciliation |
|||||||||||||
5. |
Weighted average shares calculation |
|||||||||||||
6. |
Reconciliation of stockholders equity |
|||||||||||||
7. |
Other income and expense analysis |
|||||||||||||
Halyard personnel will be responsible for review and approval of the above schedules. |
||||||||||||||
K-C will also confirm that HFM is producing the various reports generated during the reporting process (including income statement before unusual items, balance sheet, cash flow statement, and segment reports) and report to Halyard personnel any errors or inaccuracies uncovered by the K-C team. |
56
Transition Services Agreement (TSA) Schedule of Services for:
TRANSPORTATION
Schedule A-7: | Transportation | |||||
Provider: | Kimberly-Clark Corporation and its applicable affiliates (K-C) | |||||
Provider Contact: | Tim Zoppa [865-541-7377; tzoppa@kcc.com] | |||||
Recipient: | Halyard Health, Inc. and its applicable affiliates (Halyard) | |||||
Recipient Contact: | Cesar Roque [(770) 587-8639; cesar.roque@hyh.com] | |||||
Geographic Scope: | U.S. | |||||
Overview of Services: |
The Transportation Services are comprised of short-term support services with durations of 2 months and general support services with durations of 12 months.
In no event shall K-C be financially responsible for the cost of any assets, hardware and other similar items that will be retained by Halyard following the completion of these Services. |
|||||
Schedule of Service Specific Terms: |
K-Cs provision of the Services in this Schedule A-7 is dependent upon Halyards (i) reasonable cooperation with K-Cs efforts to provide such Services, (ii) procurement and provision of Halyard hardware, to the extent required, (iii) Halyards entry into contracts with the applicable third party service providers and causing such service providers to cooperate with, and provide reasonably required access to, K-C, (iv) providing reasonable access to Halyard facilities and personnel to the extent required for the provision of the subject Services (including, but not limited to, personnel to receive knowledge transfer) and (v) the IT systems set forth on the Schedule of Services for Information Technology are operational.
Any extensions of the duration of Services, and any early termination of Services, for the Services in this Schedule A-7 are subject to the notification periods below. Extensions of Services may not exceed an overall duration of 21 months after the Distribution Date (as defined in the Transition Services Agreement).
|
|||||
Anticipated Duration of Service |
Notification Required to Terminate
|
Maximum Extension of Service |
||||
0 months - 5 months | 1 month | 1 month | ||||
6 months - 11 months | 2 months | 2 months | ||||
12 months - 18 months | 3 months | 3 months | ||||
Start of Activity: | Distribution Date (as defined in the Transition Services Agreement) | |||||
End Date: | As specified in the accompanying Schedule of Services; not to exceed 2 years after the Distribution Date (as defined in the Transition Services Agreement) |
57
The Services described in this Schedule of Services shall be provided subject to the terms described in the Transition Services Agreement between K-C and Halyard dated as of October 31, 2014 (the Transition Services Agreement). Where there is a conflict between the Transition Services Agreement and this Schedule of Services, the Transition Services Agreement shall govern, except where the Transition Services Agreement specifically allows for superseding language to be provided in a Schedule of Services, and such additional or alternate guidance has been provided below. All values in USD, unless otherwise noted.
58
ID |
Description of Service |
Fees Per Month |
Anticipated Duration |
Performance
|
Time Period for
|
|||||||||
General Support | $32,459 per month | 24 months | 3 months | |||||||||||
TRA.1 | ||||||||||||||
K-C shall provide or perform the following: | ||||||||||||||
1. | Provide center of excellence (COE) support for transportation systems. | |||||||||||||
2. | Support JDA Transportation Management System for carrier and mode transportation optimization. | |||||||||||||
3. | Arrange carrier and consolidate outbound deliveries into shipments. Provide tracing and expediting for outbound shipments. | |||||||||||||
4. | Arrange transportation for exports from North America. | |||||||||||||
5. | Audit and pay freight invoices from carriers. | |||||||||||||
6. | Arrange transportation for customer returns and refusals. | |||||||||||||
7. | Freight approval problem resolution. | |||||||||||||
General Short-Term Support | $9,059 per month | 2 months | 1 month | |||||||||||
TRA.2 | ||||||||||||||
K-C shall provide or perform the following: | ||||||||||||||
1. | Schedule delivery appointments on truckloads to customers. | |||||||||||||
2. | File and manage claims to recover for carrier loss and damages. | |||||||||||||
3. | File and manage claims to recover overcharges from carriers. | |||||||||||||
Facility Occupancy | $8,152 per month* | 24 months | 3 months | |||||||||||
TRA.3 | ||||||||||||||
K-C shall provide or perform the following: |
* Occupancy cost to be reduced proportionally to Transportation service cost reductions over time (e.g., 10% reduction in Transportation TSA services shall reduce monthly facility occupancy cost by 10%). |
|||||||||||||
1. |
Provide office space and related services (e.g., security, cleaning) at the Knoxville site for use by K-C employees in the delivery of the Services described herein for the monthly fees set forth in the column to the right. |
|||||||||||||
2. |
Any occupancy costs for sites not listed above shall be included in the Facilities / Real Estate service. |
59
Transition Services Agreement (TSA) Schedule of Services for:
HUMAN RESOURCES
Schedule A-8: | Human Resources | |||||
Provider: | Kimberly-Clark Corporation and its applicable affiliates (K-C) | |||||
Provider Contact: | Jeno Marvel [770-587-8095; jamarvel@kcc.com ]; Pete Quinn [865-541-7026; pquinn@kcc.com] | |||||
Recipient: | Halyard Health, Inc. and its applicable affiliates (Halyard) | |||||
Recipient Contact: | Rhonda Gibby [770-587-8237; rhonda.gibby@hyh.com] | |||||
Geographic Scope: | U.S. and Canada | |||||
Overview of Services: |
The HR Services are comprised of the following areas: payroll and tax processing, benefits administration, relocation and Global Assignee Program, contact center services, Workday support, recruiting, and social compliance audits.
In no event shall K-C be financially responsible for the cost of any assets, hardware and other similar items that will be retained by Halyard following the completion of these Services. |
|||||
Schedule of Service Specific Terms: |
K-Cs provision of the Services in this Schedule A-8 is dependent upon Halyards (i) reasonable cooperation with K-Cs efforts to provide such Services, (ii) procurement and provision of Halyard hardware, to the extent required, (iii) Halyards entry into contracts with the applicable third party service providers and causing such service providers to cooperate with, and provide reasonably required access to, K-C, and (iv) providing reasonable access to Halyard facilities and personnel to the extent required for the provision of the subject Services (including, but not limited to, personnel to receive knowledge transfer).
Any extensions of the duration of Services, and any early termination of Services, for the services in this Schedule A-8 are subject to the notification periods below. Extensions of Services may not exceed an overall duration of 21 months after the Distribution Date (as defined in the Transition Services Agreement).
|
|||||
Anticipated Duration of
|
Notification Required to Terminate
|
Maximum Extension of Service |
||||
0 months - 5 months | 1 month | 1 month | ||||
6 months - 11 months | 2 months | 2 months | ||||
12 months - 18 months | 3 months | 3 months | ||||
Start of Activity: | Distribution Date (as defined in the Transition Services Agreement) | |||||
End Date: | As specified in the accompanying Schedule of Services; not to exceed 2 years after the Distribution Date (as defined in the Transition Services Agreement) |
60
The Services described in this Schedule of Services shall be provided subject to the terms described in the Transition Services Agreement between K-C and Halyard dated as of October 31, 2014 (the Transition Services Agrement). Where there is a conflict between the Transition Services Agreement and this Schedule of Services, the Transition Services Agreement shall govern, except where the Transition Services Agreement specifically allows for superseding language to be provided in a Schedule of Services, and such additional or alternate guidance has been provided below. All values in USD, unless otherwise noted.
61
ID |
Description of Service |
Fees Per Month |
Anticipated
|
Performance
|
Time Period for
|
|||||||||||
HR.1 |
U.S. and Canada Payroll Processing
K-C shall provide or perform the following: |
$33,000 per month | 14 months | 3 months | ||||||||||||
1. | Process employee payroll for Halyards U.S. and Canadian salaried and hourly staff at frequencies consistent with K-Cs process. | |||||||||||||||
2. | Prepare pre-processing and post-processing reconciliation of payroll data. | |||||||||||||||
3. | Audit payroll exceptions and check distribution for completeness and accuracy. | |||||||||||||||
HR.2 |
U.S. and Canada Payroll Tax
K-C shall provide or perform the following: |
$17,000 per month | 14 months | 3 months | ||||||||||||
1. | Process U.S. and Canadian annual wage and tax statements. File with the SSA, the Canadian CRA and distribute online or paper copies to employees. | |||||||||||||||
2. | Support the processing of required tax statements with all federal, state, local and provincial tax jurisdictions as required. | |||||||||||||||
HR.3 |
U.S. and Canada Benefits Administration
K-C shall provide or perform the following: |
$81,550 per month | 12 months | 3 months | ||||||||||||
1. | Administrative support of the existing benefit programs for Halyard employees in the U.S. and Canada including Benefits Finance and required communications. | |||||||||||||||
2. | Consult with the transition of the benefit plans from K-C to Halyards new benefit platform and providers. | |||||||||||||||
3. | Assist with leave of absence (LOA) administration. | |||||||||||||||
HR.4 |
Relocation and Global Assignees Program
K-C shall provide or perform the following: |
$5,800 per month | 12 months | 3 months | ||||||||||||
1. | Manage the Domestic relocation program for employees relocating within the U.S. and Canada. | |||||||||||||||
2. | Manage the Global Mobility program to include employees permanently relocating into or out of the U.S. or Canada and International Global Assignments. |
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ID |
Description of Service |
Fees Per Month |
Anticipated
|
Performance
|
Time Period for
|
|||||||||||
HR.5 |
U.S. and Canada Contact Center Services
K-C shall provide or perform the following: |
$8,000 per month | 12 months | 3 months | ||||||||||||
1. | K-C through Accenture will answer inquiries and perform HR transactional processing via email, phone and fax using Halyards Workday instance. | |||||||||||||||
HR.6 |
U.S. and Canadian Tier 2 Workday Support
K-C shall provide or perform the following: |
$12,000 per month | 12 months | 3 months | ||||||||||||
1. | Tier 2 Workday Super-User services managed & provided by K-C HR Strategy & Operations Team utilizing contract employee and Workday. | |||||||||||||||
HR.7 |
Recruiting for U.S. and Canadian Based Roles
K-C shall provide or perform the following: |
$15,630 per month (fixed), plus variable pass through costs for each employee placed, based upon the following schedule of job grades: Grades 5-6: $10,500 Grades 7-10: $8,000 Grades 11+: $4,000 Non-exempt::$1,500 |
14 months | 3 months | ||||||||||||
1. | Continued delivery of recruitment services (e.g., job postings, screening, interviewing, background checks, and on boarding of approved staff grades 5-18). | |||||||||||||||
HR.8 |
Social Compliance Audits
K-C shall provide or perform the following: |
$1,620 per month plus 3rd party fees of a maximum of $1,500 per audit. | 6 months | 2 months | ||||||||||||
1. | K-C will perform social compliance audits that are reasonably consistent with those performed by K-C prior to the Distribution as requested by Halyard. There will be a limit of 2 audits per month. |
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Transition Services Agreement (TSA) Schedule of Services for:
LATIN AMERICA OPERATIONS (LAO)
Schedule A-9: | Latin America Operations (LAO) | |
Provider: | Kimberly-Clark Corporation and its applicable affiliates (K-C) | |
Provider Contact: | Tim Domaszek [(506) 2509-8130; domaszek@kcc.com] | |
Recipient: | Halyard Health, Inc. and its applicable affiliates (Halyard) | |
Recipient Contact: | Stephanie Drilling [770-587-8925; stephanie.drilling@hyh.com] | |
Geographic Scope: | Latin American countries (Brazil, Colombia, Puerto Rico, Costa Rica, Panama) | |
Overview of Services: |
The Latin American Operations (LAO) services are composed of the following five areas: General Services, Regional IT Service, Shared Services, Finance, and Legal.
In no event shall K-C be financially responsible for the cost of any assets, hardware and other similar items that will be retained by Halyard following the completion of these Services. |
|
Schedule of Service Specific Terms: |
K-Cs provision of the Services in this Schedule A-9 is dependent upon Halyards (i) reasonable cooperation with K-Cs efforts to provide such Services, (ii) procurement and provision of Halyard hardware, to the extent required, (iii) Halyards entry into contracts with the applicable third party service providers and causing such service providers to cooperate with, and provide reasonably required access to, K-C, and (iv) providing reasonable access to Halyard facilities and personnel to the extent required for the provision of the subject Services (including, but not limited to, personnel to receive knowledge transfer).
Any extensions of the duration of Services, and any early termination of Services, for the Services in this Schedule A-9 are subject to the notification periods below. Extensions of Services may not exceed an overall duration of 21 months after the Distribution Date (as defined in the Transition Services Agreement). |
Anticipated Duration of Service |
Notification Required to Terminate or Extend the Service |
Maximum Extension of Service |
||||
0 months - 5 months | 1 month | 1 month | ||||
6 months - 11 months | 2 months | 2 months | ||||
12 months - 18 months | 3 months | 3 months |
Start of Activity: | Distribution Date (as defined in the Transition Services Agreement) | |
End Date: | As specified in the accompanying Schedule of Services; not to exceed 2 years after the Distribution Date (as defined in the Transition Services Agreement) |
64
The Services described in this Schedule of Services shall be provided subject to the terms described in the Transition Services Agreement between K-C and Halyard dated as of October 31, 2014 (the Transition Services Agreement). Where there is a conflict between the Transition Services Agreement and this Schedule of Services, the Transition Services Agreement shall govern, except where the Transition Services Agreement specifically allows for superseding language to be provided in a Schedule of Services, and such additional or alternate guidance has been provided below. All values in USD, unless otherwise noted.
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67
ID |
Description of Service |
Fees Per Month |
Anticipated
|
Performance
|
Time Period for
Extension |
|||||||||||
7. | Asset management: | |||||||||||||||
a. | Procurement and provision of all IT assets during the transition period (provided that the payment therefor is Halyards responsibility). Halyard will continue to use the K-C standard desktop/laptop image (hardware and software) during the term of the Transition Services Agreement. | |||||||||||||||
b. |
Any software/hardware outside the K-C standards will not be supported and may breach this agreement if introduced to the K-C network without prior approval. |
|||||||||||||||
c. |
All vendor expenses will pass through to Halyard at cost. |
|||||||||||||||
8. | Back office systems: | |||||||||||||||
a. | Provide continued access and use of the following core business systems under the existing terms and conditions set forth by K-C. List of applications is as follows: SAP, Workday, Visa Intellilink, and Regional Travel Management systems. | |||||||||||||||
b. |
Provide system account administration including: adds, modifications, and deletes (does not include changes to existing structure). System access and uptime to be consistent with the performance of the systems prior to the Distribution. |
|||||||||||||||
9. | Application help desk: | |||||||||||||||
a. | Provide level-one support for Halyards core business systems listed in Section 6 of this Schedule LAO.2A (back office systems). | |||||||||||||||
b. |
Services to be provided include: application usage support (navigation and general inquiries), functional issues experienced, and reasonable report and data query requests. |
|||||||||||||||
LAO.2B |
Finance Support
K-C shall provide or perform the following with respect to Brazil: |
$352 per month | 8 months | 3 months | ||||||||||||
1. | Invoice and accounts payable processing: | |||||||||||||||
a. | Record all invoices (both direct and indirect materials), payroll, and expenses into AP sub-ledger. |
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69
Transition Services Agreement (TSA) Schedule of Services for:
RESEARCH AND ENGINEERING (R&E)
Schedule A-10: | Research and Engineering (R&E) | |||||
Provider: | Kimberly-Clark Corporation and its applicable affiliates (K-C) | |||||
Provider Contact: | Laura Dellaripa [770-587-7898; ladellar@kcc.com] | |||||
Recipient: | Halyard Health, Inc. and its applicable affiliates (Halyard) | |||||
Recipient Contact: | Sam Chan [770-587-8604; sam.chan@hyh.com] | |||||
Geographic Scope: | U.S. | |||||
Overview of Services: |
The Research and Engineering services are comprised of the following areas: Sensory and Human Factors, Analytical Science and Test Method Development, and Physical and Compliance Testing.
In no event shall K-C be financially responsible for the cost of any assets, hardware and other similar items that will be retained by Halyard following the completion of these Services. |
|||||
Schedule of Service Specific Terms: |
K-Cs provision of the Services in this Schedule A-10 is dependent upon Halyards (i) reasonable cooperation with K-Cs efforts to provide such Services, (ii) procurement and provision of Halyard hardware, to the extent required, (iii) Halyards entry into contracts with the applicable third party service providers and causing such service providers to cooperate with, and provide reasonably required access to, K-C, and (iv) providing reasonable access to Halyard facilities and personnel to the extent required for the provision of the subject Services (including, but not limited to, personnel to receive knowledge transfer).
Any extensions of the duration of Services, and any early termination of Services, for the Services in this Schedule A-10 are subject to the notification periods below. Extensions of Services may not exceed an overall duration of 21 months after the Distribution Date (as defined in the Transition Services Agreement).
|
|||||
Anticipated Duration of Service |
Notification Required to Terminate
|
Maximum Extension of Service |
||||
0 months - 5 months |
1 month | 1 month | ||||
6 months - 11 months |
2 months | 2 months | ||||
12 months - 18 months |
3 months | 3 months | ||||
Start of Activity: | Distribution Date (as defined in the Transition Services Agreement) | |||||
End Date: | As specified in the accompanying Schedule of Services; not to exceed 2 years after the Distribution Date (as defined in the Transition Services Agreement) |
70
The Services described in this Schedule of Services shall be provided subject to the terms described in the Transition Services Agreement between K-C and Halyard dated as of October 31, 2014 (the Transition Services Agreement). Where there is a conflict between the Transition Services Agreement and this Schedule of Services, the Transition Services Agreement shall govern, except where the Transition Services Agreement specifically allows for superseding language to be provided in a Schedule of Services, and such additional or alternate guidance has been provided below. All values in USD, unless otherwise noted.
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Exhibit 1: Test Method List
Test Method |
STM 00067 / STM 4507 - Hydrostatic Pressure Test |
STM 00103 / STM 2401 - Absorbent Capacity - Vertical (Water) |
STM 00104 / STM 2403 - Vertical Wicking Rate |
STM 00122 / STM 3224 - Dimensions General |
STM 00123 / STM 4011 - Drape Stiffness - Cantilever Bending Method |
STM 00136 / STM 5000 - Brightness/Color/Opacity |
STM 00146 / STM 5668 - Grab Tensile Peak Stretch and Energy (NonW) |
STM 00148 / STM 2200 - Abrasion Resistance - Taber |
STM 00149 / STM 2205 - Martindale |
STM 00150 / STM 2467 - Absorbency Rate (3 Drops) |
STM 00152 / STM 2471 - Impact |
STM 00153 / STM 2477 - Resistance of Nonwovens to Low Surface Tension Liquids |
STM 00155 / STM 2482 - Resistance of NW to Penetration of Fluid |
STM 00156 / STM 2483 Alcohol Repellency |
STM 00157 / STM 2600 - Mass Per Unit Area - Basis Weight |
STM 00159 / STM 3010 - 5 Bulk |
STM 00162 / STM 3801 - Air Permeability |
STM 00164 / STM 3806 - MOCON |
STM 00165 / STM 4000 - Cup Crush |
STM 00180 / STM 4563 - Static Decay |
STM 00190 / STM 5529 - Tear |
STM 00195 / STM 5650 - Tearing Strength - Trapezoid Tear |
Test Method |
STM 00197 / STM 5671 - 180 Degree Peel - Raw Materials |
STM 00198 / STM 5678 - Strip Tensile of Nonwoven Fabrics |
STM 00204 / STM 2437 - Water Vapor Transmission Rate (WVTR) |
STM 00287 / STM 3403 - Fire 30 Sec - NFPA 702 |
STM 00291 / STM 5669 - Bond Integrity of Nonwoven Laminates (Peel) |
STM 00353 / STM 4569 - Gelbo Lint |
STM 00357 / STM 4566 - Sliding Compression |
STM 00360 / STM 3400 - 1 Sec. Fire |
STM 00369 / STM 5708 - Surgical Gown Seam Strength |
STM 00370 / STM 5709 - Surgical Gown Tie-Shear Test |
STM 00391 / STM 5688 - Seam Strength |
STM 00402 / STM 4007 - Handel-O-Meter |
STM 5679 - Puncture |
TTM 00042 - Fenestration Drape Blood Run-Off Test |
TTM 00043 - Glove Slipdown Meas Using the Glove Articulator |
TTM 00173 - Opacity and Fluid Penetration Test of Gowns |
TTM 00292 - Hook Peel Strength |
TTM 00293 - Hook Shear Strength |
TTM 00294 - Hook Adhesion to SMS |
TTM 00406 Wing and Pull Tab Adhesive Peel - Sterile Wrap |
TTM 00407 - Wing Transfer Adhesive Shear - Sterile Wrap |
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Transition Services Agreement (TSA) Schedule of Services for:
REGULATORY AND QUALITY (R&Q)
Schedule A-11: | Regulatory and Quality | |||||
Provider: | Kimberly-Clark Corporation and its applicable affiliates (K-C) | |||||
Provider Contact: | Mike Page [770-587-7084; mike.page@kcc.com] | |||||
Recipient: | Halyard Health, Inc. and its applicable affiliates (Halyard) | |||||
Recipient Contact: | Mizanu Kebede [770-587-8533; mizanu.kebede@hyh.com] | |||||
Geographic Scope: | U.S. | |||||
Overview of Services: |
The Regulatory & Quality (R&Q) services are composed of the following areas: Global Clinical Affairs, Quality, and Global Product Safety.
In no event shall K-C be financially responsible for the cost of any assets, hardware and other similar items that will be retained by Halyard following the completion of these Services. |
|||||
Schedule of Service Specific Terms: |
K-Cs provision of the Services in this Schedule A-11 is dependent upon Halyards (i) reasonable cooperation with K-Cs efforts to provide such Services, (ii) procurement and provision of Halyard hardware, to the extent required, (iii) Halyards entry into contracts with the applicable third party service providers and causing such service providers to cooperate with, and provide reasonably required access to, K-C, and (iv) providing reasonable access to Halyard facilities and personnel to the extent required for the provision of the subject Services (including, but not limited to, personnel to receive knowledge transfer).
Any extensions of the duration of Services, and any early termination of Services, for the Services in this Schedule A-11 are subject to the notification periods below. Extensions of Services may not exceed an overall duration of 21 months after the Distribution Date (as defined in the Transition Services Agreement).
|
|||||
Anticipated Duration of Service |
Notification Required to Terminate or Extend the Service |
Maximum Extension of Service |
||||
0 months - 5 months |
1 month | 1 month | ||||
6 months - 11 months |
2 months | 2 months | ||||
12 months - 18 months |
3 months | 3 months | ||||
Start of Activity: | Distribution Date (as defined in the Transition Services Agreement) | |||||
End Date: | As specified in the accompanying Schedule of Services; not to exceed 2 years after the Distribution Date (as defined in the Transition Services Agreement) |
74
The Services described in this Schedule of Services shall be provided subject to the terms described in the Transition Services Agreement between K-C and Halyard dated as of October 31, 2014 (the Transition Services Agreement). Where there is a conflict between the Transition Services Agreement and this Schedule of Services, the Transition Services Agreement shall govern, except where the Transition Services Agreement specifically allows for superseding language to be provided in a Schedule of Services, and such additional or alternate guidance has been provided below. All values in USD, unless otherwise noted.
75
ID |
Description of Service |
Fees Per Month |
Anticipated
|
Performance
|
Time Period for
|
|||||||||
RQ.1 |
Global Clinical Affairs
K-C shall provide or perform the following: |
Variable rate based on resource costs and third-party pass through
Hourly Rate: Grade 4-6: $160 Grade 7-9: $90 10 and Below: $50 |
18 Months | 3 months | ||||||||||
1. |
Conduct data entry and data validation for all current clinical studies. |
|||||||||||||
2. |
Provide statistical consulting, analysis, programming, and validation services for current clinical studies. |
|||||||||||||
3. |
Provide in-house site management and clinical site monitoring services. |
|||||||||||||
4. |
Provide in-house project management services. |
|||||||||||||
5. |
Conduct literature research and order articles. |
|||||||||||||
RQ.2 |
Quality
K-C shall provide or perform the following: |
$5,720 per month | 6 months | 2 months | ||||||||||
1. | Provide EtQ support (respond to functionality and configuration questions). | |||||||||||||
RQ.3 |
Global Product Safety
K-C shall provide or perform the following:
|
$500 per month | 12 months | 3 months | ||||||||||
1. | Provide laboratory audit services for Avent I/Tucson in support of PYtest to meet the State of New Yorks requirements to have annual audits by a registered Director of Laboratories. |
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Transition Services Agreement (TSA) Schedule of Services for:
OPERATIONS SEPARATION (FTS, OTC, DISTRIBUTION)
Schedule A-12: | Operations Separation (FTS, OTC, Distribution) | |||||
Provider: | Kimberly-Clark Corporation and its applicable affiliates (K-C) | |||||
Provider Contact: | Julie Nackers [920-721-5619; jnackers@kcc.com] | |||||
Recipient: | Halyard Health, Inc. and its applicable affiliates (Halyard) | |||||
Recipient Contact: |
OTC: Lori Hand [770-587-7621; lori.hand@hyh.com] FTS, Distribution: Dean Bergman [770-587-8849; dean.bergman@hyh.com] |
|||||
Geographic Scope: | U.S. | |||||
Overview of Services: |
The Operations Separation services are composed of Center of Excellence (COE) support for the Order to Cash (OTC), Forecast to Stock (FTS), and Distribution processes.
In no event shall K-C be financially responsible for the cost of any assets, hardware and other similar items that will be retained by Halyard following the completion of these Services. |
|||||
Schedule of Service Specific Terms: |
K-Cs provision of the Services in this Schedule A-12 is dependent upon Halyards (i) reasonable cooperation with K-Cs efforts to provide such Services, (ii) procurement and provision of Halyard hardware, to the extent required, (iii) Halyards entry into contracts with the applicable third party service providers and causing such service providers to cooperate with, and provide reasonably required access to, K-C, and (iv) providing reasonable access to Halyard facilities and personnel to the extent required for the provision of the subject Services (including, but not limited to, personnel to receive knowledge transfer).
Any extensions of the duration of Services, and any early termination of Services, for the Services in this Schedule A-12 are subject to the notification periods below. Extensions of Services may not exceed an overall duration of 21 months after the Distribution Date (as defined in the Transition Services Agreement).
|
|||||
Anticipated Duration of Service |
Notification Required to Terminate
|
Maximum Extension of Service |
||||
0 months - 5 months |
1 month | 1 month | ||||
6 months - 11 months |
2 months | 2 months | ||||
12 months - 18 months |
3 months | 3 months | ||||
Start of Activity: | Distribution Date (as defined in the Transition Services Agreement) | |||||
End Date: | As specified in the accompanying Schedule of Services; not to exceed 2 years after the Distribution Date (as defined in the Transition Services Agreement) |
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The Services described in this Schedule of Services shall be provided subject to the terms described in the Transition Services Agreement between K-C and Halyard dated as of October 31, 2014 (the Transition Services Agreement). Where there is a conflict between the Transition Services Agreement and this Schedule of Services, the Transition Services Agreement shall govern, except where the Transition Services Agreement specifically allows for superseding language to be provided in a Schedule of Services, and such additional or alternate guidance has been provided below. All values in USD, unless otherwise noted.
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ID |
Description of Service |
Fees Per Month |
Anticipated
|
Performance
|
Time Period for
|
|||||||||||
5. |
Global data synchronization (GDS) |
|||||||||||||||
6. | Transfer pricing | |||||||||||||||
OPS.2 |
Planner And Mill Material Flow Support - Forecast To Stock (FTS) | $30,200 | 12 months | 3 months | ||||||||||||
K-C shall provide or perform the following: |
Plus pass-through travel expenses |
|||||||||||||||
1. |
Provide escalated user support to mill material flow team members and planners (material ordering, machine scheduling and strategic planners) on SAP tool functionality. SAP modules: R/3 and APO (PPDS and SNP). Support Halyard in setting up in-house user support. |
|||||||||||||||
2. |
The setup of new asset or reconfiguration of existing assets. This process make sure all appropriate APO and R/3 set are present. |
|||||||||||||||
OPS.2 (contd) |
3. |
Provide training to key users for mill material flow (i.e., production reporting) and planners (material ordering, machine scheduling and strategic planners). Transition training process to Halyard. |
||||||||||||||
4. |
Set up and maintain SAP job roles to support business needs. Train Halyard resource on how to manage going forward. |
|||||||||||||||
5. |
Support major IT approved projects with design, testing, implementation and documentation. |
|||||||||||||||
6. |
Support prioritized and agreed upon system enhancements from design through testing, implementation, and documentation. |
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ID |
Description of Service |
Fees Per Month |
Anticipated Duration |
Performance
|
Time Period for
Extension |
|||||||||||
OPS.3 |
Distribution Project and Operational Support
K-C shall provide or perform the following: |
Variable: $59.20 per hour (billed based on actual hours per month)
Plus pass-through travel expenses |
12 months |
3 months | ||||||||||||
1. |
Support Halyard project to change 3PL distribution providers and/or locations. Support includes process design, user acceptance test planning, and providing guidance for test execution, documentation and implementation. |
|||||||||||||||
2. |
Provide knowledge transfer to Halyard employees in preparation for assuming full responsibility for distribution support activities. |
|||||||||||||||
3. |
Provide training for distribution processes including inventory control, shipping and receiving, and local customer service. Prepare Halyard team for ownership of training going forward. |
|||||||||||||||
4. | Support enhancement requests with design, user acceptance test planning, provide guidance in test execution, documentation and implementation. | |||||||||||||||
5. | Provide escalated user support for Distribution activities via mailbox. |
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Transition Services Agreement (TSA) Schedule of Services for:
GLOBAL NONWOVENS (GNW)
Schedule A-13: | Global Nonwovens (GNW) | |||||
Provider: | Kimberly-Clark Corporation and its applicable affiliates (K-C) | |||||
Provider Contact: | Larry Maher [770-587-7091; larry.maher@kcc.com] | |||||
Recipient: | Halyard Health, Inc. and its applicable affiliates (Halyard) | |||||
Recipient Contact: | Mike Tuck [770-587-7911; mike.tuck@hyh.com] | |||||
Geographic Scope: | U.S. | |||||
Overview of Services: |
The Global Nonwoven (GNW) services are comprised of technical knowledge transfer, subject-matter expert (SME) support, prototyping services, process engineering and mill support, supply agreement support, engraving masters storage, and gown-machine start-up support.
In no event shall K-C be financially responsible for the cost of any assets, hardware and other similar items that will be retained by Halyard following the completion of these Services. |
|||||
Schedule of Service Specific Terms: |
K-Cs provision of the Services in this Schedule A-13 is dependent upon Halyards (i) reasonable cooperation with K-Cs efforts to provide such Services, (ii) procurement and provision of Halyard hardware, to the extent required, (iii) Halyards entry into contracts with the applicable third party service providers and causing such service providers to cooperate with, and provide reasonably required access to, K-C, and (iv) providing reasonable access to Halyard facilities and personnel to the extent required for the provision of the subject Services (including, but not limited to, personnel to receive knowledge transfer).
Any extensions of the duration of Services, and any early termination of Services, for the Services in this Schedule A-13 are subject to the notification periods below. Extensions of Services may not exceed an overall duration of 21 months after the Distribution Date (as defined in the Transition Services Agreement).
|
|||||
Anticipated Duration of Service |
Notification Required to Terminate or Extend the Service |
Maximum Extension of Service |
||||
0 months - 5 months |
1 month | 1 month | ||||
6 months - 11 months |
2 months | 2 months | ||||
12 months - 18 months |
3 months | 3 months | ||||
Start of Activity: | Distribution Date (as defined in the Transition Services Agreement) | |||||
End Date: | As specified in the accompanying Schedule of Services; not to exceed 2 years after the Distribution Date (as defined in the Transition Services Agreement) |
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The Services described in this Schedule of Services shall be provided subject to the terms described in the Transition Services Agreement between K-C and Halyard on dated as of October 31, 2014 (the Transition Services Agreement). Where there is a conflict between the Transition Services Agreement and this Schedule of Services, the Transition Services Agreement shall govern, except where the Transition Services Agreement specifically allows for superseding language to be provided in a Schedule of Services, and such additional or alternate guidance has been provided below. All values in USD, unless otherwise noted.
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ID |
Description of Service |
Fees |
Anticipated
|
Performance
|
Time Period for
|
|||||||||||
GNW.5 |
Support for Supply Agreement
K-C shall provide or perform the following:
Covers life cycle maximization (LCM) term between Corinth and Neenah Nonwovens Facility (NNF), planning and quality resources required to support supply agreements.
LCM business support functions include: |
These Services shall be delivered on a time & materials basis
LCM: $129,000 per year (1 FTE)
Plus pass-through travel expenses (estimated at $13,500/year) |
2 years | 3 months | ||||||||||||
1. | Supporting the mills in achieving quality, cost and customer service OGSiMs |
Planning: $91,000 per year per FTE (see Exhibit 1 for resource requirements)
Quality: $115,700 per year per FTE (see Exhibit 1 for resource requirements)
Note: Costs associated with material changes (e.g., resins, basis weight changes) will be handled in a separate supply agreement between K-C and Halyard
Note: If either party experiences quality issues due to the other partys design process, we will bill out appropriate incremental resources at an hourly rate. These resources will be subject to availability |
||||||||||||||
2. |
Leading all controlled documentation regarding product management such as: change control, supplier corrective action reports (SCAR), corrective and preventive actions (CAPA) |
|||||||||||||||
3. |
Being first contact with BU on product evergreening |
|||||||||||||||
4. |
Being first contact for the Mill Team and technical support
|
|||||||||||||||
Planning : Tactical and staff planning resources associated with planning Halyard materials on GNW assets
Quality : Quality resources associated with supporting Halyard materials manufactured by GNW |
||||||||||||||||
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ID |
Description of Service |
Fees |
Anticipated
|
Performance
|
Time Period for
|
|||||||||||
Note: At least four Lexington Operators and two Maintenance Associates require access to Lagrange for at least eight weeks to train on Operation | ||||||||||||||||
GNW.8 |
Post-spin Development Support (On-Going Projects)
K-C shall provide or perform the following:
|
$129,000 per year (1 FTE)
Plus pass-through travel expenses |
12 months |
Work initiation
decision will be made within two weeks communication following BFx approval. |
3 months | |||||||||||
1. | Post-spin development and commercialization of K-C-produced healthcare materials. Deliver on project objectives defined upon project approval per IMF gate requirements. | |||||||||||||||
GNW.9 |
Northfield Storage Space
Provide off-site storage space and related services (lease, operating service, utilities) at the Northfield storage warehouse located at 1075 Northfield Court, Roswell GA 30076, in each case substantially similar in size and quality to that occupied by or received by the Healthcare Business immediately prior to the Distribution. The facility is managed by RAMP (GNW) and operated by Nationwide Distribution Services, which provides daily delivery and retrieval of materials. |
$9,000 per month | 24 months | 3 months |
88
Exhibit 1: Estimated Planning and Quality Support for Supply Agreement (FTEs by Quarter)
Planning | 4Q14 | 1Q15 | 2Q15 | 3Q15 | 4Q15 | 1Q16 | 2Q16 | 3Q16 | ||||||||||||||||||||||||
TSA FTEs |
1.21 | 1.21 | 1.21 | 1.21 | 0.31 | 0.31 | 0.31 | 0.31 | ||||||||||||||||||||||||
Quality | 4Q14 | 1Q15 | 2Q15 | 3Q15 | 4Q15 | 1Q16 | 2Q16 | 3Q16 | ||||||||||||||||||||||||
TSA FTEs |
0.08 | 0.07 | 0.07 | 0.07 | 0.01 | 0.00 | 0.00 | 0.00 |
Note: TSA support required (FTEs) reflects the net support required as Halyard assumes responsibility for Planning and Quality Support for Supply Agreements
89
Transition Services Agreement (TSA) Schedule of Services for:
ASIA-PACIFIC (APAC)
Schedule A-14: | Asia-Pacific (APAC) | |
Provider: | Kimberly-Clark Corporation and its applicable affiliates (K-C) | |
Provider Contact: | Shane McNabb [+61 (0) 2 9963 8987; smcnabb@kcc.com] | |
Recipient: | Halyard Health, Inc. and its applicable affiliates (Halyard) | |
Recipient Contact: | Scott Fowler [+61 (0) 2 9963 8879; scott.fowler@hyh.com] | |
Geographic Scope: | Asia-Pacific countries (Australia, New Zealand, Singapore, Malaysia and Japan) and with respect to APA.8, China | |
Overview of Services: |
The Asia-Pacific Services are composed of the four following areas: Regional ITS Services, Shared Services, Legal, and Back Office Support (HR, Finance).
In no event shall K-C be financially responsible for the cost of any assets, hardware and other similar items that will be retained by Halyard following the completion of these Services. |
|
Schedule of Service Specific Terms: |
For Services described in 1(a) through 1(d) herein, neither party shall have the unilateral right of termination or extension in respect of such Services. If the actual duration of a particular Service exceeds the Anticipated Duration as set forth below on this Schedule A-14 (a Delay Period), the cost per month for the Services shall be the same during the Delay Period as it was during the month immediately preceding the Delay Period. If in K-Cs reasonable judgment there will be a Delay Period, K-C shall provide written notice to Halyard regarding the likelihood or existence of such Delay Period [ten] days prior to the start of such Delay Period. If, and to the extent that, the Delay Period will exceed three months, such Delay Period will be subject to Halyards approval, which approval will not be unreasonably withheld.
K-Cs provision of the Services in this Schedule A-14 is dependent upon Halyards (i) reasonable cooperation with K-Cs efforts to provide such Services, (ii) procurement and provision of Halyard hardware, to the extent required, (iii) Halyards entry into contracts with the applicable third party service providers and causing such service providers to cooperate with, and provide reasonably required access to, K-C, and (iv) providing reasonable access to Halyard facilities and personnel to the extent required for the provision of the subject Services (including, but not limited to, personnel to receive knowledge transfer).
Any extensions of the duration of Services, and any early termination of Services, for the Services in this Schedule A-14 are subject to the notification periods below. Extensions of Services may not exceed an overall duration of 21 months after the Distribution Date (as defined in the Transition Services Agreement). |
Anticipated Duration of Service |
Notification Required to Terminate
|
Maximum Extension of Service |
||
0 months - 5 months | 1 month | 1 month | ||
6 months - 11 months | 2 months | 2 months | ||
12 months - 18 months | 3 months | 3 months |
90
Start of Activity: | Distribution Date (as defined in the Transition Services Agreement) | |
End Date: | As specified in the accompanying Schedule of Services; not to exceed 2 years after the Distribution Date (as defined in the Transition Services Agreement) |
The services described in this Schedule of Services shall be provided subject to the terms described in the Transition Services Agreement between K-C and Halyard dated as of October 31, 2014 (the Transition Services Agreement). Where there is a conflict between the Transition Services Agreement and this Schedule of Services, the Transition Services Agreement shall govern, except where the Transition Services Agreement specifically allows for superseding language to be provided in a Schedule of Services, and such additional or alternate guidance has been provided below. All values in USD, unless otherwise noted.
91
92
ID |
Description of Service |
Fees Per Month |
Anticipated Duration |
Performance Exceptions |
Time Period for
Termination or
|
|||||||||||||
4. |
Infrastructure move from TCC to hosted environment. |
|||||||||||||||||
5. |
Other outstanding work such as EDI customers. |
|||||||||||||||||
6. |
Setting up appropriate authorizations and owners in Halyard systems including Service-Now, SAP roles, Group Manager and IDM. |
|||||||||||||||||
7. |
Transition of knowledge to Halyard ITS department and outsourced partner minimal system documentation exists in APAC today. |
|||||||||||||||||
8. |
Untrusting networks. |
|||||||||||||||||
9. |
Management of security roles and IDs for SAP applications, including mobile devices. |
|||||||||||||||||
10. |
Management of governance to internal control and regulatory rules and standards. |
|||||||||||||||||
APA.1b |
Core Business Process Support Team
K-C shall provide or perform the following: |
$8,000 per month | 12 months | No unilateral right of termination or extension for any IT Services | ||||||||||||||
1. |
First level support SAP and some non-SAP, use of Service-Now |
|||||||||||||||||
2. |
SAP security role analysis, SOD |
|||||||||||||||||
3. |
Change requests, business requirements mainly SAP related |
|||||||||||||||||
4. | Testing and sign off of changes delegates of SAP owner | |||||||||||||||||
5. | End user documentation especially SAP | |||||||||||||||||
6. | Selected end user training SAP | |||||||||||||||||
APA.1c |
End User Infrastructure Cluster
Includes team leadership and work direction for Halyard ITS staff where currently provided by regional ITS. Also includes on-site support in Sydney from existing KC staff. |
$5,800 per month | 12 months | Notwithstanding Section 2.6 of the Transition Services Agreement, the parties have agreed to certain variances in the software and services to be provided pursuant to this APA.1c from those provided immediately prior to the Distribution Date. | No unilateral right of termination or extension for any IT Services |
93
94
ID |
Description of Service |
Fees Per Month |
Anticipated Duration |
Performance Exceptions |
Time Period for
Termination or
|
|||||||||||||
4. |
For vendor management: |
|||||||||||||||||
a. | Manage local infrastructure maintenance with third party providers; and | |||||||||||||||||
b. | Manage relationship with local third party suppliers and vendors (e.g., Telcos, hardware suppliers). | |||||||||||||||||
APA.1d |
Network Connectivity |
$21,500 per month |
12 months |
No unilateral right of termination or extension for any IT Services | ||||||||||||||
Includes on-charging external costs paid by KC but where services are shared by K-C and Halyard, e.g., Milsons Point, NZ, Far East (Singapore), Malaysia
|
Singapore: $1,300 per month |
|||||||||||||||||
K-C, in cooperation with TCS, shall provide or perform the following: |
Australia: $20,200 per month |
|||||||||||||||||
1. | Hardware Rental | |||||||||||||||||
a. |
Includes costs of file storage and other technology peripherals. |
|||||||||||||||||
2. |
Maintenance |
|||||||||||||||||
a. |
Includes maintenance and support costs of existing infrastructure hardware composed of laptops, telephone systems, network gears, servers, etc. |
|||||||||||||||||
3. |
Telecommunications |
|||||||||||||||||
a. |
Includes costs of actual telecommunication links providing connectivity for emails, SAP, internet, videoconference, etc. and office telephone lines and usage. |
|||||||||||||||||
4. |
Depreciation |
|||||||||||||||||
a. |
Includes depreciation costs for equipment supporting network, phone system, servers, etc. |
|||||||||||||||||
5. |
Management of firewalls, internet access, risk assessments, and website security |
|||||||||||||||||
APA.1e |
Business Partner Resource
K-C will provide one ITS Business Partner resource in Asia Pacific (to be based in Sydney) to: |
$12,000 per month plus pass-through of all travel expenses |
5 months commencing on December 1, 2014 |
1 month | ||||||||||||||
4. | Provide partnership, direction, and guidance to the Halyard business community relating to the provision of technology solutions and services; |
95
ID |
Description of Service |
Fees Per Month |
Anticipated Duration |
Performance Exceptions |
Time Period for
Termination or
|
|||||||||||||
5. | Act as a single point of contact to the business and escalate any issues as appropriate; and | |||||||||||||||||
6. | Manage the demand for IT services to ensure appropriate prioritization. | |||||||||||||||||
APA.1f |
New Projects | No unilateral right of termination or extension for any IT Services | ||||||||||||||||
1. | Any ITS-related requests from Halyard not described in APA.1a APA.1d or otherwise reasonably required to deliver such services would be defined as a New Project as per IT.5 herein. | |||||||||||||||||
APA.2a |
Shared Services (1 of 2) |
$2,250 per month |
12 months (Australia) |
3 months |
||||||||||||||
K-C shall provide or perform the following: | Australia: $1,600 per month | 9 months (Singapore) | 2 months | |||||||||||||||
1. | Accounts Payable |
Singapore: $650 per month |
||||||||||||||||
a. |
Review and verify invoice, invoice documentation, and invoice approvals for completeness and accuracy and route for document workflow approval where applicable (Non PO invoices and Services PO invoices). |
|||||||||||||||||
b. | Record all invoices (both direct and indirect materials), and expenses into Accounts Payable sub-ledger within 48 hours of scanned invoice receipt or 48 hours of document workflow approval receipt. | |||||||||||||||||
c. | Process full, split and partial invoice payments per Halyards request per weekly payment run for domestic payments and every 2 weeks for foreign payment. | |||||||||||||||||
d. | Initiate cash disbursements for approved payments (for vendors and employees) by Halyard and perform duplicate payment check via FirstStrike to avoid duplicate payment. | |||||||||||||||||
e. | Provide Halyard weekly cash commitments reports to enable Halyard to determine disbursement schedules and amount. | |||||||||||||||||
f. | Provide inquiry support to vendors and business managers from 8:30 am till 5:30 pm (Malaysia time) via email and/or voicemail support. | |||||||||||||||||
g. | Support GR/IR follow up with Halyard buyers to ensure GR/IR items are managed to not age more than 90 days. | |||||||||||||||||
h. | Support does not include banking authorization. Authorizers to be determined by Halyard. |
96
97
ID |
Description of Service |
Fees Per Month |
Anticipated Duration |
Performance Exceptions |
Time Period for
Termination or
|
|||||||||||||
6. | Master Data Maintenance (MDM) |
MDM: $300 (Australia: $200 Singapore: $100) |
||||||||||||||||
a. |
Provide master material data maintenance for vendor, customer, and material master records |
|||||||||||||||||
b. |
Services provided for Singapore and Australia |
|||||||||||||||||
7. |
Month End Closing Support (MECS) |
MECS: $400 (Australia: $300 Japan: $100) |
||||||||||||||||
a. |
Complete month end closing checks and support ATR user access |
|||||||||||||||||
b. |
Services provided for Australia and Japan |
|||||||||||||||||
APA.3 |
Fleet Management |
$374 per month |
12 months |
3 months | ||||||||||||||
K-C shall provide or perform the following: | Plus pass-through operating and lease costs | |||||||||||||||||
1. |
Car fleet management, administration |
|||||||||||||||||
APA.4 |
Payroll |
$1,600 per month |
12 months |
3 months | ||||||||||||||
K-C shall provide or perform the following: | ||||||||||||||||||
1. | Provide payroll processing support services for Halyard employees in Halyard Singapore | |||||||||||||||||
APA.5 | Provision of Cellular Services |
Variable (pass-through cost based on actual Halyard employee usage) |
9 months (until July 31, 2015) |
2 months | ||||||||||||||
K-C shall provide or perform the following: | ||||||||||||||||||
1. |
Provision of cellular services to Halyard employees in Australia for iPhones and iPads |
|||||||||||||||||
2. |
Contract with Telstra expires end of July 2015 |
|||||||||||||||||
APA.6 |
Legal Services - Product Registration |
Variable (to be charged at hourly rates detailed in Appendix I: Resource Rate Cards)
Plus pass-through expenses incurred (e.g., travel, meeting costs) |
12 months |
3 months | ||||||||||||||
K-C shall provide or perform the following: |
||||||||||||||||||
1. |
Maintain product approvals until the registration has been transferred to Halyard / Distributor |
|||||||||||||||||
2. |
Provides support for Australia, New Zealand, Singapore, Malaysia |
98
ID |
Description of Service |
Fees Per Month |
Anticipated Duration |
Performance Exceptions |
Time Period for
Termination or
|
|||||||||||||
Not required for Hong Kong, Philippines, Thailand, Sri Lanka, Taiwan, China, Japan | ||||||||||||||||||
APA.7 |
Tax, Treasury and Credit Control; GL and Reporting |
$6,713 per month |
9 months |
2 months | ||||||||||||||
K-C shall provide or perform the following: | Singapore: $6,713 | |||||||||||||||||
1. | Perform month-end and quarterly close and reporting activities | |||||||||||||||||
2. | US GAAP reporting | |||||||||||||||||
3. | Credit control matters | |||||||||||||||||
4. | Treasury Management | |||||||||||||||||
APA.8 |
Services to Halyard in China |
$951.12 per month per Designated Personnel (plus direct costs incurred by K-C relating to the Designated Personnel). |
12 months |
3 months | ||||||||||||||
K-C shall designate, as appropriate, specific personnel (Designated Personnel) to provide or perform the following: |
||||||||||||||||||
1. |
General services, including services in support of the quality, regulatory, operations and procurement services. |
|||||||||||||||||
2. |
Sales services, including services in support of the sales and business development services delivered. |
The number of Designated Personnel will be calculated as the number of individuals performing the services at the end of a given month. |
||||||||||||||||
APA.9 |
Office Support Costs (Milsons Point) |
Pass-through of variable office costs (estimated at $6,6667 per month) |
12 months |
3 months | ||||||||||||||
K-C shall provide or perform the following: |
||||||||||||||||||
1. |
Provide office support including cleaning, electricity, after hours security, after hours air-conditioning, usage MFD, and other direct, variable office costs. |
99
100
Transition Services Agreement (TSA) Schedule of Services for:
Legal
Schedule A-15: | Legal | |
Provider: | Kimberly-Clark Corporation and its applicable affiliates (K-C) | |
Provider Contact: | Michael Bendel [920-721-6854; mbendel@kcc.com] | |
Recipient: | Halyard Health, Inc. and its applicable affiliates (Halyard) | |
Recipient Contact: | Karl Sidor [770-587-8635; karl.sidor@hyh.com] | |
Geographic Scope: | U.S. | |
Overview of Services: |
The Legal Services are limited to certain specified business services related to intellectual property.
In no event shall K-C be financially responsible for the cost of any assets, hardware and other similar items that will be retained by Halyard following the completion of these Services. |
|
Schedule of Service Specific Terms: |
K-Cs provision of the Services in this Schedule A-15 is dependent upon Halyards (i) reasonable cooperation with K-Cs efforts to provide such Services, (ii) procurement and provision of Halyard hardware, to the extent required, (iii) Halyards entry into contracts with the applicable third party service providers and causing such service providers to cooperate with, and provide reasonably required access to, K-C, and (iv) providing reasonable access to Halyard facilities and personnel to the extent required for the provision of the subject Services (including, but not limited to, personnel to receive knowledge transfer).
Any extensions of the duration of Services, and any early termination of Services, for the Services in this Schedule A-15 are subject to the notification periods below. Extensions of Services may not exceed an overall duration of 21 months after the Distribution Date (as defined in the Transition Services Agreement). |
Anticipated Duration of Service |
Notification Required to Terminate
|
Maximum Extension of Service |
||||
0 months - 5 months | 1 month | 1 month | ||||
6 months - 11 months | 2 months | 2 months | ||||
12 months - 18 months | 3 months | 3 months |
Start of Activity: | Distribution Date (as defined in the Transition Services Agreement) | |
End Date: | As specified in the accompanying Schedule of Services; not to exceed 2 years after the Distribution Date (as defined in the Transition Services Agreement) |
101
The services described in this Schedule of Services shall be provided subject to the terms described in the Transition Services Agreement between K-C and Halyard dated as of October 31, 2014 (the Transition Services Agreement). Where there is a conflict between the Transition Services Agreement and this Schedule of Services, the Transition Services Agreement shall govern, except where the Transition Services Agreement specifically allows for superseding language to be provided in a Schedule of Services, and such additional or alternate guidance has been provided below. All values in USD, unless otherwise noted.
102
ID |
Description of Service |
Fees Per Month |
Anticipated
|
Performance
|
Time Period for
|
|||||||||
LEG.1 |
Patent Annuity Fees |
Pass-through of all fees expenses related to delivering this service plus an administrative fee of $2,000 per month | 3 months | 1 month | ||||||||||
K-C shall provide or perform the following: |
||||||||||||||
1. |
Provide support through K-Cs IP CoE to coordinate payment of Avent, Inc.s patent annuity fees using K-Cs annuity fee service provider.
|
|||||||||||||
LEG.2 |
Support for ANAQUA Express |
Time and materials (to be charged at hourly rates detailed in Appendix I: Resource Rate Cards) |
8 months |
Support
|
2 months |
|||||||||
K-C shall provide or perform the following: |
||||||||||||||
1. |
Support with confirmation of ANAQUA file record transfers from K-C to Halyard in the different modules and support with transferring ANAQUA file records between foreign associates; |
|||||||||||||
2. |
Support and training on modifying and maintaining templates in the Documents window of the ANAQUA records; |
|||||||||||||
3. |
Support and training for Invoicing: creating and working with legal service purchase orders and the interface with SAP; |
|||||||||||||
4. |
Support and training for CDA Builder: system administration and editing the templates; |
|||||||||||||
5. |
Support and training for System Administration of specific ANAQUA modules and coordinating with HR to identify and remove / change former employees (inventors) from the system. |
|||||||||||||
LEG.3 |
Secretariat Support |
Time and materials (to be charged at hourly rates detailed in Appendix I: Resource Rate Cards) |
2 months |
Support
|
No
|
|||||||||
K-C shall provider or perform the following: | ||||||||||||||
1. |
Provider Secretariat systems support and data entry |
103
Reverse Transition Services
104
Transition Services Agreement (TSA) Schedule of Services for:
CHARGEBACK, MEMBERSHIP, CONTRACTS
Schedule B-1: | Chargeback, Membership, Contracts | |
Provider: | Halyard Health, Inc. and its applicable affiliates (Halyard) | |
Provider Contact: | Steve Linville [770-587-8452; steve.linville@hyh.com] | |
Recipient: | Kimberly-Clark Corporation and its applicable affiliates (K-C) | |
Recipient Contact: |
Mike Stohr [(865) 541-7275; mstohr@kcc.com ] Ted Banker [865.541.7602; tcbanker@kcc.com] |
|
Geographic Scope: | North America | |
Overview of Services: |
The Chargeback, Membership, and Contracts services include the handling and administration of chargeback deductions.
Unless otherwise documented in this schedule of services, the services to be provided hereunder shall be performed with the same general degree of care and levels of performance as when the Service Provider and its Affiliates performed such services within the Service Provider organization immediately prior to the Distribution Date. In no event shall Halyard be financially responsible for the cost of any assets, hardware and other similar items that will be retained by K-C following the completion of these Services. |
|
Schedule of Service Specific Terms: |
Halyards provision of the Services in this Schedule B-1 is dependent upon K-Cs (i) reasonable cooperation with Halyards efforts to provide such Services, (ii) procurement and provision of K-C hardware, to the extent required, (iii) K-Cs entry into contracts with the applicable third party service providers and causing such service providers to cooperate with, and provide reasonably required access to, Halyard, and (iv) providing reasonable access to K-C facilities and personnel to the extent required for the provision of the subject Services (including, but not limited to, personnel to receive knowledge transfer).
Any extensions of the duration of Services, and any early termination of Services, for the Services in this Schedule B-1 are subject to the notification periods below. Extensions of Services may not exceed an overall duration of 21 months after the Distribution Date (as defined in the Transition Services Agreement). |
Anticipated Duration of Service |
Notification Required to Terminate or Extend the Service |
Maximum Extension of Service |
||||
0 months - 5 months | 1 month | 1 month | ||||
6 months - 11 months | 2 months | 2 months | ||||
12 months - 18 months | 3 months | 3 months |
Start of Activity: | Distribution Date (as defined in the Transition Services Agreement) | |
Schedule B-1: | Chargeback, Membership, Contracts | |
End Date: | As specified in the accompanying Schedule of Services; not to exceed 2 years after the Distribution Date (as defined in the Transition Services Agreement) |
105
The services described in this Schedule of Services shall be provided subject to the terms described in the Transition Services Agreement between Kimberly-Clark Corporation and Halyard Health, Inc. as of October 31, 2014 (the Transition Services Agreement). Where there is a conflict between the Transition Services Agreement and this Schedule of Services, the Transition Services Agreement shall govern, except where the Transition Services Agreement specifically allows for superseding language to be provided in a Schedule of Services, and such additional or alternate guidance has been provided below. All values in USD, unless otherwise noted.
106
ID |
Description of Service |
Fees Per Month |
Anticipated
|
Performance
|
Time Period for
|
|||||||||||
CMC.1 |
Chargeback Deductions |
$5,000 per month | 2 months | 1 month | ||||||||||||
1. | As receivables pre-spin are the responsibility of K-C, the Halyard chargeback, membership and contract administration will be responsible to clear deductions, issue credits, and complete the administration fees associated with these sale transactions. | |||||||||||||||
CMC.2 |
Chargeback Historical Denial Balances |
$5,000 per month | 10 months | 2 months | ||||||||||||
1. | As pre-Distribution Date receivables are the responsibility of K-C, the Halyard chargeback, membership and contract administration will be responsible to clear deductions and issue credits for the historical denial balances, which is estimated to be $1 million at the Distribution Date. This work will begin after the conclusion of the chargeback work denoted in CMC.1 above. |
107
Transition Services Agreement (TSA) Schedule of Services for:
FACILITIES - AFC NOGALES (REVERSE TRANSITION SERVICE)
Schedule B-2: | Facilities - AFC Nogales (Reverse Transition Service) | |
Provider: | Halyard Health, Inc. and its applicable affiliates (Halyard) | |
Provider Contact: | Thomas Owens [770-587-8459; thomas.owens@kcc.com] | |
Recipient: | Kimberly-Clark Corporation and its applicable affiliates (K-C) | |
Recipient Contact: | Pam VanHout [920-721-7100; pvanhout@kcc.com | |
Geographic Scope: | Mexico (Nogales) | |
Overview of Services: |
The Facilities - AFC Nogales (Reverse Transition Service) Services include on-going use of the Halyard facility in Nogales 1, Mexico.
In no event shall Halyard be financially responsible for the cost of any assets, hardware and other similar items that will be retained by K-C following the completion of these Services. |
|
Start of Activity: | Distribution Date (as defined in the Transition Services Agreement) | |
End Date: | As specified in the accompanying Schedule of Services; not to exceed 2 years after the Distribution Date (as defined in the Transition Services Agreement) |
The Services described in this Schedule of Services shall be provided subject to the terms described in the Transition Services Agreement between K-C and Halyard dated as of October 31, 2014 (the Transition Services Agreement). Where there is a conflict between the Transition Services Agreement and this Schedule of Services, the Transition Services Agreement shall govern, except where the Transition Services Agreement specifically allows for superseding language to be provided in a Schedule of Services, and such additional or alternate guidance has been provided below.
The Services documented in this Schedule B-1 will be subject to a 14-month notification period for early termination or extension requests which shall supersede any notification requirements in the Transition Services Agreement. Such notification may be given prior to the Distribution Date (as defined in the Transition Services Agreement).
All values in USD, unless otherwise noted.
108
109
Appendix
110
Appendix I: Resource Rate Cards
Unless otherwise documented in specific TSA Schedule of Services, the below rate cards will be utilized to calculate costs related to project based (time and materials) services.
United States
Title |
Grade | Hourly Rate | ||||
Senior Resource |
4 to 6 | $ | 160 | |||
Manager or Mid Level Resource |
7 to 9 | $ | 90 | |||
Staff & Administrative |
10 and below | $ | 50 |
Note:
[1] | 35% of base compensation was assumed for benefits |
India
Title |
Grade | Hourly Rate | ||||
Senior Resource |
4 to 6 | $ | 105 | |||
Manager or Mid Level Resource |
7 to 9 | $ | 50 | |||
Staff & Administrative |
10 and below | $ | 20 |
Note:
[1] | 25% of base compensation was assumed for benefits (on-costs) |
[2] | Assumes 1 INR = 0.016 USD |
Australia
Title |
Grade | Hourly Rate | ||||
Senior Resource |
4 to 6 | $ | 180 | |||
Manager or Mid Level Resource |
7 to 9 | $ | 110 | |||
Staff & Administrative |
10 and below | $ | 50 |
Note:
[1] | 16% of base compensation was assumed for benefits (on-costs) |
[2] | Assumes 1 AUD = 0.93 USD |
United Kingdom
Title |
Grade | Hourly Rate | ||||
Senior Resource |
4 to 6 | $ | 130 | |||
Manager or Mid Level Resource |
7 to 9 | $ | 75 | |||
Staff & Administrative |
10 and below | $ | 50 |
Note:
[1] | 35% of base compensation was assumed for benefits |
[2] | Assumes 1 GBP = 1.68 USD |
China
Title |
Grade | Hourly Rate | ||||
Senior Resource |
4 to 6 | $ | 170 | |||
Manager or Mid Level Resource |
7 to 9 | $ | 70 | |||
Staff & Administrative |
10 and below | $ | 25 |
Note:
[1] | 25% of base compensation was assumed for benefits (on-costs) |
[2] | Assumes 1 RMB = 0.16 USD |
Global Information Technology
Title |
Grade | Hourly Rate | ||||
Executive |
4 to 6 | $ | 260 | |||
Sr. Professional |
7 to 9 | $ | 168 | |||
Professional |
10 and below | $ | 130 |
General rate card assumptions:
[1] | Rates represent fully loaded costs and account for the mid-point salary range by grade, target bonus and benefits |
[2] | 2080 hours was used as standard work-year |
111
Appendix II: (Non-SAP Applications) - 318 Applications
Wave |
Business Function |
Official Application Name |
||
Wave 0 = Due Day 1 | Customer Service | B2B Customer Portal | ||
Interface Repository (IR) | ||||
ISSI / TEAMS Tax Exemption Administrative Management System | ||||
Livingston International Screening Tool | ||||
PRINCE - Price Increase and change tool | ||||
Axway Cyclone Interchange Tool | ||||
Electronic Data Interchange (EDI) - GentranNT | ||||
NA-CTM-VISTEX-CHARGEBACK | ||||
NA-CTM-VISTEX-INCENTIVES | ||||
Month end Data Base (MDB) - (Sales report data staging and pre-processing activities) | ||||
ePedigree Support Process - Drug Batch History Documentation Process | ||||
IBM Value Added Network (VAN) | ||||
EDI EPT (EDI Parameter Table) Web site - North America | ||||
Price Deviation Request (PDR) | ||||
Finance/Tax | Accounts Payable Invoice Imaging (AP), Kofax | |||
Blackline | ||||
CFS JPM Attachments | ||||
Enterprise Product Hierarchy | ||||
HighRadius - POD Retrieval | ||||
HSBC | ||||
Hyperion Financial Management | ||||
JPMC Access - JP Morgan | ||||
Paymetric | ||||
Royal Bank of Canada | ||||
Star Command Center (Cognos) | ||||
FIN-SSC Sales Reporting SQL | ||||
Export Documents Billing Linking Process | ||||
Accounts Payable Invoice Imaging (NA), Kofax | ||||
FIN-SSC Vertex - SAP | ||||
Citi Direct-JPMC Access-Royal Bank of Canada | ||||
Bloomberg Terminal | ||||
Concur |
112
Wave |
Business Function |
Official Application Name |
||
Essbase NA BLISS | ||||
FirstStrike | ||||
GLSU - General Ledger Spreadsheet Uploader - APAC | ||||
HDS | ||||
Tax Global Integrator | ||||
Treasury Currency Exchange Rate Upload | ||||
Treasury Workstation - Kyriba | ||||
FIN-SSC PS Project Setup Wizard, Project xRef Wizard, Master Data Wizard | ||||
FX All, Kyriba Treasury Workstation | ||||
BMG Cash Pooling software | ||||
HR | ABC - Japan Payroll | |||
ADP Payroll Tax Integration from SAP HR | ||||
ADP Payroll Tax System | ||||
AFAS - Netherlands Payroll | ||||
Ceridian - UK Payroll | ||||
Citibank Integration | ||||
E-Blox HR System, SD WORX - Payroll system | ||||
FUTA/SUTA Year End Process | ||||
Global SAP HR | ||||
Global SAP HR - Benefits | ||||
Global SAP HR - Common Data Extract | ||||
Global SAP HR - ESS - Portals - Benefits - VOE | ||||
Global SAP HR - General Ledger | ||||
Global SAP HR - Interfaces | ||||
Global SAP HR - Master Data | ||||
Global SAP HR - Payroll | ||||
Global SAP HR - Tax | ||||
Global SAP HR - Third Party Remittance | ||||
HR Cross Application Time Sheet (CATS) | ||||
HR Royal Bank of Canada-Electronic Payment Manager | ||||
HR Tax Factory | ||||
HRIS Payroll - Australia (CHRIS) | ||||
HRIS Payroll - Singapore (ORISOFT) | ||||
HRIS Payroll - Thailand (THAI GO) |
113
Wave |
Business Function |
Official Application Name |
||
Loga - Germany Payroll | ||||
Paysquare - India Payroll | ||||
Quyn - South Africa Payroll | ||||
SAP Ad Hoc Query | ||||
Time Management - Thailand SafeSkin | ||||
TRESS - HR (Acuna and Nogales, MX) | ||||
Workday | ||||
Workday - TRESS Payroll Integration | ||||
Workday to IdM Integration | ||||
Workday to SAP HR Integration | ||||
Workday to Thai Go Thailand Payroll Integration | ||||
TRESS - HR (Honduras) | ||||
Ancile - RWD uPerform | ||||
ComplianceWire | ||||
HR - Talent Acquisition (Taleo) | ||||
HR Award Choice | ||||
Onboarding Form | ||||
SAP HR Integration to Concur | ||||
SAP HR to Accenture Remedy Ticketing Tool | ||||
SAP HR to Equifax Integration | ||||
Workday to ABC (Japan Payroll) Integration | ||||
Workday to CHRIS - Australia Payroll Integration | ||||
Workday to Orisoft Singapore Payroll Integration | ||||
Workday to Paysquare - India Payroll integration | ||||
Workday to SAP AP Integration | ||||
BKC Clone and Test | ||||
SAP HR Integration to Qualtrics | ||||
N. America Payroll Back Feed To Workday | ||||
Qualtrics | ||||
Weichert | ||||
Weichert Integration with SAP HR | ||||
IQN Integrations with Common Data Extract and Workday | ||||
Legal | Anaqua IP Management System | |||
BoardVantage |
114
Wave |
Business Function |
Official Application Name |
||
LGA AccessData | ||||
LGA PCT Safe | ||||
LGA Secretariat | ||||
PatBase | ||||
Corporate Records Administration Website - CRA | ||||
Lotus Notes - CDA Builder | ||||
Procurement | D&B Supplier Risk Manager System | |||
internet-com.kimberly-clark.tc | ||||
Kelly Services - IQN | ||||
SRM - HP Catalog | ||||
Purchasing Card Program (P-Cards) | ||||
ACM - Assent Compliance | ||||
Product Supply | COMET | |||
CzarLite International & Canada | ||||
GNW Blaster | ||||
GNW INCA and Related Reporting | ||||
GNW Xtrim | ||||
HC-PLANNING TOOLS - Excel Based | ||||
i2 Transportation Management System (TMS) - North America | ||||
I-Flow eKit | ||||
JDA Agile Business Process Platform | ||||
Label Matrix | ||||
PC*Miler | ||||
PC*Miler Web Services | ||||
RateWare | ||||
Demand Solutions | ||||
Lotus Notes - Global Packaging System (GPS) | ||||
CARS | ||||
TiCon | ||||
TOPS | ||||
KC CPT Quoting Tool | ||||
Winshuttle Transaction (Desktop) |
115
Wave |
Business Function |
Official Application Name |
||
QA/RA/PS/CA | CompliantPro | |||
Device and Clearance Listing | ||||
ETQ Reliance | ||||
HC Product Dictionary | ||||
HC ScrapApp | ||||
Health Care Audit Tracking | ||||
Product Safety Clearance System (PSCS) | ||||
Track & Trend Tool | ||||
Lotus Notes - Design Control Document System (DCDS) | ||||
DataLab | ||||
FMEA - MED | ||||
I-Flow Hotline | ||||
Merge | ||||
EBSCO | ||||
NORMSCAN | ||||
R&E | eZassi | |||
IBM Rationale DOORS | ||||
Solidworks ePDM and Solidworks client license | ||||
CLARITY-CONSUMER | ||||
MiniTab | ||||
ProChain (Desktop) | ||||
ProChain (Multi-license) | ||||
AutoCAD | ||||
AutoCAD 2009 | ||||
AutoCAD 2010 | ||||
AutoCAD 2014 | ||||
Sales/Marketing | Cast Iron | |||
Global Sales Incentives | ||||
Global Territory Management (GTM) | ||||
Marketo | ||||
SalesForce.com (SFDC) | ||||
EZQuote Pain Management Custom Kit Quote System | ||||
Auto-Fleet | ||||
Coolief iPad app |
116
Wave |
Business Function |
Official Application Name |
||
EPI | ||||
HC KCUR | ||||
HCR | ||||
iLibrary Mobile App | ||||
Leadature | ||||
MRD On-line | ||||
On The Go Mobile App | ||||
On-Q Mobile App | ||||
Radian6 | ||||
SalesForce Satellite App, Geopointe | ||||
Tableau | ||||
WebTrends OnDemand | ||||
Wistia | ||||
Magento (ARS) | ||||
Salesforce Logger | ||||
SalesForce Satellite App, Rollup Helper - Real-Time | ||||
HC Customer Contacts System (CTM Bridge) | ||||
Image Hub (former GDAL) | ||||
SmartFold Calculator Mobile Application | ||||
Central Desktop | ||||
IBM WebSphere licenses | ||||
Sustainability | Sustainability Database (KCSDB) | |||
Core Technology/IT | Adobe Acrobat 11.x | |||
Apple iTunes | ||||
BMC Control-M | ||||
Cisco Anyconnect VPN Client | ||||
Citrix | ||||
Citrix Online Plugin | ||||
Citrix Receiver | ||||
Crystal Reports | ||||
E Business Access Manager (EBAM) | ||||
Electronic Fax Inbound | ||||
Electronic Fax Outbound | ||||
HC Shared drive |
117
Wave |
Business Function |
Official Application Name |
||
Identity Management (IdM) | ||||
Ingres | ||||
Lotus Domino | ||||
Lync Mobile Client | ||||
MobileIron (MDM) | ||||
MOSAIC Domain | ||||
Nth Generation | ||||
Office 2010 | ||||
Office 2010 Language Packs | ||||
PKI-Public Key Infrastructure | ||||
Quantum Corp | ||||
Team Foundation Services | ||||
Traceability Matrix | ||||
UNIX Privilege Manager (UPM) | ||||
ViewDirect for Networks | ||||
Windows Server Update Services (WSUS) for Desktop | ||||
Ipswitch | ||||
Avaya Communications Manager | ||||
Microsoft O365 | ||||
Comodo Certificates | ||||
VMWare | ||||
Milonic | ||||
HCUS - Reporting Services | ||||
Password Wizard | ||||
Adobe | ||||
SharePoint Search | ||||
Flexera | ||||
RoomWizard Exchange Cloud Synchronization Software | ||||
Global Computer Security KPI Reporting | ||||
SLNET 5.3 | ||||
Esker On Demand | ||||
Account Manager | ||||
Adobe Reader for iPad and iPhone | ||||
Data Transport Vehicle - WS-FTP |
118
Wave |
Business Function |
Official Application Name |
||
Firefight Review Manager | ||||
Group Manager | ||||
Language Line | ||||
Service-Now | ||||
System Center Configuration Manager (SMS-SCCM) | ||||
Transport Manager (RealTech) | ||||
Manufacturing - Shared | Calibration Manager - Blue Mountain | |||
C-SCAN | ||||
GNW APMS SAP Interface to NA PA4 | ||||
IHS - Dolphin Comply Plus Web | ||||
JMP | ||||
Lexington- Automated Process Management System (APMS) MIKON | ||||
MIDAS DE | ||||
NA MSBI MIDAS Reporting (HC portion) | ||||
One Touch Shipping version 2.0 | ||||
Rockwell - All Locations | ||||
Environmental Health and Safety (EHS) | ||||
Lotus Notes - QSI (Internal Assessment Database) | ||||
Lotus Notes - QSI (Management Review Database) | ||||
E-Log | ||||
Websites | Websites | |||
internet-com.halyardhealth | ||||
internet-com.halyardhealth.tc | ||||
internet-com.halyardhealth.global | ||||
Halyard Corporate Intranet | ||||
internet-au.com.halyardhealth | ||||
internet-com.myon-q | ||||
internet-com.haiwatchdog | ||||
internet-com.halyardhealthdental | ||||
internet-com.mic-key | ||||
internet-com.Mic-key.br | ||||
internet-com.Mic-key.es | ||||
internet-com.mycoolief |
119
Wave |
Business Function |
Official Application Name |
||
internet-com.halyardhealth.facebook | ||||
SharePoint Team and Project Sites | ||||
internet-com.halyardhealthcare.jp | ||||
KCHCfyi | ||||
Wave 1 = Due Day 1 + 60 days | Finance/Tax | Tax 1099 Pro | ||
1042 Pro | ||||
SharePoint - Intercompany Invoice Process | ||||
HR | SAP HR to AmeriGives | |||
Product Supply | CPC Capital Planning and Control System | |||
R&E | Request Submission and Tracking (RST) | |||
Core Technology/IT | Global Scan NX Admin Tool | |||
Manufacturing - Shared | Continiuum | |||
Websites | internet-uk.co.halyardhealth | |||
internet-fr.halyardhealth | ||||
internet-nl.halyardhealth | ||||
internet-de.halyardhealth | ||||
internet-com/es.halyardhealth | ||||
internet-com/pt.halyardhealth | ||||
internet-com.halyardhealth.lao | ||||
internet-com.halyardhealth.ladistributor-es | ||||
internet-com.halyardhealth.ladistributor-pt | ||||
internet-com.halyardhealth.eu | ||||
Wave 2 = Due Day 1 + 90 days | Finance/Tax | Oversight | ||
Fin-SSC Fixed Asset Write-Off Tool | ||||
HR | Workday for iPad-iPhone | |||
Product Supply | intranet-com.kcc.com/KCHC/DCDataExtract | |||
Therefore Scanning - Australia | ||||
QA/RA/PS/CA | DCONTROL i-Flow Application | |||
Partners In Quality (PIQ) | ||||
CSAS (Compliance Security Access System) | ||||
Easy Portal | ||||
R&E | Research Materials Management System (RMMS) |
120
Wave |
Business Function |
Official Application Name |
||
Research Files | ||||
Sustainability | SoFi5 | |||
Core Technology/IT | Articulate Studio Pro 13 | |||
Websites | internet-com.preventinfections | |||
Sales Competency Tool (http://www.competency.ap.kcc.com) | ||||
ITS Business Support System (www.aph.hcus.corp) | ||||
Vendor Master Form (www.aph.hcus.corp/aus/vendormaster/index.aspx) | ||||
Wave 3 = Other (special case) | Customer Service | Customer Interaction Center (CIC) Europe | ||
Finance/Tax | WebFilings | |||
Tax Resarch and Development Tax Credit | ||||
QA/RA/PS/CA | SAS (Statistical Analysis System) | |||
Trackwise | ||||
Core Technology/IT | Cisco Access Control Server (ACS) | |||
Cryptocard - BlackShield | ||||
Metalogix | ||||
SAVVIS All Sites | ||||
Cisco Security Agent (HIPS) | ||||
Websites | internet-in.halyardhealth |
121
Appendix III: New Projects
1. | K-C, under mutual agreement with Halyard, will provide the services and support necessary to replace the SCAN application at the Lexington Mill facility. This effort is to be priced on a T&M basis according to the Global Information Technology rate card in Appendix I. |
122
Exhibit 10.2
Execution Version
TAX MATTERS AGREEMENT
DATED AS OF OCTOBER 31, 2014
BETWEEN
KIMBERLY-CLARK CORPORATION
AND
HALYARD HEALTH, INC.
TABLE OF CONTENTS
SECTION 1. |
Definition of Terms |
2 | ||||
SECTION 2. |
Allocation of Tax Liabilities and Tax Benefits |
8 | ||||
2.1 |
Liability for and the Payment of Taxes |
8 | ||||
2.2 |
Allocation Rules |
11 | ||||
SECTION 3. |
Preparation and Filing of Tax Returns |
13 | ||||
3.1 |
Joint Returns |
13 | ||||
3.2 |
Separate Returns |
15 | ||||
3.3 |
Special Rules Relating to the Preparation of Tax Returns |
15 | ||||
3.4 |
Reliance on Exchanged Information |
17 | ||||
3.5 |
Allocation of Tax Items |
17 | ||||
SECTION 4. |
Tax Payments |
17 | ||||
4.1 |
Payment of Taxes to Tax Authority |
17 | ||||
4.2 |
Indemnification Payments |
17 | ||||
4.3 |
Initial Determinations and Subsequent Adjustments |
19 | ||||
4.4 |
Interest on Late Payments |
20 | ||||
4.5 |
Payments by or to Other Group Members |
20 | ||||
4.6 |
Procedural Matters |
20 | ||||
4.7 |
Tax Consequences of Payments |
20 | ||||
SECTION 5. |
Assistance and Cooperation |
20 | ||||
5.1 |
Cooperation |
20 | ||||
5.2 |
Supplemental Tax Opinions |
21 | ||||
SECTION 6. |
Tax Records |
21 | ||||
6.1 |
Retention of Tax Records |
21 | ||||
6.2 |
Access to Tax Records |
21 | ||||
6.3 |
Confidentiality |
21 | ||||
SECTION 7. |
Tax Contests |
22 | ||||
7.1 |
Notices |
22 | ||||
7.2 |
Control of Tax Contests |
22 | ||||
7.3 |
Cooperation |
23 | ||||
SECTION 8. |
Restriction on Certain Actions of External Distributing and External SpinCo |
23 | ||||
8.1 |
General Restrictions |
23 | ||||
8.2 |
Restricted Actions Relating to Tax Materials |
24 | ||||
8.3 |
Certain External SpinCo Actions Following the Effective Time |
24 | ||||
SECTION 9. |
General Provisions |
25 | ||||
9.1 |
Limitation of Liability |
25 | ||||
9.2 |
Entire Agreement |
25 |
i
9.3 |
Governing Law |
25 | ||||
9.4 |
Termination |
25 | ||||
9.5 |
Notices |
25 | ||||
9.6 |
Counterparts |
26 | ||||
9.7 |
Binding Effect; Assignment |
26 | ||||
9.8 |
No Third Party Beneficiaries |
26 | ||||
9.9 |
Severability |
26 | ||||
9.10 |
Failure or Indulgence Not Waiver; Remedies Cumulative |
26 | ||||
9.11 |
Amendments; Waivers |
26 | ||||
9.12 |
Authority |
27 | ||||
9.13 |
Construction |
27 | ||||
9.14 |
Interpretation |
27 | ||||
9.15 |
Predecessors or Successors |
27 | ||||
9.16 |
Effective Time |
27 | ||||
9.17 |
Change in Law |
27 | ||||
9.18 |
Disputes |
27 |
ii
TAX MATTERS AGREEMENT
THIS TAX MATTERS AGREEMENT (this Agreement ) is entered into as of October 31, 2014, between Kimberly-Clark Corporation, a Delaware corporation ( External Distributing ), and Halyard Health, Inc., a Delaware corporation ( External SpinCo ). Unless otherwise indicated, all Section references in this Agreement are to sections of this Agreement.
RECITALS
WHEREAS, External SpinCo is a wholly owned Subsidiary of External Distributing; and
WHEREAS, the Board of Directors of External Distributing has determined that it would be appropriate and desirable for External Distributing to separate the External SpinCo Group from the External Distributing Group, as contemplated by the Distribution Agreement (the Separation ); and
WHEREAS, in furtherance thereof, the Board of Directors of External Distributing has determined that, in connection with the Separation, it would be appropriate and desirable for (i) Kimberly-Clark Worldwide, Inc., a Delaware corporation and wholly-owned subsidiary of External Distributing ( Internal Distributing ), to contribute (such contribution, the Internal Contribution ) certain assets and liabilities to Avent, Inc., a Delaware corporation ( Internal SpinCo ), and to distribute its entire interest in the stock of Internal SpinCo to External Distributing (the Internal Distribution ) in what is intended to qualify, together with the Internal Contribution, as a reorganization described under Sections 368(a)(1)(D) and 355 of the Code, and (ii) following the transactions described in clause (i), for External Distributing (A) to transfer (or cause its Subsidiaries to transfer) certain assets and liabilities associated with the External SpinCo Business to External SpinCo (or to certain other Persons that will become members of the External SpinCo Group pursuant to the Separation), (B) to contribute to External SpinCo (1) all of the outstanding shares of stock of Halyard Healthcare, Inc., (such contribution, External Contribution 1 ), (2) all of the membership interests of Halyard Sales LLC (such contribution, External Contribution 2 ), and (3) all of the stock of Internal SpinCo (such contribution, External Contribution 3 and together with External Contribution 1 and External Contribution 2, the External Contributions ), and (C) to distribute its entire interest in the stock of External SpinCo on a pro rata basis to holders of External Distributing common stock (the External Distribution ) in what is intended to qualify, together with the External Contributions, as a reorganization described under Sections 368(a)(1)(D) and 355 of the Code; and
WHEREAS, the Board of Directors of External SpinCo has also approved such transactions; and
WHEREAS, the parties set forth in the Distribution Agreement the principal arrangements between them regarding the separation of the External SpinCo Group from the External Distributing Group; and
WHEREAS, the parties desire to provide for and agree upon the allocation between the parties of Taxes and Tax Items arising prior to, as a result of, and subsequent to the External Distribution, and provide for and agree upon other matters relating to Taxes.
1
NOW, THEREFORE, in consideration of the foregoing and the covenants and agreements set forth below, the parties hereto agree as follows:
SECTION 1. Definition of Terms. For purposes of this Agreement (including the recitals hereof), the following terms have the following meanings:
2014 Joint Federal Return means External Distributings U.S. federal consolidated income Tax Return for the Tax Year that begins on January 1, 2014, and ends on December 31, 2014.
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 first Person. It is expressly agreed that, from and after the Effective Time, (i) no member of the External Distributing Group shall be deemed an Affiliate of any member of the External SpinCo Group and (ii) no member of the External SpinCo Group shall be deemed an Affiliate of any member of the External Distributing Group.
Agreement has the meaning set forth in the preamble hereof.
Cash Distribution has the meaning set forth in the definition of Repatriation Taxes in this Section 1.
Code means the U.S. Internal Revenue Code of 1986, as amended from time to time, or any successor law.
Control means, with respect to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through ownership of securities or partnership, membership, limited liability company, or other ownership interests, by contract or otherwise and the terms Controlling and Controlled have meanings correlative to the foregoing.
Credit Transfer Agreement means that certain agreement between External Distributing and External SpinCo, dated as of the date hereof, pursuant to which External Distributing transferred a portion of its South Carolina jobs tax credits to External SpinCo.
Disclosing Party has the meaning set forth in Section 6.3.
Distribution Agreement means the Distribution Agreement entered into as of the date hereof, between External Distributing and External SpinCo.
Distribution Date means the date on which the External Distribution occurs.
Due Date has the meaning set forth in Section 4.4.
Effective Time means the time at which the External Distribution is effected on the Distribution Date.
External Contribution 1 has the meaning set forth in the recitals hereto.
2
External Contribution 2 has the meaning set forth in the recitals hereto.
External Contribution 3 has the meaning set forth in the recitals hereto.
External Contributions has the meaning set forth in the recitals hereto.
External Distributing has the meaning set forth in the preamble hereof.
External Distributing Business has the meaning set forth for the term Retained Business in the Distribution Agreement.
External Distributing Group means External Distributing and each Subsidiary of External Distributing (but only while such Subsidiary is a Subsidiary of External Distributing) other than any Person that is a member of the External SpinCo Group.
External SpinCo has the meaning set forth in the preamble hereof.
External SpinCo Business has the meaning set forth for the term Halyard Business in the Distribution Agreement.
External SpinCo Group means (i) with respect to any Tax Year (or portion thereof) ending on or before the Distribution Date, External SpinCo and each other Subsidiary of External Distributing that is (or will be) a Subsidiary of External SpinCo at the Effective Time; and (ii) with respect to any Tax Year (or portion thereof) that begins after the Distribution Date, External SpinCo and each Subsidiary of External SpinCo (but only while such Subsidiary is a Subsidiary of External SpinCo).
External Distribution has the meaning set forth in the recitals hereof.
Group means the External Distributing Group or the External SpinCo Group, as the context requires.
Income Tax or Income Taxes means any federal, state, local or foreign Tax measured by or imposed on net income, together with any interest, penalties, additions to tax, or additional amounts in respect of the foregoing.
Information has the meaning set forth for such term in the Distribution Agreement.
Internal Distributing has the meaning set forth in the recitals hereof.
Internal Distributing Business means the portion of the External Distributing Business consisting of contract manufacturing family, infant and childcare products through two plants, located in Ogden Utah, and Fullerton, California.
Internal Distribution has the meaning set forth in the recitals hereof.
Internal SpinCo has the meaning set forth in the recitals hereof.
3
Internal SpinCo Business means the portion of the External SpinCo Business consisting of manufacturing health care related products on behalf of Kimberly-Clark Global Sales LLC in its surgical and infection prevention and medical devices business segments.
IRS means the United States Internal Revenue Service.
Joint Return means any Tax Return, for any Tax Year, that includes Tax Items of both the External Distributing Business and the External SpinCo Business, determined without regard to Tax Items carried forward to such Tax Year; provided, however, that Joint Returns shall not include any Tax Returns (other than Tax Returns that are filed on a consolidated, combined, or unitary basis with any member of the External Distributing Group) that are required to be filed with respect to (i) Internal SpinCo (or any of its Subsidiaries prior to the External Distribution) or (ii) either of the Thai Subsidiaries.
Losses means any and all damages, losses, deficiencies, liabilities, obligations, Taxes, penalties, judgments, settlements, claims, payments, fines, interest, costs and expenses (including, without limitation, the fees and expenses of any and all actions and demands, assessments, judgments, settlements and compromises relating thereto and the costs and expenses of attorneys, accountants, consultants and other professionals fees and expenses incurred in the investigation or defense thereof or the enforcement of rights hereunder), including direct and consequential damages.
Mexican Maquilas means (i) Avent S. de R.L. de C.V. and (ii) La Ada de Acuna, S. de R.L. de C.V.
Non-Income Tax or Non-Income Taxes means all Taxes other than Income Taxes.
Non-Preparer means, in the case of any Joint Return or Separate Return, the party that is not responsible for the preparation and filing of such Joint Return or Separate Return, as applicable, pursuant to Sections 3.1(a) or 3.2.
Non-Preparer Party Item has the meaning set forth in Section 7.2(b).
Payment Date means (i) with respect to any U.S. federal income tax return, the due date for any required installment of estimated taxes determined under Code Section 6655, the due date (determined without regard to extensions) for filing the return determined under Code Section 6072, and the date the return is filed, and (ii) with respect to any other Tax Return, the corresponding dates determined under the applicable Tax Law.
Person means any individual, corporation, limited liability company, joint stock company, partnership, trust, incorporated or unincorporated association, union, unincorporated organization, joint venture, governmental entity (or any department, agency or political subdivision thereof) or other entity of any kind.
Pre-Acquisition Taxes means any Taxes that (i) are the liability of any Person listed in Appendix B and (ii) relate to any Tax Year (or portion thereof) prior to the acquisition of such Person by the External Distributing Group.
4
Pre-Spin Billed Amount has the meaning set forth in Section 4.2(c)(i).
Preparer means, in the case of any Joint Return or Separate Return, the party that is responsible for the preparation and filing of the Joint Return or Separate Return, as applicable, pursuant to Sections 3.1(a) or 3.2.
Receiving Party has the meaning set forth in Section 6.3.
Redetermination Event has the meaning set forth in Section 4.3.
Requesting Party has the meaning set forth in Section 5.2.
Repatriation Taxes means any Income Taxes (other than Separation Taxes) and withholding Taxes imposed by the United States, Thailand, or Singapore on the direct or indirect distribution of cash by the Thai Subsidiaries or Kimberly-Clark Far East Pte. Limited to a member of the External Distributing Group (all such distributions collectively, the Cash Distribution ).
Restructuring Taxes means any Income Taxes (other than Separation Taxes) including, without limitation, Income Taxes imposed by the United States or Mexico, which are related to or arise in connection with the transfer, at or prior to the Effective Time, of assets and liabilities (i) related to the External SpinCo Business from members of External Distributing Group on one hand to members of External SpinCo Group on the other hand; and (ii) related to the External Distributing Business from members of the External SpinCo Group on one hand to members of External Distributing Group on the other hand. For the avoidance of doubt, Restructuring Taxes shall include without limitation any Mexican Income Taxes arising from the transfers of FemCare assets by Internal SpinCo and Internal SpinCos Subsidiaries, and any United States Income Taxes arising out of deferred intercompany gains recognized pursuant to Treasury Regulation Section 1.1502-13, any recapture of excess loss account recognized pursuant to Treasury Regulation Section 1.1502-19, any triggering of dual consolidated losses pursuant to Treasury Regulation Section 1.1503(d)-6, recapture of overall foreign loss pursuant to Section 904(f) of the Code and gain recognition pursuant to a gain recognition agreement pursuant to Treasury Regulation Section 1.367(a)-8.
Separate Return means any Tax Return that (i) is required to be filed by or with respect to any member of either Group and (ii) is not a Joint Return (including, for the avoidance of doubt, Tax Returns of foreign Subsidiaries of External Distributing or External SpinCo which are not Joint Returns).
Separation has the meaning set forth in the recitals hereof.
Separation Taxes means any Taxes resulting from (i) the failure of the Internal Contribution together with the Internal Distribution to qualify as a transaction described in Sections 355 and 368(a)(1)(D) of the Code, (ii) the failure of the External Contributions together with the External Distribution to qualify as a transaction described in Sections 355 and 368(a)(1)(D) of the Code, or (iii) the application of Section 355(d), Section 355(e) or Section 355(f) of the Code to the Internal Distribution or the External Distribution.
5
Separation Transactions means the transactions described in Schedule 2.1 of the Distribution Agreement.
Stub Period means the two-month period beginning on November 1, 2014 and ending on December 31, 2014.
Subsidiary when used with respect to any Person, means (i)(A) a corporation a majority in voting power of whose share capital or capital stock with voting power, under ordinary circumstances, to elect directors is at the time, directly or indirectly, owned by such Person, by one or more Subsidiaries of such Person, or by such Person and one or more Subsidiaries of such Person, whether or not such power is subject to a voting agreement or similar encumbrance, (B) a partnership or limited liability company in which such Person or a Subsidiary of such Person is, at the date of determination, (1) in the case of a partnership, a general partner of such partnership with the power affirmatively to direct the policies and management of such partnership or (2) in the case of a limited liability company, the managing member or, in the absence of a managing member, a member with the power affirmatively to direct the policies and management of such limited liability company, or (C) any other Person (other than a corporation) in which such Person, one or more Subsidiaries of such Person or such Person and one or more Subsidiaries of such Person, directly or indirectly, at the date of determination thereof, has or have (1) the power to elect or direct the election of a majority of the members of the governing body of such Person, whether or not such power is subject to a voting agreement or similar encumbrance, or (2) in the absence of such a governing body, at least a majority ownership interest or (ii) any other Person of which an aggregate of 50% or more of the equity interests are, at the time, directly or indirectly, owned by such Person and/or one or more Subsidiaries of such Person. References herein to Subsidiaries includes (without limitation) any Subsidiary formed after the date hereof in anticipation of the External Distribution.
Supplemental Tax Opinion means, with respect to a specified action, an opinion (other than the Tax Opinion) from Tax Counsel to the effect that (i) such action should not preclude the Internal Contribution and the Internal Distribution together from qualifying as a reorganization described under Sections 368(a)(1)(D) and 355 of the Code, (ii) such action will not preclude the External Contributions and the External Distribution together from qualifying as a reorganization described under Sections 368(a)(1)(D) and 355 of the Code and (iii) such action will not otherwise increase the amount of Tax imposed on the Separation Transactions. No opinion relied upon by External SpinCo to satisfy the requirements of Section 8.3 shall be considered a Supplemental Tax Opinion unless such opinion is, in addition to the requirements above, an unqualified will opinion (in the case of the External Distribution) or an unqualified should opinion (in the case of the Internal Distribution) reasonably satisfactory to External Distributing, which opinion may rely upon, and may assume the accuracy of, any customary representations, reasonably satisfactory to External Distributing, contained in an officers certificate delivered by an officer of External Distributing or External SpinCo to Tax Counsel.
Tax or Taxes means all forms of taxation imposed by any governmental entity or political subdivision, agency, commission or authority thereof, whenever created or imposed, and whether of the United States or foreign jurisdiction, and whether imposed by a local, municipal, state, national, federal, or other body, and without limiting the foregoing, shall include any income, gross income, gross receipts, profits, capital stock, franchise, withholding,
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payroll, social security, workers compensation, unemployment, disability, property, ad valorem, stamp, medical device excise, other excise, severance, occupation, service, sales, use, license, lease, transfer, recording, import, export, value added, alternative minimum, estimated or other similar tax (including any fee, assessment, or other charge in the nature of or in lieu of any tax), together with any interest, penalties, additions to tax, or additional amounts in respect of the foregoing.
Tax Authority means, with respect to any Tax, the governmental entity or political subdivision, agency, commission or authority thereof that imposes such Tax, or that is charged with the assessment, determination or collection of such Tax for such entity or subdivision.
Tax Benefit means, for any Tax Year with respect to a Group, (i) losses of such Group carried forward or back to such Tax Year from another Tax Year; (ii) Tax credits generated by such Group; and (iii) after separately taking into account solely the items of income, gain, loss, and deduction of such Group for such Tax Year (but excluding any deductions attributable to losses carried forward or back to such Tax Year from another Tax year), any net operating loss of such Group for such Tax Year.
Tax Contest means an audit, review, examination, or any other administrative or judicial proceeding with the purpose or effect of examining, determining or redetermining Taxes of any member of either Group (including any administrative or judicial review of any claim for refund).
Tax Counsel means (i) with respect to the Tax Opinion delivered to External Distributing with respect to the External Distribution, Baker Botts L.L.P., (ii) with respect to the Tax Opinion delivered to External Distributing with respect to the Internal Distribution, Price Waterhouse Coopers, or (iii) with respect to a Supplemental Tax Opinion delivered to External Distributing or to External SpinCo, a nationally recognized law firm or accounting firm reasonably acceptable to External Distributing to provide such Supplemental Tax Opinion.
Tax Item means, with respect to any Tax, any item of income, gain, loss, deduction, credit or other attribute that may have the effect of increasing or decreasing any Tax.
Tax Law means the law of any governmental entity or political subdivision thereof, and any controlling judicial or administrative interpretations of such law, relating to any Tax.
Tax Materials means (i) the representation letters delivered to Tax Counsel in connection with the delivery of the Tax Opinion or the Supplemental Tax Opinion and (ii) any other materials delivered or deliverable by External Distributing, External SpinCo and others in connection with the rendering by Tax Counsel of the Tax Opinions or the Supplemental Tax Opinion.
Tax Opinion means the opinion to be delivered by Tax Counsel to External Distributing in connection with the Internal Distribution and the External Distribution to the effect that (i) the Internal Contribution and the Internal Distribution together should qualify as a reorganization described under Sections 368(a)(1)(D) and 355 of the Code and (ii) the External Contributions and the External Distribution together will qualify as a reorganization described under Sections 368(a)(1)(D) and 355 of the Code.
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Tax Records means Tax Return, Tax Return work papers, documentation relating to any Tax Contests, and any other books of account or records required to be maintained under applicable Tax Laws (including but not limited to Section 6001 of the Code) or under any record retention agreement with any Tax Authority.
Tax Return means any report of Taxes due (including estimated Taxes), any claims for refund of Taxes paid, any information return with respect to Taxes, or any other similar report, statement, declaration, election, notice or other document required to be filed (by paper, electronically or otherwise) under any applicable Tax Law (whether or not a payment is required to be made in connection with such filing), including any attachments, exhibits, schedules, appendices or other materials submitted with any of the foregoing, and including any amendments or supplements to any of the foregoing.
Tax Year means with respect to any Tax, the year, or shorter period, if applicable, for which the Tax is reported as provided under applicable Tax Law.
Thai Subsidiaries means (i) Safeskin Corporation Thailand Ltd. and (ii) Safeskin Medical and Scientific Thailand Ltd.
Treasury Regulations means the regulations promulgated from time to time under the Code as in effect for the relevant Tax Year.
SECTION 2. Allocation of Tax Liabilities and Tax Benefits.
2.1 Liability for and the Payment of Taxes . Except as provided in Section 3.1(b) (Provision of Information and Assistance), Section 3.2(c) (Provision of Information), and Section 7 (Tax Contests), and in accordance with Section 4, the parties liabilities for Taxes and payment obligations with respect to utilized Tax Benefits shall be as set forth in Sections 2.1(a) and 2.1(b) below.
(a) External SpinCo Liabilities and Payments . For any Tax Year (or portion thereof):
(i) External SpinCo shall be liable for the Taxes (determined without regard to Tax Benefits) allocated to External SpinCo pursuant to Section 2.2(a)(i) or Section 2.2(b), reduced by any Tax Benefits that External SpinCo is permitted to utilize under the rules set forth in Section 2.1(c) that are allowable under applicable Tax Law.
(ii) External SpinCo shall pay External Distributing for:
(A) any Tax Benefits arising in a Tax Year that begins on or before the Distribution Date which are allocated to External Distributing pursuant to Section 2.2(a)(ii), but which are utilized by External SpinCo to reduce Taxes for which it is liable pursuant to Section 2.1(a)(i) in any Tax Year that begins after the Distribution Date,
(B) any Tax Benefits arising in a Tax Year that begins after the Distribution Date which are allocated to External Distributing pursuant to Section 2.2(a)(ii), but which are utilized by External SpinCo to reduce Taxes for which it is liable pursuant to Section 2.1(a)(i) in any Tax Year that begins on or before the Distribution Date,
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(C) any Tax Benefits arising in any Tax Year which are allocated to External Distributing pursuant to Section 2.2(a)(ii), but which are utilized by External SpinCo to reduce Taxes for which it is liable in such Tax Year or in another Tax Year beginning on or before the Distribution Date pursuant to Section 2.1(a)(i), and
(D) any Tax Benefits arising in a Tax Year that begins on or before the Distribution Date which are allocated to External Distributing pursuant to Section 2.2(a)(ii), but which both arise as a result of a Tax Contest or other dispute which is resolved after the Distribution Date and are utilized by External SpinCo to reduce Taxes for which it is liable pursuant to Section 2.1(a)(i) in any Tax Year that begins on or before the Distribution Date.
(b) External Distributing Liabilities and Payments . For any Tax Year (or portion thereof):
(i) External Distributing shall be liable for the Taxes (determined without regard to Tax Benefits) allocated to External Distributing pursuant to Section 2.2(a)(i) or Section 2.2(b), reduced by any Tax Benefits that External Distributing is permitted to utilize under the rules set forth in Section 2.1(c) that are allowable under applicable Tax Law.
(ii) External Distributing shall pay External SpinCo for:
(A) any Tax Benefits arising in a Tax Year that begins on or before the Distribution Date which are allocated to External SpinCo pursuant to Section 2.2(a)(ii), but which are utilized by External Distributing to reduce Taxes for which it is liable pursuant to Section 2.1(b)(i) in any Tax Year that begins after the Distribution Date,
(B) any Tax Benefits arising in a Tax Year that begins after the Distribution Date which are allocated to External SpinCo pursuant to Section 2.2(a)(ii), but which are utilized by External Distributing to reduce Taxes for which it is liable pursuant to Section 2.1(b)(i) in any Tax Year that begins on or before the Distribution Date,
(C) any Tax Benefits arising in any Tax Year which are allocated to External SpinCo pursuant to Section 2.2(a)(ii), but which are utilized by External Distributing to reduce Taxes for which it is liable in such Tax Year or in another Tax Year beginning on or before the Distribution Date pursuant to Section 2.1(b)(i), and
(D) any Tax Benefits arising in a Tax Year that begins on or before the Distribution Date which are allocated to External SpinCo pursuant to Section 2.2(a)(ii), but which both arise as a result of a Tax Contest or other dispute which is resolved after the Distribution Date and are utilized by External Distributing to reduce Taxes for which it is liable pursuant to Section 2.1(b)(i) in any Tax Year that begins on or before the Distribution Date.
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(c) Rules for Utilization of Tax Benefits . For purpose of this Section 2, the parties rights to utilize Tax Benefits under Sections 2.1(a) and 2.1(b) shall be determined in accordance with the following rules:
(i) In general, the party to whom Tax Benefits are allocated pursuant to Section 2.2(a)(ii) shall be entitled to utilize such Tax Benefits to reduce Taxes for which such party is liable pursuant to Section 2.1(a)(i) or Section 2.1(b)(i).
(ii) Notwithstanding the preceding paragraph, for any Tax Year that begins on or before the Distribution Date, (A) External SpinCo may take into account a Tax Benefit under Section 2.1(a)(i) only if (and to the extent that) the utilization by External SpinCo of such Tax Benefit would be allowable under applicable Tax Law after taking into account only those Tax Items allocated to External SpinCo during such Tax Year (or portion thereof), and (B) External Distributing may take into account a Tax Benefit under Section 2.1(b)(i) only if (and to the extent that) the utilization by External Distributing of such Tax Benefit would be allowable under applicable Tax Law after taking into account only those Tax Items allocated to External Distributing during such Tax Year (or portion thereof); provided, however, that for purposes of determining whether External Distributing may take into account any foreign tax credit under this Section 2.1(c)(ii) for any Tax Year, External Distributing shall be entitled to treat any foreign source income reported on its U.S. consolidated federal income Tax Return for such Tax Year (other than foreign source income that is both a Tax Item of a member of the External SpinCo Group and is taken into account by External SpinCo during such Tax Year for purposes of utilizing a foreign tax credit (excluding any foreign tax credit carried back from another Tax Year) that is allocated to External SpinCo in such Tax Year under this Agreement) as a Tax Item allocated to External Distributing during such Tax Year.
(iii) For any Tax Year that begins on or before the Distribution Date, if, because of the application of the rules described in the preceding paragraph or otherwise, External Distributing is not able to fully utilize the Tax Benefits allocated to it pursuant to Section 2.2(a)(ii), then External SpinCo may utilize such Tax Benefits allocated to External Distributing, but only to the extent such Tax Benefits are not taken into account by External Distributing pursuant to Section 2.1(b)(i) in the same Tax Year on an original or amended return or otherwise. Similarly, if, because of the application of the rules described in the preceding paragraph or otherwise, External SpinCo is not able to fully utilize the Tax Benefits allocated to it pursuant to Section 2.2(a)(ii), then External Distributing may utilize such Tax Benefits allocated to External SpinCo, but only to the extent such Tax Benefits are not taken into account by External SpinCo pursuant to Section 2.1(a)(i) in the same Tax Year on an original or amended return or otherwise.
(iv) For any Tax Year that begins after the Distribution Date in which a party has available for utilization both Tax Benefits allocated to such party pursuant to Section 2.2(a)(ii) and Tax Benefits allocated to the other party pursuant to Section 2.2(a)(ii) (because, for example, such other party was unable to utilize the Tax Benefits allocated to it), if the applicable Tax Law does not provide for the priority and order in which such Tax Benefits are deemed to be utilized then the first party shall be deemed to first utilize the Tax Benefits allocated to it pursuant to Section 2.2(a)(ii) to the extent that such Tax Benefits may be utilized by the first party in such Tax Year under the rules set forth in this Section 2.1(c).
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(v) Payment for Tax Benefits described in Section 2.1(a)(ii) shall be made only when and to the extent that the utilization of such Tax Benefit does not increase the Taxes of External SpinCo or reduce the Tax Benefits otherwise utilizable by External SpinCo during the applicable Tax Year, and payment for Tax Benefits described in Section 2.1(b)(ii) shall be made only when and to the extent that the utilization of such Tax Benefit does not increase the Taxes of External Distributing or reduce the Tax Benefits otherwise utilizable by External Distributing during the applicable Tax Year.
(d) Deemed Utilization of Tax Benefits . Notwithstanding anything else to the contrary in this Agreement, to the extent that any action taken after the Effective Time by any member of the External SpinCo Group (other than the ordinary conduct of the External SpinCo Business consistent with past practice prior to the External Distribution) directly causes any foreign tax credits that are allocated to External Distributing pursuant to Section 2.2(a)(ii)(A) to be reduced, External SpinCo shall be deemed to have utilized foreign tax credits allocated to External Distributing to reduce Taxes for which External SpinCo is liable for the Stub Period and shall be required to make a payment to External Distributing, pursuant to Section 2.1(a)(ii)(A), with respect to such foreign tax credits. For the avoidance of doubt, any such payment shall not be subject to the limitation in the last sentence of Section 4.3.
2.2 Allocation Rules . For purposes of Section 2.1:
(a) General Rule . Except as otherwise provided in this Section 2.2,
(i) Taxes for any Tax Year (or portion thereof) shall be allocated between External SpinCo and External Distributing as follows:
(A) Pre-Acquisition Taxes and medical device excise taxes shall be allocated solely to External SpinCo.
(B) Restructuring Taxes and Repatriation Taxes shall be allocated solely to External Distributing.
(C) Income Taxes (other than Separation Taxes, which are allocated pursuant to Section 2.2(b), and other than Income Taxes described in subclauses (i)(A) and (i)(B) of this Section 2.2(a)) shall be allocated among External SpinCo and External Distributing in proportion to the separate taxable income (calculated in accordance with Treasury Regulation Section 1.1552-1(a)(1) and in accordance with past practices) attributable to or arising from the members of the External Distributing Group (including, for the avoidance of doubt, the members of the External Distributing Group that are treated as disregarded entities for U.S. federal income tax purposes), on the one hand, and the members of the External SpinCo Group (including, for the avoidance of doubt, the members of the External SpinCo Group that are treated as disregarded entities for U.S. federal income tax purposes), on the other hand.
(D) Non-Income Taxes (other than those described in subclauses (i)(A) and (i)(B) of this Section 2.2(a)) shall be allocated among External SpinCo and External Distributing based on the applicable items attributable to or arising from the respective External SpinCo Business and External Distributing Business (as so defined for such Tax Year or portion thereof) that contribute to such Taxes (e.g., sales taxes and value added taxes shall be
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allocated to External SpinCo to the extent arising from taxable sales made by the External SpinCo Business). In the event that any Non-Income Tax is not attributable to (and does not arise from) any items of the External SpinCo Business or the External Distributing Business (e.g., capital taxes imposed based on the authorized stock), such Non-Income Taxes shall be allocated among External Distributing and External SpinCo in proportion to the net taxable income of the External Distributing Business, on the one hand, and the External SpinCo Business, on the other hand.
(ii) Tax Benefits for any Tax Year (or portion thereof) shall be allocated between External SpinCo and External Distributing as follows:
(A) All foreign tax credits (including foreign tax credits arising in a Tax Year, but that cannot be claimed on the Tax Return for such Tax Year due to a limitation on such foreign tax credits under applicable Tax Law) arising (1) in 2014 with respect to the 2014 Joint Federal Return or (2) in a Tax Year beginning before 2014, shall be allocated solely to External Distributing; provided, however, that foreign tax credits attributable to (1) Mexican Income Taxes (other than Restructuring Taxes) that are imposed by the applicable Tax Authority on Internal SpinCo or the Mexican Maquilas, (2) Japanese Income Taxes (other than Restructuring Taxes) imposed by the applicable Tax Authority on Halyard Healthcare Inc. (or its Subsidiary), or (3) Honduran Income Taxes (other than Restructuring Taxes) that are imposed by the applicable Tax Authority on Avent de Honduras, S.A. de C.V., shall be allocated to External SpinCo. For the avoidance of doubt (and without limiting the foreign tax credits allocated to External Distributing under this Section 2.2(a)(ii)(A)), any foreign tax credits related to or arising in connection with the Cash Distribution or any Restructuring Taxes (whether or not such foreign tax credits arise prior to the Effective Time) shall be allocated to External Distributing.
(B) Tax Benefits arising from (1) the Georgia research and development tax credits and the North Carolina investment tax credits shall be allocated solely to External Distributing and (2) the portion of the South Carolina jobs tax credits transferred from External Distributing to External SpinCo pursuant to the Credit Transfer Agreement shall be allocated solely to External SpinCo.
(C) Except as provided in subclause (ii)(B) of this Section 2.2(a), all research and development tax credits shall be allocated solely to External Distributing.
(D) Except as provided in subclauses (ii)(A) through (ii)(C) of this Section 2.2(a), Tax Benefits with respect to Income Taxes (including, for the avoidance of doubt, Tax Benefits derived from the payment or accrual of Taxes, whether Income Taxes or Non-Income Taxes) shall be allocated in proportion to the losses, credits, or other applicable items attributable to or arising from the members of the External Distributing Group (including, for the avoidance of doubt, the members of the External Distributing Group that are treated as disregarded entities for U.S. federal income tax purposes), on the one hand, and from the members of the External SpinCo Group (including, for the avoidance of doubt, the members of the External SpinCo Group that are treated as disregarded entities for U.S. federal income tax purposes), on the other hand, that gave rise to such Tax Benefits.
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(E) Tax Benefits other than Tax Benefits allocated pursuant to subclauses (ii)(A) through (ii)(D) of this Section 2.2(a) shall be allocated among External SpinCo and External Distributing in proportion to the losses, credits, or other applicable items attributable to or arising from the respective External SpinCo Business and External Distributing Business (as so defined for such Tax Year or portion thereof) that contribute to such Tax Benefits.
For purposes of applying this Section 2.2, any Taxes imposed on payments from a member of one Group to a member of the other Group shall be treated as attributable entirely to the payee, except that Taxes in the nature of sales, value added or other transaction-based Taxes shall be treated as attributable entirely to the payer.
(b) Taxes Resulting from the Internal Contribution, the Internal Distribution, the External Contributions, or the External Distribution . Separation Taxes will be allocated as follows:
(i) Separation Taxes Allocable to External Distributing . Separation Taxes shall be allocated to External Distributing to the extent that such Separation Taxes result primarily from one or more of the following:
(A) from the External Distributing Group ceasing to be engaged in the Internal Distributing Business or the External Distributing Business; or
(B) from an action or failure to act by the External Distributing Group that causes Section 355(e) of the Code to apply to either the Internal Distribution or the External Distribution, or that causes Section 355(f) of the Code to apply to the Internal Distribution; or
(C) taking any of the actions prohibited in (or failing to take any of the actions required by) Sections 8.1 or 8.2.
(ii) Separation Taxes Allocable to External SpinCo . Separation Taxes shall be allocated to External SpinCo to the extent that such Separation Taxes result primarily from External SpinCos taking any of the actions prohibited in (or failing to take any of the actions required by) Sections 8.1, 8.2 or 8.3.
(iii) Joint Responsibility for Separation Taxes . Any Separation Taxes not allocated under Section 2.2(b)(i) or Section 2.2(b)(ii) shall be allocated fifty percent (50%) to External Distributing and fifty percent (50%) to External SpinCo.
SECTION 3. Preparation and Filing of Tax Returns.
3.1 Joint Returns .
(a) Preparation of Joint Returns . In general, External Distributing shall be responsible for preparing and timely filing all Joint Returns. Notwithstanding the previous sentence, with respect to tax years ending on or before December 31, 2014, (i) External Distributing shall be responsible for (A) preparing all IRS Forms 5471 required to be filed with
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respect to any foreign Subsidiaries of External Distributing and (B) timely filing all IRS Forms 5471 required to be filed with respect to any foreign Subsidiaries of External Distributing (other than foreign Subsidiaries of External SpinCo) and (ii) External SpinCo shall be responsible for timely filing all IRS Forms 5471 required to be filed with respect to any foreign Subsidiaries of External SpinCo.
(b) Provision of Information and Assistance.
(i) Information with Respect to Joint Returns . The Non-Preparer shall provide the Preparer with all information in its possession necessary for the Preparer to properly and timely file all Joint Returns for which such Preparer is responsible pursuant to Section 3.1(a). The Non-Preparer shall provide such information no later than thirty days prior to the extended due date of such Joint Return. If the Non-Preparer fails to provide such information within the time period provided in this Section 3.1(b)(i) and in the form reasonably requested by the Preparer to permit the timely filing of any Joint Return for which the Preparer is responsible pursuant to Section 3.1(a), then notwithstanding any other provision of this Agreement, the Non-Preparer shall be liable for, and shall indemnify and hold harmless each member of the Preparers Group from and against, any penalties, interest, or other payment obligation assessed against any member of either Group by reason of a failure to file such return by its due date (including applicable extensions). If the Non-Preparer provides information within the time period provided in this Section 3.1(b)(i) in the form reasonably requested by the Preparer to permit the timely filing of a Joint Return for which such Preparer is responsible pursuant to Section 3.1(a), or if the Preparer does not request any such information, then notwithstanding any other provision of this Agreement, the Preparer shall be liable for, and shall indemnify and hold harmless each member of the Non-Preparers Group from and against, any penalties, interest, or other payments assessed against any member of either Group by reason of a failure to file such return by its due date (including applicable extensions).
(ii) Information with Respect to Estimated Payments and Extension Payments . The Non-Preparer shall provide the Preparer with all information relating to members of the Non-Preparers Group that the Preparer needs to determine the amount of Taxes due on any Payment Date with respect to a Joint Return for which such Preparer is responsible pursuant to Section 3.1(a). The Non-Preparer shall provide such information no later than thirty days before such Payment Date. In the event that the Non-Preparer fails to provide information within the time period provided in this Section 3.1(b)(ii) in the form reasonably requested by the Preparer to permit the timely payment of such Taxes, the indemnification principles of Section 3.1(b)(i) shall apply with respect to any penalties, interest, or other payments assessed against any member of either Group by reason of a failure to pay such Taxes by the Payment Date.
(iii) Assistance . At the request of the Preparer, the Non-Preparer shall take (at its own cost and expense), and shall cause the members of the Non-Preparers Group to take (at their own cost and expense), any reasonable action ( e.g ., filing a ruling request with the relevant Tax Authority or executing a power of attorney) that is reasonably necessary in order for the Preparer or any other member of the Preparers Group to prepare, file, amend or take any other action with respect to a Joint Return for which the Preparer is responsible pursuant to Section 3.1(a). In the event that the Non-Preparer fails to take, or cause to be taken, any such
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requested action, the indemnification principles of Section 3.1(b)(i) shall apply with respect to any penalties, interest, or other payments assessed against any member of either Group by reason of a failure to take any such requested action.
(iv) Information with Respect to Liability for Taxes . At the reasonable request of either Party, the Parties shall provide whatever documentation, schedules, workpapers, Tax Returns, etc. as may be reasonably required to substantiate a claim made by one Party against the other Party for Taxes or Tax Benefits pursuant to Section 2.1.
3.2 Separate Returns .
(a) Tax Returns to be Prepared by External Distributing . External Distributing shall be responsible for preparing and timely filing all Separate Returns that include Tax Items of the External Distributing Business (other than Separate Returns described in Section 3.2(b)), determined without regard to Tax Items carried forward to such Tax Year.
(b) Tax Returns to be Prepared by External SpinCo . External SpinCo shall be responsible for preparing and timely filing (i) any Separate Returns that are required to be filed with respect to (A) Internal SpinCo (or any of its Subsidiaries prior to the External Distribution) or (B) either of the Thai Subsidiaries and (ii) all Separate Returns that include Tax Items of the External SpinCo Business, determined without regard to Tax Items carried forward to such Tax Year.
(c) Provision of Information . External Distributing shall provide to External SpinCo, and External SpinCo shall provide to External Distributing, any information about members of the External Distributing Group or the External SpinCo Group, respectively, which the party receiving such information reasonably needs to properly and timely file all Separate Returns pursuant to Sections 3.2(a) or (b). Such information shall be provided within the time prescribed by Section 3.1(b) for the provision of information for Joint Returns. In the event that External Distributing or External SpinCo fails to provide information within the time period provided in Section 3.1(b) and in the form reasonably requested by the other party to permit the timely filing of a Separate Return, the indemnification principles of Section 3.1(b)(i) shall apply with respect to any penalties, interest, or other payments assessed against any member of the External Distributing Group or the External SpinCo Group by reason of a failure to file any such return by its due date (including applicable extensions).
3.3 Special Rules Relating to the Preparation of Tax Returns .
(a) General Rule . Except as otherwise provided in this Agreement, the Preparer shall have the exclusive right, in its reasonable discretion, with respect to such Tax Return to determine (i) the manner in which such Tax Return shall be prepared and filed, including the elections, methods of accounting, positions, conventions and principles of taxation to be used and the manner in which any Tax Item shall be reported, (ii) whether any extensions may be requested, (iii) whether an amended Tax Return shall be filed, (iv) whether any claims for refund shall be made, (v) whether any refunds shall be paid by way of refund or credited against any liability for the related Tax and (vi) whether to retain outside firms to prepare or review such Tax Return. Notwithstanding the preceding sentence, if the External SpinCo Group
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pays any Tax to a Tax Authority other than the IRS that may be claimed as a foreign Tax credit for U.S. federal income tax purposes in a Tax Return for which External Distributing is the party responsible for filing (or causing to be filed), External Distributing shall amend such Tax Returns and file such claims for credit or refund that External SpinCo may reasonably request. In addition, the Preparer shall provide to the Non-Preparer for Non-Preparers review and comment pro forma Tax Returns reflecting the Non-Preparers share of Tax Items to be reflected on a Joint Return twenty (20) days prior to the due date of such Joint Return.
(b) External SpinCo Tax Returns . With respect to any Separate Return for which External SpinCo is responsible pursuant to Section 3.2(b):
(i) External SpinCo may not take, and shall cause the members of the External SpinCo Group not to take (including, without limitation, any such members formed after the date hereof in anticipation of the External Distribution), any positions that it knows, or reasonably should know, would be inconsistent with past practices or positions taken by any member of the External Distributing Group; and
(ii) External SpinCo and other members of the External SpinCo Group must (A) allocate Tax Items between such Separate Return for which External SpinCo is responsible pursuant to Section 3.2(b) and any related Joint Return for which External Distributing is responsible pursuant to Section 3.1(a) that is filed with respect to the same Tax Year (or with respect to a Tax Year that includes the Tax Year for such Separate Return) in a manner that is consistent with the reporting of such Tax Items on the related Joint Return for which External Distributing is responsible pursuant to Section 3.1(a) and (B) make any applicable elections required under applicable Tax Law (including, without limitation, under Treasury Regulations Section 1.1502-76(b)(2)) necessary to effect such allocation.
(c) Election to File Consolidated, Combined or Unitary Tax Returns . External Distributing shall have the reasonable discretion of filing any Tax Return on a consolidated, combined or unitary basis, if such Tax Return would include at least one member of each Group and the filing of such Tax Return is elective under the relevant Tax Law.
(d) Carrybacks of Tax Benefits . External SpinCo shall not carry back and utilize as a Tax Benefit in a Tax Year that begins on or before the Distribution Date any Tax Item arising in a Tax Year that begins after the Distribution Date, provided, that, if the carryback of such Tax Item is material and is required by applicable Tax Law (for example, pursuant to Section 904(c) of the Code), and if External Distributing would be the Preparer of any Tax Return (or Tax Returns) amended to include the carried-back Tax Item, External Distributing shall amend such Tax Return (or Tax Returns) and file such claims for credit or refund that External SpinCo may reasonably request. External SpinCo shall reimburse External Distributing for reasonable outside advisor fees incurred in connection with amending such Tax Return (or Tax Returns). With respect to any foreign Taxes claimed on any such amended Tax Return, External Distributing shall only elect the benefits of the foreign Tax credit under Section 901 of the Code and shall not elect to deduct such foreign Taxes.
(e) Withholding and Reporting . With respect to stock of External Distributing delivered to any Person, External Distributing and External SpinCo shall cooperate (and shall
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cause their Affiliates to cooperate) so as to permit External Distributing to discharge any applicable Tax withholding and Tax reporting obligations, including the appointment of External SpinCo or one or more of its Affiliates as the withholding and reporting agent if External Distributing or one or more of its Affiliates is not otherwise required or permitted to withhold and report under applicable Tax Law.
(f) Standard of Performance . Each party shall act reasonably and in good faith in preparing the Tax Returns for which it is responsible pursuant to this Section 3.
(g) IRS Forms 8858 . In each case, the party responsible under applicable law for filing (or causing to be filed) IRS Form 8858 shall prepare and timely file such forms.
3.4 Reliance on Exchanged Information . If a member of the External SpinCo Group supplies information to a member of the External Distributing Group, or a member of the External Distributing Group supplies information to a member of the External SpinCo Group, and an officer of the requesting member intends to sign a statement or other document under penalties of perjury in reliance upon the accuracy of such information, then a duly authorized officer of the member supplying such information shall certify, to the best of such officers knowledge, the accuracy and completeness of the information so supplied.
3.5 Allocation of Tax Items . External Distributing shall determine in accordance with applicable Tax Laws the allocation of any applicable Tax Items ( e.g. , net operating loss, net capital loss, investment Tax credit, foreign Tax credit, research and experimentation credit, charitable deduction, or credit related to alternative minimum Tax) as of the Effective Time among External Distributing, each other External Distributing Group member, External SpinCo, and each other External SpinCo Group member. External Distributing and External SpinCo hereby agree that in the absence of controlling legal authority each such Tax Item shall be allocated as provided in Section 2.2. External Distributing shall provide reasonably timely updates of the allocation of Tax Items, as it finalizes its Tax Returns and as adjustments, if any, are subsequently made to such Tax Returns.
SECTION 4. Tax Payments.
4.1 Payment of Taxes to Tax Authority . External Distributing shall be responsible for remitting to the proper Tax Authority all Tax shown (including Taxes for which External SpinCo is wholly or partially liable pursuant to Section 2) on any Tax Return for which it is responsible for the preparation and filing pursuant to Section 3.1(a) or Section 3.2(a), and External SpinCo shall be responsible for remitting to the proper Tax Authority all Tax shown (including Taxes for which External Distributing is wholly or partially liable pursuant to Section 2) on any Tax Return for which it is responsible for the preparation and filing pursuant to Section 3.2(b).
4.2 Indemnification Payments .
(a) Tax Payments Made by the External Distributing Group . If any member of the External Distributing Group remits a payment to a Tax Authority for Taxes for which External SpinCo is wholly or partially liable under this Agreement, External SpinCo shall remit the amount for which it is liable pursuant to Section 2 to External Distributing within thirty days after receiving notification requesting such amount.
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(b) Tax Payments Made by the External SpinCo Group . If any member of the External SpinCo Group remits a payment to a Tax Authority for Taxes for which External Distributing is wholly or partially liable under this Agreement, External Distributing shall remit the amount for which it is liable pursuant to Section 2 to External SpinCo within thirty days after receiving notification requesting such amount.
(c) Credit for Prior Deemed Payments .
(i) For purposes of Section 4.2(a), the portion of any Taxes paid by External Distributing to a Tax Authority for which External SpinCo is liable will be determined by assuming that External SpinCo has previously paid in the aggregate any amounts that the members of the External SpinCo Group paid to External Distributing prior to the Effective Time (adjusted, as appropriate and without duplication, for any additional payments made prior to the Effective Time with respect to any such Taxes as a result of any audit or Tax Contest that was finally concluded prior to the Effective Time with respect to any such Taxes) based on External Distributings calculation prior to the External Distribution of the portion of such Taxes that was allocable to members of the External SpinCo Group (as so adjusted with respect to any such Taxes, such payments the Pre-Spin Billed Amount ). For the avoidance of doubt, in the event that, after the application of the preceding sentence, External SpinCo is required to make a payment to External Distributing under Section 4.2(a) with respect to Taxes relating to Tax Years or portions thereof ending on or prior to the Distribution Date (including, without limitation, as a result of the conclusion after the Distribution Date of a Tax Contest with respect to a Tax for which there was a Pre-Spin Billed Amount or as a result of a difference between External SpinCos allocable share of the amount actually shown on the 2014 Joint Federal Return and the Pre-Spin Billed Amount with respect to the Taxes reported on the 2014 Joint Federal Return), no payment shall be made to account for any errors that were previously made in the calculation of the Pre-Spin Billed Amount. External Distributings obligation under this Agreement to provide information relating to the calculation of any Pre-Spin Billed Amount will be governed by Section 3.1(b)(iv).
(ii) For purposes of Section 4.2(d)(i), the payments that External Distributing is required to make to External SpinCo pursuant to Section 2.1(b)(ii) will be determined by assuming that External Distributing has previously paid External SpinCo for any Tax Benefit to the extent that such Tax Benefit was previously taken into account by External Distributing for purposes of calculating a Pre-Spin Billed Amount.
(d) Payments for Tax Benefits.
(i) If a member of the External Distributing Group utilizes a Tax Benefit for which External SpinCo is entitled to payment pursuant to clause (ii) of Section 2.1(b), External Distributing shall pay to External SpinCo, within fifteen business days following the utilization of such Tax Benefit, an amount equal to such Tax Benefit.
(ii) If a member of the External SpinCo Group utilizes a Tax Benefit for which External Distributing is entitled to payment pursuant to clause (ii) of Section 2.1(a), External SpinCo shall pay to External Distributing, within fifteen business days following the utilization of such Tax Benefit, an amount equal to such Tax Benefit.
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(iii) For purposes of this Agreement, a Tax Benefit will be considered utilized (i) in the case of a Tax Benefit that generates a Tax refund, at the time such Tax refund is received and (ii) in all other cases, at the time the Tax Return is filed with respect to such Tax Benefit or, if no Tax Return is filed, at the time the Tax would have been due in the absence of such Tax Benefit. The amount of such Tax Benefit will be the amount by which Taxes are actually reduced by such Tax Benefit (determined in accordance with the provisions of Section 2.1(c)).
(e) Withholding Taxes. If any member of the External SpinCo Group determines that it is required under applicable Tax Law to withhold Taxes that are allocated to External Distributing under Section 2.2 in respect of any payment directly or indirectly made by such member of the External SpinCo Group to a member of the External Distributing Group, External Distributing shall be deemed to have made payment of such Taxes to External SpinCo for purposes of Section 4.2(b) to the extent of such withholdings. If any member of the External Distributing Group determines that it is required under applicable Tax Law to withhold Taxes that are allocated to External SpinCo under Section 2.2 in respect of any payment directly or indirectly made by such member of the External Distributing Group to a member of the External SpinCo Group, External SpinCo shall be deemed to have made payment of such Taxes to External Distributing for purposes of Section 4.2(a) to the extent of such withholdings. For the avoidance of doubt, this Section 4.2(e) shall apply to any withholding taxes imposed on the Cash Distribution.
4.3 Initial Determinations and Subsequent Adjustments . The initial determination of the amount of any payment that one party is required to make to another under this Agreement shall be made on the basis of the Tax Return as filed, or, if the Tax to which the payment relates is not reported in a Tax Return, on the basis of the amount of Tax initially paid to the Tax Authority. The amounts paid under this Agreement will be redetermined, and additional payments relating to such redetermination will be made (subject to the last sentence of this Section 4.3), as appropriate, if as a result of an audit by a Tax Authority, an amended Tax Return, or for any other reason (i) additional Taxes to which such redetermination relates are subsequently paid, (ii) a refund of such Taxes is received, (iii) the party utilizing a Tax Benefit changes, or (iv) the amount or character of any Tax Item is adjusted or redetermined. Each payment required by the immediately preceding sentence (i) as a result of a payment of additional Taxes will be due thirty days after the date on which the additional Taxes were paid or, if later, fifteen days after the date of a request from the other party for the payment, (ii) as a result of the receipt of a refund will be due thirty days after the refund was received, (iii) as a result of a change in utilization of a Tax Benefit will be due thirty days after the date on which the final action resulting in such change is taken by a Tax Authority or either party or any of their Subsidiaries, or (iv) as a result of an adjustment or redetermination of the amount or character of a Tax Item will be due thirty days after the date on which the final action resulting in such adjustment or redetermination is taken by a Tax Authority or either party or any of their Subsidiaries. If a payment is made as a result of an audit by a Tax Authority which does not conclude the matter, further adjusting payments will be made, as appropriate, to reflect the outcome of subsequent administrative or judicial proceedings. Notwithstanding anything else to the contrary in this Agreement, in any case in which amounts are redetermined pursuant to a particular event described in the second sentence of this Section 4.3 (a Redetermination Event ), the parties will be obligated to make additional payments otherwise owed under this Section 4.3 only if the amount of additional payment resulting from such Redetermination Event exceeds $50,000.
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4.4 Interest on Late Payments . Payments pursuant to this Agreement that are not made by the date prescribed in this Agreement or, if no such date is prescribed, within fifteen days after demand for payment is made (the Due Date ) shall bear interest for the period from and including the date immediately following the Due Date through and including the date of payment at a per annum rate equal to the rate specified in Section 6.8 of the Distribution Agreement. Such interest will be payable at the same time as the payment to which it relates and shall be calculated on the basis of a year of 365 days and the actual number of days for which due.
4.5 Payments by or to Other Group Members . When appropriate under the circumstances to reflect the underlying liability for a Tax or entitlement to a Tax refund or Tax Benefit, a payment which is required to be made by or to External Distributing or External SpinCo may be made by or to another member of the External Distributing Group or the External SpinCo Group, as appropriate, but nothing in this Section 4.5 shall relieve External Distributing or External SpinCo of its obligations under this Agreement.
4.6 Procedural Matters . Any written notice delivered to the indemnifying party in accordance with Section 9.5 shall show the amount due and owing together with a schedule calculating in reasonable detail such amount (and shall include any relevant Tax Return, statement, bill or invoice related to such Taxes, costs, expenses or other amounts due and owing). All payments required to be made by one party to the other party pursuant to this Section 4 shall be made by electronic, same day wire transfer. Payments shall be deemed made when received. If the indemnifying party fails to make a payment to the indemnified party within the time period set forth in this Section 4, the indemnifying party shall pay to the indemnified party, in addition to interest that accrues pursuant to Section 4.4, any costs or expenses, including any breakage costs, incurred by the indemnified party to secure such payment or to satisfy the indemnifying partys portion of the obligation giving rise to the indemnification payment.
4.7 Tax Consequences of Payments . For all Tax purposes and to the extent permitted by applicable Tax Law, the parties hereto shall treat any payment made pursuant to this Agreement as a capital contribution or a distribution, as the case may be, immediately prior to the External Distribution. Under no circumstances shall any payment (or portion thereof) made pursuant to this Agreement be grossed up to take into account any additional Taxes that may be owed by the recipient (or any of the members of its Group) as a result of such payment. In the event that a Tax Authority asserts that External Distributings or External SpinCos treatment of a payment pursuant to this Agreement should be other than as required pursuant to this Section 4.7, External Distributing or External SpinCo, as appropriate, shall use its reasonable best efforts to contest such assertion if the parties reasonably believe that the treatment described in this Section 4.7 is permitted by applicable Tax Law.
SECTION 5. Assistance and Cooperation.
5.1 Cooperation . In addition to the obligations enumerated in Sections 3.1(b) and 3.2(c), External Distributing and External SpinCo will cooperate (and cause their respective
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Subsidiaries to cooperate) with each other and with each others agents, including accounting firms and legal counsel, in connection with Tax matters, including provision of relevant documents and information in their possession and making available to each other, as reasonably requested and available, personnel (including officers, directors, employees and agents of the parties or their Affiliates) responsible for preparing, maintaining, and interpreting information and documents relevant to Taxes, and personnel reasonably required as witnesses or for purposes of providing information or documents in connection with any administrative or judicial proceedings relating to Taxes.
5.2 Supplemental Tax Opinions . Each of the parties agrees that at the reasonable request of the other party (the Requesting Party ), such party shall cooperate and use reasonable efforts to (and shall cause its Subsidiaries to cooperate and use reasonable efforts to) assist the Requesting Party in obtaining, as expeditiously as reasonably practicable, a Supplemental Tax Opinion from Tax Counsel. Within thirty days after receiving an invoice from the other party therefor, the Requesting Party shall reimburse such party for all reasonable costs and expenses incurred by such party and the members of its Group in connection with assisting the Requesting Party in obtaining any Supplemental Tax Opinion.
SECTION 6. Tax Records.
6.1 Retention of Tax Records . Each of External Distributing and External SpinCo shall preserve, and shall cause their respective Subsidiaries to preserve, all Tax Records that are in their possession, and that could affect the liability of any member of the other Group for Taxes, for as long as the contents thereof may become material in the administration of any matter under applicable Tax Law, but in any event until the later of (i) the expiration of any applicable statutes of limitation, as extended, and (ii) seven years after the Distribution Date.
6.2 Access to Tax Records . External SpinCo shall make available, and cause its Subsidiaries to make available, to members of the External Distributing Group for inspection and copying (i) all Tax Records in their possession that relate to Tax Years that begin on or before the Distribution Date, and (ii) the portion of any Tax Record in their possession that relates to Tax Years that begin after the Distribution Date and which is reasonably necessary for the preparation of a Joint Return or Separate Return by a member of the External Distributing Group or with respect to an audit or litigation by a Tax Authority of such return. External Distributing shall make available, and cause its Subsidiaries to make available, to members of the External SpinCo Group for inspection and copying (i) that portion of any Tax Record in their possession (redacted to reflect only the information relating to the members of the External SpinCo Group) that relates to Tax Years that begin on or before the Distribution Date and which is reasonably necessary for the preparation of a Separate Return by a member of the External SpinCo Group or with respect to an audit or litigation by a Tax Authority of such return and (ii) workpapers or other documentation relating to the calculation of the Taxes and Tax Benefits that have been allocated to External SpinCo pursuant to this Agreement.
6.3 Confidentiality . Each party hereby agrees that it will hold, and shall use its reasonable best efforts to cause its officers, directors, employees, accountants, counsel, consultants, advisors and agents to hold, in confidence all records and information prepared and shared by and among the parties in carrying out the intent of this Agreement, except as may
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otherwise be necessary in connection with the filing of Tax Returns or any administrative or judicial proceedings relating to Taxes or unless disclosure is compelled by a governmental authority. Information and documents of one party (the Disclosing Party ) shall not be deemed to be confidential for purposes of this Section 6.3 to the extent such information or document (i) becomes publicly available by means other than unauthorized disclosure under this Agreement by the other party (the Receiving Party ) or (ii) is received from a third party without, to the knowledge of the Receiving Party after reasonable diligence, a duty of confidentiality owed to the Disclosing Party.
SECTION 7. Tax Contests.
7.1 Notices . Each party shall provide prompt notice to the other party of any pending or threatened Tax audit, assessment or proceeding or other Tax Contest of which it becomes aware relating to (i) Taxes for which it is or may be indemnified by the other party hereunder, (ii) the qualification of the Internal Contribution and the Internal Distribution together as a reorganization described under Sections 368(a)(1)(D) and/or 355 of the Code or (iii) the qualification of the External Contributions and the External Distribution together as a reorganization described under Sections 368(a)(1)(D) and/or 355 of the Code. Such notice shall contain factual information (to the extent known) describing any asserted Tax liability in reasonable detail and shall be accompanied by copies of any notice and other documents received from any Tax Authority in respect of any such matters. If (i) an indemnified party has knowledge of an asserted Tax liability with respect to a matter for which it is to be indemnified hereunder, (ii) such party fails to give the indemnifying party prompt notice of such asserted Tax liability and (iii) the indemnifying party has the right, pursuant to Section 7.2(a), to control the Tax Contest relating to such Tax liability, then (x) if the indemnifying party is precluded from contesting the asserted Tax liability as a result of the failure to give prompt notice, the indemnifying party shall have no obligation to indemnify the indemnified party for any Taxes arising out of such asserted Tax liability and (y) if the indemnifying party is not precluded from contesting the asserted Tax liability, but such failure to give prompt notice results in a monetary detriment to the indemnifying party, then any amount which the indemnifying party is otherwise required to pay the indemnified party pursuant to this Agreement shall be reduced by the amount of such detriment.
7.2 Control of Tax Contests .
(a) General Rule . Except as provided in the following sentence or in Section 7.2(b), each party (or the appropriate member of their Group) shall have full responsibility, control and discretion in handling, settling or contesting any Tax Contest involving a Tax reported on a Tax Return for which it is responsible for preparing (or causing to be prepared) pursuant to Section 3 of this Agreement. Notwithstanding the previous sentence, External SpinCo may not take, and shall cause the members of the External SpinCo Group not to take (including, without limitation, any such members formed after the date hereof in anticipation of the External Distribution), any position in a Tax Contest that it knows, or reasonably should know, would have a material adverse effect on any member of the External Distributing Group.
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(b) Non-Preparer Participation Rights . With respect to a Tax Contest of any Tax Return which involves a Tax Item for which the Non-Preparer may be liable (in the case of Tax Items that increase Tax liability), or which is allocated to the Non-Preparer (in the case of Tax Benefits), under this Agreement (a Non-Preparer Party Item ), (i) the Non-Preparer shall, at its own cost and expense, be entitled to participate in such Tax Contest, to the extent it relates to a Non-Preparer Party Item; (ii) the Preparer shall keep the Non-Preparer reasonably informed and consult in good faith with the Non-Preparer and its Tax advisors with respect to any issue relating to a Non-Preparer Party Item; (iii) the Preparer shall provide the Non-Preparer with copies of all correspondence, notices, and other written materials received from any Tax Authority and shall otherwise keep the Non-Preparer and its Tax advisors advised of significant developments in the Tax Contest and of significant communications involving representatives of the Tax Authority, to the extent related to a Non-Preparer Party Item; (iv) the Non-Preparer may request that the Preparer take a position in respect of a Non-Preparer Party Item, and the Preparer shall do so provided that (A) there exists substantial authority for such position (within the meaning of the accuracy-related penalty provisions of Section 6662 of the Code), (B) the adoption of such position could not reasonably be expected to increase the Taxes or reduce the Tax Benefits allocated to the Preparer pursuant to Section 2 of this Agreement (unless the Non-Preparer agrees to indemnify and hold harmless the Preparer from such increase in Taxes or reduction in Tax Benefits) and (C) the Non-Preparer agrees to reimburse the Preparer for any reasonable third-party costs that are attributable to the Non-Preparers request; (v) the Preparer shall provide the Non-Preparer with a copy of any written submission to be sent to a Taxing Authority to the extent related to a Non-Preparer Party Item prior to the submission thereof and shall give good faith consideration to any comments or suggested revisions that the Non-Preparer or its Tax advisors may have with respect thereto; and (vi) there will be no settlement, resolution, or closing or other agreement with respect to the Non-Preparer Party Item without the consent of the Non-Preparer, which consent shall not be unreasonably withheld.
7.3 Cooperation . The Non-Preparer shall provide a party controlling any Tax Contest pursuant to Section 7.2(a) with all information relating to the Non-Preparers Group which the party controlling the Tax Contest needs to handle, settle or contest the Tax Contest. At the request of a party controlling any Tax Contest pursuant to Section 7.2(a), the other party shall take any action ( e.g. , executing a power of attorney) that is reasonably necessary in order for the party controlling the Tax Contest to handle, settle or contest the Tax Contest. External SpinCo shall assist External Distributing, and External Distributing shall assist External SpinCo, in taking any remedial actions that are necessary or desirable to minimize the effects of any adjustment made by a Tax Authority. The indemnifying party shall reimburse the indemnified party for any reasonable out-of-pocket costs and expenses incurred in complying with this Section 7.3. The party controlling the Tax Contest shall have no obligation to indemnify the indemnified party for any additional Taxes resulting from the Tax Contest, if the indemnified party fails to cooperate in accordance with this Section 7.3.
SECTION 8. Restriction on Certain Actions of External Distributing and External SpinCo.
8.1 General Restrictions . Following the Effective Time, External Distributing and External SpinCo shall not, and shall cause the members of their respective Groups not to, take any action that, or fail to take any action the failure of which, (i) would be inconsistent with the Internal Contribution and the
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Internal Distribution together qualifying, or preclude the Internal Contribution and the Internal Distribution together from qualifying, as a reorganization described under Sections 368(a)(1)(D) and/or 355 of the Code, (ii) would be inconsistent with the External Contributions and the External Distribution together qualifying, or preclude the External Contributions and the External Distribution together from qualifying, as a reorganization described under Sections 368(a)(1)(D) and/or 355 of the Code, (iii) would result in the recognition of gain under either Section 355(d), Section 355(e) or Section 355(f) of the Code, or (iv) reasonably could be expected to increase the amount of Tax imposed on any other part of the Separation Transactions.
8.2 Restricted Actions Relating to Tax Materials . Without limiting the other provisions of this Section 8, following the Effective Time, External Distributing and External SpinCo shall not, and shall cause the members of their Groups not to, take any action that, or fail to take any action the failure of which, would be reasonably likely to be inconsistent with, or cause any Person to be in breach of, any representation or covenant, or any material statement, made in the Tax Materials.
8.3 Certain External SpinCo Actions Following the Effective Time . Without limiting the other provisions of this Section 8, during the two-year period following the Distribution Date, External SpinCo shall not take (and shall cause the members of the External SpinCo Group to not take), nor negotiate or enter into a binding agreement to take (and shall cause the members of the External SpinCo Group to not negotiate or enter into a binding agreement to take), any of the following actions: (i) liquidate, or sell or transfer (1) 50% or more of the assets that constitute the External SpinCo Business as of the Effective Time to any Person other than External SpinCo or an entity which is and will be wholly-owned, directly or indirectly, by External SpinCo or (2) 50% or more of the assets that constitute the Internal SpinCo Business as of the Effective Time to any Person other than Internal SpinCo or an entity which is and will be wholly-owned, directly or indirectly, by Internal SpinCo; (ii) transfer, in a transaction described in subparagraphs (A), (C), (D), or (G) of Section 368(a)(1), (1) any assets of External SpinCo or any External SpinCo Affiliate to another entity (other than to External SpinCo or an entity which is and will be wholly-owned, directly or indirectly, by External SpinCo) or (2) any assets of Internal SpinCo or any Internal SpinCo Affiliate to another entity (other than to Internal SpinCo or an entity which is and will be wholly-owned, directly or indirectly, by Internal SpinCo); (iii) issue stock of External SpinCo or any External SpinCo Affiliate (or any instrument that is convertible or exchangeable into any such stock), other than an issuance to which Treasury Regulations Section 1.355-7(d)(8) or (9) applies, equal to or exceeding twenty percent (20%) (by vote or value) of the stock of External SpinCo or of such External SpinCo Affiliate that was issued and outstanding immediately following the Effective Time; (iv) facilitate or otherwise participate in any acquisition (or deemed acquisition) of stock of External SpinCo or Internal SpinCo that would result in (1) any shareholder owning (or being deemed to own after applying the rules of Sections 355(e)(4)(C) and 355(e)(3)(B) of the Code) forty percent (40%) or more (by vote or value) of the outstanding stock of External SpinCo or (2) any shareholder other than External SpinCo owning (or being deemed to own after applying the rules of Sections 355(e)(4)(C) and 355(e)(3)(B) of the Code) forty percent (40%) or more (by vote or value) of the outstanding stock of Internal SpinCo; (v) redeem or otherwise repurchase any stock of External SpinCo other than pursuant to open market stock repurchase programs meeting the requirements of Section 4.05(1)(b) of Rev. Proc. 96-30, 1996-1 C.B. 696; or (vi) terminate the active conduct
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by the External SpinCo Group of the External SpinCo Business or the Internal SpinCo Business; in each case, without first obtaining and delivering to External Distributing at External SpinCos own expense a Supplemental Tax Opinion with respect to such action, in such form and on such terms as External Distributing may reasonably direct.
SECTION 9. General Provisions.
9.1 Limitation of Liability . IN NO EVENT SHALL ANY MEMBER OF THE EXTERNAL DISTRIBUTING GROUP OR THE EXTERNAL SPINCO GROUP OR THEIR RESPECTIVE DIRECTORS, OFFICERS AND EMPLOYEES BE LIABLE TO ANY OTHER MEMBER OF THE EXTERNAL DISTRIBUTING GROUP OR THE EXTERNAL SPINCO GROUP FOR ANY SPECIAL, CONSEQUENTIAL, INDIRECT, INCIDENTAL OR PUNITIVE DAMAGES OR LOST PROFITS, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY (INCLUDING NEGLIGENCE) ARISING IN ANY WAY OUT OF THIS AGREEMENT, WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
9.2 Entire Agreement . This Agreement and the Distribution Agreement constitute the entire agreement between External Distributing and External SpinCo with respect to the subject matter hereof and shall supersede all prior written and oral and all contemporaneous oral agreements and understandings with respect to the subject matter hereof.
9.3 Governing Law . This Agreement shall be governed and construed and enforced in accordance with the laws of the State of Texas as to all matters regardless of the laws that might otherwise govern under the principles of conflicts of laws applicable thereto.
9.4 Termination .
(a) This Agreement may be terminated at any time prior to the Distribution Date by and in the sole discretion of External Distributing without the approval of External SpinCo. In the event of termination pursuant to this Section 9.4, neither party shall have any liability of any kind to the other party.
(b) This Agreement shall otherwise terminate at such time as all obligations and liabilities of the parties hereto have been satisfied. The obligations and liabilities of the parties arising under this Agreement shall continue in full force and effect until all such obligations have been satisfied and such liabilities have been paid in full, whether by expiration of time, operation of law, or otherwise.
9.5 Notices . Unless expressly provided herein, all notices, claims, certificates, requests, demands and other communications hereunder shall be in writing and shall be deemed to be duly given (i) when personally delivered or (ii) if mailed registered or certified mail, postage prepaid, return receipt requested, on the date the return receipt is executed or the letter is refused by the addressee or its agent or (iii) if sent by overnight courier which delivers only upon the signed receipt of the addressee, on the date the receipt acknowledgment is executed or refused by the addressee or its agent or (iv) if sent by facsimile or other generally accepted means of electronic transmission, on the date confirmation of transmission is received (provided that a copy of any notice delivered pursuant to this clause (iv) shall also be sent pursuant to
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clause (ii) or (iii)), addressed to the attention of the addressees General Counsel at the address of its principal executive office or to such other address or facsimile number for a party as it shall have specified by like notice.
9.6 Counterparts . This Agreement may be executed in counterparts, each of which shall be deemed to be an original but all of which shall constitute one and the same agreement.
9.7 Binding Effect; Assignment . This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective legal representatives and successors, and nothing in this Agreement, express or implied, is intended to confer upon any other Person any rights or remedies of any nature whatsoever under or by reason of this Agreement. This Agreement may not be assigned by any party hereto.
9.8 No Third Party Beneficiaries . This Agreement is solely for the benefit of External Distributing, External SpinCo and their Subsidiaries and is not intended to confer upon any other Person any rights or remedies hereunder.
9.9 Severability . If any term or other provision of this Agreement is determined by a nonappealable decision by a court, administrative agency or arbitrator to be invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to either party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the court, administrative agency or arbitrator shall interpret this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the fullest extent possible. If any sentence in this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable.
9.10 Failure or Indulgence Not Waiver; Remedies Cumulative . No failure or delay on the part of either party hereto in the exercise of any right hereunder shall impair such right or be construed to be a waiver of, or acquiescence in, any breach of any representation, warranty or agreement herein, nor shall any single or partial exercise of any such right preclude other or further exercise thereof or of any other right. All rights and remedies existing under this Agreement are cumulative to, and not exclusive of, any rights or remedies otherwise available.
9.11 Amendments; Waivers . Any provision of this Agreement may be amended or waived if, but only if, such amendment or waiver is in writing and is signed, in the case of an amendment, by each party to this Agreement, or in the case of a waiver, by the party against whom the waiver is to be effective. No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. Except as otherwise provided herein, the rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by applicable law. Any consent provided under this Agreement must be in writing, signed by the party against whom enforcement of such consent is sought.
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9.12 Authority . Each of the parties hereto represents to the other that (a) it has the corporate or other requisite power and authority to execute, deliver and perform this Agreement, (b) the execution, delivery and performance of this Agreement by it has been duly authorized by all necessary corporate or other actions, (c) it has duly and validly executed and delivered this Agreement to be executed and delivered on or prior to the Distribution Date, and (d) this Agreement creates legal, valid and binding obligations, enforceable against it in accordance with its respective terms subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors rights generally and general equity principles.
9.13 Construction . This Agreement shall be construed as if jointly drafted by External SpinCo and External Distributing and no rule of construction or strict interpretation shall be applied against either party. The parties represent that this Agreement is entered into with full consideration of any and all rights which the parties may have. The parties have relied upon their own knowledge and judgment and upon the advice of the attorneys of their choosing. The parties have received independent legal advice, have conducted such investigations they and their counsel thought appropriate, and have consulted with such other independent advisors as they and their counsel deemed appropriate regarding this Agreement and their rights and asserted rights in connection therewith. The parties are not relying upon any representations or statements made by any other party, or such other partys employees, agents, representatives or attorneys, regarding this Agreement, except to the extent such representations are expressly incorporated in this Agreement. The parties are not relying upon a legal duty, if one exists, on the part of any other party (or such other partys employees, agents, representatives or attorneys) to disclose any information in connection with the execution of this Agreement or its preparation, it being expressly understood that no party shall ever assert any failure to disclose information on the part of the other party as a ground for challenging this Agreement.
9.14 Interpretation . The headings contained in this Agreement and in the table of contents to this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. The word including and words of similar import when used in this Agreement will mean including, without limitation, unless otherwise specified. The operation of various provisions of this Agreement is illustrated by examples in Appendix A hereto, and this Agreement shall be interpreted in accordance with such examples.
9.15 Predecessors or Successors . Any reference to External Distributing, External SpinCo, a Person, or a Subsidiary in this Agreement shall include any predecessors or successors ( e.g. , by merger or other reorganization, liquidation, conversion, or election under Treasury Regulations Section 301.7701-3) of External Distributing, External SpinCo, such Person, or such Subsidiary, respectively.
9.16 Effective Time . This Agreement shall become effective on the date recited above on which the parties entered into this Agreement.
9.17 Change in Law . Any reference to a provision of the Code or any other Tax Law shall include a reference to any applicable successor provision or law.
9.18 Disputes . The procedures for discussion, negotiation and arbitration set forth in Article XI of the Distribution Agreement shall apply to all disputes, controversies or claims (whether sounding in contract, tort or otherwise) that may rise out of or relate to, or arise under or in connection with this Agreement.
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9.19 Conflict . Notwithstanding anything else to the contrary in the Distribution Agreement, except to the extent expressly provided in this Agreement the parties shall have no obligation to each other (or to any of each others Affiliates) with respect to the transfer, delivery, sharing, disclosure, provision, preparation, or maintenance of (i) any books and records primarily relating to Taxes, (ii) any Information primarily relating to Taxes, or (iii) any Tax Records.
[Signature Page Follows]
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IN WITNESS WHEREOF , the parties have caused this Agreement to be executed by their authorized representatives as of the date set forth above.
KIMBERLY-CLARK CORPORATION | ||
By: |
/s/ Mark A. Buthman |
|
Name: | Mark A. Buthman | |
Title: | Chief Financial Officer | |
HALYARD HEALTH, INC. | ||
By: |
/s/ Steven E. Voskuil |
|
Name: | Steven E. Voskuil | |
Title: | Senior Vice President and Chief Financial Officer |
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APPENDIX A
The following examples illustrate the operation of various provisions of this Agreement. However, each example is not necessarily intended to illustrate every provision of this Agreement that may be relevant thereto.
Except as stated otherwise, each of the examples assumes (i) a U.S. federal income Tax rate of 35%, (ii) that the Distribution Date was October 31, 2014, and that both the Internal Distribution and the External Distribution occurred thereon, (iii) that External SpinCo files a Separate Return with respect to all Taxes for the Stub Period ( External SpinCo Stub Period Return ), for 2015 and for later years, (iv) that the Internal Contribution and the Internal Distribution together qualify as a reorganization under Sections 368(a)(1)(D) and 355 of the Code, (v) that the External Contributions and the External Distribution together qualify as a reorganization under Sections 368(a)(1)(D) and 355 of the Code, and (vi) that, for convenience, there are no Separation Taxes, Restructuring Taxes or Repatriation Taxes. In addition, for convenience, it is assumed that the amount of the credit for prior deemed tax payments which would otherwise be allowed by Section 4.2(c) is zero.
Example 1. | General Tax Allocation on Joint Return . |
On the 2014 Joint Federal Return, the External Distributing consolidated group reports $200x of consolidated taxable income, no credits, no losses carried forward to 2014 from any prior Tax Year, and a Tax liability of $70x ( viz. , (35%)($200x)). Of the $200x of consolidated taxable income reported on such Tax Return, $150x is attributable to the separate taxable income (calculated in accordance with Treasury Regulation Section 1.1552-1(a)(1) and in accordance with past practices) of the members of the External Distributing Group. The remaining $50x of consolidated taxable income is attributable to the separate taxable income (calculated in accordance with Treasury Regulation Section 1.1552-1(a)(1) and in accordance with past practices) of the members of the External SpinCo Group during the period in which External SpinCo joins in the filing of such Tax Return ( viz. , the period beginning January 1, 2014, and ending on the Distribution Date (the External SpinCo Pre-Spin 2014 Period )).
The $150x of consolidated taxable income attributable to the External Distributing Group and the $50x of consolidated taxable income attributable to the External SpinCo Group in each case includes deductions. However, in neither case are these deductions a Tax Benefit because after separately taking into account solely the items of income, gain, loss, and deduction of each Group for such Tax Year, the aggregate of such deductions for each Group in the Tax Year does not exceed the income attributable to or arising from the relevant Group in such Tax Year.
Because the 2014 Joint Federal Return includes Tax Items attributable to the External Distributing Business and Tax Items attributable to the External SpinCo Business (determined without regard to Tax Items carried forward to such Tax Year), it will be a Joint Return. Pursuant to Section 2.1, each of External Distributing and External SpinCo will be liable for its allocable portion of the $70x of Tax shown on such Joint Return. Because $150x of the consolidated taxable income that gave rise to the Tax was attributable to members of the External Distributing Group and $50x of the consolidated taxable income that gave rise to the
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Tax was attributable to members of the External SpinCo Group, pursuant to Section 2.2(a), $52.5x of Tax will be allocable to External Distributing ( viz. , ($150x/$200x)($70x)) and $17.5x of Tax will be allocable to External SpinCo ( viz. , ($50x/$200x)($70x)).
Pursuant to Section 3.1(a), External Distributing is responsible for preparing and filing the 2014 Joint Federal Return. As a result, External Distributing will have the exclusive right, in its reasonable discretion, to make those determinations described in Section 3.3(a) with respect to the 2014 Joint Federal Return. Pursuant to Section 4.1, External Distributing must pay the $70x of Tax to the proper Tax Authority. Pursuant to Section 4.2(a), External SpinCo must remit the amount for which it is liable ( viz. , $17.5x) to External Distributing within thirty days after receiving notification requesting such amount. If payment is not made within thirty days, External SpinCo must pay interest thereafter on the amount past due at the rate and as determined under Section 4.4.
Pursuant to Section 4.7, the parties would ordinarily characterize External SpinCos payment of $17.5x in the same manner as if it were a distribution to External Distributing immediately prior to the External Distribution. However, under applicable Tax Law ( viz. , Treasury Regulations Sections 1.1552-1(b)(2) and 1.1502-32(b)(3)(iv)(D)), the parties are required to treat the obligation to make such payment as a distribution to External Distributing and to treat the payment itself as a payment in satisfaction of indebtedness owed by External SpinCo to External Distributing. Finally, such payment does not further reduce External Distributings basis in the External SpinCo stock.
Example 2. | Treatment of Tax Benefits - Net Operating Losses. |
On the 2014 Joint Federal Return, the External Distributing consolidated group reports $130x of consolidated taxable income, no credits, no losses carried forward to 2014 from any prior Tax Year, and a Tax liability of $45.5x ( viz. , (.35)($130x)). The $130x of consolidated taxable income reported on such Tax Return represents (i) $150x of separate taxable income (calculated in accordance with Treasury Regulation Section 1.1552-1(a)(1) and in accordance with past practices) attributable to the members of the External Distributing Group and (ii) after separately taking into account solely the items of income, gain, loss, and deduction of the External SpinCo Group for the External SpinCo Pre-Spin 2014 Period (but excluding any deductions attributable to losses carried forward or back to the 2014 Joint Federal Return from another Tax Year), a net operating loss of $20x (calculated in accordance with Treasury Regulation Section 1.1552-1(a)(1) and in accordance with past practices) attributable to the External SpinCo Group for the External SpinCo Pre-Spin 2014 Period.
The $20x net operating loss is a Tax Benefit that is allocated solely to External SpinCo under Section 2.2(a)(ii)(D), but, taking into account only those Tax Items allocated to External SpinCo during such Tax Year, none of this Tax Benefit would be allowable under applicable Tax Law. Therefore, under Section 2.1(c)(ii), none of this Tax Benefit can be utilized by External SpinCo. Instead, the $20x net operating loss is utilized by External Distributing under Section 2.1(c)(iii), reducing the Tax for which External Distributing is liable pursuant to Section 2.1(b)(i). Consequently, pursuant to Section 2.1(b)(ii)(C) External Distributing must pay External SpinCo for utilizing such Tax Benefit to reduce the Taxes for which External Distributing is liable under Section 2.1(b)(i). Under Section 4.2(d)(iii), the amount of the payment from External Distributing for the utilization of this Tax Benefit would be $7x ( viz. , the amount by which External Distributings Taxes were actually reduced by the Tax Benefit).
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Example 3. | Treatment of Tax Benefits - Foreign Tax Credits. |
For the 2014 Joint Federal Return, External Distributing has $150x of foreign tax credits available (ignoring any limitation on such foreign tax credits), $30x of which are carried forward from prior Tax Years (and are allocable to External Distributing under this Agreement) and $120x of which arise in 2014. Of the $120x of foreign tax credits arising in 2014, $15x are attributable to Mexican Income Taxes imposed on the Mexican Maquilas with respect to their Tax Year that begins in 2014, $5x are attributable to Japanese Income Taxes imposed on Halyard Healthcare Inc.s Subsidiary with respect to its Tax Year that begins in 2014, and none are attributable to Honduran Income Taxes. Assume that (i) the foreign source income of the members of the External SpinCo Group reported for the External SpinCo Pre-Spin 2014 Period exceeds the amount needed for External SpinCo to take into account all foreign tax credits that arise in 2014 and are allocated to External SpinCo (such excess foreign source income, the Excess FSI ) under this Agreement and (ii) the foreign source income of the members of the External Distributing Group that is reported for External Distributings 2014 Tax Year is less than the amount needed for External Distributing to take into account all foreign tax credits that arise in (or are carried forward to) 2014 and are allocated to External Distributing for 2014 under this Agreement.
The $30x of foreign tax credits carried forward to 2014 are assumed to be allocated to External Distributing. The $20x of foreign tax credits arising in 2014 that are attributable to the Mexican Income Taxes and Japanese Income Taxes imposed in 2014 on the Mexican Maquilas and Halyard Healthcare Inc.s Subsidiary, respectively, are allocated to External SpinCo under Section 2.2(a)(ii)(A). The remaining $100x of foreign tax credits arising in 2014 are allocated to External Distributing under Section 2.2(a)(ii)(A).
Because the foreign source income of the members of the External SpinCo Group reported for the External SpinCo Pre-Spin 2014 Period exceeds the amount needed for External SpinCo to take into account all foreign tax credits that arise in 2014 and are allocated to External SpinCo, External SpinCo is entitled to use all $20x of these foreign tax credits to reduce the Taxes for which it is liable under Section 2.1(a)(i). The foreign source income of the members of the External Distributing Group for 2014 is less than the amount needed for External SpinCo to take into account the $130x of foreign tax credits that are allocated to External Distributing. However, under Section 2.1(c)(ii) External Distributing is entitled to treat the Excess FSI as a Tax Item allocated to External Distributing during 2014.
The foreign tax credits allocated to External Distributing for 2014 that cannot be taken into account by External Distributing on the 2014 Joint Federal Return after treating the Excess FSI as a Tax Item allocated to External Distributing during 2014, if any, are carried forward to 2015 (and will be allocated to External Distributing in 2015). External Distributing is not required to make any payment to External SpinCo under Section 2.1(b)(ii) (or otherwise) for utilizing any portion of the $130x of foreign tax credits (including any portion that External Distributing is entitled to utilize solely as a result of being entitled to treat the Excess FSI as a Tax Item allocated to External Distributing during 2014) to reduce its liability for Taxes on the
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2014 Joint Federal Return, because all such foreign tax credits are allocated to External Distributing. Furthermore, External Distributing is not required to make any payment to External SpinCo under this Agreement for treating the Excess FSI as a Tax Item allocated to External Distributing.
Example 4. | Treatment of Foreign Tax Credit Carrybacks . |
Assume the same facts as Example 3, except that in the Stub Period, the External SpinCo Group has foreign tax credits of $10x which it cannot use on the Stub Period Tax Return due to the foreign tax credit limitation. The External SpinCo Group has sufficient Excess FSI during the External SpinCo Pre-Spin 2014 Period to both permit External SpinCo Group to utilize the foreign tax credit carryback and to allow the External Distributing Groups utilization of its foreign tax credits to remain unchanged.
Assuming that the $10x foreign tax credit carryback is material, it can be carried back to the 2014 Joint Federal Return pursuant to Section 3.3(d). Taking into account only those Tax Items allocated to the External SpinCo Group on the 2014 Joint Federal Return, the External SpinCo Group has sufficient foreign source income to utilize the $10x foreign tax credit carryback from the Stub Period. Consequently, pursuant to Section 2.1(a)(i), the External SpinCo Group may reduce Taxes allocated to it under Section 2.2(a)(i) or Section 2.2(b). External Distributing shall amend the 2014 Joint Federal Return and file a claim for refund for such Tax Benefit, which is a Redetermination Event pursuant to Section 4.3. External Distributing shall pay External SpinCo the amount of such refund within thirty day of receipt, provided the refund exceeds $50,000.
For the avoidance of doubt, if, alternatively, the Excess FSI (reduced by the amount of the Excess FSI that External Distributing was previously entitled to treat as a Tax Item allocated to External Distributing during 2014 pursuant to Section 2.1(c)(ii)) (such reduced Excess FSI, the Adjusted Excess FSI ) would not be sufficient to permit External SpinCo to fully utilize the foreign tax credit carryback from the Stub Period, External SpinCo is not permitted to carry back its foreign tax credits from the Stub Period to the 2014 Joint Federal Return to the extent such a carryback exceeds the foreign tax credit that could be utilized after taking into account solely the Adjusted Excess FSI. The External SpinCo Groups remaining excess foreign tax credit from the Stub Period must be carried forward.
Example 5. | Treatment of Income and Value Added Taxes Arising from a Transfer of Assets . |
External Distributing directly or indirectly owns 100% of the stock of a foreign corporation ( ForeignCo ) which is a member of the External Distributing Group. Prior to the Distribution Date, ForeignCo held assets related to the External SpinCo Business and other assets related to the External Distributing Business. On or before the Distribution Date, ForeignCo sold or otherwise transferred the assets related to the External SpinCo Business to a member of the External SpinCo Group. The transfer of those assets gave rise to $20x of Income Tax in the foreign jurisdiction in which ForeignCo is organized. In addition, the transfer gave rise to value added tax paid by the purchasing member of the External SpinCo Group.
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The foreign income Tax Return of ForeignCo is a Joint Return because it includes Tax Items of both the External Distributing Business and the External SpinCo Business (and is not required to be filed with respect to Internal SpinCo (or any of its foreign Subsidiaries prior to the External Distribution) or the Thai Subsidiaries, each of which are members of the External SpinCo Group). External Distributing is responsible for preparing and filing ForeignCos Joint Return pursuant to Section 3.1(a) and for remitting the $20x of foreign Income Tax shown thereon pursuant to Section 4.1. The $20x of Income Tax arising from the transfer is a Restructuring Tax and is allocated entirely to External Distributing pursuant to Section 2.2(a)(i)(B). Because the transaction involves a payment from a member of one Group to a member of the other Group, value added tax arising from the transaction is allocated entirely to External SpinCo pursuant to the flush language in Section 2.2(a).
After the Distribution Date, the Tax Authority in the country where ForeignCo is resident conducts an Income Tax audit of ForeignCo and challenges the value at which the assets related to the External SpinCo Business were sold to the External SpinCo Group member for Income Tax purposes. The External Distributing Group shall handle the audit of ForeignCo pursuant to Section 7.2(a) and any Tax Contest that may result therefrom at its own expense. External SpinCo shall have no responsibility to indemnify External Distributing for any additional Income Tax arising from that Tax Contest under Section 4.2(a) because External SpinCo is not partially or wholly responsible for the underlying Income Tax pursuant to Section 2.2(a)(i)(B). However, in the event that the Tax Contest has the effect of increasing the value added tax imposed on the transfer, External SpinCo would be liable for the increased value added tax and the associated interest and penalties, consistent with Section 4.3.
Example 6. | Allocation of Separation Taxes . |
Assume the same facts as in Example 1 and that all payments discussed in Example 1 were timely made. In 2016, the relevant Tax Authority initiates a Tax Contest with respect to the 2014 Joint Federal Return. In the Tax Contest, the Tax Authority successfully asserts that, due to certain actions taken by members of the External SpinCo Group during 2015 (and that were prohibited under Section 8.3), the Internal Contribution together with the Internal Distribution fail to qualify as a transaction described under Sections 355 and 368(a)(1)(D) of the Code. As a result, a portion of the Internal Contribution (which had previously been were treated as a tax-free transfer of property to Internal SpinCo for U.S. federal income tax purposes) is recharacterized as an intercompany sale of assets from Internal Distributing to Internal SpinCo, resulting in a deferred intercompany gain to Internal Distributing of $10x. Under applicable Tax Law ( viz ., Treasury Regulations Section 1.1502-13(d)), Internal Distributings $10x of deferred intercompany gain is required to be taken into account immediately prior to the External Distribution, with the result that an additional $10x of taxable income must be reported for the 2014 Joint Federal Return.
As a result of the Tax Contest relating to the 2014 Joint Federal Return, Section 4.3 requires that the amounts paid under this Agreement be redetermined. Since External Distributing is responsible for preparing the 2014 Joint Federal Return pursuant to Section 3.1, Section 4.1 requires External Distributing to pay the $3.5x of Tax resulting from the Tax Contest ( viz , (.35)(the additional $10x of taxable income arising from taking the deferred intercompany gain into account)). This $3.5x of Tax is a Separation Tax because it results from the failure of
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the Internal Contribution together with the Internal Distribution to qualify as a transaction described under Sections 355 and 368(a)(1)(D) of the Code. This Separation Tax results primarily from External SpinCo taking actions prohibited by Section 8.3 and therefore is allocated to External SpinCo under Section 2.2(b)(ii). As a result, pursuant to Section 4.3, External SpinCo is required to make a payment of $3.5x to External Distributing within thirty days after the date on which External Distributing paid the $3.5x in additional Tax to the Tax Authority (or, if later, fifteen days after the date of a request for such payment from External Distributing), provided that the $3.5x in additional Tax exceeds $50,000.
This Example 6 shall apply to External Distributing in a similar manner under the assumption that a member of the External Distributing Group took actions that were prohibited under Sections 8.1 or 8.2.
Example 7. | Repatriation Taxes and Foreign Tax Credits . |
Part I. Assume the same facts as Example 1 and further assume that the Thai Subsidiaries have (i) $50x of net taxable profits in 2014 (which is equal to the Thai Subsidiaries current earnings and profits for 2014 under United States Income Tax law), on which Thailand imposes an Income Tax equal to $10x (which is not considered to have accrued until after the Effective Time, but before January 1, 2015, and is not payable until 2015), and (ii) additional local distributable reserves of $40x as of December 31, 2013 (which is equal to the Thai Subsidiaries accumulated earnings and profits under United States Income Tax law as of such date), with respect to which the Thai Subsidiaries have previously paid $10x of Thailand Income Tax.
During 2014, and prior to the Effective Time, the Thai Subsidiaries, which are disregarded as entities separate from their parent, Safeskin B.V.I. ( Safeskin ) for United States federal income tax purposes, make a cash distribution of $80x to Safeskin ( representing all of the Thai Subsidiaries current and accumulated earnings and profits). This cash distribution to Safeskin is subject to a $8x Thailand withholding tax. Safeskin, in turn (and prior to the Effective Time), distributes the remaining $72x to External Distributing, and such distribution is not subject to a withholding tax. Collectively, the Thai Subsidiaries distribution to Safeskin, followed by Safeskins distribution to External Distributing are referred to as the Thai Cash Distribution . The Thai Cash Distribution is reported on the 2014 Joint Federal Return as resulting in $100x of U.S. federal taxable income (which includes any dividend deemed to have been paid under section 78 of the Code) and a $28x foreign tax credit ( viz. , equal to the sum of the Thailand Income Taxes on current earnings, plus the withholding taxes with respect to the Thai Cash Distribution, plus the Thailand Income Taxes previously paid with respect to the Thai Subsidiaries accumulated earnings and profits).
Assume that Kimberly-Clark Far East Pte. Limited ( KC Singapore ) has (i) $50x of chargeable income in 2014 (which is equal to KC Singapores current earnings and profits for 2014 under United States Income Tax law), on which Singapore imposes an Income Tax equal to $10x (which is considered to accrue ratably during 2014 and is payable after the Effective Time), and (ii) additional local distributable reserves of $40x as of December 31, 2013 (which is equal to KC Singapores accumulated earnings and profits under United States Income Tax law as of such date), with respect to which KC Singapore has previously paid $10x of Singapore Income Tax.
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During 2014, and prior to the Effective Time, KC Singapore makes a cash distribution of $40x (the Singapore Cash Distribution ) to its parent, Kimberly-Clark International, S.A., a Panamanian corporation that is a member of the External Distributing Group ( KC International ). Assume further that KC International sells KC Singapore to Halyard Health prior to the Effective Time (the Singapore Sale ), which, under United States Income Tax law ( viz. , section 964(e) of the Code), results in a deemed dividend from KC Singapore to KC International of $40x. Assume further that Panama imposes $5x of Income Tax on the Singapore Sale (and that this Tax is considered to be accrued after the Effective Time and is paid in 2015). Finally, assume the Singapore Cash Distribution and the deemed dividend resulting from the Singapore Sale (net of the Panama Income Taxes imposed on the Singapore Sale) (collectively, the Singapore Income ) constitute $75x of subpart F income of KC International ( viz. , $40x from the Singapore Cash Distribution, plus $40x of deemed dividend income from the Singapore Sale, minus $5x of Panama Income Tax imposed on the Singapore Sale). As a result, the Singapore Income gives rise to $25x of foreign tax credits for the 2014 Joint Federal Return ( viz. , $20x attributable to the Singapore Income Tax imposed on KC Singapores chargeable income, plus $5x attributable to the Panama Income Tax imposed on the gain in the Singapore Sale) and $100x of taxable income ( viz. , $75x attributable to the subpart F income, plus a $25x deemed dividend under section 78 of the Code).
On the 2014 Joint Federal Return, the External Distributing consolidated group reports $400x of consolidated taxable income, no losses carried forward to 2014 from any prior Tax Year, foreign tax credits of $53x, and a Tax liability of $87x ( viz. , (.35)($400x) - $53x of foreign tax credits).
Of the $200x of consolidated taxable income reported on such Tax Return that is not attributable to the Thai Cash Distribution or the Singapore Income, $150x is attributable to the separate taxable income (calculated in accordance with Treasury Regulation Section 1.1552-1(a)(1) and in accordance with past practices) of the members of the External Distributing Group, and the remaining $50x of consolidated taxable income is attributable to the separate taxable income (calculated in accordance with Treasury Regulation Section 1.1552-1(a)(1) and in accordance with past practices) of the members of the External SpinCo Group during the External SpinCo Pre-Spin 2014 Period. The $200x of consolidated taxable income reported on such Tax Return that is not attributable to the Thai Cash Distribution or the Singapore Income results in $70x of Tax. For the reasons discussed in Example 1, $52.5x of such Tax is allocated to External Distributing, while the other $17.5x of such Tax is allocated to External SpinCo.
The $52.5x of U.S. federal income taxes imposed on the $150x of U.S. federal taxable income attributable to the Thai Cash Distribution and the Singapore Cash Distribution ( viz. , $72x distributed in the Thai Cash Distribution, plus $40x of subpart F income deemed distributed and attributable to the Singapore Cash Distribution, plus $38x of deemed dividends under section 78 of the Code ( viz. , $28x attributable to the Thai Cash Distribution, plus $10x attributable to the Singapore Cash Distribution)) are Repatriation Taxes and are allocated solely to External Distributing under Section 2.2(a)(i)(B). The $17.5x of U.S. federal income taxes imposed on the $50x of U.S federal taxable income attributable to the Singapore Sale ( viz. , $35x of subpart F
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income attributable to the Singapore Sale, plus a deemed dividend of $15x under section 78 of the Code) are Restructuring Taxes and are allocated solely to External Distributing under Section 2.2(a)(i)(B). Finally, notwithstanding the fact that a portion of the foreign tax credits attributable to the Thai Cash Distribution and the Singapore Income relate to taxes that accrue after the Effective Time and are payable after the Effective Time, the entire $53x of these foreign tax credits are allocated to External Distributing under Section 2.2(a)(ii)(A) (even if some portion of the $53x of these foreign tax credits cannot be claimed on the 2014 Joint Federal Return due to a limitation on such foreign tax credits under applicable Tax Law), because they arise in 2014 with respect to the 2014 Joint Federal Return (and are not attributable to Mexican or Japanese Income Taxes). Therefore, pursuant to Section 2.1 External Distributing is liable for $69.5x of the Tax reported on the 2014 Joint Federal Return ( viz. , ($52.5x plus $70x of Tax) - $53x of foreign tax credits), and External SpinCo is liable for the remaining $17.5x of the Tax reported on the 2014 Joint Federal Return.
Pursuant to Section 3.1(a), External Distributing is responsible for preparing and filing the 2014 Joint Federal Return. Pursuant to Section 4.1, External Distributing must pay the $87x of Tax to the Tax Authority. Pursuant to Section 4.2(a), External SpinCo must remit the amount for which it is liable ( viz. , $17.5x) to External Distributing within thirty days after receiving notification requesting such amount. If payment is not made within thirty days, External SpinCo must pay interest thereafter on the amount past due at the rate and as determined under Section 4.4.
For the avoidance of doubt, for purposes of calculating the parties liability for non-U.S. Taxes and the utilization of Tax Benefits for 2014:
(i) The $8x of withholding taxes that were imposed by Thailand on the Thai Subsidiaries cash distribution to Safeskin are Repatriation Taxes and are allocated solely to External Distributing under Section 2.2(a)(i)(B). Section 4.2(e) applies to such withholding taxes because they are imposed on the Cash Distribution. Therefore, External Distributing is deemed to have made payment of such withholding taxes to External SpinCo for purposes of Section 4.2(b) to the extent of such withholdings.
(ii) The $10x of Income Tax imposed by Thailand on the Thai Subsidiaries net taxable profits for 2014 is allocated solely to External SpinCo under Section 2.2(a)(i)(C). As a result, External SpinCo is liable for such Income Tax under Section 2.1(a)(i). External SpinCo is responsible for preparing and filing the Tax Return with respect to such Income Tax pursuant to Section 3.2(b) and remitting the Income Tax shown thereon to the proper Tax Authority pursuant to Section 4.1. No payment will be required from External Distributing under Section 4.2(b) with respect to such Income Taxes.
(iii) The $10x of Singapore Income Tax imposed on KC Singapores $50x of chargeable income in 2014 is allocated solely to External SpinCo under Section 2.2(a)(i)(C). As a result, External SpinCo is liable for such Income Tax under Section 2.1(a)(i). External SpinCo is responsible for preparing and filing the Tax Return with respect to such Income Tax pursuant to Section 3.2(b) and remitting the Income Tax shown thereon to the proper Tax Authority pursuant to Section 4.1. No payment will be required from External Distributing under Section 4.2(b) with respect to such Income Tax.
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(iv) The $5x of Panama Income Tax with respect to the Singapore Sale is a Restructuring Tax allocated to External Distributing under Section 2.2(a)(i)(B). As a result, External Distributing is liable for such Income Tax under Section 2.1(b)(i). External Distributing is responsible for preparing and filing the Tax Return with respect to such Income Tax pursuant to Section 3.2(a) and remitting the Income Tax shown thereon to the proper Tax Authority pursuant to Section 4.1. No payment will be required from External SpinCo under Section 4.2(a) with respect to such Income Tax.
Part II. Assume the same facts as in Part I of this Example 7, except that following the Effective Time the Thai Subsidiaries make an additional cash distribution during 2014 to Safeskin, which in turn immediately distributes such cash to Internal SpinCo (which is a member of the External SpinCo Group) (collectively, such distributions the Post-Spin Distribution ). Moreover, assume that, for U.S. federal income tax purposes, the effect of the Post-Spin Distribution is to reduce the portion of the Thai Cash Distribution that is treated as a dividend to External Distributing ( viz. , by causing some of the Thai Subsidiaries current earnings and profits for 2014 to be deemed distributed to Internal SpinCo), with the result that (i) the foreign tax credits claimed with respect to the Thai Cash Distribution on the 2014 Joint Federal Return are only $20x (rather than $28x) and (ii) the remaining $8x of foreign tax credits that were claimed with respect to the Thai Cash Distribution under Part I of this Example 7 (the Shifted Foreign Tax Credits ) are instead claimed by External SpinCo against its U.S. federal income taxes on its External SpinCo Stub Period Return.
The $20x of foreign tax credits claimed with respect to the Thai Cash Distribution on the 2014 Joint Federal Return are allocated to External Distributing under Section 2.2(a)(ii)(A) because they arise in 2014 with respect to the 2014 Joint Federal Return. Because of the Post-Spin Distribution, the Shifted Foreign Tax Credits arise in 2014 with respect to the External SpinCo Stub Period Return rather than the 2014 Joint Federal Return, with the result that they are allocated to External SpinCo under Section 2.2(a)(ii)(D) (rather than to External Distributing under Section 2.2(a)(ii)(A)). However, because the Post-Spin Distribution directly causes foreign tax credits that are allocated to External Distributing pursuant to Section 2.2(a)(ii)(A) to be reduced, External SpinCo is deemed under Section 2.1(d) to have utilized foreign tax credits allocated to External Distributing to reduce Taxes for which External SpinCo is liable for the Stub Period and is required under Section 2.1(d) to make a payment to External Distributing, pursuant to Section 2.1(a)(ii)(A), for the Shifted Foreign Tax Credits. Such payment is not subject to the limitation in the last sentence of Section 4.3.
Part III. Assume the same facts as in Part II of this Example 7, except that in 2015 Thailand initiates an audit of the Thai Subsidiaries that successfully asserts that the Thai Subsidiaries owed additional Income Taxes for 2014. For U.S. federal income tax purposes, the effect of these additional Thailand Income Taxes is that each of External Distributing and External SpinCo are able to amend the 2014 Joint Federal Return and the External SpinCo Stub Period Return, respectively, (i) to claim additional foreign tax credits and (ii) to report additional deemed dividend income under section 78 of the Code. For the same reasons set forth in Parts I and II of this Example 7, the additional foreign tax credit reported on the amended 2014 Joint Federal Return and the additional Shifted Foreign Tax Credits are each allocated in the same manner as set forth in Part II of this Example 7. The additional United States Income Taxes imposed on the additional deemed dividend income reported on the amended 2014 Joint Federal
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Return are Repatriation Taxes, and the additional United States Income Taxes imposed on the additional deemed dividend income reported on the amended External SpinCo Stub Period Return are Income Taxes allocated to External SpinCo under Section 2.2(a)(i)(C). For the same reasons set forth in Part II of this Example 7, External SpinCo must make a payment to External Distributing for the additional Shifted Foreign Tax Credits.
Example 8. | Restructuring Taxes and Foreign Tax Credits . |
For the External SpinCo Pre-Spin 2014 Period, the Mexican Maquilas, which are disregarded as entities separate from Internal SpinCo for U.S. federal income tax purposes and which are members of the External SpinCo Group, have $100x of taxable income under both United States and Mexican Income Tax law. This taxable income includes gain from a sale by the Mexican Maquilas of certain assets relating to the External Distributing Business to members of the External Distributing Group (such sale, the Mexican Sale ) in preparation for the External Distribution. The Mexican Sale results in $20x of taxable gain under Mexican Income Tax law and a deferred intercompany gain of $20x under United States Income Tax law (which is taken into account by Internal SpinCo immediately prior to the External Distribution as required under Treasury Regulations Section 1.1502-13(d)). Assume the Mexican Maquilas pay Mexican Income Tax equal to $30x ($6x of which is attributable to the Mexican Sale) to the Tax Authority pursuant to Section 4.1. With respect to the 2014 Joint Federal Return, the Mexican Maquilas give rise to $100x of taxable income and $30x of foreign tax credits.
Mexican Income Taxes. The $6x of Mexican Income Tax attributable to the Mexican Sale is a Restructuring Tax that is allocated solely to External Distributing pursuant to Section 2.2(a)(i)(B). The remaining $24x of Mexican Income Tax is allocated solely to External SpinCo pursuant to Section 2.2(a)(i)(C). Assuming that these Mexican Income Taxes are filed and paid by External SpinCo pursuant to Section 4.1, External Distributing must remit the amount for which it is liable ( viz. , $6x) to External SpinCo under Section 4.2(b) within thirty days after receiving notification requesting such amount. If payment is not made within thirty days, External Distributing must pay interest thereafter on the amount past due at the rate and as determined under Section 4.4.
United States Income Taxes. Because the 2014 Joint Federal Return is a Joint Return, External Distributing is responsible for filing the 2014 Joint Federal Return (pursuant to Section 3.1(a)) and remitting the Taxes shown thereon to the Tax Authority. The $7x of United States Income Tax attributable to the Mexican Sale ( viz. , (.35)($20x of deferred intercompany gain taken into account by Internal SpinCo immediately prior to the External Distribution)) is a Restructuring Tax that is allocated solely to External Distributing pursuant to Section 2.2(a)(i)(B). The remaining $28x ( viz. , (.35)($100x-$20x)) of United States Income Tax attributable to the Mexican Maquilas for the External SpinCo Pre-Spin 2014 Period is allocated to External SpinCo under Section 2.2(a)(i)(C). Under Section 2.2(a)(ii)(A), the $6x of foreign tax credit attributable to the Mexican Restructuring Tax is allocated to External Distributing, and the remaining $24x of foreign tax credit attributable to the Mexican Income Taxes are allocated to External SpinCo.
Under Section 2.1(b)(i) External Distributing is liable for $1x ( viz. , $7x of Restructuring Tax - $6x of foreign tax credit) of United States Income Tax reported on the 2014 Joint Federal
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Return related to the Mexican Maquilas. Under Section 2.1(a)(i) External SpinCo is liable for $4x ( viz. , $28x of United States Income Tax - $24x of foreign tax credit) of United States Income Tax reported on the 2014 Joint Federal Return related to the Mexican Maquilas. Therefore, assuming the same facts as in Example 1 (other than the income relating to the Mexican Maquilas), under Section 4.2(a) External SpinCo will be required to make a payment of $4x to External Distributing relating to the United States Income Tax imposed with respect to the Mexican Maquilas.
Example 9. | Tax Contests - U.S. Income Taxes . |
Assume the same facts as in Example 1 and that all payments discussed in Example 1 were timely made. In 2016, the relevant Tax Authority initiates a Tax Contest with respect to the 2014 Joint Federal Return. As a result of the Tax Contest, it is concluded that External Distributing (i) failed to report $50x of consolidated taxable income ($25x of which is allocated to External Distributing under Section 2.2(a)(i)(C), and the remaining $25x of which is allocated to External SpinCo under Section 2.2(a)(i)(C)) and (ii) was entitled to claim an additional foreign tax credit of $10x that is allocated to External Distributing pursuant to Section 2.2(a)(ii)(A). Consequently, External Distributing is required to pay an additional $7.5x to the Tax Authority ( viz. , (.35)($50x of additional taxable income) minus $10x of foreign tax credits).
Section 4.3 requires that the amounts paid under this Agreement be redetermined as follows: Taking into account the adjustments from the Tax Contest, the 2014 Joint Federal Return should have reported $250x of consolidated taxable income ($175x of which is allocated to External Distributing, and $75x of which is allocated to External SpinCo), $10x of foreign tax credits (all of which are allocated to External Distributing), and Tax liability of $77.5x ( viz. , (.35)($250x) minus $10x of foreign tax credits). Under Section 2.1, External Distributing is liable for $51.25x of Tax ( viz. , (.35)($175x of taxable income allocated to External Distributing) minus $10x of foreign tax credits), and External SpinCo is liable for $26.25x of Tax ( viz. , (.35)($75x of taxable income allocated to External SpinCo)). When the 2014 Joint Federal Return was originally filed, External Distributing paid $70x to the Tax Authority and received a payment of $17.5x from External SpinCo. External Distributing is required to pay an additional $7.5x to the Tax Authority as a result of the Tax Contest, and External SpinCo is required to make a payment to External Distributing of $8.75x ( viz. , $26.25x redetermined liability after the Tax Contest, minus $17.5x initially paid to External Distributing with respect to the 2014 Joint Federal Return) within thirty days after the date on which External Distributing paid the $7.5x in additional tax to the Tax Authority (or, if later, fifteen days after the date of a request for such payment from External Distributing), provided that the $8.75x in additional tax exceeds $50,000.
Example 10. | Tax Contests - State Taxes . |
External Distributing files its income Tax Return for State 1 with respect to the Tax Year that begins on January 1, 2014, and ends on December 31, 2014 (the 2014 Combined State 1 Return ), on a combined basis with the other corporate members of both Groups. Assume that States 1 imposes its income tax at a 10% rate and that the 2014 Combined State 1 Return reported $1,000,000 of combined taxable income, no losses carried forward to 2014 from any prior year, a $50,000 research and development tax credit, and a Tax liability of $50,000 ( viz. , (.1)($1,000,000) minus the $50,000 research and development tax credit). Of the $1,000,000 of
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combined taxable income reported on the 2014 Combined State 1 Return, assume that $900,000 is allocated to External Distributing under Section 2.2, and the remaining $100,000 of combined taxable income is allocated to External SpinCo under Section 2.2. Assume the research and development tax credits are allocated entirely to External Distributing under Section 2.2(a)(ii)(C). Consistent with Sections 3.1, 4.1, and 4.2(a), External Distributing prepared and filed the 2014 Combined State 1 Return, paid the $50,000 Tax liability, and timely received a $10,000 payment from External SpinCo for the portion of the Tax for which External SpinCo is liable under Section 2.1.
For the Tax Year that begins on January 1, 2015, and ends on December 31, 2015, External SpinCo reports a loss of $500,000 on its combined income Tax Return for State 1. Under State 1s Income Tax law, External SpinCo is required to carry back this loss to the 2014 Combined State 1 Return, and for purposes of this Example 10, the carryback of this Tax Item is assumed to be material. Therefore, at External SpinCos reasonable request, External Distributing is required under Section 3.3(d) to amend the 2014 Combined State 1 Return and file a claim for refund. The 2014 Combined State 1 Return is amended (the State 1 Redetermination Event ), to report combined taxable income of $500,000, a $50,000 research and development tax credit, and a Tax liability of $0 ( viz. , (.1)($500,000), minus the $50,000 research and development tax credit), resulting in a refund of $50,000 that is paid to External Distributing. Under Section 3.3(d), External SpinCo is required to reimburse External Distributing for reasonable outside advisor fees incurred in connection with amending the 2014 Combined State 1 Return.
Under Section 4.3 the amounts paid under this Agreement are redetermined to take into account the State 1 Redetermination Event. In this regard, the parties take the following into consideration:
(i) Without regard to Tax Benefits, the amended 2014 Combined State 1 Return reflects $900,000 of combined taxable income that is allocated to External Distributing under Section 2.2, and $100,000 of combined taxable income that is allocated to External SpinCo. Therefore, under Section 2.1 (and ignoring Tax Benefits) External Distributing is liable for $90,000 of Tax and External SpinCo is liable for $10,000 of Tax.
(ii) The amended 2014 Combined State 1 Return reflects two Tax Benefits. The $50,000 of research and development tax credits are allocated entirely to External Distributing and therefore are utilized by External Distributing under Section 2.1(c)(i) to reduce its Tax liability. The $500,000 loss carryback is allocated solely to External SpinCo under Section 2.2(a)(ii)(D), but, taking into account only those Tax Items allocated to External SpinCo during such Tax Year ( viz. , $100,000 of combined taxable income), only $100,000 of such Tax Benefit would be allowable under applicable Tax Law. Therefore, under Section 2.1(c)(ii), only $100,000 of the loss carryback is utilized by External SpinCo, and the remaining $400,000 of the loss carryback is utilized by External Distributing under Section 2.1(c)(iii). Taking into account the utilization of Tax Benefits, External Distributing and External SpinCo each have no liability for any Tax with respect to the amended 2014 Combined State 1 Return.
(iii) External Distributing paid the $50,000 Tax liability reflected on the 2014 Combined State 1 Return as originally filed and received a refund of $50,000 from the Tax
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Authority, resulting in a net payment of $0 from External Distributing to the Tax Authority. Because External Distributing received a $10,000 payment from External SpinCo for the portion of the Tax for which External SpinCo is liable under Section 2.1 and, as a result of the State 1 Redetermination Event, External SpinCo is not liable for any Tax with respect to the amended 2014 Combined State 1 Return, External Distributing is required under Section 4.3 to make a payment of $10,000 to External SpinCo (subject to the limitation in the last sentence of Section 4.3). Furthermore, subject to the limitation set forth in the last sentence of Section 4.3, under Section 2.1(b)(ii)(D) External Distributing is required to pay External SpinCo for the loss carrybacks that were utilized by External Distributing. Under Section 4.2(d)(iii), the amount of the payment from External Distributing for the utilization of the loss carryback would be $40,000 ( viz. , the amount by which External Distributings Taxes were actually reduced by the Tax Benefit).
Based on the foregoing, the redetermined payment attributable to the State 1 Redetermination Event is determined to be a payment from External Distributing to External SpinCo of $50,000 ( viz. , $10,000 as repayment of the payment previously received from External SpinCo for its allocable share of Taxes, and $40,000 for External Distributings utilization Tax Benefits allocated to External SpinCo). However, this redetermined payment attributable to the State 1 Redetermination Event is not required to be made under Section 4.3 because it does not exceed $50,000.
In addition to the State 1 Redetermination Event, assume that the relevant Tax Authority initiates a Tax Contest in 2015 with respect to a Joint Return filed by External Distributing with respect to Non-Income Taxes in State 2 for the period that begins on October 1, 2014, and ends on the Distribution Date (the State 2 Non-Income Tax Return ). Consistent with Sections 3.1, 4.1, and 4.2(a), External Distributing originally prepared and filed the State 2 Non-Income Tax Return, paid the $150,000 Tax liability reported thereon, and timely received a $50,000 payment from External SpinCo for the portion of the Tax for which External SpinCo was liable under Section 2.1. As a result of this Tax Contest (the State 2 Redetermination Event ), however, it is concluded that an exemption was available to the External SpinCo Business, making the correct Tax liability on the State 2 Non-Income Tax Return equal to $110,000, $100,000 of which is allocated to External Distributing. Therefore, following the redetermination of payments made with respect to the State 2 Non-Income Tax Return under Section 4.3, it is determined that External SpinCo overpaid External Distributing by $40,000. Additional payments calculated with respect to the State 1 Redetermination Event and the State 2 Redetermination Event are not aggregated for purposes of applying the threshold in Section 4.3 because they arise from separate Redetermination Events. Therefore, no payment is required to be made under Section 4.3 from External Distributing to External SpinCo with respect to the State 2 Redetermination Event.
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APPENDIX B
AcryMed Incorporated
Aria Aesthetics, Inc.
Avent Slovakia, Inc.
Avent, Inc.
Ballard Medical Products
Ballard Purchase Corporation
Ballard Real Estate Holdings, Inc
BMCO One, Inc.
BMCO Two, Inc.
Cardiotronics Systems, Inc.
Eastern Safeskin Corp.
Halyard Healthcare Inc.
I-Flow Corporation
Kimberly-Clark PHC International, Inc.
Medical Innovations Corporation
Mistassist, Inc.
Plastic Engineered Products Company
R2 Medical Systems, Inc.
Safeskin Corporation
Safeskin Insurance Management, Inc.
Safeskin Real Estate
Safeskin Scientific Corporation
Safeskin Sensicon Corporation
Spenco Medical Corporation
TAC II
Tactyl Technologies, Inc.
TCNL Technologies
Tecnadyne Scientific Incorporated
Tecnol Consumer Products, Inc.
Tecnol Medical Products, Inc.
Tecnol New Jersey Wound Care, Inc.
Tecnol, Inc.
Tri-Med Specialties, Inc.
Value Select Corporation
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Exhibit 10.3
Execution Version
EMPLOYEE MATTERS AGREEMENT
This Employee Matters Agreement (Agreement), dated as of October 31, 2014, is between Kimberly-Clark Corporation (Kimberly-Clark), a Delaware corporation, and Halyard Health, Inc. (Halyard), a Delaware corporation.
RECITALS
1. Kimberly-Clark and Halyard have entered into a Distribution Agreement dated as of October 31, 2014 (the Distribution Agreement) pursuant to which all of the outstanding shares of Halyards common stock will be distributed on a pro rata basis to the holders of Kimberly-Clarks common stock (the Distribution).
2. Pursuant to the Distribution Agreement, Kimberly-Clark will transfer, or cause its subsidiaries to transfer, to Halyard certain assets and liabilities prior to the Distribution.
3. In connection with the Distribution, Kimberly-Clark and Halyard desire to enter into this Employee Matters Agreement.
In consideration of the mutual agreements contained herein and in the Distribution Agreement, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the meanings set forth below. Capitalized terms used but not defined herein shall have the meanings set forth in the Distribution Agreement.
1.01 Automatic Transfer Employee means a Business Employee (other than an Isolated Employee) whose employment transfers or will transfer from Kimberly-Clark to Halyard as a result of the implementation of the Distribution Agreement and/or by operation of any Automatic Transfer Law.
1.02 Automatic Transfer Law means any law which provides for the transfer of an employee from Kimberly-Clark to Halyard automatically by operation of law (including, without limitation, the EUs Acquired Rights Directive (Council Directive 2001/23/EC) and any implementing legislation in respect thereof).
1.03 Business Employee means any and all of the following: (i) an individual employed at any time on or prior to the Distribution Date by Kimberly-Clark who has, as of the Distribution Date, or who, immediately prior to his or her termination of employment with Kimberly-Clark, had employment duties primarily related to the Halyard Business; (ii) the Isolated Employees; and (iii) the administrative and functional support personnel to be agreed upon between Kimberly-Clark and Halyard.
1.04 COBRA means the Consolidated Omnibus Budget Reconciliation Act of 1985, as codified at Part 6 of Subtitle B of Title I of ERISA and at section 4980B of the Code.
1.05 Domestic Business Employee means a Business Employee who is employed by Kimberly-Clark in the United States.
1.06 ERISA means the Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C. §1001, et . seq .
1.07 Foreign Business Employee means a Business Employee employed by Kimberly-Clark outside the United States.
1.08 Isolated Employee means a Business Employee employed by Kimberly-Clark or a third party leasing agency or other entity on behalf of Kimberly-Clark on or prior to the Distribution Date in a jurisdiction where Halyard does not intend to have a legal entity presence following the Distribution Date, and to be agreed upon between Kimberly-Clark and Halyard.
1.09 Isolated Employer means the employee leasing agency or other third party entity by whom an Isolated Employee is employed on or before the Distribution Date, or where the context requires, after the Distribution Date, as agreed upon between Kimberly-Clark and Halyard.
1.10 Non-Automatic Transfer Employee means a Business Employee who is not an Automatic Transfer Employee and not an Isolated Employee.
1.11 Non-ERISA Benefit Arrangement means each contract, agreement, policy, practice, program, plan, trust or arrangement, other than a Pension Plan or Welfare Plan, providing for benefits, perquisites or compensation of any nature to any Business Employee, or to any family member, dependent or beneficiary of any such Business Employee, including, without limitation, disability, severance, health, dental, life, accidental death and dismemberment, travel and accident, tuition reimbursement, supplemental unemployment, vacation, sick, personal or bereavement days, holidays, retirement, deferred compensation, profit sharing, bonus, stock-based compensation or other forms of incentive compensation.
1.12 Pension Plan means any pension plan as defined in section 3(2) of ERISA, without regard to sections 4(b)(4) or 4(b)(5) of ERISA.
1.13 Transferred Employee means any Automatic Transfer Employee described in Section 2.01(a) or any Non-Automatic Transfer Employee described in Section 2.01(b) who is employed by Halyard immediately following the Effective Time (or as soon thereafter as is legally permissible or practicable or such other time as is specified in Section 2.01). Where applicable, the term also includes the Isolated Employees agreed upon between Kimberly-Clark and Halyard.
1.14 Welfare Plan means any employee welfare plan as defined in section 3(1) of ERISA, without regard to sections 4(b)(4) or 4(b)(5) of ERISA
1.15 Any reference in this Agreement to an individuals employment or engagement by Kimberly-Clark or by Halyard (and any reference to any related benefit provided by such entity), shall, where the context requires, be deemed to be a reference to the employment or engagement of that individual (or the provision of such a benefit) by any relevant Kimberly-Clark or Halyard subsidiary or Affiliate.
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1.16 Any reference in this Agreement to substantially similar terms and conditions or any equivalent phrase shall mean substantially similar terms and conditions of employment for the employee or other service provider in question (relating, where relevant, to salary, wages, incentive pay opportunity, equity compensation, employee welfare benefits, retirement benefits, or other terms and conditions of employment, or where the context indicates, any combination thereof), as in effect at Kimberly-Clark (or, where relevant, an Isolated Employer) on the Distribution Date, but subject to the exceptions set forth herein or agreed upon between Kimberly-Clark and Halyard.
ARTICLE II
TRANSFERRED EMPLOYEE MATTERS
2.01 Employment.
(a) Automatic Transfer Employees. The Automatic Transfer Employees shall transfer from Kimberly-Clark to Halyard by operation of law, effective as of the Distribution Date. Except to the extent set out in this Agreement or otherwise agreed between the parties, such employees shall be employed by Halyard on terms and conditions as required by the relevant Automatic Transfer Law.
(b) Non-Automatic Transfer Employees. On or before the Distribution Date (or (i) as soon thereafter as is legally permissible, taking into account the timing of the formation of the local Halyard subsidiaries, immigration laws and other applicable requirements, or (ii) such later time as provided in the Transition Services Agreement or other agreement between the parties), Halyard shall (unless otherwise expressly agreed between the parties in respect of any one or more individual, including without limitation, any individual on workers compensation in a jurisdiction where an employment transfer would cause loss of such benefits) employ or (if already employed) continue to employ each Non-Automatic Transfer Employee who, as of the day immediately prior thereto is employed by Kimberly-Clark, including any such employee who is then an inactive employee on approved medical, non-medical or short-term disability, long-term disability or weekly indemnity leave of absence or absent from active employment due to occupational illness or injury covered by workers compensation (with the employees on disability or leave, to Kimberly-Clarks best knowledge as of September 30, 2014, agreed upon between Kimberly-Clark and Halyard). Except to the extent set out or scheduled in this Agreement or otherwise agreed between the parties, such employee shall initially be employed by Halyard on terms and conditions substantially similar in the aggregate to the terms and conditions of such employees last day of employment with Kimberly-Clark.
(c) Isolated Employees . Except to the extent they agree otherwise, the parties shall use their respective reasonable endeavors to ensure that any Isolated Employees being employed by Kimberly-Clark or an Isolated Employer on or before the Distribution Date are employed or offered employment by Halyard or a 3rd party staffing agency providing staffing services to Halyard (or other 3rd party employer) as agreed upon between Kimberly-Clark and Halyard opposite the name of each Isolated Employee associated with such employer,
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on such initial terms and conditions substantially similar in the aggregate to the terms and conditions of such employees last day of employment with Kimberly-Clark or the relevant Isolated Employer.
(d) Terms and Conditions of Transferred Employees . In respect of each Transferred Employee, the terms and conditions of that employees employment with Halyard (i) shall be communicated to each such Transferred Employee prior to the Distribution Date in a form mutually satisfactory to Halyard and Kimberly-Clark, (ii) except as otherwise provided herein, shall include credit, for all purposes, for all years of service credited by Kimberly-Clark (other than under retiree medical or retiree life plans), (iii) shall include credit for all hours worked for or paid by Kimberly-Clark for overtime, leave of absence and unemployment compensation purposes, and (iv) may include a requirement to execute one or more agreements dealing with confidentiality, non-competition, non-solicitation, or other similar obligations, between such Transferred Employee and Halyard. To the extent legally possible, Business Employees temporarily seconded to Halyard shall remain Kimberly-Clark employees until actually transferred to Halyard and the provisions herein relating to Transferred Employees shall not apply until such transfer of employment occurs. Such employees to be seconded will be agreed upon between Kimberly-Clark and Halyard. Similarly, Business Employees who are not transferred or moved to Halyard until after the Distribution Date (either pursuant to the terms of the Transition Services Agreement or otherwise) shall remain Kimberly-Clark employees and shall not become Transferred Employees until actually transferred or moved to Halyard, and the provisions herein relating to Transferred Employees shall not apply until such transfer or movement of employment occurs.
2.02 Severance. It is not intended that any Transferred Employee or other Business Employee will be eligible for termination or severance payments or benefits from Kimberly-Clark as a result of the transfer or change of employment from Kimberly-Clark to Halyard (or, in the case of an Isolated Employee, the change of employment from Kimberly-Clark to an Isolated Employer). Notwithstanding the preceding sentence, in the event that any such termination or severance payments or benefits become payable on account of such transfer, change or the refusal of a Business Employee to accept employment with Halyard (or, with respect to an Isolated Employee, to accept employment with an Isolated Employer), Halyard shall indemnify Kimberly-Clark for the amount of such termination or severance payments or benefits. Halyard shall be liable, and indemnify Kimberly-Clark for any termination or severance obligations owed to Business Employees on or after the Distribution Date.
2.03 Employment Solicitation. For a period of 12 months following the Distribution Date, neither Kimberly-Clark nor Halyard may, and will not permit any of their respective subsidiaries, Affiliates or agents to, solicit or recruit for employment any then current employees of the other company or its subsidiaries or Affiliate, without the prior written consent of the other company. Nothing in this Section 2.03 shall be construed so as to (i) prohibit the hiring by either company or its subsidiaries or Affiliates of any employee of the other company who initiated contact for the purpose of seeking employment without prior contact initiated by any employee or agent of the company where employment is sought, or (ii) prohibit the hiring of any person who applied for employment with either company in response to any public advertising medium.
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2.04 Personnel Records. Subject to applicable law, all information and records regarding employment, global mobility and personnel matters (including immigration records but not including medical files) of Transferred Employees will be transferred to and/or retained after the Distribution Date (or after the effective date of such Transferred Employees move to Halyard, as the case may be) by Halyard in accordance with all laws relating to the collection, storage, retention, privacy, and disclosure of such records. Access to such records after the transfer will be provided to Kimberly-Clark in accordance with this Article 2, the Transition Services Agreement and the Distribution Agreement. Notwithstanding anything to the contrary in the foregoing, Kimberly-Clark shall retain reasonable access (either through retaining copies or Halyard sharing such information with Kimberly-Clark upon request) to those records necessary to (i) Kimberly-Clarks continued administration of any plans or programs on behalf of Transferred Employees after the date of transfer of such records for so long as said administration continues pursuant to this Agreement or the Transition Services Agreement (and Kimberly-Clark and Halyard agree to enter into any ancillary or additional agreements necessary for such purpose, including a HIPAA Business Associate Agreement in a form agreed upon between Kimberly-Clark and Halyard), and (ii) as needed for any litigation, investigation, charge or other employment matter relating to a Transferred Employee or any employee benefit plan or other employment matter. Kimberly-Clark shall also retain copies of all confidentiality, non-competition, non-solicitation, or other similar agreements with any Business Employee in which Kimberly-Clark has an interest. Personnel files for Business Employees who are not Transferred Employees shall be retained by Kimberly-Clark with provision for access by Halyard in accordance with this Article 2, the Transition Service Agreement and the Distribution Agreement.
2.05 Consultation Issues . To the extent required by law, the parties have and shall continue to cooperate with each other in respect of any obligations they may have to consult with Transferred Employees and/or their representatives, and to the parties knowledge, all such consultations as of the date hereof have been satisfactorily completed in accordance with applicable law. Each party shall indemnify the other in respect of any claims, liabilities and demands that may arise from their respective failures to so cooperate and consult.
2.06 Relocation Agreements . Halyard shall have the right to enforce and receive any payments pursuant to any relocation agreement previously entered into by Kimberly-Clark and any Transferred Employee that provides for reimbursement or penalties if the Transferred Employee voluntarily terminates employment with Kimberly-Clark or Halyard before the end of the applicable repayment period. The relocation agreements with Business Employees currently in force will be agreed upon between Kimberly-Clark and Halyard. To the extent that Halyard is unable directly to enforce such relocation agreement provisions, Kimberly-Clark shall take all reasonable steps to provide assistance to Halyard to do so or to receive the benefit of having done so, including (without limitation) novating or assigning such relocation agreement to Halyard or taking reasonable steps to recover any such payment (to be paid, net of all recovery costs including attorneys fees, to Halyard).
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ARTICLE III
WELFARE PLANS
The provisions of Section 3.01 3.07 shall apply only to Transferred Employees (or where relevant, Business Employees) who are Domestic Business Employees. Provisions with regard to Transferred Employees (or where relevant, Business Employees) who are not Domestic Business Employees are set forth in Section 3.08.
3.01 Cessation of Participation in Kimberly-Clark Welfare Plans.
(a) 2014 Transition . Effective as of the Effective Time, Halyard shall (i) adopt the Kimberly-Clark Flexible Plan and underlying Welfare Plans to be agreed upon between Kimberly-Clark and Halyard as an additional adopting employer for the remainder of the 2014 Plan Year, and (ii) establish its own Section 125 Cafeteria Plan for the purpose of effectuating the Transferred Employees continued salary deferrals to pay the employee portion of the premiums under the Kimberly-Clark Welfare Plans. Except as otherwise provided in this Agreement or as required by the terms of any Kimberly-Clark Welfare Plan or by COBRA or any comparable state or federal law, participation in the Kimberly-Clark Welfare Plans by all Transferred Employees and all Business Employees who are no longer employed by Kimberly-Clark as of the Distribution Date, will cease as of 11:59 P.M. on December 31, 2014. Halyard shall pay and/or reimburse Kimberly-Clark for the cost of such Transferred Employees and Business Employees continued coverage in the Kimberly Clark Welfare Plans on and after the Distribution Date through 11:59 P.M. on December 31, 2014 (both for the actual benefit costs and the reasonably necessary administration costs, including, without limitation, for the services and costs detailed in the Transition Services Agreement).
(b) Continued Participation in Kimberly-Clark Welfare Plans . Notwithstanding the above (i) Domestic Business Employees receiving Kimberly-Clark long-term disability insurance benefits as of the Distribution Date shall remain on such insurance and Halyard shall reimburse Kimberly-Clark for any post-Distribution Date costs incurred by Kimberly-Clark associated therewith (including, without limitation, the Employers share of any federal and state employment taxes associated therewith); and (ii) Business Employees participating in or eligible for Kimberly-Clark Retiree Medical Plan and/or Retiree Life Insurance benefits as of the Distribution Date shall retain such participation and/or eligibility pursuant to the terms of such plans, and Halyard shall not be responsible for such costs.
3.02 Halyards Welfare Plans. Except with respect to the long-term disability, retiree medical and retiree life insurance benefits referenced in Section 3.01 above, effective as of January 1, 2015, Halyard shall adopt and establish for the benefit of Transferred Employees (and any otherwise eligible Business Employees who are no longer employed by Kimberly-Clark as of the Distribution Date) and their respective eligible dependents, health (including medical, vision and dental), disability, life insurance, and other Welfare Plans substantially similar in the aggregate (except as otherwise agreed upon between Kimberly-Clark and Halyard) to the Welfare Plans maintained by Kimberly-Clark in which such individuals were eligible to participate immediately prior thereto. Except with respect to the long-term disability, retiree medical and retiree life insurance benefits referenced in Section 3.01 above, Transferred Employees (and, as applicable, otherwise eligible Business Employees who are no longer employed by Kimberly-Clark thereof as of the Distribution Date) shall be eligible to participate in the Halyard Welfare Plans as of January 1, 2015 on the same basis on which they were eligible to participate in the Kimberly-Clark Welfare Plans immediately prior thereto.
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Notwithstanding the above, Halyard shall not be required to establish or maintain any post-employment health or life insurance benefits, other than as may be required under COBRA or other applicable law. Effective as of January 1, 2015, all Business Employees on COBRA coverage under a Kimberly-Clark Welfare Plan shall either (a) be transferred to an applicable Halyard Welfare Plan, and Halyard shall be solely responsible for such COBRA liability, or (b) at Kimberly-Clarks election, certain Business Employees who elected COBRA prior to the Distribution Date shall remain on Kimberly-Clarks Health Plan and Halyard shall reimburse Kimberly-Clark to the extent that Kimberly-Clark pays any health benefits or other cost or liability (including plan administration costs) for any such COBRA participant in excess of his or her COBRA premiums. For avoidance of doubt, the parties understand that (i) the transfer of employment from Kimberly-Clark to Halyard in connection with the Spin-Off is not intended to be a qualifying event under COBRA, and (ii) all COBRA liability for current and former Business Employees and their qualified beneficiaries on and after the Distribution Date will be the liability of Halyard, either through reimbursing Kimberly-Clark for coverage provided under a K-C Healthcare Plan (including both benefit costs in excess of the COBRA premiums and administration costs) or directly by Halyard under a Halyard Healthcare Plan, and Halyard hereby holds harmless and indemnifies Kimberly-Clark with respect thereto.
3.03 Welfare Plan Liabilities.
(a) Halyard Liabilities. Except as provided in this Agreement, as of the Effective Time, Halyard shall assume, and either be responsible for paying or, to the extent incurred by Kimberly-Clark under a Kimberly-Clark Plan, for reimbursing Kimberly-Clark for (i) all Welfare Plan liabilities incurred by Halyard or Kimberly-Clark, as the case may be, with respect to any Business Employee after the Effective Time; and (ii) all COBRA and long-term disability benefit costs or liabilities incurred by Kimberly-Clark with respect to any Business Employee who is participating in a Kimberly-Clark-sponsored continuation plan as of the Effective Time (provided that any post Distribution Date benefits for claims incurred prior to the Effective Time pursuant to the terms of a fully insured plan maintained by Kimberly-Clark shall be paid pursuant to such plan and reimbursed by Halyard).
(b) Kimberly-Clark Liabilities. Kimberly-Clark shall continue to be responsible after the Effective Time for employer liabilities under its Welfare Plans with respect to the following:
(1) Retirees. Any Domestic Business Employee whose employment terminated on or prior to the Effective Time due to retirement and who elected or is eligible to elect retiree medical and/or retiree life insurance benefits under the Kimberly-Clark Retiree Medical and/or Retiree Life Insurance Plan.
(2) Pre-Distribution Claims. All claims for welfare benefits incurred by Business Employees prior to the Effective Time that remain unpaid as of such date, shall be paid from the appropriate Kimberly-Clark Welfare Plan and an appropriate reimbursement or accrual charged to Halyard. Claims for health benefits shall be considered to be incurred prior to the Effective Time if the services related to such claims were provided prior to the Effective Time. Claims for all other welfare benefits shall be considered to be incurred prior to the Effective Time if the date of loss occurred prior to the Effective Time. Notwithstanding the above, Halyard shall be responsible for the Welfare Plan costs as set forth in Sections 2.02, 3.04 and 3.07.
(3) Long-Term Disability. Any Domestic Business Employee receiving fully insured benefits on a Kimberly-Clark long-term disability insurance plan as of the Distribution Date shall continue to be covered under such policy (pursuant to the terms thereof) but subject to reimbursement by Halyard as provided in Sections 3.01(b) and 3.03(a).
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3.04 Flexible Spending Accounts. Effective as of the Effective Time, Halyard shall adopt the Kimberly-Clark Flexible Spending Account Plan, as an additional adopting employer, for the remainder of the 2014 calendar year (and with respect to any permitted grace period for claims incurred by March 15, 2015). Halyard shall effect the Transferred Employees continued flexible spending account salary deferrals into the Kimberly-Clark Flexible Spending Account Plan for the remainder of the 2014 calendar year under its own Section 125 Cafeteria Plan. For the 2014 calendar year, Transferred Employees shall maintain their existing eligibility, participation status and account balances under the flexible spending account plan maintained by Kimberly-Clark. Salary reduction elections made by Transferred Employees shall continue to apply through the end of the 2014 calendar year and Halyard shall promptly transfer all such 2014 post-Effective Date Flexible Spending Account deferrals to Kimberly-Clark. After the end of the 2014 Plan Submission / Reconciliation Report Period (typically, July 15, 2015), Kimberly-Clark shall calculate the positive or negative remaining flexible spending account balances of all Transferred Employees in the aggregate. Kimberly-Clark shall pay, or cause to have paid, to Halyard any net positive balance, and Halyard shall pay, or cause to have paid, to Kimberly-Clark any net negative balance. Halyard shall establish its own Flexible Spending Account Plan as of January 1, 2015.
3.05 Kimberly-Clark Assets. Kimberly-Clark shall retain all claim reserves, bank accounts, trust funds or other balances maintained by or on behalf of Kimberly-Clarks Welfare Plans.
3.06 Flex Days. Halyard shall assume and be responsible for paying the remaining 2014 Flex Days (as provided under the Kimberly-Clark Flexible Plan and/or Kimberly-Clark Time-Off Policy) for all Transferred Employees that have not yet been taken as of the Effective Time in accordance with this Section 3.06. That is, with respect to Transferred Employees, Halyard shall administer and pay any Flex Days taken on or after the Effective Time, and shall honor any previously banked but not yet used Flex Days with respect to the 2014 calendar year (which shall be rolled over to Halyard). Kimberly-Clark shall either transfer cash to Halyard or provide Halyard with an accrual, in an amount equal to the Transferred Employees prior 2014 Flex Day deferrals not yet taken as paid vacation (or other Paid Time Off) as of the Effective Time. Thus, Halyard shall credit Transferred Employees for any previously accrued (but unused) Flex Days, and Kimberly-Clark shall either reimburse Halyard or provide Halyard an appropriate accrual for the 2014 Flex Day benefits accrued and paid for by the Transferred Employees under the Kimberly-Clark Flex Days Plan but paid out post-Effective Date under the Halyard Plan. Unless otherwise provided by local law, any Flex Days owed to any Transferred Employees not used on or before December 31, 2014 shall be forfeited effective as of January 1, 2015, and such forfeited amounts shall be equitably divided such that Halyard shall transfer 10/12 of such amounts to Kimberly-Clark and shall retain 2/12 of such forfeited amounts.
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3.07 Disability.
(a) Weekly Indemnity/Short-Term Disability Benefits. Halyard shall be responsible for all claims for weekly indemnity and short-term disability benefits payable to Business Employees on or after the Distribution Date. Kimberly-Clark shall continue to be responsible after the Distribution Date for all claims for weekly indemnity benefits incurred by a Business Employee prior to the Distribution Date which are payable under an insured weekly indemnity plan, and Halyard shall reimburse Kimberly-Clark for any ongoing costs associated therewith. Periods of active work or disability absence for any Business Employee credited under any Kimberly-Clark disability plan shall count as work days or disability absence under the Halyard disability plans.
(b) Long-Term Disability Benefits. Kimberly-Clark shall continue to be responsible after the Effective Time for all claims for long-term disability incurred prior to the Effective Time by any Business Employee who is absent from active employment due to a disability, as defined in the Kimberly-Clark disability plan, on or prior to the Effective Time to the extent that such long-term disability benefits are provided under an insured Welfare Plan. Kimberly-Clark shall also remain responsible for long-term disability benefits for any Transferred Employee who is receiving weekly indemnity or short-term disability benefits as of the Effective Time and who becomes eligible for long-term disability benefits thereafter, provided that the disability relates to the same condition for which weekly indemnity or short-term disability benefits were paid and, provided further, that such long-term disability benefits are payable under an insured Welfare Plan. Notwithstanding the above, Halyard shall reimburse Kimberly-Clark for any post-Effective Time costs that Kimberly-Clark incurs by virtue of the continued long-term disability coverage provided under this Section 3.07(b). Halyard shall assume and be solely responsible for all other claims for long-term disability payable after the Effective Time with respect to any Business Employee. Periods of active work or disability absence for any Business Employee credited under any Kimberly-Clark disability plan shall count as work days or disability absence under the Halyard disability plans.
3.08 Special Provision for Foreign Welfare Plans and Benefits. Except as may otherwise be agreed upon between Kimberly-Clark and Halyard or as required under any state or provincial law, effective as of the Distribution Date, (i) participation in all Kimberly-Clark foreign (i.e., non U.S.) Welfare Plans by all Transferred Employees and other Business Employees who are no longer employed by Kimberly-Clark as of the Distribution Date, will cease as of the Effective Time; (ii) Halyard shall adopt and establish Welfare Plans for Foreign Business Employees with substantially similar terms and conditions to the Kimberly-Clark Welfare Plans in which Foreign Business Employees were eligible to participate immediately prior to the Distribution Date, with immediate participation in such plans by all Foreign Business Employees who are Transferred Employees, with no waiting period, evidence of insurability or preexisting condition limitations, and with the participants being credited for all 2014 out-of-pocket expenses incurred to date; and (iii) Kimberly-Clark shall retain all claim reserves, bank accounts, trust funds or other balances maintained by or on behalf of the Kimberly-Clark foreign Welfare Plans.
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ARTICLE IV
COMPENSATION MATTERS
AND NON-ERISA BENEFIT ARRANGEMENTS
4.01 Cessation of Participation in Kimberly-Clark Non-ERISA Benefit Arrangements. Except as otherwise provided in this Agreement or as required by the terms of any Kimberly-Clark Non-ERISA Benefit Arrangement, or by state, federal, foreign, provincial or other applicable law, participation in Kimberly-Clark Non-ERISA Benefit Arrangements will cease for all Transferred Employees and all Business Employees who are not Transferred Employees as of the Effective Time.
4.02 Assumption of Certain Employee Related Obligations. To the extent not otherwise provided for by law and subject to the specific provisions set out below, effective as of the Effective Time, Kimberly-Clark shall assign, and/or Halyard shall assume the rights and obligations in respect of (with Kimberly-Clark not retaining any further liability for), the following agreements, obligations and liabilities; provided, however, that (i) this section shall only apply to agreements, obligations and liabilities to the extent Kimberly-Clark would otherwise have been responsible for them, and (ii) if any such agreement, obligation or liability cannot be assumed by Halyard for a reason beyond the reasonable control of the parties hereto (including where Halyard may assume the same but Kimberly-Clark retains any residual liability), including the refusal of a third party to agree to such an assumption, then Halyard shall indemnify Kimberly-Clark and hold it harmless with respect to such agreement, obligation or liability, as though it had been assumed by Halyard.
(a) Agreements entered into between Kimberly-Clark and Transferred Employees, including without limitation any employment agreements and severance or executive severance agreements, including, without limitation, those agreements to be identified and agreed upon between Kimberly-Clark and Halyard, but not including any Kimberly-Clark equity plan agreements; provided, however, notwithstanding the above, that with respect to any retention agreements provided by Kimberly-Clark in contemplation of or in connection with the Distribution, Kimberly-Clark shall transfer the accrual to Halyard and Halyard shall pay the same from the Halyard payroll. Effective as of the Effective Time, Halyard shall enter into new Executive Severance Agreements, in a form substantially comparable to the existing Kimberly-Clark Executive Severance Agreements (except as otherwise agreed upon between Kimberly-Clark and Halyard), with the Halyard officers and key personnel to be agreed between Kimberly-Clark and Halyard.
(b) Agreements entered into between Kimberly-Clark and its independent contractors providing services to the Halyard Business, in a manner to be agreed upon between Kimberly-Clark and Halyard (except to the extent the parties agree that such agreements should instead be terminated by Kimberly-Clark and/or replaced by new agreements with Halyard, as shall be agreed upon between Kimberly-Clark and Halyard).
(c) All confidentiality, non-competition, non-solicitation and other similar agreements between Kimberly-Clark and Transferred Employees, including without limitation those referenced by jurisdiction and to be agreed upon between Kimberly-Clark and Halyard; provided, however, that Kimberly-Clark shall retain (and may enforce) all confidentiality and similar agreements relating to any Domestic Business Employee. Halyard may enter into new restricted covenant and confidentiality agreements with the Transferred Employees.
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(d) To the extent required by applicable law, all collective bargaining agreements and collective agreements entered into between Kimberly-Clark, its subsidiaries or Affiliates and any union, works council or similar representative body representing a Transferred Employee, including without limitation, the collective bargaining and collective agreements to be identified and agreed upon between Kimberly-Clark and Halyard.
(e) All wages, salary, incentive compensation, commissions, bonuses, (including 13th month compensation and legally mandated compensation), overtime payments and other remuneration and allowances payable to Business Employees after the Effective Time (whether referable to the period before or after the Distribution Date), subject to the following,
(1) The accrual for Business Employees under the Kimberly-Clark Executive Officer Achievement Award Program, the Kimberly-Clark Management Achievement Award Program and the Kimberly-Clark Achievement Incentive Plan for the portion of the 2014 calendar year occurring prior to the Effective Time shall be transferred to Halyard on the Distribution Date, and Halyard shall pay the same in February 2015 based on actual results and performance ratings. The Europe (EBP), Asia (PIP) and Latin America (LIP) incentive plans will be administrated and paid the same way as the U.S. incentive plans described in the immediately preceding sentence.
(2) September and October 2014 U.S. Healthcare-related sales incentives / commissions earned by Transferred Employees will be paid by Halyard in Nov and Dec 2014, and Kimberly-Clark shall either transfer the accrual or reimburse Halyard therefor;
(3) The Lexington Mill Quarterly Incentive Bonus for the 4th quarter 2014 will be payable by Halyard in Jan 2015. The accrual for the portion thereof relating to the pre-Effective Time (i.e., the accrual for October 2014) will be transferred to Halyard as of the Distribution Date. A reasonable estimate of the Oct bonus accrual will be determined by looking at the prior four quarters actual results
(4) Kimberly-Clark shall either transfer the accrual or reimburse Halyard for the pre-Distribution Date overtime payments paid by Halyard, to the extent agreed upon between Kimberly-Clark and Halyard.
Except as required by law or other agreement between the parties, Halyard shall make relevant payments (agreed in advance with Kimberly-Clark) to any Transferred Employee under (1) through (4) and, to the extent specified above, Kimberly-Clark shall provide Halyard with an appropriate accrual or reimbursement therefor. Effective as of the Effective Time, Halyard shall adopt and establish annual incentive, commission or other variable remuneration plans for the remainder of 2014 substantially comparable in the aggregate to the Kimberly-Clark annual incentive plans.
(f) Effective as of the Effective Time, (i) Halyard shall establish for Transferred Employees, Severance and Executive Severance Plans substantially comparable to
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the Kimberly-Clark Severance and Executive Severance Plans, and (ii) Kimberly-Clark shall have no further liability for any Business Employee under the Kimberly-Clark Severance Plan or Executive Severance Plan.
(g) All commitments under the Kimberly-Clark Global Assignment Program with respect to Business Employees.
(h) All moving expenses incurred by Transferred Employees and Isolated Employees in connection with the Distribution, in accordance with the terms of the Kimberly-Clark employee relocation program.
(i) All immigration-related rights, obligations and liabilities related to Transferred Employees (including liabilities relating both to employees transferred to the U.S. and employees transferred to foreign jurisdictions, but excluding any fines or assessments for pre-Distribution noncompliance), including but not limited to, all obligations, liabilities and undertakings of any immigration related applications filed with any governmental agency. For avoidance of doubt, Halyard shall reimburse Kimberly-Clark for any costs associated with filing applications to transfer L-1 Visas to Halyard, whether prior to, on or after the Distribution Date.
(j) All liabilities and obligations whatsoever of the Halyard Business with respect to claims made by or with respect to Business Employees or any other persons who at any time prior to the Distribution Date had employment duties primarily related to the Halyard Business relating to Non-ERISA Benefit Arrangements with respect to the Halyard Business and not otherwise retained or assumed by Kimberly-Clark pursuant to this Agreement, including such liabilities relating to actions or omissions of or by Halyard or any officer, director, employee or agent thereof on or prior to the Distribution Date, as further detailed in the Distribution Agreement; provided, however, that if the Distribution Agreement assigns a liability to Kimberly-Clark (such as Director and Officer Insurance Policy claims), the Distribution Agreement shall control.
(k) All liabilities and obligations whatsoever in recognition of the Transferred Employees years of service and seniority.
(l) With regard to the Kimberly-Clark Employee Referral Bonus Program, Kimberly-Clark shall be solely responsible for payment of any amounts due to a Kimberly-Clark employee based on a referral made on or before the Distribution Date, and Halyard shall be solely responsible for payment of any amounts due to a Business Employee based on a referral made on or before the Distribution Date, regardless of whether the referred person is or becomes a Kimberly-Clark employee or a Transferred Employee.
4.03 Equity Compensation Plans. The following shall apply in respect of the Transferred Employees and Isolated Employees, to the extent allowed by any provincial or other applicable law.
(a) Halyard 2014 Plan. Effective as of the Effective Time, Halyard shall adopt and establish the Halyard Health Inc. Equity Participation Plan (Halyard 2014 Plan), which Plan shall have terms and conditions substantially similar to the Kimberly-Clark 2011 Equity Participation Plan (Kimberly-Clark 2011 Plan). The Halyard 2014 Plan shall be
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approved by the Halyard Board of Directors and by Kimberly-Clark Corporation, as the sole stockholder of Halyard, prior to the Distribution Date. Halyard shall file a Form S-8 Registration Statement with the SEC with respect to the Halyard 2014 Plan and shall be responsible for compliance with applicable securities laws in respect of the operation of the plan.
(b) Unexercisable Options. As of the Effective Time, each outstanding option to purchase Kimberly-Clark common stock, other than an option granted under the Kimberly-Clark Corporation SharePlus Plan, that is held by a Transferred Employee (a K-C Option) shall, to the extent such K-C Option is not exercisable as of the Effective Time and the Transferred Employee is under age 55, be cancelled and replaced with a substitute option to purchase shares of Halyard common stock (Halyard Option), granted by Halyard under the Halyard 2014 Plan. The substitute Halyard Option shall have the same intrinsic value as the forfeited K-C Option, such that (i) the exercise price of such Halyard Option will be decreased by multiplying the exercise price of the K-C Option immediately prior to the Effective Time by a fraction (the Halyard Ratio), the numerator of which is the fair market value of Halyard common stock immediately following the Effective Time and the denominator of which is the fair market value of Kimberly-Clark common stock immediately prior to the Effective Time, and (ii) the number of Halyard shares purchasable under each Halyard Option will be increased by dividing the number of K-C Option Shares that were forfeited at the Effective Time by the Halyard Ratio. Employment or service credited by Kimberly-Clark shall be taken into account in determining when such substitute Halyard Options become exercisable, and when they terminate. Except as otherwise provided herein, each substitute Halyard Option shall be exercisable upon the same terms and conditions as were applicable under the related K-C Option immediately prior to the Effective Time. For purposes of this Section 4.03(b), (i) the fair market value of Kimberly-Clark common stock immediately prior to the Effective Time shall equal the closing price of Kimberly-Clarks common stock on The New York Stock Exchange for the day prior to the first day in which Halyard common stock is traded on a regular way basis, and (ii) the fair market value of Halyard common stock immediately following the Effective Time shall equal the volume-weighted average price of Halyards common stock on The New York Stock Exchange for the first five (5) days in which the Halyard common stock is traded on a regular way basis.
(c) Exercisable Options. As of the Effective Time, pursuant to the terms of the Kimberly-Clark 2011 Plan, (i) any vested K-C Option held by any Transferred Employee under age 55 will be exercisable for the lesser of three (3) months or the remaining term of the K-C Option, and (ii) any unvested K-C Option held by a Transferred Employee who is age 55 or older will vest and, together with all otherwise vested K-C Options held by Transferred Employees age 55 or older, shall remain exercisable for the lesser of five (5) years or the remaining term of the K-C Option. All such vested K-C Options held by Transferred Employees shall remain options to purchase Kimberly-Clark common stock and will be adjusted to maintain their intrinsic value, such that (i) the exercise price of each such K-C Option will be decreased by dividing the pre-Distribution Date exercise price of the K-C Option by a fraction (the K-C Ratio), the numerator of which is the closing price of Kimberly-Clark common stock on The New York Stock Exchange on the Distribution Date, and the denominator of which is the opening price of Kimberly-Clark common stock on The New York Stock Exchange on the first trading day immediately following the Distribution, and (ii) the number of Kimberly-Clark shares purchasable under each such K-C Option will be increased by multiplying the number of such K-C Options by the K-C Ratio.
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(d) Restricted Stock Units Held by Participants under age 55 . As of the Effective Time, with respect to Transferred Employees under age 55 on the Distribution Date;
(1) any unvested performance-based restricted share units granted under the Kimberly-Clark 2011 Plan (K-C PRSUs) that have been outstanding more than 6 months from date of grant will vest pro-rata, based on the number of full years of employment from the grant date to the Effective Time, but to be paid out (in the form of K-C common stock) only at the end of the relevant performance period and (A) only to the extent the performance criteria are satisfied at that time, after adjusting the ROIC and Net Sales as reported metrics to take into account the Distribution, as determined in the sole discretion of the Kimberly-Clark Management Development and Compensation Committee, and (B) the number of such vested K-C PRSUs shall be increased by the Dividend Equivalent on the pro-rata vested PRSUs, with such Dividend Equivalent being equal, for each pro-rata vested PRSU, to the fair market value of the fractional amount of Halyard common stock received in the Distribution for each share of K-C common stock, with such fair market value being equal to the opening price of Halyard common stock on the New York Stock Exchange on the first trading day immediately following the Distribution, multiplied by the fractional amount of Halyard common stock received in the Distribution for each share of Kimberly-Clark common stock (Dividend Equivalent). The Dividend Equivalent will be reinvested in additional K-C PRSUs at the opening price of Kimberly-Clarks common stock on The New York Stock Exchange on the first trading day immediately following the Distribution. The additional K-C PRSUs credited by virtue of such Dividend Equivalent will be accumulated and paid only if, when and to the extent that the underlying K-C PRSUs outstanding immediately prior to the Distribution vest, achieve their performance goals and are paid.
(2) the K-C PRSUs not pro rata vested pursuant to (1) above (either because not held for 6 months or because they consist of the remaining portion not vested in the pro-rata vesting) shall be forfeited and Halyard shall issue replacement Halyard Time-Based Restricted Stock Units ( Halyard TRSUs) as of the Effective Time, on the same terms and conditions as the forfeited K-C PRSUs, except that the Halyard TRSUs shall vest at the end of the original performance period, subject to the participants continued employment through that date, and taking into account service with Kimberly-Clark, and except that the number of replacement Halyard TRSUs shall be determined by dividing the number of K-C PRSUs that were forfeited at the Effective Time (calculated as if the performance requirement is met at the target level) by the Halyard Ratio.
(3) any unvested TRSUs granted under the Kimberly-Clark 2011 Plan (the K-C TRSUs) will vest pro-rata, based on the number of full years of employment from the grant date to the Effective Time, but only paid out (in the form of K-C common stock) on the normal vesting date, and the number of such pro-rata vested K-C TRSUs shall be increased by the Dividend Equivalent on such pro-rated vested K-C TRSUs; and
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(4) the K-C TRSUs not pro rata vested pursuant to (3) above shall be forfeited and Halyard shall issue replacement Halyard TRSUs as of the Effective Time, on the same terms and conditions as the forfeited K-C TRSUs and taking into account service with Kimberly-Clark, except that the number of replacement Halyard TRSUs shall be determined by dividing the number if K-C TRSUs that were forfeited at the Effective Time by the Halyard Ratio.
Moreover, to the extent that any K-C PRSUs or K-C TRSUs become vested after the Record Date, and therefore did not receive the dividend distribution in the spin-off, K-C shall increase the number of such K-C PRSUs or K-C TRSUs by the Dividend Equivalent on such vested K-C PRSUs and K-C TRSUs, to make them whole.
(e) Restricted Stock Units Held by Participants at or over age 55. As of the Effective Time, with respect to Transferred Employees at or over age 55 on the Distribution Date, (i) any unvested K-C PRSUs outstanding more than six months after the date of grant will vest and be payable (in the form of K-C common stock) at the end of the performance period, based on the attainment of the performance goals, with the number of such K-C PRSUs being increased by the Dividend Equivalent on such K-C PRSUs (based on the same principles as detailed in Section 4.03(d)(1) above), and the ROIC and Net Sales as reported performance metrics criteria being adjusted for the Distribution as determined in the sole discretion of the Kimberly-Clark Management Development and Compensation Committee; (ii) any K-C PRSUs not outstanding for more than six months from the date of grant shall be forfeited and Halyard shall issue replacement Halyard TRSUs in the same manner as detailed in (d)(2) above; (iii) any unvested K-C TRSUs will vest pro-rata, based on the number of full years of employment from the grant date to the Effective Time, but only paid out on the normal vesting date, and the number of such pro-rata vested K-C TRSUs shall be increased by the Dividend Equivalent on such pro-rata vested K-C TRSUs; and (iv) the K-C TRSUs not vested pursuant to (iii) above shall be forfeited and Halyard shall issue replacement Halyard TRSUs as of the Effective Time in the same manner as detailed in (d)(4) above.
(f) Kimberly-Clark SharePlus Plans. Business Employees participating in the SharePlus Plans shall be treated the same as terminated employees. Halyard shall not be required to establish any new SharePlus Plans for its employees.
(g) Other Equity Awards. To the extent not addressed above in this Section 4.03 or in any agreement between Kimberly-Clark and Halyard, all other outstanding equity compensation awards held by Business Employees under any Kimberly-Clark equity compensation plan shall be subject to the terms of such plan and applicable award agreements. For avoidance of doubt, any equity awards related to Kimberly-Clark stock and vested hereunder shall remain the liability of Kimberly-Clark.
4.04 Workers Compensation.
(a) U.S. Employees. Except as provided herein, Halyard shall be solely responsible for all claims for workers compensation reported by a Transferred Employee employed in the U.S. on or after the Distribution Date. Kimberly-Clark shall continue to be responsible after the Distribution Date for administering all claims for workers compensation
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reported by a Domestic Business Employee prior to the Distribution Date under the terms of any Kimberly-Clark workers compensation policy or plan; however, Halyard shall reimburse, and shall indemnify Kimberly-Clark, or its subsidiaries or Affiliates, for any amounts payable under such claims. In accordance with Section 6.05, Kimberly-Clark shall transfer, or cause to have transferred, to Halyard the amount of any reserves related to such claims which have been set aside by Kimberly-Clark or its subsidiaries or Affiliates prior to the Distribution Date.
(b) Foreign Employees. Halyard shall be solely responsible, and shall indemnify Kimberly-Clark for all outstanding claims for workers compensation reported by a Foreign Business Employee before the Distribution Date, and for any such new claims reported by a Foreign Business Employee on or after the Distribution Date. Notwithstanding the foregoing, in the event any such claims are covered by an insurance policy held or maintained by Kimberly-Clark which cannot be assigned to the benefit of Halyard, then (i) Halyard shall reimburse and indemnify Kimberly-Clark for any amounts payable under such claims; (ii) any amounts received by or for the benefit of Kimberly-Clark pursuant to such insurance policy shall be offset against Halyards indemnification obligation; and (iii) any experience refunds which relate to such claims shall be paid to Halyard, or if received by Kimberly-Clark, paid by Kimberly-Clark to Halyard. Halyard shall be solely responsible for, and shall indemnify Kimberly-Clark for any experience surcharges which relate to such claims.
4.05 Accrued Vacation Days Off. Halyard shall recognize and assume all liability for all vacation, holiday, Flex Days (subject to Section 3.06 above), personal days and other Paid Time-Off, including long-service leave entitlements and banked vacation, accrued but untaken or not otherwise paid or satisfied for any Transferred Employees as of the Effective Time, and Halyard shall credit each Transferred Employee with such days off accrual as of the date of the movement of such Transferred Employee to Halyard.
4.06 Leaves of Absence. Halyard shall establish leave of absence policies which are substantially similar to the leave of absence policies maintained by Kimberly-Clark immediately prior to the Distribution Date and will continue to apply such policies to inactive Transferred Employees who are on an approved leave of absence as of the Distribution Date. Transferred Employees shall be eligible for leaves of absence after the Distribution Date to the same extent they would have been had they remained employed by Kimberly-Clark, its subsidiaries or Affiliates. Leaves of absence taken by Transferred Employees prior to the Distribution Date shall be deemed to have been taken as employees of Halyard under such policies. For avoidance of doubt, Halyard shall recognize and honor all approved leaves of absence granted to any Transferred Employee prior to the Distribution Date or Effective Time. For avoidance of doubt, for purposes of this Section 4.06, the term leave of absence shall not include absences covered by any long-term disability insurance policy maintained by Kimberly-Clark.
4.07 Past Service Credit. Halyard shall credit Transferred Employees with all years of service credited to such Transferred Employees by Kimberly-Clark and its subsidiaries and Affiliates for all purposes relating to Halyard s Non-ERISA Benefit Arrangements. Kimberly-Clark shall provide Halyard with copies of any records available to Kimberly-Clark to document such service. For avoidance of doubt, this Section 4.07 does not obligate Halyard to be responsible for any costs related to retiree medical or retiree life insurance benefits referenced in Section 3.01 above.
4.08 Kimberly-Clark Assets. Kimberly-Clark shall retain all reserves, bank accounts, trust funds or other balances maintained with respect to Kimberly-Clarks Non-ERISA Benefit Arrangements.
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ARTICLE V
PENSION PLANS
5.01 Foreign Retirement Benefit Plans. Effective as of the Distribution Date, Halyard shall establish supplemental employee retirement plans or other registered and/or non-registered pension plans that are substantially similar to the Kimberly-Clark supplemental employee retirement plans and pension plans in which Foreign Business Employees participate immediately prior to the Distribution Date. Halyard shall assume and be solely responsible for any liabilities arising from or in connection with all such Foreign Business Employees under such plans. To the extent not addressed in this Section 5 or in any other agreement between Kimberly-Clark and Halyard, or as required by the terms of any state or provincial law, participation in the Kimberly-Clark supplemental employee retirement plans and pension plans in which Foreign Business Employees participate by all Transferred Employees and all Business Employees who are no longer employed by Kimberly-Clark as of the Distribution Date, will cease as of the Effective Time, and Kimberly-Clark shall retain all claim reserves, bank accounts, trust funds or other balances maintained by or on behalf of such plans.
5.02 U.S. Defined Contribution Plans.
(a) Employees 401(k) Plan.
(1) Establishment of Halyard 401(k) Plan. Effective as of the Distribution Date, (i) participation in the Kimberly-Clark Corporation 401(k) and Profit Sharing Plan will cease for all Transferred Employees and other Business Employees, and (ii) Halyard shall adopt and establish a Pension Plan and trust qualified under sections 401(a), 401(k) and 501(a) of the Code (the Halyard 401(k) Plan) that is substantially similar (except as may be agreed upon between Kimberly-Clark and Halyard) to the Kimberly-Clark Corporation 401(k) and Profit-Sharing Plan and trust immediately prior to the Distribution Date (the K-C 401(k) Plan). Halyard shall assume and thereafter be solely responsible for all then existing or future employer liabilities related to Transferred Employees and other Business Employees under the Halyard 401(k) Plan and the administration thereof. As soon as practicable after the adoption of the Halyard 401(k) Plan, Halyard shall submit an application to the IRS for a determination regarding the qualification of the Halyard 401(k) Plan and shall take any actions not inconsistent with Halyards other general commitments contained in this Agreement and make any amendments necessary to receive a favorable determination letter. All existing participant elections for Transferred Employees and other Business Employees (and their beneficiaries and alternate payees) under the K-C 401(k) Plan, including without limitation, beneficiary designations, deferral elections, investment elections and form of payment elections shall continue in full force and effect under the Halyard 401(k) Plan, until otherwise changed pursuant to the terms of the Halyard 401(k) Plan, except that any investment election for the Employer Stock Fund shall be deemed instead to be an election for the Target Date Fund, until otherwise changed by the participant.
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(2) Transfer of Account Balances. As soon as administratively practicable after the Distribution Date, there shall be transferred to the Halyard 401(k) Plan assets having a value as of the applicable valuation date that are equal to the value of the account balances of, and liabilities with respect to, all Transferred Employees and other Business Employees (other than seconded employees described in Section 2.01(d)) with an account balance under the K-C 401(k) Plan as of such valuation date. Such transferred assets shall be in cash and in-kind transfers of investment fund units (except for any promissory notes evidencing outstanding loan balances of Transferred Employees), and shall be in accordance with section 414(l) of the Code. Liabilities under any qualified domestic relations orders (as defined in section 414(p) of the Code) received with respect to any assets transferred to the Halyard 401(k) Plan shall be transferred to Halyard (along with such qualified domestic relations orders and administrative instructions) at the time such assets are transferred. Kimberly-Clark shall transfer to Halyard, and Halyard shall accept any promissory notes including outstanding loan balances of Business Employees, and Halyard shall continue to process any plan loans transferred from the K-C 401(k) Plan to the Halyard 401(k) Plan.
(3) Employer Stock. By virtue of the Distribution, participants in the K-C 401(k) Plan who have investments in the K-C Employer Stock Fund will receive shares of Halyard stock for each share of Kimberly-Clark stock held in their account, based on the Distribution Ratio. With respect to K-C 401(k) Plan participants who are not Business Employees, the Halyard Stock allocated to their accounts shall be automatically sold and reinvested in K-C stock within the K-C Employer Stock Fund. With respect to Business Employees, both the K-C stock and Halyard Stock allocated to their accounts shall be automatically sold as of a date determined by the K-C 401(k) Plan Administrator and the cash proceeds transferred to the Halyard 401(k) Plan and reinvested in the Target Date Fund thereunder, until otherwise changed pursuant to the terms of the Halyard 401(k) Plan. Kimberly-Clark and Halyard shall co-operate in providing appropriate notice to Business Employees with respect to the above.
(4) 2014 Employer Contributions. Kimberly-Clark shall make the 2014 Profit-Sharing Contribution to the K-C 401(k) Plan, with respect to the participants pre-Distribution Date Eligible Earnings (as defined in the K-C 401(k) Plan) for those K-C 401(k) Plan participants who are at or over age 55 on the Distribution Date, as per the terms of the K-C 401(k) Plan. The Halyard 401(k) Plan shall provide for a one-time 2014 Profit-Sharing Contribution for all Transferred Employees who are participants in the Halyard 401(k) Plan and who did not receive a 2014 Profit Sharing Contribution to the K-C 401(k) Plan, equal to 3% of their 2014 pre-Distribution Date Eligible Earnings (including, for avoidance of doubt, both their base compensation and their 2013 bonus or other incentive compensation paid in 2014).
In addition, the Halyard 401(k) Plan shall provide for a true-up Company Match Contribution for the 2014 Plan Year for any Transferred Employee participating in the Halyard 401(k) Plan who would have received a true-up Company
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Match Safe Harbor Contribution under the K-C 401(k) Plan had he or she been a participant in the K-C 401(k) Plan for the entire 2014 Plan Year, due to his or her total 2014 Company Match Safe Harbor Contributions under the K-C 401(k) Plan and Halyard 401(k) Plan being limited to less than it otherwise would have been by virtue of the Code Section 401(a)(17) or 402(g) limits being reached before Plan Year end. The amount of the true-up contribution shall be equal to the difference between 4.33% of the Participants 2014 combined Eligible Earnings for both Kimberly-Clark and Halyard (or if less, his actual combined Contributions to both the K-C 401(k) Plan and the Halyard 401(k) Plan for the 2014 Plan Year) and the amount of Company Match Safe Harbor Contributions allocated to his account under the K-C 401(k) Plan and the Halyard 401(k) Plan for such 2014 Plan Year.
Kimberly-Clark shall transfer the appropriate accruals to Halyard with respect to (i) the above-described Profit-Sharing Contributions, (ii) the above-described Company Match True-Up Contributions, and (iii) 4% of the Company Safe Harbor Match Contribution for that portion of the 2014 bonus or other incentive compensation that is transferred to and payable by Halyard in 2015 that is attributed to pre-Distribution Date service.
(b) Supplemental 401(k) Plan. Effective as of the Distribution Date, (i) participation in the Kimberly-Clark Corporation Supplemental Retirement 401(k) and Profit Sharing Plan (K-C Supplemental 401(k) Plan) will cease for all Transferred Employees and other Business Employees, and (ii) Halyard shall adopt and establish a Supplemental 401(k) Plan (Halyard Supplemental 401(k) Plan) that is substantially similar (except as may be agreed upon between Kimberly-Clark and Halyard) to the K-C Supplemental 401(k) Plan immediately prior to the Distribution Date. All existing elections by Transferred Employees and other Business Employees under the K-C Supplemental 401(k) Plan, including salary deferral, investments, beneficiaries, and forms and timing of payment, shall continue under the Halyard Supplemental 401(k) Plan, until otherwise changed pursuant to the terms of the Halyard Supplemental 401(k) Plan. Effective as of the Distribution Date, Kimberly-Clark shall transfer to Halyard, and Halyard shall assume and thereafter be solely responsible for all then existing or future liabilities related to Transferred Employees and other Business Employees under either the K-C Supplemental 401(k) Plan or the Halyard Supplemental 401(k) Plan and the administration thereof. However, given that the K-C Supplemental 401(k) Plan is an unfunded plan, there shall be no assets transferred from Kimberly-Clark or the K-C Supplemental 401(k) Plan to Halyard or the Halyard Supplemental 401(k) Plan (including, without limitation, any assets held in a grantor or so-called rabbi trust).
(c) Deferred Compensation Plan. Following the Effective Time, Business Employees shall be considered to have incurred a Termination of Service as defined under the Kimberly-Clark Corporation Deferred Compensation Plan (which is a grandfathered plan exempt from Code Section 409A), and shall be entitled to a distribution therefrom pursuant to the terms of such Plan. Halyard shall not be required to establish a similar plan.
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5.03 U.S. Pension Plan.
(a) K-C Pension Plan. Halyard shall not be required to adopt a U.S. defined benefit pension plan and shall not assume any liabilities under the Kimberly-Clark Corporation Pension Plan. Effective as of the Effective Time, Business Employees shall be deemed to have incurred a Termination of Employment as defined under the Kimberly-Clark Corporation Pension Plan (K-C Pension Plan), and shall be entitled to a distribution therefrom pursuant to its terms and conditions.
(b) K-C Supplemental Pension Plans. Halyard shall not be required to adopt any U.S. supplemental pension plans and shall not assume any liabilities under the Supplemental Benefit Plan to the Kimberly-Clark Corporation Pension Plan (K-C Supplemental Pension Plan) or the Second Supplemental Benefit Plan to the Kimberly-Clark Corporation Pension Plan (K-C Second Supplemental Pension Plan). Effective as of the Effective Time, Business Employees shall be deemed to have incurred a Termination of Employment (as defined under the K-C Supplemental Pension Plan and the K-C Second Supplemental Pension Plan) under the Grandfathered Portions ( i.e ., those portions of the Plan exempt from Code Section 409A) of the K-C Supplemental Pension Plan and the K-C Second Supplemental Pension Plan, and shall be entitled to distributions therefrom pursuant to their terms and conditions. Business Employee Participants in the non-Grandfathered Portions of the K-C Supplemental Pension Plan and K-C Second Supplemental Pension Plan shall not be considered to have incurred a Separation from Service (as defined in Code Section 409A) from Kimberly-Clark by virtue of the Distribution, and thus shall not be entitled to any distribution from such non Grandfathered Portions of such Plans by virtue of the Distribution. Rather, Business Employee Participants shall be considered to have incurred a Separation from Service under the non-Grandfathered Portions of such Plans when they incur a Separation from Service with Halyard, and Halyard shall notify Kimberly-Clark of the same, so that Kimberly-Clark can comply with the automatic payment provisions thereunder.
5.04 Past Service Credit. With respect to all Business Employees, Halyard shall recognize all service, plan participation and membership recognized under the (i) K-C 401(k) Plan, (ii) K-C Supplemental 401(k) Plan, and (iii) any foreign retirement or pension plan assumed or transferred to Halyard or any of whose assets or liabilities are assumed by or transferred to Halyard or to a Halyard retirement or pension plan, in each case for purposes of determining benefit eligibility, participation, vesting, and calculation of benefits under Halyard retirement plans and programs including the Halyard 401(k) Plan, the Halyard Supplemental 401(k) Plan, any foreign retirement or pension plan sponsored or maintained by Halyard, and non-pension fringe benefit plans (but not including any retiree medical or retiree life insurance plan). Kimberly-Clark will provide to Halyard copies of any records available to Kimberly-Clark to document such service, plan participation and membership and cooperate with Halyard to resolve any discrepancies or obtain any missing data for purposes of determining benefit eligibility, participation, vesting and calculation of benefits with respect to such Business Employees.
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ARTICLE VI
GENERAL PROVISIONS
6.01 Miscellaneous. All Miscellaneous Matters contained in Article XIII of the Distribution Agreement are fully applicable hereto and are incorporated herein by reference.
6.02 Preservation of Rights to Amend. The rights of Kimberly-Clark or Halyard to amend or terminate any plan referred to herein shall not be limited in any way by this Employee Matters Agreement.
6.03 Applicability to Subsidiaries and Affiliate. The obligations of Halyard in this Agreement shall also be applicable to any subsidiary or Affiliate of Halyard, and Halyard shall cause its subsidiaries or Affiliates to comply with such obligations. The obligation of Kimberly-Clark in this Agreement shall also be applicable to any subsidiary or Affiliate of Kimberly-Clark, and Kimberly-Clark shall cause its subsidiaries and Affiliates to comply with such obligations. Further, any reference in this Agreement to a person being employed or engaged by a party, shall be construed as including a reference to that person being employed or engaged by a subsidiary or an Affiliate of the party, as the case may require.
6.04 Administrative Complaints/Litigation. As of and after the Distribution Date, Halyard shall assume, and be solely liable for, the handling, administration, investigation, and defense of actions (whether arising before, on or after the Distribution Date), including, without limitation, ERISA, occupational safety and health, employment standards, union grievances, wrongful dismissal, discrimination or human rights and unemployment compensation claims, that are outstanding on the Distribution Date or asserted on or after the Distribution Date against Kimberly-Clark or Halyard by any Business Employee or any other person arising out of or relating to employment with the Halyard Business or Halyard. Any Losses arising from such actions shall be deemed Assumed Liabilities under the Distribution Agreement. Kimberly-Clark reserves the right to participate in the investigation, defense or settlement of any matter to the extent it deems reasonably necessary. Notwithstanding the above, this Section 6.04 shall not apply to any claims covered by the Kimberly-Clark Director and Officer Liability Insurance Policy that Kimberly-Clark retains pursuant to the terms of the Distribution Agreement.
6.05 Reimbursement and Indemnification. The parties hereto agree to reimburse each other, within 30 days of receipt from the other party of appropriate verification, for all costs and expenses which each may incur on behalf of the other as a result of any of the Welfare Plans, Pension Plans and Non-ERISA Benefit Arrangements and, as contemplated by Section 2.02, any termination or severance payments or benefits. All liabilities retained, assumed or indemnified against by Halyard pursuant to this Agreement shall be deemed Assumed Liabilities, and all liabilities retained, assumed or indemnified against by Kimberly-Clark pursuant to this Agreement shall be deemed Retained Liabilities, and in each case shall be subject to the indemnification provisions of the Distribution Agreement.
6.06 No Third Party Beneficiaries. No Transferred Employee, Business Employee, or other current or former employee of Kimberly-Clark or Halyard or any subsidiary or Affiliate of either (or his/her spouse, dependent or beneficiary), or any other Person not a party to this Agreement, shall be entitled to assert any claim hereunder. This Agreement shall be binding
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upon and inure to the benefit only of the parties hereto and their respective successors. Notwithstanding any other provisions to the contrary except with respect to such successors, this Agreement is not intended and shall not be construed for the benefit of any third party or any Person not a signatory hereto. In no event shall this Agreement constitute a third party beneficiary contract. Notwithstanding the above, any reference to a party or parties in this Section 6.06 shall also include the subsidiaries and Affiliates, excluding for these purposes individuals who are Affiliates, of such party or parties.
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IN WITNESS WHEREOF , the parties have caused this Agreement to be executed in their names by a duly authorized officer as of the date first written above.
KIMBERLY-CLARK CORPORATION | ||
By: |
/s/ Mark A. Buthman |
|
Name: | Mark A. Buthman | |
Title: | Chief Financial Officer | |
HALYARD HEALTH, INC. | ||
By: |
/s/ Steven E. Voskuil |
|
Name: | Steven E. Voskuil | |
Title: | Senior Vice President and Chief Financial Officer |
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Exhibit 10.4
Patent and Know How License Agreement
between
Kimberly-Clark Worldwide, Inc.
and
Avent, Inc.
Made as of the 30 th day of October, 2014
PATENT AND KNOW HOW LICENSE AGREEMENT
THIS AGREEMENT, effective as of the 30 th day of October, 2014, by and between KIMBERLY-CLARK WORLDWIDE, INC., a Delaware corporation (KCWW or Licensor), and AVENT, INC., a Delaware corporation (Avent or Licensee).
W I T N E S S E T H :
WHEREAS, Kimberly-Clark Corporation (Kimberly-Clark), the sole shareholder of KCWW, is contributing its Health Care business to Halyard Health, Inc. (Halyard), the sole shareholder of Avent, as of October 31, 2014, and is then distributing to the shareholders of Kimberly-Clark all of the shares of common stock of Halyard on a pro-rata basis; and
WHEREAS, KCWW possesses valuable patents and technology relating to products manufactured and marketed by Avent and its affiliates; and
WHEREAS, in connection with the contribution, KCWW is assigning to Avent certain of KCWWs patents and know how and granting licenses to Avent under certain of KCWWs patents and know how, in both cases relating to certain products manufactured and marketed by Avent and its affiliates; and
WHEREAS, also in connection with the contribution, Avent is granting back to KCWW licenses under certain of the patents and technology assigned to Avent as they relate to certain products manufactured and marketed by KCWW and its affiliates; and
WHEREAS, KCWW and Avent desire to enter into this agreement to define the terms and conditions of the licenses set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants contained herein, the parties agree as follows:
ARTICLE 1
DEFINITIONS
The following terms shall have the meanings hereinafter set forth. Capitalized terms used but not otherwise defined elsewhere in this Agreement shall have the respective meanings given to such terms in the Distribution Agreement. Unless the context clearly requires otherwise, the singular shall have the same meaning as the plural and vice versa:
1.01 Affiliates Means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by or is under common control with such Person. For the purpose of this definition, the term control means the power to direct the management of an entity, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the term controlled has the meaning correlative to the foregoing. After the Distribution, Halyard and Kimberly-Clark shall not be deemed to be under common control for purposes hereof due solely to the fact that Halyard and Kimberly-Clark have common stockholders. Notwithstanding the foregoing definition, Hogla-Kimberly Limited, Kimberly-Clark de Mexico, Kimberly-Clark Lever Private Limited, Olayan Kimberly-Clark Saudi Limited, Olayan Kimberly-Clark Bahrain and Olayan Kimberly Child Care Products WLL are Affiliates of Kimberly-Clark.
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1.02 Confidential Information Any and all proprietary information without regard to form, both technical and business related, including Know How (as defined hereinafter), financial data, financial plans, product or service plans or lists of actual or potential customers or suppliers which is not commonly known by or available to the public.
1.03 Consumer Products Devices, products, articles or merchandise of common or frequent use, ordinarily bought by individuals or households for private consumption from a retail outlet or otherwise obtained or provided direct to the consumer. Consumer Products expressly includes Kimberly-Clark Consumer Products. Consumer Products do not include products, articles or merchandise sold by Kimberly-Clarks Global Health Care Business as of the Effective Date of this Agreement.
1.04 Copyrights Text, drawings, symbols, characters, icons, photographs, websites, and other artwork or media.
1.05 Effective Date The date first written herein above.
1.06 Existing Health Care Customer shall mean any Person that purchases Medical Products from Kimberly-Clarks Global Health Care Business immediately prior to the Effective Time. In the event that any such Person consists of multiple divisions, departments, branches, offices, or other subdivisions, the Existing Health Care Customer shall include only such divisions, departments, branches, offices or other subdivisions that purchase Medical Products from Kimberly-Clarks Global Health Care Business immediately prior to the Effective Time.
1.07 Existing K-C Consumer Customer Any Person that purchases Consumer Products from Kimberly-Clarks Global Consumer Business, immediately prior to the Effective Time. In the event that any such Person consists of multiple divisions, departments, branches, offices, or other subdivisions, the Existing K-C Consumer Customer shall include only such divisions, departments, branches, offices or other subdivisions that purchase Consumer Products from Kimberly-Clarks Global Consumer Business, as applicable, immediately prior to the Effective Time.
1.08 Existing KCP Customer Any Person that purchases Professional Products from Kimberly-Clarks Global Professional Business and Global Partnership Products Business immediately prior to the Effective Time. In the event that any such Person consists of multiple divisions, departments, branches, offices, or other subdivisions, the Existing KCP Customer shall include only such divisions, departments, branches, offices or other subdivisions that purchase Professional Products from Kimberly-Clarks Global Professional Business and Global Partnership Products Business immediately prior to the Effective Time.
1.09 Halyard Competitor A third party that manufactures, sells or distributes Medical Products of a type sold by Halyard.
1.10 Health Care Market End users whose primary business is the delivery of medical, veterinary or patient care or treatment, medical diagnostic services, or medical care provided in connection with disaster relief, including, but not limited to: (1) professional medical and healthcare service companies, businesses, institutions and enterprises, (2) medical diagnostics facilities and laboratories having patient interaction, (3) government and private organizations providing medical care in connection with disaster relief and (4) firms selling products or services into such end users;
Such as:
| Hospitals, including their pharmacies; |
| Integrated medical service provider networks and their member facilities; |
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| Surgery centers, including their pharmacies; |
| Blood banks; |
| Bone and tissue centers; |
| Physician and medical clinic offices including their pharmacies; |
| Psychiatric health facilities, including their pharmacies; |
| Clinics in retail outlets that perform or provide medical services or care; |
| Long-term medical care facilities, including their pharmacies; |
| Medical care components of the Red Cross or other disaster relief organizations; |
| Veterinary and other facilities that primarily provide medical care to animals; and |
| Dental care facilities. |
1.11 Kimberly-Clark Competitor A third party that manufactures, sells or distributes Kimberly-Clark Consumer Products or Professional Products of a type sold by Kimberly-Clark.
1.12 Kimberly-Clark Consumer Products Consumer Products whose primary purpose is to help maintain or improve the hygiene, healthy aging process and/or household care and maintenance of the end user. Such products include those intended to be used in connection with enuresis, incontinence, menstruation, personal hygiene, diaper rash, healthy skincare, household cleaning and similar such fields, and may include medical devices, over-the-counter drugs or devices, prescription drugs or devices, or other regulated products or materials. Kimberly-Clark Consumer Products expressly include those products sold or otherwise transferred to customers or end users by Kimberly-Clarks Global Consumer Business as of the Effective Date of this Agreement.
1.13 Know How Refers generally to engineering drawings, technical data, invention disclosures, reports, technical knowledge, methods, formulas, patterns, compilations, programs, devices, techniques, tests, drawings, processes, experience, base and analytical science relating to the manufacture, testing, converting, packaging, handling, sales, marketing, distributing and supplying of products and is inclusive of any and all trade secrets.
1.14 Medical Products Devices, products, articles, methods, systems or merchandise that are primarily utilized by (i) healthcare professionals for the diagnosis, treatment or prevention of disease or injuries or (ii) caregivers under the direction and supervision of medical professionals in the treatment or prevention of disease or injuries. Medical Products expressly include those devices, products, articles or merchandise sold or otherwise transferred to end users or customers in the Health Care Market by Kimberly-Clarks Global Health Care Business as of the Effective Date of this Agreement. Medical Products do not include devices, products, articles or merchandise sold by Kimberly-Clarks Global Consumer Business as of the Effective Date of this Agreement.
1.15 Patents Refers generally to United States and foreign patents and patent applications including any continuations, continuations-in-part, divisions, renewals, reissues and reexaminations thereof. The Appendices include lists of patents and patent applications that will be licensed from one party to the other.
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1.16 Professional Products Devices, products, articles or merchandise whose primary purpose is to:
| Help maintain facilities or manufacturing equipment; |
| Increase or improve employee and other individuals: |
| efficiency, |
| safety or protection; or |
| cleanliness; |
| Enhance the safety or cleanliness or efficiency of facilities or equipment or processes. |
Professional Products expressly include those devices, products, articles or merchandise sold or otherwise transferred to customers or end users by Kimberly-Clarks Global Professional Business and Global Partnership Products Business as of the Effective Date of this Agreement.
ARTICLE 2
PATENT AND KNOW HOW LICENSE GRANTS
2.01 Specific license grants from Licensor to Licensee are set forth in Appendix AH. The licenses in this Agreement include the right to sublicense to Affiliates. However, unless otherwise specifically provided in the license grants of Appendix AH, the licenses in this Agreement do not include the right to sub-license to any other third party. The license grants are limited to the Patents and Know How specifically enumerated in each Appendix and do not include any rights to Know How or Patents that are not listed or improvements to Patents or Know How made by either party after the Effective Date of this Agreement. Notwithstanding the foregoing, in the event that Licensor chooses in their sole discretion to pursue patent protection for an invention that is the subject to a license by being included as Know How, Licensee will have rights to any Patent that matures from such an invention commensurate with the rights Licensor has to the Patents in the subject license.
2.02 Nothing in this Agreement shall obligate Licensor to maintain any or all licensed Patents. Notwithstanding the foregoing, in the event that Licensor decides to allow a Patent to lapse or become abandoned, Licensor shall take reasonable efforts to provide notice of such decision to Licensee at least thirty (30) days prior to the date of lapse or abandonment of the Patent. Licensee then has up to ten (10) business days following such notification to inform Licensor as to whether or not it will take action to prevent the lapse or abandonment of the Patent and have ownership of the Patent transferred to Licensee. A lack of timely response by the Licensee shall be deemed to indicate that the Licensee has no interest in the Patent that is slated to lapse or be abandoned. Any action taken by Licensee to prevent the lapse or abandonment of a Patent and have ownership transferred to Licensee shall be at Licensees expense.
2.03 Licensor acknowledges that the grant of an exclusive license to any trade secrets by this Agreement does not limit the ability of the Licensee or a third party to independently develop the subject matter of any such licensed trade secret, or in the event of such independent development, create a cause of action for the Licensor.
2.04 Notwithstanding anything to the contrary in this Agreement, Halyard and its Affiliates may continue selling or otherwise transferring Medical Products to Existing Health Care Customers with the benefit of the license(s) set forth in this Agreement.
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2.05 Notwithstanding anything to the contrary in this Agreement, Kimberly-Clark and its Affiliates may continue selling or otherwise transferring Professional Products to Existing KCP Customers and Consumer Products to Existing K-C Consumer Customers with the benefit of the license(s) set forth in the Patent and Know How License Agreement between Avent and KCWW effective October 30, 2014.
ARTICLE 3
CONFIDENTIALITY
3.01 Neither party shall, without the prior written consent of the other party, directly or indirectly disclose to any third party, or permit anyone on its behalf to disclose to any third-party, any Confidential Information obtained pursuant to and/or in connection with this Agreement, and both parties shall use such measures to protect all such Confidential Information that it would use in the protection of its own confidential information, and in any event no less than reasonable care. The obligations in this Section 3.01 shall continue during the term of this Agreement and for ten (10) years thereafter (or such shorter period as required by applicable law); provided that with respect to any Confidential Information that is protectable as a trade secret, such obligations shall continue in perpetuity (or until the earlier occurrence of one of the exceptions in Section 3.02). Notwithstanding the foregoing, this Article 3 will not preclude the owner of Confidential Information from seeking patent protection concerning such Confidential Information.
3.02 The obligations under Section 3.01 shall not apply to Confidential Information that, as evidenced by written documentation: (a) was received by such party on a non-confidential basis from a third party having the right to impart such information; (b) was generally known or generally available to the public prior to the Effective Date of this Agreement; (c) is independently developed without the benefit of the Confidential Information; or (d) becomes generally known or generally available to the public after the Effective Date of this Agreement through no act or failure to act on the part of such party. Confidential Information shall not be deemed to be part of the public domain merely because such information may be contained within substantially less specific broad disclosures or combinations of disclosures.
ARTICLE 4
MARKING
For the life of the U.S. Patents, both parties shall mark in accordance with applicable laws all products sold, offered for sale, or otherwise disposed of by it within the United States, its territories, or possessions, with the word Patent or Patents and the number or numbers of the applicable U.S. Patents being practiced on a visible surface thereof or on the package, tags, labels, manuals, or other associated materials. It is acceptable to mark by referring to lists of patents included on some other publicly available location such as an internet site.
ARTICLE 5
INFRINGEMENTS OF PATENTS
5.01 Licensee shall notify Licensor promptly and fully of any infringement of any Patent which comes to its notice. Licensor shall take such steps as Licensor in its sole discretion shall deem advisable to abate infringements of Patents, including, if Licensor shall so decide, the bringing of a lawsuit. When requested by Licensor, Licensee may at its sole discretion cooperate, at Licensors expense, in the conduct of such lawsuit. After deductions for expenses incurred, Licensor and Licensee shall participate on a fair and equitable basis in any money damages recovered.
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5.02 Should Licensor elect not to bring a lawsuit with respect to infringement of any Patent, Licensee may, with Licensors written consent, which shall not be unreasonably withheld, bring a lawsuit, either in Licensees own name or jointly with Licensor. Licensee shall be solely responsible for any and all costs associated with such lawsuits and including costs related to the defense of any counterclaim thereto and/or any civil or administrative challenges as to the validity of the Patent. When requested by Licensee, Licensor may at its sole discretion cooperate, at Licensees expense, in the conduct of such lawsuit. After deductions for expenses incurred, Licensor and Licensee shall participate on a fair and equitable basis in any money damages recovered.
ARTICLE 6
ASSIGNMENT
This Agreement and all rights and obligations hereunder may not be assigned by either party without the express prior written consent of the other party, except that this Agreement shall be binding upon and inure to the benefit of a third party that acquires either partys entire or substantially entire business, subject to Section 7.04 below. Any assignment or attempt at the same in the absence of prior written consent required by this paragraph shall be void and without effect. Notwithstanding the foregoing, either party may, with written notice to the other party, assign this Agreement to a wholly owned Affiliate.
ARTICLE 7
TERM AND TERMINATION
7.01 Term . This Agreement shall commence on the Effective Date and shall terminate upon expiration of the last to expire of the Patents except that any license to Know How shall last indefinitely or until such Know How becomes generally known or generally available to the public.
7.02 Termination for Breach by Licensee . In the event Licensee breaches any of its representations or material obligations under this Agreement, Licensor may terminate this Agreement and the license granted in this Agreement by giving notice in writing to Licensee of the breach. In the event Licensee does not correct or eliminate the breach within thirty (30) days from the date of receipt of such notice, this Agreement, including the license to use the Licensed Patents and Know How, shall terminate ten (10) days following the thirty (30) day cure period.
7.03 Termination for Breach by Licensor . In the event Licensor breaches any of its representations or material obligations under this Agreement, Licensee may terminate this Agreement and the license granted in this Agreement by giving notice in writing to Licensor of the breach. In the event Licensor does not correct or eliminate the breach within thirty (30) days from the date of receipt of such notice, this Agreement, including the license to use the Licensed Patents and Know How, shall terminate ten (10) days following the thirty (30) day cure period.
7.04 Termination for Change of Control . Licensor will have the right to terminate this Agreement and the licenses granted in this Agreement by giving written notice to Licensee in the event of a Change of Control of Licensee. A Change of Control means a transaction in which there is a change in the person or persons holding a controlling interest in the equity of Licensee (or in the equity of any parent entity of Licensee) and such change results in the controlling interest in the Licensee or such parent entity being held by a Kimberly-Clark Competitor.
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7.05 Failure to Spin Off the Health Care Business . If for any reason Kimberly-Clark should elect not to spin off its Global Health Care Business, then this Agreement shall be void ab initio .
ARTICLE 8
REPRESENTATIONS AND WARRANTIES
8.01 Representations and Warranties . Each of the parties represents and warrants that it has authority to enter into this Agreement and to perform its obligations under this Agreement and that it has been duly authorized to execute and to deliver this Agreement.
8.02 No Other Representations or Warranties . Other than specifically provided for elsewhere in this Article, nothing in this Agreement shall be construed as:
(a) | a warranty or representation by either party as to the validity, enforceability, or scope of any of the Patents or Know How; |
(b) | a warranty or representation that anything made, used, sold or otherwise disposed of under any license granted in this Agreement is or will be free from infringement of patents or third parties; |
(c) | an obligation to furnish any manufacturing or technical information, or any information concerning pending patent applications; |
(d) | granting by implication, estoppel, or otherwise any licenses or rights under patents other than the Patents; or |
(e) | a requirement that either party maintain, defend or enforce any licensed Patent. |
ARTICLE 9
LIMITATIONS AND INDEMNIFICATION
9.01 With respect to the use of any and all Patents and Know-How, Licensee shall be and remain solely responsible and liable for identifying and making determinations regarding (i) the suitability of any good or service for a particular purpose, (ii) any health and safety issues associated with the handling, processing and/or use of any good or service, (iii) accuracy of all specifications for any good or service, and (iv) compliance of any good or service with associated regulatory or other governmental requirements.
9.02 Licensee shall indemnify and hold Licensor and Licensors Affiliates harmless from or against any losses, claims, damages and expenses arising out of or resulting from Licensees use of the Patents and Know-How after the Effective Date.
ARTICLE 10
NOTICES
All notices and communications in connection with this Agreement shall be in writing and shall be deemed sufficient and delivery thereof shall be complete on the day of receipt if sent by KCWW by overnight commercial carrier to:
Avent Inc.
5405 Windward Parkway, Suite 100, South
Alpharetta, Georgia 30004
ATTENTION: General Counsel
Page 7
or if sent by Avent by overnight commercial carrier to:
Kimberly-Clark Worldwide, Inc.
2100 Winchester Road
Neenah, WI 54956
ATTENTION: General Counsel
or any other address and to the attention of any other officer or person as each of the parties hereto may specify by written notice to the other.
ARTICLE 11
SEVERABILITY OF PROVISIONS
If any provision of this Agreement shall be held to be invalid, illegal or unenforceable in any jurisdiction, the validity and enforceability of the remaining provisions shall not be affected thereby in such jurisdiction nor shall the validity or enforceability of such provisions, or this Agreement as a whole, be affected thereby in any other jurisdiction.
ARTICLE 12
HEADINGS
Article and paragraph headings used in this Agreement are for the purpose of reference only and shall not be considered in construing this Agreement.
ARTICLE 13
COMPLIANCE WITH LAW
Nothing in this Agreement shall require KCWW or Avent to violate any applicable law.
ARTICLE 14
WAIVER OF BREACH
No waiver of breach of any of the provisions of this Agreement shall be construed to be a waiver of any succeeding breach of the same or any other provision.
ARTICLE 15
ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the parties relating to the subject matter hereof, and supersedes any and all prior or contemporaneous agreements, whether oral or written, relating to the subject matter hereof. No amendment or change in this Agreement shall be valid unless made in writing and signed by both parties.
ARTICLE 16
APPLICABLE LAW
This Agreement shall be construed in accordance with the substantive laws of the State of Delaware of the United States of America, without regard to its conflict of laws provisions. Both parties to this Agreement submit to the personal jurisdiction of any court of competent subject matter jurisdiction located in the State of Delaware of the United States of America.
Page 8
ARTICLE 17
FORCE MAJEURE
Neither KCWW nor Avent shall be liable to the other for any failure to comply with any terms of the Agreement to the extent any such failure is caused directly or indirectly by fire, strike, union disturbance, or other industrial dispute, war (whether or not declared), acts or the threat of terrorism, riots, insurrection, government restrictions or other government acts, or other causes beyond the reasonable control of either KCWW or Avent. Upon the occurrence of any event of the type referred to in this Article, the party affected thereby shall give prompt notice thereof to the other party, together with a description of such event and the duration for which such party expects its ability to comply with the provisions of this Agreement shall be affected thereby. The party so affected shall thereafter devote reasonable commercial efforts to remedy to the extent possible the condition giving rise to such event and to resume performance of its obligations hereunder as promptly as possible.
ARTICLE 18
FURTHER INSTRUMENTS AND ACTS
The parties agree to execute, acknowledge and deliver all such further instruments, and to do all such other acts, as may be necessary and appropriate in order to effectuate this Agreement.
ARTICLE 19
RELATIONSHIP BETWEEN THE PARTIES
This Agreement does not, and shall not be deemed to, designate either party as the agent or legal representative of the other party for any purpose whatsoever. Neither party is granted, nor shall such party be deemed to be granted, any right or authority under this Agreement to assume or create any obligation or responsibility, expressed or implied, on behalf of or in the name of the other party or to bind the other party in any manner or thing whatsoever. No joint venture, association or partnership between KCWW and Avent is intended or shall be deemed to be created as a result of this Agreement.
Page 9
ARTICLE 20
COUNTERPARTS
This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same document.
IN WITNESS WHEREOF, the parties have caused their authorized representatives to execute this Agreement.
KIMBERLY-CLARK WORLDWIDE, INC. | ||
By: /s/ Jeff Doherty | ||
Name: Jeff Doherty | ||
Title: Authorized Signatory | ||
AVENT, INC. | ||
By: /s/ John W. Wesley | ||
Name: John W. Wesley | ||
Title: Senior Vice President, General Counsel | ||
and Secretary |
Page 10
APPENDIX A ANTI-VIRAL TECHNOLOGY
Patents and Know How: Anti-Viral Technology refers to delivery systems for anti-viral agents and is limited to the following Patents and Know How and the Know How directly related to the following Patents:
InventionId |
PatentId |
ApplicationTitle |
Territory Name |
Application No. |
Patent No. |
|||||
64366867 | 64377741 | Anti-Microbial Substrates With Peroxide Treatment | United States of America | 11/847976 | ||||||
64481242 | Anti-Microbial Substrates With Peroxide Treatment | Patent Cooperation Treaty | PCT/IB2008/052512 |
License: KCWW hereby grants to Avent a royalty-free, worldwide, irrevocable, exclusive license to make, have made, use, import, offer for sale, and sell Medical Products in the Health Care Market under the Patents and Know How set forth above and the Know How directly related to the Patents set forth above in this Appendix A.
Term: The term of this Anti-Viral Technology license shall end upon expiration of the last to expire of the licensed Anti-Viral Technology Patents except that any license to Anti-Viral Technology Know How shall last indefinitely or until such Know How becomes generally known or generally available to the public.
Page 11
APPENDIX B APPLICATORS & DRESSINGS TECHNOLOGY
Patents and Know How: Applicators & Dressings Technology refers to liquid applicators, delivery of skin wellness agents and wound dressings and is limited to the following Patents and Know How and the Know How directly related to the following Patents:
InventionId |
PatentId |
ApplicationTitle |
Territory Name |
Application No. |
Patent No. |
|||||
64120380 | 64124963 | Method For Detecting Candida On Skin | United States of America | 11/513500 | 7763442 | |||||
64378985 | Method For Detecting Candida On Skin | Patent Cooperation Treaty | PCT/IB2007/052872 | |||||||
64510905 | Method For Detecting Candida On Skin | Australia | 2007290941 | 2007290941 | ||||||
64510919 | Method For Detecting Candida On Skin | China | 200780031765.X | |||||||
64510933 | Method For Detecting Candida On Skin | European Patent | 07805195.0 | |||||||
64510947 | Method For Detecting Candida On Skin | India | 1133/CHENP/2009 | |||||||
64510961 | Method For Detecting Candida On Skin | Korea, Republic of (KR) | 2009-7003026 | |||||||
64510975 | Method For Detecting Candida On Skin | Mexico | MX/a/2009/002110 | 285188 | ||||||
64680845 | Method For Detecting Candida On Skin | United States of America | 12/843922 | 8361742 | ||||||
64803219 | 64885742 | Stable Emulsion for Prevention of Skin Irritation and Items Using Same | United States of America | 61/666382 | ||||||
64924350 | Stable Emulsion for Prevention of Skin Irritation and Items Using Same | United States of America | 13/925316 | |||||||
64925861 | Stable Emulsion for Prevention of Skin Irritation and Items Using Same | Patent Cooperation Treaty | PCT/IB2013/055228 | |||||||
64930480 | Pressure Ulcer Prevention Device | TBD |
License: KCWW hereby grants to Avent a royalty-free, worldwide, irrevocable, exclusive license to make, have made, use, import, offer for sale, and sell Medical Products in the Health Care Market under the Patents and Know How set forth above and the Know How directly related to the Patents set forth above in this Appendix B.
Term: The term of this Applicators & Dressings Technology license shall end upon expiration of the last to expire of the licensed Applicators & Dressings Technology Patents except that any license to Applicators & Dressings Technology Know How shall last indefinitely or until such Know How becomes generally known or generally available to the public.
Page 12
APPENDIX C FLEXIBLE BINDERS TECHNOLOGY
Patents and Know How: Flexible Binders Technology refers to flexible superabsorbent binders and coatings and is limited to the following Patents and Know How and the Know How directly related to the following Patents:
Patent ID |
App Title |
Country | App No. |
Patent
No. |
||||
64480289 | ABSORBENT CORE INCLUDING FOLDED SUBSTRATE |
United States of
America |
12/110079 | 8207395 | ||||
64097535 | ARTICLES COMPRISING TRANSPARENT/TRANSLUCENT POLYMER COMPOSITION |
United States of
America |
11/292570 | 7619131 | ||||
64096816 | MULTI-PURPOSE ADHESIVE COMPOSITION |
United States of
America |
11/025317 | 7495055 | ||||
64093755 | ABSORBENT BINDER DESICCANT COMPOSITION AND ARTICLES INCORPORATING IT |
United States of
America |
10/622752 | 7205259 | ||||
64093085 | ABSORBENT ARTICLE WITH SELF-FORMING ABSORBENT BINDER LAYER |
United States of
America |
10/427808 | 6808801 | ||||
64093083 | ABSORBENT STRUCTURES WITH SELECTIVELY PLACED FLEXIBLE ABSORBENT BINDER |
United States of
America |
10/427564 | 6964803 | ||||
64093082 | ABSORBENT BINDER COATING |
United States of
America |
10/427700 | 7115321 | ||||
64093081 | ABSORBENT BINDER COMPOSITION AND METHOD OF MAKING IT |
United States of
America |
10/427809 | 6887961 |
Page 13
64092335 | METHOD FOR MAKING AN ABSORBENT BINDER COMPOSITION AND APPLICATION THEREOF TO A SUBSTRATE |
United States of
America |
10/324478 | 6849685 | ||||
64092171 | ABSORBENT CORE INCLUDING FOLDED SUBSTRATE |
United States of
America |
10/318493 | 7378566 | ||||
64092170 | ABSORBENT COMPOSITE INCLUDING A FOLDED SUBSTRATE AND AN ABSORBENT ADHESIVE COMPOSITION |
United States of
America |
10/318567 | 7294591 | ||||
64090673 | ABSORBENT BINDER COMPOSITION AND METHOD OF MAKING SAME |
United States of
America |
10/206883 | 6737491 | ||||
64090668 | FLUID STORAGE MATERIAL INCLUDING PARTICLES SECURED WITH A CROSSLINKABLE BINDER COMPOSITION AND METHOD OF MAKING SAME |
United States of
America |
10/206888 | 6822135 | ||||
64894403 | Composition for Forming a Porous Absorbent Structure |
United States of
America |
13/832966 | |||||
64935678 | To be Filed |
Enzyme stability and
controlled release in a Flexible Absorbent Binder (FAB) matrix |
||||||
64935809 | To be Filed |
FAB + Compressed
paper for wound sealing |
||||||
64936415 | To be Filed |
Healthcare Regimen
for a sprayable wound healing delivery |
Page 14
64936677 | To be Filed |
Method of Making
a Hydrogel foam Patch that delivers Dissolved Oxygen |
||||||
64937195 | To be Filed |
Acceleration of
FAB gelation with Biological Materials |
||||||
64937499 | To be Filed |
Method to deliver
compounds/ peptides to a wound bed for enhanced wound healing |
License: KCWW hereby grants to Avent a royalty-free, worldwide, irrevocable, exclusive license to make, have made, use, import, offer for sale, and sell Medical Products in the Health Care Market under the Patents and Know How set forth above and the Know How directly related to the Patents set forth above in this Appendix C.
Term: The term of this Flexible Binders Technology license shall end upon expiration of the last to expire of the licensed Flexible Binders Technology Patents except that any license to Flexible Binders Technology Know How shall last indefinitely or until such Flexible Binders Technology Know How becomes generally known or generally available to the public.
Page 15
APPENDIX D CR&E TECHNOLOGIES
Patents and Know How: CR&E Technologies refers to technology developed by Kimberly-Clarks Corporate Research and Engineering team having relevance to Medical Products and is limited to the following Know How:
TECHNOLOGY
Skin Sealant Technology (e.g., polymers in categories beyond cyanoacrylates)
P38 - Hard Surface Indicator
Topical Pain Relief Using Olive Extract
Indicator Technology (Normal, Cold, Allergy, pH Indicators)
Wound Care
Design of Endotracheal Tube (balloon placement, shape, etching, tubing)
Modeling Thermal Comfort For Surgical Apparel
Moisturizing Gloves
Blood Color Discharge
Diagnostic Technologies
CHG Skin Prep And Oral Care (chlorohexidine gluconate)
Foaming Oral Care Products - CPC, H 2 O 2
Percutaneous Tracheostomy Safety Needle/Impedance Probe (utilizing impedance differences between tissues and/or gas)
Design of MIC-KEY* Feeding Tube (balloon shape modeling)
Modeling Pull Forces of Feed Tube Retainers (e.g., PEG Tubes)
Position Monitoring of GJ Tube and other Feed Tubes (e.g., pH indicator)
Failure indicator for MIC-KEY* Feeding Tube
Readiness to Feed Indicator for Digestive Health
Gastric Decompression TR
Respiratory Muscle Fitness (Weaning)
License: KCWW hereby grants to Avent a royalty-free, worldwide, irrevocable, non-exclusive license to make, have made, use, import, offer for sale, and sell Medical Products in the Health Care Market under the Know How set forth above in this Appendix D, except that, solely with respect to the P38 Hard Surface Indicator Know How, Avent will not have rights to any Patent that may mature from the P38 Hard Surface Indicator Know How.
Term: The term of this CR&E Technologies license shall last indefinitely or until such CR&E Technologies Know How becomes generally known or generally available to the public.
Page 16
APPENDIX E WOUND CARE TECHNOLOGY
Patents and Know How: Wound Care Technology refers to wound care formulations including peptide sequences to reduce chrondrosarcoma and various formulations to promote skin wellness and is limited to the following Patents and Know How and the Know How directly related to the following Patents:
InventionId |
PatentId |
ApplicationTitle |
Territory Name | Application No. |
Patent
No. |
|||||
64035489 | 64088761 | TRIGGERED RELEASE FROM PROTEINOID MICROSPHERES |
United States of
America |
10/027441 | 7056535 | |||||
64090345 | TRIGGERED RELEASE FROM PROTEINOID MICROSPHERES |
Patent
Cooperation Treaty |
PCT/US02/18596 | |||||||
64096061 | TRIGGERED RELEASE FROM PROTEINOID MICROSPHERES |
United States of
America |
10/840557 | 7238371 | ||||||
64375602 | Triggered Release From Proteinoid Microspheres |
United States of
America |
11/758287 | |||||||
64040414 | 64093576 | ANTI-CHRONDROSARCOMA COMPOUNDS |
United States of
America |
10/601059 | 7189700 | |||||
64348726 | ANTI-CHRONDROSARCOMA COMPOUNDS |
United States of
America |
11/609816 | 7795225 |
License: KCWW hereby grants to Avent a royalty-free, worldwide, irrevocable, non-exclusive license to make, have made, use, import, offer for sale, and sell Medical Products in the Health Care Market under the Patents and Know How set forth above and the Know How directly related to the Patents set forth above in this Appendix E.
Term: The term of this Wound Care Technology license shall end upon expiration of the last to expire of the licensed Wound Care Technology Patents except that any license to Wound Care Technology Know How shall last indefinitely or until such Wound Care Technology Know How becomes generally known or generally available to the public.
Page 17
APPENDIX F OTHER K-C TECHNOLOGY
Patents and Know How: Other K-C Technology refers to sterilization packaging, indicators, elder care methods and pathogen selective wipes and is limited to the following Patents and Know How and the Know How directly related to the following Patents:
InventionId |
PatentId |
ApplicationTitle |
Territory Name | Application No. | Patent No. | |||||
64384712 | 64401147 | Self-Indicating Wipe for Removing Bacteria from a Surface |
United States of
America |
11/955696 | ||||||
64495367 | Self-Indicating Wipe for Removing Bacteria from a Surface |
Patent Cooperation
Treaty |
PCT/IB2008/053709 | |||||||
64658242 | Self-Indicating Wipe for Removing Bacteria from a Surface | Australia | 2008334327 | 2008334327 | ||||||
64658244 | Self-Indicating Wipe for Removing Bacteria from a Surface | Brazil | PI0819423-8 | |||||||
64658246 | Self-Indicating Wipe for Removing Bacteria from a Surface | China | 200880120653.6 | |||||||
64658248 | Self-Indicating Wipe for Removing Bacteria from a Surface | European Patent | 08807642.7 | |||||||
64658250 | Self-Indicating Wipe for Removing Bacteria from a Surface |
Korea, Republic of
(KR) |
10-2010-7012880 | |||||||
64658252 | Self-Indicating Wipe for Removing Bacteria from a Surface | Mexico | MX/a/2010/006584 | |||||||
64036679 | 64093627 | WIPE COMPRISING A PATHOGEN SELECTIVE ANTIMICROBIAL |
United States of
America |
10/608661 | 7485110 | |||||
64095894 | WIPE COMPRISING A PATHOGEN SELECTIVE ANTIMICROBIAL |
Patent Cooperation
Treaty |
PCT/US2004/011043 |
Page 18
64095900 | WIPE COMPRISING A PATHOGEN SELECTIVE ANTIMICROBIAL | Korea, Republic of (KR) | 10-2005-7023839 | 10-1075325 | ||||||
64095901 | WIPE COMPRISING A PATHOGEN SELECTIVE ANTIMICROBIAL | European Patent | 04749945.4 | |||||||
64095902 | WIPE COMPRISING A PATHOGEN SELECTIVE ANTIMICROBIAL | Brazil | PCT/US2004/011043 | |||||||
64095903 | WIPE COMPRISING A PATHOGEN SELECTIVE ANTIMICROBIAL | Australia | 2004258808 | 2004258808 | ||||||
64095904 | WIPE COMPRISING A PATHOGEN SELECTIVE ANTIMICROBIAL | Mexico | PA/a/2005/013501 | 268968 | ||||||
64393916 | 64885651 | Vacuum Packaged Products And Methods For Making Same | United Kingdom | 09750252.0 | ||||||
64885629 | Vacuum Packaged Products And Methods For Making Same |
Germany (Federal
Republic of) |
09750252.0 | |||||||
64885607 | Vacuum Packaged Products And Methods For Making Same | France | 09750252.0 | |||||||
64796824 | Vacuum Packaged Products And Methods For Making Same |
United States of
America |
13/239522 | 8323562 | ||||||
64665490 | Vacuum Packaged Products And Methods For Making Same | Mexico | MX/a/2010/011650 | |||||||
64665468 | Vacuum Packaged Products And Methods For Making Same | Korea, Republic of (KR) | 10-2010-7026055 | |||||||
64665446 | Vacuum Packaged Products And Methods For Making Same | Japan | 2011-510083 | 5384622 |
Page 19
64665424 | Vacuum Packaged Products And Methods For Making Same | European Patent | 09750252.0 | |||||||
64665402 | Vacuum Packaged Products And Methods For Making Same | China | 200980118750.6 | ZL200980118750.6 | ||||||
64665380 | Vacuum Packaged Products And Methods For Making Same | Canada | 2723200 | |||||||
64665358 | Vacuum Packaged Products And Methods For Making Same | Brazil | PI0907266-7 | |||||||
64665336 | Vacuum Packaged Products And Methods For Making Same | Australia | 2009250856 | |||||||
64513056 | Vacuum Packaged Products And Methods For Making Same |
Patent Cooperation
Treaty |
PCT/IB2009/052129 | |||||||
64483873 | Vacuum Packaged Products And Methods For Making Same |
United States of
America |
12/126279 | |||||||
64895938 | 64909847 | Method for Reducing Illness in Elder Care Facilities |
United States of
America |
61/758905 | ||||||
64935287 | Method for Reducing Illness in Elder Care Facilities |
United States of
America |
61/883537 | |||||||
64943550 | Method for Reducing Illness in Care Facilities |
United States of
America |
14/155688 | |||||||
64944707 | Method for Reducing Illness in Care Facilities |
Patent Cooperation
Treaty |
PCT/IB2014/058416 |
License: KCWW hereby grants to Avent a royalty-free, worldwide, irrevocable, exclusive license to make, have made, use, import, offer for sale, and sell Medical Products in the Health Care Market under the Patents and Know How set forth above and the Know How directly related to the Patents set forth above in this Appendix F.
Term: The term of this Other K-C Technology license shall end upon expiration of the last to expire of the licensed Other K-C Technology Patents except that any license to Other K-C Technology Know How shall last indefinitely or until such Other K-C Technology Know How becomes generally known or generally available to the public.
Page 20
APPENDIX G GNW TECHNOLOGY
Patents: GNW Patents refers to Patents relating to the manufacture and use of nonwoven fabrics and film/nonwoven laminates used to produce infection control products including sterile wrap, surgical drapes, face masks, medical equipment covers, and protective apparel, and is limited to the following Patents:
GNW Breathable Film Patents
Patent ID |
Application Title |
Country | Patent No. | |||||
64079950 | BREATHABLE LAMINATE PERMANENTLY CONFORMABLE TO THE CONTOURS OF A WEARER |
United States of
America |
6632212 | |||||
64084707 | BREATHABLE LAMINATE PERMANENTLY CONFORMABLE TO THE CONTOURS OF A WEARER |
Patent
Cooperation Treaty |
||||||
64084710 | BREATHABLE LAMINATE PERMANENTLY CONFORMABLE TO THE CONTOURS OF A WEARER | Japan | ||||||
64084711 | BREATHABLE LAMINATE PERMANENTLY CONFORMABLE TO THE CONTOURS OF A WEARER | Mexico | 237228 | |||||
64084712 | BREATHABLE LAMINATE PERMANENTLY CONFORMABLE TO THE CONTOURS OF A WEARER | Poland | ||||||
64084713 | BREATHABLE LAMINATE PERMANENTLY CONFORMABLE TO THE CONTOURS OF A WEARER |
Korea, Republic
of (KR) |
10-0714342 | |||||
64084714 | BREATHABLE LAMINATE PERMANENTLY CONFORMABLE TO THE CONTOURS OF A WEARER | Indonesia | ||||||
64084715 | BREATHABLE LAMINATE PERMANENTLY CONFORMABLE TO THE CONTOURS OF A WEARER | India | ||||||
64084716 | BREATHABLE LAMINATE PERMANENTLY CONFORMABLE TO THE CONTOURS OF A WEARER | China | ZL00818990.0 | |||||
64084717 | BREATHABLE LAMINATE PERMANENTLY CONFORMABLE TO THE CONTOURS OF A WEARER |
European
Patent |
EP1240014 | |||||
64084718 | BREATHABLE LAMINATE PERMANENTLY CONFORMABLE TO THE CONTOURS OF A WEARER |
Russian
Federation |
2266138 | |||||
64084719 | BREATHABLE LAMINATE PERMANENTLY CONFORMABLE TO THE CONTOURS OF A WEARER | South Africa | 2002/4467 |
Page 21
64084720 | BREATHABLE LAMINATE PERMANENTLY CONFORMABLE TO THE CONTOURS OF A WEARER | Australia | 776781 | |||||
64084721 | BREATHABLE LAMINATE PERMANENTLY CONFORMABLE TO THE CONTOURS OF A WEARER | Brazil | ||||||
64084948 | BREATHABLE LAMINATE PERMANENTLY CONFORMABLE TO THE CONTOURS OF A WEARER | Thailand | ||||||
64085153 | BREATHABLE LAMINATE PERMANENTLY CONFORMABLE TO THE CONTOURS OF THE WEARER | Colombia | 28483 | |||||
64085169 | BREATHABLE LAMINATE PERMANENTLY CONFORMABLE TO THE CONTOURS OF A WEARER | Argentina | ||||||
64085967 | BREATHABLE LAMINATE PERMANENTLY CONFORMABLE TO THE CONTOURS OF A WEARER | Saudi Arabia | ||||||
64500929 | BREATHABLE LAMINATE PERMANENTLY CONFORMABLE TO THE CONTOURS OF A WEARER |
Germany (Federal Republic
of) |
60041982.7 | |||||
64500932 | BREATHABLE LAMINATE PERMANENTLY CONFORMABLE TO THE CONTOURS OF A WEARER | United Kingdom | EP1240014 | |||||
64083812 | BREATHABLE LAMINATE PERMANENTLY CONFORMABLE TO THE CONTOURS OF A WEARER | United States of America | 6579274 | |||||
64082265 | FILM HAVING HIGH BREATHABILITY INDUCED BY LOW CROSS-DIRECTIONAL STRETCH | United States of America | ||||||
64085550 | FILM HAVING HIGH BREATHABILITY INDUCED BY LOW CROSS-DIRECTIONAL STRETCH | United States of America | 6821915 | |||||
64086251 | FILM HAVING HIGH BREATHABILITY INDUCED BY LOW CROSS-DIRECTIONAL STRETCH | Patent Cooperation Treaty | ||||||
64086255 | FILM HAVING HIGH BREATHABILITY INDUCED BY LOW CROSS-DIRECTIONAL STRETCH | Australia | 2001259103 | |||||
64086256 | FILM HAVING HIGH BREATHABILITY INDUCED BY LOW CROSS-DIRECTIONAL STRETCH | European Patent | EP1299460 | |||||
64086257 | FILM HAVING HIGH BREATHABILITY INDUCED BY LOW CROSS-DIRECTIONAL STRETCH | South Africa | 2002/7687 |
Page 22
64086258 | FILM HAVING HIGH BREATHABILITY INDUCED BY LOW CROSS-DIRECTIONAL STRETCH | Japan | ||||||
64086259 | FILM HAVING HIGH BREATHABILITY INDUCED BY LOW CROSS-DIRECTIONAL STRETCH | Korea, Republic of (KR) | 10-0753313 | |||||
64086260 | FILM HAVING HIGH BREATHABILITY INDUCED BY LOW CROSS-DIRECTIONAL STRETCH | Brazil | PI0110181-1 | |||||
64086261 | FILM HAVING HIGH BREATHABILITY INDUCED BY LOW CROSS-DIRECTIONAL STRETCH | China | ZL01808960.7 | |||||
64086262 | FILM HAVING HIGH BREATHABILITY INDUCED BY LOW CROSS-DIRECTIONAL STRETCH | Mexico | 229351 | |||||
64086333 | FILM HAVING HIGH BREATHABILITY INDUCED BY LOW CROSS-DIRECTIONAL STRETCH | Argentina | AR028390B1 | |||||
64092447 | CROSS-DIRECTIONAL EXTENDIBLE FILMS HAVING HIGH BREATHABILITY AND LOW OUTER DAMPNESS | United States of America | ||||||
64094590 | FILM HAVING HIGH BREATHABILITY INDUCED BY LOW CROSS-DIRECTIONAL STRETCH | United States of America | 6811865 | |||||
64098931 | FILM HAVING HIGH BREATHABILITY INDUCED BY LOW CROSS-DIRECTIONAL STRETCH | United Kingdom | EP1299460 | |||||
64098932 | FILM HAVING HIGH BREATHABILITY INDUCED BY LOW CROSS-DIRECTIONAL STRETCH | France | EP1299460 | |||||
64098933 | FILM HAVING HIGH BREATHABILITY INDUCED BY LOW CROSS-DIRECTIONAL STRETCH |
Germany (Federal
Republic of) |
60120407.7 | |||||
64087263 | BREATHABLE MULTILAYER FILMS WITH BREAKABLE SKIN LAYERS | United States of America | 6638636 | |||||
64089696 | BREATHABLE MULTILAYER FILMS WITH BREAKABLE SKIN LAYERS | Patent Cooperation Treaty | ||||||
64089702 | BREATHABLE MULTILAYER FILMS WITH BREAKABLE SKIN LAYERS | Australia | ||||||
64089703 | BREATHABLE MULTILAYER FILMS WITH BREAKABLE SKIN LAYERS | Brazil | PI0210954-9 | |||||
64089704 | BREATHABLE MULTILAYER FILMS WITH BREAKABLE SKIN LAYERS | China | ZL02816861.5 |
Page 23
64089705 | BREATHABLE MULTILAYER FILMS WITH BREAKABLE SKIN LAYERS | Colombia | ||||||
64089706 | BREATHABLE MULTILAYER FILMS WITH BREAKABLE SKIN LAYERS | European Patent | 1423275 | |||||
64089707 | BREATHABLE MULTILAYER FILMS WITH BREAKABLE SKIN LAYERS | Japan | ||||||
64089708 | BREATHABLE MULTILAYER FILMS WITH BREAKABLE SKIN LAYERS | Korea, Republic of (KR) | ||||||
64089709 | BREATHABLE MULTILAYER FILMS WITH BREAKABLE SKIN LAYERS | Mexico | ? | |||||
64089710 | BREATHABLE MULTILAYER FILMS WITH BREAKABLE SKIN LAYERS | South Africa | 2004/0068 | |||||
64090945 | BREATHABLE MULTILAYER FILMS WITH BREAKABLE SKIN LAYERS | Argentina | AR036291B1 | |||||
64764414 | BREATHABLE MULTILAYER FILMS WITH BREAKABLE SKIN LAYERS | France | 1423275 | |||||
64764453 | BREATHABLE MULTILAYER FILMS WITH BREAKABLE SKIN LAYERS |
Germany (Federal Republic
of) |
1423275 | |||||
64764492 | BREATHABLE MULTILAYER FILMS WITH BREAKABLE SKIN LAYERS | United Kingdom | 1423275 | |||||
64094023 | MICROPOROUS STRETCH THINNED FILM/NONWOVEN LAMINATES AND LIMITED USE OR DISPOSABLE PRODUCT APPLICATIONS | United States of America | 7932196 | |||||
64095860 | MICROPOROUS STRETCH-THINNED FILM/NONWOVEN LAMINATES AND LIMITED USE OR DISPOSABLE PRODUCT APPLICATIONS | Patent Cooperation Treaty | ||||||
64095871 | MICROPOROUS STRETCH-THINNED FILM/NONWOVEN LAMINATES AND LIMITED USE OR DISPOSABLE PRODUCT APPLICATIONS | Brazil | ||||||
64095872 | MICROPOROUS STRETCH-THINNED FILM/NONWOVEN LAMINATES AND LIMITED USE OR DISPOSABLE PRODUCT APPLICATIONS | South Africa | 2006/00764 | |||||
64095873 | MICROPOROUS STRETCH-THINNED FILM/NONWOVEN LAMINATES AND LIMITED USE OR DISPOSABLE PRODUCT APPLICATIONS | Japan | ||||||
64095874 | MICROPOROUS STRETCH-THINNED FILM/NONWOVEN LAMINATES AND LIMITED USE OR DISPOSABLE PRODUCT APPLICATIONS | China |
Page 24
64095875 | MICROPOROUS STRETCH-THINNED FILM/NONWOVEN LAMINATES AND LIMITED USE OR DISPOSABLE PRODUCT APPLICATIONS | Korea, Republic of (KR) | ||||||
64095876 | MICROPOROUS STRETCH-THINNED FILM/NONWOVEN LAMINATES AND LIMITED USE OR DISPOSABLE PRODUCT APPLICATIONS | Mexico | 257808 | |||||
64095877 | MICROPOROUS STRETCH-THINNED FILM/NONWOVEN LAMINATES AND LIMITED USE OR DISPOSABLE PRODUCT APPLICATIONS | Colombia | ||||||
64095878 | MICROPOROUS STRETCH-THINNED FILM/NONWOVEN LAMINATES AND LIMITED USE OR DISPOSABLE PRODUCT APPLICATIONS | Australia | ||||||
64095881 | MICROPOROUS STRETCH-THINNED FILM/NONWOVEN LAMINATES AND LIMITED USE OR DISPOSABLE PRODUCT APPLICATIONS | European Patent | EP1656253 | |||||
64096320 | MICROPOROUS STRETCH THINNED FILM/NONWOVEN LAMINATES AND LIMITED USE OR DISPOSABLE PRODUCT APPLICATIONS | Argentina | ||||||
64351652 | MICROPOROUS STRETCH-THINNED FILM/NONWOVEN LAMINATES AND LIMITED USE OR DISPOSABLE PRODUCT APPLICATIONS | France | EP1656253 | |||||
64351656 | MICROPOROUS STRETCH-THINNED FILM/NONWOVEN LAMINATES AND LIMITED USE OR DISPOSABLE PRODUCT APPLICATIONS |
Germany (Federal
Republic of) |
602004006760.1 | |||||
64351660 | MICROPOROUS STRETCH-THINNED FILM/NONWOVEN LAMINATES AND LIMITED USE OR DISPOSABLE PRODUCT APPLICATIONS | United Kingdom | EP1656253 |
Page 25
GNW Non-Woven Applications
Patent ID |
Application Title |
Country | Application No. | Patent No. | ||||||||
64371496 | Antistatic Breathable Nonwoven Laminate Having Improved Barrier Properties |
United States of
America |
||||||||||
64495492 | Antistatic Breathable Nonwoven Laminate Having Improved Barrier Properties |
Patent
Cooperation Treaty |
||||||||||
64495494 | Antistatic Breathable Nonwoven Laminate Having Improved Barrier Properties | Argentina | 80105423 | |||||||||
64663686 | Antistatic Breathable Nonwoven Laminate Having Improved Barrier Properties | Australia | 2008337175 | |||||||||
64663688 | Antistatic Breathable Nonwoven Laminate Having Improved Barrier Properties | Brazil | PI0819424-6 | |||||||||
64663690 | Antistatic Breathable Nonwoven Laminate Having Improved Barrier Properties |
European
Patent |
2222466 | |||||||||
64663692 | Antistatic Breathable Nonwoven Laminate Having Improved Barrier Properties |
Korea, Republic
of (KR) |
10-2010-7012929 | |||||||||
64663694 | Antistatic Breathable Nonwoven Laminate Having Improved Barrier Properties | Mexico | 287685 | |||||||||
64964958 | Antistatic Breathable Nonwoven Laminate Having Improved Barrier Properties |
Germany
(Federal Republic of) |
2222466 | |||||||||
64964959 | Antistatic Breathable Nonwoven Laminate Having Improved Barrier Properties |
United
Kingdom |
2222466 | |||||||||
64590002 | Puncture Resistant Fabric |
United States of
America |
8709959 | |||||||||
64674146 | Puncture Resistant Fabric |
Patent
Cooperation Treaty |
||||||||||
64820109 | Puncture Resistant Fabric | Australia | 2010337911 | |||||||||
64820136 | Puncture Resistant Fabric | Canada | 2781838 | |||||||||
64820163 | Puncture Resistant Fabric |
European
Patent |
10840682.8 | |||||||||
64820190 | Puncture Resistant Fabric | Japan | 2012-546529 | |||||||||
64820217 | Puncture Resistant Fabric | Mexico |
|
MX/a/
2012/007628 |
|
|||||||
64786169 | HIGH REPELLENCY FILMS VIA MICROTOPOGRAPHY AND POST TREATMENT |
United States of
America |
||||||||||
64857984 | HIGH REPELLENCY FILMS VIA MICROTOPOGRAPHY AND POST TREATMENT |
Patent
Cooperation Treaty |
||||||||||
64691757 | Nonwoven Webs Having Improved Barrier Properties |
United States of
America |
||||||||||
64776430 | Nonwoven Webs Having Improved Barrier Properties |
Patent
Cooperation Treaty |
||||||||||
64921564 | Nonwoven Webs Having Improved Barrier Properties | Australia | ||||||||||
64921565 | Nonwoven Webs Having Improved Barrier Properties | Brazil | ||||||||||
64921566 | Nonwoven Webs Having Improved Barrier Properties | China | ||||||||||
64921567 | Nonwoven Webs Having Improved Barrier Properties |
European
Patent |
||||||||||
64921568 | Nonwoven Webs Having Improved Barrier Properties |
Korea, Republic
of (KR) |
||||||||||
64921569 | Nonwoven Webs Having Improved Barrier Properties | Mexico |
Page 26
GNW Non-Woven Patents
Patent ID |
Application Title |
Country | Patent No. | |||||
64070110 | STRETCH-THINNED FILMS COMPRISING LOW CRYSTALLINITY POLYMERS AND LAMINATESTHEREOF |
United States of
America |
5947944 | |||||
64072794 | STRETCHED-THINNED BREATHABLE FILMS RESISTANT TO BLOOD AND VIRUS PENETRATION |
United States of
America |
6002064 | |||||
64073075 | STRETCHED-THINNED FILMS COMPRISING LOW CRYSTALLINITY POLYMERS AND LAMINATESTHEREOF |
Patent
Cooperation Treaty |
||||||
64073093 | STRETCHED-THINNED FILMS COMPRISING LOW CRYSTALLINITY POLYMERS AND LAMINATESTHEREOF | Australia | 728912 | |||||
64073094 | STRETCHED-THINNED FILMS COMPRISING LOW CRYSTALLINITY POLYMERS AND LAMINATESTHEREOF | Brazil | PI9714192-5 | |||||
64073095 | STRETCHED-THINNED FILMS COMPRISING LOW CRYSTALLINITY POLYMERS AND LAMINATESTHEREOF | Canada | ||||||
64073096 | STRETCHED-THINNED FILMS COMPRISING LOW CRYSTALLINITY POLYMERS AND LAMINATESTHEREOF | China | 97181156.3 | |||||
64073097 | STRETCH-THINNED FILMS COMPRISING LOW CRYSTALLINITY POLYMERS AND LAMINATESTHEREOF | European Patent | EP0948567 | |||||
64073098 | STRETCHED-THINNED FILMS COMPRISING LOW CRYSTALLINITY POLYMERS AND LAMINATESTHEREOF |
Korea, Republic
of (KR) |
10-500076 | |||||
64073100 | STRETCHED-THINNED FILMS COMPRISING LOW CRYSTALLINITY POLYMERS AND LAMINATESTHEREOF | Mexico | 208974 | |||||
64073108 | STRETCH-THINNED FILMS COMPRISING LOW CRYSTALLINITY POLYMERS AND LAMINATESTHEREOF | France | EP0948567 | |||||
64073109 | STRETCH-THINNED FILMS COMPRISING LOW CRYSTALLINITY POLYMERS AND LAMINATESTHEREOF | United Kingdom | EP0948567 | |||||
64073110 | STRETCH-THINNED FILMS COMPRISING LOW CRYSTALLINITY POLYMERS AND LAMINATESTHEREOF |
Germany
(Federal Republic of) |
69710783.3 | |||||
64073111 | STRETCH-THINNED FILMS COMPRISING LOW CRYSTALLINITY POLYMERS AND LAMINATESTHEREOF | Italy | EP0948567 | |||||
64073261 | STRETCHED-THINNED BREATHABLE FILMS RESISTANT TO BLOOD AND VIRUS PENETRATION |
Patent
Cooperation Treaty |
||||||
64073270 | STRETCHED-THINNED FILMS COMPRISING LOW CRYSTALLINITY POLYMERS AND LAMINATESTHEREOF | Thailand |
Page 27
64073277 | STRETCHED-THINNED BREATHABLE FILMS RESISTANT TO BLOOD AND VIRUS PENETRATION | Australia | 732173 | |||||
64073278 | STRETCHED-THINNED BREATHABLE FILMS RESISTANT TO BLOOD AND VIRUS PENETRATION | Brazil | PI9713796-0 | |||||
64073279 | STRETCHED-THINNED BREATHABLE FILMS RESISTANT TO BLOOD AND VIRUS PENETRATION | Canada | ||||||
64073280 | STRETCHED-THINNED BREATHABLE FILMS RESISTANT TO BLOOD AND VIRUS PENETRATION | China | 97181143.1 | |||||
64073281 | STRETCHED-THINNED BREATHABLE FILMS RESISTANT TO BLOOD AND VIRUS PENETRATION | European Patent | EP0948568 | |||||
64073282 | STRETCHED-THINNED BREATHABLE FILMS RESISTANT TO BLOOD AND VIRUS PENETRATION | Korea, Republic of (KR) | 10-0500075 | |||||
64073283 | STRETCHED-THINNED BREATHABLE FILMS RESISTANT TO BLOOD AND VIRUS PENETRATION | Mexico | 205641 | |||||
64073285 | STRETCHED-THINNED BREATHABLE FILMS RESISTANT TO BLOOD AND VIRUS PENETRATION | France | EP0948568 | |||||
64073286 | STRETCHED-THINNED BREATHABLE FILMS RESISTANT TO BLOOD AND VIRUS PENETRATION | United Kingdom | EP0948568 | |||||
64073287 | STRETCHED-THINNED BREATHABLE FILMS RESISTANT TO BLOOD AND VIRUS PENETRATION |
Germany (Federal
Republic of) |
69717146.9 | |||||
64073288 | STRETCHED-THINNED BREATHABLE FILMS RESISTANT TO BLOOD AND VIRUS PENETRATION | Italy | EP0948568 | |||||
64073303 | STRETCHED-THINNED BREATHABLE FILMS RESISTANT TO BLOOD AND VIRUS PENETRATION | Thailand | 17688 | |||||
64073306 | STRETCHED-THINNED BREATHABLE FILMS RESISTANT TO BLOOD AND VIRUS PENETRATION | Argentina | 011303 | |||||
64073307 | STRETCHED-THINNED FILMS COMPRISING LOW CRYSTALLINITY POLYMERS AND LAMINATESTHEREOF | Argentina | AR011302B1 | |||||
64086870 | SIDED TOPICAL TREATMENT FOR IMPROVED BARRIER FABRIC PERFORMANCE |
United States of
America |
||||||
64088222 | TREATED NONWOVEN FABRICS |
United States of
America |
6787184 | |||||
64089697 | TREATED NONWOVEN FABRICS |
Patent Cooperation
Treaty |
||||||
64089741 | TREATED NONWOVEN FABRICS | Korea, Republic of (KR) | 10-0869607 | |||||
64089742 | TREATED NONWOVEN FABRICS | Mexico | 262112 | |||||
64089743 | TREATED NONWOVEN FABRICS | Japan | 4339110 | |||||
64089744 | TREATED NONWOVEN FABRICS | United Kingdom | GB2393739 | |||||
64089745 | TREATED NONWOVEN FABRICS |
Germany (Federal
Republic of) |
||||||
64089746 | TREATED NONWOVEN FABRICS | Brazil |
Page 28
64090317 | TREATED NONWOVEN FABRICS | Argentina | ||||||
64098658 | TREATED NONWOVEN FABRICS | European Patent | ||||||
64096507 | EXTRUDED THERMOPLASTIC ARTICLES WITH ENHANCED SURFACE SEGREGATION OF INTERNAL MELT ADDITIVE |
United States of
America |
||||||
64528243 | Extruded Thermoplastic Articles with Enhanced Surface Segregation of Internal Melt Additive |
United States of
America |
7781353 | |||||
64092330 | BREATHABLE FILM AND FABRIC HAVING LIQUID AND VIRAL BARRIER |
United States of
America |
7381666 | |||||
64094509 | BREATHABLE FILM AND FABRIC HAVING LIQUID AND VIRAL BARRIER |
Patent
Cooperation Treaty |
||||||
64094523 | BREATHABLE FILM AND FABRIC HAVING LIQUID AND VIRAL BARRIER | European Patent | EP1572452 | |||||
64094524 | BREATHABLE FILM AND FABRIC HAVING LIQUID AND VIRAL BARRIER | Japan | 4429174 | |||||
64373273 | BREATHABLE FILM AND FABRIC HAVING LIQUID AND VIRAL BARRIER | France | EP1572452 | |||||
64373277 | BREATHABLE FILM AND FABRIC HAVING LIQUID AND VIRAL BARRIER |
Germany
(Federal Republic of) |
EP1572452 | |||||
64373281 | BREATHABLE FILM AND FABRIC HAVING LIQUID AND VIRAL BARRIER |
United
Kingdom |
EP1572452 | |||||
64094994 | METHOD OF TREATING SUBSTRATES WITH IONIC FLUOROPOLYMERS |
United States of
America |
7931944 | |||||
64094995 | METHOD OF TREATING NONWOVEN FABRICS WITH NON-IONIC FLUOROPOLYMERS |
United States of
America |
7811949 | |||||
64096334 | METHOD OF TREATING SUBSTRATES WITH IONIC FLUOROPOLYMERS |
Patent
Cooperation Treaty |
||||||
64096335 | METHOD OF TREATING NONWOVEN FABRICS WITH NON-IONIC FLUOROPOLYMERS |
Patent
Cooperation Treaty |
||||||
64096601 | METHOD OF TREATING SUBSTRATES WITH IONIC FLUOROPOLYMERS | Argentina | AR 046839 B1 | |||||
64096602 | METHOD OF TREATING NONWOVEN FABRICS WITH NON-IONIC FLUOROPOLYMERS | Argentina | ||||||
64122695 | METHOD OF TREATING SUBSTRATES WITH IONIC FLUOROPOLYMERS | Brazil | ||||||
64122696 | METHOD OF TREATING SUBSTRATES WITH IONIC FLUOROPOLYMERS | China | ZL 200480033207.3 | |||||
64122697 | METHOD OF TREATING SUBSTRATES WITH IONIC FLUOROPOLYMERS | European Patent | 1687477 | |||||
64122698 | METHOD OF TREATING SUBSTRATES WITH IONIC FLUOROPOLYMERS |
Korea, Republic
of (KR) |
10-1135300 | |||||
64122699 | METHOD OF TREATING SUBSTRATES WITH IONIC FLUOROPOLYMERS | Mexico | 289819 | |||||
64122700 | METHOD OF TREATING NONWOVEN FABRICS WITH NON-IONIC FLUOROPOLYMERS | Brazil | ||||||
64122701 | METHOD OF TREATING NONWOVEN FABRICS WITH NON-IONIC FLUOROPOLYMERS | China | ZL200480034718.7 | |||||
64122702 | METHOD OF TREATING NONWOVEN FABRICS WITH NON-IONIC FLUOROPOLYMERS | European Patent |
Page 29
64122703 | METHOD OF TREATING NONWOVEN FABRICS WITH NON-IONIC FLUOROPOLYMERS |
Korea, Republic of
(KR) |
10-1148414 | |||||
64122704 | METHOD OF TREATING NONWOVEN FABRICS WITH NON-IONIC FLUOROPOLYMERS | Mexico | 280700 | |||||
64893314 | METHOD OF TREATING NONWOVEN FABRICS WITH NON-IONIC FLUOROPOLYMERS |
Germany (Federal
Republic of) |
||||||
64893315 | METHOD OF TREATING NONWOVEN FABRICS WITH NON-IONIC FLUOROPOLYMERS | United Kingdom | ||||||
64893491 | METHOD OF TREATING SUBSTRATES WITH IONIC FLUOROPOLYMERS |
Germany (Federal
Republic of) |
1687477 | |||||
64893492 | METHOD OF TREATING SUBSTRATES WITH IONIC FLUOROPOLYMERS | United Kingdom | 1687477 | |||||
64096241 | SYNERGISTIC FLUOROCHEMICAL TREATMENT BLEND |
United States of
America |
7285595 | |||||
64097625 | LAMINATE CONTAINING A FLUORINATED NONWOVEN WEB |
United States of
America |
7976662 | |||||
64128535 | Hydrogel-Web Composites for Thermal Energy Transfer Applications and Methods of Makfing the Same |
United States of
America |
7678716 | |||||
64379021 | Hydrogel-Web Composites for Thermal Energy Transfer Applications and Methods of Making the Same |
Patent
Cooperation Treaty |
||||||
64364678 | Cooling Product |
United States of
America |
8187697 | |||||
64410720 | Cooling Product |
Patent
Cooperation Treaty |
||||||
64691754 | Nonwoven Webs Having Improved Barrier Properties |
United States of
America |
8551895 | |||||
64776432 | Nonwoven Webs Having Improved Barrier Properties |
Patent
Cooperation Treaty |
||||||
64921584 | Nonwoven Webs Having Improved Barrier Properties | Australia | ||||||
64921585 | Nonwoven Webs Having Improved Barrier Properties | Brazil | ||||||
64921586 | Nonwoven Webs Having Improved Barrier Properties | China | ||||||
64921587 | Nonwoven Webs Having Improved Barrier Properties | European Patent | ||||||
64921588 | Nonwoven Webs Having Improved Barrier Properties |
Korea, Republic of
(KR) |
||||||
64921589 | Nonwoven Webs Having Improved Barrier Properties | Mexico |
Know How: BSFL Know How refers to Breathable Spunbond/Film Laminate (BSFL) Know How, which is technology associated with the design, operation and maintenance of the methods of making, treating, converting, testing, packaging, and handling breathable spunbond/film laminates as such equipment and methods are commercially practiced on the Effective Date of this Agreement.
BTC Know How refers to Back Table Cover (BTC) Know How, which is technology associated with the design, operation and maintenance of the methods of making, treating, converting, testing, packaging, and handling BTC laminates as such equipment and methods are commercially practiced on the Effective Date of this Agreement.
Page 30
Trade Secrets: BSFL Trade Secrets refer to the specific centerline good run settings for the following BSFL processes as such methods are commercially practiced in relation to the MICROCOOL and AERO BLUE products on the Effective Date of this Agreement; the good run settings are the combination of:
| resin composition and type |
| filler composition and type |
| film structure |
| stretch conditions and settings |
| retraction conditions and settings |
Patent License: KCWW hereby grants to Avent a royalty-free, worldwide, irrevocable, exclusive license to make, have made, use, import, offer for sale, and sell Medical Products in the Health Care Market under the Patents set forth above in this Appendix G.
BSFL Trade Secrets License: KCWW hereby grants to Avent a royalty-free, worldwide, irrevocable, exclusive license to make, have made, use, import, offer for sale, and sell Medical Products in the Health Care Market or to any Existing Health Care Customer under the BSFL Trade Secrets set forth above in this Appendix G.
Option: KCWW further grants Avent an option to receive from KCWW a royalty-free, irrevocable, non-exclusive license to make and use BSFL Know How and BTC Know How at the Lexington Mill; such option exercisable for a period of five (5) years from the Effective date, upon Avents acquisition of film manufacturing equipment at the Lexington Mill.
Term: The term of the GNW Patents license shall end upon expiration of the last to expire of the licensed GNW Patents except that any license to BSFL Trade Secrets shall last indefinitely or until such BSFL Trade Secrets becomes generally known or generally available to the public. Should Avent exercise its option to the BSFL Know How license, such license shall last indefinitely or until such BSFL Know How becomes generally known or generally available to the public
Page 31
APPENDIX H BUSINESS PROCESS TECHNOLOGY
Patents, Copyrights and Know How: Business Process Technology refers to Patents, Copyrights and Know How that relate to business operations and can refer to Environmental, Finance, Human Resources, Information Technology, Legal, Treasury or other such methodologies. Business Process Technology is limited to the Business Process Technology Patents, Business Process Technology Copyrights and Business Process Technology Know How that was used by Kimberly-Clarks Global Health Care Business as of the Effective Date. Business Process Technology does not include any Business Process Technology Patents, Business Process Technology Copyrights or Business Process Technology Know How that are solely directed to Consumer Products, Professional Products or are solely directed to the manufacturing, production or branding of Consumer Products or Professional Products.
License: KCWW hereby grants to Avent a royalty-free, worldwide, irrevocable, non-exclusive license to make, have made, use, import, offer for sale, and sell Medical Products in the Health Care Market under Business Process Technology as set forth in this Appendix H.
Term: The term of this Business Process Technology license shall end upon expiration of the last to expire of the licensed Business Process Technology Patents or Copyrights except that any license to Business Process Technology Know How shall last indefinitely or until such Business Process Technology Know How becomes generally known or generally available to the public.
Page 32
Exhibit 10.5
TRADEMARK LICENSE AGREEMENT
This Trademark License Agreement (this Agreement ), effective as of October 30, 2014 (the Effective Date ), is made and entered by and between Kimberly-Clark Worldwide, Inc., a Delaware corporation ( Licensor ); and Avent, Inc., a Delaware corporation ( Licensee ).
R ECITALS
W HEREAS , Licensor is a wholly-owned subsidiary of Kimberly-Clark Corporation ( Kimberly-Clark ) and, as of the Effective Date, Licensee will be a wholly-owned subsidiary of Halyard Health, Inc. ( Halyard ); and
W HEREAS , Licensor has adopted, used and is the owner of certain trademarks for certain goods, as identified below; and
W HEREAS , Licensor wishes to grant to Licensee, and Licensee desires to obtain from Licensor, a license to use said trademarks on or in connection with the manufacture, distribution, marketing, advertising, promotion and sale of medical and healthcare products and related services, on the terms and conditions described in this Agreement;
A GREEMENT
N OW , T HEREFORE , in consideration of the foregoing and the mutual covenants and obligations contained herein, the parties agree as follows:
1. Definitions. As used in this Agreement, the following terms shall have the following meanings. Capitalized terms used but not otherwise defined elsewhere in this Agreement shall have the respective meanings given to such terms in the Distribution Agreement by and between Kimberly-Clark and Halyard dated as of October 31, 2014 (the Distribution Agreement ).
1.1 Affiliate shall mean, with respect to any Person, any other Person that directly or indirectly controls, is controlled by or is under common control with such Person. For the purpose of this definition, the term control means the power to direct the management of an entity, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the term controlled has the meaning correlative to the foregoing. After consummation of the Distribution Agreement, Halyard and Kimberly-Clark shall not be deemed to be under common control for purposes hereof due solely to the fact that Halyard and Kimberly-Clark have common stockholders. Notwithstanding the foregoing definition, Hogla-Kimberly Limited, Kimberly-Clark de Mexico, Kimberly-Clark Lever Private Limited, Olayan Kimberly-Clark Saudi Limited, Olayan Kimberly-Clark Bahrain and Olayan Kimberly Child Care Products WLL are Affiliates of Kimberly-Clark.
1.2 Change of Control shall mean a transaction in which there is a change in the person or persons holding a controlling interest in the equity of Licensee (or in the equity of any parent entity of Licensee) and such change results in the controlling interest in the Licensee or such parent entity being held by a Kimberly-Clark Competitor.
1.3 Consumer Products shall mean devices, products, articles or merchandise of common or frequent use, ordinarily bought by individuals or households for private consumption from a retail outlet or otherwise obtained or provided direct to the consumer. Consumer Products expressly includes Kimberly-Clark Consumer Products. Consumer Products do not include Medical Products, sold by Kimberly-Clarks Global Health Care Business as of the Effective Date of this Agreement.
1.4 Existing Health Care Customer shall mean any Person that purchases Medical Products from Kimberly-Clarks Global Health Care Business immediately prior to the Effective Time. In the event that any such Person consists of multiple divisions, departments, branches, offices, or other subdivisions, the Existing Health Care Customer shall include only such divisions, departments, branches, offices or other subdivisions that purchase Medical Products from Kimberly-Clarks Global Health Care Business immediately prior to the Effective Time.
1.5 Existing K-C Consumer Customer shall mean any Person that purchases Consumer Products from Kimberly-Clarks Global Consumer Business, immediately prior to the Effective Time. In the event that any such Person consists of multiple divisions, departments, branches, offices, or other subdivisions, the Existing K-C Consumer Customer shall include only such divisions, departments, branches, offices or other subdivisions that purchase Consumer Products from Kimberly-Clarks Global Consumer Business, as applicable, immediately prior to the Effective Time.
1.6 Existing KCP Customer shall mean any Person that purchases Professional Products from Kimberly-Clarks Global Professional Business or Global Partnership Products Business immediately prior to the Effective Time. In the event that any such Person consists of multiple divisions, departments, branches, offices, or other subdivisions, the Existing KCP Customer shall include only such divisions, departments, branches, offices or other subdivisions that purchase Professional Products from Kimberly-Clarks Global Professional Business or Global Partnership Products Business immediately prior to the Effective Time.
1.7 Health Care Market shall mean end users whose primary business is the delivery of medical, veterinary or patient care or treatment, medical diagnostic services, or medical care provided in connection with disaster relief, including, but not limited to: (a) professional medical and healthcare service companies, businesses, institutions and enterprises, (b) medical diagnostics facilities and laboratories having patient interaction, (c) government and private organizations providing medical care in connection with disaster relief, and (d) firms selling products or services into such end users; examples of such end users are:
| Hospitals, including their pharmacies; |
- 2 -
| Integrated medical service provider networks and their member facilities; |
| Surgery centers, including their pharmacies; |
| Blood banks; |
| Bone and tissue centers; |
| Physician and medical clinic offices, including their pharmacies; |
| Psychiatric health facilities, including their pharmacies; |
| Clinics in retail outlets that perform or provide medical services or care; |
| Long-term medical care facilities, including their pharmacies; |
| Medical care components of the Red Cross or other disaster relief organizations; |
| Veterinary and other facilities that primarily provide medical care to animals; and |
| Dental care facilities. |
1.8 Kimberly-Clark Competitor shall mean a third party that manufactures, sells or distributes products of a type sold by Kimberly-Clark.
1.9 Kimberly-Clark Consumer Products shall mean Consumer Products whose primary purpose is to help maintain or improve the hygiene, healthy aging process and/or household care and maintenance of the end user. Such products include those intended to be used in connection with enuresis, incontinence, menstruation, personal hygiene, diaper rash, healthy skincare, household cleaning and similar such fields, and may include medical devices, over-the-counter drugs or devices, prescription drugs or devices, or other regulated products or materials. Kimberly-Clark Consumer Products expressly include those products sold or otherwise transferred to customers or end users by Kimberly-Clarks Global Consumer Business as of the Effective Date of this Agreement.
1.10 Licensed Marks shall mean (a) the marks shown in Appendix A attached hereto, including the marks that are the subject of the registrations and applications identified in Appendix A; (b) marks that include or incorporate such marks; and (c) any variants or formatives thereof, each as used on, for and in connection with products intended to be used by providers of medical and healthcare services or their patients.
1.11 Medical Products shall mean devices, products, articles, methods, systems or merchandise on or in connection with which the Licensed Marks are used and that are primarily utilized by (a) healthcare professionals for the diagnosis, treatment or prevention of disease or injuries or (b) caregivers under the direction and supervision of medical professionals in the treatment or prevention of disease or injuries. Medical Products expressly include those
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devices, products, articles or merchandise sold or otherwise transferred to end users or customers in the Health Care Market by Kimberly-Clarks Global Health Care Business as of the Effective Date of this Agreement. Medical Products do not include devices, products, articles or merchandise sold by Kimberly-Clarks Global Consumer Business as of the Effective Date of this Agreement.
1.12 Professional Products shall mean devices, products, articles or merchandise on or in connection with which the Licensed Marks are used and whose primary purpose is to: (a) help maintain facilities or manufacturing equipment; (b) increase or improve employee or other individuals efficiency, safety or protection, or cleanliness; or (c) enhance the safety or cleanliness or efficiency of facilities or equipment or processes. Professional Products expressly include those devices, products, articles or merchandise sold or otherwise transferred to customers or end users by Kimberly-Clarks Global Professional Business or Global Partnership Products Business as of the Effective Date of this Agreement.
2. Grant and Scope of License
2.1 Grant of License. Subject to the terms and conditions of this Agreement, Licensor grants to Licensee, and to all Affiliates of Licensee, and Licensee accepts an exclusive, non-transferable (unless transferred in compliance with Section 8.1) license, for the term stated in this Agreement, subject to the payment of royalties as provided in Exhibit A to this Agreement, to use throughout the world the Licensed Marks:
(a) on or in connection with Medical Products that are marketed solely to the Health Care Market;
(b) in connection with manufacturing Medical Products and distributing Medical Products solely to the Health Care Market; and
(c) in connection with marketing, advertising, promotion, and/or sale of the Medical Products solely to the Health Care Market, including such use by Licensees authorized sales representatives.
All of the foregoing uses identified in paragraphs 2.1(a) through 2.1(c) shall hereinafter be referred to collectively as the Licensed Uses.
2.2 Limited Purpose. Licensee shall not use the Licensed Marks in connection with any activities other than the Licensed Uses without prior written approval of Licensor. All rights not expressly granted herein to Licensee are specifically reserved to and vested in Licensor, including the right to use or authorize others to use the Licensed Marks in connection with Medical Products, provided such products are marketed and sold to parties other than those in the Health Care Market. Notwithstanding the foregoing and for the sake of clarity, Licensor shall not directly market or sell products bearing the Licensed Marks to the Health Care Market.
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2.3 Compliance by Affiliates. Licensee agrees that Licensee shall be responsible for ensuring and guaranteeing compliance by all Affiliates of Licensee with all of the terms, conditions and provisions of this Agreement. Licensee represents and warrants to Licensor that Licensee has the power and authority to cause all such Affiliates to comply with all such terms, conditions and provisions, and acknowledges that such compliance shall be a condition to the lawful exercise by any of Licensees Affiliates of any of the rights granted in this Agreement to Licensee.
2.4 Continued Sales to Existing KCP Customers and K-C Consumer Customers. Notwithstanding anything to the contrary in this Agreement, Kimberly-Clark and its Affiliates may continue selling or otherwise transferring Professional Products to existing KCP Customers and Consumer Products to Existing K-C Consumer Customers.
2.5 Continued Sales to Existing Health Care Customers. Notwithstanding anything to the contrary in this Agreement, Halyard and its Affiliates may continue selling or otherwise transferring Medical Products to existing Health Care Customers, and such sales or transfers shall be subject to this Agreement and the licenses set forth herein.
3. Compliance Issues
3.1 Form of Use. Licensee shall use the Licensed Marks only in forms and presentations that have been approved in advance, in writing, by Licensor. All forms and presentations in use by Kimberly-Clarks Global Health Care Business as of the Effective Date are hereby deemed approved by Licensor. Once any such form or presentation has been approved by Licensor, Licensees use of the Licensed Marks in such form or presentation shall not be restricted; provided, however, that Licensor may, for Good Reason (as defined herein) object to a previously-approved form or presentation by giving Licensee written notice of Licensors objection and the reasons for the objection (a Notice of Objection ). Licensee shall timely comply with and correct all objections set forth in the Notice of Objection. For purposes of this Agreement, Good Reason shall mean a reason based on trademark law principles (including but not limited to principles relating to maintenance of trademark validity and/or integrity, proper trademark usage, and brand identity) that, in Licensors opinion, justifies Licensors objection, so long as such Notice of Objection proposes an alternative form or presentation that is as similar to the previously-approved form or presentation as is consistent, in Licensors opinion, with such trademark law principles.
3.2 Marking. Licensee shall include, where appropriate and as requested by Licensor, agreed-to trademark markings or legends for the Licensed Marks. Licensee shall comply with all applicable laws and regulations pertaining to the proper use and designation of trademarks.
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3.3 Use of Other Marks. Licensee shall not use during the term of this Agreement or thereafter without the written consent of Licensor any name, mark, designation or design that is likely to cause confusion with any of the Licensed Marks, including any mark (other than the Licensed Marks) that begins with or includes KIM.
4. Quality Control and Use of Licensed Marks
4.1 Quality Control. Licensor shall at all times retain the right, in its sole discretion, to control the nature and quality of all Medical Products in accordance with applicable trademark law. Licensee shall comply with all requests or instructions of Licensor relating to the nature or quality of the Medical Products, and shall comply with all quality control guidelines of Licensor, as adopted from time to time by Licensor in writing and provided to Licensee. Licensor and Licensee intend the quality control provisions of this Section 4 to require Licensee to maintain the nature and quality of the Medical Products as required by Licensor, so as to maintain the validity and integrity of the Licensed Marks, as required by applicable law.
4.2 Quality Standards. In furtherance of its quality control rights and obligations set forth in Section 4.1 above, Licensor has furnished to Licensee quality standards applicable to goods bearing the Licensed Marks as of the Effective Date. Licensee shall ensure that all Medical Products conform to the quality standards historically associated with the products of Licensor on which the Licensed Marks have been used prior to the Effective Date, and with such quality standards as Licensor may reasonably adopt after the Effective Date and communicate in writing to Licensee. Licensee represents that, as a principal part of its business, it has acquired all the necessary and appropriate knowledge, skill, experience and expertise to enable it to manufacture, inspect, test, approve, market, advertise, promote, distribute and sell Medical Products in compliance with Licensors existing quality standards, including with respect to their performance and safety, in compliance with all applicable laws and regulations, and acknowledges and agrees that, as a result thereof, Licensor may reasonably rely on Licensee to regularly ensure that all Medical Products comply with such quality standards, laws and regulations. Nothing contained herein, however, shall preclude or limit Licensors right or ability to inspect any Medical Products or to determine, in Licensors reasonable discretion, whether such Medical Products comply with the quality standards communicated by Licensor to Licensee in accordance with this Section 4.2. Licensee shall cooperate fully with Licensor, as requested by Licensor, in connection with any such inspection or determination by Licensor. Licensor and Licensee agree that any subsequent adoption of different quality standards with which Licensee must comply may be made to maintain compliance of all Medical Products with applicable laws and regulations, and Licensor agrees that any different quality control standards adopted during the term of this Agreement shall be reasonable and consistent with the nature and qualities of the products of Licensor on which the Licensed Marks have been used in the past.
4.3 Compliance with Law. Licensee shall comply with all applicable laws and regulations and obtain all appropriate government approvals pertaining to its use of the Licensed Marks, including the Licensed Uses and Licensees manufacture, sale, distribution, marketing, advertising and promotion of products on or in connection with which the Licensed Marks are used.
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4.4 No Disparagement of Licensor or Licensed Marks. Licensee shall not use the Licensed Marks in connection with any activity that disparages Licensor, its products or services, or the Licensed Marks.
4.5 Licensors Maintenance of Licensed Marks. Licensor shall take no actions that derogate or devalue the Licensed Marks, and agrees to make reasonable efforts to maintain the goodwill of the Licensed Marks, as well as any registrations for, and applications for registration of, the Licensed Marks. Licensee agrees to cooperate with Licensor or its representatives by timely obtaining and/or submitting to Licensor or its representatives, as requested by Licensor, documents, information, specimens, verified or sworn statements, assignments or other documents reasonably believed by Licensor to be necessary in order to maintain such registrations or prosecute applications for the Licensed Marks.
5. Ownership
5.1 Ownership of Licensed Marks. Licensee acknowledges that Licensor will remain the sole and exclusive owner of all right, title and interest in and to the Licensed Marks. Licensee agrees that any goodwill in the Licensed Marks resulting from Licensees use of the Licensed Marks under this Agreement will inure solely to the benefit of Licensor and will not create any right, title or interest of Licensee (including any ownership right by Licensee) in or to the Licensed Marks.
5.2 No Contest. Licensee shall not contest, oppose or challenge Licensors ownership of the Licensed Marks or the validity thereof. Licensee will do nothing to impair Licensors ownership or rights in the Licensed Marks. In particular, Licensee shall not register or attempt to register any of the Licensed Marks, alone or with other words or designs, in any country or jurisdiction, and will not oppose or contest Licensors application(s) to register, registration(s) or permitted use(s) of the Licensed Marks in any jurisdiction.
5.3 Adverse Use and Enforcement
(a) Notice. Each party shall promptly notify the other party in writing of any legal proceeding or action instituted against such party arising out of the use of or involving the Licensed Marks. Each party shall also promptly notify the other party in writing should such party learn of use by an unauthorized third party of any mark that may be confusingly similar to, infringe or otherwise violate Licensors rights in one or more of the Licensed Marks or Licensees exclusive rights under this Agreement.
(b) Enforcement. Except as provided for below, Licensor shall have the sole right and discretion to enforce its rights in any of the Licensed Marks, including but not limited to the right to bring infringement, unfair competition, dilution or false advertising proceedings involving any of the Licensed Marks. Licensee shall cooperate fully to assist Licensor and its attorneys or other authorized agents, at Licensors expense, with any legal, equitable, administrative, regulatory or other proceeding or action taken by Licensor against a
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third party to protect the Licensed Marks. Notwithstanding the foregoing, if, within twenty (20) days of Licensors receipt of a notice from Licensee in accordance with paragraph (a) above, Licensor does not agree in writing to bring or take action to terminate such activities of the unauthorized third party, or if Licensor subsequently decides not to proceed with any such action, and if Licensee has a good faith belief that such activities have or will injure its rights under this Agreement, then Licensee may take such action as is reasonably necessary to halt such activities including filing suit, after providing written notice to Licensor at least seven (7) days in advance of taking such action. Whichever party takes action against such activities shall be responsible for the costs and fees of such action including payment of both Licensors and Licensees attorneys fees, costs and expenses, and the other party shall, if requested, cooperate in such action as shall be reasonably necessary (including joining as a party plaintiff to the extent necessary and requested by the other party), but again at the cost of the party taking action. Any monies recovered as a result of such action shall first be used to pay the legal expenses of the party that took such action and the legal fees of the party cooperating in such action and any remaining amounts after reimbursement of such fees shall be retained by, paid to or recovered by the party that initiated the action.
6. Indemnification
6.1 By Licensor. Licensor shall defend, indemnify and hold harmless Licensee and its respective parents, subsidiaries, and otherwise related entities, agents, servants, current and former officers, directors and employees, shareholders, attorneys, successors and assigns, against all claims, liabilities, damages, losses, costs, settlement amounts and expenses (including expenses of litigation and/or attorneys fees) arising out of or in connection with any claims, legal proceedings or actions instituted or asserted against Licensee or Licensor for trademark infringement arising out of Licensees use of the Licensed Marks in accordance with this Agreement (an Indemnified Claim ); and Licensor shall defend or settle any such claims, legal proceedings or actions instituted against Licensee or Licensor at no expense to Licensee or Licensees Affiliates, employees, officers, directors, or authorized sales representatives; PROVIDED THAT Licensee shall give to Licensor prompt written notice of any Indemnified Claim following Licensees receipt of written notification of such claim, legal proceeding or action instituted by a third party against Licensee; and PROVIDED FURTHER THAT Licensee shall not enter into any negotiation or settlement regarding any Indemnified Claim and shall provide to Licensor the full authority to defend or settle the claim. Licensee shall cooperate fully in the defense of such claim at Licensors expense. Licensee may participate in any such claim at its own expense with counsel of its choosing.
6.2 By Licensee. Except with respect to Indemnified Claims as defined in the foregoing Section, Licensee shall defend, indemnify and hold harmless Licensor and its respective parents, subsidiaries, and otherwise related entities, agents, servants, current and former officers, directors and employees, shareholders, attorneys, successors and assigns, against all claims, liabilities, damages, losses, costs, settlement amounts and expenses (including expenses of litigation and/or attorneys fees) arising out of or in connection with any claims, legal proceedings or actions instituted or asserted against Licensee or Licensor arising in whole
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or in part from any activities of Licensee relating to the Licensed Marks or the Medical Products, including but not limited to: (i) alleged defects or deficiencies in the Medical Products offered by Licensee; (ii) Licensees agreements, policies, promises, or activities relating to the provision or advertising of the Medical Products; (iii) alleged violations of any applicable law or regulation relating to the Medical Products offered by Licensee; (iv) alleged acts of piracy, plagiarism, infringement, fraud, larceny/theft, libel or invasion of privacy; and/or (v) any allegations by third parties asserting claims of fraud, negligence, or gross negligence relating to the provision of the Medical Products. Licensor shall promptly notify Licensee in writing of any such claims asserted against Licensor.
7. Term and Termination
7.1 Term. The term of this Agreement shall commence on the Effective Date and continue for a term of two (2) years, unless terminated at an earlier time in accordance with the provisions of this Agreement.
7.2 Termination by Licensor
(a) Breach . In the event Licensee breaches any of its material obligations under this Agreement, Licensor may terminate this Agreement and the license granted in this Agreement by giving notice in writing to Licensee of the breach. In the event Licensee does not correct or eliminate the breach within thirty (30) days from the date of receipt of such notice, this Agreement, including the license to use the Licensed Marks, shall terminate ten (10) days following the thirty (30) day cure period. In the event Licensor breaches any of its representations or material obligations under this Agreement, Licensee may terminate this Agreement and the license granted in this Agreement by giving notice in writing to Licensor of the breach. In the event Licensor does not correct or eliminate the breach within thirty (30) days from the date of receipt of such notice, this Agreement, including the license to use the Licensed Marks, shall terminate ten (10) days following the thirty (30) day cure period.
(b) Change of Control . Licensor will have the right to terminate this Agreement and the license granted in this Agreement by giving written notice to Licensee in the event of a Change of Control of Licensee.
(c) Threat of Infringement . If, at any time, Licensor becomes, or in the opinion of Licensor may become, the subject of a claim of infringement with respect to the Licensed Marks, Licensor may, at its option (i) procure for Licensee the right to continue using the Licensed Marks; or (ii) terminate this Agreement.
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7.3 Automatic Termination
(a) In the event that Licensee dissolves or liquidates or ceases to engage in its business, files a petition in bankruptcy, is adjudicated a bankrupt or files a petition or otherwise seeks relief under or pursuant to any bankruptcy, insolvency or reorganization statute or proceeding, or if a petition in bankruptcy is filed against it and is not discharged within sixty (60) days thereafter or if Licensee makes an assignment for the benefit of its creditors or if a custodian, receiver or trustee is appointed for it or for a substantial portion of its business or assets and such appointment is not discharged within sixty (60) days thereafter (hereinafter individually and/or collectively referred to as Bankruptcy or Related Proceedings ), then this Agreement will terminate automatically. In the event of Licensees Bankruptcy or Related Proceedings, Licensor and/or its custodian, receiver, or trustee retains the right to reject and terminate this Agreement in its entirety.
(b) In the event Licensee, in its sole discretion, ceases to use the Licensed Marks with intent not to resume such use, the license granted under this Agreement will terminate following receipt of written notice from Licensee without any penalty, payment or other form of remuneration from one party to the other.
7.4 Effect of Termination. In the event of any termination of this Agreement under any circumstance, Licensee shall, subject to the following sentence, discontinue using the Licensed Marks. In the event of such termination under any circumstance and notwithstanding any other term or condition set out in this Agreement, Licensee shall sell off or exhaust its inventory of any Medical Products and any other materials or matter that bear any of the Licensed Marks within six (6) months, and thereafter will cease and forever desist from all use of the Licensed Marks and shall not use any mark, designation or design confusingly similar to any of the Licensed Marks, including any mark that begins with or includes KIM anywhere in the world. Nothing herein, however, shall bar or prohibit Licensee after such six-month period from servicing any Medical Products bearing the Licensed Marks that were marketed or sold prior to the termination or expiration of this Agreement.
7.5 Survival. The provisions of Sections 3.3, 5.1, 5.2, 6.1, 6.2 and 7.4 shall survive termination of this Agreement regardless of the reason for termination.
7.6 Condition Precedent to Agreement. The Parties agree that this Agreement shall be null, void and of no effect unless and until the transaction contemplated by the Distribution Agreement has been closed and consummated. In the event the parties to the Distribution Agreement conclude that such transaction shall not be consummated, this Agreement shall be deemed to be terminated and of no further force or effect.
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8. Miscellaneous
8.1 Non-assignment/Binding Agreement. Neither this Agreement nor any rights under this Agreement may be assigned or otherwise transferred by Licensee, in whole or in part, whether voluntarily or by operation of law, including by way of sale of assets, merger or consolidation, or Change of Control without the prior written consent of Licensor, which consent will not be unreasonably withheld. Notwithstanding the foregoing, Licensee may transfer this Agreement to any entity that owns Licensee, is owned by Licensee, or is under common control with Licensee, provided Licensee gives Licensor at least thirty (30) days advance written notice of such assignment and the proposed transferee entity represents in writing to Licensor that it shall have the authority and will in fact assume and discharge all obligations of Licensee under this Agreement. Licensor expressly reserves its unilateral right to assign or transfer its interest in this Agreement, provided Licensor gives Licensee at least thirty (30) days advance written notice of such assignment. Subject to the foregoing, this Agreement will be binding upon and will inure to the benefit of the parties and their respective successors and assigns. Any assignment in violation of the foregoing will be null and void.
8.2 Independent Contractors. The relationship of the parties under this Agreement is that of independent contractors. Neither party will be deemed to be an employee, agent, partner, or legal representative of the other for any purpose and neither will have any right, power or authority to create any obligation or responsibility on behalf of the other. Nothing herein shall be construed as creating any joint venture or other form of joint enterprise between the parties.
8.3 Notices. Any notice required or permitted under the terms of this Agreement or required by law must be in writing and must be: (a) delivered in person; (b) sent by first class registered mail; or (c) sent by overnight courier, in each case properly posted and fully prepaid to the appropriate address set forth below:
If to Licensor: | Kimberly-Clark Worldwide, Inc. | |
2300 Winchester Road | ||
Neenah, Wisconsin 54956 | ||
Attention: General Counsel | ||
If to Licensee: | Avent, Inc. | |
5450 Windward Parkway, Suite 100 South | ||
Alpharetta, Georgia 30004 | ||
Attention: General Counsel |
8.4 Change of Address. Either party may change its address for notice by providing notice to the other party given in accordance with this Section. Notices will be considered to have been given at the time of actual delivery in person, seven business days after deposit in the mail as set forth above, or three business day after delivery to an overnight air courier service.
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8.5 Force Majeure. Neither party will be liable to the other party on account of any loss or damage resulting from any delay or failure to perform all or any part of this Agreement if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control and without negligence of the party allegedly delaying or failing to perform. Such events, occurrences, or causes will include, without limitation, acts of God, strikes, lockouts, riots, acts of war, acts of terrorism, earthquake, fire and explosions, but the inability to meet financial obligations is expressly excluded.
8.6 Waiver. Any waiver of the provisions of this Agreement or of a partys rights or remedies under this Agreement must be in writing to be effective and signed by the party being charged with waiver. Failure, neglect, or delay by a party to enforce the provisions of this Agreement or its rights or remedies at any time, will not be construed as a waiver of such partys rights under this Agreement and will not in any way affect the validity of the whole or any part of this Agreement or prejudice such partys right to take subsequent action. No exercise or enforcement by either party of any right or remedy under this Agreement will preclude the enforcement by such party of any other right or remedy under this Agreement or that such party is entitled by law to enforce.
8.7 Severability. If any of the terms or conditions of this Agreement are declared void, invalid, unlawful or unenforceable by any judicial or administrative authority having proper jurisdiction over the parties and after all appeals have been exhausted, this declaration shall not, in and of itself, nullify the remaining provisions of this Agreement, which shall remain in force and effect unless the severing of such term, condition or provision adversely and materially affects the original intent of the parties or the validity of the Licensed Marks; in which event, this Agreement may terminate on sixty (60) days written notice from one party to the other, provided that the parties have first made reasonable, good faith efforts to reach agreement on modifying such term or condition to fulfill as closely as possible the original intent and purpose thereof.
8.8 Integration. This Agreement contains the entire agreement of the parties with respect to the subject matter of this Agreement and supersedes all previous communications, representations, understandings and agreements, either oral or written, between the parties with respect to said subject matter. No terms, provisions or conditions of any purchase order, acknowledgement or other business form that either party may use in connection with the transactions contemplated by this Agreement will have any effect on the rights, duties or obligations of the parties under, or otherwise modify, this Agreement, regardless of any failure of a receiving party to object to such terms, provisions or conditions. This Agreement may not be amended, except by a writing signed by both parties.
8.9 Choice of Law and Forum. This Agreement shall be governed by and construed and enforced in accordance with the federal trademark laws of the United States of America as to trademark issues and the substantive laws of the State of Delaware, as though all acts and omissions related hereto occurred in Delaware, as to contract formation, interpretation and construction. The Parties hereby irrevocably submit to the non-exclusive jurisdiction of the
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state and federal courts located in the State of Delaware, and each party hereby irrevocably agrees that all disputes, controversies or claims may be heard and determined in the state and federal courts located in Wilmington, Delaware. The Parties hereby irrevocably waive, to the fullest extent permitted by applicable law, any objection which they may now or hereafter have to the laying of venue of any such dispute brought in such court or any defense of inconvenient forum for the maintenance of such dispute. Each of the Parties hereto agrees that a judgment in any such dispute may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.
8.10 Interpretation. For purposes of interpreting this Agreement, whenever the context requires, the singular number will include the plural, and vice versa; the masculine gender will include the feminine and neuter genders; the feminine gender will include the masculine and neuter genders; and the neuter gender will include the masculine and feminine genders. Any rule of construction to the effect that ambiguities are to be resolved against the drafting party will not be applied in the construction or interpretation of this Agreement. As used in this Agreement, the words include and including and variations thereof, will not be deemed to be terms of limitation, but rather will be deemed to be followed by the words without limitation. Any reference herein to the parties means the entities that are parties to this agreement; any reference to a third party means a person or an entity that is not a party to this Agreement.
8.11 Counterparts. This Agreement may be executed in counterparts, each of which so executed will be deemed to be an original and such counterparts together will constitute one and the same agreement. A facsimile, digital or .pdf signature shall be deemed an original.
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I N W ITNESS W HEREOF , the parties have executed this Agreement as of the Effective Date.
KIMBERLY-CLARK WORLDWIDE, INC. | ||
(Licensor) | ||
By: |
/s/ Jeff Doherty |
|
Name: | Jeff Doherty | |
Title: | Senior Director | |
AVENT, INC. | ||
(Licensee) | ||
By: |
/s/ John W. Wesley |
|
Name: | John W. Wesley | |
Title: | Senior Vice President, General Counsel and | |
Chief Ethics and Compliance Officer |
EXHIBIT A
ROYALTIES
A. The license granted in this Agreement shall bear royalties at the rate of three-fourths of one percent (0.75%), payable each calendar quarter during the term of this Agreement, commencing on the Effective Date.
B. Licensee shall remit to Licensor, within thirty (30) days after the close of each calendar quarter, an accounting of all royalties due to Licensor, accompanied by payment of such royalties in U.S. dollars. The royalties shall be calculated by multiplying the royalty rate set forth in paragraph A above by the Net Sales by Licensee of Medical Products during the preceding calendar quarter, exclusive of taxes and less returns during such period. The term Net Sales shall be consistent with generally accepted accounting principles in the United States of America as applied by Licensor in publishing its annual reports. Licensee shall report such royalties on the form prescribed by Licensor, which shall identify all Medical Products and state the volume and Net Sales for each Licensed Product with specificity.
C. Licensee shall not be obligated to pay royalties to Licensor based on any sales by Licensee of any Medical Products that were in Licensors inventory as of the Effective Date and are transferred to Licensee. Licensor and Licensee shall agree, in writing, as to the value of such inventory, and Licensee may deduct from its royalty payments to Licensor any royalties that would otherwise be payable to Licensor based on the sales of such inventory by Licensee. Licensee shall report all such sales to Licensor in Licensees accountings in accordance with paragraph B above, and may make such deduction(s) either as one or more lump-sum deduction(s) from its initial royalty payment(s) or on a rolling basis, as such inventory is sold by Licensee.
D. Licensee shall keep complete and accurate books and records relating to Licensees sales of Medical Products, and Licensor shall have the right, upon reasonable notice to Licensee but no more frequently than once every two (2) years, to have an independent certified public accountant of Licensors choice to audit such books and records at Licensors expense. If any such audit finds that Licensee has under-reported or underpaid the royalties due to Licensor under this Agreement, Licensee shall remit to Licensor all unpaid royalties within thirty (30) days after the receipt by Licensee of the report of the audit. If any such audit finds that Licensee has under-reported or underpaid royalties by more than five percent (5%), Licensee shall, in addition to remitting all unpaid royalties, also reimburse Licensor for all costs incurred by Licensor in connection with such audit, including all fees and expenses of the accountant that conducted the audit.
EXHIBIT A
APPENDIX A
MARKS AND REGISTRATIONS
I. MARKS
The marks, whether registered or not, that (a) are used both on or in connection with Medical Products marketed to the Health Care Market and other products; and (b) are not the subject of any other license agreement between Licensor and Licensee, including but not limited to:
KIMBERLY-CLARK
K-C
KIMBERLY-CLARK KIMPACK
KIMCARE
KIMFLEX
KIMLIFE
KIMPACK
KIMSMART
KIMTHERM
KIMTRACH
KIMVENT
the distinctive configurations of any such Medical Products
the trade dress used for any such Medical Products
APPENDIX A
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II. APPLICATIONS AND REGISTRATIONS
The marks that are the subject of the applications and registrations shown in the attached chart.
APPENDIX A
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Exhibit 10.6
TRADEMARK LICENSE AGREEMENT
This Trademark License Agreement (this Agreement ), effective as of October 30, 2014 (the Effective Date ), is made and entered by and between Kimberly-Clark Worldwide, Inc., a Delaware corporation ( Licensor ); and Avent, Inc., a Delaware corporation ( Licensee ).
R ECITALS
W HEREAS , Licensor is a wholly-owned subsidiary of Kimberly-Clark Corporation ( Kimberly-Clark ) and, as of the Effective Date, Licensee will be a wholly-owned subsidiary of Halyard Health, Inc. ( Halyard ); and
W HEREAS , Licensor has adopted, used and is the owner of certain trademarks for certain goods, as identified below; and
W HEREAS , Licensor wishes to grant to Licensee, and Licensee desires to obtain from Licensor, a license to use said trademarks on or in connection with the manufacture, distribution, marketing, advertising, promotion and sale of medical and healthcare products and related services, on the terms and conditions described in this Agreement;
A GREEMENT
N OW , T HEREFORE , in consideration of the foregoing and the mutual covenants and obligations contained herein, the parties agree as follows:
1. Definitions. As used in this Agreement, the following terms shall have the following meanings. Capitalized terms used but not otherwise defined elsewhere in this Agreement shall have the respective meanings given to such terms in the Distribution Agreement by and between Kimberly-Clark and Halyard dated as of October 31, 2014 ( the Distribution Agreement ).
1.1 Affiliate shall mean, with respect to any Person, any other Person that directly or indirectly controls, is controlled by or is under common control with such Person. For the purpose of this definition, the term control means the power to direct the management of an entity, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the term controlled has the meaning correlative to the foregoing. After consummation of the Distribution Agreement, Halyard and Kimberly-Clark shall not be deemed to be under common control for purposes hereof due solely to the fact that Halyard and Kimberly-Clark have common stockholders. Notwithstanding the foregoing definition, Hogla-Kimberly Limited, Kimberly-Clark de Mexico, Kimberly-Clark Lever Private Limited, Olayan Kimberly-Clark Saudi Limited, Olayan Kimberly-Clark Bahrain and Olayan Kimberly Child Care Products WLL are Affiliates of Kimberly-Clark.
1.2 Change of Control shall mean a transaction in which there is a change in the person or persons holding a controlling interest in the equity of Licensee (or in the equity of any parent entity of Licensee) and such change results in the controlling interest in the Licensee or such parent entity being held by a Kimberly-Clark Competitor.
1.3 Consumer Products shall mean devices, products, articles or merchandise of common or frequent use, ordinarily bought by individuals or households for private consumption from a retail outlet or otherwise obtained or provided direct to the consumer. Consumer Products expressly includes Kimberly-Clark Consumer Products. Consumer Products do not include Medical Products, sold by Kimberly-Clarks Global Health Care Business as of the Effective Date of this Agreement.
1.4 Existing Health Care Customer shall mean any Person that purchases Medical Products from Kimberly-Clarks Global Health Care Business immediately prior to the Effective Time. In the event that any such Person consists of multiple divisions, departments, branches, offices, or other subdivisions, the Existing Health Care Customer shall include only such divisions, departments, branches, offices or other subdivisions that purchase Medical Products from Kimberly-Clarks Global Health Care Business immediately prior to the Effective Time.
1.5 Existing K-C Consumer Customer shall mean any Person that purchases Consumer Products from Kimberly-Clarks Global Consumer Business, immediately prior to the Effective Time. In the event that any such Person consists of multiple divisions, departments, branches, offices, or other subdivisions, the Existing K-C Consumer Customer shall include only such divisions, departments, branches, offices or other subdivisions that purchase Consumer Products from Kimberly-Clarks Global Consumer Business, as applicable, immediately prior to the Effective Time.
1.6 Existing KCP Customer shall mean any Person that purchases Professional Products from Kimberly-Clarks Global Professional Business or Global Partnership Products Business immediately prior to the Effective Time. In the event that any such Person consists of multiple divisions, departments, branches, offices, or other subdivisions, the Existing KCP Customer shall include only such divisions, departments, branches, offices or other subdivisions that purchase Professional Products from Kimberly-Clarks Global Professional Business or Global Partnership Products Business immediately prior to the Effective Time.
1.7 Health Care Market shall mean end users whose primary business is the delivery of medical, veterinary or patient care or treatment, medical diagnostic services, or medical care provided in connection with disaster relief, including, but not limited to: (a) professional medical and healthcare service companies, businesses, institutions and enterprises, (b) medical diagnostics facilities and laboratories having patient interaction, (c) government and private organizations providing medical care in connection with disaster relief, and (d) firms selling products or services into such end users; examples of such end users are:
| Hospitals, including their pharmacies; |
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| Integrated medical service provider networks and their member facilities; |
| Surgery centers, including their pharmacies; |
| Blood banks; |
| Bone and tissue centers; |
| Physician and medical clinic offices, including their pharmacies; |
| Psychiatric health facilities, including their pharmacies; |
| Clinics in retail outlets that perform or provide medical services or care; |
| Long-term medical care facilities, including their pharmacies; |
| Medical care components of the Red Cross or other disaster relief organizations; |
| Veterinary and other facilities that primarily provide medical care to animals; and |
| Dental care facilities |
1.8 Kimberly-Clark Competitor shall mean a third party that manufactures, sells or distributes products of a type sold by Kimberly-Clark.
1.9 Kimberly-Clark Consumer Products shall mean Consumer Products whose primary purpose is to help maintain or improve the hygiene, healthy aging process and/or household care and maintenance of the end user. Such products include those intended to be used in connection with enuresis, incontinence, menstruation, personal hygiene, diaper rash, healthy skincare, household cleaning and similar such fields, and may include medical devices, over-the-counter drugs or devices, prescription drugs or devices, or other regulated products or materials. Kimberly-Clark Consumer Products expressly include those products sold or otherwise transferred to customers or end users by Kimberly-Clarks Global Consumer Business as of the Effective Date of this Agreement.
1.10 Licensed Marks shall mean (a) the marks identified in Appendix A attached hereto, including the marks that are the subject of the registrations and applications identified in Appendix A; and (b) marks that include or incorporate such marks; each as used on, for and in connection with products intended to be used by providers of medical and healthcare services or their patients.
1.11 Medical Products shall mean devices, products, articles, methods, systems or merchandise on or in connection with which the Licensed Marks are used and that are primarily utilized by (a) healthcare professionals for the diagnosis, treatment or prevention of disease or injuries or (b) caregivers under the direction and supervision of medical professionals in the treatment or prevention of disease or injuries. Medical Products expressly include those
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devices, products, articles or merchandise sold or otherwise transferred to end users or customers in the Health Care Market by Kimberly-Clarks Global Health Care Business as of the Effective Date of this Agreement. Medical Products do not include devices, products, articles or merchandise sold by Kimberly-Clarks Global Consumer Business as of the Effective Date of this Agreement.
1.12 Professional Products shall mean devices, products, articles or merchandise on or in connection with which the Licensed Marks are used and whose primary purpose is to: (a) help maintain facilities or manufacturing equipment; (b) increase or improve employee or other individuals efficiency, safety or protection, or cleanliness; or (c) enhance the safety or cleanliness or efficiency of facilities or equipment or processes. Professional Products expressly include those devices, products, articles or merchandise sold or otherwise transferred to customers or end users by Kimberly-Clarks Global Professional Business or Global Partnership Products Business as of the Effective Date of this Agreement.
2. Grant and Scope of License
2.1 Grant of License. Subject to the terms and conditions of this Agreement, Licensor grants to Licensee, and to all Affiliates of Licensee, and Licensee accepts an irrevocable, exclusive, non-transferable (unless transferred in compliance with Section 8.1), royalty-free and perpetual license to use throughout the world the Licensed Marks:
(a) on or in connection with Medical Products that are marketed solely to the Health Care Market;
(b) in connection with manufacturing Medical Products and distributing Medical Products solely to the Health Care Market; and
(c) in connection with marketing, advertising, promotion, and/or sale of Medical Products solely to the Health Care Market, including such use by Licensees authorized sales representatives.
All of the foregoing uses identified in paragraphs 2.1(a) through 2.1(c) shall hereinafter be referred to collectively as the Licensed Uses.
2.2 Limited Purpose. Licensee shall not use the Licensed Marks in connection with any activities other than the Licensed Uses without prior written approval of Licensor. All rights not expressly granted herein to Licensee are specifically reserved to and vested in Licensor, including the right to use or authorize others to use the Licensed Marks in connection with Medical Products, provided such products are marketed and sold to parties other than those in the Health Care Market. Notwithstanding the foregoing and for the sake of clarity, Licensor shall not directly market or sell products bearing the Licensed Marks to the Health Care Market.
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2.3 Compliance by Affiliates. Licensee agrees that Licensee shall be responsible for ensuring and guaranteeing compliance by all Affiliates of Licensee with all of the terms, conditions and provisions of this Agreement. Licensee represents and warrants to Licensor that Licensee has the power and authority to cause all such Affiliates to comply with all such terms, conditions and provisions, and acknowledges that such compliance shall be a condition to the lawful exercise by any of Licensees Affiliates of any of the rights granted in this Agreement to Licensee.
2.4 Continued Sales to Existing KCP Customers and K-C Consumer Customers. Notwithstanding anything to the contrary in this Agreement, Kimberly-Clark and its Affiliates may continue selling or otherwise transferring Professional Products to existing KCP Customers and Consumer Products to Existing K-C Consumer Customers.
2.5 Continued Sales to Existing Health Care Customers. Notwithstanding anything to the contrary in this Agreement, Halyard and its Affiliates may continue selling or otherwise transferring Medical Products to existing Health Care Customers, and such sales or transfers shall be subject to this Agreement and the licenses set forth herein.
3. Compliance Issues
3.1 Form of Use. Licensee shall use the Licensed Marks only in forms and presentations that have been approved in advance, in writing, by Licensor. All forms and presentations in use by Kimberly-Clarks Global Health Care Business as of the Effective Date are hereby deemed approved by Licensor. Once any such form or presentation has been approved by Licensor, Licensees use of the Licensed Marks in such form or presentation shall not be restricted; provided, however, that Licensor may, for Good Reason (as defined herein) object to a previously-approved form or presentation by giving Licensee written notice of Licensors objection and the reasons for the objection (a Notice of Objection ). Licensee shall timely comply with and correct all objections set forth in the Notice of Objection. For purposes of this Agreement, Good Reason shall mean a reason based on trademark law principles (including but not limited to principles relating to maintenance of trademark validity and/or integrity, proper trademark usage, and brand identity) that, in Licensors opinion, justifies Licensors objection, so long as such Notice of Objection proposes an alternative form or presentation that is as similar to the previously-approved form or presentation as is consistent, in Licensors opinion, with such trademark law principles.
3.2 Marking. Licensee shall include, where appropriate and as requested by Licensor, agreed-to trademark markings or legends for the Licensed Marks. Licensee shall comply with all applicable laws and regulations pertaining to the proper use and designation of trademarks.
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3.3 Use of Other Marks. Licensee shall not use during the term of this Agreement or thereafter without the written consent of Licensor any name, mark, designation or design that is likely to cause confusion with any of the Licensed Marks, including any mark (other than KIMGUARD) that begins with or includes KIM.
4. Quality Control and Use of Licensed Marks
4.1 Quality Control. Licensor shall at all times retain the right, in its sole discretion, to control the nature and quality of all Medical Products in accordance with applicable trademark law. Licensee shall comply with all requests or instructions of Licensor relating to the nature or quality of the Medical Products, and shall comply with all quality control guidelines of Licensor, as adopted from time to time by Licensor in writing and provided to Licensee. Licensor and Licensee intend the quality control provisions of this Section 4 to require Licensee to maintain the nature and quality of the Medical Products as required by Licensor, so as to maintain the validity and integrity of the Licensed Marks, as required by applicable law.
4.2 Quality Standards. In furtherance of its quality control rights and obligations set forth in Section 4.1 above, Licensor has furnished to Licensee quality standards applicable to goods bearing the Licensed Marks as of the Effective Date. Licensee shall ensure that all Medical Products conform to the quality standards historically associated with the products of Licensor on which the Licensed Marks have been used prior to the Effective Date, and with such quality standards as Licensor may reasonably adopt after the Effective Date and communicate in writing to Licensee. Licensee represents that, as a principal part of its business, it has acquired all the necessary and appropriate knowledge, skill, experience and expertise to enable it to manufacture, inspect, test, approve, market, advertise, promote, distribute and sell Medical Products in compliance with Licensors existing quality standards, including with respect to their performance and safety, in compliance with all applicable laws and regulations, and acknowledges and agrees that, as a result thereof, Licensor may reasonably rely on Licensee to regularly ensure that all Medical Products comply with such quality standards, laws and regulations. Nothing contained herein, however, shall preclude or limit Licensors right or ability to inspect any Medical Products or to determine, in Licensors reasonable discretion, whether such Medical Products comply with the quality standards communicated by Licensor to Licensee in accordance with this Section 4.2. Licensee shall cooperate fully with Licensor, as requested by Licensor, in connection with any such inspection or determination by Licensor. Licensor and Licensee agree that any subsequent adoption of different quality standards with which Licensee must comply may be made to maintain compliance of all Medical Products with applicable laws and regulations, and Licensor agrees that any different quality control standards adopted during the term of this Agreement shall be reasonable and consistent with the nature and qualities of the products of Licensor on which the Licensed Marks have been used in the past.
4.3 Compliance with Law. Licensee shall comply with all applicable laws and regulations and obtain all appropriate government approvals pertaining to its use of the Licensed Marks, including the Licensed Uses and Licensees manufacture, sale, distribution, marketing, advertising and promotion of products on or in connection with which the Licensed Marks are used.
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4.4 No Disparagement of Licensor or Licensed Marks. Licensee shall not use the Licensed Marks in connection with any activity that disparages Licensor, its products or services, or the Licensed Marks.
4.5 Licensors Maintenance of Licensed Marks. Licensor shall take no actions that derogate or devalue the Licensed Marks, and agrees to make reasonable efforts to maintain the goodwill of the Licensed Marks, as well as any registrations for, and applications for registration of, the Licensed Marks. Licensee agrees to cooperate with Licensor or its representatives by timely obtaining and/or submitting to Licensor or its representatives, as requested by Licensor, documents, information, specimens, verified or sworn statements, assignments or other documents reasonably believed by Licensor to be necessary in order to maintain such registrations or prosecute applications for the Licensed Marks. Licensor shall give Licensee notice of any registrations or applications that Licensor does not intend to maintain or further prosecute, and Licensee shall give Licensor notice of any additional applications that Licensee believes should be filed for the Licensed Marks. It shall be Licensors right to determine in the first instance whether, when and in what jurisdictions additional applications for registration of the Licensed Marks shall be filed and whether existing applications or registrations shall be further prosecuted or maintained; provided, however, that if Licensee and Licensor disagree regarding any such issues, Licensor shall file, prosecute or maintain such applications or registrations in Licensors name if Licensee pays for all expenses, including all attorneys fees and filing fees, associated with such applications or registrations; and provided further that the foregoing obligation on Licensors part shall not be applicable if Licensor believes in good faith that such application, prosecution or maintenance will be unsuccessful, is unnecessary, or would otherwise cause damage or risk to Licensor, the Licensed Marks, or Licensee.
5. Ownership
5.1 Ownership of Licensed Marks. Licensee acknowledges that Licensor will remain the sole and exclusive owner of all right, title and interest in and to the Licensed Marks. Licensee agrees that any goodwill in the Licensed Marks resulting from Licensees use of the Licensed Marks under this Agreement will inure solely to the benefit of Licensor and will not create any right, title or interest of Licensee (including any ownership right by Licensee) in or to the Licensed Marks.
5.2 No Contest. Licensee shall not contest, oppose or challenge Licensors ownership of the Licensed Marks or the validity thereof. Licensee will do nothing to impair Licensors ownership or rights in the Licensed Marks. In particular, Licensee shall not register or attempt to register any of the Licensed Marks, alone or with other words or designs, in any country or jurisdiction, and will not oppose or contest Licensors application(s) to register, registration(s) or permitted use(s) of the Licensed Marks in any jurisdiction.
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5.3 Adverse Use and Enforcement
(a) Notice. Each party shall promptly notify the other party in writing of any legal proceeding or action instituted against such party arising out of the use of or involving the Licensed Marks. Each party shall also promptly notify the other party in writing should such party learn of use by an unauthorized third party of any mark that may be confusingly similar to, infringe or otherwise violate Licensors rights in one or more of the Licensed Marks or Licensees exclusive rights under this Agreement.
(b) Enforcement. Except as provided for below, Licensor shall have the sole right and discretion to enforce its rights in any of the Licensed Marks, including but not limited to the right to bring infringement, unfair competition, dilution or false advertising proceedings involving any of the Licensed Marks. Licensee shall cooperate fully to assist Licensor and its attorneys or other authorized agents, at Licensors expense, with any legal, equitable, administrative, regulatory or other proceeding or action taken by Licensor against a third party to protect the Licensed Marks. Notwithstanding the foregoing, if, within twenty (20) days of Licensors receipt of a notice from Licensee in accordance with paragraph (a) above, Licensor does not agree in writing to bring or take action to terminate such activities of the unauthorized third party, or if Licensor subsequently decides not to proceed with any such action, and if Licensee has a good faith belief that such activities have or will injure its rights under this Agreement, then Licensee may take such action as is reasonably necessary to halt such activities including filing suit, after providing written notice to Licensor at least seven (7) days in advance of taking such action. Whichever party takes action against such activities shall be responsible for the costs and fees of such action including payment of both Licensors and Licensees attorneys fees, costs and expenses, and the other party shall, if requested, cooperate in such action as shall be reasonably necessary (including joining as a party plaintiff to the extent necessary and requested by the other party), but again at the cost of the party taking action. Any monies recovered as a result of such action shall first be used to pay the legal expenses of the party that took such action and the legal fees of the party cooperating in such action and any remaining amounts after reimbursement of such fees shall be retained by, paid to or recovered by the party that initiated the action.
6. Indemnification
6.1 By Licensor. Licensor shall defend, indemnify and hold harmless Licensee and its respective parents, subsidiaries, and otherwise related entities, agents, servants, current and former officers, directors and employees, shareholders, attorneys, successors and assigns, against all claims, liabilities, damages, losses, costs, settlement amounts and expenses (including expenses of litigation and/or attorneys fees) arising out of or in connection with any claims, legal proceedings or actions instituted or asserted against Licensee or Licensor for trademark infringement arising out of Licensees use of the Licensed Marks in accordance with this Agreement (an Indemnified Claim ); and Licensor shall defend or settle any such claims, legal proceedings or actions instituted against Licensee or Licensor at no expense to Licensee or Licensees Affiliates, employees, officers, directors, or authorized sales representatives;
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PROVIDED THAT Licensee shall give to Licensor prompt written notice of any Indemnified Claim following Licensees receipt of written notification of such claim, legal proceeding or action instituted by a third party against Licensee; and PROVIDED FURTHER THAT Licensee shall not enter into any negotiation or settlement regarding any Indemnified Claim and shall provide to Licensor the full authority to defend or settle the claim. Licensee shall cooperate fully in the defense of such claim at Licensors expense. Licensee may participate in any such claim at its own expense with counsel of its choosing.
6.2 By Licensee. Except with respect to Indemnified Claims as defined in the foregoing Section, Licensee shall defend, indemnify and hold harmless Licensor and its respective parents, subsidiaries, and otherwise related entities, agents, servants, current and former officers, directors and employees, shareholders, attorneys, successors and assigns, against all claims, liabilities, damages, losses, costs, settlement amounts and expenses (including expenses of litigation and/or attorneys fees) arising out of or in connection with any claims, legal proceedings or actions instituted or asserted against Licensee or Licensor arising in whole or in part from any activities of Licensee relating to the Licensed Marks or the Medical Products, including but not limited to: (i) alleged defects or deficiencies in the Medical Products offered by Licensee; (ii) Licensees agreements, policies, promises, or activities relating to the provision or advertising of the Medical Products; (iii) alleged violations of any applicable law or regulation relating to the Medical Products offered by Licensee; (iv) alleged acts of piracy, plagiarism, infringement, fraud, larceny/theft, libel or invasion of privacy; and/or (v) any allegations by third parties asserting claims of fraud, negligence, or gross negligence relating to the provision of the Medical Products. Licensor shall promptly notify Licensee in writing of any such claims asserted against Licensor.
7. Term and Termination
7.1 Term. The term of this Agreement shall commence on the Effective Date and continue in perpetuity, unless terminated at an earlier time in accordance with the provisions of this Agreement.
7.2 Termination by Licensor
(a) Breach . In the event Licensee breaches any of its material obligations under this Agreement, Licensor may terminate this Agreement and the license granted in this Agreement by giving notice in writing to Licensee of the breach. In the event Licensee does not correct or eliminate the breach within thirty (30) days from the date of receipt of such notice, this Agreement, including the license to use the Licensed Marks, shall terminate ten (10) days following the thirty (30) day cure period. In the event Licensor breaches any of its representations or material obligations under this Agreement, Licensee may terminate this Agreement and the license granted in this Agreement by giving notice in writing to Licensor of the breach. In the event Licensor does not correct or eliminate the breach within thirty (30) days from the date of receipt of such notice, this Agreement, including the license to use the Licensed Marks, shall terminate ten (10) days following the thirty (30) day cure period.
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(b) Change of Control . Licensor will have the right to terminate this Agreement and the license granted in this Agreement by giving written notice to Licensee in the event of a Change of Control of Licensee.
(c) Threat of Infringement . If, at any time, Licensor becomes, or in the opinion of Licensor may become, the subject of a claim of infringement with respect to the Licensed Marks, Licensor may, at its option (i) procure for Licensee the right to continue using the Licensed Marks; or (ii) terminate this Agreement.
7.3 Automatic Termination
(a) In the event that Licensee dissolves or liquidates or ceases to engage in its business, files a petition in bankruptcy, is adjudicated a bankrupt or files a petition or otherwise seeks relief under or pursuant to any bankruptcy, insolvency or reorganization statute or proceeding, or if a petition in bankruptcy is filed against it and is not discharged within sixty (60) days thereafter or if Licensee makes an assignment for the benefit of its creditors or if a custodian, receiver or trustee is appointed for it or for a substantial portion of its business or assets and such appointment is not discharged within sixty (60) days thereafter (hereinafter individually and/or collectively referred to as Bankruptcy or Related Proceedings ), then this Agreement will terminate automatically. In the event of Licensees Bankruptcy or Related Proceedings, Licensor and/or its custodian, receiver, or trustee retains the right to reject and terminate this Agreement in its entirety.
(b) In the event Licensee, in its sole discretion, ceases to use the Licensed Marks with intent not to resume such use, the license granted under this Agreement will terminate following receipt of written notice from Licensee without any penalty, payment or other form of remuneration from one party to the other.
7.4 Effect of Termination. In the event of any termination of this Agreement under any circumstance, Licensee shall, subject to the following sentence, discontinue using the Licensed Marks. In the event of such termination under any circumstance and notwithstanding any other term or condition set out in this Agreement, Licensee shall sell off or exhaust its inventory of any Medical Products and any other materials or matter that bear any of the Licensed Marks within six (6) months, and thereafter will cease and forever desist from all use of the Licensed Marks and shall not use any mark, designation or design confusingly similar to any of the Licensed Marks, including any mark that begins with or includes KIM anywhere in the world. Nothing herein, however, shall bar or prohibit Licensee after such six-month period from servicing any Medical Products bearing the Licensed Marks that were marketed or sold prior to the termination or expiration of this Agreement.
7.5 Survival. The provisions of Sections 3.3, 5.1, 5.2, 6.1, 6.2 and 7.4 shall survive termination of this Agreement regardless of the reason for termination.
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7.6 Condition Precedent to Agreement. The Parties agree that this Agreement shall be null, void and of no effect unless and until the transaction contemplated by the Distribution Agreement has been closed and consummated. In the event the parties to the Distribution Agreement conclude that such transaction shall not be consummated, this Agreement shall be deemed to be terminated and of no further force or effect.
8. Miscellaneous
8.1 Non-assignment/Binding Agreement. Neither this Agreement nor any rights under this Agreement may be assigned or otherwise transferred by Licensee, in whole or in part, whether voluntarily or by operation of law, including by way of sale of assets, merger or consolidation, or Change of Control without the prior written consent of Licensor, which consent will not be unreasonably withheld. Notwithstanding the foregoing, Licensee may transfer this Agreement to any entity that owns Licensee, is owned by Licensee, or is under common control with Licensee, provided Licensee gives Licensor at least thirty (30) days advance written notice of such assignment and the proposed transferee entity represents in writing to Licensor that it shall have the authority and will in fact assume and discharge all obligations of Licensee under this Agreement. Licensor expressly reserves its unilateral right to assign or transfer its interest in this Agreement, provided Licensor gives Licensee at least thirty (30) days advance written notice of such assignment. Subject to the foregoing, this Agreement will be binding upon and will inure to the benefit of the parties and their respective successors and assigns. Any assignment in violation of the foregoing will be null and void.
8.2 Independent Contractors. The relationship of the parties under this Agreement is that of independent contractors. Neither party will be deemed to be an employee, agent, partner, or legal representative of the other for any purpose and neither will have any right, power or authority to create any obligation or responsibility on behalf of the other. Nothing herein shall be construed as creating any joint venture or other form of joint enterprise between the parties.
8.3 Notices. Any notice required or permitted under the terms of this Agreement or required by law must be in writing and must be: (a) delivered in person; (b) sent by first class registered mail; or (c) sent by overnight courier, in each case properly posted and fully prepaid to the appropriate address set forth below:
If to Licensor: | Kimberly-Clark Worldwide, Inc. | |
2300 Winchester Road | ||
Neenah, Wisconsin 54956 | ||
Attention: General Counsel |
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If to Licensee: | Avent, Inc. | |
5450 Windward Parkway, Suite 100 South | ||
Alpharetta, Georgia 30004 | ||
Attention: General Counsel |
8.4 Change of Address. Either party may change its address for notice by providing notice to the other party given in accordance with this Section. Notices will be considered to have been given at the time of actual delivery in person, seven business days after deposit in the mail as set forth above, or three business day after delivery to an overnight air courier service.
8.5 Force Majeure. Neither party will be liable to the other party on account of any loss or damage resulting from any delay or failure to perform all or any part of this Agreement if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control and without negligence of the party allegedly delaying or failing to perform. Such events, occurrences, or causes will include, without limitation, acts of God, strikes, lockouts, riots, acts of war, acts of terrorism, earthquake, fire and explosions, but the inability to meet financial obligations is expressly excluded.
8.6 Waiver. Any waiver of the provisions of this Agreement or of a partys rights or remedies under this Agreement must be in writing to be effective and signed by the party being charged with waiver. Failure, neglect, or delay by a party to enforce the provisions of this Agreement or its rights or remedies at any time, will not be construed as a waiver of such partys rights under this Agreement and will not in any way affect the validity of the whole or any part of this Agreement or prejudice such partys right to take subsequent action. No exercise or enforcement by either party of any right or remedy under this Agreement will preclude the enforcement by such party of any other right or remedy under this Agreement or that such party is entitled by law to enforce.
8.7 Severability. If any of the terms or conditions of this Agreement are declared void, invalid, unlawful or unenforceable by any judicial or administrative authority having proper jurisdiction over the parties and after all appeals have been exhausted, this declaration shall not, in and of itself, nullify the remaining provisions of this Agreement, which shall remain in force and effect unless the severing of such term, condition or provision adversely and materially affects the original intent of the parties or the validity of the Licensed Marks; in which event, this Agreement may terminate on sixty (60) days written notice from one party to the other, provided that the parties have first made reasonable, good faith efforts to reach agreement on modifying such term or condition to fulfill as closely as possible the original intent and purpose thereof.
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8.8 Integration . This Agreement contains the entire agreement of the parties with respect to the subject matter of this Agreement and supersedes all previous communications, representations, understandings and agreements, either oral or written, between the parties with respect to said subject matter. No terms, provisions or conditions of any purchase order, acknowledgement or other business form that either party may use in connection with the transactions contemplated by this Agreement will have any effect on the rights, duties or obligations of the parties under, or otherwise modify, this Agreement, regardless of any failure of a receiving party to object to such terms, provisions or conditions. This Agreement may not be amended, except by a writing signed by both parties.
8.9 Choice of Law and Forum. This Agreement shall be governed by and construed and enforced in accordance with the federal trademark laws of the United States of America as to trademark issues and the substantive laws of the State of Delaware, as though all acts and omissions related hereto occurred in Delaware, as to contract formation, interpretation and construction. The Parties hereby irrevocably submit to the non-exclusive jurisdiction of the state and federal courts located in the State of Delaware, and each party hereby irrevocably agrees that all disputes, controversies or claims may be heard and determined in the state and federal courts located in Wilmington, Delaware. The Parties hereby irrevocably waive, to the fullest extent permitted by applicable law, any objection which they may now or hereafter have to the laying of venue of any such dispute brought in such court or any defense of inconvenient forum for the maintenance of such dispute. Each of the Parties hereto agrees that a judgment in any such dispute may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.
8.10 Interpretation. For purposes of interpreting this Agreement, whenever the context requires, the singular number will include the plural, and vice versa; the masculine gender will include the feminine and neuter genders; the feminine gender will include the masculine and neuter genders; and the neuter gender will include the masculine and feminine genders. Any rule of construction to the effect that ambiguities are to be resolved against the drafting party will not be applied in the construction or interpretation of this Agreement. As used in this Agreement, the words include and including and variations thereof, will not be deemed to be terms of limitation, but rather will be deemed to be followed by the words without limitation. Any reference herein to the parties means the entities that are parties to this agreement; any reference to a third party means a person or an entity that is not a party to this Agreement.
8.11 Counterparts. This Agreement may be executed in counterparts, each of which so executed will be deemed to be an original and such counterparts together will constitute one and the same agreement. A facsimile, digital or .pdf signature shall be deemed an original.
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I N W ITNESS W HEREOF , the parties have executed this Agreement as of the Effective Date.
KIMBERLY-CLARK WORLDWIDE, INC. | ||
(Licensor) | ||
By: |
/s/ Jeff Doherty |
|
Name: | Jeff Doherty | |
Title: | Senior Director | |
AVENT, INC. | ||
(Licensee) | ||
By: |
/s/ John W. Wesley |
|
Name: | John W. Wesley | |
Title: | Senior Vice President, General Counsel and | |
Chief Ethics and Compliance Officer |
APPENDIX A
MARKS AND REGISTRATIONS
I. MARKS
The following marks, whether registered or not, as used on or in connection with Medical Products marketed to the Health Care Market:
KIMGUARD
KIMGUARD ONE-STEP
the DAISY Design shown below:
II. APPLICATIONS AND REGISTRATIONS
The marks that are the subject of the applications and registrations shown in the attached chart.
APPENDIX A
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Exhibit 10.7
TRADEMARK LICENSE AGREEMENT
This Trademark License Agreement (this Agreement ), effective as of October 30, 2014 (the Effective Date ), is made and entered by and between Avent, Inc., a Delaware corporation ( Licensor ); and Kimberly-Clark Worldwide, Inc., a Delaware corporation ( Licensee ).
R ECITALS
W HEREAS , Licensor will be, as of the Effective Date, a wholly-owned subsidiary of Halyard Health, Inc. ( Halyard ) and Licensee is a wholly-owned subsidiary of Kimberly-Clark Corporation ( Kimberly-Clark ); and
W HEREAS , Licensor will be, as of the Effective Date, the owner of certain trademarks for certain goods, as identified below; and
W HEREAS , Licensor wishes to grant to Licensee, and Licensee desires to obtain from Licensor, a license to use said trademarks on or in connection with the manufacture, distribution, marketing, advertising, promotion and sale of certain products and related services, on the terms and conditions described in this Agreement;
A GREEMENT
N OW , T HEREFORE , in consideration of the foregoing and the mutual covenants and obligations contained herein, the parties agree as follows:
1. Definitions. As used in this Agreement, the following terms shall have the following meanings. Capitalized terms used but not otherwise defined elsewhere in this Agreement shall have the respective meanings given to such terms in the Distribution Agreement by and between Kimberly-Clark and Halyard dated as of October 31, 2014 (the Distribution Agreement).
1.1 Affiliate shall mean, with respect to any Person, any other Person that directly or indirectly controls, is controlled by or is under common control with such Person. For the purpose of this definition, the term control means the power to direct the management of an entity, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the term controlled has the meaning correlative to the foregoing. After consummation of the Distribution Agreement, Halyard and Kimberly-Clark shall not be deemed to be under common control for purposes hereof due solely to the fact that Halyard and Kimberly-Clark have common stockholders. Notwithstanding the foregoing definition, Hogla-Kimberly Limited, Kimberly-Clark de Mexico, Kimberly-Clark Lever Private Limited, Olayan Kimberly-Clark Saudi Limited, Olayan Kimberly-Clark Bahrain and Olayan Kimberly Child Care Products WLL are Affiliates of Kimberly-Clark.
1.2 Change of Control shall mean a transaction in which there is a change in the person or persons holding a controlling interest in the equity of Licensee (or in the equity of any parent entity of Licensee) and such change results in the controlling interest in the Licensee or such parent entity being held by a Halyard Competitor.
1.3 Consumer Market shall mean end users that are directly purchasing or otherwise obtaining Consumer Products for consumption or customers who are retail or other outlets that resell Consumer Products to the end user for consumption.
1.4 Consumer Products shall mean devices, products, articles or merchandise of common or frequent use, ordinarily bought by individuals or households for private consumption from a retail outlet or otherwise obtained or provided direct to the consumer. Consumer Products expressly includes Kimberly-Clark Consumer Products. Consumer Products do not include Medical Products, sold by Kimberly-Clarks Global Health Care Business as of the Effective Date of this Agreement.
1.5 Existing Health Care Customer shall mean any Person that purchases Medical Products from Kimberly-Clarks Global Health Care Business immediately prior to the Effective Time. In the event that any such Person consists of multiple divisions, departments, branches, offices or other subdivisions, the Existing Health Care Customer shall include only such divisions, departments, branches, offices or subdivisions that purchase Medical Products from Kimberly-Clarks Global Health Care Business immediately prior to the Effective Time.
1.6 Existing K-C Consumer Customer shall mean any Person that purchases Consumer Products from Kimberly-Clarks Global Consumer Business, immediately prior to the Effective Time. In the event that any such Person consists of multiple divisions, departments, branches, offices, or other subdivisions, the Existing K-C Consumer Customer shall include only such divisions, departments, branches, offices or other subdivisions that purchase Consumer Products from Kimberly-Clarks Global Consumer Business, as applicable, immediately prior to the Effective Time.
1.7 Existing KCP Customer shall mean any Person that purchases Professional Products from Kimberly-Clarks Global Professional Business or Global Partnership Products Business immediately prior to the Effective Time. In the event that any such Person consists of multiple divisions, departments, branches, offices, or other subdivisions, the Existing KCP Customer shall include only such divisions, departments, branches, offices or other subdivisions that purchase Professional Products from Kimberly-Clarks Global Professional Business or Global Partnership Products Business immediately prior to the Effective Time.
1.8 Halyard Competitor shall mean a third party that manufactures, sells or distributes Medical Products of a type sold by Halyard.
1.9 Health Care Market shall mean end users whose primary business is the delivery of medical, veterinary or patient care or treatment, medical diagnostic services, or medical care provided in connection with disaster relief, including, but not limited to: (1) professional medical and healthcare service companies, businesses, institutions and enterprises, (2) medical diagnostics facilities and laboratories having patient interaction, (3) government and private organizations providing medical care in connection with disaster relief and (4) firms selling products or services into such end users; examples of such end users are:
| Hospitals, including their pharmacies; |
| Integrated medical service provider networks and their member facilities; |
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| Surgery centers, including their pharmacies; |
| Blood banks; |
| Bone and tissue centers; |
| Physician and medical clinic offices including their pharmacies; |
| Psychiatric health facilities, including their pharmacies; |
| Clinics in retail outlets that perform or provide medical services or care; |
| Long-term medical care facilities, including their pharmacies; |
| Medical care components of the Red Cross or other disaster relief organizations; |
| Veterinary and other facilities that primarily provide medical care to animals; and |
| Dental care facilities. |
1.10 Kimberly-Clark Consumer Products shall mean Consumer Products whose primary purpose is to help maintain or improve the hygiene, healthy aging process and/or household care and maintenance of the end user. Such products include those intended to be used in connection with enuresis, incontinence, menstruation, personal hygiene, diaper rash, healthy skincare, household cleaning and similar such fields, and may include medical devices, over-the-counter drugs or devices, prescription drugs or devices, or other regulated products or materials. Kimberly-Clark Consumer Products expressly include those products sold or otherwise transferred to customers or end users by Kimberly-Clarks Global Consumer Business as of the Effective Date of this Agreement.
1.11 Licensed Marks shall mean (a) the marks shown in Appendix A attached hereto, including the marks that are the subject of the registrations and applications identified in Appendix A; (b) marks that include or incorporate such marks; (c) any variants or formatives thereof, each as used on, for and in connection with Professional Products, as defined in this Agreement, sold to the Professional Market, as defined in this Agreement; (d) the mark SAFESKIN and related marks identified in Section II of Appendix A (the SAFESKIN Marks), as used on, for and in connection with Consumer Products, as defined in this Agreement, sold to the Consumer Market, as defined in this Agreement; and (e) the mark EVOLUTION, as used on, for and in connection with Consumer Products, as defined in this Agreement.
1.12 Licensed Consumer Products shall mean (a) in the case of the SAFESKIN Marks, sports wrap products marketed to the Consumer Market; and (b) in the case of the EVOLUTION mark, car cover products and fabrics for car cover products marketed to the Consumer Market.
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1.13 Medical Products shall mean devices, products, articles, methods, systems or merchandise that are primarily utilized by (i) healthcare professionals for the diagnosis, treatment or prevention of disease or injuries or (ii) caregivers under the direction and supervision of medical professionals in the treatment or prevention of disease or injuries. Medical Products expressly include those devices, products, articles or merchandise sold or otherwise transferred to end users or customers in the Health Care Market by Kimberly-Clarks Global Health Care Business as of the Effective Date of this Agreement. Medical Products do not include devices, products, articles or merchandise sold by Kimberly-Clarks Global Consumer Business as of the Effective Date of this Agreement.
1.14 Professional Products shall mean devices, products, articles or merchandise on or in connection with which the Licensed Marks are used and whose primary purpose is to: (a) help maintain facilities or manufacturing equipment; (b) increase or improve employee or other individuals efficiency, safety or protection, or cleanliness; or (c) enhance the safety or cleanliness or efficiency of facilities or equipment or processes. Professional Products expressly include those devices, products, articles or merchandise sold or otherwise transferred to customers or end users by Kimberly-Clarks Global Professional Business or Global Partnership Products Business as of the Effective Date of this Agreement.
1.15 Professional Market shall mean end users whose primary business is performed in an industrial, commercial, or institutional setting, including but not limited to:
(a) | manufacturing facilities or factories; |
(b) | repair and service facilities (e.g., equipment, machines, vehicles, etc.); |
(c) | lodging, entertainment and hospitality facilities; |
(d) | professional offices other than components directed to the provision of medical care and treatment to patients; |
(e) | food preparation and processing facilities; |
(f) | facilities directed to natural resource extraction and processing (e.g., mining, drilling, refining, etc.); |
(g) | schools and academic institutions (including research laboratories in hospitals associated with academic institutions); |
(h) | technology development, research, or scientific facilities or labs; |
(i) | non-medical care components of relief agencies; |
(j) | non-medical care components of long term medical care facilities; |
(k) | pharmacies other than components directed to the provision of medical care and treatment to patients; |
(l) | components of hospitals, clinics or other medical care facilities other than those that relate to the diagnosis, treatment or prevention of disease, injury or a medical condition or other activities that are typically administered by or under the direction of a medical professional (e.g., laboratory work, facility maintenance, janitorial services, etc.); |
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(m) | non-veterinary care components of animal shelters or animal care facilities; and |
(n) | firms selling products or services into such end users. |
The Professional Market specifically does not include the patient interaction components of veterinary facilities, hospitals, pharmacies, medical care facilities and/or components of such facilities used for the delivery of medical care.
2. Grant and Scope of License
2.1 Grant of License. Subject to the terms and conditions of this Agreement, Licensor grants to Licensee, and to all Affiliates of Licensee, and Licensee accepts an exclusive, non-transferable (unless transferred in compliance with Section 8.1) license, for the term stated in this Agreement, subject to the payment of royalties as provided in Exhibit A to this Agreement, to use throughout the world the Licensed Marks:
(a) on or in connection with Professional Products that are marketed solely to the Professional Market and, in the case of the SAFESKIN Marks and the mark EVOLUTION only, on or in connection with Licensed Consumer Products that are marketed to the Consumer Market;
(b) in connection with manufacturing Professional Products and distributing Professional Products solely to the Professional Market and, in the case of the SAFESKIN Marks and the mark EVOLUTION only, in connection with manufacturing Licensed Consumer Products and distributing such Licensed Consumer Products solely to the Consumer Market; and
(c) in connection with marketing, advertising, promotion, and/or sale of Professional Products solely to the Professional Market and, in the case of the SAFESKIN Marks and the mark EVOLUTION only, in connection with marketing, advertising, promotion and/or sale of Licensed Consumer Products solely to the Consumer Market, including, in each case, such use by Licensees authorized sales representatives.
All of the foregoing uses identified in paragraphs 2.1(a) through 2.1(c) shall hereinafter be referred to collectively as the Licensed Uses. The products on which the Licensed Marks may be used pursuant to paragraphs 2.1(a) through 2.1(c) (including both Professional Products and Licensed Consumer Products) shall hereinafter be referred to collectively as the Licensed Products.
2.2 Limited Purpose. Licensee shall not use the Licensed Marks in connection with any activities other than the Licensed Uses without prior written approval of Licensor. All rights not expressly granted herein to Licensee are specifically reserved to and vested in Licensor, including the right to use or authorize others to use the Licensed Marks in connection with Licensed Products, provided such products are marketed and sold to parties other than those in the Professional Market or, in the case of the SAFESKIN Marks and the mark
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EVOLUTION only, in the Consumer Market. Notwithstanding the foregoing and for the sake of clarity, Licensor shall not directly market or sell products bearing the Licensed Marks to the Professional Market (or, in the case of the SAFESKIN Marks and the mark EVOLUTION only, to the Consumer Market) during the term of this Agreement and for a period of two (2) years following the expiration or termination of this Agreement.
2.3 Compliance by Affiliates. Licensee agrees that Licensee shall be responsible for ensuring and guaranteeing compliance by all Affiliates of Licensee with all of the terms, conditions and provisions of this Agreement. Licensee represents and warrants to Licensor that Licensee has the power and authority to cause all such Affiliates to comply with all such terms, conditions and provisions, and acknowledges that such compliance shall be a condition to the lawful exercise by any of Licensees Affiliates of any of the rights granted in this Agreement to Licensee.
2.4 Continued Sales to Existing Health Care Customers. Notwithstanding anything to the contrary in this Agreement, Halyard and its Affiliates may continue selling or otherwise transferring Medical Products to existing Health Care Customers.
2.5 Continued Sales to Existing K-C Customers. Notwithstanding anything to the contrary in this Agreement, Kimberly-Clark and its Affiliates may continue selling or otherwise transferring Professional Products to Existing KCP Customers and Consumer Products to Existing K-C Consumer Customers, and such sales or transfers shall be subject to this Agreement and the licenses set forth herein.
3. Compliance Issues
3.1 Form of Use. Licensee shall use the Licensed Marks only in forms and presentations that have been approved in advance, in writing, by Licensor. All forms and presentations in use by Kimberly-Clarks Global Professional Business or Global Partnership Products Business (or, in the case of the SAFESKIN Marks and the mark EVOLUTION only, by Kimberly-Clarks Global Consumer Business) as of the Effective Date are hereby deemed approved by Licensor. Once any such form or presentation has been approved by Licensor, Licensees use of the Licensed Marks in such form or presentation shall not be restricted; provided, however, that Licensor may, for Good Reason (as defined herein) object to a previously-approved form or presentation by giving Licensee written notice of Licensors objection and the reasons for the objection (a Notice of Objection ). Licensee shall timely comply with and correct all objections set forth in the Notice of Objection. For purposes of this Agreement, Good Reason shall mean a reason based on trademark law principles (including but not limited to principles relating to maintenance of trademark validity and/or integrity, proper trademark usage, and brand identity) that, in Licensors opinion, justifies Licensors objection, so long as such Notice of Objection proposes an alternative form or presentation that is as similar to the previously-approved form or presentation as is consistent, in Licensors opinion, with such trademark law principles.
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3.2 Marking. Licensee shall include, where appropriate and as requested by Licensor, agreed-to trademark markings or legends for the Licensed Marks. Licensee shall comply with all applicable laws and regulations pertaining to the proper use and designation of trademarks.
3.3 Use of Other Marks. Licensee shall not use during the term of this Agreement or thereafter without the written consent of Licensor any name, mark, designation or design that is likely to cause confusion with any of the Licensed Marks.
4. Quality Control and Use of Licensed Marks
4.1 Quality Control. Licensor shall at all times retain the right, in its sole discretion, to control the nature and quality of all Licensed Products in accordance with applicable trademark law. Licensee shall comply with all requests or instructions of Licensor relating to the nature or quality of the Licensed Products, and shall comply with all quality control guidelines of Licensor, as adopted from time to time by Licensor in writing and provided to Licensee. Licensor and Licensee intend the quality control provisions of this Section 4 to require Licensee to maintain the nature and quality of the Licensed Products as required by Licensor, so as to maintain the validity and integrity of the Licensed Marks, as required by applicable law.
4.2 Quality Standards. In furtherance of its quality control rights and obligations set forth in Section 4.1 above, Licensor has furnished to Licensee quality standards applicable to goods bearing the Licensed Marks as of the Effective Date. Licensee shall ensure that all Licensed Products conform to the quality standards historically associated with the products of Licensor or its predecessors on which the Licensed Marks have been used prior to the Effective Date, and with such quality standards as Licensor may reasonably adopt after the Effective Date and communicate in writing to Licensee. Licensee represents that, as a principal part of its business, it possesses all the necessary and appropriate knowledge, skill, experience and expertise to enable it to manufacture, inspect, test, approve, market, advertise, promote, distribute and sell Licensed Products in compliance with Licensors existing quality standards, including with respect to their performance and safety, in compliance with all applicable laws and regulations, and acknowledges and agrees that, as a result thereof, Licensor may reasonably rely on Licensee to regularly ensure that all Licensed Products comply with such quality standards, laws and regulations. Nothing contained herein, however, shall preclude or limit Licensors right or ability to inspect any Licensed Products or to determine, in Licensors reasonable discretion, whether such Licensed Products comply with the quality standards communicated by Licensor to Licensee in accordance with this Section 4.2. Licensee shall cooperate fully with Licensor, as requested by Licensor, in connection with any such inspection or determination by Licensor. Licensor and Licensee agree that any subsequent adoption of different quality standards with which Licensee must comply may be made to maintain compliance of all Licensed Products with applicable laws and regulations, and Licensor agrees that any different quality control standards adopted during the term of this Agreement shall be reasonable and consistent with the nature and qualities of the products of Licensor or its predecessors on which the Licensed Marks have been used in the past.
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4.3 Compliance with Law. Licensee shall comply with all applicable laws and regulations and obtain all appropriate government approvals pertaining to its use of the Licensed Marks, including the Licensed Uses and Licensees manufacture, sale, distribution, marketing, advertising and promotion of products on or in connection with which the Licensed Marks are used.
4.4 No Disparagement of Licensor or Licensed Marks. Licensee shall not use the Licensed Marks in connection with any activity that disparages Licensor, its products or services, or the Licensed Marks.
4.5 Licensors Maintenance of Licensed Marks. Licensor shall take no actions that derogate or devalue the Licensed Marks, and agrees to make reasonable efforts to maintain the goodwill of the Licensed Marks, as well as any registrations for, and applications for registration of, the Licensed Marks. Licensee agrees to cooperate with Licensor or its representatives by timely obtaining and/or submitting to Licensor or its representatives, as requested by Licensor, documents, information, specimens, verified or sworn statements, assignments or other documents reasonably believed by Licensor to be necessary in order to maintain such registrations or prosecute applications for the Licensed Marks. Licensor shall give Licensee notice of any registrations or applications that Licensor does not intend to maintain or further prosecute, and Licensee shall give Licensor notice of any additional applications that Licensee believes should be filed for the Licensed Marks. It shall be Licensors right to determine in the first instance whether, when and in what jurisdictions additional applications for registration of the Licensed Marks shall be filed and whether existing applications or registrations shall be further prosecuted or maintained; provided, however, that if Licensee and Licensor disagree regarding any such issues, Licensor shall file, prosecute or maintain such applications or registrations in Licensors name if Licensee pays for all expenses, including all attorneys fees and filing fees, associated with such applications or registrations; and provided further that the foregoing obligation on Licensors part shall not be applicable if Licensor believes in good faith that such application, prosecution or maintenance will be unsuccessful, is unnecessary, or would otherwise cause damage or risk to Licensor, the Licensed Marks, or Licensee.
5. Ownership
5.1 Ownership of Licensed Marks. Licensee acknowledges that Licensor will remain the sole and exclusive owner of all right, title and interest in and to the Licensed Marks. Licensee agrees that any goodwill in the Licensed Marks resulting from Licensees use of the Licensed Marks under this Agreement will inure solely to the benefit of Licensor and will not create any right, title or interest of Licensee (including any ownership right by Licensee) in or to the Licensed Marks.
5.2 No Contest. Licensee shall not contest, oppose or challenge Licensors ownership of the Licensed Marks or the validity thereof. Licensee will do nothing to impair Licensors ownership or rights in the Licensed Marks. In particular, Licensee shall not register or attempt to register any of the Licensed Marks, alone or with other words or designs, in any country or jurisdiction, and will not oppose or contest Licensors application(s) to register, registration(s) or permitted use(s) of the Licensed Marks in any jurisdiction.
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5.3 Adverse Use and Enforcement
(a) Notice. Each party shall promptly notify the other party in writing of any legal proceeding or action instituted against such party arising out of the use of or involving the Licensed Marks. Each party shall also promptly notify the other party in writing should such party learn of use by an unauthorized third party of any mark that may be confusingly similar to, infringe or otherwise violate Licensors rights in one or more of the Licensed Marks or Licensees exclusive rights under this Agreement.
(b) Enforcement. Except as provided for below, Licensor shall have the sole right and discretion to enforce its rights in any of the Licensed Marks, including but not limited to the right to bring infringement, unfair competition, dilution or false advertising proceedings involving any of the Licensed Marks. Licensee shall cooperate fully to assist Licensor and its attorneys or other authorized agents, at Licensors expense, with any legal, equitable, administrative, regulatory or other proceeding or action taken by Licensor against a third party to protect the Licensed Marks. Notwithstanding the foregoing, if, within twenty (20) days of Licensors receipt of a notice from Licensee in accordance with paragraph (a) above, Licensor does not agree in writing to bring or take action to terminate such activities of the unauthorized third party, or if Licensor subsequently decides not to proceed with any such action, and if Licensee has a good faith belief that such activities have or will injure its rights under this Agreement, then Licensee may take such action as is reasonably necessary to halt such activities including filing suit, after providing written notice to Licensor at least seven (7) days in advance of taking such action. Whichever party takes action against such activities shall be responsible for the costs and fees of such action including payment of both Licensors and Licensees attorneys fees, costs and expenses, and the other party shall, if requested, cooperate in such action as shall be reasonably necessary (including joining as a party plaintiff to the extent necessary and requested by the other party), but again at the cost of the party taking action. Any monies recovered as a result of such action shall first be used to pay the legal expenses of the party that took such action and the legal fees of the party cooperating in such action and any remaining amounts after reimbursement of such fees shall be retained by, paid to or recovered by the party that initiated the action.
6. Indemnification
6.1 By Licensor . Licensor shall defend, indemnify and hold harmless Licensee and its respective parents, subsidiaries, and otherwise related entities, agents, servants, current and former officers, directors and employees, shareholders, attorneys, successors and assigns, against all claims, liabilities, damages, losses, costs, settlement amounts and expenses (including expenses of litigation and/or attorneys fees) arising out of or in connection with any claims, legal proceedings or actions instituted or asserted against Licensee or Licensor for trademark infringement arising out of Licensees use of the Licensed Marks in accordance with this Agreement (an Indemnified Claim ); and Licensor shall defend or settle any such claims, legal proceedings or actions instituted against Licensee or Licensor at no expense to Licensee or Licensees Affiliates, employees, officers, directors, or authorized sales representatives; PROVIDED THAT Licensee shall give to Licensor prompt written notice of any Indemnified Claim following Licensees receipt of written notification of such claim, legal proceeding or
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action instituted by a third party against Licensee; and PROVIDED FURTHER THAT Licensee shall not enter into any negotiation or settlement regarding any Indemnified Claim and shall provide to Licensor the full authority to defend or settle the claim. Licensee shall cooperate fully in the defense of such claim at Licensors expense. Licensee may participate in any such claim at its own expense with counsel of its choosing.
6.2 By Licensee. Except with respect to Indemnified Claims as defined in the foregoing Section, Licensee shall defend, indemnify and hold harmless Licensor and its respective parents, subsidiaries, and otherwise related entities, agents, servants, current and former officers, directors and employees, shareholders, attorneys, successors and assigns, against all claims, liabilities, damages, losses, costs, settlement amounts and expenses (including expenses of litigation and/or attorneys fees) arising out of or in connection with any claims, legal proceedings or actions instituted or asserted against Licensee or Licensor arising in whole or in part from any activities of Licensee relating to the Licensed Marks or the Licensed Products, including but not limited to: (i) alleged defects or deficiencies in the Licensed Products offered by Licensee; (ii) Licensees agreements, policies, promises, or activities relating to the provision or advertising of the Licensed Products; (iii) alleged violations of any applicable law or regulation relating to the Licensed Products offered by Licensee; (iv) alleged acts of piracy, plagiarism, infringement, fraud, larceny/theft, libel or invasion of privacy; and/or (v) any allegations by third parties asserting claims of fraud, negligence, or gross negligence relating to the provision of the Licensed Products. Licensor shall promptly notify Licensee in writing of any such claims asserted against Licensor.
7. Term and Termination
7.1 Term. The term of this Agreement shall commence on the Effective Date and continue for a term of eight (8) years, unless terminated at an earlier time in accordance with the provisions of this Agreement.
7.2 Termination by Licensor
(a) Breach . In the event Licensee breaches any of its material obligations under this Agreement, Licensor may terminate this Agreement and the license granted in this Agreement by giving notice in writing to Licensee of the breach. In the event Licensee does not correct or eliminate the breach within thirty (30) days from the date of receipt of such notice, this Agreement, including the license to use the Licensed Marks, shall terminate ten (10) days following the thirty (30) day cure period. In the event Licensor breaches any of its representations or material obligations under this Agreement, Licensee may terminate this Agreement and the license granted in this Agreement by giving notice in writing to Licensor of the breach. In the event Licensor does not correct or eliminate the breach within thirty (30) days from the date of receipt of such notice, this Agreement, including the license to use the Licensed Marks, shall terminate ten (10) days following the thirty (30) day cure period.
(b) Change of Control . Licensor will have the right to terminate this Agreement and the license granted in this Agreement by giving written notice to Licensee in the event of a Change of Control of Licensee.
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(c) Threat of Infringement . If, at any time, Licensor becomes, or in the opinion of Licensor may become, the subject of a claim of infringement with respect to the Licensed Marks, Licensor may, at its option (i) procure for Licensee the right to continue using the Licensed Marks; or (ii) terminate this Agreement.
7.3 Automatic Termination
(a) In the event that Licensee dissolves or liquidates or ceases to engage in its business, files a petition in bankruptcy, is adjudicated a bankrupt or files a petition or otherwise seeks relief under or pursuant to any bankruptcy, insolvency or reorganization statute or proceeding, or if a petition in bankruptcy is filed against it and is not discharged within sixty (60) days thereafter or if Licensee makes an assignment for the benefit of its creditors or if a custodian, receiver or trustee is appointed for it or for a substantial portion of its business or assets and such appointment is not discharged within sixty (60) days thereafter (hereinafter individually and/or collectively referred to as Bankruptcy or Related Proceedings ), then this Agreement will terminate automatically. In the event of Licensees Bankruptcy or Related Proceedings, Licensor and/or its custodian, receiver, or trustee retains the right to reject and terminate this Agreement in its entirety.
(b) In the event Licensee, in its sole discretion, ceases to use the Licensed Marks with intent not to resume such use, the license granted under this Agreement will terminate following receipt of written notice from Licensee without any penalty, payment or other form of remuneration from one party to the other.
7.4 Effect of Termination. In the event of any termination of this Agreement under any circumstance, Licensee shall, subject to the following sentence, discontinue using the Licensed Marks. In the event of such termination under any circumstance and notwithstanding any other term or condition set out in this Agreement, Licensee shall sell off or exhaust its inventory of any Licensed Products and any other materials or matter that bear any of the Licensed Marks within six (6) months, and thereafter will cease and forever desist from all use of the Licensed Marks and shall not use any mark, designation or design confusingly similar to any of the Licensed Marks anywhere in the world. Nothing herein, however, shall bar or prohibit Licensee after such six-month period from servicing any Licensed Products bearing the Licensed Marks that were marketed or sold prior to the termination or expiration of this Agreement.
7.5 Survival. The provisions of Sections 3.3, 5.1, 5.2, 6.1, 6.2 and 7.4 shall survive termination of this Agreement regardless of the reason for termination.
7.6 Condition Precedent to Agreement. The Parties agree that this Agreement shall be null, void and of no effect unless and until the transaction contemplated by the Distribution Agreement has been closed and consummated. In the event the parties to the Distribution Agreement conclude that such transaction shall not be consummated, this Agreement shall be deemed to be terminated and of no further force or effect.
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8. Miscellaneous
8.1 Non-assignment/Binding Agreement. Neither this Agreement nor any rights under this Agreement may be assigned or otherwise transferred by Licensee, in whole or in part, whether voluntarily or by operation of law, including by way of sale of assets, merger or consolidation, or Change of Control without the prior written consent of Licensor, which consent will not be unreasonably withheld. Notwithstanding the foregoing, Licensee may transfer this Agreement to any entity that owns Licensee, is owned by Licensee, or is under common control with Licensee, provided Licensee gives Licensor at least thirty (30) days advance written notice of such assignment and the proposed transferee entity represents in writing to Licensor that it shall have the authority and will in fact assume and discharge all obligations of Licensee under this Agreement. Licensor expressly reserves its unilateral right to assign or transfer its interest in this Agreement, provided Licensor gives Licensee at least thirty (30) days advance written notice of such assignment. Subject to the foregoing, this Agreement will be binding upon and will inure to the benefit of the parties and their respective successors and assigns. Any assignment in violation of the foregoing will be null and void.
8.2 Independent Contractors. The relationship of the parties under this Agreement is that of independent contractors. Neither party will be deemed to be an employee, agent, partner, or legal representative of the other for any purpose and neither will have any right, power or authority to create any obligation or responsibility on behalf of the other. Nothing herein shall be construed as creating any joint venture or other form of joint enterprise between the parties.
8.3 Notices. Any notice required or permitted under the terms of this Agreement or required by law must be in writing and must be: (a) delivered in person; (b) sent by first class registered mail; or (c) sent by overnight courier, in each case properly posted and fully prepaid to the appropriate address set forth below:
If to Licensor: | Avent, Inc. | |||
5450 Windward Parkway, Suite 100 South | ||||
Alpharetta, Georgia 30004 | ||||
Attention: General Counsel |
If to Licensee: | Kimberly-Clark Worldwide, Inc. | |||
2300 Winchester Road | ||||
Neenah, Wisconsin 54956 | ||||
Attention: General Counsel |
8.4 Change of Address. Either party may change its address for notice by providing notice to the other party given in accordance with this Section. Notices will be considered to have been given at the time of actual delivery in person, seven business days after deposit in the mail as set forth above, or three business day after delivery to an overnight air courier service.
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8.5 Force Majeure. Neither party will be liable to the other party on account of any loss or damage resulting from any delay or failure to perform all or any part of this Agreement if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control and without negligence of the party allegedly delaying or failing to perform. Such events, occurrences, or causes will include, without limitation, acts of God, strikes, lockouts, riots, acts of war, acts of terrorism, earthquake, fire and explosions, but the inability to meet financial obligations is expressly excluded.
8.6 Waiver. Any waiver of the provisions of this Agreement or of a partys rights or remedies under this Agreement must be in writing to be effective and signed by the party being charged with waiver. Failure, neglect, or delay by a party to enforce the provisions of this Agreement or its rights or remedies at any time, will not be construed as a waiver of such partys rights under this Agreement and will not in any way affect the validity of the whole or any part of this Agreement or prejudice such partys right to take subsequent action. No exercise or enforcement by either party of any right or remedy under this Agreement will preclude the enforcement by such party of any other right or remedy under this Agreement or that such party is entitled by law to enforce.
8.7 Severability. If any of the terms or conditions of this Agreement are declared void, invalid, unlawful or unenforceable by any judicial or administrative authority having proper jurisdiction over the parties and after all appeals have been exhausted, this declaration shall not, in and of itself, nullify the remaining provisions of this Agreement, which shall remain in force and effect unless the severing of such term, condition or provision adversely and materially affects the original intent of the parties or the validity of the Licensed Marks; in which event, this Agreement may terminate on sixty (60) days written notice from one party to the other, provided that the parties have first made reasonable, good faith efforts to reach agreement on modifying such term or condition to fulfill as closely as possible the original intent and purpose thereof.
8.8 Integration. This Agreement contains the entire agreement of the parties with respect to the subject matter of this Agreement and supersedes all previous communications, representations, understandings and agreements, either oral or written, between the parties with respect to said subject matter. No terms, provisions or conditions of any purchase order, acknowledgement or other business form that either party may use in connection with the transactions contemplated by this Agreement will have any effect on the rights, duties or obligations of the parties under, or otherwise modify, this Agreement, regardless of any failure of a receiving party to object to such terms, provisions or conditions. This Agreement may not be amended, except by a writing signed by both parties.
8.9 Choice of Law and Forum. This Agreement shall be governed by and construed and enforced in accordance with the federal trademark laws of the United States of America as to trademark issues and the substantive laws of the State of Delaware, as though all acts and omissions related hereto occurred in Delaware, as to contract formation, interpretation and construction. The Parties hereby irrevocably submit to the non-exclusive jurisdiction of the state and federal courts located in the State of Delaware, and each party hereby irrevocably agrees that all disputes, controversies or claims may be heard and determined in the state and
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federal courts located in Wilmington, Delaware. The Parties hereby irrevocably waive, to the fullest extent permitted by applicable law, any objection which they may now or hereafter have to the laying of venue of any such dispute brought in such court or any defense of inconvenient forum for the maintenance of such dispute. Each of the Parties hereto agrees that a judgment in any such dispute may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.
8.10 Interpretation. For purposes of interpreting this Agreement, whenever the context requires, the singular number will include the plural, and vice versa; the masculine gender will include the feminine and neuter genders; the feminine gender will include the masculine and neuter genders; and the neuter gender will include the masculine and feminine genders. Any rule of construction to the effect that ambiguities are to be resolved against the drafting party will not be applied in the construction or interpretation of this Agreement. As used in this Agreement, the words include and including and variations thereof, will not be deemed to be terms of limitation, but rather will be deemed to be followed by the words without limitation. Any reference herein to the parties means the entities that are parties to this agreement; any reference to a third party means a person or an entity that is not a party to this Agreement.
8.11 Counterparts. This Agreement may be executed in counterparts, each of which so executed will be deemed to be an original and such counterparts together will constitute one and the same agreement. A facsimile, digital or .pdf signature shall be deemed an original.
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I N W ITNESS W HEREOF , the parties have executed this Agreement as of the Effective Date.
AVENT, INC. | ||
(Licensor) | ||
By: |
/s/ John W. Wesley |
|
Name: | John W. Wesley | |
Title: | Senior Vice President, General Counsel and | |
Chief Ethics and Compliance Officer | ||
KIMBERLY-CLARK WORLDWIDE, INC. | ||
(Licensee) | ||
By: |
/s/ Jeff Doherty |
|
Name: | Jeff Doherty | |
Title: | Senior Director |
EXHIBIT A
ROYALTIES
A. The license granted in this Agreement shall bear royalties at the rate of three-fourths of one percent (0.75%), payable each calendar quarter during the term of this Agreement, commencing on the Effective Date.
B. Licensee shall remit to Licensor, within thirty (30) days after the close of each calendar quarter, an accounting of all royalties due to Licensor, accompanied by payment of such royalties in U.S. dollars. The royalties shall be calculated by multiplying the royalty rate set forth in paragraph A above by the Net Sales by Licensee of Licensed Products during the preceding calendar quarter, exclusive of taxes and less returns during such period. The term Net Sales shall be consistent with generally accepted accounting principles in the United States of America as applied by Licensor in publishing its Annual Report. Licensee shall report such royalties on the form prescribed by Licensor, which shall identify all Licensed Products and state the volume and Net Sales for each Licensed Product with specificity.
C. Licensee shall not be obligated to pay royalties to Licensor based on any sales by Licensee of any Licensed Products that were in Licensees inventory as of the Effective Date. Licensor and Licensee shall agree, in writing, as to the value of such inventory, and Licensee may deduct from its royalty payments to Licensor any royalties that would otherwise be payable to Licensor based on the sales of such inventory by Licensee. Licensee shall report all such sales to Licensor in Licensees accountings in accordance with paragraph B above, and may make such deduction(s) either as one or more lump-sum deduction(s) from its initial royalty payment(s) or on a rolling basis, as such inventory is sold by Licensee.
D. Licensee shall keep complete and accurate books and records relating to Licensees sales of Licensed Products, and Licensor shall have the right, upon reasonable notice to Licensee but no more frequently than once every two (2) years, to have an independent certified public accountant of Licensors choice to audit such books and records at Licensors expense. If any such audit finds that Licensee has under-reported or underpaid the royalties due to Licensor under this Agreement, Licensee shall remit to Licensor all unpaid royalties within thirty (30) days after the receipt by Licensee of the report of the audit. If any such audit finds that Licensee has under-reported or underpaid royalties by more than five percent (5%), Licensee shall, in addition to remitting all unpaid royalties, also reimburse Licensor for all costs incurred by Licensor in connection with such audit, including all fees and expenses of the accountant that conducted the audit.
EXHIBIT A
APPENDIX A
MARKS AND REGISTRATIONS
I. GLOVE MARKS
The following marks, whether registered or not, as used on or in connection with gloves marketed to the Professional Market :
PURPLE NITRILE
PURPLE NITRILE XTRA
STERLING
STERLING SG
SATIN PLUS
the colors purple, lavender and gray for gloves
the distinctive configurations of
any gloves that use one or more of the marks identified above
the trade dress used for
any gloves that use one or more of the marks identified above
II. SPORTS WRAP MARKS
The following marks, whether registered or not, as used on or in connection with sports wrap products marketed to the Consumer Market:
SAFESKIN
the distinctive configurations of
any sports wrap products that use the mark identified above
the trade dress used for
any sports wrap products that use the mark identified above
APPENDIX A
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III. CAR COVER MARKS
The following mark, whether registered or not, as used on or in connection with car cover products and fabrics for car cover products marketed to the Consumer Market
EVOLUTION
IV. APPLICATIONS AND REGISTRATIONS
The marks that are the subject of the applications and registrations shown in the attached chart.
APPENDIX A
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Exhibit 10.8
HALYARD HEALTH, INC.
EQUITY PARTICIPATION PLAN
(Effective November 1, 2014)
1. PURPOSE
This Equity Participation Plan (the Plan) of Halyard Health, Inc. (the Corporation) is intended to aid in attracting and retaining highly qualified personnel and to encourage those persons who materially contribute to the success of the Corporation or of an Affiliate (by managerial, scientific or other innovative means) to acquire an ownership interest in the Corporation, thereby increasing their motivation for and interest in the Corporations or Affiliates long-term success.
2. EFFECTIVE DATE
The Plan was approved by the sole stockholder of the Corporation on October 7, 2014, and is adopted effective as of November 1, 2014 (the Effective Date ).
3. DEFINITIONS
Affiliate means any domestic or foreign corporation at least fifty percent (50%) of whose shares normally entitled to vote in electing directors is owned directly or indirectly by the Corporation or other Affiliates (collectively, the Affiliates), provided, however, that at least twenty percent (20%) shall replace at least fifty percent (50%) where there is a legitimate business criteria for using such lower percentage.
Award has the meaning set forth in Section 6 of the Plan.
Award Agreement means an agreement entered into between the Corporation and a Participant setting forth the terms and conditions applicable to the Award granted to the Participant.
Board means the Board of Directors of the Corporation.
Cause means any of the following: (i) the commission by the Participant of a felony; (ii) the Participants dishonesty, habitual neglect or incompetence in the management of the affairs of the Corporation; or (iii) the refusal or failure by the Participant to act in accordance with any lawful directive or order of the Corporation, or an act or failure to act by the Participant which is in bad faith and which is detrimental to the Corporation.
Change of Control means an event deemed to have taken place if: (i) a third person, including a group as defined for purposes of Code Section 409A, acquires in a single transaction, or a series of transactions over a twelve-month period, shares of the Corporation having thirty percent (30%) or more of the total number of votes that may be cast for the election of directors of the Corporation; or (ii) as the result of any cash tender or exchange offer, merger or other business combination, sale of assets or contested election, or any combination of the foregoing transactions, a majority of the members of the Board of Directors of the Corporation is replaced during any twelve-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board of Directors of the Corporation before the date of the appointment or election.
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Code means the Internal Revenue Code of 1986 and the regulations thereunder, as amended from time to time.
Committee means the Compensation Committee of the Board, provided that if the requisite number of members of the Compensation Committee are not Disinterested Persons, the Plan shall be administered by a committee, all of whom are Disinterested Persons, appointed by the Board and consisting of two or more directors with full authority to act in the matter. The term Committee shall mean the Compensation Committee or the committee appointed by the Board, as the case may be. Furthermore, the term Committee shall include any delegate to the extent authority is delegated pursuant to Section 4 hereunder.
Committee Rules means the interpretative guidelines approved by the Committee providing the foundation for administration of the Plan.
Common Stock means the common stock, par value $.01 per share, of the Corporation and shall include both treasury shares and authorized but unissued shares and shall also include any security of the Corporation issued in substitution, in exchange for, or in lieu of the Common Stock.
Disinterested Person means a person who is a Non-Employee Director for purposes of Rule 16b-3 under the Exchange Act, or any successor provision, and who is also an outside director for purposes of Section 162(m) of the Code or any successor section.
Effective Date has the meaning set forth in section 2 of the Plan.
Exchange Act means the Securities Exchange Act of 1934 and the rules and regulations thereunder, as amended from time to time.
Fair Market Value means (a) the reported closing price of the Common Stock, on the relevant date as reported on the composite list used by The Wall Street Journal for reporting stock prices, or if no such sale shall have been made on that day, on the last preceding day on which there was such a sale, or (b) if clause (a) is not applicable, the value determined by the Committee using such reasonable method of valuation that complies with Section 409A of the Code and the regulations thereunder.
Grant Price has the meaning set forth in subsection 8(b) of the Plan.
Incentive Stock Option means an Option which is so defined for purposes of Section 422 of the Code or any successor section.
Nonqualified Stock Option means any Option which is not an Incentive Stock Option.
Option means a right to purchase a specified number of shares of Common Stock at a fixed option price equal to no less than one hundred percent (100%) of the Fair Market Value of the Common Stock on the date the Award is granted, except with respect to substitute Awards made pursuant to Section 18 of the Plan.
Other Stock-Based Award has the meaning set forth in Section 12 of the Plan.
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Option Price has the meaning set forth in subsection 7(b) of the Plan.
Participant means an employee, consultant or advisor who the Committee selects to participate in and receive Awards under the Plan (collectively, the Participants).
Performance Award shall mean any right granted under Section 11 of the Plan.
Performance Goal means the specific performance objectives as established by the Committee, which, if achieved, will result in the amount of payment, or the early payment, of the Award. For Awards intended to qualify as performance-based compensation under Section 162(m) of the Code, the Performance Goal must be established by the Committee in writing within (a) the lesser of 90 days from the beginning of the relevant performance period or before 25% of the performance period has elapsed, or (b) such other time period as may be permitted by or under Section 162(m) of the Code from time to time. The Performance Goal may consist of one or more or any combination of the following criteria: return on invested capital, stock price, market share, sales revenue, cash flow, earnings per share, return on equity, total stockholder return, gross margin, net sales, operating profit return on sales, costs and/or such other financial, accounting or quantitative metric determined by the Committee. The performance goals may be described in terms that are related to the individual Participant, to the Corporation as a whole, or to a subsidiary, division, department, region, function or business unit of the Corporation in which the Participant is employed. In addition, the performance goals may be compared to the performance of a selected group of comparison companies, or a published or special index that the Committee, in its sole discretion, deems appropriate, or as compared to various stock market indices. The Committee may make adjustments to the performance goals at any time (but for Awards that the Committee intends to qualify as performance-based compensation under Code Section 162(m), only to the extent permitted by Section 162(m) of the Code) in order to appropriately reflect one or more of the following events: (i) asset write-downs; (ii) litigation or claim judgments or settlements; (iii) the effect of changes in tax laws, accounting principles, or other laws or regulatory rules affecting reported results; (iv) any reorganization and restructuring programs; (v) extraordinary nonrecurring items as described in Accounting Standards Codification Topic 225-20 (or any successor pronouncements thereto) and/or in managements discussion and analysis of financial condition and results of operations appearing in the Corporations annual report to stockholders for the applicable year; (vi) acquisitions or divestitures; (vii) any other specific, unusual or nonrecurring events, or objectively determinable category thereof; (vii) foreign exchange gains and losses; (ix) discontinued operations and nonrecurring charges; and (x) a change in the Corporations fiscal year. For Awards not intended to be subject to Code Section 162(m), the Committee, in its discretion, may change or modify these criteria; however, in the case of any Award to any employee who is or may be a covered employee, as defined in Section 162(m) of the Code, the Committee has no discretion to increase the amount of compensation that would otherwise be due upon attainment of the goal, and at all times the criteria must meet the requirements of Section 162(m) of the Code, or any successor section, to the extent applicable. For any Award intended to qualify as performance-based compensation under Section 162(m) of the Code, the Committee must certify in writing the extent to which the Performance Goals have been achieved and the amount of performance compensation earned, before any amount may be paid with respect thereto.
Qualified Termination of Service means the termination of a Participants employment or service, as the case may be, with the Corporation and/or its Affiliates within the two (2) year period following a Change of Control of the Corporation for any reason unless
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such termination is by reason of death or disability or unless such termination is (i) by the Corporation for Cause or (ii) by the Participant without Good Reason. Subject to the definition of Termination by the Participant for Good Reason, transfers of employment or service for administrative purposes among the Corporation and its Affiliates shall not be deemed a Qualified Termination of Service.
Restricted Period shall mean the period of time during which Awards remain unvested and the Transferability Restrictions applicable to Awards will be in force.
Restricted Share shall mean a share of Common Stock which may not be traded or sold, until the date the Transferability Restrictions expire.
Restricted Share Unit means the right, as described in Section 10, to receive an amount, payable in either cash or shares of Common Stock, equal to the value of a specified number of shares of Common Stock. No certificates shall be issued with respect to such Restricted Share Unit, except as provided in subsection 10(d), and the Corporation shall maintain a bookkeeping account in the name of the Participant to which the Restricted Share Unit shall relate.
Retirement and Retires means the termination of employment or service on or after the date the Participant has attained age 55.
Stock Appreciation Right (SAR) has the meaning set forth in Section 8 of the Plan.
Termination by the Participant for Good Reason shall mean the separation from service during the two year time period following the initial existence (without the Participants express written consent) of any one of the following conditions:
(a) | A material diminution in the Participants base compensation; |
(b) | A material diminution in the Participants authority, duties, or responsibilities; |
(c) | A material diminution in the authority, duties, or responsibilities of the supervisor to whom the Participant is required to report, including a requirement that a Participant report to a corporate officer or employee instead of reporting directly to the board of directors of the Corporation; |
(d) | A material diminution in the budget over which the Participant retains authority; |
(e) | A change, by more than 50 miles, in the geographic location at which the Participant must perform the services; or |
(f) | Any other action or inaction that constitutes a material breach by the Corporation of any agreement under which the Participant provides services. |
The Participant must provide notice to the Corporation of the existence of any of the above conditions within a period not to exceed 90 days of the initial existence of the condition, upon the notice of which the Corporation must be provided a period of at least 30 days during which it may remedy the condition and not be required to pay the amount.
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The Participants right to terminate the Participants employment or service for Good Reason shall not be affected by the Participants incapacity due to physical or mental illness. The Participants continued employment or service shall not constitute consent to, or a waiver of rights with respect to, any act or failure to act constituting Good Reason hereunder.
Total and Permanent Disability means a condition arising out of injury or disease which causes the Participant to terminate employment or service and which the Corporation determines is permanent and prevents the Participant from engaging in any occupation or perform any work for any kind of compensation of financial value. The disability must be certified by a licensed Doctor of Medicine to be such as can reasonably be expected to continue during the remainder of the Participants lifetime.
Transferability Restrictions means the restrictions on transferability imposed on Awards of Restricted Shares or Restricted Share Units.
4. ADMINISTRATION
The Plan and all Awards granted pursuant thereto shall be administered by the Committee. The Committee, in its absolute discretion, shall have the power to interpret and construe the Plan and any Award Agreements; provided, however, that no such action or determination may increase the amount of compensation payable that would otherwise be due in a manner that would result in the disallowance of a deduction to the Corporation under Section 162(m) of the Code or any successor section. Any interpretation or construction of any provisions of the Plan or the Award Agreements by the Committee shall be final and conclusive upon all persons. No member of the Board or the Committee shall be liable for any action or determination made in good faith.
The Committee shall have the power to promulgate Committee Rules and other guidelines in connection with the performance of its obligations, powers and duties under the Plan, including its duty to administer and construe the Plan and the Award Agreements.
The Committee may authorize persons other than its members to carry out its policies and directives subject to the limitations and guidelines set by the Committee, and may delegate its authority under the Plan. The foregoing delegation of authority shall be limited as follows: (a) with respect to persons who are subject to Section 16 of the Exchange Act, the authority to grant Awards, the selection for participation, decisions concerning the timing, pricing and amount of a grant or Award and authority to administer Awards shall not be delegated by the Committee; (b) the maximum number of shares of Common Stock covered by Awards to newly hired employees, consultants or advisors, or to respond to special recognition or retention needs which may be granted by delegated authority within any calendar year period shall not exceed 300,000, provided, however, this limitation shall not apply to any delegation by the Committee with respect to any scheduled annual grant of Awards (subject, however, to the other limitations set forth in this Section 4); (c) the delegation of authority to grant Awards shall be limited to grants by a special committee, consisting of one or more directors who may but need not be officers of the Corporation, to which the Board or the Committee expressly delegates such authority by resolution; (d) any delegation shall satisfy all applicable requirements of Rule 16b-3 of the Exchange Act, or any successor provision; (e) no such delegation shall result in the disallowance of a deduction to the Corporation under Section 162(m) of the Code or any successor section; and (f) the special committee shall not have the authority to grant Awards to the members thereof, or to persons who are subject to Section 16 of the Exchange Act. The members of such special committee shall continue to be eligible to receive Awards under the Plan.
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5. ELIGIBILITY
The Committee shall from time to time select the Participants from those employees, consultants or advisors whom the Committee determines either to be in a position to contribute materially to the success of the Corporation or Affiliate or to have in the past so contributed. Only employees (including officers and directors who are employees), consultants and advisors of the Corporation and its Affiliates are eligible to participate in the Plan.
6. FORM OF GRANTS
All Awards under the Plan shall be made in the form of Options, Stock Appreciation Rights, Restricted Shares, Restricted Share Units, Performance Awards, Other Stock-Based Awards or any combination thereof. Notwithstanding anything in the Plan to the contrary, any Awards shall contain the restriction on assignability in subsection 21(f) of the Plan to the extent required under Rule 16b-3 of the Exchange Act.
7. STOCK OPTIONS
The Committee or its delegate shall determine and designate from time to time those Participants to whom Options are to be granted, the number of shares of Common Stock to be granted/awarded to each and the periods the Option shall be exercisable. Such Options may be in the form of Incentive Stock Options or in the form of Nonqualified Stock Options. The Committee in its discretion at the time of grant may establish Performance Goals that may affect the grant, exercise and/or settlement of an Option. After granting an Option to a Participant, the Committee shall cause to be delivered to the Participant an Award Agreement evidencing the granting of the Option. The Award Agreement shall be in such form as the Committee shall from time to time approve. The terms and conditions of all Options granted under the Plan need not be the same, but all Options must meet the applicable terms and conditions specified in subsections 7(a) through 7(i).
(a) | Period of Option. The Period of each Option shall be no more than 10 years from the date it is granted. |
(b) | Option Price. The Option price shall be determined by the Committee, but shall not in any instance, except with respect to substitute Awards made pursuant to Section 18 of the Plan, be less than the Fair Market Value of the Common Stock at the time that the Option is granted (the Option Price). |
(c) |
Limitations on Exercise. Except with respect to substitute Awards made pursuant to Section 18 of the Plan, the Option shall not be exercisable until at least one year has expired after the granting of the Option, during which time the Participant shall have been in the continuous employ or service of the Corporation or an Affiliate; provided, however, that the Option shall become exercisable immediately in the event of a Qualified Termination of Service of a Participant, without regard to the limitations set forth below in this subsection 7(c). Unless otherwise determined by the Committee or its delegate at the time of grant, at any time during the period of the Option after the end of the first year, the Participant may purchase up to thirty percent (30%) of the shares |
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covered by the Option; after the end of the second year, an additional thirty percent (30%); and after the end of the third year, the remaining forty percent (40%) of the total number of shares covered by the Option; provided, however, that if the Participants employment or service is terminated for any reason other than death Retirement or Total and Permanent Disability, the Option shall be exercisable only for three months following such termination and only for the number of shares of Common Stock which were exercisable on the date of such termination. In no event, however, may an Option be exercised more than 10 years after the date of its grant. |
(d) | Exercise after Death, Retirement, or Disability. Unless otherwise determined by the Committee or its delegate at the time of grant, if a Participant dies, becomes Totally and Permanently Disabled, or Retires without having exercised the Option in full, the remaining portion of such Option may be exercised, without regard to the limitations in subsection 7(c), as follows. If a Participant dies or becomes Totally and Permanently Disabled the remaining portion of such Option may be exercised within (i) three years from the date of any such event or (ii) the remaining period of the Option, whichever is earlier. Upon a Participants death, the Option may be exercised by the person or persons to whom such Participants rights under the Option shall pass by will or by applicable law or, if no such person has such rights, by his executor or administrator. If a Participant Retires the remaining portion of such Option may be exercised within (i) five years from the date of any such event or (ii) the remaining period of the Option, whichever is earlier. |
(e) | No Repricings. No Option or SAR may be re-priced, replaced, re-granted through cancellation, or modified (except in connection with a change in the Common Stock or the capitalization of the Corporation as provided in Section 17 hereof) if the effect would be to reduce the exercise price for the shares underlying such Option or SAR. In addition, no Option or SAR may be repurchased or otherwise cancelled in exchange for cash or other Awards (except in connection with a change in the Common Stock or the capitalization of the Corporation as provided in Section 17 hereof) if the Option Price or Grant Price of the SAR is equal to or greater than the Fair Market Value of the Common Stock at the time of such repurchase or exchange. Notwithstanding anything herein to the contrary, the Committee may take any such action set forth in this subsection 7(e) subject to the approval of the stockholders. |
(f) | Exercise; Notice Thereof. Options shall be exercised by delivering to the Corporation, or an agent designated by the Corporation, subject to any applicable rules or regulations adopted by the Committee, notice of the number of shares with respect to which Option rights are being exercised and by paying in full the Option Price of the shares at the time being acquired. Exercise methods and processes for paying the Option Price shall be as determined by the Committee, or its delegate, and may include payment in cash, a check payable to the Corporation, in shares of Common Stock transferable to the Corporation and having a fair market value on the transfer date equal to the amount payable to the Corporation or such other methods, including cashless exercise arrangements permitted by the Committee in its sole discretion. A Participant shall have none of the rights of a stockholder with respect to shares covered by such Option until the Participant becomes the record holder of such shares. |
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(g) | Purchase for Investment. It is contemplated that the Corporation will register shares sold to Participants pursuant to the Plan under the Securities Act of 1933. In the absence of an effective registration, however, a Participant exercising an Option hereunder may be required to give a representation that he/she is acquiring such shares as an investment and not with a view to distribution thereof. |
(h) | Limitations on Incentive Stock Option Grants. |
(i) | An Incentive Stock Option shall be granted only to an individual who, at the time the Option is granted, is employed by the Corporation or a qualifying parent or subsidiary (such terms having the meaning set forth in Section 424(f) of the Code) and does not own stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Corporation or Affiliates. |
(ii) | The aggregate Fair Market Value of all shares with respect to which Incentive Stock Options are exercisable by a Participant for the first time during any year shall not exceed $100,000. The aggregate Fair Market Value of such shares shall be determined at the time the Option is granted. |
8. STOCK APPRECIATION RIGHTS
The Committee or its delegate may from time to time designate those Participants who shall receive Awards of Stock Appreciation Rights. Subject to the terms of the Plan and any applicable Award Agreement, a SAR granted under the Plan shall confer on the holder thereof a right to receive, upon exercise thereof, the excess of the difference between the Grant Price of the SAR and the Fair Market Value of the Common Stock on the date of conversion. A SAR may be revoked by the Committee, in its sole discretion, at any time, provided, however, that no such revocation may be taken hereunder if such action would result in the disallowance of a deduction to the Corporation under Section 162(m) of the Code or any successor section.
(a) | Grant. A SAR may be granted in addition to any other Award under the Plan. |
(b) | Grant Price. The grant price shall be determined by the Committee, provided, however, that such price shall not be less than one hundred percent (100%) of the Fair Market Value of one share of Common Stock on the date of grant of the SAR, except with respect to substitute Awards made pursuant to Section 18 of the Plan (the Grant Price). |
(c) | Term. The term of each SAR shall be such period of time as is fixed by the Committee; provided, however, that the term of any SAR shall not exceed ten (10) years from the date of grant. The Committee in its discretion at the time of grant may establish Performance Goals that may affect the grant, exercise and/or settlement of a SAR. |
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(d) | Time and Method of Exercise. The Committee shall establish in the applicable Award Agreement the time or times at which a SAR may be exercised in whole or in part. |
(e) | Form of Payment. Payment may be made to the Participant in respect thereof in cash or in shares of Common Stock, or any combination thereof, as the Committee in its sole discretion, shall determine and provide in the relevant Award Agreement. If stock-settled SARs are issued and paid, the gross amount of the Award shall be counted against the Plan. |
9. RESTRICTED SHARES
The Committee or its delegate may from time to time designate those Participants who shall receive Awards of Restricted Shares. Each grant of Restricted Shares under the Plan shall be evidenced by an agreement which shall be executed by the Corporation and the Participant. The agreement shall contain such terms and conditions, not inconsistent with the Plan, as shall be determined by the Committee and shall indicate the number of Restricted Shares awarded and the following terms and conditions of the award.
(a) | Grant of Restricted Shares. The Committee shall determine the number of Restricted Shares to be included in the grant and the conditions and period or periods during which the award is subject to vesting and the Transferability Restrictions applicable to the Restricted Shares will be in force (the Restricted Period). Unless otherwise determined by the Committee at the time of grant, the Restricted Period shall be for a minimum of three years and shall not exceed ten years from the date of grant, as determined by the Committee at the time of grant. The Restricted Period may be the same for all Restricted Shares granted at a particular time to any one Participant or may be different with respect to different Participants or with respect to various of the Restricted Shares granted to the same Participant, all as determined by the Committee at the time of grant. |
(b) |
Transferability Restrictions. During the Restricted Period, Restricted Shares may not be sold, assigned, transferred or otherwise disposed of, or mortgaged, pledged or otherwise encumbered. Furthermore, a Participants right, if any, to receive Common Stock upon termination of the Restricted Period may not be assigned or transferred except by will or by the laws of descent and distribution. In order to enforce the limitations imposed upon the Restricted Shares the Committee may (i) cause a legend or legends to be placed on any such certificates, and/or (ii) issue stop transfer instructions as it deems necessary or appropriate. Holders of Restricted Shares limited as to sale under this subsection 9(b) shall have rights as a stockholder with respect to such shares to receive dividends in cash or other property or other distribution or rights in respect of such shares, and to vote such shares as the record owner thereof; provided that Restricted Shares that constitute Performance Awards will have such dividend rights as set forth in Section 11. With respect to each grant of Restricted Shares, the Committee shall determine the vesting conditions and Transferability Restrictions which will apply to the Restricted Shares for all or part of the Restricted Period. By way of illustration but not by way of limitation, the Committee may provide (i) that the Participant will not be entitled to receive any shares of Common Stock unless he or she is still a service provider of the Corporation or its Affiliates at the end of the Restricted Period, (ii) that the |
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Participant will become vested in Restricted Shares according to a schedule determined by the Committee, or under other terms and conditions, including Performance Goals, determined by the Committee, and (iii) how any Transferability Restrictions will be applied, modified or accelerated in the case of the Participants death or Total and Permanent Disability. |
(c) | Manner of Holding and Delivering Restricted Shares. If the Corporation issues physical certificates for Restricted Shares, each such certificate shall be registered in the name of the Participant and deposited with the Corporation or its designee. These certificates shall remain in the possession of the Corporation or its designee until the end of the applicable Restricted Period or, if the Committee has provided for earlier termination of the Transferability Restrictions following a Participants death, Total and Permanent Disability or earlier vesting of the shares of Common Stock, such earlier termination of the Transferability Restrictions. At whichever time is applicable, certificates representing the number of shares to which the Participant is then entitled shall be delivered to the Participant free and clear of the Transferability Restrictions; provided that in the case of a Participant who is not entitled to receive the full number of Shares evidenced by the certificates then being released from escrow because of the application of the Transferability Restrictions, those certificates shall be returned to the Corporation and canceled and a new certificate representing the shares of Common Stock, if any, to which the Participant is entitled pursuant to the Transferability Restrictions shall be issued and delivered to the Participant, free and clear of the Transferability Restrictions. |
10. RESTRICTED SHARE UNITS
The Committee or its delegate shall from time to time designate those Participants who shall receive Awards of Restricted Share Units. The Committee shall advise such Participants of their Awards by a letter indicating the number of Restricted Share Units awarded and the following terms and conditions of the award.
(a) | Restricted Share Units may be granted to Participants as of the first day of a Restricted Period. The number of Restricted Share Units to be granted to each Participant and the Restricted Period shall be determined by the Committee in its sole discretion. |
(b) |
Transferability Restrictions. During the Restricted Period, Restricted Share Units may not be sold, assigned, transferred or otherwise disposed of, or mortgaged, pledged or otherwise encumbered. Furthermore, a Participants right, if any, to receive cash or Common Stock upon termination of the Restricted Period may not be assigned or transferred except by will or by the laws of descent and distribution. With respect to each grant of Restricted Share Units, the Committee shall determine the vesting conditions and Transferability Restrictions which will apply to the Restricted Share Units for all or part of the Restricted Period. By way of illustration but not by way of limitation, the Committee may provide (i) that the Participant will forfeit any Restricted Share Units unless he or she is still a service provider of the Corporation or its Affiliates at the end of the Restricted Period, (ii) that the Participant will forfeit any or all Restricted Share Units unless he or she has met the Performance Goals according to the schedule determined by the Committee, (iii) that the Participant will become |
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vested in Restricted Share Units according to a schedule determined by the Committee, or under other terms and conditions, including Performance Goals, determined by the Committee, and (iv) how any Transferability Restrictions will be applied, modified or accelerated in the case of the Participants death or Total and Permanent Disability. |
(c) | Unless otherwise determined by the Committee, (i) during the Restricted Period, Participants will be credited with dividend equivalents equal in value to those declared and paid on shares of Common Stock, on all Restricted Share Units granted to them, (ii) these dividends will be regarded as having been reinvested in Restricted Share Units on the date of the Common Stock dividend payments based on the then Fair Market Value of the Common Stock thereby increasing the number of Restricted Share Units held by a Participant, and (iii) such dividend equivalents will be paid only to the extent the underlying Awards vest. Holders of Restricted Share Units under this subsection 10(c) shall have none of the rights of a stockholder with respect to such shares. Holders of Restricted Share Units are not entitled to receive distribution of rights in respect of such shares, nor to vote such shares as the record owner thereof. |
(d) | Payment of Restricted Share Units. The payment of Restricted Share Units shall be made in cash or shares of Common Stock, or a combination of both, as determined by the Committee at the time of grant. The payment of Restricted Share Units shall be made promptly following the end of the Restricted Period, but not later than March 15 of the year following the year in which the Restricted Period ends. |
11. PERFORMANCE AWARDS
The Committee or its delegate may from time to time designate those Participants who shall receive Performance Awards. Performance Awards include arrangements under which the grant, issuance, retention, vesting and/or transferability of any Award is subject to such Performance Goals, Transferability Restrictions and such additional conditions or terms as the Committee may designate. Subject to the terms of the Plan and any applicable Award Agreement, a Performance Award granted under the Plan:
(a) | may be denominated or payable in cash, Common Stock (including, without limitation, Restricted Shares), other securities, or other Awards; |
(b) | shall confer on the holder thereof rights valued as determined by the Committee and payable to, or exercisable by, the holder of the Performance Award, in whole or in part, upon the achievement of such Performance Goals during such performance periods as the Committee shall establish; and |
(c) | as specified in the relevant Award Agreement, the Committee may provide that Performance Awards denominated in shares earn dividend equivalents. Unless otherwise determined by the Committee, dividend equivalents for Performance Awards will accrue and will not be paid unless and until the underlying Awards vest. |
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12. OTHER STOCK-BASED AWARDS
The Committee or its delegate may from time to time designate those Participants who shall receive such other Awards (Other Stock-Based Awards) that are denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, Common Stock (including, without limitation, securities convertible into Common Stock), as are deemed by the Committee to be consistent with the purposes of the Plan, provided, however, that such grants must comply with applicable law. Subject to the terms of the Plan and any applicable Award Agreement, the Committee shall determine the terms and conditions, including Performance Goals and Transferability Restrictions, of such Awards. Common Stock or other securities delivered pursuant to a purchase right granted under this Section 12 shall be purchased for such consideration, which may be paid by such method or methods and in such form or forms, including, without limitation, cash, Common Stock, other securities, or other Awards, or any combination thereof, as the Committee shall determine, the value of which consideration, as established by the Committee shall not be less than the Fair Market Value of such Common Stock or other securities as of the date such purchase right is granted except with respect to substitute Awards made pursuant to Section 18 of the Plan.
13. VESTING
Except as otherwise provided in this Plan, an Award (other than Awards subject to Performance Goals) may not vest in whole in less than three years from the date of grant (although individual Award shares may vest in annual installments over a period of not less than three years). Notwithstanding the preceding sentence, in certain limited situations such as for substitute awards under Section 18 of this Plan, new hires, retirement and certain other limited situations warranting a shorter or no vesting period, as may be determined by the Committee, these Awards may vest in whole in less than three years from the date of grant. Except as otherwise provided in this Plan, Awards subject to Performance Goals may not vest in whole in less than one year from the date of grant.
14. CHANGE OF CONTROL, GOVERNMENT SERVICE, LEAVES OF ABSENCE AND OTHER TERMINATIONS
(a) | If, pending a Change of Control, the Committee determines the Common Stock will cease to exist without an adequate replacement security that preserves Participants economic rights and positions, then, by action of the Committee, the following shall occur: |
(i) | All Options and SARs, except for Incentive Stock Options, shall become exercisable immediately prior to the consummation of the Change of Control in such manner as is deemed fair and equitable by the Committee. |
(ii) |
The restrictions on all Restricted Shares shall lapse, and all Restricted Share Units, Performance Awards and Other Stock-Based Awards shall vest immediately prior to consummation of the Change of Control and shall be settled upon the Change of Control in cash equal to the Fair Market Value of the Restricted Share Units, Performance Awards and Other Stock-Based Awards at the time of the Change of Control. For purposes of determining Fair Market Value of any Award subject to performance conditions, the Award will be deemed earned at the target |
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level. Provided, however, that any Restricted Share Units that are required to meet the requirements of Section 409A of the Code and the regulations thereunder shall be settled in a manner that complies with Section 409A of the Code and the regulations thereunder. |
(b) | A termination of employment or service shall not be deemed to have occurred while a Participant is on military leave or other bona fide leave of absence if the period of such leave does not exceed six months, or if longer, so long as the Participant retains a right to reemployment or return to service with the Corporation or an Affiliate under an applicable statute or by contract. For purposes of this subparagraph, a leave of absence constitutes a bona fide leave of absence only if there is a reasonable expectation that the Participant will return to perform services for the Corporation or an Affiliate. If the period of leave exceeds six months and the Participant does not retain a right to reemployment or return to service under an applicable statute or by contract, the employment or service relationship is deemed to terminate on the first date immediately following such six-month period. Notwithstanding the foregoing sentence, where a leave of absence is due to any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than six months, where such impairment causes the Participant to be unable to perform the duties of his or her position of employment or service or any substantially similar position of employment or service, a 29-month period of absence is substituted for such six-month period in determining whether a termination of employment or service shall be deemed to have occurred. A termination of employment or service with the Corporation or an Affiliate to accept immediate reemployment or return to service with the Corporation or an Affiliate likewise shall not be deemed to be a termination of employment or service for purposes of the Plan. A Participant who is classified as an intermittent employee, consultant or advisor shall be deemed to have a termination of employment or service for purposes of the Plan. Notwithstanding anything in the Plan to the contrary, a termination of employment or service with respect to any Restricted Share Units, Performance Awards and Other Stock-Based Awards that are required to meet the requirements of Section 409A of the Code and the regulations thereunder shall not be deemed to be a termination of employment or service for purposes of the Plan if it is anticipated that the level of bona fide services the Participant would perform after such date would continue at a rate equal to more than 20 percent (20%) of the average level of bona fide services performed over the immediately preceding 36-month period (or the full period of services to the Corporation or an Affiliate if the Participant has been providing such services less than 36 months). |
(c) | If any amounts payable under the Plan would constitute a parachute payment under Section 280G(b)(2) of the Code then such amounts shall be reduced to the extent necessary to provide the Participant with the greatest aggregate net after tax receipt as determined by applying the procedures set forth in the Committee Rules. |
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15. SHARES SUBJECT TO THE PLAN
(a) | The number of shares of Common Stock available with respect to all Awards that may be issued under the Plan shall not exceed 4,500,000 in the aggregate. |
(b) | In no event shall more than 2,000,000 shares of Common Stock be available for grant as Restricted Shares, Restricted Share Units, Performance Awards settled in shares of Common Stock, and all Other Stock-Based Awards settled in shares of Common Stock (the Stock Award Pool), in each case subject to the adjustment provision set forth in Section 17 hereof. |
(c) | Shares subject to (i) Options and SARs which become ineligible for exercise or purchase, (ii) Restricted Share Units, Performance Awards and Other Stock-Based Awards which are retired through forfeiture or maturity, other than those which are retired through the payment or withholding of Common Stock, and (iii) Restricted Shares which are forfeited during the Restricted Period due to any applicable vesting conditions or Transferability Restrictions will again be available for Awards under the Plan. |
(d) | The total number of shares of Common Stock available for Awards under the Plan shall be reduced by the maximum number of shares of Common Stock issued upon exercise or settlement of Options and SARs granted, as well as shares of Common Stock retained or withheld by the Corporation in satisfaction of a Participants withholding (as defined in subsection 21(j) below). Shares that were subject to an Option or SAR and were not issued upon the net settlement or net exercised of such Option or SAR may not again be made available for issuance under the Plan. All other Awards (except Restricted Share Units subject to Performance Goals, Performance Awards, Other Stock-Based Awards subject to Performance Goals and dividend equivalents thereof) shall reduce the total number of shares available for Awards under the Stock Award Pool by the number of shares of Common Stock vested under the Award. Restricted Share Units subject to Performance Goals, Performance Awards and Other Stock-Based Awards subject to Performance Goals shall reduce the total number of shares available for Awards under the Stock Award Pool by the maximum number of shares of Common Stock to be issued under grants of Restricted Share Units subject to Performance Goals, grants of Performance Awards and grants of Other Stock-Based Awards, and the number of shares available for Awards under the Stock Award Pool will then be adjusted accordingly upon actual vesting of such Awards. Dividend equivalents on Restricted Share Units, Performance Awards and Other Stock-Based Awards subject to Performance Goals shall reduce the total number of shares available for Awards under the Stock Award Pool by the number of shares of Common Stock vested upon vesting of the underlying Award. Any Award that may be settled only in cash shall not reduce the number of shares available for Awards, including, as applicable, the Stock Award Pool. |
(e) | The shares of Common Stock subject to the Plan may consist in whole or in part of authorized but unissued shares or of treasury shares, as the Board may from time to time determine. |
(f) | Substitute Awards made pursuant to section 18 of the Plan, other than the Awards issued in connection with the spin-off of the Corporation from Kimberly-Clark Corporation, shall not count against the Shares otherwise available for issuance under the Plan under this section 15. |
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16. INDIVIDUAL LIMITS
The maximum number of shares of Common Stock covered by Awards which may be granted to any Participant within any calendar year period shall not exceed 1,000,000 in the aggregate, except that in connection with a newly-hired Participants initial service, a Participant may be granted Awards covering up to an additional 1,000,000 shares of Common Stock. If an Option which had been granted to a Participant is canceled, the shares of Common Stock which had been subject to such canceled Option shall continue to be counted against the maximum number of shares for which Options may be granted to the Participant. In the event that the number of Options which may be granted is adjusted as provided in the Plan, the above limits shall automatically be adjusted in the same ratio which reflects the adjustment to the number of Options available under the Plan.
17. CHANGES IN CAPITALIZATION
In the event there are any changes in the Common Stock or the capitalization of the Corporation through a corporate transaction, such as any merger, any acquisition through the issuance of capital stock of the Corporation, any consolidation, combination, or exchange of shares, any separation of the Corporation (including a spin-off, split-up or other distribution of stock of the Corporation), any reorganization of the Corporation (whether or not such reorganization comes within the definition of such term in Section 368 of the Code), or any partial or complete liquidation by the Corporation, recapitalization, stock dividend, stock split, extraordinary cash dividend or other change in the corporate structure, appropriate adjustments and changes shall be made by the Committee, to the extent necessary to preserve the benefit to the Participant contemplated hereby, to reflect such changes in (a) the maximum number of shares subject to the Plan, (b) the maximum number of shares for which Awards may be granted to any Participant, (c) the number of shares and the Option Price per share of all shares of Common Stock subject to outstanding Options, (d) the number of shares and the Grant Price per share of all shares of Common Stock subject to outstanding SARs (e) the maximum number of shares of Common Stock covered by Awards which may be granted by the special committee within any calendar year period, (f) the maximum number of shares of Common Stock available for option and sale and available for grant as Restricted Shares, Restricted Share Units, Performance Awards settled in shares of Common Stock, and Other-Stock Based Awards settled in Common Stock, (g) the number of Restricted Shares, Restricted Share Units, Performance Awards and Other Stock-Based Awards awarded to Participants, and (h) such other provisions of the Plan and individual Awards as may be necessary and equitable to carry out the foregoing purposes, provided, however that no such adjustment or change may be made to the extent that such adjustment or change will result in the disallowance of a deduction to the Corporation under Section 162(m) of the Code or any successor section. For avoidance of doubt, with respect to any equity restructuring event that could result in an additional compensation expense pursuant to the provisions of FASB ASC Topic 718 if adjustments to Awards with respect to such event were discretionary, the Committee shall equitably adjust the number and type of shares covered by each outstanding Award and the terms and conditions, including the exercise price and performance criteria (if any), of such Award to equitably reflect such event, and will adjust the number and type of shares (or other securities or property) with respect to which Awards may be granted under the Plan after such event.
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18. SUBSTITUTE AWARDS
The Committee may grant Awards under the Plan in substitution for stock and stock-based awards held by employees of another entity who become employees of the Corporation or an Affiliate as a result a merger or consolidation of the former employing entity with the Corporation or an Affiliate, the acquisition by the Corporation or an Affiliate of property or stock of the former employing corporation, or the spin-off of the Corporation from Kimberly-Clark Corporation. The Committee may direct that the substitute awards be granted on such terms and conditions as the Committee considers appropriate in the circumstances.
19. EFFECT ON OTHER PLANS
All payments and benefits under the Plan shall constitute special compensation and shall not affect the level of benefits provided to or received by any Participant (or the Participants estate or beneficiaries) as part of any employee benefit plan of the Corporation or an Affiliate. The Plan shall not be construed to affect in any way a Participants rights and obligations under any other plan maintained by the Corporation or an Affiliate on behalf of employees.
20. TERM OF THE PLAN
The term of the Plan shall be ten years, beginning November 1, 2014 and ending October 31, 2024, unless the Plan is terminated prior thereto by the Committee. No Award may be granted or awarded after the termination date of the Plan, but Awards theretofore granted or awarded shall continue in force beyond that date pursuant to their terms.
21. GENERAL PROVISIONS
(a) | No Right of Continued Service. Neither the establishment of the Plan nor the payment of any benefits hereunder nor any action of the Corporation, its Affiliates, the Board of Directors of the Corporation or its Affiliates, or the Committee shall be held or construed to confer upon any person any legal right to be continued in the employ of the Corporation or its Affiliates, and the Corporation and its Affiliates expressly reserve the right to discharge any Participant without liability to the Corporation, its Affiliates, the Board of Directors of the Corporation or its Affiliates or the Committee, except as to any rights which may be expressly conferred upon a Participant under the Plan. |
(b) | Binding Effect. Any decision made or action taken by the Corporation, the Board or by the Committee arising out of or in connection with the construction, administration, interpretation and effect of the Plan shall be conclusive and binding upon all persons. Notwithstanding anything in Section 3 to the contrary, the Committee may determine in its sole discretion whether a termination of employment or service for purposes of the Plan is caused by disability, retirement or for other reasons. |
(c) |
Modification of Awards. The Committee may in its sole and absolute discretion, by written notice to a Participant, (i) limit the period in which an Incentive Stock |
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Option may be exercised to a period ending at least three months following the date of such notice, (ii) limit or eliminate the number of shares subject to an Incentive Stock Option after a period ending at least three months following the date of such notice, (iii) accelerate the Restricted Period with respect to the Restricted Shares, Restricted Share Units, Performance Awards and Other Stock-Based Awards granted under the Plan, (iv) subject any Performance-Based Award or any other Award subject to Performance Goals to any policy adopted by the Corporation relating to the recovery of such Award to the extent it is determined that the Performance Goals were not actually achieved and/or (v) determine whether, to what extent, and under what circumstances Awards may be settled or exercised in cash, Common Stock, other securities or other Awards, or canceled, forfeited, or suspended, and the method or methods by which Awards may be settled, exercised, canceled, forfeited, or suspended. Notwithstanding anything in this subsection 21(c) to the contrary, the Committee may not take any action to the extent that such action would result in the disallowance of a deduction to the Corporation under Section 162(m) of the Code or any successor section. Provided however, that any Restricted Share Units, Performance Awards and Other Stock-Based Awards that are required to meet the requirements of Section 409A of the Code and the regulations thereunder shall be settled in a manner that complies with Section 409A of the Code and the regulations thereunder. Except as provided in this subsection and in subsection 21(d) no amendment, suspension, or termination of the Plan or any Awards under the Plan shall, without the consent of the Participant, adversely alter or change any of the rights or obligations under any Awards or other rights previously granted the Participant. |
(d) | Nonresident Aliens. In the case of any Award granted to a Participant who is not a resident of the United States or who is employed by an Affiliate other than an Affiliate that is incorporated, or whose place of business is, in a State of the United States, the Committee may (i) waive or alter the terms and conditions of any Awards to the extent that such action is necessary to conform such Award to applicable foreign law, (ii) determine which Participants, countries and Affiliates are eligible to participate in the Plan, (iii) modify the terms and conditions of any Awards granted to Participants who are employed outside the United States, (iv) establish subplans, each of which shall be attached as an appendix hereto, modify Option exercise procedures and other terms and procedures to the extent such actions may be necessary or advisable, and (v) take any action, either before or after the Award is made, which is deemed advisable to obtain approval of such Award by an appropriate governmental entity; provided, however, that no action may be taken hereunder if such action would (i) materially increase any benefits accruing to any Participants under the Plan, (ii) increase the number of shares of Common Stock which may be issued under the Plan, (iii) modify the requirements for eligibility to participate in the Plan, (iv) result in a failure to comply with applicable provisions of the Securities Act of 1933, the Exchange Act or the Code or (v) result in the disallowance of a deduction to the Corporation under Section 162(m) of the Code or any successor section. |
(e) |
No Segregation of Cash or Stock. The Restricted Share Unit accounts established for Participants are merely a bookkeeping convenience and neither the Corporation nor its Affiliates shall be required to segregate any cash or stock |
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which may at any time be represented by Awards. Nor shall anything provided herein be construed as providing for such segregation. Neither the Corporation, its Affiliates, the Board nor the Committee shall, by any provisions of the Plan, be deemed to be a trustee of any property, and the liability of the Corporation or its Affiliates to any Participant pursuant to the Plan shall be those of a debtor pursuant to such contract obligations as are created by the Plan, and no such obligation of the Corporation or its Affiliates shall be deemed to be secured by any pledge or other encumbrance on any property of the Corporation or its Affiliates. |
(f) | Non-transferability. During the Participants lifetime, Options shall be exercisable only by such Participant. Awards shall not be transferable other than by will or the laws of descent and distribution upon the Participants death. Notwithstanding anything in this subsection 21(f) to the contrary, the Committee may grant to designated Participants the right to transfer Awards, to the extent allowed under Rule 16b-3 of the Exchange Act, subject to the terms and conditions of the Committee Rules. |
Except as otherwise provided in the Plan, no benefit payable under or interest in the Plan shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge, and any such attempted action shall be void and no such benefit or interest shall be in any manner liable for or subject to debts, contracts, liabilities, engagements, or torts of any Participant or beneficiary.
(g) | Delaware Law to Govern. All questions pertaining to the construction, interpretation, regulation, validity and effect of the provisions of the Plan shall be determined in accordance with the laws of the State of Delaware. |
(h) | Purchase of Common Stock. The Corporation and its Affiliates may purchase from time to time shares of Common Stock in such amounts as they may determine for purposes of the Plan. The Corporation and its Affiliates shall have no obligation to retain, and shall have the unlimited right to sell or otherwise deal with for their own account, any shares of Common Stock purchased pursuant to this paragraph. |
(i) | Use of Proceeds. The proceeds received by the Corporation from the sale of Common Stock pursuant to the exercise of Options shall be used for general corporate purposes. |
(j) | Withholding. The Committee shall require the withholding of all taxes as required by law. In the case of exercise of an Option or payments of Awards whether in cash or in shares of Common Stock or other securities, withholding shall be as required by law and the Committee Rules. |
(k) |
Amendments. The Committee may at any time amend, suspend, or discontinue the Plan or alter or amend any or all Awards and Award Agreements under the Plan to the extent (1) permitted by law, (2) permitted by the rules of any stock exchange on which the Common Stock or any other security of the Corporation is listed, (3) permitted under applicable provisions of the Securities Act of 1933, as amended, the Exchange Act (including Rule 16b-3 thereof); and (4) that such |
18
action would not result in the disallowance of a deduction to the Corporation under Section 162(m) of the Code or any successor section (including the rules and regulations promulgated thereunder); provided, however, that if any of the foregoing requires the approval by stockholders of any such amendment, suspension or discontinuance, then the Committee may take such action subject to the approval of the stockholders. Except as provided in subsections 21(c) and 21(d) no such amendment, suspension, or termination of the Plan shall, without the consent of the Participant, adversely alter or change any of the rights or obligations under any Awards or other rights previously granted the Participant. |
(l) | Section 409A of the Code. |
(i) | General. To the extent that any Award is subject to Section 409A of the Code, such Award and the Plan is intended to comply with the applicable requirements of Section 409A of the Code and shall be limited, construed and interpreted in accordance with such intent. Such Award shall be paid in a manner that will comply with Section 409A of the Code, including the final treasury regulations or any other official guidance issued by the Secretary of the Treasury or the Internal Revenue Service with respect thereto. Nevertheless, the tax treatment of the benefits provided under the Plan or any Award is not warranted or guaranteed. Neither the Corporation, its Affiliates nor their respective directors, officers, employees or advisers (other than in his or her capacity as a Participant) shall be held liable for any taxes, interest, penalties or other monetary amounts owed by any Participant or other taxpayer as a result of the Plan or any Award. |
(ii) | Six-Month Delay in Certain Circumstances. Notwithstanding anything in the Plan or in any Award Agreement to the contrary, if any amount or benefit that would constitute non-exempt deferred compensation for purposes of Section 409A of the Code (Non-Exempt Deferred Compensation) would otherwise be payable or distributable under this Plan or any Award Agreement by reason of a Participants separation from service during a period in which the Participant is a Specified Employee (as defined below), then, subject to any permissible acceleration of payment by the Committee under Treas. Reg. Section 1.409A-3(j)(4)(ii) (domestic relations order), (j)(4)(iii) (conflicts of interest), or (j)(4)(vi) (payment of employment taxes): (a) the amount of such Non-Exempt Deferred Compensation that would otherwise be payable during the six-month period immediately following the Participants separation from service will be accumulated through and paid or provided on the first day of the seventh month following the Participants separation from service (or, if the Participant dies during such period, within 30 days after the Participants death) (in either case, the Required Delay Period); and (b) the normal payment or distribution schedule for any remaining payments or distributions will resume at the end of the Required Delay Period. |
For purposes of this Plan, the term Specified Employee has the meaning given such term in Code Section 409A and the final regulations thereunder, provided, however, that, as permitted in such final
19
regulations, the Corporations Specified Employees and its application of the six-month delay rule of Code Section 409A(a)(2)(B)(i) shall be determined in accordance with rules adopted by the Board or any committee of the Board, which shall be applied consistently with respect to all nonqualified deferred compensation arrangements of the Corporation, including this Plan.
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Exhibit 10.9
HALYARD HEALTH, INC.
NONQUALIFIED STOCK OPTION
AWARD AGREEMENT
This Award, granted on , by Halyard Health, Inc., a Delaware corporation (hereinafter called the Corporation), to (the Participant) is subject to the terms and conditions of the Halyard Health, Inc. Equity Participation Plan (the Plan) and this Award Agreement, including any country-specific terms and conditions contained in Appendix A to this Award Agreement.
W I T N E S S E T H:
WHEREAS, the Corporation has adopted the Plan to aid in attracting and retaining highly qualified personnel and to encourage those persons who materially contribute, by managerial, scientific or other innovative means, to the success of the Corporation or of an Affiliate, to acquire an ownership interest in the Corporation, thereby increasing their motivation for and interest in the Corporations or the Affiliates long-term success;
NOW, THEREFORE, it is agreed as follows:
1. | Number of Shares Optioned; Option Price . The Corporation grants to the Participant the right and option to purchase in his or her own name, on the terms and conditions hereinafter set forth, all or any part of an aggregate of shares of the $.01 par value common stock of the Corporation, and at the purchase price of $ per share, as granted on the date set forth above. This option shall not be an incentive stock option within the meaning of Section 422 of the U.S. Internal Revenue Code of 1986, as amended (the Code). |
2. | Exercise of Option . |
(a) | Limitations on Exercise . This option shall be subject to forfeiture until the Participant becomes vested in such Awards according to the schedule that was approved on the Grant Date and as reflected on the Merrill Lynch Benefits OnLine site, or any successor system, via the Grant Summary screen as the Future Vesting table; provided, however, that the option shall become exercisable immediately in the event of a Qualified Termination of Service of the Participant, without regard to the limitations set forth below in this subsection. If the Participants employment or service is terminated for any reason other than death, Retirement, or Total and Permanent Disability, this option shall only be exercisable for three months following such termination and only for the number of shares which were exercisable on the date of such termination. In no event, however, may this option be exercised more than ten (10) years after the date of its grant. |
A termination of employment or service shall not be deemed to have occurred while the Participant is on military leave or other bona fide leave of absence if the period of such leave does not exceed six months, or if longer, so long as the Participant retains a right to reemployment or return to service with the Corporation or an Affiliate under an applicable statute or by contract. For purposes of this subparagraph, a leave of absence constitutes a bona fide leave of absence only if there is a reasonable expectation that the Participant will return to perform services for the Corporation or an Affiliate. If the period of leave exceeds six months and the Participant does not retain a right to reemployment or return to service under an applicable statute or by contract, the employment or service relationship is deemed to terminate on the first date immediately following such six-month period. Notwithstanding the foregoing sentence, where a leave of absence is due to any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than six months, where such impairment causes the Participant to be unable to perform the duties of his or her position of employment or service or any substantially similar position of employment or service, a 29-month period of absence is substituted for such six-month period in determining whether a termination of employment or service shall be deemed to have occurred. A termination of employment or service with the Corporation or an Affiliate to accept immediate reemployment or return to service with the Corporation or an Affiliate likewise shall not be deemed to be a termination of employment or service for purposes of the Plan. A Participant who is classified as an intermittent employee, consultant or advisor shall be deemed to have a termination of employment or service for purposes of the Plan.
(b) Exercise after Death, Retirement, or Disability . If the Participant dies, Retires or becomes Totally and Permanently Disabled without having exercised this option in full, the remaining portion of this option, determined without regard to the limitations in subsection 2(a), may be exercised within the earlier of (i) three years from the date of death or Total and Permanent Disability or five years from the date of Retirement, as the case may be, or (ii) the remaining period of this option. In the case of a Participant who dies, this option may be exercised by the person or persons to whom the Participants rights under this option shall pass by will or by applicable law or, if no such person has such rights, by his executor or administrator.
Notwithstanding the above, if the Corporation receives an opinion of counsel that there has been a legal judgment and/or legal development in the Participants jurisdiction that likely would result in the favorable Retirement treatment that applies to this option pursuant to this subsection (b) being deemed unlawful and/or discriminatory, then the Corporation will not apply the favorable Retirement treatment at the time of termination and this option will be treated as it would under the rules that apply if the Participants employment is terminated for reasons other than death, Retirement or Total and Permanent Disability.
(c) Method of Exercise . This option shall be exercised by delivering to Merrill Lynch, or other authorized agent of the Corporation, as set forth in their terms and conditions of exercise, written notice of the number of shares with respect to which option rights are being exercised and by paying in full the option price of the shares at the time being acquired. Payment may be made in cash, pursuant to a cashless exercise arrangement permitted by the Committee in its sole discretion, or, for U.S. Participants only, in shares of the
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Corporations common stock as set forth in the terms and conditions of exercise. The date of exercise shall be deemed to be the date of receipt of the written notice and payment for the shares being purchased. The Participant shall have none of the rights of a stockholder with respect to shares covered by such options until the Participant becomes record holder of such shares.
(d) Payment of Withholding Taxes . No shares of common stock may be purchased under this option, unless prior to or simultaneously with such purchase, (i) the Participant or (ii) in the event of his death, the person succeeding to his rights hereunder, pay to the Corporation or the Affiliate, as applicable, such amount as the Corporation advises is required under applicable federal, state or local laws to withhold and pay over to governmental taxing authorities in relation to this option. Unless otherwise determined by the Committee, payment of required withholding taxes may be made with shares of the Corporations common stock which otherwise would be distributable upon exercise of the option, pursuant to the rules of the Committee.
3. | Nontransferability . Except as may otherwise be provided by the Committee, this option shall be transferable only by will or by the laws of descent and distribution, and during the Participants lifetime shall be exercisable only by him or her. |
4. | Compliance with Law . No shares of common stock may be purchased under this option, unless prior to the purchase thereof, the Corporation shall have received an opinion of counsel to the effect that the issuance and sale of such shares by the Corporation to the Participant will not constitute a violation of the U.S. Securities Act of 1933, as amended. As a condition of exercise, the Participant shall, if requested by the Corporation, submit a written statement in form satisfactory to counsel for the Corporation, to the effect that any shares of common stock purchased upon exercise of this option will be purchased for investment and not with a view to the distribution thereof within the meaning of the U.S. Securities Act of 1933, as amended, and the Corporation shall have the right, in its discretion, to cause the certificates representing shares of common stock purchased hereunder to be appropriately legended to refer to such undertaking or to any legal restrictions imposed upon the transferability thereof by reason of such undertaking. |
The option granted hereby is subject to the condition that if the listing, registration or qualification of the shares subject hereto on any securities exchange or under any state or federal law, or if the consent or approval of any regulatory body shall be necessary as a condition of, or in connection with, the granting of the option or the delivery or purchase of shares thereunder, such option may not be exercised in whole or in part unless and until such listing, registration, qualification, consent or approval shall have been effected or obtained. The Corporation agrees to use its best efforts to obtain any such requisite listing, registration, qualification, consent or approval.
5. | No Right of Continued Service . The granting of this option does not confer upon the Participant any legal right to be continued in the employ or service of the Corporation or its Affiliates, and the Corporation and its Affiliates reserve the right to discharge the Participant whenever the interest of the Corporation or its Affiliates may so require without liability to the Corporation or its Affiliates, the Board of Directors of the Corporation or its Affiliates, or the Committee, except as to any rights which may be expressly conferred on the Participant under this option. |
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6. | Discretion of the Corporation, Board of Directors and the Committee . Any decision made or action taken by the Corporation or by the Board of Directors of the Corporation or by the Committee arising out of or in connection with the construction, administration, interpretation and effect of this option shall be within the absolute discretion of the Corporation, the Board of Directors of the Corporation or the Committee, as the case may be, and shall be conclusive and binding upon all persons. |
7. | Amendments . The Committee may at any time alter or amend this option to the extent (1) permitted by law, (2) permitted by the rules of any stock exchange on which the common stock or any other security of the Corporation is listed, (3) permitted under applicable provisions of the U.S. Securities Act of 1933, as amended, the U.S. Securities Exchange Act of 1934, as amended (including rule 16b-3 thereof), and (4) that such action would not result in the disallowance of a deduction to the Corporation under Section 162(m) of the Code or any successor section (including the rules and regulations promulgated thereunder). Notwithstanding anything to the contrary contained herein, the Committee may not take any action that would result in any amount payable under this option qualifying as applicable employee remuneration as so defined for purposes of Section 162(m) of the Code. |
8. | Inalienability of Benefits and Interest . This option and the rights and privileges conferred hereby shall not be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge, and any such attempted action shall be void and no such benefit or interest shall be in any manner liable for or subject to debts, contracts, liabilities, engagements, or torts of the Participant. |
9. | Delaware Law to Govern . All questions pertaining to the construction, interpretation, regulation, validity and effect of the provisions of this option shall be determined in accordance with the laws of the State of Delaware. |
10. | Purchase of Common Stock . The Corporation and its Affiliates may, but shall not be required to, purchase shares of common stock of the Corporation for purposes of satisfying the requirements of this option. The Corporation and its Affiliates shall have no obligation to retain and shall have the unlimited right to sell or otherwise deal with for their own account, any shares of common stock of the Corporation purchased for satisfying the requirements of this option. |
11. | Notices . Any notice to be given to the Corporation under this option shall be addressed to the Corporation in care of its Director of Compensation located at the World Headquarters, and any notice to be given to the Participant under the terms of this option may be addressed to him at his address as it appears on the Corporations records, or at such other address as either party may hereafter designate in writing to the other. Any such notice shall be deemed to have been duly given if and when enclosed in a properly sealed envelope or wrapper addressed as aforesaid, registered and deposited, postage and registry fee prepaid, in a post office or branch post office regularly maintained by the United States Government or any equivalent non-U.S. postal service. |
12. |
Changes in Capitalization . In the event there are any changes in the common stock or the capitalization of the Corporation through a corporate transaction, such as any merger, any acquisition through the issuance of capital stock of the Corporation, any consolidation, any separation of the Corporation (including a spin-off or other distribution of stock of the Corporation), any reorganization of the Corporation (whether |
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or not such reorganization comes within the definition of such term in Section 368 of the Code), or any partial or complete liquidation by the Corporation, recapitalization, stock dividend, stock split or other change in the corporate structure, appropriate adjustments and changes shall be made by the Committee in (a) the number of shares and the option price per share of stock subject to this option, and (b) such other provisions of this option as may be necessary and equitable to carry out the foregoing purposes, provided, however that no such adjustment or change may be made to the extent that such adjustment or change will result in the disallowance of a deduction to the Corporation under Section 162(m) of the Code or any successor section. |
13. | Effect on Other Plans . All benefits under this option shall constitute special incentives and shall not affect the level of benefits provided to or received by the Participant (or the Participants estate or heirs) as part of any employee benefit plan of the Corporation or an Affiliate. This option shall not be construed to affect in any way the Participants rights and obligations under any other plan maintained by the Corporation or an Affiliate on behalf of employees. |
14. | Successors . This option shall be binding upon and inure to the benefit of any successor or successors of the Corporation. |
15. | Defined Terms . Terms which are capitalized are defined herein or in the Plan and have the same meaning set forth in the Plan, unless the context indicates otherwise. |
16. | Non-Competition Provisions For U.S. Participants Only . |
(a) During the term of the Participants employment or service and for a period of two (2) years following the termination of employment or service, regardless of the reason for or the manner of termination, unless otherwise prohibited by state law, the Participant agrees that the Participant shall not, without the written consent of the Corporation, within the United States of America, either directly or indirectly, undertake for a Competitor to perform duties and responsibilities that are the same or substantially similar to those duties and responsibilities that the Participant undertook for the Corporation or an Affiliate, relating to the research, development, production, sales and/or marketing of any health or hygiene product (Business of the Corporation) competitive with any health or hygiene product for which the Participant had research, development, production, sales and/or marketing duties or responsibilities during the two (2) year period prior to the end of the Participants employment or service, unless such product is no longer produced or sold by the Corporation. As used herein, Competitor means any business that is the same or substantially the same as the Business of the Corporation anywhere in the United States; provided, however, the foregoing restriction shall not apply if the Participant resides and/or primarily works in the State of California.
(b) During the period of two (2) years following termination of Participants employment or service with the Corporation or an Affiliate, the Participant agrees to notify the Corporation in writing prior to accepting new employment, or engaging in any other activity which may violate this Agreement, and the Participant agrees to provide in such notice information concerning the anticipated new employment or activity, including, but not limited to: name of employer; address of employer; name of new team leader; job title; and scope
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and responsibilities of the new position. The Participant recognizes that such duty of notification is absolute and is not affected by the Participants belief that such employment may perhaps not violate this Agreement or otherwise be unfairly competitive with the Corporation. The Participants written notice should be addressed to General Counsel, Attention: Noncompetition and Confidentiality Agreement, Halyard Health, Inc. 5405 Windward Parkway, Alpharetta, Georgia 30004; provided, however, the foregoing notice requirement shall not apply if the Participant resides and/or primarily works in the State of California.
(c) During the period of two (2) years following termination of the Participants employment or service with the Corporation or an Affiliate, the Participant shall provide a copy of this Section 16 of this Agreement to each new employer or service recipient before starting in any new employment or service. The Participant agrees that the Corporation may notify any third party about the Participants obligations under Section 16 of this Agreement until such obligations are fulfilled.
(d) If any provision of this Section 16 is held to be invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, such provision shall be deemed to be severed from the Agreement and such invalidity, illegality or unenforceability will not affect any other provision of the Agreement, all of which shall remain valid and enforceable. Notwithstanding the foregoing, if a court of competent jurisdiction determines that the covenants contained in this Section 16 are unenforceable because they are overbroad in some respect, to the full extent permitted by applicable law, the court should revise or reform any aspect of this Section 16 so as to make the scope of such Section 16 as broad as can be enforced under applicable law.
(e) In the event of an anticipated or actual breach by the Participant of this Section 16, the Participant acknowledges and agrees that damages would not be an adequate remedy to compensate the Corporation for the harm to the business of the Corporation and, in such event, agrees that the Corporation shall be entitled to a temporary restraining order and to temporary injunctive relief to prevent or terminate such anticipated or actual breach, provided, however, that nothing in this Agreement shall be construed to limit any permanent relief to which the Corporation may be entitled or the damages otherwise recoverable by the Corporation in any such event.
(f) If the Participant violates any aspect of this Section 16, or any duty of loyalty or confidentiality imposed by law, in addition to any damages that the Participant may be required to pay, the Participant understands and agrees that the Participant shall be required to reimburse the Corporation for all its costs incurred to enforce this Agreement, including but not limited to, all attorneys fees.
17. | Acceptance of Option Terms and Conditions . An Participant has until the end of the one hundred twenty (120) day period beginning from the Grant Date of this option to accept this Award Agreement. If the Participant does not accept this Award Agreement on or before the end of such one hundred twenty (120) day period, then the grant of the right and option to purchase the shares of common stock of the Corporation, as set forth in Section 1, shall not be binding on and shall be voidable by the Corporation, in which case it shall have no further force or effect. |
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18. | Conflict with Plan . This option is awarded pursuant to and subject to the Plan. This option agreement is intended to supplement and carry out the terms of the Plan. It is subject to all terms and provisions of the Plan and, in the event of a conflict, the Plan shall prevail. |
Acknowledgment of Conditions
I understand, acknowledge and agree to the following conditions with respect to the Award granted to me under the Plan:
| The Plan is discretionary in nature and the Corporation may modify, amend, suspend, cancel or terminate it at any time, to the extent permitted by the Plan. The grant of an option is a voluntary and occasional benefit and does not create any contractual or other right to receive a grant of options or benefits in lieu of options in the future, even if options have been granted in the past. Future grants, if any, will be at the sole discretion of the Corporation, including, but not limited to, the timing of any grant, the number of option shares, vesting provisions and the exercise price. |
| My participation in the Plan is voluntary. The value of this option and the shares of common stock covered by this option and the income and value of same, are extraordinary items that do not constitute compensation of any kind for services of any kind rendered to the Corporation or, if different, my actual employer (the Employer), and which are outside the scope of my employment or service contract, if any, and are not intended to replace any pension rights or compensation. As such, the option is not part of normal or expected compensation or salary for any purposes, including, but not limited to, calculating any severance, resignation, termination, redundancy, end of service payments, bonuses, long-service awards, pension, retirement or welfare benefits or similar payments and in no event shall be considered as compensation for, or relating in any way to, past services for the Corporation, the Employer or any other Affiliate. |
| Vesting of any option shares ceases upon termination of active employment or service for any reason (whether or not in breach of local labor laws and except as may otherwise be explicitly provided in the Plan document or this Award Agreement), and will not be extended by any notice period mandated under local law ( e.g., active employment or service would not include a period of garden leave or similar period pursuant to local law); the Committee shall have the exclusive discretion to determine when I am no longer actively employed or in service for purposes of this option. |
| No claim or entitlement to compensation or damages shall arise from termination of this option or diminution in value of this option resulting from termination of my employment or service by the Corporation or the Employer (for any reason whatsoever and whether or not in breach of local labor laws) and, in consideration of the grant of this option, to which I am not otherwise entitled, I irrevocably agree never to institute any claim against the Corporation, the Employer or any other Affiliate, waive my ability, if any, to bring any such claim, and release the Corporation, the Employer and all other Affiliates from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction to have arisen, then, by participating in the Plan, I shall be deemed irrevocably to have agreed not to pursue such a claim and agree to execute any and all documents necessary to request dismissal or withdrawal of such claims. |
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| The future value of the underlying shares is unknown, indeterminable, and cannot be predicted with certainty. If the underlying shares do not increase in value, the option will have no value. If I exercise this option and obtain shares, the value of those shares acquired upon exercise may increase or decrease in value, even below the option price. |
| Neither the Corporation, the Employer nor any other Affiliate shall be liable for any foreign exchange rate fluctuation between my local currency and the United States Dollar that may affect the value of this option or of any amounts due to me pursuant to the exercise of this option or the subsequent sale of any shares of common stock acquired upon exercise. |
| Regardless of any action the Corporation or the Employer takes with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related withholding related to my participation in the Plan and legally applicable to me (Tax-Related Items), I acknowledge that the ultimate liability for all Tax-Related Items is and remains my responsibility and may exceed the amount actually withheld by the Corporation or the Employer. I further acknowledge that the Corporation and/or the Employer (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of this option, including, but not limited to, the grant, vesting or exercise of this option, the subsequent sale of shares acquired pursuant to such exercise and the receipt of any dividends; and (2) do not commit to and are under no obligation to structure the terms of the grant or any aspect of this option to reduce or eliminate my liability for Tax-Related Items or achieve any particular tax result. Furthermore, if I have become subject to Tax-Related Items in more than one jurisdiction between the Grant Date and the date of any relevant taxable or tax withholding event, as applicable, I acknowledge that the Corporation and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction. |
| Prior to the relevant taxable or tax withholding event, as applicable, I shall pay or make adequate arrangements satisfactory to the Corporation and/or the Employer to satisfy or account for all Tax-Related Items. In this regard, I authorize the Corporation or the Employer, or their respective agents, at their discretion, to satisfy their withholding obligations with regard to all Tax-Related Items by one or a combination of the following: |
(1) | withholding from my wages or other cash compensation paid to me by the Corporation and/or the Employer; or |
(2) | withholding from proceeds of the sale of shares acquired pursuant to the exercise of this option, either through a voluntary sale or through a mandatory sale arranged by the Corporation (on my behalf, pursuant to this authorization); or |
(3) | withholding in shares to be issued upon exercise of this option. |
| To avoid negative accounting treatment, the Corporation may withhold or account for Tax-Related Items by considering applicable minimum statutory withholding amounts or other applicable withholding rates, including maximum applicable rates, in which case I will receive a refund of any over-withheld amount in cash and will have no entitlement to the common stock equivalent. If the obligation for Tax-Related Items is satisfied by withholding in shares, I am deemed, for tax purposes, to have been issued the full number of shares subject to the portion of this option that is exercised, notwithstanding that a number of shares is held back solely for the purpose of paying Tax-Related Items due as a result of any aspect of my participation in the Plan. |
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| I shall pay to the Corporation or to the Employer any amount of Tax-Related Items that the Corporation or the Employer may be required to withhold or account for as a result of my participation in the Plan that cannot be satisfied by the means previously described. The Corporation may refuse to honor the exercise or deliver shares to me if I fail to comply with my obligation in connection with the Tax-Related Items as described herein. |
| The Corporation is not providing any tax, legal or financial advice, nor is the Corporation making any recommendations regarding my participation in the Plan, or my acquisition or sale of the underlying shares. I am hereby advised to consult with my own personal tax, legal and financial advisors regarding my participation in the Plan before taking any action related to the Plan. |
| Data Privacy. I hereby explicitly and unambiguously consent to the collection, use and transfer, in electronic or other form, of my personal data as described in this Award Agreement and any other this option grant materials by and among, as applicable, the Employer, the Corporation and its other Affiliates for the exclusive purpose of implementing, administering and managing my participation in the Plan. |
I understand that the Corporation and the Employer may hold certain personal information about me, including, but not limited to, my name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Corporation, details of all options or any other entitlement to shares of common stock awarded, canceled, exercised, vested, unvested or outstanding in my favor (Data), for the exclusive purpose of implementing, administering and managing the Plan.
I understand that Data will be transferred to Merrill Lynch, or such other stock plan service provider as may be selected by the Corporation in the future, which is assisting the Corporation with the implementation, administration and management of the Plan. I understand that the recipients of the Data may be located in the United States or elsewhere, and that the recipients country (e.g., the United States) may have different data privacy laws and protections than my country. I understand that I may request a list with the names and addresses of any potential recipients of the Data by contacting my local human resources representative. I authorize the Corporation, Merrill Lynch and any other possible recipients which may assist the Corporation (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purpose of implementing, administering and managing my participation in the Plan. I understand that Data will be held only as long as is necessary to implement, administer and manage my participation in the Plan. I understand that I may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing my local human resources representative. Further, I understand that I am providing the consents herein on a purely voluntary basis. If I do not consent, or if I later seek to revoke my consent, my employment or service status or service and career with the Employer will not be adversely affected; the only adverse consequence of refusing or withdrawing my consent is that the Corporation would not be able to grant me options or other equity awards or administer or maintain such awards. Therefore, I understand that refusing or withdrawing my consent may affect my ability to participate in the Plan. For more information on the consequences of my refusal to consent or withdrawal of consent, I understand that I may contact my local human resources representative.
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| My option may not be assigned, sold, encumbered, or in any way transferred or alienated. |
| The Plan is governed by and subject to U.S. law. Interpretation of the Plan and my rights under the Plan will be governed by provisions of U.S. law. For purposes of litigating any dispute that arises under this grant or the Agreement, the parties hereby submit to and consent to the jurisdiction of the State of Georgia, U.S.A. and agree that such litigation shall be conducted in the federal courts for the United States for the Northern District of Georgia, where this grant is made and/or to be performed. |
| I am solely responsible for obtaining/providing whatever exchange control approvals, permits, licenses or notices, which may be necessary for me to exercise my option, acquire the shares or to hold or sell the shares subject to the option or restricted share unit award. Neither the Corporation nor its Affiliates will be responsible for obtaining such approvals, licenses or permits, or for making any such notices, nor will the Corporation or its Affiliates be liable for any fines or penalties I may incur for failure to obtain any required approvals, permits or licenses or to make any required notices. |
| The provisions of this Award Agreement are severable and if one or more of the provisions of this Award Agreement shall be held invalid, illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nonetheless be binding and enforceable. To the extent that any provisions of this Award Agreement are held to be invalid or otherwise unenforceable in any respect, the validity, legality and enforceability of the remaining provisions shall not in any be affected or impaired thereby and the invalid, illegal or unenforceable provisions shall be deemed null and void; however, to the extent permissible by law, any provisions which could be deemed null and void shall first be construed, interpreted or revised retroactively to permit this Award Agreement to be construed so as to foster the intent of this Award Agreement and the Plan. |
| If I have received this Award Agreement or any other document related to the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control. |
| Notwithstanding any provisions in this Award Agreement, this option shall be subject to any special terms and conditions set forth in Appendix A to this Award Agreement for my country. Moreover, if I relocate to one of the countries included in Appendix A, the special terms and conditions for such country will apply to me, to the extent the Corporation determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. Appendix A constitutes part of this Award Agreement. |
| The Corporation reserves the right to impose other requirements on my participation in the Plan, on this option and on any shares acquired under the Plan, to the extent that the Corporation determines it is necessary or advisable for legal or administrative reasons, and to require me to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing. |
| The Corporation may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. I hereby consent to receive such documents by on-line delivery and agree to participate in the Plan through an on-line or electronic system established and maintained by the Corporation or a third party designated by the Corporation. |
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| A waiver by the Corporation of breach of any provision of this Award Agreement shall not operate or be construed as a waiver of any other provision of this Award Agreement, or of any subsequent breach by me or any other employee. |
| Depending on my country of residence, I may be subject to insider trading restrictions and/or market abuse laws, which may affect my ability to acquire or sell shares of common stock or rights to shares of common stock (e.g., options) under the Plan during such times as I am considered to have inside information regarding the Corporation (as defined by the laws in my country). Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Corporation insider trading policy. I am responsible for ensuring my compliance with any applicable restrictions and am advised to speak with my personal legal advisor on this matter. |
Conclusion and Acceptance
I accept this grant via electronic signature by clicking the Accept icon and certify that I have read, understand and agree to the terms and conditions of the Halyard Health, Inc. Equity Participation Plan (the Plan), the provisions of the applicable agreements and all other applicable documents (including any country-specific terms for my country). I hereby authorize my employer or service recipient to furnish the Corporation (and any agent administering the Plan or providing recordkeeping services) with such information and data as it shall request in order to facilitate the grant of options and enable administration of the Plan and I understand that such information shall be used only as long and to the extent necessary to administer my participation in the Plan. I agree that my participation in the Plan and the awards granted to me under the Plan will be governed solely by provisions of U.S. law.
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HALYARD HEALTH, INC.
NONQUALIFIED STOCK OPTION
AWARD AGREEMENT
APPENDIX A
This Appendix A includes additional terms and conditions that govern this option granted to the Participant under the Plan if the Participant resides and/or works in one of the countries listed below. Certain capitalized terms used but not defined in this Appendix A have the meanings set forth in the Plan and/or the Award Agreement.
This Appendix A also includes information regarding exchange controls and certain other issues of which the Participant should be aware with respect to the Participants participation in the Plan. The information is based on the securities, exchange control and other laws in effect in the respective countries as of January 2014. Such laws are often complex and change frequently. As a result, the Corporation strongly recommends that the Participant not rely on the information noted herein as the only source of information relating to the consequences of the Participants participation in the Plan because the information be out of date at exercise of this option or the subsequent sale of shares acquired under the Plan or receipt of any dividends.
In addition, the information is general in nature and may not apply to the Participants particular situation, and the Corporation is not in a position to assure the Participant of any particular result. Accordingly, the Participant is advised to seek appropriate professional advice as to how the relevant laws in the Participants country may apply to the Participants situation.
Finally, if the Participant is a citizen or resident of a country other than the one in the Participant is currently residing and/or working, transferred or transfers employment after the Grant Date or is considered a resident of another country for local law purposes, the information contained herein may not be applicable to the Participant. The Corporation shall, in its sole discretion, determine to what extent the terms and conditions included herein will apply to the Participant in such circumstances.
BELGIUM
Tax Considerations
This option must be accepted more than 60 days after the offer.
Foreign Asset/Account Reporting Information
The Participant is required to report any bank accounts opened and maintained outside Belgium on his or her annual tax return.
BRAZIL
Compliance with Law
By accepting this option, the Participant acknowledges that he or she agrees to comply with applicable Brazilian laws and pay any and all applicable taxes associated with the exercise of this option, the receipt of any dividends, and the sale of shares of common stock acquired under the Plan. The Participant should consult with his or her personal tax advisor with respect to the option.
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Exchange Control Information
If the Participant is resident or domiciled in Brazil, he or she will be required to submit annually a declaration of assets and rights held outside of Brazil to the Central Bank of Brazil if the aggregate value of such assets and rights is equal to or greater than US$100,000. Assets and rights that must be reported include shares of common stock.
CANADA
Form of Payment
Due to regulatory considerations in Canada, the Participant is prohibited from surrendering shares of common stock that he or she already owns or attesting to the ownership of shares to pay the option price or any Tax-Related Items in connection with this option.
Securities Law Information
The Participant is permitted to sell shares acquired through the Plan through the designated broker appointed under the Plan, if any, provided the resale of shares acquired under the Plan takes place outside of Canada through the facilities of a stock exchange on which the shares are listed. The Corporations shares are currently listed on New York Stock Exchange.
Acknowledgment of Conditions
The following provision supplements the Acknowledgement of Conditions section of the Award Agreement:
Except as may otherwise be explicitly provided in the Plan or this Award Agreement, my right to vest in this option will terminate and the period remaining to exercise the option will be measured effective as of the date that is the earlier of: (1) the date my employment is terminated, (2) the date I receive notice of termination of employment or service from the Employer, or (3) the date I am no longer actively employed or providing services, regardless of any notice period or period of pay in lieu of such notice required under local law (including, but not limited to, statutory law, regulatory law, and/or common law); the Committee shall have the exclusive discretion to determine when I am no longer actively employed or providing services for purpose of this option.
Foreign Asset/Account Reporting Information
Foreign property (including shares of common stock) held by Canadian residents must be reported annually on Form T1135 (Foreign Income Verification Statement) if the total value of such foreign property exceeds C$100,000 at any time during the year. It is not certain if the unvested options constitute foreign property that needs to be reported on Form T1135. The form must be filed by April 30th of the following year. It is the Participants responsibility to comply with applicable reporting obligations.
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The following provisions apply if the Participant is a resident of Quebec:
Language Consent
The parties acknowledge that it is their express wish that the Award Agreement, as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.
Les parties reconnaissent avoir exigé la rédaction en anglais de la convention, ainsi que de tous documents exécutés, avis donnés et procédures judiciaries intentées, directement ou indirectement, relativement à ou suite à la présente convention.
Authorization to Release and Transfer Necessary Personal Information
The Participant hereby authorizes the Corporation and the Corporations representatives to discuss with and obtain all relevant information from all personnel, professional or not, involved in the administration and operation of the Plan. The Participant further authorizes the Corporation, any Affiliate and the plan administrators to disclose and discuss the Plan with their advisors. The Participant further authorizes the Corporation and any Affiliate to record such information and to keep such information in the Participants personnel file.
COLOMBIA
Exchange Control Information
Investments in assets located abroad (including shares of common stock) are subject to registration with the Bank of the Republic if the Participants aggregate investments held abroad (as of December 31 of the applicable calendar year) equal or exceed US$500,000.
If funds are remitted from Colombia through an authorized local financial institution, the authorized financial institution will automatically register the investment.
If the Participant does not remit funds through an authorized financial institution when exercising this option because a partial cashless exercise method is used (selling only enough shares of Stock to cover the grant price and any brokerage fees), then the Participant must register the investment himself or herself if the accumulated financial investments the Participant holds abroad at the year-end are equal to or exceed the equivalent of US$500,000. The Participant must register by filing a Form No. 11 and submitting it to Señores, Banco de la República, Atn: Jefe Sección Inversiones, Departamento de Cambios Internacionales, Carrera 7 No. 1418, Bogotá, Colombia by June 30 of the following year.
If the Participant uses the cashless sell-all method of exercise, then no registration is required because no funds are remitted from Colombia and no shares are held abroad.
Acknowledgment of Conditions
The following provision supplements the Acknowledgement of Conditions section of the Award Agreement:
I acknowledge that pursuant to Article 128 of the Colombian Labor Code, the Plan and related benefits do not constitute a component of my salary for any legal purpose.
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COSTA RICA
There are no country-specific provisions.
FRANCE
Option Not Tax-Qualified
The Participant understands that this option is not intended to be French tax-qualified.
Consent to Receive Information in English
By accepting the Award Agreement providing for the terms and conditions of the Participants grant, the Participant confirms having read and understood the documents relating to this grant (the Plan and the Award Agreement), which were provided in the English language. The Participant accepts the terms of those documents accordingly.
En acceptant le Contrat dAttribution décrivant les termes et conditions de lattribution doptions, lemployé confirme ainsi avoir lu et compris les documents relatifs à cette attribution (le Plan U.S. et ce Contrat dAttribution) qui ont été communiqués en langue anglaise. Lemployé accepte les termes en connaissance de cause.
Foreign Asset/Account Reporting Information
If the Participant holds shares of common stock outside of France or maintains a foreign bank account, he or she is required to report such to the French tax authorities when filing his or her annual tax return. Failure to comply could trigger significant penalties.
GERMANY
Exchange Control Information
Cross-border payments in excess of 12,500 must be reported monthly to the German Federal Bank. No report is required for payments less than 12,500. In case of payments in connection with securities (including proceeds realized upon the sale of shares of common stock), the report must be made by the 5th day of the month following the month in which the payment was received. Effective from September 2013, the report must be filed electronically. The form of report ( Allgemeine Meldeportal Statistik ) can be accessed via the Bundesbanks website ( www.bundesbank.de ) and is available in both German and English. The Participant is responsible for satisfying the reporting obligation.
HONDURAS
There are no country-specific provisions.
JAPAN
Exchange Control Information
If the Participant acquires shares of common stock valued at more than ¥100,000,000 in a single transaction, the Participant must file a Securities Acquisition Report with the Ministry of Finance through the Bank of Japan within 20 days of the purchase of the shares.
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In addition, if the Participant pays more than ¥30,000,000 in a single transaction for the purchase of shares when the Participant exercises this option, the Participant must file a Payment Report with the Ministry of Finance through the Bank of Japan by the 20th day of the month following the month in which the payment was made. The precise reporting requirements vary depending on whether or not the relevant payment is made through a bank in Japan.
A Payment Report is required independently from a Securities Acquisition Report. Therefore, if the total amount that the Participant pays upon a one-time transaction for exercising this option and purchasing shares of common stock exceeds ¥100,000,000, then the Participant must file both a Payment Report and a Securities Acquisition Report.
Foreign Asset/Account Reporting Information
The Participant will be required to report details of any assets (including any shares of common stock acquired under the Plan) held outside of Japan as of December 31 st of each year, to the extent such assets have a total net fair market value exceeding ¥50 million. Such report will be due by March 15 th of the following year. The Participant should consult with his or her personal tax advisor as to whether the reporting obligation applies to the Participant and whether the Participant will be required to report details of any outstanding options or shares of common stock held by the Participant in the report.
Options may not be issued in Japan to persons who are not employees, officers or directors of the Corporation or an Affiliate.
MEXICO
Modification
By accepting this option, the Participant understands and agrees that any modification of the Plan or the Award Agreement or its termination shall not constitute a change or impairment of the terms and conditions of employment.
Acknowledgment of Grant
In accepting this option, the Participant acknowledges that the Participant has received a copy of the Plan and the Award Agreement, including this Appendix A, has reviewed the Plan and the Award Agreement, including this Appendix A, in their entirety and fully understands and accepts all provisions of the Plan and the Award Agreement, including this Appendix A. The Participant further acknowledges that the Participant has read and specifically and expressly approves the Acknowledgment of Conditions section of the Award Agreement, in which the following is clearly described and established:
(1) | The Participants participation in the Plan does not constitute an acquired right. |
(2) | The Plan and the Participants participation in the Plan are offered by the Corporation on a wholly discretionary basis. |
(3) | The Participants participation in the Plan is voluntary. |
(4) | Neither the Corporation nor any Affiliate is responsible for any decrease in the value of this option and/or shares of common stock acquired under the Plan. |
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Labor Law Acknowledgment and Policy Statement
In accepting the grant of this option, the Participant expressly recognizes that Halyard Health, Inc., with registered offices at 5405 Windward Parkway, Alpharetta, Georgia 30004, U.S.A. , is solely responsible for the administration of the Plan and that the Participants participation in the Plan and acquisition of shares of common stock do not constitute an employment relationship between the Participant and the Corporation since the Participant is participating in the Plan on a wholly commercial basis and his or her sole Employer is (Halyard-Mexico). Based on the foregoing, the Participant expressly recognizes that the Plan and the benefits that he or she may derive from participating in the Plan do not establish any rights between the Participant and the Employer, Halyard-Mexico and do not form part of the employment conditions and/or benefits provided by Halyard-Mexico, and any modification of the Plan or its termination shall not constitute a change or impairment of the terms and conditions of the Participants employment.
The Participant further understands that his or her participation in the Plan is as a result of a unilateral and discretionary decision of the Corporation; therefore, the Corporation reserves the absolute right to amend and/or discontinue the Participants participation at any time without any liability to the Participant.
Finally, the Participant hereby declares that he or she does not reserve to himself or herself any action or right to bring any claim against Halyard Health, Inc.for any compensation or damages regarding any provision of the Plan or the benefits derived under the Plan, and the Participant therefore grants a full and broad release to the Corporation, its shareholders, officers, agents, or legal representatives or Affiliates with respect to any claim that may arise.
Spanish Translation
Modificación
Al aceptar el otorgamiento de la opción de Compra de Acciones, el Empleado entiende y acuerda que cualquier modificación al Plan o al Acuerdo o su terminación, no cambiará o disminuirá los términos y condiciones de empleo.
Reconocimiento del Otorgamiento
Al aceptar el otorgamiento de la opción de Compra de Acciones, el Empleado está de acuerdo en haber recibido una copia del Plan, del Acuerdo incluyendo el presente Anexo A y ha revisado el Plan y el Acuerdo, incluyendo este Anexo A en su totalidad y comprende y acepta todas las disposiciones previstas en el Plan, en el Acuerdo, incluyendo el presente Anexo A. Asimismo, el Empleado reconoce que ha leído y manifiesta su específica y expresa conformidad con los términos y condiciones establecidos del Acuerdo, en el cual claramente se describe y establece lo siguiente:
(1) | La participación del Empleado en el Plan no constituye un derecho adquirido. |
(2) | El Plan y la participación del Empleado en el Plan se ofrecen por la Compañía de forma completamente discrecional. |
(3) | La participación del Empleado en el Plan es voluntaria. |
(4) | Ni la Compañía ni sus Afiliadas son responsables por la reducción del valor de la opción de Compra de Acciones emitida bajo el Plan. |
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Reconocimiento de la Legislación Laboral y Declaracion de la Poltitica
Al aceptar el otorgamiento de la opción de Compra de Acciones, el Empleado expresamente reconoce que Halyard Health, Inc. con oficinas registradas en 5405 Windward Parkway, Alpharetta, Georgia 30004, U.S.A. , es la única responsable por la administración del Plan y que la participación del Empleado en el Plan y en su caso la adquisición de las Opciones de Compra de Acciones o Acciones no constituyen ni podrán interpretarse como una relación de trabajo entre el Empleado y Halyard Health, Inc., ya que el Empleado participa en el Plan en un marco totalmente comercial y su único Patrón lo es [ ]. Derivado de lo anterior, el Empleado expresamente reconoce que el Plan y los beneficios que pudieran derivar de la participación en el Plan no establecen derecho alguno entre el Empleado y el Patrón, [ ] y no forma parte de las condiciones de trabajo y/o las prestaciones otorgadas por [ ] y que cualquier modificación al Plan o su terminación no constituye un cambio o impedimento de los términos y condiciones de la relación de trabajo del Empleado.
Asimismo, el Empleado reconoce que su participación en el Plan es resultado de una decisión unilateral y discrecional de Halyard Health, Inc.por lo tanto, Halyard Health, Inc. se reserva el absoluto derecho de modificar y/o terminar la participación del Empleado en cualquier momento y sin responsabilidad alguna frente el Empleado.
Finalmente, el Empleado por este medio declara que no se reserva derecho o acción alguna que ejercitar en contra de Halyard Health, Inc. por cualquier compensación o daño en relación con las disposiciones del Plan o de los beneficios derivados del Plan y por lo tanto, el Empleado otorga el más amplio finiquito que en derecho proceda a Halyard Health, Inc., sus afiliadas, subsidiarias, oficinas de representación, sus accionistas, funcionarios, agentes o representantes legales en relación con cualquier demanda que pudiera surgir.
SINGAPORE
Securities Law Information
This option is being granted pursuant to the Qualifying Person exemption under section 273(1)(f) of the Securities and Futures Act (Chapter 289, 2006 Ed.) (SFA). The Plan has not been lodged or registered as a prospectus with the Monetary Authority of Singapore. The Participant should note that this option is subject to section 257 of the SFA and the Participant will not be able to make (i) any subsequent sale of the shares of common stock in Singapore or (ii) any offer of such subsequent sale of the shares of common stock in Singapore, unless such sale or offer is made pursuant to the exemptions under Part XIII Division (1) Subdivision (4) (other than section 280) of the SFA.
Director Notification Obligation
If the Participant is a director, associate director or shadow director of the Corporations Singapore Affiliate, the Participant is subject to certain notification requirements under the Singapore Companies Act. Among these requirements is an obligation to notify the Corporations Singapore Affiliate in writing when the Participant receives an interest ( e.g. , an option or shares) in the Corporation or any Affiliate. In addition, the Participant must notify the Corporations Singapore Affiliate when he or she sells shares of the Corporation or of any Affiliate (including when the Participant sells shares acquired upon exercise of this option). These notifications must be made within two business days of acquiring or disposing of any interest in the Corporation or any Affiliate. In addition, a notification of the Participants interests in the Corporation or any Affiliate must be made within two business days of becoming a director.
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SOUTH AFRICA
Tax Acknowledgment
By accepting this option, the Participant agrees to notify the Employer of the amount of any gain realized upon exercise of this option. If the Participant fails to advise the Employer of the gain realized upon exercise, the Participant may be liable for a fine. The Participant will be responsible for paying any difference between the actual tax liability and the amount withheld.
If the Participant uses cash to exercise this option and purchase shares, rather than a cashless exercise method, the Participant must first obtain a Tax Clearance Certificate (in Respect of Foreign Investment) from the South African Reserve Service. The Participant must also complete a transfer of funds application form to transfer the funds. The Tax Clearance Certificate should be presented to a dealer of the Exchange Control Department of the South Africa Reserve Bank (it is likely that the Participants bank will qualify as such a dealer), together with a completed application form to transfer funds. No transfer of funds may be completed unless the original Tax Clearance Certificate bears the official stamp and signature of the Office of Receiver of Revenue of the South African Reserve Service.
Exchange Control Information
To participate in the Plan, the Participant must comply with exchange control regulations and rulings (the Exchange Control Regulations) in South Africa.
The Participant is subject to an overall offshore investment allowance of ZAR5,000,000. The first ZAR1,000,000 annual discretionary allowance requires no prior authorization. The next ZAR4,000,000 requires clearance. This is a cumulative allowance, and his or her ability to remit funds for the purchase of shares will be reduced if Participants foreign investment limit is utilized to make a transfer of funds offshore that is unrelated to the Plan. If the ZAR5,000,000 limit is exceeded, the Participant may still transfer funds for the exercise of this option; however, the shares obtained from the exercise must be sold immediately and the full proceeds repatriated to South Africa.
If the Participant exercises this option using either the cashless sell-all exercise method or the cashless sell-to-cover method, it is not necessary to obtain a Tax Clearance Certificate (as described above) or a transfer of funds application form. In addition, under a cashless sell-to-cover method, the Participant may acquire and hold shares up to any amount, even in excess of ZAR5,000,000. The value of the shares acquired using a cashless sell-to-cover exercise method will not be counted against the ZAR5,000,000 limit. The sale proceeds of such shares may be held offshore and will not count against the investment limit.
Because the Exchange Control Regulations change frequently and without notice, the Participant understands that he or she should consult a legal advisor prior to the purchase or sale of shares under the Plan to ensure compliance with current regulations. The Participant understands that it is his or her responsibility to comply with South African exchange control laws, and neither the Corporation nor the Employer will be liable for any fines or penalties resulting from failure to comply with applicable laws.
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SWEDEN
There are no country-specific provisions.
THAILAND
Exchange Control Information
If the proceeds from the sale of shares of common stock or the receipt of dividends paid or such shares are equal to or greater than US$50,000 in a single transaction, the Participant must repatriate all cash proceeds to Thailand immediately following the receipt of the cash proceeds and then either convert such proceeds to Thai Baht or deposit the proceeds into a foreign currency account opened with a commercial bank in Thailand within 360 days of repatriation. In addition, the Participant must specifically report the inward remittance to the Bank of Thailand on a foreign exchange transaction form. If the Participant fails to comply with these obligations, the Participant may be subject to penalties assessed by the Bank of Thailand.
The Participant should consult his or her personal advisor prior to taking any action with respect to remittance of cash proceeds into Thailand. The Participant is responsible for ensuring compliance with all exchange control laws in Thailand.
UNITED KINGDOM
Tax Acknowledgment
The following information supplements the information regarding Tax-Related Items in the Acknowledgment of Conditions section of the Award Agreement:
If payment or withholding of the income tax due is not made within 90 days of the event giving rise to the Tax-Related Items or such other period specified in section 222(1)(c) of the U.K. Income Tax (Earnings and Pensions) Act 2003 (the Due Date), the amount of any uncollected income tax shall constitute a loan owed by the Participant to the Employer, effective on the Due Date. The Participant agrees that the loan will bear interest at the then-current Her Majestys Revenue and Customs (HMRC) official rate; it will be immediately due and repayable. Notwithstanding the foregoing, if the Participant is an officer or executive director (as within the meaning of Section 13(k) of the U.S. Securities and Exchange Act of 1934, as amended), the terms of this provision will not apply to the Participant. In the event that the Participant is an officer or director, as defined above, and income tax is not collected from or paid by the Participant by the Due Date, the amount of any uncollected income tax may constitute a benefit to the Participant on which additional income tax and National Insurance Contributions may be payable. The Participant acknowledges that the Participant ultimately will be responsible for reporting and paying any income tax due on this additional benefit directly to HMRC under the self-assessment regime and for reimbursing the Corporation or the Employer (as applicable) for the value of any employee NICs due on this additional benefit, which the Corporation and/or the Employer may recover from the Participant at any time thereafter by any of the means referred to in the Acknowledgement of Conditions section of the Award Agreement.
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HALYARD HEALTH, INC.
TIME-VESTED RESTRICTED STOCK UNIT
AWARD AGREEMENT
This Award, granted on , , by Halyard Health, Inc., a Delaware corporation (hereinafter called the Corporation), to (the Participant) is subject to the terms and conditions of the Halyard Health Equity Participation Plan (the Plan) and this Award Agreement, including any country-specific terms and conditions contained in Appendix A to this Award Agreement.
W I T N E S S E T H :
WHEREAS, the Corporation has adopted the Plan to aid in attracting and retaining highly qualified personnel and to encourage those persons who materially contribute, by managerial, scientific or other innovative means, to the success of the Corporation or of an Affiliate, to acquire an ownership interest in the Corporation, thereby increasing their motivation for and interest in the Corporations or the Affiliates long-term success;
NOW, THEREFORE, it is agreed as follows:
1. | Number of Share Units Granted . The Corporation hereby grants to the Participant the right to receive all or any part of Time-Vested Restricted Stock Units (RSUs) of the $.01 par value Common Stock of the Corporation, subject to the terms, conditions and restrictions set forth herein and in the Plan. |
2. | Transferability Restrictions . |
(a) | Restricted Period . During the Restricted Period, the Participant may not sell, assign, transfer, or otherwise dispose of, or mortgage, pledge or otherwise encumber the Award. The RSUs, including any accrued dividend equivalents, shall be subject to forfeiture until the Participant becomes vested in such Awards on the date(s) that were approved on the Grant Date and as reflected on the Merrill Lynch Benefits OnLine site, or any successor system, via the Grant Summary screen as the Future Vesting table. |
The Restricted Period shall begin on the date of the granting of this Award, and shall end upon the vesting of the Award. Holders of Awards shall have none of the rights of a shareholder with respect to such shares including, but not limited to, any right to receive dividends in cash or other property or other distribution or rights in respect of such shares except as otherwise provided in this Award Agreement, nor to vote such shares as the record owner thereof.
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During each year in the Restricted Period, the Participant will not be paid dividend equivalents on the unvested RSUs, but the Participant will receive a credit equal to dividends declared on the Corporations Common Stock which will be reinvested in additional RSUs at the then fair market value of the Corporations Common Stock on the date dividends are paid, and the additional RSUs will be accumulated and paid if and when the RSUs vest, based on the actual number of RSUs that vest. In the case of dividends paid in property other than cash, the amount of the dividend shall be deemed to be the fair market value of the property at the time of the payment of the dividend, as determined in good faith by the Corporation. The Corporation shall not be required to segregate any cash or other property of the Corporation.
(b) | Termination of Service . Participant shall forfeit any unvested Award, including any accrued dividend equivalents, upon termination of employment or service unless such termination is (i) due to a Qualified Termination of Service, or (ii) due to death or Total and Permanent Disability. An authorized leave of absence shall not be deemed to be a termination of employment or service if the period of such leave does not exceed six months, or if longer, so long as the Participant retains a right to reemployment or return to service with the Corporation or an Affiliate under an applicable statute or by contract. For purposes of this subparagraph, a leave of absence constitutes a bona fide leave of absence only if there is a reasonable expectation that the Participant will return to perform services for the Corporation or an Affiliate. If the period of leave exceeds six months and the Participant does not retain a right to reemployment or return to service under an applicable statute or by contract, the employment relationship is deemed to terminate on the first date immediately following such six-month period. Notwithstanding the foregoing, where a leave of absence is due to any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than six months, where such impairment causes the Participant to be unable to perform the duties of his or her position of employment or service or any substantially similar position of employment or service, a 29-month period of absence is substituted for such six-month period in determining whether a termination of employment or service shall be deemed to have occurred. A termination of employment or service with the Corporation or an Affiliate to accept immediate reemployment with the Corporation or an Affiliate likewise shall not be deemed to be a termination of employment or service for the purposes of the Plan if the level of bona fide services the Participant would perform after such date would continue at a rate equal to more than 20 percent of the average level of bona fide services performed over the immediately preceding 36-month period (or the full period of services to the Corporation or an Affiliate if the Participant has been providing such services less than 36 months). A Participant who is classified as an intermittent employee, consultant or advisor shall be deemed to have a termination of employment or service for purposes of the Plan if the level of bona fide services the Participant would perform after such date would permanently decrease to less than 20 percent of the average level of bona fide services performed over the immediately preceding 36-month period (or the full period of services to the Corporation or an Affiliate if the Participant has been providing such services less than 36 months). |
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(c) | Death or Total and Permanent Disability . If the Participants termination of employment or service is due to death or Total and Permanent Disability, it shall result in pro rata vesting, as determined by the Committee, and the number of shares that are considered to vest shall be prorated for the number of full months of employment during the Restricted Period prior to the Participants termination of employment, and shall be paid within 70 days following the Participants termination of employment or service. |
(d) | Qualified Termination of Service . In the event of a Qualified Termination of Service all restrictions will lapse and the shares will become fully vested and shall be paid within 10 days following the last day of employment or service of the Participant with the Corporation or an Affiliate. |
(e) | Payment of Awards . The payment of the Award shall be made in shares of Common Stock. The payment of an Award shall be made within 70 days following the end of the Restricted Period. |
(f) | Payment of Withholding Taxes . No shares of Common Stock, nor any cash payment, may be delivered under this Award, unless prior to or simultaneously with such issuance, the Participant or, in the event of his death, the person succeeding to his rights hereunder, shall pay to the Corporation or an Affiliate, as applicable, such amount as the Corporation advises is required under applicable federal, state or local laws to withhold and pay over to governmental taxing authorities in relation to this Award. The Corporation may, in its discretion, withhold payment of required withholding taxes with cash or shares of Common Stock which otherwise would be delivered following the date of vesting of the Award under this paragraph 2. |
3. | Nontransferability . Neither the Award nor the Participants right to receive payment for vested Awards may be assigned or transferred except upon the death of the Participant (i) by will or (ii) by the laws of descent and distribution. |
4. | Compliance with Law . No payment may be made under this Award, unless prior to the issuance thereof, the Corporation shall have received an opinion of counsel to the effect that this Award by the Corporation to the Participant will not constitute a violation of the U.S. Securities Act of 1933, as amended. As a condition of this Award, the Participant shall, if requested by the Corporation, submit a written statement in form satisfactory to counsel for the Corporation, to the effect that any shares received under this Award shall be for investment and not with a view to the distribution thereof within the meaning of the U.S. Securities Act of 1933, as amended, and the Corporation shall have the right, in its discretion, to cause the certificates representing shares hereunder to be appropriately legended to refer to such undertaking or to any legal restrictions imposed upon the transferability thereof by reason of such undertaking. |
The Award granted hereby is subject to the condition that if the listing, registration or qualification of the shares subject hereto on any securities exchange or under any state or federal law, or if the consent or approval of any regulatory body shall be necessary as a condition of, or in connection with, the granting of the Award or the delivery of shares thereunder, such shares may not be delivered unless and until such listing, registration, qualification, consent or approval shall have been effected or obtained. The Corporation agrees to use its best efforts to obtain any such requisite listing, registration, qualification, consent or approval. |
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The Participant is solely responsible for obtaining/providing whatever exchange control approvals, permits, licenses, or notices, which may be necessary for the Participant to hold the Award, or to receive any payment of cash or shares or to hold or sell the shares subject to the Award, if any. Neither the Corporation nor its Affiliates will be responsible for obtaining any such approvals, licenses or permits, or for making any such notices, nor will the Corporation or its Affiliates be liable for any fines or penalties the Participant may incur for failure to obtain any required approvals, permits or licenses or to make any required notices.
5. | No Right of Continued Service . The granting of this Award does not confer upon the Participant any legal right to be continued in the employ or service of the Corporation or its Affiliates, and the Corporation and its Affiliates reserve the right to discharge the Participant whenever the interest of the Corporation or its Affiliates may so require without liability to the Corporation or its Affiliates, the Board of Directors of the Corporation or its Affiliates, or the Committee, except as to any rights which may be expressly conferred on the Participant under this Award. |
6. | Discretion of the Corporation, Board of Directors and the Committee . Any decision made or action taken by the Corporation or by the Board of Directors of the Corporation or by the Committee arising out of or in connection with the construction, administration, interpretation and effect of this Award shall be within the absolute discretion of the Corporation, the Board of Directors of the Corporation or the Committee, as the case may be, and shall be conclusive and binding upon all persons. |
7. | Inalienability of Benefits and Interest . This Award and the rights and privileges conferred hereby shall not be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge, and any such attempted action shall be void and no such benefit or interest shall be in any manner liable for or subject to debts, contracts, liabilities, engagements, or torts of the Participant. |
8. | Delaware Law to Govern . The Plan is governed by and subject to the laws of the United States of America. All questions pertaining to the construction, interpretation, regulation, validity and effect of the provisions of this Award and any rights under the Plan shall be determined in accordance with the laws of the State of Delaware. |
9. | Purchase of Common Stock . The Corporation and its Affiliates may, but shall not be required to, purchase shares of Common Stock of the Corporation for purposes of satisfying the requirements of this Award. The Corporation and its Affiliates shall have no obligation to retain and shall have the unlimited right to sell or otherwise deal with for their own account, any shares of Common Stock of the Corporation purchased for satisfying the requirements of this Award. |
10. | Notices . Any notice to be given to the Corporation under this Award shall be addressed to the Corporation in care of its Director of Compensation located at the World Headquarters, and any notice to be given to the Participant under the terms of this Award may be addressed to him or her at the address as it appears on the Corporations records, or at such other address as either party may hereafter designate in writing to the other. Any such notice shall be deemed to have been duly given if and when enclosed in a properly sealed envelope or wrapper addressed as aforesaid, registered and deposited, postage and registry fee prepaid, in a post office or branch post office regularly maintained by the United States Government or any equivalent non-U.S. postal service. |
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11. | Changes in Capitalization . In the event there are any changes in the Common Stock or the capitalization of the Corporation through a corporate transaction, such as any merger, any acquisition through the issuance of capital stock of the Corporation, any consolidation, any separation of the Corporation (including a spin-off or other distribution of stock of the Corporation), any reorganization of the Corporation (whether or not such reorganization comes within the definition of such term in Section 368 of the Code), or any partial or complete liquidation by the Corporation, recapitalization, stock dividend, stock split or other change in the corporate structure, appropriate adjustments and changes shall be made by the Committee in (a) the number of shares subject to this Award, and (b) such other provisions of this Award as may be necessary and equitable to carry out the foregoing purposes. |
12. | Effect on Other Plans . All benefits under this Award shall constitute special incentives and shall not affect the level of benefits provided to or received by the Participant (or the Participants estate or beneficiaries) as part of any employee benefit plan of the Corporation or an Affiliate. This Award shall not be construed to affect in any way the Participants rights and obligations under any other plan maintained by the Corporation or an Affiliate on behalf of employees. |
13. | Discretionary Nature of Award . The grant of an Award is a one-time benefit and does not create any contractual or other right to receive a grant of Awards or benefits in lieu of Awards in the future. Future grants, if any, will be at the sole discretion of the Corporation, including, but not limited to, the timing of any grant, the number of RSUs and vesting provisions. The value of the Award is an extraordinary item outside the scope of the Participants employment or service contract, if any. As such, the Award is not part of normal or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments. |
14. | Data Privacy . The Participant hereby authorizes their employer to furnish the Corporation (and any agent of the Corporation administering the Plan or providing Plan recordkeeping services) with such information and data as it shall request in order to facilitate the grant of Awards and administration of the Plan and the Participant waives any data privacy rights such Participant might otherwise have with respect to such information. |
15. | Conflict with Plan . This Award is awarded pursuant to and subject to the Plan. This Agreement is intended to supplement and carry out the terms of the Plan. It is subject to all terms and provisions of the Plan and, in the event of a conflict, the Plan shall prevail. |
16. | Successors . This Award shall be binding upon and inure to the benefit of any successor or successors of the Corporation. |
17. | Amendments . The Committee may at any time alter or amend this Award to the extent (1) permitted by law, (2) permitted by the rules of any stock exchange on which the Common Stock or any other security of the Corporation is listed, and (3) permitted under applicable provisions of the U.S. Securities Act of 1933, as amended, the U.S. Securities Exchange Act of 1934, as amended (including rule 16b-3 thereof). |
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18. | Defined Terms . Terms which are capitalized are defined herein or in the Plan and have the same meaning set forth in the Plan, unless the context indicates otherwise. |
19. | Non-Competition Provisions For U.S. Participants Only . |
(a) During the term of the Participants employment or service and for a period of two (2) years following the termination of employment or service, regardless of the reason for or the manner of termination, unless otherwise prohibited by state law, the Participant agrees that the Participant shall not, without the written consent of the Corporation, within the United States of America, either directly or indirectly, undertake for a Competitor to perform duties and responsibilities that are the same or substantially similar to those duties and responsibilities that the Participant undertook for the Corporation or an Affiliate, relating to the research, development, production, sales and/or marketing of any health or hygiene product (Business of the Corporation) competitive with any health or hygiene product for which the Participant had research, development, production, sales and/or marketing duties or responsibilities during the two (2) year period prior to the end of the Participants employment or service, unless such product is no longer produced or sold by the Corporation. As used herein, Competitor means any business that is the same or substantially the same as the Business of the Corporation anywhere in the United States; provided, however, the foregoing restriction shall not apply if the Participant resides and/or primarily works in the State of California.
(b) During the period of two (2) years following termination of the Participants employment or service with the Corporation or an Affiliate, the Participant agrees to notify the Corporation in writing prior to accepting new employment, or engaging in any other activity which may violate this Agreement, and the Participant agrees to provide in such notice information concerning the anticipated new employment or activity, including, but not limited to: name of employer; address of employer; name of new team leader; job title; and scope and responsibilities of the new position. The Participant recognizes that such duty of notification is absolute and is not affected by the Participants belief that such employment or service may perhaps not violate this Agreement or otherwise be unfairly competitive with the Corporation. The Participants written notice should be addressed to General Counsel, Attention: Noncompetition and Confidentiality Agreement, Halyard Health, Inc., 5405 Windward Parkway, Alpharetta, Georgia 30004; provided, however, the foregoing notice requirement shall not apply if the Participant resides and/or primarily works in the State of California.
(c) During the period of two (2) years following termination of the Participants employment or service with the Corporation or an Affiliate, the Participant shall provide a copy of Section 19 of this Agreement to each new employer or service recipient before starting in any new employment or service. The Participant agrees that the Corporation may notify any third party about the Participants obligations under Section 19 of this Award Agreement until such obligations are fulfilled.
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(d) If any provision of this Section 19 is held to be invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, such provision shall be deemed to be severed from the Agreement and such invalidity, illegality or unenforceability will not affect any other provision of the Agreement, all of which shall remain valid and enforceable. Notwithstanding the foregoing, if a court of competent jurisdiction determines that the covenants contained in this Section 19 are unenforceable because they are overbroad in some respect, to the full extent permitted by applicable law, the court should revise or reform any aspect of this Section 19 so as to make the scope of such Section 19 as broad as can be enforced under applicable law.
(e) In the event of an anticipated or actual breach by the Participant of this provision, the Participant acknowledges and agrees that damages would not be an adequate remedy to compensate the Corporation for the harm to the business of the Corporation and, in such event, agrees that the Corporation shall be entitled to a temporary restraining order and to temporary injunctive relief to prevent or terminate such anticipated or actual breach, provided, however, that nothing in this Agreement shall be construed to limit any permanent relief to which the Corporation may be entitled or the damages otherwise recoverable by the Corporation in any such event.
(f) If the Participant violates any aspect of this provision, or any duty of loyalty or confidentiality imposed by law, in addition to any damages that the Participant may be required to pay, the Participant understands and agrees that the Participant shall be required to reimburse the Corporation for all its costs incurred to enforce this Agreement, including but not limited to, all attorneys fees.
20. | Acceptance of Award Terms and Conditions . A Participant has until the end of the one hundred twenty (120) day period beginning from the Grant Date of this Award to accept this Award Agreement. If the Participant does not accept this Award Agreement on or before the end of such one hundred twenty (120) day period then the grant of the Award, as set forth in Section 1, shall not be binding on and shall be voidable by the Corporation, in which case it shall have no further force or effect. |
Acknowledgment of Conditions
I understand, acknowledge and agree to the following conditions with respect to the Award granted to me under the Plan:
| The Plan is established voluntarily by the Corporation, is discretionary in nature and may be modified, amended, suspended, cancelled or terminated at any time, to the extent permitted by the Plan. The grant of an Award is a voluntary and occasional benefit and does not create any contractual or other right to receive an Award or benefits in lieu of an Award in the future, even if the Awards have been granted in the past. Future grants, if any, will be at the sole discretion of the Corporation, including, but not limited to, the timing of any grant, the number of Awards, vesting provisions and the exercise price. |
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| My participation in the Plan is voluntary. Participation in the Plan will not create a right to further employment or service with my actual employer (the Employer) and shall not interfere with the ability of the Employer to terminate my employment or service relationship at any time. Further, the Award and my participation in the Plan will not be interpreted to form an employment or service contract or relationship with the Corporation or any Affiliate. |
| The Award and the shares of Common Stock subject to the Award and the income and value of same, are extraordinary items that do not constitute compensation of any kind for services of any kind rendered to the Corporation or, if different, the Employer, and which are outside the scope of my employment or service contract, if any, and are not intended to replace any pension rights or compensation. As such, the Award is not part of normal or expected compensation for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end of service payments, bonuses, long-service awards, pension, retirement or welfare benefits or similar payments and in no event shall be considered as compensation for, or relating in any way to, past services for the Corporation, the Employer or any other Affiliate. |
| The future value of the underlying shares of Common Stock is unknown, indeterminable, and cannot be predicted with certainty. |
| No claim or entitlement to compensation or damages shall arise from forfeiture of the Award resulting from termination of my employment or service by the Corporation or the Employer (for any reason whatsoever and whether or not in breach of local labor laws) and in consideration of the grant of the Award, to which I am otherwise not entitled, I irrevocably agree never to institute any claim against the Corporation, the Employer or any other Affiliate, waive my ability, if any, to bring any such claim, and release the Corporation, the Employer and all other Affiliates from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, I shall be deemed irrevocably to have agreed not to pursue such a claim and agree to execute any and all documents necessary to request dismissal or withdrawal of such claims. |
| In the event of termination of my employment or service (whether or not in breach of local labor laws and except as otherwise explicitly provided in the Award Agreement of the Plan), my right to receive RSUs and vest in the Award under the Plan, if any, will terminate effective as of the date that I am no longer actively employed or in service and will not be extended by any notice period mandated under local law ( e.g. , active employment or service would not include a period of garden leave or similar period pursuant to local law); the Committee shall have the exclusive discretion to determine when I am no longer actively employed or in service for purposes of the Award. |
| The Corporation is not providing any tax, legal or financial advice, nor is the Corporation making any recommendations regarding participation in the Plan, or my acquisition or sale of the underlying shares of Common Stock. Further, I have been advised to consult with my own advisors regarding participation in the Plan before taking any action related to the Plan. |
| Neither the Corporation, the Employer nor any other Affiliate shall be liable for any foreign exchange rate fluctuation between my local currency and the United States Dollar that may affect the value of the RSUs or of any amounts due to me pursuant to the settlement of the RSUs or the subsequent sale of any shares of Common Stock acquired upon settlement. |
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| Regardless of any action the Corporation or the Employer takes with respect to any or all income tax (including federal, state and local taxes), social insurance, payroll tax, payment on account or other tax-related items related to my participation in the Plan and legally applicable to me (Tax-Related Items), I acknowledge that the ultimate liability for all Tax-Related Items is and remains my responsibility and may exceed the amount actually withheld by the Corporation or the Employer. I further acknowledge that the Corporation and/or the Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Award, including the grant of the RSUs, the vesting of RSUs, the conversion of the RSUs into shares or the receipt of an equivalent cash payment, the subsequent sale of any shares acquired at vesting and the receipt of any dividends or dividend equivalents; and (ii) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Award to reduce or eliminate the my liability for Tax-Related Items or achieve any particular tax result. Further, if I have become subject to Tax-Related Items in more than one jurisdiction between the Grant Date and the date of any relevant taxable or tax withholding event, as applicable, I acknowledge that the Corporation and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction. |
| Prior to the relevant taxable or tax withholding event, as applicable, I shall pay or make adequate arrangements satisfactory to the Corporation and/or the Employer to satisfy or account for all Tax-Related Items. In this regard, I authorize the Corporation or the Employer, or their respective agents, at their discretion, to satisfy their withholding obligations with regard to all Tax-Related Items by one or a combination of the following: |
(1) | withholding from my wages or other cash compensation paid to me by the Corporation and/or the Employer; or |
(2) | withholding from proceeds of the sale of shares acquired upon vesting of the Award either through a voluntary sale or through a mandatory sale arranged by the Corporation (on my behalf, pursuant to this authorization); or |
(3) | withholding in shares to be issued upon vesting of the Award. |
| To avoid negative accounting treatment, the Corporation may withhold or account for Tax-Related Items by considering applicable minimum statutory withholding amounts or other applicable withholding rates, including maximum applicable rates, in which case I will receive a refund of any over-withheld amount in cash and will have no entitlement to the common stock equivalent. If the obligation for Tax-Related Items is satisfied by withholding in shares, for tax purposes, I am deemed to have been issued the full number of shares subject to the Award, notwithstanding that a number of shares are held back solely for the purpose of paying the Tax-Related Items due as a result of any aspect of my participation in the Plan. |
| I shall pay to the Corporation or to the Employer any amount of Tax-Related Items that the Corporation or the Employer may be required to withhold or account for as a result of my participation in the Plan that cannot be satisfied by the means previously described. The Corporation may refuse to deliver shares or the proceeds of the sale of shares to me if I fail to comply with my obligations in connection with the Tax-Related Items. |
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| I hereby explicitly and unambiguously consent to the collection, use and transfer, in electronic or other form, of my personal data as described in this Award Agreement by and among, as applicable, my Employer, the Corporation, and its other Affiliates for the exclusive purpose of implementing, administering and managing my participation in the Plan. |
| I understand that the Corporation and my Employer may hold certain personal information about me, including, but not limited to, my name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of Common Stock or directorships held in the Corporation, details of all Awards or any other entitlement to shares awarded, canceled, vested, unvested or outstanding in my favor (Data), for the purpose of implementing, administering and managing the Plan. |
| I understand that Data will be transferred to Merrill Lynch, or such other stock plan service provider as may be selected by the Corporation in the future, which is assisting the Corporation with the implementation, administration and management of the Plan. I understand that the recipients of the Data may be located in the United States or elsewhere, and that the recipients country (e.g., the United States) may have different data privacy laws and protections than my country. I understand that I may request a list with the names and addresses of any potential recipients of the Data by contacting my local human resources representative. I authorize the Corporation, Merrill Lynch and any other possible recipients which may assist the Corporation (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purpose of implementing, administering and managing my participation in the Plan. I understand that Data will be held only as long as is necessary to implement, administer and manage my participation in the Plan. I understand that I may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing my local human resources representative. Further, I understand that I am providing the consents herein on a purely voluntary basis. If I do not consent, or if I later seek to revoke my consent, my employment or service status or service and career with the Employer will not be adversely affected; the only adverse consequence of refusing or withdrawing my consent is that the Corporation would not be able to grant me RSUs or other equity awards or administer or maintain such awards. Therefore, I understand that refusing or withdrawing my consent may affect my ability to participate in the Plan. For more information on the consequences of my refusal to consent or withdrawal of consent, I understand that I may contact my local human resources representative. |
| The Plan and the Award are governed by and subject to U.S. law. Interpretation of the Plan and my rights under the Plan will be governed by provisions of U.S. law. For purposes of litigating any dispute that arises under this Award or Award Agreement, the parties submit to and consent to the jurisdiction of the State of Georgia, U.S.A. and agree that such litigation shall be conducted in the federal courts for the United States for the Northern District of Georgia and no other courts. |
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| I understand that I am solely responsible for obtaining/providing whatever exchange control approvals, permits, licenses or notices, which may be necessary for my Award, to acquire the shares or to hold or sell the shares subject to the RSU award. Neither the Corporation nor its Affiliates will be responsible for obtaining such approvals, licenses or permits, or for making any such notices, nor will the Corporation or its Affiliates be liable for any fines or penalties I may incur for failure to obtain any required approvals, permits or licenses or to make any required notices. |
| The provisions of this Award Agreement are severable and if one or more of the provisions of this Award Agreement shall be held invalid, illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nonetheless be binding and enforceable. To the extent that any provisions of this Award Agreement are held to be invalid or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby and the invalid, illegal or unenforceable provisions shall be deemed null and void; however, to the extent permissible by law, any provisions which could be deemed null and void shall first be construed, interpreted or revised retroactively to permit this Award Agreement to be construed so as to foster the intent of this Award Agreement and the Plan. |
| If I have received this Award Agreement or any other document related to the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control. |
| Notwithstanding any provisions in this Award Agreement, the Award shall be subject to any special terms and conditions set forth in Appendix A to this Award Agreement for my country. Moreover, if I relocate to one of the countries included in Appendix A, the special terms and conditions for such country will apply to me, to the extent the Corporation determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. Appendix A constitutes part of this Award Agreement. |
| The Corporation reserves the right to impose other requirements on my participation in the Plan, on the Award and on any shares acquired under the Plan, to the extent the Corporation determines it is necessary or advisable for legal or administrative reasons, and to require me to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing. |
| The Corporation may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. I hereby consent to receive such documents by on-line delivery and agree to participate in the Plan through an on-line or electronic system established and maintained by the Corporation or a third-party designated by the Corporation. |
| A waiver by the Corporation of breach of any provision of this Award Agreement shall not operate or be construed as a waiver of any other provision of this Award Agreement, or of any subsequent breach by me or any other participant. |
| Depending on my country of residence, I may be subject to insider trading restrictions and/or market abuse laws, which may affect my ability to acquire or sell shares of Common Stock or rights to shares of Common Stock ( e.g ., RSUs) under the Plan during such times as I am considered to have inside information regarding the Corporation (as defined by the laws in my country). Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Corporation insider trading policy. I am responsible for ensuring my compliance with any applicable restrictions and am advised to speak with my personal legal advisor on this matter. |
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Conclusion and Acceptance
I accept this grant via electronic signature by clicking the Accept icon and certify that I have read, understand and agree to the terms and conditions of the Halyard Health, Inc. Equity Participation Plan (the Plan), the provisions of the applicable Award Agreement and all other applicable documents (including any country-specific terms applicable to my grant). I hereby authorize the Employer or service recipient to furnish the Corporation (and any agent administering the Plan or providing recordkeeping services) with such information and data as it shall request in order to facilitate the grant of Awards and enable administration of the Plan and I understand that such information shall be used only as long and to the extent necessary to administer my participation in the Plan. I agree that my participation in the Plan and the Awards granted to me under the Plan will be governed solely by provisions of U.S. law.
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HALYARD HEALTH, INC.
TIME-VESTED RESTRICTED STOCK UNIT
AWARD AGREEMENT
APPENDIX A
This Appendix A includes additional terms and conditions that govern the Award granted to the Participant under the Plan if the Participant resides and/or works in one of the countries listed below. Certain capitalized terms used but not defined in this Appendix A have the meanings set forth in the Plan and/or the Award Agreement.
This Appendix A also includes information regarding exchange controls and certain other issues of which the Participant should be aware with respect to the Participants participation in the Plan. The information is based on the securities, exchange control and other laws in effect in the respective countries as of January 2014. Such laws are often complex and change frequently. As a result, the Corporation strongly recommends that the Participant not rely on the information noted herein as the only source of information relating to the consequences of the Participants participation in the Plan because the information may be out of date at vesting of the Award or the subsequent sale of the shares or receipt of any dividends or dividend equivalents.
In addition, the information is general in nature and may not apply to the Participants particular situation, and the Corporation is not in a position to assure the Participant of any particular result. Accordingly, the Participant is advised to seek appropriate professional advice as to how the relevant laws in the Participants country may apply to the Participants situation.
Finally, if the Participant is a citizen or resident of a country other than the one in which the Participant is currently residing and/or working, transferred or transfers employment after the Award is granted or is considered a resident of another country for local law purposes, the information contained herein may not be applicable to the Participant. The Corporation shall, in its sole discretion, determine to what extent the terms and conditions included herein will apply to the Participant in such circumstances.
AUSTRALIA
Shutdown or Divestiture
The following provision replaces Section 2(d) of the Award Agreement.
In the event that, after the Grant Date, the Participants termination of employment is due to the shutdown or divestiture of the Corporations or its Affiliates business, it shall result in pro-rata vesting, as determined by the Committee, and the number of shares that are considered to vest shall be determined by prorating the number of full years of employment during the Restricted Period prior to the Participants termination of employment, and shall be paid within 70 days following the Participants termination of employment. Any fractional share of the Corporation resulting from such a prorated Award shall be rounded to the nearest whole share.
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Securities Law Information
If the Participant acquires shares of the Corporations Common Stock pursuant to this Award and the Participant offers his or her shares of the Corporations Common Stock for sale to a person or entity resident in Australia, the offer may be subject to disclosure requirements under Australian law. The Participant should obtain legal advice on his or her disclosure obligations prior to making any such offer.
Exchange Control Information
Exchange control reporting is required for cash transactions exceeding AUD10,000 and for international fund transfers. If an Australian bank is assisting with the transaction, the bank will file the report on the Participants behalf.
BELGIUM
Foreign Asset/Account Reporting Information
The Participant is required to report any bank accounts opened and maintained outside Belgium on his or her annual tax return.
BRAZIL
Compliance with Law
By accepting the Award, the Participant acknowledges that he or she agrees to comply with applicable Brazilian laws and pay any and all applicable taxes associated with the vesting of the RSUs, the conversion of the RSUs into shares or the receipt of an equivalent cash payment, the receipt of any dividends, and the sale of shares of Common Stock acquired under the Plan. The Participant should consult with his or her personal tax advisor with respect to the RSUs.
Exchange Control Information
If the Participant is resident or domiciled in Brazil, he or she will be required to submit annually a declaration of assets and rights held outside of Brazil to the Central Bank of Brazil if the aggregate value of such assets and rights is equal to or greater than US$100,000. Assets and rights that must be reported include shares of Common Stock.
CANADA
Award Payable Only in Shares
Awards granted to Participants in Canada shall be paid in shares of the Corporations Common Stock only and do not provide any right for Participant to receive a cash payment.
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Securities Law Information
The Participant is permitted to sell shares acquired through the Plan through the designated broker appointed under the Plan, if any, provided the resale of shares acquired under the Plan takes place outside of Canada through the facilities of a stock exchange on which the shares are listed. The Corporations shares are currently listed on New York Stock Exchange.
Acknowledgment of Conditions
The following provision supplements the Acknowledgement of Conditions section of the Award Agreement:
Except as may otherwise be explicitly provided in the Plan or this Award Agreement, for the purposes of this Award Agreement, my termination of employment will be measured effective as of the date that is the earlier of: (1) the date my employment is terminated, (2) the date I receive notice of termination of employment or service from the Employer, or (3) the date I am no longer actively employed or providing services, regardless of any notice period or period of pay in lieu of such notice required under local law (including, but not limited to, statutory law, regulatory law, and/or common law); the Committee shall have the exclusive discretion to determine when I am no longer actively employed or providing services for purposes of the RSUs.
Foreign Asset/Account Reporting Information
Foreign property (including shares of Common Stock) held by Canadian residents must be reported annually on Form T1135 (Foreign Income Verification Statement) if the total value of such foreign property exceeds C$100,000 at any time during the year. It is not certain if the RSUs constitute foreign property that needs to be reported on Form T1135. The form must be filed by April 30th of the following year. It is the Participants responsibility to comply with applicable reporting obligations.
The following provisions apply if the Participant is a resident of Quebec:
Language Consent
The parties acknowledge that it is their express wish that the Award Agreement, as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.
Les parties reconnaissent avoir exigé la rédaction en anglais de la convention, ainsi que de tous documents exécutés, avis donnés et procédures judiciaires intentées, directement ou indirectement, relativement à ou suite à la présente convention.
Authorization to Release and Transfer Necessary Personal Information
The Participant hereby authorizes the Corporation and the Corporations representatives to discuss with and obtain all relevant information from all personnel, professional or not, involved in the administration and operation of the Plan. The Participant further authorizes the Corporation, any Affiliate and the plan administrators to disclose and discuss the Plan with their advisors. The Participant further authorizes the Corporation and any Affiliate to record such information and to keep such information in the Participants employee file.
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COLOMBIA
Acknowledgment of Conditions
The following provision supplements the Acknowledgement of Conditions section of the Award Agreement:
I acknowledge that pursuant to Article 128 of the Colombian Labor Code, the Plan and related benefits do not constitute a component of my salary for any legal purpose.
COSTA RICA
There are no country-specific provisions.
FRANCE
RSUs Not Tax-Qualified
The Participant understands that this Award is not intended to be French tax-qualified.
Consent to Receive Information in English
By accepting the Award Agreement providing for the terms and conditions of the Participants grant, the Participant confirms having read and understood the documents relating to this grant (the Plan and this Award Agreement) which were provided in English language. The Participant accepts the terms of those documents accordingly.
En acceptant le Contrat dAttribution décrivant les termes et conditions de lattribution, le participant confirme ainsi avoir lu et compris les documents relatifs à cette attribution (le Plan U.S. et ce Contrat dAttribution) qui ont été communiqués en langue anglaise. Le participant accepte les termes en connaissance de cause.
Foreign Asset/Account Reporting Information
If the Participant holds shares of Common Stock outside of France or maintains a foreign bank account, he or she is required to report such to the French tax authorities when filing his or her annual tax return. Failure to comply could trigger significant penalties.
GERMANY
Exchange Control Information
Cross-border payments in excess of 12,500 must be reported monthly to the German Federal Bank. No report is required for payments less than 12,500. In case of payments in connection with securities (including proceeds realized upon the sale of shares of Common Stock), the report must be made by the 5th day of the month following the month in which the payment was received. Effective from September 2013, the report must be filed electronically. The form of report ( Allgemeine Meldeportal Statistik ) can be accessed via the Bundesbanks website ( www.bundesbank.de ) and is available in both German and English. The Participant is responsible for satisfying the reporting obligation.
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HONDURAS
There are no country-specific provisions.
INDIA
Awards Payable in Cash Only
Awards granted to Participants in India shall be paid in cash only and do not provide any right for the Participant to receive shares of Common Stock.
Exchange Control Documentation
The Participant understands that he or she must repatriate the cash payment acquired under the Plan to India and convert the proceeds into local currency within 90 days of receipt. The Participant will receive a foreign inward remittance certificate (FIRC) from the bank where the foreign currency is deposited. The Participant should maintain the FIRC as evidence of the repatriation of funds in the event that the Reserve Bank of India, the Employer or the Corporation requests proof of repatriation.
Foreign Asset/Account Reporting Information
The Participant is required to declare foreign bank accounts and any foreign financial assets in his or her annual tax return. It is the Participants responsibility to comply with this reporting obligation and the Participant should consult with his or her personal tax advisor in this regard.
JAPAN
Foreign Asset/Account Reporting Information
The Participant will be required to report details of any assets (including any shares of Common Stock acquired under the Plan) held outside of Japan as of December 31 st of each year, to the extent such assets have a total net fair market value exceeding ¥50 million. Such report will be due by March 15 th of the following year. The Participant should consult with his or her personal tax advisor as to whether the reporting obligation applies to the Participant and whether the Participant will be required to report details of any outstanding RSUs or shares of Common Stock held by the Participant in the report.
RSUs may not be issued in Japan to persons who are not employees, officers or directors of the Corporation or an Affiliate.
MEXICO
Modification
By accepting the Award, the Participant understands and agrees that any modification of the Plan or the Award Agreement or its termination shall not constitute a change or impairment of the terms and conditions of employment.
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Acknowledgment of the Grant
In accepting the Award, the Participant acknowledges that the Participant has received a copy of the Plan and the Award Agreement, including this Appendix A, has reviewed the Plan and the Award Agreement, including this Appendix A, in their entirety and fully understands and accepts all provisions of the Plan and the Award Agreement, including this Appendix A. The Participant further acknowledges that the Participant has read and specifically and expressly approves the Acknowledgement of Conditions section of the Award Agreement, in which the following is clearly described and established:
(1) | The Participants participation in the Plan does not constitute an acquired right. |
(2) | The Plan and the Participants participation in the Plan are offered by the Corporation on a wholly discretionary basis. |
(3) | The Participants participation in the Plan is voluntary. |
(4) | Neither the Corporation nor any Affiliates are responsible for any decrease in the value of the Award granted and/or shares of Common Stock issued under the Plan. |
Labor Acknowledgment and Policy Statement
In accepting the grant of this Award, the Participant expressly recognizes that the Corporation, with registered offices at 5405 Windward Parkway, Alpharetta, Georgia 30004, U.S.A., is solely responsible for the administration of the Plan and that the Participants participation in the Plan and acquisition of shares of Common Stock do not constitute an employment relationship between the Participant and the Corporation since the Participant is participating in the Plan on a wholly commercial basis and his or her sole Employer is (Halyard-Mexico). Based on the foregoing, the Participant expressly recognizes that the Plan and the benefits that he or she may derive from participating in the Plan do not establish any rights between the Participant and the Employer, Halyard-Mexico and do not form part of the employment conditions and/or benefits provided by Halyard-Mexico, and any modification of the Plan or its termination shall not constitute a change or impairment of the terms and conditions of the Participants employment.
The Participant further understands that his or her participation in the Plan is as a result of a unilateral and discretionary decision of the Corporation; therefore, the Corporation reserves the absolute right to amend and/or discontinue the Participants participation at any time without any liability to the Participant.
Finally, the Participant hereby declares that he or she does not reserve to him- or herself any action or right to bring any claim against the Corporation for any compensation or damages regarding any provision of the Plan or the benefits derived under the Plan, and the Participant therefore grants a full and broad release to the Corporation, its Affiliates, branches, representation offices, its shareholders, officers, agents, or legal representatives with respect to any claim that may arise.
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Spanish Translation
Modificación
Al aceptar el Premio, el Participante entiende y acuerda que cualquier modificación al Plan o al Acuerdo o su terminación, no cambiará o disminuirá los términos y condiciones de empleo.
Reconocimiento del Otorgamiento
Al aceptar el Premio, el Participante está de acuerdo en haber recibido una copia del Plan, del Acuerdo incluyendo el presente Anexo A y ha revisado el Plan y el Acuerdo, incluyendo este Anexo A en su totalidad y comprende y acepta todas las disposiciones previstas en el Plan, en el Acuerdo, incluyendo el presente Anexo A. Asimismo, el Participante reconoce que ha leído y manifiesta su específica y expresa conformidad con los términos y condiciones establecidos del Acuerdo, en el cual claramente se describe y establece lo siguiente:
(1) | La participación del Participante en el Plan no constituye un derecho adquirido. |
(2) | El Plan y la participación del Participante en el Plan se ofrecen por la Compañía de forma completamente discrecional. |
(3) | La participación del Participante en el Plan es voluntaria. |
(4) | Ni la Compañía ni sus Afiliadas son responsables por la reducción del valor del Premio y/o Acciones Ordinarias emitidas bajo el Plan. |
Reconocimiento de la Legislación Laboral y Declaración de la Política
Al aceptar el otorgamiento de este Premio, el Participante expresamente reconoce que Halyard Health, Inc. con oficinas registradas en 5405 Windward Parkway, Alpharetta, Georgia 30004, U.S.A.., es la única responsable por la administración del Plan y que la participación del Participante en el Plan y en su caso la adquisición de las Opciones de Compra de Acciones o Acciones no constituyen ni podrán interpretarse como una relación de trabajo entre el Participante y Halyard Health, Inc., ya que el Participante participa en el Plan en un marco totalmente comercial y su único Patrón lo es , con domicilio en . Derivado de lo anterior, el Participante expresamente reconoce que el Plan y los beneficios que pudieran derivar de la participación en el Plan no establecen derecho alguno entre el Participante y el Patrón, y no forma parte de las condiciones de trabajo y/o las prestaciones otorgadas por y que cualquier modificación al Plan o su terminación no constituye un cambio o impedimento de los términos y condiciones de la relación de trabajo del Participante.
Asimismo, el Participante reconoce que su participación en el Plan es resultado de una decisión unilateral y discrecional de Halyard Health, Inc. por lo tanto, Halyard Health, Inc.se reserva el absoluto derecho de modificar y/o terminar la participación del Participante en cualquier momento y sin responsabilidad alguna frente el Participante.
Finalmente, el Participante por este medio declara que no se reserva derecho o acción alguna que ejercitar en contra de Halyard Health, Inc. por cualquier compensación o daño en relación con las disposiciones del Plan o de los beneficios derivados del Plan y por lo tanto, el Participante otorga el más amplio finiquito que en derecho proceda a Halyard Health, Inc., sus afiliadas, subsidiarias, oficinas de representación, sus accionistas, funcionarios, agentes o representantes legales en relación con cualquier demanda que pudiera surgir.
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SINGAPORE
Securities Law Information
The Award is being made pursuant to the Qualifying Person exemption under section 273(1)(f) of the Securities and Futures Act (Chapter 289, 2006 Ed.) (SFA). The Plan has not been lodged or registered as a prospectus with the Monetary Authority of Singapore. The Participant should note that the Award is subject to section 257 of the SFA and the Participant will not be able to make (i) any subsequent sale of the shares of Common Stock in Singapore or (ii) any offer of such subsequent sale of the shares of Common Stock subject to the Award in Singapore, unless such sale or offer is made pursuant to the exemptions under Part XIII Division (1) Subdivision (4) (other than section 280) of the SFA.
Director Notification Obligation
If the Participant is a director, associate director or shadow director of the Corporations Singapore Affiliate, the Participant is subject to certain notification requirements under the Singapore Companies Act. Among these requirements is an obligation to notify the Corporations Singapore Affiliate in writing when the Participant receives an interest ( e.g. , an Award or shares) in the Corporation or any Affiliate. In addition, the Participant must notify the Corporations Singapore Affiliate when he or she sells shares of the Corporation or of any Affiliate (including when the Participant sells shares issued upon vesting and settlement of the Award). These notifications must be made within two business days of acquiring or disposing of any interest in the Corporation or any Affiliate. In addition, a notification of the Participants interests in the Corporation or any Affiliate must be made within two business days of becoming a director.
SOUTH AFRICA
Tax Acknowledgment
By accepting the Award, the Participant agrees to notify the Employer of the amount of any gain realized upon vesting of the Award. If the Participant fails to advise the Employer of the gain realized upon vesting, the Participant may be liable for a fine. The Participant will be responsible for paying any difference between the actual tax liability and the amount withheld.
Exchange Control Information
To participate in the Plan, the Participant must comply with exchange control regulations and rulings (the Exchange Control Regulations) in South Africa.
Because the Exchange Control Regulations change frequently and without notice, the Participant understands that he or she should consult a legal advisor prior to the acquisition or sale of shares under the Plan to ensure compliance with current regulations. The Participant understands that it is his or her responsibility to comply with South African exchange control laws, and neither the Corporation nor the Employer will be liable for any fines or penalties resulting from failure to comply with applicable laws.
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SWEDEN
There are no country-specific provisions
THAILAND
Exchange Control Information
If the proceeds from the sale of shares of Common Stock or the receipt of dividends paid on such shares are equal to or greater than US$50,000 in a single transaction, the Participant must repatriate all cash proceeds to Thailand immediately following the receipt of the cash proceeds and then either convert such proceeds to Thai Baht or deposit the proceeds into a foreign currency account opened with a commercial bank in Thailand within 360 days of repatriation. In addition, the Participant must specifically report the inward remittance to the Bank of Thailand on a foreign exchange transaction form. If the Participant fails to comply with these obligations, the Participant may be subject to penalties assessed by the Bank of Thailand.
The Participant should consult his or her personal advisor prior to taking any action with respect to remittance of cash proceeds into Thailand. The Participant is responsible for ensuring compliance with all exchange control laws in Thailand.
UNITED KINGDOM
Tax Acknowledgment
The following information supplements the information regarding Tax-Related Items in the Acknowledgment of Conditions section of the Award Agreement:
If payment or withholding of the income tax due is not made within 90 days of the event giving rise to the Tax-Related Items or such other period specified in section 222(1)(c) of the U.K. Income Tax (Earnings and Pensions) Act 2003 (the Due Date), the amount of any uncollected income tax shall constitute a loan owed by the Participant to the Employer, effective on the Due Date. The Participant agrees that the loan will bear interest at the then-current Her Majestys Revenue and Customs (HMRC) official rate; it will be immediately due and repayable. Notwithstanding the foregoing, if the Participant is an officer or executive director (as within the meaning of Section 13(k) of the U.S. Securities and Exchange Act of 1934, as amended), the terms of this provision will not apply to the Participant. In the event that the Participant is an officer or director, as defined above, and income tax is not collected from or paid by the Participant by the Due Date, the amount of any uncollected income tax may constitute a benefit to the Participant on which additional income tax and National Insurance Contributions may be payable. The Participant acknowledges that the Participant ultimately will be responsible for reporting and paying any income tax due on this additional benefit directly to HMRC under the self-assessment regime and for reimbursing the Corporation or the Employer (as applicable) for the value of any employee NICs due on this additional benefit, which the Corporation and/or the Employer may recover from the Participant at any time thereafter by any of the means referred to in the Acknowledgement of Conditions section of the Award Agreement.
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Exhibit 10.10
HALYARD HEALTH, INC.
OUTSIDE DIRECTORS COMPENSATION PLAN
1. | INTRODUCTION |
The Halyard Health, Inc. Outside Directors Compensation Plan (the Plan ) is intended to promote the interests of Halyard Health, Inc. (the Corporation ) and its stockholders by enhancing the Corporations ability to attract, motivate and retain as Outside Directors persons of training, experience and ability, and to encourage the highest level of Outside Director performance. The Plan is intended to permit the Corporation maximum flexibility in implementing a compensation policy including aligning the Outside Directors economic interests closely with those of the Corporations stockholders by use of equity based compensation awards.
2. | DEFINITIONS |
Unless otherwise defined in the text of the Plan, capitalized terms herein shall have the meanings set forth in this Section 2.
Affiliate means any Corporation in which the Corporation owns 20 percent or more of the equity interest (collectively, the Affiliates).
Award has the meaning set forth in Section 3 of the Plan.
Board means the Board of Directors of the Corporation.
Change of Control shall be deemed to have taken place upon the first of the following to occur: (i) a third person, including a group as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, acquires in a single transaction, or a series of transactions during a twelve-month period, shares of the Corporation having 30% or more of the total number of votes that may be cast for the election of directors of the Corporation; or (ii) as the result of any cash tender or exchange offer, merger or other business combination, sale of assets or contested election, or any combination of the foregoing transactions, a majority of the members of the Board is replaced during any twelve-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board before the date of the appointment or election.
Code means the Internal Revenue Code of 1986 and the regulations thereunder, as amended from time to time.
Committee means the Compensation Committee of the Board.
Committee Rules means the Committee Rules for the Halyard Health, Inc. Equity Participation Plan or any successor plan.
Corporate Governance Committee means the Corporate Governance Committee of the Board.
1
Director means a member of the Board.
Effective Date means November 1, 2014. The Plan was approved by the sole stockholder of the Corporation on October 7, 2014, and is adopted effective as of November 1, 2014.
Exchange Act means the Securities Exchange Act of 1934 and the rules and regulations thereunder, as amended from time to time.
Fair Market Value means the reported closing price of the Stock, on the relevant date as reported on the composite list used by The Wall Street Journal for reporting stock prices or, if no such sale shall has been made on that day, on the last preceding day on which there was such a sale.
Option means a right to purchase a specified number of shares of Stock at a fixed Option price equal to no less than the Fair Market Value of the Stock on the date the Option is granted. For purposes of this Plan, Options shall be issued either as Annual Options , as described in subsection 8(a)(iii), or Additional Options , as described in subsection 8(b).
Outside Director means a Director who is not on the date of grant of an Award pursuant to the Plan, or within one year prior to the date of such grant, an employee of the Corporation or any of its Affiliates.
Restricted Period shall mean the period of time during which the Award remains unvested and the Transferability Restrictions applicable to Awards will be in force.
Restricted Share shall mean a share of Stock which may not be traded or sold, until the date the Award vests and the Transferability Restrictions expire.
Restricted Share Unit means the right, as described in Section 10, to receive an amount, payable in either cash or shares of Stock, equal to the value of a specified number of shares of Stock. No certificates shall be issued with respect to such Restricted Share Unit, except as provided in subsection 10(d), and the Corporation shall maintain a bookkeeping account in the name of the Outside Director to which the Restricted Share Unit shall relate.
Retainer means the annual retainer payable to an Outside Director for services rendered as a Director.
Rule 16b-3 means Rule 16b-3 under the Securities Exchange Act of 1934, as amended.
Retirement and Retires means the separation from service as a Director on or after the date the Director has attained age 55.
Stock means the shares of the Corporations common stock, par value $0.01 per share.
Stock Appreciation Right (SAR) has the meaning set forth in subsection 8(l)(i) of this Plan.
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Transferability Restrictions means the restrictions on transferability imposed on Awards of Restricted Shares or Restricted Share Units.
3. | COMPENSATION |
The Outside Directors will be entitled to receive compensation for their services as a member of the Board, and any of its committees, as may be determined from time to time by the Board following a review of, and recommendation on, Outside Director compensation made by the Corporate Governance Committee and/or Compensation Committee. The compensation paid to each Outside Director is referred to herein as an Award , and may be paid in cash, Stock, Options, SARs, Restricted Shares, Restricted Share Units, other forms of equity or any combination thereof as is determined by the Board.
4. | PARTICIPATION AND FORM OF GRANT |
Participation in the Plan is limited to Outside Directors. It is intended that all Outside Directors will be participants in the Plan.
All Awards under the Plan shall be made in the form of Options, SARs, Stock, cash, Restricted Shares, Restricted Share Units, other forms of equity or any combination thereof. Notwithstanding anything in this Plan to the contrary, all Awards shall contain restrictions on assignability to the extent required under Rule 16b-3 of the Exchange Act.
5. | ADMINISTRATION OF THE PLAN |
The Plan shall be administered by the Board, which shall have sole and complete discretion and authority with respect thereto, except as expressly limited by the Plan. All action taken by the Board in the administration and interpretation of the Plan shall be final and binding on all matters relating to the Plan. All questions of interpretation, administration and application of the Plan shall be determined by a majority of the members of the Board, except that the Board may authorize any Directors, officers or employees of the Corporation to assist the Board in the administration of the Plan and to execute documents on behalf of the Board. The Board also may delegate to a committee of the Board, or such other Directors, officers or employees, as the Board determines, such other ministerial and discretionary duties as it sees fit.
The Corporation or the Board may employ such legal counsel, consultants and agents as it may deem desirable for the administration of the Plan, and may rely upon any advice or opinion received from any such counsel or consultant and any computation received from any such consultant or agent. No member of the Board shall be liable for any act done or omitted to be done by such member, or by any other member of the Board, in connection with the Plan, except for such members own willful misconduct or as otherwise expressly provided by statute.
The Board shall have the power to promulgate rules and other guidelines in connection with the performance of its obligations, powers and duties under the Plan, including its duty to administer and construe the Plan and the Awards.
All expenses of administering the Plan shall be paid by the Corporation.
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6. | TERM OF PLAN |
The Plan shall become effective as of the Effective Date. The Plan shall remain in effect until October 31, 2024, unless the Plan is terminated prior thereto by the Board. No Awards may be granted after the termination date of the Plan, but Awards theretofore granted shall continue in force beyond that date pursuant to their terms.
7. | SHARES SUBJECT TO THE PLAN; ADJUSTMENTS |
(a) Shares Subject to the Plan . The aggregate maximum number of shares of Stock available for grant under the Plan shall be 400,000 shares, subject to the adjustment provision set forth in subsection 7(b) below. Shares of Stock subject to the Plan may consist in whole or in part of authorized but unissued shares or Treasury shares, as the Board may from time to time determine. Shares subject to Awards which become ineligible for purchase, and Restricted Shares forfeited, will be available for Awards under the Plan to the extent permitted by Section 16 of the Exchange Act (or the rules and regulations promulgated thereunder) and to the extent determined to be appropriate by the Board. Notwithstanding anything in this Plan to the contrary, each grant of Awards under this Plan shall be subject to the availability of shares of Stock under this subsection 7(a).
(b) Adjustments . In the event there are any changes in the Stock or the capitalization of the Corporation through a corporate transaction, such as any merger, any acquisition through the issuance of capital stock of the Corporation, any consolidation, any separation of the Corporation (including a spin-off or other distribution of stock of the Corporation), any reorganization of the Corporation (whether or not such reorganization comes within the definition of such term in Section 368 of the Code), or any partial or complete liquidation by the Corporation, recapitalization, stock dividend, stock split or other change in the corporate structure, appropriate adjustments and changes shall be made by the Board, to the extent necessary to preserve the benefit to the Outside Director contemplated hereby, to reflect such changes in (i) the aggregate number of shares of Stock subject to the Plan, (ii) the number of shares and the Award price per share of all shares of Stock subject to outstanding Awards, and (iii) such other provisions of the Plan as may be necessary and equitable to carry out the foregoing purposes, provided, however, that no such adjustment or change may be made to the extent that such adjustment or change will result in the dilution or enlargement of any rights of any Outside Director.
8. | STOCK OPTIONS |
(a) Annual Grant of Options . Except to the extent that the Board determines otherwise, Options may be granted to Outside Directors under the Plan as follows:
(i) The Board, by resolution, may provide that each Outside Director in office on January 1 of the calendar year may be automatically granted an Option to purchase a number of shares of Stock to be determined by the Board. The Board, by resolution, also may provide that each Outside Director who is first elected or appointed to the Board after January 1 of the calendar year, may be automatically granted a pro rata number of Options hereunder, without further action by the Board or the stockholders of the
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Corporation, on the earlier of the date of the first regular meeting during the calendar year of the Board or the Compensation Committee after the date such Outside Director first becomes eligible for the grant of Options under this subsection 8(a). The Options to be pro-rated will be the amount that would have been paid during the calendar year.
(ii) In addition, the Board, by resolution, may provide that each Outside Director who during the calendar year is designated to serve as the Lead Director or as the Chair of any one or more of the Audit, Compensation, or Corporate Governance Committees of the Board, or such other committee as may be determined by the Board, may be granted an Option to purchase an additional number of shares of Stock as may be determined by the Board.
(iii) A grant of Options as payment of either the annual Retainer or for Lead Director or each applicable Chair of a Committee is referred to herein as Annual Options.
(iv) To the extent determined by the Board, Annual Options that may be granted to each Outside Director, the Lead Director and each Chair of the Audit, Compensation, or Corporate Governance Committees, as of January 1 of the calendar year, shall be automatically granted, without further action by the Board or the stockholders of the Corporation, on the first business day of such calendar year.
(b) Election of Additional Option . To the extent determined by the Board, each Outside Director may elect to receive the cash portion of his or her annual Retainer in the form of an additional Option (hereinafter referred to as an Additional Option ), in increments of 50 percent of such cash portion of the Retainer. Except as otherwise provided below, such election must be made prior to the date that services are rendered in the calendar year in which such Retainer otherwise would be paid and shall be irrevocable thereafter for such calendar year; provided, however, that an election by an Outside Director pursuant to this subsection for a calendar year (or portion thereof) shall be valid and effective for all purposes for all succeeding calendar years, unless and until such election is revoked or modified by such Outside Director prior to the date that services are rendered in such succeeding calendar year(s); and, provided further, that no such election, revocation or modification may be made within six months of another such election, revocation or modification if the exemption afforded by Rule 16b-3 would not be available as a result thereof.
Notwithstanding the preceding, an individual who is first elected to the Board as an Outside Director during a calendar year may, to the extent determined by the Board, be permitted to make an election to receive the cash portion of his or her annual Retainer in the form of an Additional Option, in increments of 50 percent of such cash portion of the Retainer, during the thirty day period following his or her election date. An election under this paragraph shall be subject to the terms and conditions of this Section.
The number of shares of Stock subject to this Additional Option shall be based (i) on the same pricing methodology the Corporation uses for stock options granted to its management employees, (ii) the Black-Scholes-Merton option value as of the date of grant, or (iii) such other pricing methodology as determined by the Board in its sole discretion. To the extent Additional
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Options are authorized by the Board, each Outside Director as of January 1 of the calendar year, shall be automatically granted the Additional Options elected hereunder, without further action by the Board or the stockholders of the Corporation, on the first business day of such calendar year. To the extent Additional Options are authorized by the Board, each Outside Director who first becomes eligible for a grant after January 1 of the calendar year, shall be automatically granted the Additional Options elected hereunder, without further action by the Board or the stockholders of the Corporation, on the first business day following the date such Outside Director becomes eligible for such grant.
(c) Form of Additional Option Election . An election by an Outside Director to receive some or all of the cash portion of his or her Retainer as an Additional Option shall (i) be in writing, (ii) be delivered to the Secretary of the Corporation, and (iii) be irrevocable in all respects with respect to the calendar year(s) to which the election relates. If no election has ever been made by the Outside Director pursuant to subsection 8(b) above, he or she shall be deemed to have made an election to receive the entire cash portion of the Retainer in cash.
(d) Period of Option . The period of each Option shall be 10 years from the date it is granted.
(e) Option Price . The exercise price of an Option shall be the Fair Market Value of the Stock at the time the Option is granted.
(f) Limitations on Exercise . Each Option shall not be exercisable until at least one year has expired after the granting of the Option, during which time the Outside Director shall have been in the continuous service as a Director of the Corporation; provided, however, that the provisions of this subsection 8(f) shall not apply and all Options outstanding under the Plan shall be exercisable in full if the Outside Director separates from service as a Director within the two (2) year period following the date a Change of Control of the Corporation occurs. Commencing one year after the date the Option was granted, the Outside Director may purchase the total number of shares of Stock covered by the Option; provided, however, that if the Director separates from service as a Director for any reason other than death, Retirement, a voluntary decision by the Outside Director not to stand for reelection to the Board or total and permanent disability, the Option shall be exercisable only for the number of shares of Stock which were exercisable on the date of such separation from service. In no event, however, may an Option be exercised more than 10 years after the date of its grant.
(g) Exercise; Notice Thereof . Options shall be exercised by delivering to the Corporation, at the location as directed by the Corporations Treasurer, a written notice of the number of shares of Stock with respect to which Option rights are being exercised and by paying in full the Option Price of the shares at the time being acquired. Payment may be made in cash, a check payable to the Corporation, in shares of Stock transferable to the Corporation and having a Fair Market Value on the transfer date equal to the amount payable to the Corporation, or such other methods, including cashless exercise arrangements, as permitted by the Board in its sole discretion. The date of exercise shall be deemed to be the date the Corporation receives the written notice and payment for the shares being purchased. An Outside Director shall have none of the rights of a stockholder with respect to shares covered by an Option until the Outside Director becomes the record holder of such shares.
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(h) Exercise after Death, Retirement, Disability or Voluntary Separation of Service . If a Director dies, retires, becomes totally and permanently disabled, or separates from service on the Board by reason of a voluntary decision by the Outside Director not to stand for reelection to the Board, without having exercised an Option in full, the remaining portion of such Option may be exercised, without regard to the limitations in subsection 8(f), within the remaining period of the Option. Upon an Outside Directors death, the Option may be exercised by the person or persons to whom such Outside Directors rights under the Option shall pass by will or the laws of descent and distribution or, if no such person has such rights, by his executor or administrator.
(i) Non-transferability . During the Outside Directors lifetime, Options shall be exercisable only by such Outside Director. Options shall not be transferable other than by will or the laws of descent and distribution upon the Outside Directors death. Notwithstanding anything in this subsection 8(i) to the contrary, Outside Directors shall have the right to transfer Options, to the extent allowed under Rule 16b-3 of the Exchange Act, subject to the same terms and conditions applicable to Options granted to the Chief Executive Officer of the Corporation under Committee Rules.
(j) Purchase for Investment . It is contemplated that the Corporation will register shares sold to Directors pursuant to the Plan under the Securities Act of 1933. In the absence of an effective registration, however, an Outside Director exercising an Option hereunder may be required to give a representation that he/she is acquiring such shares as an investment and not with a view to distribution thereof.
(k) Options for Nonresident Aliens . In the case of any Option awarded to an Outside Director who is not a resident of the United States, the Board may (i) waive or alter the conditions set forth in subsections 8(a) through 8(j) to the extent that such action is necessary to conform such Option to applicable foreign law, or (ii) take any action, either before or after the award of such Option, which it deems advisable to obtain approval of such Option by an appropriate governmental entity; provided, however, that no action may be taken hereunder if such action would (1) increase any benefits accruing to any Outside Directors under the Plan, (2) increase the number of securities which may be issued under the Plan, (3) modify the requirements for eligibility to participate in the Plan, or (4) result in a failure to comply with applicable provisions of the Securities Act of 1933, the Exchange Act or the Code.
(l) Election to Receive Cash Rather than Stock .
(i) At the same time as Options are granted the Board may also grant to designated Outside Directors the right to convert a specified number of shares of Stock covered by such Options to cash, subject to the terms and conditions of this subsection 8(l). For each such Option so converted, the Outside Director shall be entitled to receive cash equal to the difference between the Outside Directors Option Price and the Fair Market Value of the Stock on the date of conversion. Such a right shall be referred to herein as a Stock Appreciation Right ( SAR ). Outside Directors to whom a SAR has been granted shall be notified of such grant and of the Options to which such SAR pertains. A SAR may be revoked by the Board, in its sole discretion, at any time, provided, however, that no such revocation may be taken hereunder if such action would result in the disallowance of a deduction to the Corporation under Section 162(m) of the Code or any successor section.
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(ii) An Outside Director who has been granted a SAR may exercise such SAR, once it is otherwise vested pursuant to subsections 8(f) or 8(h), during such periods as provided for in the rules promulgated under Section 16 of the Exchange Act. The SAR shall expire when the period of the subject Option expires.
(iii) At the time an Outside Director converts one or more shares of Stock covered by an Option to cash pursuant to a SAR, such Outside Director must exercise one or more Options, which were granted at the same time as the Option subject to such SAR, for an equal number of shares of Stock. In the event that the number of shares and the Option Price per share of all shares of Stock subject to outstanding Options is adjusted as provided in the Plan, the above SARs shall automatically be adjusted in the same ratio which reflects the adjustment to the number of shares and the Option Price per share of all shares of Stock subject to outstanding Options.
(m) No Repricings . No Option or SAR may be re-priced, replaced, re-granted through cancellation, or modified without stockholder approval (except in connection with a change in the Common Stock or the capitalization of the Corporation as provided in Section 7 hereof) if the effect would be to reduce the exercise price for the shares underlying such Option or SAR. In addition, no Option or SAR may be repurchased or otherwise cancelled in exchange for cash or other Awards (except in connection with a change in the Common Stock or the capitalization of the Corporation as provided in Section 7 hereof) if the Option Price or Grant Price of the SAR is equal to or greater than the Fair Market Value of the Common Stock at the time of such repurchase or exchange. Notwithstanding anything herein to the contrary, the Committee may take any such action set forth in this subsection 8(m) subject to the approval of the stockholders.
9. | RESTRICTED SHARES |
The Board may from time to time designate those Outside Directors who shall receive Restricted Share Awards. Each grant of Restricted Shares under the Plan shall be evidenced by a notice from the Board to the Outside Director. The notice shall contain such terms and conditions, not inconsistent with the Plan, as shall be determined by the Board and shall indicate the number of Restricted Shares awarded and the following terms and conditions of the award.
(a) Grant of Restricted Shares . The Board shall determine the number of Restricted Shares to be included in the grant and the conditions and period or periods during which the Award is subject to vesting and the Transferability Restrictions applicable to the Restricted Shares will be in force (the Restricted Period ). The Restricted Period may be the same for all Restricted Shares granted at a particular time to any-one Outside Director or may be different with respect to different Outside Directors or with respect to various of the Restricted Shares granted to the same Outside Director, all as determined by the Board at the time of grant.
(b) Transferability Restrictions . During the Restricted Period, Restricted Shares may not be sold, assigned, transferred or otherwise disposed of, or mortgaged, pledged or otherwise encumbered. Furthermore, an Outside Directors right, if any, to receive Stock upon termination
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of the Restricted Period may not be assigned or transferred except by will or by the laws of descent and distribution. In order to enforce the limitations imposed upon the Restricted Shares the Board may (i) cause a legend or legends to be placed on any such certificates, and/or (ii) issue stop transfer instructions as it deems necessary or appropriate. Holders of Restricted Shares limited as to sale under this subsection 9(b) shall have rights as a shareholder with respect to such shares to receive dividends in cash or other property or other distribution or rights in respect of such shares, and to vote such shares as the record owner thereof. With respect to each grant of Restricted Shares, the Board shall determine the vesting conditions and Transferability Restrictions which will apply to the Restricted Shares for all or part of the Restricted Period. By way of illustration but not by way of limitation, the Board may provide (i) that the Outside Director will not be entitled to receive any shares of Stock unless he or she still serves as a Director of the Corporation at the end of the Restricted Period, (ii) that the Outside Director will become vested in Restricted Shares according to a schedule determined by the Board, or under other terms and conditions determined by the Board, and (iii) how any vesting conditions and Transferability Restrictions will be applied, modified or accelerated in the case of the Outside Directors death or total and permanent disability.
(c) Manner of Holding and Delivering Restricted Shares . Each certificate issued for Restricted Shares shall be registered in the name of the Outside Director and deposited with the Corporation or its designee. These certificates shall remain in the possession of the Corporation or its designee until the end of the applicable Restricted Period or, if the Board has provided for earlier termination of the Transferability Restrictions following an Outside Directors death, total and permanent disability or earlier vesting of the shares of Stock, such earlier termination of the Transferability Restrictions. At whichever time is applicable, certificates representing the number of shares of Stock to which the Outside Director is then entitled shall be delivered to the Outside Director free and clear of the Transferability Restrictions; provided that in the case of an Outside Director who is not entitled to receive the full number of Restricted Shares evidenced by the certificates then being released from escrow because of the application of the vesting conditions and/or Transferability Restrictions, those certificates shall be returned to the Corporation and canceled and a new certificate representing the shares of Stock, if any, to which the Outside Director is entitled shall be issued and delivered to the Outside Director, free and clear of the vesting conditions and Transferability Restrictions.
10. | RESTRICTED SHARE UNITS |
The Board shall from time to time designate those Outside Directors who shall receive Restricted Share Unit Awards. The Board shall advise such Outside Directors of their Awards by a letter indicating the number of Restricted Share Units awarded and the following terms and conditions of the award.
(a) Restricted Share Units may be granted to Outside Directors as of the first day of a Restricted Period . The number of Restricted Share Units to be granted to each Outside Director and the Restricted Period shall be determined by the Board in its sole discretion.
(b) Transferability Restrictions . During the Restricted Period, Restricted Share Units may not be sold, assigned, transferred or otherwise disposed of, or mortgaged, pledged or otherwise encumbered. Furthermore, an Outside Directors right, if any, to receive cash or Stock
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upon termination of the Restricted Period may not be assigned or transferred except by will or by the laws of descent and distribution. With respect to each grant of Restricted Share Units, the Board shall determine the vesting conditions and Transferability Restrictions which will apply to the Restricted Share Units for all or part of the Restricted Period. By way of illustration but not by way of limitation, the Board may provide (i) that the Outside Director will forfeit any Restricted Share Units unless he or she still serves as a Director of the Corporation at the end of the Restricted Period, (ii) that the Outside Director will become vested in Restricted Share Units according to a schedule determined by the Board or under other terms and conditions determined by the Board, and (iii) how any vesting conditions and Transferability Restrictions will be applied, modified or accelerated in the case of the Outside Directors death or total and permanent disability.
(c) Dividends . During the Restricted Period, Outside Directors will be credited with dividends, equivalent in value to those declared and paid on shares of Stock, on all Restricted Share Units granted to them. These dividends will be regarded as having been reinvested in Restricted Share Units on the date of the Stock dividend payments based on the then Fair Market Value of the Stock thereby increasing the number of Restricted Share Units held by an Outside Director. Such dividend equivalents will be paid only to the extent the underlying Awards vest. Holders of Restricted Share Units under this subsection 10(c) shall have none of the rights of a shareholder with respect to such shares. Holders of Restricted Share Units are not entitled to receive dividends in cash or other property, nor other distribution of rights in respect of such shares, nor to vote such shares as the record owner thereof.
(d) Payment of Restricted Share Units . The payment of Restricted Share Units shall be made in shares of Stock unless the Board determines at the time of grant that payment will be made in cash or a combination of both cash and shares of Stock. The payment of Restricted Share Units shall be made within 90 days following the end of the Restricted Period, or if sooner, no later than March 15 of the year following the year in which the Restricted Period ends.
11. | NOTICES; DELIVERY OF STOCK CERTIFICATES |
Any notice required or permitted to be given by the Corporation or the Board pursuant to the Plan shall be deemed given when personally delivered or deposited in the United States mail, registered or certified, postage prepaid, addressed to the Outside Director at the last address shown for the Outside Director on the records of the Corporation.
12. | AMENDMENT AND TERMINATION |
The Board may at any time amend, suspend, or discontinue the Plan or alter or amend any or all Awards under the Plan to the extent (i) permitted by law, (ii) permitted by the rules of any stock exchange on which the Stock or any other security of the Corporation is listed, and (iii) permitted under applicable provisions of the Securities Act of 1933, as amended, the Exchange Act (including Rule 16b-3 thereof); provided, however, that if any of the foregoing requires the approval by the stockholders of any such amendment, suspension or discontinuance, then the Board may take such action subject to the approval of the stockholders. Except as provided in subsection 7(b), no such amendment, suspension or termination of the Plan shall, without the consent of the Director, adversely alter or change any of the rights or obligations
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under any Award granted to the Director. Except as provided in subsection 8(k) and this Section 12, no such amendment, suspension, or termination of the Plan shall, without the consent of the Director, adversely alter or change any of the rights or obligations under any Options or other rights previously granted the Director under the Plan.
13. | TAXES |
The Corporation shall require the withholding of all taxes as required by law. An Outside Director may elect, to the extent allowed by law, to have any portion of the federal, state or local income tax withholding required with respect to an Award satisfied by tendering Stock to the Corporation, which, in the absence of such an election, would have been issued to the Director in connection with the Award.
14. | GOVERNING LAW |
The terms of the Plan shall be governed, construed, administered and regulated in accordance with the laws of the state of Delaware and applicable federal law. In the event any provision of the Plan shall be determined to be illegal or invalid for any reason, the other provisions of the Plan shall continue in full force and effect as if such illegal or invalid provision had never been included herein.
15. | DIRECTORS SERVICE |
Nothing contained in the Plan, or with respect to any grant hereunder, shall interfere with or limit in any way the right of stockholders of the Corporation to remove any Director from the Board, nor confer upon any Director any right to continue to serve on the Board as a Director.
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Exhibit 10.11
HALYARD HEALTH, INC.
RESTRICTED SHARE UNIT AWARD
TERMS AND CONDITIONS
| Number of Share Units Granted . The Corporation grants to «First_Name» «Last_Name» (the Outside Director) «Number_of_RSUs» Restricted Share Units (rounded to the nearest whole share), effective , subject to the terms and conditions of the Halyard Health, Inc. Outside Directors Compensation Plan (the Plan). |
| Transferability Restrictions . During the Restricted Period, (i) the Restricted Share Units shall remain unvested and subject to forfeiture, and (ii) the Outside Director may not sell, assign, transfer, or otherwise dispose of the Restricted Share Units except upon the death of the Outside Director (i) by will, (ii) by the laws of descent and distribution or (iii) pursuant to a designation by the Outside Director of a beneficiary or beneficiaries, provided that no such designation shall be effective unless filed with the Corporation prior to the death of such Outside Director. |
| Restricted Period . The Restricted Period shall begin on the date of the granting of this Award, and shall end on the date the Outside Director terminates service on the Board of Directors of the Corporation (the Board) by reason of: death; retirement; resignation; removal from office, with or without cause; total and permanent disability; separation from service by reason of a voluntary decision of the Outside Director not to stand for reelection; or any separation from service within two years of a Change in Control. |
| Dividend Credits . Holders of Restricted Share Units shall have none of the rights of a shareholder with respect to such shares. For example, holders of Restricted Share Units shall not have any right to receive dividends or other distribution or rights in respect of such shares, nor to vote such shares as the record owner thereof. During the Restricted Period, the Outside Director will be credited with dividends, equivalent in value to those declared and paid on shares of Common Stock, on all Restricted Share Units granted under this Award. These dividends will be regarded as having been reinvested in Restricted Share Units on the date of the Common Stock dividend payments based on the then Fair Market Value of the Common Stock, thereby increasing the number of Restricted Share Units held by the Outside Director. |
| Payment of Restricted Share Units . The payment of Restricted Share Units shall be made in shares of Common Stock. In lieu of any fractional shares, the Corporation shall pay an amount equal to the Fair Market Value of such fractional shares. The payment of Restricted Share Units shall be made within 90 days following the end of the Restricted Period or, if sooner, no later than March 15 of the year following the year in which the Restricted Period ends. |
| Amendments . The Board may at any time alter or amend this Award to the extent (1) permitted by law, (2) permitted by the rules of any stock exchange on which the common stock or any other security of the Corporation is listed, and (3) permitted under applicable provisions of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended (including rule 16b-3 thereof). |
Exhibit 10.12
HALYARD HEALTH, INC.
EXECUTIVE OFFICER ACHIEVEMENT AWARD PROGRAM
Effective November 1, 2014
EXECUTIVE OFFICER ACHIEVEMENT AWARD PROGRAM
Effective November 1, 2014
Special Provisions Relating to 2014
Pursuant to that certain Employee Matters Agreement (the EMA), dated as of October 31, 2014, between Kimberly-Clark Corporation (Kimberly-Clark), and Halyard Health, Inc. (the Company), in connection of Kimberly-Clarks spin-off of its health care businesses to the Company, the accrual for Business Employees (as such term is defined in the EMA) under the Kimberly-Clark Executive Officer Achievement Award Program, the Kimberly-Clark Management Achievement Award Program and the Kimberly-Clark Achievement Incentive Plan (collectively, the Kimberly-Clark Incentive Plans) for the portion of the 2014 calendar year occurring prior to the effective time of the spin-off is being transferred to Halyard on the distribution date, and Halyard has agreed to pay such awards in February 2015 based on actual results and performance ratings. Such amounts shall be paid out pursuant to the Companys Management Achievement Award Program.
In addition, the Compensation Committee of the Company may, in its discretion, make additional incentive compensation awards for 2014 under the EOAAP to certain Business Employees based upon the performance of the Company during the remainder of the year (November and December 2014). Accordingly, notwithstanding the eligibility requirements set forth in Section 2, each Business Employee for whom the Compensation Committee grants such an additional award for 2014 shall be a Participant in the EOAAP for such year.
HALYARD HEALTH, INC.
EXECUTIVE OFFICER ACHIEVEMENT AWARD PROGRAM
(Effective November 1, 2014)
1. PURPOSE
This Executive Officer Achievement Award Program (EOAAP or the Plan) is effective November 1, 2014. The purpose of EOAAP is to further unite the interests of the stockholders of Halyard Health, Inc. (the Company) and its executive officers through the annual payment of performance-based incentive compensation to each participating executive in the form of a cash award.
2. ELIGIBILITY
Employees eligible to participate in EOAAP (the Participants) shall be limited to the Chief Executive Officer and other executive officers of the Company (within the meaning of Rule 3b-7 of the Securities Exchange Act of 1934 as amended from time to time) as of March 30 of each calendar year (performance year) who shall receive awards under the Plan for such performance year. An individual who becomes an executive officer after March 30 and on or before October 1 of a calendar year shall receive an award as provided in Section 3.
3. AWARDS
Subject to the Compensation Committees discretion to reduce such awards, each Participant shall be entitled to an award for each performance year equal to 2.0 percent of the Companys earnings before unusual items. The Companys independent auditors will review the Companys calculation of the award amount and confirm its mathematical accuracy to the Compensation Committee.
An individual who becomes a Participant after March 30 and on or before October 1 of a performance year shall receive an award for that performance year based on the earnings before unusual items of the Company for each calendar quarter following the quarter in which the individual becomes an executive officer.
4. PAYMENT OF AWARDS; COMPENSATION COMMITTEE DISCRETION TO REDUCE
As soon as practicable after the end of each performance year, the Companys independent auditors shall report to the Compensation Committee the Companys earnings before unusual items, and the Compensation Committee shall certify the amount of each award for that year under the provisions of this Plan.
The Compensation Committee, in its sole discretion, based on any factors the Compensation Committee deems appropriate including objectives established under the Companys Management Achievement Award Program (MAAP) for the performance year, may reduce the award to a Participant in any year (including reduction to zero if the Compensation Committee so determines). The Compensation Committee shall make a determination of whether and to what extent to reduce awards under the Plan for each year at such time or times as the Compensation Committee shall deem appropriate. The reduction in the amount of an award to a Participant for a performance year shall have no effect on the amount of the award to any other Participant for such year. In the event that the Compensation Committee determines a Participants reduced award amount under the EOAAP based upon objectives established under the MAAP, the Participants award nevertheless shall remain subject to the EOAPP. Participants under the EOAPP will be ineligible for separate awards relating to the same performance period under the MAAP.
Payments of awards to Participants who are employees of subsidiaries of the Company shall be paid directly by such subsidiaries.
A Participants Separation from Service for any reason prior to the payment of the award may result in a pro rata or other reduction to the amount of the award that would otherwise be payable based upon actual performance over the relevant performance period, as shall be determined fair and equitable by the Compensation Committee in its discretion, and any such award shall be paid no later than 60 days following the end of the performance year. A Separation from Service means a termination of employment with the Company or any Subsidiary. A Separation from Service with the Company or a Subsidiary to accept immediate reemployment with the Company or a Subsidiary likewise shall not be deemed to be a Separation from Service for purposes of the Plan. A Separation from Service will also be deemed to have occurred if the Employees services with the Company or any Subsidiary is reduced to an annual rate that is 20 percent or less of the services rendered, on average, during the immediately preceding three years of employment (or if employed less than three years, such lesser period). Subsidiary means any domestic or foreign corporation at least twenty percent (20%) of whose shares normally entitled to vote in electing directors is owned directly or indirectly by the Company or by other Subsidiaries, provided, however, that at least fifty percent (50%) shall replace at least twenty percent (20%) where there is not a legitimate business criteria for using such lower percentage.
Notwithstanding any provision of EOAAP, no award shall be paid to a Participant who, in any calendar year, has discharged his principal accountabilities in a manner deemed unacceptable by the Compensation Committee.
Awards shall be paid in cash no later than 60 days following the end of the performance year, provided, however, should any payments under this Plan be delayed, no interest will be owed to the Participant with respect to such late payment.
5. GENERAL PROVISIONS
The Plan shall be administered by the Compensation Committee. The Compensation Committee, in its sole discretion, shall have the power to interpret and construe the Plan; provided, however, that no such action or determination may increase the amount of compensation payable that would otherwise be due under an award, or otherwise result in the disallowance of a deduction to the Company under Section 162(m) of the Code or any successor section. Any interpretation or construction of any provisions of the Plan by the Compensation Committee shall be final and conclusive upon all persons. No member of the Board or the Compensation Committee shall be liable for any action or determination made in good faith.
This Plan is intended to be exempt or compliant with Section 409A of the Code and the guidance promulgated thereunder. Notwithstanding any other provision of this Plan, the Company and the Compensation Committee shall administer and interpret the Plan, and exercise all authority and discretion under the Plan, to satisfy the exemption or compliance requirements of Code Section 409A and the guidance promulgated thereunder and any noncompliant provisions of this Plan will either be void or deemed amended to comply with Section 409A of the Code and the guidance promulgated thereunder.
Compensation Committee means the Compensation Committee of the Board of Directors of the Company, provided that if the requisite number of members of the Compensation Committee are not outside directors as defined in Section 162(m) of the Code, so that the Compensation Committee qualifies as an independent compensation committee under Section 162(m) of the Code, then the Plan shall be administered by a committee, all of whom are outside directors, appointed by the Board and consisting of two or more directors with full authority to act in the matter.
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Except as provided in this Plan, no right of any Participant shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, charge, attachment, garnishment, execution, levy, bankruptcy, or any other disposition of any kind, whether voluntary or involuntary, prior to actual payment of an award. No Participant, or any other person, shall have any interest in any fund, or in any specific asset or assets of the Company, by reason of an award that has been made but has not been paid or distributed.
Nothing contained in the EOAAP shall be construed as a contract of employment or as a right of any Participant to be continued in the employment of the Company, or as a limitation on the right of the Company to discharge any Participant with or without cause.
The Compensation Committee may at any time amend, suspend, or discontinue the Plan or alter or amend any or all awards under the Plan to the extent (1) permitted by law and (2) that such action would not result in the disallowance of a deduction to the Company under Section 162(m) of the Code or any successor section (including the rules and regulations promulgated thereunder); provided, however, that if any of the foregoing requires the approval by stockholders of the Company, then the Compensation Committee may take such action subject to the approval of the stockholders. No such amendment, suspension, or discontinuance of the Plan shall, without the consent of the Participant, adversely alter or change any of the rights or obligations under any awards previously granted the Participant. In the case of a Participant employed outside the United States, the Compensation Committee may vary the provisions of the Plan as it may deem appropriate to conform to local laws, practices and procedures. Further, unless the stockholders of the Company shall have first approved such action, no amendment shall be made which increases the maximum amount payable with respect to any award pursuant to the formula described in Section 3.
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Exhibit 10.13
HALYARD HEALTH, INC.
EXECUTIVE SEVERANCE PLAN
Effective November 1, 2014
1. Preamble and Statement of Purpose . The purpose of this Plan is to assure the Corporation that it will have the continued dedication of, and the availability of objective advice and counsel from, key executives of the Corporation notwithstanding the possibility, threat or occurrence of a change of control of the Corporation.
In the event the Corporation receives any proposal from a third person concerning a possible business combination with the Corporation, or acquisition of the Corporations equity securities, or otherwise considers or pursues a transaction that could lead to a change of control, the Committee believes it imperative that the Corporation and the Board of Directors of the Corporation (the Board) be able to rely upon key executives to continue in their positions and be available for advice, if requested, without concern that those individuals might be distracted by the personal uncertainties and risks created by such a possibility.
Should the Corporation receive or consider any such proposal or transaction, in addition to their regular duties, such key executives may be called upon to assist in the assessment of the proposal or transaction, to advise management and the Board as to whether the proposal or transaction would be in the best interests of the Corporation and its stockholders, and to take such other actions as the Board might determine to be appropriate.
2. Definitions . As used in this Plan, the following terms shall have the following respective meanings. Notwithstanding anything herein to the contrary, the Plan shall be interpreted and administered in a manner so that any amount or benefit payable hereunder shall be paid or provided in a manner that is exempt or compliant with the requirements of Internal Revenue Code Section 409A and applicable guidance thereunder.
(a) Agreements : Executive Severance Agreements in substantially the forms approved by the Committee and attached hereto as Exhibit A (for Tier I Participants) or Exhibit B (for Tier II Participants) which provide for participation and payment under this Plan.
(b) Annual Bonus Amount : For any Participant, the three year average of the annual awards paid to the Participant under the Halyard Health, Inc. Executive Officer Achievement Award Program or the Halyard Health, Inc. Management Achievement Award Program, as applicable, or any successor or additional plan (the Bonus Program). The three year average of the annual awards paid to the Participant will be determined based on the higher of the three year period consisting of either (i) the year in which the Relevant Date occurred (or, if the bonus is not yet paid as of the Relevant Date, for the preceding year) and the two preceding years or, (ii) the year of the Qualified Termination of Employment (or, if the bonus is not yet paid as of the Qualified Termination of Employment, for the preceding year) and the two preceding years. If a Participant has been paid less than three years of annual awards the Annual Bonus Amount will be determined based on the average dollar amount of the annual awards paid in prior years to the Participant under the Bonus Program. If a Participant has not received any prior payment of annual awards, the Annual Bonus Amount under the Bonus Program will be determined as follows:
(i) | For a Participant classified at the Corporations Tier II level, as defined by the Corporations compensation department, the Annual Bonus Amount shall be based on the average dollar amount of the annual awards paid over the prior three year period to other employees at the same grade level. |
(ii) | For a Participant at the Tier I (except for the Chief Executive Officer of the Corporation), the Annual Bonus Amount shall be based on the average dollar amount of the annual awards paid over the prior three year period to Participants at the Tier I level. |
(iii) | For the Chief Executive Officer of the Corporation, the Annual Bonus Amount shall be based on the average dollar amount of the annual awards paid over the prior three year period to the previous Chief Executive Officer(s) of the Corporation. |
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For the purpose of determining the Annual Bonus Amount during the period beginning on the Effective Date of the Plan and ending on the third anniversary of the Effective Date (the Initial Period), the Annual Bonus Amount will take into account bonus awards paid to the Participant for services in an equivalent position for the most recent years under the Kimberly-Clark Corporation Executive Officer Achievement Award Program and/or the Kimberly-Clark Corporation Management Achievement Award Program, as if they had been earned under the Corporations Bonus Program for such years.
Notwithstanding anything in this Plan to the contrary, this definition may be amended at the discretion of the Committee as may be necessary for amounts payable by the Corporation (including amounts payable under other equity, incentive, or benefit programs) to comply with the definition of performance based compensation under Section 162(m) of the Code or any successor section (including the rules and regulations promulgated thereunder).
(c) Average PSU Payout : For any Participant, the three year average of the dollar amount of the PRSUs paid to the Participant under the Equity Plans, or any successor or additional plan. The three year average of the PRSUs paid to the Participant will be determined based on the higher of two dollar amount averages computed during alternative three year periods consisting of either (i) the year in which the Relevant Date occurred (or, if the award is not yet paid as of the Relevant Date, for the preceding year) and the two preceding years or, (ii) the year of the Qualified Termination of Employment (or, if the award is not yet paid as of the Qualified Termination of Employment, for the preceding year) and the two preceding years. If a Participant has been paid less than three years of PRSUs, the three year average of the PRSUs paid to the Participant will be determined based on the average dollar amount of the PRSUs paid in prior years to the Participant under the Equity Plans, or any successor or additional plan. If a Participant has not received any prior payment of PRSUs, the Average PRSU Payout under the Equity Plans, or any successor or additional plan, will be determined as follows:
(i) | For a Participant classified at the Tier II level, as defined by the Corporations compensation department, the Average PRSU Payout shall be calculated based on the prior three year average dollar amount of the PRSUs paid to other employees at the same grade level. |
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(ii) | For a Participant at the Tier I level (except for the Chief Executive Officer of the Corporation), the Average PRSU Payout shall be calculated based on the prior three year average dollar amount of the PRSUs paid to Participants at the Tier I level. |
(iii) | For the Chief Executive Officer of the Corporation, the Average PRSU Payout shall be calculated based on the prior three year average dollar amount of the PRSUs paid to the previous Chief Executive Officer(s) of the Corporation. |
Notwithstanding anything in this Plan to the contrary, this definition may be amended at the discretion of the Committee to allow any amounts payable by the Corporation to comply with the definition of performance-based compensation under Section 162(m) of the Code or any successor section (including the rules and regulations promulgated thereunder).
(d) | Cause : The term Cause shall mean any of the following: |
(i) | the commission by the Participant of a felony; |
(ii) | the Participants dishonesty, habitual neglect or incompetence in the management of the affairs of the Corporation; or |
(iii) | the refusal or failure by the Participant to act in accordance with any lawful directive or order of the Corporation, or an act or failure to act by the Participant which is in bad faith and which is detrimental to the Corporation. |
(e) |
Change of Control : A Change of Control shall be deemed to have taken place upon the first of the following to occur: (i) a third person, including a group as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, acquires in a single transaction, or a series of transactions during a twelve-month period, shares of the Corporation having 30% or more of the total number of votes that may be cast for the election of directors of the Corporation; or (ii) as the result of any cash tender or exchange offer, merger or other business combination, sale of assets or contested election, or any combination of the foregoing |
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transactions, a majority of the members of the Board of Directors of the Corporation is replaced during any twelve-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board of Directors of the Corporation before the date of the appointment or election. |
(f) | Code : The Internal Revenue Code of 1986, as amended. |
(g) | Committee : The Compensation Committee of the Board. |
(h) | Corporation : Halyard Health, Inc. and any successor thereto that assumes this Plan and the Agreements pursuant to Section 13 below. |
(i) | Eligible Executive : Those key executives of the Corporation and its Subsidiaries who are from time to time designated by the Committee as, or who pursuant to criteria established by the Board or the Committee are, eligible to receive an Agreement. |
(j) | Equity Plans : The Halyard Health, Inc. Equity Participation Plan, and any successor or additional plans under which a Participant receives stock options, restricted stock, restricted stock units or other equity-based compensation. |
(k) | Excise Tax : The excise tax imposed by Section 4999 of the Code, together with any interest or penalties imposed with respect to such excise tax. |
(l) | Fair Market Value : With respect to any publicly traded equity security, the reported closing price of such security on the relevant date as reported on the composite list used by The Wall Street Journal for reporting stock prices, or, if no such sale shall have been made on that day, on the last preceding day on which there was such a sale; and with respect to any other property, the fair market value thereof as determined by the Committee in good faith. |
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(m) | Good Reason : Termination by the Participant for Good Reason shall mean the Separation from Service during the two year time period following the initial existence (without the Participants express written consent) of any one of the following conditions: |
(i) | A material diminution in the Participants base compensation. |
(ii) | A material diminution in the Participants authority, duties or responsibilities. |
(iii) | A material diminution in the authority, duties, or responsibilities of the supervisor to whom the Participant is required to report, including a requirement that a Participant report to a corporate officer or employee instead of reporting directly to the board of directors of the Corporation. |
(iv) | A material diminution in the budget over which the Participant retains authority. |
(v) | A material change in the geographic location at which the Participant must perform the services. |
(vi) | Any other action or inaction that constitutes a material breach by the Corporation of any agreement under which the Participant provides services. |
The Participant must provide notice to the Corporation of the existence of any of the above conditions within a period not to exceed 90 days of the initial existence of the condition, upon the notice of which the Corporation must be provided a period of at least 30 days during which it may remedy the condition and not be required to pay the amount.
The Participants right to terminate the Participants employment for Good Reason shall not be affected by the Participants incapacity due to physical or mental illness. The Participants continued employment shall not constitute consent to, or a waiver of rights with respect to, any act or failure to act constituting Good Reason hereunder.
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(n) | Multiplier : For a Tier I Participant, two; and for a Tier II Participant, one. |
(o) | Net After Tax Receipt : The Value of a Payment, net of all taxes imposed on a Participant with respect thereto under Sections 1 and 4999 of the Code, under Section 3121 of the Code, and any state and local income taxes, determined by applying the highest marginal rate under Section 1 of the Code which applied to the Participants taxable income for the immediately preceding taxable year. |
(p) | Participant : An Eligible Executive who is a party to an Agreement which has not been terminated in accordance with the terms of this Plan. |
(q) | Payment : Any payment or distribution in the nature of compensation (within the meaning of Section 280G(b)(2) of the Code) to or for the benefit of a Participant, whether paid or payable pursuant to this Plan or otherwise. |
(r) | PRSUs : Restricted shares and/or restricted share units which are determined by the attainment of performance goals. |
(s) | Qualified Termination of Employment : The separation of Participants service with the Corporation and/or its Subsidiaries either (i) within the two (2) year period following a Change of Control of the Corporation (A) by the Corporation without Cause or, (B) by the Participant with Good Reason, or (ii) by the Corporation without Cause before a Change of Control, if a Change of Control occurs within one year after such Separation from Service and it is reasonably demonstrated by the Participant that such Separation from Service was at the request of a third party that had taken steps reasonably calculated to effect a Change of Control or otherwise arose in connection with or in anticipation of a Change of Control. A transfer of employment for administrative purposes among the Corporation and its Subsidiaries shall not be deemed a Qualified Termination of Employment, but if such a transfer results in the occurrence of Good Reason, the affected Participant shall have the right to Separate from Service for Good Reason and such separation shall be a Qualified Termination of Employment. |
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(t) | Reduced Amount : With respect to a Participant, the greatest aggregate amount of Separation Payments which (a) is less than the sum of all Separation Payments and (b) results in aggregate Net After Tax Receipts which are equal to or greater than the Net After Tax Receipts which would result if the Participant were paid the sum of all Separation Payments. |
(u) | Relevant Date : In the case of a Qualified Termination of Employment as described in clause (ii) of the definition of Qualified Termination of Employment, the date of such Qualified Termination of Employment and, in all other cases, the date of the Change of Control. |
(v) | Separation from Service : Termination of employment with the Corporation or a Subsidiary. A Separation from Service will be deemed to have occurred if the Participants services with the Corporation or a Subsidiary is reduced to an annual rate that is 20 percent or less of the services rendered, on average, during the immediately preceding three years of employment (or if employed less than three years, such lesser period). |
(w) | Separation Payment : With respect to a Participant, a Payment paid or payable to the Participant pursuant to this Plan or an Agreement (disregarding Section 10 of this Plan). |
(x) | Severance Period : For a Tier I Participant, the period of two years beginning on the date of the Qualified Termination of Employment; and for a Tier II Participant, the period of one year beginning on the date of the Qualified Termination of Employment. |
(y) | Subsidiary : Any domestic or foreign corporation at least twenty percent (20%) of whose shares normally entitled to vote in electing directors is owned directly or indirectly by the Corporation or by other Subsidiaries, provided, however, that at least fifty percent (50%) shall replace at least twenty percent (20%) where there is not a legitimate business criteria for using such lower percentage. |
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(z) | Tier I Participant : A Participant whose Agreement indicates that he or she is a Tier I Participant. |
(aa) | Tier II Participant : A Participant whose Agreement indicates that he or she is a Tier II Participant. |
(bb) | Value : With respect to a Payment, the economic present value of a Payment as of the date of the change of control for purposes of Section 280G of the Code, as determined by the Accounting Firm using the discount rate required by Section 280G(d)(4) of the Code. |
3. Participation; Agreements . Eligible Executives shall be proffered an Agreement and upon execution and delivery thereof by the Eligible Executive evidencing such Eligible Executives agreement not to leave voluntarily the employ of the Corporation and its Subsidiaries and to continue to render services during the pendency of any potential Change of Control of the Corporation, such Eligible Executive shall become a Participant. Each Agreement shall indicate whether the Participant to whom it is proffered will be a Tier I Participant or a Tier II Participant. A Participant shall cease to be a Participant in the Plan upon the termination of the Participants Agreement in accordance with its terms.
4. Separation from Service of Participants . Nothing in this Plan shall be deemed to entitle a Participant to continued employment with the Corporation and its Subsidiaries, and the rights of the Corporation to terminate a Participants service shall continue as fully as though this Plan were not in effect, provided that any Qualified Termination of Employment shall entitle the Participant to the benefits herein provided. In addition, nothing in this Plan shall be deemed to entitle a Participant under this Plan to any rights, or to payments under this Plan, with respect to any plan in which the Participant was not a participant prior to a Qualified Termination of Employment.
5. Payments Upon Qualified Termination of Employment . In the event of a Qualified Termination of Employment of a Participant, a lump sum cash payment shall be made to such Participant as compensation for services rendered, in an amount or amounts (subject to any applicable payroll or other taxes required to be withheld) equal to the sum of the amounts
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specified in subsections (a) through (f) below, such payments to be made within 10 days following the later of the date of Separation from Service or the date of the Change of Control except to the extent not yet calculable, in which case such portions shall be paid as soon as practicable following the ability to calculate the amount. Notwithstanding the foregoing, except as provided in Section 10, all amounts payable under the terms of this Plan shall be payable no later than March 15 of the year following the later of the date of Separation from Service or the date of the Change of Control. Notwithstanding anything in this Section 5 to the contrary, any amounts which are payable under this Plan with respect to amounts which the Executive would have been entitled to receive under a deferred compensation plan required to meet the requirements of Section 409A of the Code and the regulations promulgated thereunder, shall be payable at the dates and in such amounts as would have been payable to the Executive under the terms of the deferred compensation plan.
(a) Salary Plus Incentive Compensation . A lump sum amount equal to the Multiplier times the sum of (a) the Participants annual base salary at the rate in effect immediately prior to the Relevant Date or, if higher, immediately before the Qualified Termination of Employment and (b) the Annual Bonus Amount;
(b) Stock Options . All stock options that were granted to the Participant under any of the Equity Plans, including but not limited to any substitute plans adopted prior to the Relevant Date (or any successor or additional plan), that were outstanding both on the Relevant Date and immediately before the Qualified Termination of Employment, shall vest and become exercisable and the Qualified Termination of Employment of the Participant shall be deemed a retirement for purposes of exercising the stock options under the terms of the Equity Plans.
(c) Restricted Stock . With respect to any restricted shares and/or restricted share units granted to the Participant under any of the Equity Plans that were outstanding but not vested on the Relevant Date where such vesting of restricted shares and/or restricted share units was not determined by the attainment of performance goals, and which are forfeited as a result of the Participants Separation from Service, a lump sum amount equal to the Fair Market Value of an equivalent number of shares of common stock of the Corporation (or such other equity security into which the restricted shares and/or restricted share units has been converted) on the date of Separation from
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Service. With respect to any PRSUs granted to the Participant under any of the Equity Plans that were outstanding but not vested on the Relevant Date and which are forfeited as a result of the Participants Separation from Service, a lump sum amount equal to the Average PSU Payout.
(d) Successor or Additional Stock Appreciation Right, Incentive Compensation, and Bonus Plan . A lump sum amount equal to the payment to which the Participant would have been entitled had all amounts awarded or granted to the Participant, vested or matured, under any stock appreciation right, incentive compensation, and bonus plans, which are adopted after the effective date of the Participants Agreement and in which the Participant participates immediately prior to the Relevant Date, including but not limited to any substitute plans adopted prior to the Relevant Date (or any successor or additional plan), which had not vested or matured as of the date of Separation from Service and will not vest or mature as a result of the Participants Separation from Service, such payment to be determined as though such award or grant had vested or matured on the date of termination of the Participants employment;
(e) Employer Portion of Retirement Plan Benefits . With respect to a Tier I Participant only, a lump sum amount equal to the Participants maximum matching contribution under the Halyard Health, Inc. 401(k) Plan (the 401(k) Plan) (or any successor or additional plans) and the Halyard Health, Inc. Supplemental Retirement 401(k) Plan (or any successor or additional plans) (individually the Supplemental 401(k) Plan) and collectively, the Retirement Benefit Plans) to which the Participant would have been entitled if he or she had remained employed by the Corporation for the Severance Period at the rate of annual compensation specified in Section 5(a) above except that the Annual Bonus Amount shall be treated as earned for the year in which separation occurred and the balance of the Severance Period and no award actually earned in, and paid for, the year in which termination occurred shall be considered. Notwithstanding anything in Section 5 to the contrary, any amounts under subsection (ii) of this subparagraph which are payable due to amounts owing to the Participant under the Supplemental 401(k) Plan shall be payable at the date such amount would have been payable if the Participant were entitled to this amount under the terms of the Supplemental 401(k) Plan; and
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(f) Medical and Dental Benefits . A lump sum amount equal to (a) the amount of the monthly premiums that the Participant would be required to pay, if he or she elected COBRA continuation coverage under the medical and dental plans of the Corporation in which the Participant was participating immediately before the Qualified Termination of Employment, based upon the premium rates in effect as of the date of the Qualified Termination of Employment, times (b) 24.
6. No Payments on Other Termination of Employment . In the event a Participants employment terminates in any way that does not constitute a Qualified Termination of Employment, no benefits shall be payable under this Plan.
7. Other Terms and Conditions . The Agreement to be entered into pursuant to this Plan shall contain such other terms, provisions and conditions not inconsistent with this Plan as shall be determined by the Committee. Where appearing in this Plan or the Agreement, the masculine shall include the feminine and the plural shall include the singular, unless the context clearly indicates otherwise.
8. Non-Assignability . Each Participants rights under this Plan shall be non-transferable except by will or by the laws of descent and distribution.
9. Unfunded Plan . The Plan shall be unfunded. Neither the Corporation nor the Board shall be required to segregate any assets that may at any time be represented by benefits under the Plan. Neither the Corporation nor the Board shall be deemed to be a trustee of any amounts to be paid under the Plan. Any liability of the Corporation to any Participant with respect to any benefit shall be based solely upon any contractual obligations created by the Plan and the Agreement; no such obligation shall be deemed to be secured by any pledge or any encumbrance on any property of the Corporation.
10. Certain Reduction of Payments by the Corporation .
(a) |
Anything in this Plan to the contrary notwithstanding, in the event a reputable certified public accounting firm designated by the Corporation (the Accounting Firm) shall determine that receipt of all Payments would subject a Participant to tax under Section 4999 of the Code, it shall determine whether some amount of Separation Payments would meet the |
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definition of a Reduced Amount. If the Accounting Firm determines that there is a Reduced Amount, the aggregate Separation Payments shall be reduced to such Reduced Amount. All fees payable to the Accounting Firm with respect to this Section 10 shall be paid solely by the Corporation. |
(b) | If the Accounting Firm determines that aggregate Separation Payments should be reduced to the Reduced Amount, the Corporation shall promptly give the Participant notice to that effect and a copy of the detailed calculation thereof, and the Participant may then elect, in his or her sole discretion, which and how much of the Separation Payments that are not required to meet the requirements of Section 409A of the Code and the regulations promulgated thereunder shall be eliminated or reduced (as long as after such election the Value of the aggregate Separation Payments equals the Reduced Amount), and shall advise the Corporation in writing of his or her election within ten days of his receipt of notice. If no such election is made by the Participant within such ten-day period, the Corporation may elect which of such Separation Payments that are not required to meet the requirements of Section 409A of the Code and the regulations promulgated thereunder shall be eliminated or reduced (as long as after such election the Value of the aggregate Separation Payments equals the Reduced Amount) and shall notify the Participant promptly of such election. All determinations made by the Accounting Firm under this Section 10 shall be binding upon the Corporation and the Participant and shall be made as promptly as practicable. Following such determination, the Corporation shall pay to or distribute for the benefit of the Participant such Separation Payments as are then due to the Participant under Section 5 of this Plan and shall promptly pay to or distribute for the benefit of the Participant in the future such Separation Payments as become due to the Participant under this Plan. Notwithstanding the prior sentence, such determination by the Accounting Firm shall be made within 60 days of the later of a Separation from Service of the Executive or the date of the Change of Control. |
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(c) | While it is the intention of the Corporation to reduce the amounts payable or distributable to a Participant hereunder only if the aggregate Net After Tax Receipts to the Participant would thereby be increased, as a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that amounts will have been paid or distributed by the Corporation to or for the benefit of a Participant pursuant to this Plan which should not have been so paid or distributed (Overpayment) or that additional amounts which will have not been paid or distributed by the Corporation to or for the benefit of a Participant pursuant to this Plan could have been so paid or distributed (Underpayment), in each case, consistent with the calculation of the Reduced Amount hereunder. In the event that the Accounting Firm determines that an Overpayment has been made, based upon the assertion of a deficiency by the Internal Revenue Service against the Corporation or the Participant which the Accounting Firm believes has a high probability of success, the Participant shall repay any such benefit to the Corporation together with interest at the applicable federal rate provided for in Section 7872(f)(2) of the Code; provided, however, that no such interest shall be deemed to have been incurred and no amount shall be payable by a Participant to the Corporation if and to the extent such repayment would not either reduce the amount on which the Participant is subject to tax under Section 1 and Section 4999 of the Code or generate a refund of such taxes. In the event that the Accounting Firm, based upon controlling precedent or substantial authority, determines that an Underpayment has occurred, any such Underpayment shall be promptly paid by the Corporation to or for the benefit of the Participant together with interest at the applicable federal rate provided for in Section 7872(f)(2) of the Code. Notwithstanding anything in this Plan or any Agreement to the contrary, the payment will be conditioned upon the Overpayment or Underpayment meeting the requirements of Section 409A of the Code and the regulations promulgated thereunder. |
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11. No Duty to Mitigate . In no event shall any Participant be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Participant under any of the provisions of this Plan, and such amounts shall not be reduced whether or not the Participant obtains other employment.
12. Termination and Amendment of this Plan . The Committee shall have power at any time, in its discretion, to amend, abandon or terminate this Plan, in whole or in part; except that no amendment, abandonment or termination shall impair or abridge the obligations of the Corporation under any Agreements previously entered into pursuant to this Plan, except as expressly permitted by the terms of such Agreements without the written consent of the affected Participants.
13. Successors . The Corporation shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of its business and/or assets to assume expressly and agree to perform this Plan and the Agreements in the same manner and to the same extent that the Corporation would be required to perform them if no such succession had taken place.
14. Interpretation of the Plan. The Committee shall have sole and absolute authority to interpret and construe the terms of this Plan. Any interpretations, rules, decisions, or constructions by the Committee shall be final and binding on all Participants.
15. Tax Treatment. The Participant shall be solely responsible for tax consequences of any payment under the Plan. The Corporation makes no guarantee or promise regarding any tax provision, including (without limitation) compliance or exemption from Internal Revenue Code Section 409A.
16. Effective Date . This Plan shall become effective on November 1, 2014.
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Exhibit A
Tier I Agreement
HALYARD HEALTH, INC.
Executive Severance Agreement for Tier I Participants
As of November 1, 2014
AGREEMENT made effective as of the 1 st day of November 2014 between HALYARD HEALTH, INC., a Delaware corporation, and (the Executive).
W I T N E S S E T H :
WHEREAS, the Committee has approved the Corporation entering into severance agreements with key executives of the Corporation and its subsidiaries pursuant to the Halyard Health, Inc. Executive Severance Plan, effective November 1, 2014 and as amended from time to time thereafter (the Plan); and
WHEREAS, the Executive is a key executive of the Corporation or one of its subsidiaries and has been selected by the Committee as a key executive to be an Executive under the Plan; and
WHEREAS, should the Corporation receive or learn of any good faith proposal by or from a reliable third person concerning a possible business combination with, or acquisition of equity securities of, the Corporation, or should the Corporation otherwise consider or pursue a transaction that could lead to a change of control, the Committee believes it imperative that the Corporation and the Board be able to rely upon the Executive to continue in the Executives position, and that they be able to receive and rely upon the Executives advice, if they request it, as to the best interests of the Corporation and its stockholders, without concern that the Executive might be distracted by the personal uncertainties and risks created by such a possibility; and
WHEREAS, should the Corporation receive or consider any such proposal or transaction, in addition to the Executives regular duties, the Executive may be called upon to assist in the assessment of the proposal or transaction, advise management and the Board as to whether the proposal or transaction would be in the best interest of the Corporation and its stockholders, and to take such other actions as the Board might determine to be appropriate;
NOW, THEREFORE, to assure the Corporation that it will have the continued dedication of the Executive and the availability of the Executives advice and counsel notwithstanding the possibility, threat or occurrence of such a proposal or transaction, and to induce the Executive to remain in the employ of the Corporation, and for other good and valuable consideration, the Corporation and the Executive agree as follows.
All capitalized terms not otherwise defined herein shall have the meanings set forth in the Plan.
(a) Executives Obligations . In the event a third person, in order to effect a Change of Control (as hereinafter defined), begins a tender or exchange offer, circulates a proxy to stockholders, or takes other steps, or in the event the Corporation considers taking, or decides to take, steps that are expected to lead to a Change of Control, the Executive agrees that the Executive will not voluntarily leave the employ of the Corporation, and will render the services contemplated in the recitals to this Agreement and the Plan, until the efforts by the third party or the Corporation to effect a Change of Control are abandoned or until a Change of Control has occurred.
(b) Severance Benefits . The Corporation and the Executive agree that the Executive shall be treated as a Tier I Participant in the Halyard Health, Inc. Executive Severance Plan, and shall receive the benefits described under the Plan.
2
(c) Incorporation . The terms of the Plan are incorporated into this Agreement. This Agreement and the Plan together supersede any and all prior agreements between the Executive and the Corporation under the Plan as in effect at this time or at any prior time. From and after the Relevant Date, except as specifically provided herein, this Agreement shall supersede any other agreement between the parties with respect to severance pay and benefits. Notwithstanding the foregoing, any previously executed noncompetition agreement shall continue in effect following the execution of this Agreement and the Relevant Date.
(d) No Other Severance Pay Plan Payments . In the event of a Qualified Termination of Employment, the Executive shall not be entitled to receive any severance benefits that would otherwise be available to the Executive under the Halyard Health Inc. Severance Pay Plan (or any successor or additional plan), or any other severance program sponsored by the Corporation and/or any of its Subsidiaries.
(e) Participation in Employee Benefit Plans . The Executives participation in savings, retirement, profit sharing, stock option, and/or stock appreciation rights plans of the Corporation and/or any of its Subsidiaries shall continue only through the last day of the Executives employment. Any terminating distributions and/or vested rights under such plans shall be governed by the terms of those respective plans. Furthermore, the Executives participation in any insurance plans of the Corporation and rights to any other fringe benefits shall except as otherwise specifically provided in such plans or corporate policy, terminate as of the close of the Executives last day of employment, except to the extent specifically provided to the contrary in this Agreement. Nothing in this Agreement shall be deemed to entitle the Executive to any rights, or to payments under this Agreement, with respect to any employee benefit plan in which the Executive was not a participant prior to a Qualified Termination of Employment.
3
(f) Continuing Obligations . The Executive shall retain in confidence any confidential information known to the Executive concerning the Corporation and its business so long as such information is not publicly disclosed.
(g) No Guarantee of Employment . Nothing in this Agreement shall be deemed to entitle the Executive to continued employment with the Corporation or any of its Subsidiaries and the rights of the Corporation and its Subsidiaries to terminate the employment of the Executive shall continue as fully as if this Agreement were not in effect; provided that any Qualified Termination of Employment shall entitle the Executive to the benefits herein provided.
(h) Indemnification . If litigation shall be brought to enforce any provision contained herein, the Corporation hereby agrees to indemnify the Executive for the Executives reasonable attorneys fees and disbursements incurred in such litigation, and hereby agrees to pay prejudgment interest on any money judgment obtained by the Executive calculated at Citibanks (or any successor entity) prime rate of interest in effect from time to time from the date that payment(s) to the Executive should have been made under this Agreement. The reimbursement of an attorneys fees and disbursements incurred in such litigation will be made on or before the last day of the calendar year following the calendar year in which the expense was incurred.
(i) Payment Obligations Absolute . The Corporations obligation to pay the Executive the compensation and to make the arrangements provided herein shall be absolute and unconditional and shall not be affected by any circumstances, including without limitation, any set-off, counterclaim, recoupment, defense or other right which the Corporation may have against the Executive or anyone else. All amounts payable by the Corporation hereunder shall be paid without notice or demand.
4
(j) Severability . Any provision in this Agreement which is prohibited or unenforceable in any jurisdiction shall as to such jurisdiction, be ineffective only to the extent of such prohibition or unenforceability without invalidating or affecting the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
(k) Successors . This Agreement shall be binding upon and inure to the benefit of the Executive and the Executives estate, and the Corporation and any successor of the Corporation, but neither this Agreement nor any rights arising hereunder may be assigned or pledged by the Executive. The Corporation shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of its business and/or assets to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Corporation would be required to perform it if no such succession had taken place.
(l) Termination . This Agreement shall terminate on the third anniversary of the effective date hereof unless either (1) a Change of Control occurs on or before such third anniversary or (2) the Committee determines to extend this Agreement for an additional three-year term or such shorter period as it determines to be appropriate. Notwithstanding the foregoing, if at the time when this Agreement would otherwise terminate, a third party has taken steps reasonably calculated to effect a Change of Control or a Change of Control is otherwise under consideration, then this Agreement shall automatically continue in effect until (A) a Change of Control occurs, in which event this Agreement shall thereafter remain in effect in accordance with its terms, or (B) the Board makes a good faith determination that in its opinion, the efforts by the third party or the Corporation to effect a Change of Control have been abandoned, at which time the Agreement shall terminate unless it is extended pursuant to clause (2) of the preceding sentence.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the day of , 20 .
Executive | ||
HALYARD HEALTH, INC. | ||
By: |
6
Exhibit B
Tier II Agreement
HALYARD HEALTH, INC.
Executive Severance Agreement for Tier II Participant
As of November 1, 2014
AGREEMENT made effective as of the 1 st day of November 2014 between HALYARD HEALTH, INC., a Delaware corporation (the Corporation), and (the Executive).
W I T N E S S E T H :
WHEREAS, the Committee has approved the Corporation entering into severance agreements with key executives of the Corporation and its subsidiaries pursuant to the Halyard Health, Inc. Executive Severance Plan, effective November 1, 2014 and as amended from time to time thereafter (the Plan); and
WHEREAS, the Executive is a key executive of the Corporation or one of its subsidiaries and has been selected by the Committee as a key executive to be an Executive under the Plan; and
WHEREAS, should the Corporation receive or learn of any good faith proposal by or from a reliable third person concerning a possible business combination with, or acquisition of equity securities of, the Corporation, or should the Corporation otherwise consider or pursue a transaction that could lead to a change of control, the Committee believes it imperative that the Corporation and the Board be able to rely upon the Executive to continue in the Executives position, and that they be able to receive and rely upon the Executives advice, if they request it, as to the best interests of the Corporation and its stockholders, without concern that the Executive might be distracted by the personal uncertainties and risks created by such a possibility; and
WHEREAS, should the Corporation receive or consider any such proposal or transaction, in addition to the Executives regular duties, the Executive may be called upon to assist in the assessment of the proposal or transaction, advise management and the Board as to whether the proposal or transaction would be in the best interest of the Corporation and its stockholders, and to take such other actions as the Board might determine to be appropriate;
NOW, THEREFORE, to assure the Corporation that it will have the continued dedication of the Executive and the availability of the Executives advice and counsel notwithstanding the possibility, threat or occurrence of such a proposal or transaction, and to induce the Executive to remain in the employ of the Corporation, and for other good and valuable consideration, the Corporation and the Executive agree as follows.
All capitalized terms not otherwise defined herein shall have the meanings set forth in the Plan.
(a) Executives Obligations . In the event a third person, in order to effect a Change of Control (as hereinafter defined), begins a tender or exchange offer, circulates a proxy to stockholders, or takes other steps, or in the event the Corporation considers taking, or decides to take, steps that are expected to lead to a Change of Control, the Executive agrees that the Executive will not voluntarily leave the employ of the Corporation, and will render the services contemplated in the recitals to this Agreement and the Plan, until the efforts by the third party or the Corporation to effect a Change of Control are abandoned or until a Change of Control has occurred.
(b) Severance Benefits . The Corporation and the Executive agree that the Executive shall be treated as a Tier II Participant in the Halyard Health, Inc. Executive Severance Plan, and shall receive the benefits described under the Plan.
2
(c) Incorporation . The terms of the Plan are incorporated into this Agreement. This Agreement and the Plan together supersede any and all prior agreements between the Executive and the Corporation under the Plan as in effect at this time or at any prior time. From and after the Relevant Date, except as specifically provided herein, this Agreement shall supersede any other agreement between the parties with respect to severance pay and benefits. Notwithstanding the foregoing, any previously executed noncompetition agreement shall continue in effect following the execution of this Agreement and the Relevant Date.
(d) No Other Severance Pay Plan Payments . In the event of a Qualified Termination of Employment, the Executive shall not be entitled to receive any severance benefits that would otherwise be available to the Executive under the Halyard Health Inc. Severance Pay Plan (or any successor or additional plan), or any other severance program sponsored by the Corporation and/or any of its Subsidiaries.
(e) Participation in Employee Benefit Plans . The Executives participation in savings, retirement, profit sharing, stock option, and/or stock appreciation rights plans of the Corporation and/or any of its Subsidiaries shall continue only through the last day of the Executives employment. Any terminating distributions and/or vested rights under such plans shall be governed by the terms of those respective plans. Furthermore, the Executives participation in any insurance plans of the Corporation and rights to any other fringe benefits shall except as otherwise specifically provided in such plans or corporate policy, terminate as of the close of the Executives last day of employment, except to the extent specifically provided to the contrary in this Agreement. Nothing in this Agreement shall be deemed to entitle the Executive to any rights, or to payments under this Agreement, with respect to any employee benefit plan in which the Executive was not a participant prior to a Qualified Termination of Employment.
3
(f) Continuing Obligations . The Executive shall retain in confidence any confidential information known to the Executive concerning the Corporation and its business so long as such information is not publicly disclosed.
(g) No Guarantee of Employment . Nothing in this Agreement shall be deemed to entitle the Executive to continued employment with the Corporation or any of its Subsidiaries and the rights of the Corporation and its Subsidiaries to terminate the employment of the Executive shall continue as fully as if this Agreement were not in effect; provided that any Qualified Termination of Employment shall entitle the Executive to the benefits herein provided.
(h) Indemnification . If litigation shall be brought to enforce any provision contained herein, the Corporation hereby agrees to indemnify the Executive for the Executives reasonable attorneys fees and disbursements incurred in such litigation, and hereby agrees to pay prejudgment interest on any money judgment obtained by the Executive calculated at Citibanks (or any successor entity) prime rate of interest in effect from time to time from the date that payment(s) to the Executive should have been made under this Agreement. The reimbursement of an attorneys fees and disbursements incurred in such litigation will be made on or before the last day of the calendar year following the calendar year in which the expense was incurred.
(i) Payment Obligations Absolute . The Corporations obligation to pay the Executive the compensation and to make the arrangements provided herein shall be absolute and unconditional and shall not be affected by any circumstances, including without limitation, any set-off, counterclaim, recoupment, defense or other right which the Corporation may have against the Executive or anyone else. All amounts payable by the Corporation hereunder shall be paid without notice or demand.
4
(j) Severability . Any provision in this Agreement which is prohibited or unenforceable in any jurisdiction shall as to such jurisdiction, be ineffective only to the extent of such prohibition or unenforceability without invalidating or affecting the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
(k) Successors . This Agreement shall be binding upon and inure to the benefit of the Executive and the Executives estate, and the Corporation and any successor of the Corporation, but neither this Agreement nor any rights arising hereunder may be assigned or pledged by the Executive. The Corporation shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of its business and/or assets to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Corporation would be required to perform it if no such succession had taken place.
(l) Termination . This Agreement shall terminate on the third anniversary of the effective date hereof unless either (1) a Change of Control occurs on or before such third anniversary or (2) the Committee determines to extend this Agreement for an additional three-year term or such shorter period as it determines to be appropriate. Notwithstanding the foregoing, if at the time when this Agreement would otherwise terminate, a third party has taken steps reasonably calculated to effect a Change of Control or a Change of Control is otherwise under consideration, then this Agreement shall automatically continue in effect until (A) a Change of Control occurs, in which event this Agreement shall thereafter remain in effect in accordance with its terms, or (B) the Board makes a good faith determination that in its opinion, the efforts by the third party or the Corporation to effect a Change of Control have been abandoned, at which time the Agreement shall terminate unless it is extended pursuant to clause (2) of the preceding sentence.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the day of , 20 .
Executive | ||
HALYARD HEALTH, INC. | ||
By: |
6
Exhibit 99.1
Jessica Van Derven
HALYARD HEALTH
+1.770.587.8709
jessica.vanderven@hyh.com
Laura Weitzenhoff
MSLGROUP
781-684-0770
Corp_hyh@mslgroup.com
Halyard Health Debuts as Public Company Following Spinoff
Shares of new medical technology company begin trading on the New York Stock Exchange
ALPHARETTA, Ga. Nov. 3, 2014 Halyard Health (NYSE:HYH), a global medical technology company focused on preventing infection, eliminating pain and speeding recovery, today announced the completion of its tax-free spinoff from Kimberly-Clark Corporation (NYSE:KMB). Beginning today, Halyard shares will commence regular-way trading on the New York Stock Exchange (NYSE).
The distribution of Halyard common stock took place on October 31, 2014. In the distribution, Halyard issued one share of common stock for every eight shares of Kimberly-Clark common stock held as of the close of business on October 23, 2014, the record date for the distribution.
Today Halyard Health launches with three decades of industry experience, leading positions in large markets, a diverse portfolio of strong brands and solid cash flow, said Robert Abernathy, chairman and CEO, Halyard Health. We are confident about our prospects to deliver growth and value creation to our shareholders as an independent healthcare company focused on innovation.
The new company, headquartered in Alpharetta, Ga., reported 2013 net sales of $1.7 billion across its surgical and infection prevention (S&IP) products and medical device businesses. Halyard has 16,500 employees and markets products in more than 100 countries worldwide.
Halyards solutions are designed to address some of todays most important healthcare needs, such as preventing infection and reducing the use of narcotics, while helping patients recover faster, said Abernathy. We will focus on maintaining leading market positions for our diverse portfolio of S&IP products and growing our pain management, digestive and respiratory health medical devices business.
On Nov. 7, Halyards leadership team will ring the closing bell at the NYSE at 4:00 p.m. EST. Footage of the bell ringing will be available live on the NYSE website. Halyard will also cover the event on its Twitter feed, @HalyardHealth.
About Halyard Health
Halyard Health (NYSE: HYH] is a medical technology company focused on preventing infection, eliminating pain and speeding recovery for healthcare providers and their patients. Headquartered in Alpharetta, Georgia, Halyard is committed to addressing some of todays most important healthcare needs, such as preventing healthcare-associated infections and reducing the use of narcotics while helping patients move from surgery to recovery. Halyards business segments Surgical and Infection Prevention and Medical Devices develop, manufacture and market clinically superior solutions that improve medical outcomes and business performance in more than 100 countries. For more information, visit www.halyardhealth.com .
Forwarding-Looking Statements
Certain matters in this press release constitute forward-looking statements regarding business strategies, market potential, future financial performance and other matters. Forward-looking statements include all statements that do not relate solely to historical or current facts, and can generally be identified by the use of words such as may, believe, will, expect, project, estimate, anticipate, plan, or continue and similar expressions, among others. The matters discussed in these forward-looking statements are based on the current plans and expectations of management and are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected, anticipated or implied in the forward-looking statements. These risks include but are not limited to actions by governmental and regulatory authorities; delays, costs and difficulties related to the spin-off and the operation as a separate, publicly traded company following the spin-off; and general economic and political conditions globally and in the markets in which Halyard Health does business. There can be no assurance that these future events will occur as anticipated or that Halyard Healths results will be as estimated. For a description of additional factors that could cause Halyard Healths future results to differ materially from those expressed in any such forward-looking statements, see Risk Factors under Item 1A of Halyard Healths Registration Statement on Form 10 (as amended) filed with the Securities and Exchange Commission.
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