PROCTER & GAMBLE Co (Form 10-K Received 08 07 2015 16 06 25) PDF

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark one)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended June 30, 2015
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 1-434
THE PROCTER & GAMBLE COMPANY

One Procter & Gamble Plaza, Cincinnati, Ohio 45202
Telephone (513) 983-1100
IRS Employer Identification No. 31-0411980
State of Incorporation: Ohio
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, without Par Value
Name of each exchange on which registered
New York Stock Exchange, NYSE Euronext-Paris
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes
No o
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes o No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation
S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act).
Large accelerated filer
Accelerated filer o
Non-accelerated filer o
Smaller reporting company o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o
No
The aggregate market value of the voting stock held by non-affiliates amounted to $246 billion on December 31, 2014 .
There were 2,712,561,733 shares of Common Stock outstanding as of July 31, 2015 .
Documents Incorporated by Reference
Portions of the Proxy Statement for the 2015 Annual Meeting of Shareholders which will be filed within one hundred and twenty days of the fiscal year ended June 30, 2015 ( 2015 Proxy Statement) are incorporated
by reference into Part III of this report to the extent described herein.
The Procter & Gamble Company 12
PART I
Item 1. Business.
Additional information required by this item is incorporated herein by reference to Management's

Discussion and Analysis (MD&A); Note 1 to our Consolidated Financial Statements and Note 12
to our Consolidated Financial Statements. Unless the context indicates otherwise, the terms the
"Company," "P&G," "we," "our" or "us" as used herein refer to The Procter & Gamble Company
(the registrant) and its subsidiaries.
The Procter & Gamble Company is focused on providing branded consumer packaged goods of
superior quality and value to improve the lives of the world's consumers. The Company was
incorporated in Ohio in 1905, having been built from a business founded in 1837 by William
Procter and James Gamble. Today, we sell our products in more than 180 countries and territories.
Throughout this Form 10-K, we incorporate by reference information from other documents filed
with the Securities and Exchange Commission (SEC).
The Company's Annual Report on Form 10-K, quarterly reports on Form 10-Q and current reports
on Form 8-K, and amendments thereto, are filed electronically with the SEC. The SEC maintains
an internet site that contains these reports at: www.sec.gov. You can also access these reports
through links from our website at: www.pginvestor.com.
Copies of these reports are also available, without charge, by contacting Computershare Inc., 250
Royall Street, Canton, MA 02021.
Financial Information about Segments
As of June 30, 2015 the Company has five reportable segments under U.S. GAAP: Beauty, Hair
and Personal Care ; Grooming ; Health Care ; Fabric Care and Home Care ; and Baby, Feminine
and Family Care . Many of the factors necessary for understanding these businesses are similar.
Operating margins of the individual businesses vary due to the nature of materials and processes
used to manufacture the products, the capital intensity of the businesses and differences in selling,
general and administrative expenses as a percentage of net sales. Net sales growth by business is
also expected to vary slightly due to the underlying growth of the markets and product categories
in which they operate. While none of our reportable segments are highly seasonal, components
within certain reportable segments, such as Appliances (Grooming) and Prestige Fragrances
(Beauty, Hair and Personal Care) are seasonal.
Additional information about our reportable segments can be found in the MD&A and Note 12 to
our Consolidated Financial Statements.
Narrative Description of Business
Business Model . Our business model relies on the continued growth and success of existing
brands and products, as well as the creation of new products. The markets and industry segments
in which we offer our products are highly
competitive. Our products are sold in more than 180 countries and territories around the world
primarily through mass merchandisers, grocery stores, membership club stores, drug stores,
department stores, salons, e-commerce, high-frequency stores and pharmacies. We utilize our
superior marketing and online presence to win with consumers at the "zero moment of truth" when they are searching for information about a brand or product. We work collaboratively with
our customers to improve the in-store presence of our products and win the "first moment of truth"
- when a consumer is shopping in the store. We must also win the "second moment of truth" when a consumer uses the product, evaluates how well it met his or her expectations and decides
whether it was a good value. We believe we must continue to provide new, innovative products
and branding to the consumer in order to grow our business. Research and product development
activities, designed to enable sustained organic growth, continued to carry a high priority during
the past fiscal year. While many of the benefits from these efforts will not be realized until future
years, we believe these activities demonstrate our commitment to future growth.
Key Product Categories . Information on key product categories can be found in Note 12 to our
Consolidated Financial Statements.
Key Customers . Our customers include mass merchandisers, grocery stores, membership club
stores, drug stores, department stores, salons, distributors, e-commerce and high-frequency stores.
Sales to Wal-Mart Stores, Inc. and its affiliates represent approximately 14% of our total revenue
in 2015 , 2014 and 2013 . No other customer represents more than 10% of our net sales. Our top
ten customers account for approximately 33% of our total sales in 2015 , 2014 and 2013 . The
nature of our business results in no material backlog orders or contracts with the government. We
believe our practices related to working capital items for customers and suppliers are consistent
with the industry segments in which we compete.
Sources and Availability of Materials . Almost all of the raw and packaging materials used by
the Company are purchased from others, some of which are single-source suppliers. We produce
certain raw materials, primarily chemicals, for further use in the manufacturing process. In
addition, fuel, natural gas and derivative products are important commodities consumed in our
manufacturing process and in the distribution of input materials and finished product to customers.
The prices we pay for materials and other commodities are subject to fluctuation. When prices for
these items change, we may or may not pass the change to our customers. The Company purchases
a substantial variety of other raw and packaging materials, none of which is material to our
business taken as a whole.
Trademarks and Patents . We own or have licenses under patents and registered trademarks
which are used in connection with our activity in all businesses. Some of these patents or licenses
cover significant product formulation and processes
13 The Procter & Gamble Company
used to manufacture our products. The trademarks are important to the overall marketing and
branding of our products. All major trademarks in each business are registered. In part, our success
can be attributed to the existence and continued protection of these trademarks, patents and
licenses.
Competitive Condition . The markets in which our products are sold are highly competitive. Our
products compete against similar products of many large and small companies, including wellknown global competitors. In many of the markets and industry segments in which we sell our
products we compete against other branded products as well as retailers' private-label brands. We
are well positioned in the industry segments and markets in which we operate, often holding a
leadership or significant market share position. We support our products with advertising,
promotions and other marketing vehicles to build awareness and trial of our brands and products in
conjunction with an extensive sales force. We believe this combination provides the most efficient
method of marketing for these types of products. Product quality, performance, value and
packaging are also important differentiating factors.
Research and Development Expenditures . Research and development expenditures enable us to
develop technologies and obtain patents across all categories in order to meet the needs and
improve the lives of our consumers. Total research and development expenses were $2.0 billion in
2015 and 2014 and $1.9 billion in 2013 .
Expenditures for Environmental Compliance . Expenditures for compliance with federal, state
and local environmental laws and regulations are fairly consistent from year to year and are not
material to the Company. No material change is expected in fiscal year 2016 .
Employees . Total number of employees is an estimate of total Company employees excluding

interns, co-ops and employees of joint ventures as of the years ended June 30. The number of
employees includes manufacturing and non-manufacturing employees. A discussion of progress on
non-manufacturing enrollment objectives is included in Note 3 to our Consolidated Financial
Statements. The number of employees includes employees of discontinued operations.
2015
2014
2013
2012
2011
2010
Total Number of Employees
110,000
118,000
121,000
126,000
129,000
127,000
Financial Information about Foreign and Domestic Operations. Net sales in the U.S. account
for approximately 37% of total net sales. No other individual country exceeds 10% of total net
sales. Operations outside the U.S. are generally characterized by the same conditions discussed in
the description of the business above and may be affected by additional factors including changing
currency values, different rates of inflation, economic growth and political and
economic uncertainties and disruptions. Our sales by geography for the fiscal years ended June 30
were as follows:
2015
North America (1)

Europe
Asia Pacific
Greater China
IMEA (2)
Latin America
(1)
(2)
2014
40%
26%
8%
8%
8%
10%
38%
28%
8%
8%
8%
10%
North America includes results for the United States, Canada and Puerto Rico only.
IMEA includes India, Middle East and Africa.
2013
39%
27%
9%
8%
7%
10%
Net sales and total assets in the United States and internationally were as follows (in billions):
Net Sales (years ended June 30)
2015
2014
2013
Total Assets (years ended June 30)
2015
2014
2013
Item 1A. Risk Factors.
United States
International
$65.0
$68.8
$68.3
$64.5
$75.5
$71.0
$28.3
$28.3
$28.1
$48.0
$52.2
$52.0
We discuss our expectations regarding future performance, events and outcomes, such as our
business outlook and objectives in this Form 10-K, quarterly reports, press releases and other
written and oral communications. All statements, except for historical and present factual
information, are forward-looking statements and are based on financial data and business plans
available only as of the time the statements are made, which may become outdated or incomplete.
We assume no obligation to update any forward-looking statements as a result of new information,
future events or other factors. Forward-looking statements are inherently uncertain, and investors
must recognize that events could significantly differ from our expectations.
The following discussion of risk factors identifies significant factors that may adversely affect
our business, operations, financial position or future financial performance. This information
should be read in conjunction with the MD&A and the Consolidated Financial Statements and
related Notes incorporated in this report. The following discussion of risks is not all inclusive, but
is designed to highlight what we believe are important factors to consider when evaluating our
expectations. These and other factors could cause our future results to differ from those in the
forward-looking statements and from historical trends.
Our business is subject to numerous risks as a result of our having significant operations and
sales in international markets, including foreign currency fluctuations, currency exchange or
pricing controls and localized volatility.
We are a global company, with operations in approximately 70 countries and products sold in
more than 180 countries and territories around the world. We hold assets, incur liabilities, earn
revenues and pay expenses in a variety of currencies other than the U.S. dollar, and our operations
outside the U.S. generate a significant portion of our net revenue. Fluctuations in exchange rates
for foreign currencies, such as the recent volatility in the Russian ruble, may reduce the U.S. dollar
value of revenues, profits and cash flows we receive from non-U.S. markets, increase our supply
costs (as measured in U.S. dollars) in those markets, or otherwise adversely impact our business
results or financial condition. Moreover, discriminatory or conflicting fiscal policies in different
countries could adversely affect our results. See also the Results of Operations and Cash Flow,
Financial Condition and Liquidity sections of the MD&A and Note 5 to our Consolidated
Financial Statements.
We also have sizable businesses and maintain local currency cash balances in a number of foreign
countries with exchange, import authorization, pricing or other controls, including Argentina,
China, Egypt, Greece, India, Nigeria, Ukraine and Venezuela. Our results of operations and
financial condition could be adversely impacted if we are unable to successfully manage such
controls and repatriate earnings from overseas, or if new or increased tariffs, quotas, exchange or
price controls, trade barriers or similar restrictions are imposed on our business outside the U.S.,
such as the current year impact of deconsolidating our Venezuelan subsidiaries as discussed in this
Form 10-K.
Additionally, our business, operations or employees may be affected by political volatility, labor
market disruptions or other crises or vulnerabilities in individual countries or regions, including
political instability or upheaval, broad economic instability or sovereign risk related to a default by
or deterioration in the credit worthiness of local governments, particularly in emerging markets,
which could negatively impact our financial condition or results of operations.
Uncertain global economic conditions, including disruptions in credit markets or changes to
our credit rating, may adversely impact demand for our products, cause our customers and
other business partners to suffer financial hardship or reduce our access to credit, all of
which could adversely impact our business.
Our business could be negatively impacted by reduced demand for our products related to one or
more significant local, regional or global economic disruptions, such as: a slow-down in the
general economy; reduced market growth rates; tighter credit markets for our suppliers, vendors or
customers; or the inability to conduct day-to-day transactions through our financial intermediaries
to pay funds to or collect funds from our customers, vendors and suppliers. Additionally, economic
conditions may cause our suppliers, distributors, contractors or other third party partners to suffer
financial difficulties that
they cannot overcome, resulting in their inability to provide us with the materials and services we
need, in which case our business and results of operations could be adversely affected. Customers
may also suffer financial hardships due to economic conditions such that their accounts become
uncollectible or are subject to longer collection cycles. If we are unable to generate sufficient
income and cash flow, it could affect the Companys ability to achieve expected share repurchase
and dividend payments.
A disruption in the credit markets or a downgrade of our current credit rating could increase our
future borrowing costs and impair our ability to access capital and credit markets on terms
commercially acceptable to us, which could adversely affect our liquidity and capital resources or
significantly increase our cost of capital.
Disruption in our global supply chain may negatively impact our business results.
Our ability to meet our customers needs and achieve cost targets depends on our ability to
maintain key manufacturing and supply arrangements, including execution of our previouslyannounced supply chain simplifications and certain sole supplier or sole manufacturing plant
arrangements. The loss or disruption of such manufacturing and supply arrangements, including
for issues such as labor disputes, loss or impairment of key manufacturing sites, inability to
procure sufficient raw or input materials, natural disasters, acts of war or terrorism or other
external factors over which we have no control, could interrupt product supply and, if not
effectively managed and remedied, have an adverse impact on our business, financial condition or
results of operations.
Our businesses face cost fluctuations and pressures that could affect our business results.
Our costs are subject to fluctuations, particularly due to changes in the prices of commodities and
raw materials and the costs of labor, transportation, energy, pension and healthcare. Therefore, our
business results are dependent, in part, on our continued ability to manage these fluctuations
through pricing actions, cost saving projects and sourcing decisions, while maintaining and
improving margins and market share. In addition, our financial projections include cost savings
described in our announced productivity plan. Failure to manage these fluctuations and deliver the
planned cost savings could adversely impact our financial results.
Our ability to meet our growth targets depends on successful product, marketing and
operations innovation and successful responses to competitive innovation .
We are a consumer products company that relies on continued global demand for our brands and
products. Achieving our business results depends, in part, on successfully developing, introducing
and marketing new products and on making significant improvements to our equipment and
manufacturing processes. The success of such innovation depends on our ability to correctly
anticipate customer and consumer acceptance and trends, to obtain, maintain and enforce
necessary intellectual property protections and to avoid
infringing upon the intellectual property rights of others. We must also be able to successfully
respond to technological advances made by, and intellectual property rights granted to,
competitors. Failure to do so could compromise our competitive position and adversely impact our
results.
The ability to achieve our business objectives is dependent on how well we can compete with
our local and global competitors in new and existing markets and channels.
The consumer products industry is highly competitive. Across all of our categories, we compete
against a wide variety of global and local competitors. As a result, we experience ongoing
competitive pressures in the environments in which we operate, as well as challenges in
maintaining profit margins. This includes, among other things, increasing competition from midand lower-tier value products, including private-label products, in both developed and developing
markets. To address these challenges, we must be able to successfully respond to competitive
factors, including pricing, promotional incentives and trade terms. In addition, the emergence of
new sales channels and business models may affect customer and consumer preferences as well as
market dynamics. Failure to successfully respond to competitive factors and effectively compete in
new sales channels could negatively impact our results.
A significant change in customer relationships or in customer demand for our products could
have a significant impact on our business.
We sell most of our products via retail customers, which include mass merchandisers, grocery
stores, membership club stores, drug stores, department stores, salons, distributors, e-commerce
and high-frequency stores. Our success is dependent on our ability to successfully manage
relationships with our retail trade customers, which includes our ability to offer trade terms that are
mutually acceptable and are aligned with our pricing and profitability targets. Continued
consolidation among our retail customers could create significant cost and margin pressure on our
business, and our business performance could suffer if we cannot reach agreement with a key
customer based on our trade terms and principles. Our business could also be negatively impacted
if a key customer were to significantly reduce the inventory level of our products or experience a
significant business disruption.
If the reputation of the Company or one or more of our brands erodes significantly, it could
have a material impact on our financial results.
The Company's reputation, and the reputation of our brands, form the foundation of our
relationships with key stakeholders and other constituencies, including consumers, customers and
suppliers. The quality and safety of our products are critical to our business. Many of our brands
have worldwide recognition, and our financial success is directly dependent on the success of our
brands. The success of our brands can suffer if our marketing plans or product initiatives do not
have the desired impact on a brand's image or its ability to attract consumers. Our results could
also be negatively impacted if one of our brands suffers a substantial impediment to its
reputation due to a significant product recall, product-related litigation, allegations of product

tampering or the distribution and sale of counterfeit products. Additionally, negative or inaccurate
postings or comments on social media or networking websites about the Company or one of its
brands could generate adverse publicity that could damage the reputation of our brands or the
Company. If we are unable to effectively manage real or perceived issues, including concerns
about safety, quality, efficacy or similar matters, sentiments toward the Company or our products
could be negatively impacted and our financial results could suffer. Our Company also devotes
significant time and resources to programs that are consistent with our corporate values and are
designed to protect and preserve our reputation, such as social responsibility and environmental
sustainability. If these programs are not executed as planned or suffer negative publicity, the
Company's reputation and financial results could be adversely impacted.
We rely on third parties in many aspects of our business, which creates additional risk.
Due to the scale and scope of our business, we must rely on relationships with third parties,
including our suppliers, distributors, contractors, joint venture partners or external business
partners, for certain functions. If we are unable to effectively manage our third party relationships
and the agreements under which our third party partners operate, our financial results could suffer.
Additionally, while we have policies and procedures for managing these relationships, they
inherently involve a lesser degree of control over business operations, governance and compliance,
thereby potentially increasing our financial, legal, reputational and operational risk.
A breach of information security, including a cybersecurity breach or failure of one or more
key information technology systems, networks, hardware, processes, associated sites or
service providers could have a material adverse impact on our business or reputation.
We rely extensively on information technology (IT) systems, networks and services, including
internet sites, data hosting and processing facilities and tools and other hardware, software and
technical applications and platforms, some of which are managed, hosted, provided and/or used by
third-parties or their vendors, to assist in conducting our business. The various uses of these IT
systems, networks and services include, but are not limited to:
ordering and managing materials from suppliers;

converting materials to finished products;
shipping products to customers;
marketing and selling products to consumers;
collecting, transmitting, transferring and storing customer, consumer, employee, vendor,
investor and other stakeholder information and personal data;
summarizing and reporting results of operations;
hosting, processing and sharing, as appropriate, confidential and proprietary research, business
plans and financial information;
complying with regulatory, legal and tax requirements;
providing data security; and

handling other processes necessary to manage our business.
Numerous and evolving information security threats, including advanced persistent cybersecurity
threats, pose a risk to the security of our IT systems, networks and services, as well as the
confidentiality, availability and integrity of our data. As cybersecurity threats rapidly evolve in
sophistication and become more prevalent across the industry globally, the Company is continually
increasing its sensitivity and attention to these threats. We continue to assess potential threats and
make investments seeking to address these threats, including monitoring of networks and systems
and upgrading skills, employee training and security policies for the Company and its third-party
providers. However, because the techniques used in these attacks change frequently and may be
difficult to detect for periods of time, we may face difficulties in anticipating and implementing
adequate preventative measures. Our IT systems have been, and will likely continue to be, subject
to computer viruses or other malicious codes, unauthorized access attempts, phishing and other
cyber-attacks. To date, we have seen no material impact on our business or operations from these
attacks; however, we cannot guarantee that our security efforts will prevent breaches or
breakdowns to our or our third-party providers databases or systems. If the IT systems, networks
or service providers we rely upon fail to function properly, or if we or one of our third-party
providers suffer a loss, significant unavailability of or disclosure of our business or stakeholder
information, due to any number of causes, ranging from catastrophic events or power outages to
improper data handling or security breaches, and our business continuity plans do not effectively
address these failures on a timely basis, we may be exposed to reputational, competitive and
business harm as well as litigation and regulatory action. The costs and operational consequences
of responding to breaches and implementing remediation measures could be significant.
We must successfully manage compliance with legislation, regulation and enforcement, as
well as pending legal matters in the U.S. and abroad.
Our business is subject to a wide variety of laws and regulations across all of the countries in
which we do business, including those laws and regulations involving intellectual property,
product liability, marketing, antitrust, privacy, environmental, employment, anti-bribery or anticorruption (such as the U.S. Foreign Corrupt Practices Act) or other matters. Rapidly changing
laws, regulations and related interpretations, including changes in accounting standards, as well as
increased enforcement actions, create challenges for our compliance and ethics programs and may
alter the environment in which we do business. If we are unable to continue to meet these
challenges and comply with all laws, regulations and related interpretations, it could negatively
impact our reputation and our business results. Failure to successfully manage regulatory and legal
matters and resolve such matters without significant liability or damage to our reputation may
materially adversely impact our results of operations and financial position.
Furthermore, if pending legal matters result in fines or costs in excess of the amounts accrued to
date, that may also materially impact our results of operations and financial position.
Changes in applicable tax regulations could negatively affect our financial results.
The Company is subject to taxation in the U.S. and numerous foreign jurisdictions. Because the
U.S. maintains a worldwide corporate tax system, the foreign and U.S. tax systems are somewhat
interdependent. For example, certain income that is earned and taxed in countries outside the U.S.
is not taxed in the U.S., provided those earnings are indefinitely reinvested outside the U.S. If
those same foreign earnings are instead repatriated to the U.S., additional residual U.S. taxation
will likely occur, due to the U.S.s worldwide tax system and higher U.S. corporate tax rate. The
U.S. is considering corporate tax reform that may significantly change the corporate tax rate and
the U.S. international tax rules. Additionally, longstanding international tax norms that determine
each countrys jurisdiction to tax cross-border international trade are evolving , such as the Base
Erosion and Profit Shifting project (BEPS") currently being undertaken by the G8, G20, and
Organization for Economic Cooperation and Development ("OECD"). As these and other tax laws
and related regulations change, our financial results could be materially impacted. Given the
unpredictability of these possible changes and their potential interdependency, it is very difficult to
assess whether the overall effect of such potential tax changes would be cumulatively positive or
negative for our earnings and cash flow, but such changes could adversely impact our financial
results.
If we are unable to successfully execute our portfolio optimization strategy, as well as
successfully manage ongoing acquisition, joint venture and divestiture activities, it could
adversely impact our business.
In August 2014, the Company announced a plan to significantly streamline our product portfolio
by divesting, discontinuing or consolidating about 100 non-strategic brands, resulting in a portfolio
of about 65 brands. The Company has announced a series of transactions that will substantially
complete this plan. It will take time to execute this plan, and our ability to successfully do so
could impact our results.
In addition, as a company that manages a portfolio of consumer brands, our ongoing business
model includes a certain level of acquisition, joint venture and divestiture activities. We must be
able to successfully manage the impacts of these activities, while at the same time delivering
against our business objectives. Specifically, our financial results could be adversely impacted by
the dilutive impacts from the loss of earnings associated with divested brands. Our financial results
could also be impacted in the event of acquisitions or joint venture activities if: 1) changes in the
cash flows or other market-based assumptions cause the value of acquired assets to fall below book
value, or 2) we are not able to deliver the expected cost and growth synergies associated with such
acquisitions and joint ventures, which could also have an impact on goodwill and intangible assets.
Our business results depend on our ability to successfully manage ongoing organizational
change.
Our financial targets assume a consistent level of productivity improvement, including those
described in our announced productivity plan and our portfolio-optimization strategy. If we are
unable to deliver these expected productivity improvements, while continuing to invest in business
growth, our financial results could be adversely impacted. We expect these types of changes,
which will include staffing adjustments as well as employee departures, to continue for the
foreseeable future. Successfully executing these changes, including effective management
transitions at leadership levels of the Company and retention of key employees, is critical to our
business success. We are generally a build-from-within company and our success is dependent on
identifying, developing and retaining key employees to provide uninterrupted leadership and
direction for our business. This includes developing and retaining organizational capabilities in key
growth markets where the depth of skilled or experienced employees may be limited and
competition for these resources is intense. It also includes continued development and execution of
robust leadership succession plans, including successful execution of our recently announced CEO
transition.
Item 1B. Unresolved Staff Comments.
None.
Item 2. Properties.
In the U.S., we own and operate 29 manufacturing sites located in 21 different states or territories.
In addition, we own and operate 100 manufacturing sites in 38 other countries. Many of the
domestic and international sites manufacture products for multiple businesses. Beauty, Hair and
Personal Care products are manufactured at 37 of these locations; Grooming products at 18; Health
Care products at 16; Fabric Care and Home Care products at 50; and Baby, Feminine and Family
Care at 43. Management believes that the Company's manufacturing sites are adequate to support
the business and that the properties and equipment have been well maintained.
Item 3. Legal Proceedings.
On February 10, 2015, the Sacramento County Environmental Management Department

(Sacramento EMD) issued an Administrative Enforcement Order to The Procter & Gamble
Manufacturing Company, a subsidiary of the Company, alleging violations of Californias
hazardous waste management regulations at the subsidiarys facility in Sacramento, California. On
May 26, 2015, the subsidiary and Sacramento EMD agreed to a Final Stipulation and Order that
includes no admission of liability, a release of all claims against the subsidiary, a $200,000 fine
assessed against the subsidiary, and an agreement by the subsidiary to make certain plant
modifications and have a third party conduct an integrity assessment of certain hazardous waste
systems at its Sacramento, California facility.
On August 25, 2014, Procuradura Federal de Proteccin al Ambiente (PROFEPA) issued a
ruling to Procter & Gamble
Manufactura, S. de R.L. de C.V. (Planta Vallejo), a subsidiary of the Company, citing violations of
Mexicos air emissions regulations at the subsidiarys facility in Zona Industrial Vallejo, Mexico
City, Mexico and requiring the subsidiary to perform certain corrective measures at the facility,
most of which have been completed. On June 15, 2015, PROFEPA issued a final ruling to the
subsidiary imposing monetary sanctions of $133,000. The proceedings are still pending as
PROFEPA reviews compliance with additional terms of the subsidiarys environmental licenses.
The Company is subject, from time to time, to certain other legal proceedings and claims arising
out of our business, which cover a wide range of matters, including antitrust and trade regulation,
product liability, advertising, contracts, environmental issues, patent and trademark matters, labor
and employment matters and tax. See Note 11 to our Consolidated Financial Statements for
information on certain legal proceedings for which there are contingencies.
This item should be read in conjunction with the Company's Risk Factors in Part I, Item 1A for
additional information.
Item 4. Mine Safety Disclosure.
Not applicable.
EXECUTIVE OFFICERS OF THE REGISTRANT
The names, ages and positions held by the Executive Officers of the Company on August 7, 2015 , are:
A. G. Lafley
Name
Jon R. Moeller
Giovanni Ciserani
Martin Riant
Carolyn M. Tastad
David S. Taylor
Mark F. Biegger
Linda Clement-Holmes
Gary A. Coombe
Tarek N. Farahat
Kathleen B. Fish
Hatsunori Kiriyama
Deborah P. Majoras
Julio N. Nemeth
Matthew Price
Marc S. Pritchard
Mohamed Samir
Jeffrey K. Schomburger
Valarie L. Sheppard
Yannis Skoufalos
Age
First Elected to
Officer Position
Chief Financial Officer
51
2009
Group President - Global Baby, Feminine and Family Care
56
2013
Chairman of the Board, President and

Chief Executive Officer
Director since May 23, 2013
Position
Group President - Global Fabric and Home Care
Group President - North America Selling and Market Operations
Group President - Global Beauty, Grooming and Health Care; Director

Chief Human Resources Officer
Chief Information Officer
President - Europe Selling and Market Operations
President - Latin America Selling and Market Operations

Chief Technology Officer
President - Asia Pacific Selling and Market Operations

Chief Legal Officer and Secretary
President - Global Business Services
President - Greater China Selling and Market Operations

Chief Brand Officer
President - India, Middle East and Africa (IMEA) Selling and Market Operations
Global Sales Officer
Senior Vice President, Comptroller and Treasurer

Global Product Supply Officer
68
53
54
57
53
53
51
51
58
52
51
54
49
55
48
53
51
58
2013
2013
2014
2013
2012
2014
2014
2014
2014
2014
2010
2015
2015
2008
2014
2015
2005
2011
All the Executive Officers named above, excluding Mr. Lafley, have been employed by the Company for more than the past five years. Mr. Lafley is Chairman of the Board, President and Chief Executive
Officer of the Company and was reappointed to this position on May 23, 2013. Mr. Lafley originally joined the Company in 1977 and held positions of increasing responsibility, in the U.S. and
internationally, until he was elected President and Chief Executive Officer in 2000, a position he held until June 30, 2009. On July 1, 2002, Mr. Lafley was elected Chairman of the Board, a position he held
until January 2010, at which time he retired from the Company. During the past five years and prior to his return as CEO, Mr. Lafley served as a consultant to the Company and as a member of the boards of
directors of public companies Dell, Inc. and General Electric Company, though he no longer serves on these boards. He also served as a Senior Advisor at Clayton, Dubilier & Rice, LLC, a private equity
partnership, consulted with a number of Fortune 50 companies on business and innovation strategy, and advised on CEO succession and executive leadership development. He currently serves on the board
of directors of Legendary Pictures, LLC (a film production company).
PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
ISSUER PURCHASES OF EQUITY SECURITIES
Period
(1)
(2)
(3)
4/1/2015 - 4/30/2015
5/1/2015 - 5/31/2015
6/1/2015 - 6/30/2015
Total
Total Number of
Shares Purchased (1 )
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs (3)
Average Price
Paid per Share (2)
4,420,851
$79.17
4,420,851
Approximate Dollar Value of Shares that May Yet Be

Purchased Under Our Share Repurchase Program
4,420,851
$79.17
(3)
(3)
(3)
4,420,851
(3)
The total number of shares purchased for the three months ended June 30, 2015 was 4,420,851. All transactions were made in the open market with large financial institutions. This table excludes shares withheld from
employees to satisfy minimum tax withholding requirements on option exercises and other equity-based transactions. The Company administers cashless exercises through an independent third party and does not repurchase
stock in connection with cashless exercises.
Average price paid per share is calculated on a settlement basis and excludes commission.
On April 23, 2015, the Company stated that fiscal year 2015 share repurchases to reduce Company shares outstanding were estimated to be approximately $5 billion, notwithstanding any purchases under the Company's
compensation and benefit plans. The share repurchases were authorized pursuant to a resolution issued by the Company's Board of Directors and were financed through a combination of operating cash flows and issuance of
long-term and short-term debt. The total value of the shares purchased under the share repurchase plan was $4.6 billion. The share repurchase plan ended on June 30, 2015 .
Additional information required by this item can be found in Part III, Item 12 of this Form 10-K.
SHAREHOLDER RETURN PERFORMANCE GRAPHS
Market and Dividend Information
P&G has been paying a dividend for 125 consecutive years since its incorporation in 1890 and has increased its dividend for 59 consecutive years at an annual compound average rate of over 9%.
(in dollars; split-adjusted)
Dividends per share
1956
0.01
1966
0.03
1976
0.06
1986
0.16
1996
0.40
2006
1.15
2015
2.59
Quarterly Dividends
Quarter Ended
September 30
December 31
March 31
June 30
2014 - 2015
0.6436
0.6436
0.6436
0.6629
2013 - 2014
0.6015
0.6015
0.6015
0.6436
Common Stock Price Range

Quarter Ended
September 30
December 31
March 31
June 30
High
2014 - 2015
85.40
93.89
91.78
84.20
Low
77.29
81.57
80.82
77.10
High
2013 - 2014
82.40
85.82
81.70
82.98
Low
73.61
75.20
75.26
78.43
P&G trades on the New York Stock Exchange and NYSE Euronext-Paris under the stock symbol PG. There were approximately 2.6 million common stock shareowners, including shareowners of record,
participants in the P&G Shareholder Investment Program, participants in P&G stock ownership plans and beneficial owners with accounts at banks and brokerage firms, as of June 30, 2015 .
Shareholder Return
The following graph compares the cumulative total return of P&Gs common stock for the five-year period ended June 30, 2015 , against the cumulative total return of the S&P 500 Stock Index (broad
market comparison) and the S&P 500 Consumer Staples Index (line of business comparison). The graph and table assume $100 was invested on June 30, 2010, and that all dividends were reinvested.
Company Name/Index
P&G
S&P 500 Index
S&P 500 Consumer Staples Index
2010
100 $
100
100
2011
Cumulative Value of $100 Investment, through June 30
109 $
131
127
2012
109 $
138
145
2013
141 $
166
171
2014
149 $
207
197
2015
153
222
215
Item 6. Selected Financial Data.
The information required by this item is incorporated by reference to Note 1 and Note 12 to our Consolidated Financial Statements.
Financial Summary (Unaudited)
Amounts in millions, except per share amounts
Net sales
Gross profit
Operating income
Net earnings from continuing operations
Net earnings from discontinued operations
Net earnings attributable to Procter & Gamble
Net earnings margin from continuing operations

Basic net earnings per common share: (1)
Earnings from continuing operations
Earnings from discontinued operations
Diluted net earnings per common share: (1)

Earnings from discontinued operations
Basic net earnings per common share
Diluted net earnings per common share
Research and development expense

Advertising expense
Total assets
Capital expenditures
Long-term debt
Shareholders' equity
Dividends per common share
(1)
(2)
2015
(2)
76,279
37,403
11,790
8,930
(1,786)
7,036
11.7%
3.16
(0.66)
2.50
3.06
(0.62)
2.59
2.44
2,047
8,290
129,495
3,736
18,329
63,050
2014
80,510
39,500
14,740
11,318
467
11,643
14.1%
4.03
0.16
4.19
3.86
0.15
2.45
4.01
1,984
8,979
144,266
3,848
19,811
69,976
2013
80,116
40,125
13,817
10,953
449
11,312
13.7%
3.87
0.17
4.04
3.71
0.15
2.29
3.86
1,940
9,364
139,263
4,008
19,111
68,709
2012
79,545
39,628
12,611
8,874
2,030
10,756
11.2%
3.08
0.74
3.82
2.97
0.69
2.14
3.66
1,947
8,981
132,244
3,964
21,080
64,035
2011
76,982
39,594
14,779
11,197
730
11,797
14.5%
3.87
0.25
4.12
3.69
0.24
1.97
3.93
1,897
8,868
138,354
3,306
22,033
68,001
2010
73,435
38,717
14,801
10,201
2,645
12,736
13.9%
3.41
0.91
4.32
3.26
0.85
4.11
1.80
1,851
8,162
128,172
3,067
21,360
61,439
Basic net earnings per common share and diluted net earnings per common share are calculated based on net earnings attributable to Procter & Gamble.
Our 2015 net sales were negatively impacted by approximately $4.8 billion of unfavorable foreign exchange fluctuation compared to 2014. Net earnings attributable to Procter & Gamble in 2015 were negatively impacted by
approximately $1.4 billion due to foreign exchange, $2.1 billion of non-cash impairment charges related to the Batteries business reported in discontinued operations and a $2.1 billion Venezuelan deconsolidation charge.
These impacts are discussed more fully later in Item 7 "Summary of 2015 Results" and "Results of Operations" of the MD&A.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Management's Discussion and Analysis
Forward-Looking Statements
Certain statements in this report, other than purely historical information, including estimates,
projections, statements relating to our business plans, objectives and expected operating results and
the assumptions upon which those statements are based, are forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements
may appear throughout this report, including, without limitation, in the following sections:
Management's Discussion and Analysis and Risk Factors. These forward-looking statements
generally are identified by the words believe, project, expect, anticipate, estimate,
intend, strategy, future, opportunity, plan, may, should, will, would, will be,
will continue, will likely result and similar expressions. Forward-looking statements are based
on current expectations and assumptions that are subject to risks and uncertainties which may
cause actual results to differ materially from those expressed or implied in the forward-looking
statements. A detailed discussion of risks and uncertainties that could cause actual results and
events to differ materially from such forward-looking statements is included in the section titled
"Economic Conditions and Uncertainties" and the section titled Risk Factors (Item 1A of this
Form 10-K). Forward-looking statements are made as of the date of this report, and we undertake
no obligation to update or revise publicly any forward-looking statements, whether because of new
information, future events or otherwise.
The following Management's Discussion and Analysis (MD&A) is intended to provide the reader
with an understanding of P&G's financial condition, results of operations and cash flows by
focusing on changes in certain key measures from year to year. The MD&A is provided as a
supplement to, and should be read in conjunction with, our Consolidated Financial Statements and
accompanying Notes. The MD&A is organized in the following sections:
Overview
Summary of 2015 Results
Economic Conditions and Uncertainties
Results of Operations
Segment Results
Cash Flow, Financial Condition and Liquidity
Significant Accounting Policies and Estimates
Other Information
Throughout the MD&A, we refer to measures used by management to evaluate performance,

including unit volume growth, net sales and net earnings. We also refer to a number of financial
measures that are not defined under accounting principles generally accepted in the United States
of America (U.S. GAAP), including organic sales growth, core earnings per share (Core EPS), free
cash flow, adjusted free cash flow
and adjusted free cash flow productivity. Organic sales growth is net sales growth excluding the
impacts of foreign exchange, acquisitions and divestitures. Core EPS is diluted net earnings per
share from continuing operations excluding certain specified charges and gains. Free cash flow is
operating cash flow less capital spending. Adjusted free cash flow is free cash flow excluding tax
payments for the Pet Care divestiture. Adjusted free cash flow productivity is the ratio of adjusted
free cash flow to net earnings excluding impairment charges on the Batteries business and the
Venezuelan deconsolidation charge. We believe these measures provide our investors with
additional information about our underlying results and trends, as well as insight to some of the
metrics used to evaluate management. The explanation at the end of the MD&A provides more
details on the use and derivation of these measures.
Management also uses certain market share and market consumption estimates to evaluate
performance relative to competition despite some limitations on the availability and comparability
of share and consumption information. References to market share and market consumption in the
MD&A are based on a combination of vendor-reported consumption and market size data, as well
as internal estimates. All market share references represent the percentage of sales in dollar terms
on a constant currency basis of our products, relative to all product sales in the category and are
measured on an annual basis versus the prior 12-month period. References to competitive activity
include promotional and product initiatives from our competitors.
OVERVIEW
P&G is a global leader in fast-moving consumer goods, focused on providing branded consumer
packaged goods of superior quality and value to our consumers around the world. Our products are
sold in more than 180 countries and territories primarily through mass merchandisers, grocery
stores, membership club stores, drug stores, department stores, salons, distributors, e-commerce,
high-frequency stores and pharmacies. We have on-the-ground operations in approximately 70
countries.
Our market environment is highly competitive with global, regional and local competitors. In
many of the markets and industry segments in which we sell our products, we compete against
other branded products as well as retailers' private-label brands. Additionally, many of the product
segments in which we compete are differentiated by price tiers (referred to as super-premium,
premium, mid-tier and value-tier products). We are well positioned in the industry segments and
markets in which we operate, often holding a leadership or significant market share position.
ORGANIZATIONAL STRUCTURE
Our organizational structure is comprised of Global Business Units (GBUs), Selling and Market Operations (SMOs), Global Business Services (GBS) and Corporate Functions (CF).
Global Business Units
Our Global Business Units (GBUs) are organized into four industry-based sectors, comprised of 1) Global Beauty, 2) Global Health and Grooming, 3) Global Fabric and Home Care and 4) Global Baby,
Feminine and Family Care. Under U.S. GAAP, the GBUs underlying the four sectors are aggregated into five reportable segments: Beauty, Hair and Personal Care ; Grooming ; Health Care ; Fabric Care
and Home Care ; and Baby, Feminine and Family Care . The GBUs are responsible for developing overall brand strategy, new product upgrades and innovations and marketing plans. The following provides
additional detail on our reportable segments and the key product categories and brand composition within each segment.
% of
Net Sales*
% of Net
Earnings*
Grooming
10%
16%
Health Care
10%
11%
Fabric Care and Home Care
29%
24%
Baby, Feminine and Family Care
27%
26%
Reportable Segment
Beauty, Hair and Personal Care
24%
23%
GBUs (Categories)
Billion Dollar Brands
Skin and Personal Care (Antiperspirant and Deodorant, Personal Cleansing, Skin Care); Head & Shoulders, Olay, Pantene,
Cosmetics; Hair Care and Color; Prestige; Salon Professional
SK-II, Wella
Shave Care (Female Blades & Razors, Male Blades & Razors, Pre- and Post-Shave Fusion, Gillette, Mach3,
Products, Other Shave Care); Electronic Hair Removal
Prestobarba
Personal Health Care (Gastrointestinal, Rapid Diagnostics, Respiratory,
Vitamins/Minerals/Supplements, Other Personal Health Care); Oral Care (Toothbrush, Crest, Oral-B, Vicks
Toothpaste, Other Oral Care)
Fabric Care (Laundry Additives, Fabric Enhancers, Laundry Detergents); Home Care Ariel, Dawn, Downy, Febreze,
(Air Care, Dish Care, P&G Professional, Surface Care)
Gain, Tide
Baby Care (Baby Wipes, Diapers and Pants); Feminine Care (Adult Incontinence,
Always, Bounty, Charmin, Pampers
Feminine Care); Family Care (Paper Towels, Tissues, Toilet Paper)
* Percent of net sales and net earnings from continuing operations for the year ended June 30, 2015 (excluding results held in Corporate).
Recent Developments: As of June 30, 2015, the Company deconsolidated our Venezuelan
subsidiaries and began accounting for our investment in those subsidiaries using the cost method
of accounting. This change resulted in a fourth quarter fiscal 2015 one-time after-tax charge of
$2.1 billion ($0.71 per share). In future periods, our financial results will only include sales of
finished goods to our Venezuela subsidiaries to the extent we receive cash payments from
Venezuela (expected to be largely through the CENCOEX exchange market). Accordingly, we
will no longer include the results of our local Venezuelan subsidiaries' operations in future
reporting periods (see Note 1 to the Consolidated Financial Statements and additional discussion in
this MD&A under "Venezuela Impacts" in Results of Operations).
the value of the transaction was approximately $15.0 billion. While the ultimate form of the
transaction has not yet been decided, the Companys current preference is for a Reverse Morris
Trust split-off transaction in which P&G shareholders could elect to participate in an exchange
offer to exchange P&G shares for Coty shares.
On July 9, 2015, the Company announced the signing of a definitive agreement with Coty, Inc. to
divest four product categories, including 43 of its beauty brands to Coty Inc. Coty's offer was
$12.5 billion. While the final value of the transaction will be determined at closing, based on
Coty's stock price and outstanding shares and equity grants as of the date of signing,
On November 13, 2014, the Company announced that it plans to divest the Batteries business via a
split transaction with Berkshire Hathaway valued at $2.9 billion, in which it will exchange a
recapitalized Duracell Company for Berkshire Hathaways shares of Procter & Gamble stock. The
Company had previously sold its controlling interest in a China-based batteries joint venture,
which represented the balance of the
In August 2014, the Company announced a plan to significantly streamline our product portfolio
by divesting, discontinuing or consolidating about 100 non-strategic brands. The resulting
portfolio of about 65 key brands will retain about 85% of sales and 95% of before-tax profit.
The transaction includes P&Gs global salon professional hair care and color, retail hair color,
cosmetics and fine fragrance categories, along with select hair styling brands, all of which have
historically been part of the Company's Beauty, Hair and Personal Care reportable segment and
had net sales of $5.5 billion in fiscal year 2015. The Company expects to complete this beauty
transaction by the end of calendar year 2016. For the period ended June 30, 2015, the results of the
affected beauty categories and brands remain part of our continuing operations. Beginning with
fiscal year 2015-16 reported results, the earnings, assets and liabilities from the affected beauty
businesses will be reported as discontinued operations.
Companys Batteries business, during the quarter ended December 31, 2014. The Company
expects to complete the Duracell transaction in the beginning of calendar year 2016, pending
necessary regulatory approvals. The Batteries business had historically been part of the Companys
Fabric Care and Home Care reportable segment. The results of the Batteries business are now
presented as discontinued operations and, as such, are excluded from both continuing operations
and segment results for all periods presented. Additionally, the Batteries balance sheet positions as
of June 30, 2015 are presented as held for sale in the Consolidated Balance Sheets.
During fiscal 2015, the Company completed the divestiture of its Pet Care business. The gain on
the transaction was not material. The results of the Pet Care business are now presented as
discontinued operations and, as such, are excluded from both continuing operations and segment
results for all periods presented. Additionally, the Pet Care balance sheet positions as of June 30,
2014 are presented as held for sale in the Consolidated Balance Sheets.
With these transactions and other recently completed and announced minor brand divestitures, the
Company will have substantially completed the strategic portfolio reshaping program with 93 out
of approximately 100 brands having been sold, discontinued or consolidated.
Beauty, Hair and Personal Care : We are a global market leader in the beauty category. Most of
the beauty markets in which we compete are highly fragmented with a large number of global and
local competitors. We compete in beauty care, hair care and color and prestige. In beauty care, we
offer a wide variety of products, ranging from deodorants to cosmetics to skin care, such as our
Olay brand, which is the top facial skin care brand in the world with over 8% global market share.
In hair care and color, we compete in both the retail and salon professional channels. We are the
global market leader in the retail hair care and color market with over 20% global market share
primarily behind our Pantene and Head & Shoulders brands. In the prestige channel, we compete
primarily with our prestige fragrances behind Dolce & Gabbana, Gucci and Hugo Boss fragrance
brands and the SK-II brand.
Grooming : We are the global market leader in the blades and razors market. Our global blades
and razors market share is over 65%, primarily behind the Gillette franchise including Fusion,
Mach3, Prestobarba and Venus. Our electronic hair removal devices, such as electric razors and
epilators, are sold under the Braun brand in a number of markets around the world where we
compete against both global and regional competitors. We hold over 20% of the male shavers
market and nearly 50% of the female epilators market.
Health Care : We compete in oral care and personal health care. In oral care, there are several
global competitors in the market and we have the number two market share position with
approximately 20% global market share. In personal health care, we are a top ten competitor in a
large, highly fragmented industry behind respiratory treatments (Vicks brand) and nonprescription
heartburn medications (Prilosec OTC brand). Nearly all of our sales outside the U.S. in personal
health care
are generated through the PGT Healthcare partnership with Teva Pharmaceuticals Ltd.
Fabric Care and Home Care : This segment is comprised of a variety of fabric care products
including laundry detergents, additives and fabric enhancers; and home care products including
dishwashing liquids and detergents, surface cleaners and air fresheners. In fabric care, we
generally have the number one or number two share position in the markets in which we compete
and are the global market leader with approximately 30% global market share, primarily behind
our Tide, Ariel and Downy brands. Our global home care market share is approximately 20%
across the categories in which we compete.
Baby, Feminine and Family Care : In baby care, we compete mainly in diapers, pants and baby
wipes with over 30% global market share. We are the number one or number two baby care
competitor in most of the key markets in which we compete, primarily behind Pampers, the
Company's largest brand, with annual net sales of approximately $10 billion. We are the global
market leader in the feminine care category with approximately 30% global market share,
primarily behind Always. We have recently entered the adult incontinence category in certain
markets, achieving nearly a 10% market share in those markets where we have entered. Our family
care business is predominantly a North American business comprised largely of the Bounty paper
towel and Charmin toilet paper brands. U.S. market shares are nearly 45% for Bounty and over
25% for Charmin.
Selling and Market Operations
Our SMOs are responsible for developing and executing go-to-market plans at the local level. The
SMOs include dedicated retail customer, trade channel and country-specific teams. Our SMOs are
organized under six regions comprised of North America, Europe, Latin America, Asia Pacific,
Greater China and India, Middle East and Africa (IMEA). Throughout the MD&A, we reference
business results in developed markets, which are comprised of North America, Western Europe
and Japan, and developing markets which are all other markets not included in developed.
Global Business Services
GBS provides technology, processes and standard data tools to enable the GBUs and the SMOs to
better understand the business and better serve consumers and customers. The GBS organization is
responsible for providing world-class solutions at a low cost and with minimal capital investment.
Corporate Functions
CF provides Company-level strategy and portfolio analysis, corporate accounting, treasury, tax,
external relations, governance, human resources and legal, as well as other centralized functional
support.
STRATEGIC FOCUS
We are focused on strategies that we believe are right for the long-term health of the Company
with the objective of delivering total shareholder return in the top one-third of our peer group.
Our value creation progress is measured internally with the operating total shareholder return
(O-TSR) model. Over time,
O-TSR performance is highly correlated with market total shareholder returns. O-TSR is a
balanced measure that requires strong performance across the three primary drivers of value
creation: sales growth, profit margin expansion and efficient utilization of assets to generate
strong, reliable operating cash flow. We operationalize O-TSR deep within the Company by
defining tight linkages between business activities and the key drivers of value creation, from
strategic choices of global business units, brands and country teams down to individual employees
daily work plans.
innovations. We are also innovating to improve our category, brand and market business models to
better serve consumers and customers.
Productivity is a core strength for P&G, which creates flexibility to fund our growth efforts, offset
cost challenges and/or improve operating margins. We have taken significant steps to accelerate
productivity and savings across all elements of costs, including cost of goods sold, marketing
expense and non-manufacturing overhead. These efforts are yielding significant benefits to our
operating margin.
The Company has recently undertaken an effort to focus and strengthen its business portfolio to
compete in categories and brands that are structurally attractive and that play to P&G strengths.
This will enable us to allocate resources to leading brands - marketed in the right set of countries,
channels and customers - where the size of the prize and probability of winning is highest. When
the major portion of this work is complete, we expect to compete in four industry-based sectors
made up of approximately ten product categories and 65 leading brands.
Finally, we are focused on improving execution and operating discipline in everything we do.
Operating discipline and execution have always been - and must continue to be - core capabilities
and competitive advantages for P&G.
The Company expects the delivery of the following long-term annual financial targets will result in
total shareholder returns in the top third of the competitive peer group:
Organic sales growth above market growth rates in the categories and geographies in which
we compete;
Core EPS growth of high single digits; and
Adjusted free cash flow productivity of 90% or greater.
Innovation has always been - and continues to be - P&G's lifeblood. To consistently win with
consumers around the world across price tiers and preferences and to consistently win versus our
best competitors, each P&G product category needs a full portfolio of innovation, including a mix
of commercial programs, product improvements and game-changing
In periods with significant macroeconomic pressures, we will maintain a disciplined approach to

investing so as not to sacrifice the long-term health of our businesses to meet short-term objectives
in any given year.
SUMMARY OF 2015 RESULTS

Amounts in millions, except per share amounts
Net sales
Operating income
Net earnings/(loss) from discontinued operations
Diluted net earnings per common share
Diluted net earnings per share from continuing operations
Core earnings per common share
Net sales decreased 5% to $76.3 billion including a negative 6% impact from foreign
exchange.
Organic sales increased 1%.
Unit volume decreased 1%. Volume grew low single digits in Fabric Care and Home
Care. Volume decreased low single digits in Baby, Feminine and Family Care, Grooming
and Health Care, and declined mid-single digits in Beauty, Hair and Personal Care.
Net earnings from continuing operations decreased $2.4 billion or 21% due to a $2.1 billion
after tax charge related to the deconsolidation of our Venezuelan subsidiaries and the decline
in net sales, partially offset by reduced selling, general and administrative expenses (SG&A).
Foreign exchange impacts negatively affected net earnings by approximately 12%.
2015
76,279
11,790
8,930
(1,786)
7,036
2.44
3.06
4.02
Change vs. Prior Year
(5)%
(20)%
(21)%
(482)%
(40)%
(39)%
(21)%
(2)%
2014
80,510
14,740
11,318
467
11,643
4.01
3.86
4.09
Change vs. Prior Year
%
7%
3%
4%
3%
4%
4%
5%
2013
80,116
13,817
10,953
449
11,312
3.86
3.71
3.89
Net earnings from discontinued operations decreased $2.3 billion due primarily to impairment
charges in our Batteries business, which is included in discontinued operations due to the
pending divestiture.
Net earnings attributable to Procter & Gamble were $7.0 billion, a decrease of $4.6 billion or
40% versus the prior year period due primarily to the Venezuelan deconsolidation charge and
impairment charges in our Batteries business.
Diluted net earnings per share decreased 39% to $2.44
Diluted net earnings per share from continuing operations decreased 21% to $3.06.
Core EPS decreased 2% to $4.02.
Cash flow from operating activities was $14.6 billion.
Adjusted free cash flow was $11.6 billion.
Adjusted free cash flow productivity was 102%.
ECONOMIC CONDITIONS AND UNCERTAINTIES
We discuss expectations regarding future performance, events and outcomes, such as our business
outlook and objectives, in annual and quarterly reports, press releases and other written and oral
communications. All such statements, except for historical and present factual information, are
"forward-looking statements" and are based on financial data and our business plans available only
as of the time the statements are made, which may become out-of-date or incomplete. We assume
no obligation to update any forward-looking statements as a result of new information, future
events or other factors. Forward-looking statements are inherently uncertain and investors must
recognize that events could be significantly different from our expectations. For more information
on risks that could impact our results, refer to Item 1A Risk Factors in this 10-K.
Global Economic Conditions. Current macroeconomic factors remain dynamic, and any causes of
market size contraction, such as greater political unrest in the Middle East and Eastern Europe,
further economic instability in the European Union, political instability in certain Latin American
markets and economic slowdowns in Japan and China, could reduce our sales or erode our
operating margin, in either case reducing our earnings.
Changes in Costs. Our costs are subject to fluctuations, particularly due to changes in commodity
prices and our own productivity efforts. We have significant exposures to certain commodities, in
particular certain oil-derived materials like resins, and volatility in the market price of these
commodity input materials has a direct impact on our costs. If we are unable to manage
commodity fluctuations through pricing actions, cost savings projects and sourcing decisions as
well as through consistent productivity improvements, it may adversely impact our gross margin,
operating margin and net earnings. Sales could also be adversely impacted following pricing
actions if there is a negative impact on consumption of our products. We strive to implement,
achieve and sustain cost improvement plans, including outsourcing projects, supply chain
optimization and general overhead and workforce optimization. As discussed later in this MD&A,
we initiated certain non-manufacturing overhead reduction projects along with manufacturing and
other supply chain cost improvements projects in 2012. If we are not successful in executing these
changes, there could be a negative impact on our operating margin and net earnings.
Foreign Exchange. We have both translation and transaction exposure to the fluctuation of
exchange rates. Translation exposures relate to exchange rate impacts of measuring income
statements of foreign subsidiaries that do not use the U.S. dollar as their functional currency.
Transaction exposures relate to 1) the impact from input costs that are denominated in a currency
other than the local reporting currency and 2) the revaluation of transaction-related working capital
balances denominated in currencies other than the functional currency. In 2015 and 2014, the U.S.
dollar has strengthened versus a number of foreign currencies leading to lower sales and earnings
from these foreign exchange impacts. Certain
countries experiencing significant exchange rate fluctuations, like Russia, Ukraine, Japan and
Switzerland, have had, and could have, an additional significant impact on our sales, costs and
earnings. Increased pricing in response to these fluctuations in foreign currency exchange rates
may offset portions of the currency impacts, but could also have a negative impact on consumption
of our products, which would affect our sales.
Government Policies. Our net earnings could be affected by changes in U.S. or foreign
government tax policies. For example, the U.S. is considering corporate tax reform that may
significantly impact the corporate tax rate and change the U.S. tax treatment of international
earnings. Additionally, we attempt to carefully manage our debt and currency exposure in certain
countries with currency exchange, import authorization and pricing controls, such as Argentina,
China, Egypt, Greece, India, Nigeria, Ukraine and Venezuela. Changes in government policies in
these areas might cause an increase or decrease in our sales, operating margin and net earnings.
During fiscal 2015, the Company deconsolidated its Venezuelan subsidiaries due to evolving
conditions that have resulted in an other-than-temporary lack of exchangeability between the
Venezuelan bolivar and U.S. dollar and have restricted our ability to pay dividends and satisfy
certain other obligations denominated in U.S. dollars.
RESULTS OF OPERATIONS
The key metrics included in our discussion of our consolidated results of operations include net
sales, gross margin, SG&A, other non-operating items and income taxes. The primary factors
driving year-over-year changes in net sales include overall market growth in the categories in
which we compete, product initiatives, the level of initiatives and other activities by competitors,
geographic expansion and acquisition and divestiture activity, all of which drive changes in our
underlying unit volume as well as pricing actions (which can also indirectly impact volume),
changes in product and geographic mix and foreign currency impacts on sales outside the U.S.
Most of our cost of products sold and SG&A are to some extent variable in nature. Accordingly,
our discussion of these operating costs focuses primarily on relative margins rather than the
absolute year-over-year changes in total costs. The primary drivers of changes in gross margin are
input costs (energy and other commodities), pricing impacts, geographic mix (for example, gross
margins in developed markets are generally higher than in developing markets for similar
products), product mix (for example, the Beauty, Hair and Personal Care segment has higher gross
margins than the Company average), foreign exchange rate fluctuations (in situations where certain
input costs may be tied to a different functional currency than the underlying sales), the impacts of
manufacturing savings projects and to a lesser extent scale impacts (for costs that are fixed or less
variable in nature). The primary drivers of SG&A are marketing-related costs and nonmanufacturing overhead costs. Marketing-related costs are primarily variable in nature, although
we do achieve some level of scale benefit over time due to overall growth and other
marketing efficiencies. Overhead costs are also variable in nature, but on a relative basis, less so
than marketing costs due to our ability to leverage our organization and systems infrastructures to
support business growth. Accordingly, we generally experience more scale-related impacts for
these costs.
The Company is in the midst of a productivity and cost savings plan to reduce costs in the areas of
supply chain, marketing and overhead expenses. The plan is designed to accelerate cost reductions
by streamlining management decision making, manufacturing and other work processes to fund
the Company's growth strategy.
Net Sales
Fiscal year 2015 compared with fiscal year 2014
Net sales decreased 5% to $76.3 billion in 2015 on a 1% decrease in unit volume versus the prior
year period. Volume grew low single digits in Fabric Care and Home Care. Volume decreased low
single digits in Baby, Feminine and Family Care, Grooming and Health Care and decreased midsingle digits in Beauty, Hair and Personal Care. Volume increased low single digits in developed
regions and declined low single digits in developing regions due, in part, to pricing actions to
address
foreign exchange devaluations. Unfavorable foreign exchange reduced net sales by 6%, while
higher pricing drove a 2% favorable impact on net sales. Organic volume decreased 1% and
organic sales grew 1% driven by higher pricing.
Net sales increased less than half a percent to $80.5 billion in 2014 on a 3% increase in unit
volume versus the prior year period. Fabric Care and Home Care along with Baby, Feminine and
Family Care volume grew mid-single digits. Grooming and Health Care volume grew low single
digits. Beauty, Hair and Personal Care volume was unchanged. Volume increased low single digits
in developed regions and grew mid-single digits in developing regions. Unfavorable foreign
exchange reduced net sales by 3%. Organic sales grew 3% driven by the unit volume increase. A
1% favorable impact from higher pricing was offset by a 1% impact from unfavorable geographic
and product mix due to higher relative growth of developing regions, which have lower than
average selling prices, and of lower priced product categories such as Fabric Care and Baby Care.
Operating Costs
Comparisons as a percentage of net sales; Years ended June 30
Gross margin
Selling, general and administrative expense
Operating margin
Earnings from continuing operations before income taxes
Gross margin decreased 10 basis points to 49.0% of net sales in 2015. Gross margin benefited
from a 200 basis point impact from manufacturing cost savings and a 90 basis point benefit from
higher pricing. These impacts were offset by a 140 basis point impact from unfavorable geographic
and product mix, primarily from a decline in the Prestige business, which has higher than average
margins, and within the Fabric Care and Home Care and Grooming segments. Additional offsets
include a 40 basis point impact from unfavorable foreign exchange, a 40 basis point impact from
costs related to initiatives and capacity investments, a 30 basis point impact from higher
restructuring costs and smaller impacts from lower volume scale and higher commodity costs.
Total SG&A decreased 5% to $23.6 billion, as reduced overhead and marketing spending was
partially offset by increased foreign exchange transaction charges. SG&A as a percentage of net
sales increased 10 basis points to 30.9%, as the negative scale impacts of lower net sales and
inflationary
2015
49.0%
30.9%
15.5%
15.5%
11.7%
9.2%
Basis Point Change
(10)
10
(280)
(230)
(240)
(530)
2014
49.1%
30.8%
18.3%
17.8%
14.1%
14.5%
Basis Point Change
(100)
(170)
110
10
40
40
2013
50.1%
32.5%
17.2%
17.7%
13.7%
14.1%
impacts were partially offset by cost savings efforts. Marketing spending as a percentage of net
sales decreased 60 basis points behind lower spending due to efficiency efforts. Overhead
spending as a percentage of net sales increased 40 basis points as productivity savings of 60 basis
points from reduced overhead spending were more than offset by wage inflation, investments in
research and development, the negative scale impacts of lower net sales and higher restructuring
costs. Increased foreign exchange transaction charges added approximately 30 basis points to
SG&A as a percentage of net sales, as current year foreign currency transaction charges (from
revaluing receivables and payables denominated in a currency other than a local entitys functional
currency) were partially offset by lower year-on-year charges for Venezuela remeasurement and
devaluation.
During fiscal 2015, the Company incurred a $2.0 billion ($2.1 billion after tax) charge related to
the deconsolidation of its Venezuelan subsidiaries. See the Venezuela Impacts later in the
Results of Operations section.
Gross margin contracted 100 basis points to 49.1% of net sales in 2014. The decrease in gross
margin was primarily driven by a 150 basis point impact from unfavorable geographic and product
mix, a 50 basis point impact from higher commodity costs and a 90 basis point impact from
unfavorable foreign exchange, partially offset by manufacturing cost savings of 190 basis points
and a 40 basis point benefit from higher pricing. The unfavorable geographic and product mix was
caused by disproportionate growth in developing regions and the Fabric Care and Home Care and
Baby, Feminine and Family Care segments, which have lower gross margins than the Company
average.
Total SG&A decreased 5% to $ 24.8 billion in 2014 due to a reduction in marketing spending,
overhead expense, impairment charges and restructuring costs. SG&A as a percentage of net sales
decreased 170 basis points to 30.8% . Lower restructuring spending drove 30 basis points of the
decline. Marketing spending as a percentage of net sales decreased 80 basis points primarily due to
lower spending behind a focus on more efficient marketing support and scale benefits from
increased net sales. Overhead spending decreased 50 basis points from productivity savings.
Impairment charges were 40 basis points in 2013, but were zero in 2014. Charges for the 2014
foreign currency policy changes in Venezuela were comparable to the 2013 Venezuela devaluation
impact.
During fiscal 2013, we incurred impairment charges of $308 million ($290 million after tax)
related to the carrying value of goodwill in our Appliances business and the related Braun trade
name intangible asset.
Non-Operating Items
Interest expense was $626 million in 2015, a decrease of $84 million versus the prior year due to
lower average debt balances and a decrease in weighted average interest rates. Interest income was
$151 million in 2015, an increase of $50 million versus the prior year due to an increase in cash,
cash equivalents and investment securities. Other non-operating income, net, primarily includes
divestiture gains and investment income. Other non-operating income increased $325 million to
$531 million, primarily due to minor brand divestiture gains. In 2015, we had approximately $400
million in minor brand divestiture gains, including Zest, Camay, Fekkai and Wash & Go hair care
brands, Rochas and Laura Biagotti fine fragrance brands and Vaposteam. The prior year
acquisition and divestiture activities included approximately $150 million in divestiture gains,
primarily related to the sale of our bleach businesses in Europe, IMEA and Latin America, our Pert
hair care business in Latin America and MDVIP.
Interest expense increased 6% in 2014 to $ 710 million , primarily due to an increase in average
debt outstanding. Interest income was $ 101 million in 2014, an increase of $13 million versus the
prior year due to an increase in cash, cash equivalents and investment securities. Other nonoperating
income, net, primarily includes divestiture gains and investment income. Other non-operating
income decreased $735 million to $206 million, primarily due to acquisition and divestiture
impacts. In 2014, we had approximately $150 million in divestiture gains, primarily related to the
sale of our bleach businesses in Europe, IMEA and Latin America, our Pert hair care business in
Latin America and MDVIP. The 2013 acquisition and divestiture activities included a $631 million
holding gain resulting from P&G's purchase of the balance of its Baby Care and Feminine Care
joint venture in Iberia and an approximate $250 million gain from the divestiture of our Italy
bleach business.
Income Taxes
The effective tax rate on continuing operations increased 350 basis points to 24.6% in 2015 mainly
due to the non-deductibility of the $2.0 billion Venezuelan deconsolidation charge. The rate
increase caused by lower current year favorable discrete adjustments related to uncertain income
tax positions (the net benefit was 80 basis points in the current year versus 160 basis points in the
prior year) was largely offset by a decrease related to favorable geographic earnings mix.
The effective tax rate on continuing operations decreased 170 basis points to 21.1% in 2014. The
primary driver of this rate decline was approximately 320 basis points from the favorable
geographic mix of earnings and approximately 60 basis points due to the non-deductibility of the
2013 impairment charges related to our Appliances business. These impacts were partially offset
by a 50 basis point increase due to the Venezuela currency policy changes and devaluation
discussed below (which decreased the prior year rate 20 basis points and increased the current year
rate by 30 basis points), a 110 basis point increase due to the tax impacts of acquisition and
divestiture activities (the gains from the purchase of the balance of the Baby Care and Feminine
Care joint venture in Iberia and the sale of our Italy bleach business in 2013) and a 30 basis point
increase due to the net impact of favorable discrete adjustments related to uncertain income tax
positions. The net benefit 2014 was $228 million, or 160 basis points, versus 190 basis points of
net benefit in 2013.
Net Earnings
Net earnings from continuing operations decreased $2.4 billion or 21% to $8.9 billion due to the
$2.1 billion after tax charge related to the deconsolidation of Venezuelan subsidiaries and the
decline in net sales, partially offset by reduced selling, general and administrative costs (SG&A).
Foreign exchange impacts negatively affected net earnings by approximately $1.4 billion in 2015
due to the weakening of certain key currencies against the U.S. dollar, primarily in Russia,
Ukraine, Venezuela and Argentina, partially offset by lower after-tax charges related to balance
sheet remeasurement charges in Venezuela.
Net earnings from discontinued operations decreased $2.3 billion in 2015 due primarily to $2.1
billion of after tax impairment charges in our Batteries business (see Note 2 to the Consolidated
Financial Statements) and the absence of fiscal 2015 earnings from our divested Pet Care business.
Net earnings attributable to Procter & Gamble decreased $4.6 billion, or 40% to $7.0 billion.
Diluted net earnings per share from continuing operations decreased $0.80, or 21%, to $3.06 due
to the decrease in net earnings. We had a diluted net loss per share from discontinued operations of
$0.62 due primarily to the impairment charges on the Batteries business. This was a reduction of
$0.78 per share versus the prior year. Diluted net earnings per share decreased $1.57, or 39%, to
$2.44.
Core EPS decreased 2% to $4.02. Core EPS represents diluted net earnings per share from
continuing operations excluding charges for Venezuelan deconsolidation, balance sheet
remeasurement charges from foreign exchange policy changes and devaluation in Venezuela (see
below), charges for certain European legal matters and incremental restructuring related to our
productivity and cost savings plan. The decline was driven by reduced net sales, partially offset by
minor brand divestiture gains.
Net earnings from continuing operations increased $365 million or 3% to $11.3 billion in 2014 due
to the increase in sales and a 40-basis point expansion in net earnings margin. The increase in net
earnings margin was primarily driven by the decrease in SG&A as a percentage of net sales and
the lower tax rate, partially offset by the gross margin contraction and the acquisition and
divestiture-driven net reduction in other non-operating income, net.
Net earnings from discontinued operations increased $18 million in 2014 due to stronger results in
our Batteries business offsetting the ongoing impacts of prior year product recalls in Pet Care. Net
earnings attributable to Procter & Gamble increased $331 million, or 3% to $11.6 billion.
Diluted net earnings per share from continuing operations increased 4% to $3.86 primarily due to
the increase in net earnings. Diluted net earnings per share from discontinued operations was $0.15
due to the earnings of the Batteries and Pet Care businesses. Diluted net earnings per share
increased 4% to $4.01.
Core EPS increased 5% to $4.09 primarily due to increased net sales, a 40 basis point net earnings
margin expansion and the reduction in shares outstanding. Core EPS represents diluted net
earnings per share from continuing operations excluding charges from foreign exchange policy
changes and the devaluation of the foreign exchange rates in Venezuela (see below), the 2013
holding gain on the purchase of the balance of our Iberian joint venture, the 2013 impairment of
goodwill and indefinite-lived intangible assets and charges in both years for European legal
matters and incremental restructuring related to our productivity and cost savings plan.
Venezuela Impacts
Effective June 30, 2015, the Company deconsolidated its local Venezuelan operations from our
Consolidated Financial Statements. P&G has operated in Venezuela for over 65 years and remains
committed to serving Venezuelan consumers with our leading brands and products to grow our
business. We expect our operations in Venezuela will continue for the foreseeable future. We
continue to work proactively with the Venezuelan official agencies to ensure we fully understand
and remain compliant as the policies within which our Venezuelan subsidiaries operate evolve. We
do not expect this change in accounting to directly affect the local operations of our Venezuelan
subsidiaries .
There are a number of currency and other operating controls and restrictions in Venezuela, which
have evolved over time and may continue to evolve in the future. These evolving conditions have
resulted in an other-than-temporary lack of exchangeability between the Venezuelan bolivar and
U.S. dollar and have restricted our Venezuelan operations ability to pay dividends and satisfy
certain other obligations denominated in U.S. dollars. For accounting purposes, this has resulted in
a lack of control over our Venezuelan subsidiaries. Therefore, in accordance with the applicable
accounting standards for consolidation, effective June 30, 2015, we deconsolidated our
Venezuelan subsidiaries and began accounting for our investment in those subsidiaries using the
cost method of accounting. This change resulted in a fourth quarter fiscal 2015 one-time before-tax
charge of $2.0 billion ($2.1 billion after tax, or $0.71 per share). In future periods, our financial
results will only include sales of finished goods to our Venezuelan subsidiaries to the extent we
receive payments from Venezuela (expected to be largely through the CENCOEX exchange
market). Accordingly, we will no longer include the results of our Venezuelan subsidiaries
operations in future reporting periods (see Note 1 to the Consolidated Financial Statements). Our
operations in Venezuela accounted for less than 2% of consolidated net sales and earnings from
continuing operations (before the deconsolidation charge) during fiscal 2015.
Venezuela is a highly inflationary economy under U.S. GAAP. As a result, prior to

deconsolidation, the U.S. dollar had been the functional currency for our subsidiaries in Venezuela.
A number of changes have been initiated in the Venezuelan exchange rate system, including
changes that resulted in devaluations to their currency. Prior to deconsolidation, currency
remeasurement adjustments for non-dollar denominated monetary assets and liabilities held by our
Venezuelan subsidiaries, along with any other transactional foreign exchange gains and losses,
have been reflected in earnings, and totaled $104 million, $275 million and $236 million on an
after-tax basis in 2015, 2014 and 2013, respectively.
There are currently three official exchange rate mechanisms in Venezuela. The CENCOEX
(National Center for External Commerce) exchange rate is 6.3 Venezuelan bolivares fuerte (VEF)
per dollar and can be used for the importation of certain qualifying products and materials. SICAD
(Complementary
System for Foreign Exchange Administration) is an auction-based exchange program applicable to

foreign investment transactions and certain other qualifying imports of finished goods and
materials. The rate available through SICAD was 10.6 VEF per dollar at June 30, 2014 and 12.8
VEF per dollar at June 30, 2015. A third exchange mechanism, referred to as SIMADI (Sistema
Marginal de Divisas), is also an auction-based program recently trading at approximately 200 VEF
per dollar.
Through December 31, 2013, Venezuela had only one officially established exchange rate for
qualifying dividends and imported goods and services, the CENCOEX rate, previously CADIVI
(Foreign Exchange Administrative Commission). Accordingly, through December 31, 2013, our
results in Venezuela and all of our net monetary assets were measured at this exchange rate. On
January 24, 2014, a number of announcements were made affecting currency exchange rate and
other controls, including the introduction of the SICAD and SICAD II exchange rate mechanisms.
In addition, based on local regulatory guidance, we had expected dividends to be executed under
the SICAD rate. Accordingly, beginning in
January 2014, other than transactions flowing through CENCOEX, our historical operations and
balance sheet positions were generally measured using the SICAD rate. In January 2015,
additional announcements were made relating to currency exchange rate and other controls,
including the elimination of the SICAD II exchange rate and the introduction of the SIMADI rate.
A significant portion of our imports have historically qualified for the CENCOEX rate. While we
continue to import certain materials and products under this rate, payments for such qualifying
imports have declined in recent years. At this time, there is considerable uncertainty as to how
CENCOEX will operate in the future, including the nature and quantity of transactions that will
continue to flow through CENCOEX. However, we believe a portion of our imports will continue
to qualify for the preferential rate. We have had no recent access to the SICAD market for imports
or dividends. To date, we have had limited access to the SIMADI market. Our plans and ability to
access that market in the future is unclear.
SEGMENT RESULTS
Segment results reflect information on the same basis we use for internal management reporting and performance evaluation. The results of these reportable segments do not include certain non-business unit
specific costs such as interest expense, investing activities and certain restructuring and asset impairment costs. These costs are reported in our Corporate segment and are included as part of our Corporate
segment discussion. Additionally, as described in Note 12 to the Consolidated Financial Statements, we apply blended statutory tax rates in the segments. Eliminations to adjust segment results to arrive at
our effective tax rate are included in Corporate. All references to net earnings throughout the discussion of segment results refer to net earnings from continuing operations.

Grooming
Health Care
TOTAL COMPANY

Grooming
Health Care
TOTAL COMPANY
Volume with Acquisitions &

Divestitures
(4)%
(3)%
(1)%
1%
(1)%
(1)%
Volume with Acquisitions &
Divestitures
0%
1%
2%
4%
4%
3%
Volume Excluding
Acquisitions & Divestitures
(3)%
(3)%
(1)%
1%
(1)%
(1)%
Volume Excluding
Acquisitions & Divestitures
0%
1%
2%
5%
3%
3%
Net Sales Change Drivers (2015 vs. 2014)

Foreign Exchange
(5)%
(8)%
(5)%
(6)%
(6)%
Price
(6)%
2%
4%
2%
1%
2%
Mix
2%
0%
0%
3%
0%
2%
0%
Other
0%
0%
0%
(1)%
0%
0%
Net Sales Growth
(7)%
(7)%
(1)%
(5)%
(3)%
(5)%
Net Sales Change Drivers (2014 vs. 2013)

Foreign Exchange
(2)%
(3)%
(1)%
(3)%
(3)%
(3)%
Price
0%
4%
1%
(1)%
1%
1%
Mix
0%
(2)%
(1)%
0%
0%
(1)%
Other
0%
0%
0%
0%
0%
0%
Net Sales Growth
(2)%
0%
1%
0%
2%
0%
Net sales percentage changes are approximations based on quantitative formulas that are consistently applied. Other includes the sales mix impact from acquisitions and divestitures and rounding impacts necessary to reconcile
volume to net sales.
digits in developing markets and declined low single digits in developed markets.
BEAUTY, HAIR AND PERSONAL CARE

($ millions)
Volume
Net sales
Net earnings
% of net sales
2015
N/A
$18,135
$2,584
14.2%
Change vs. 2014
(4)%
(7)%
(6)%
20 bps
2014
N/A
$19,507
$2,739
14.0%
Change vs. 2013
%
(2)%
11%
160 bps
Beauty, Hair and Personal Care net sales decreased 7% to $18.1 billion in 2015 on a 4% decrease
in unit volume. Organic sales decreased 1% on a 3% decline in organic volume. Unfavorable
foreign exchange reduced net sales by 5%. Increased pricing was a benefit of 2%. Global market
share of the Beauty, Hair and Personal Care segment decreased 0.5 points. Volume decreased low
single digits in developed markets and was down mid-single digits in developing markets.
Volume in Hair Care and Color decreased low single digits in both developed and developing
markets following minor divestitures and competitive activity. Global market share of the hair
care category was down more than half a point.
Volume in Skin and Personal Care was down mid-single digits, driven by a high single-digits
decline in developing markets, primarily due to decreases in skin care and personal cleansing
due to ongoing competitive activity. Volume was unchanged in developed markets. Global
market share of the skin and personal care category was down half a point.
Volume in Cosmetics was unchanged as a mid-single-digit increase in developing markets
primarily due to market growth and product innovation was offset by a low single-digit
decrease in developed markets due to competitive activity. Global market share of the
cosmetics category was down slightly.
Volume in Salon Professional decreased low single digits due to a low single-digit decrease in
developed markets primarily due to market declines. Volume in developing markets was
unchanged.
Volume in Prestige decreased double digits due to competitive activity and reduced levels of
initiative activity.
Net earnings decreased 6% to $2.6 billion primarily due to lower volume and the currency-driven
reduction in net sales. Net earnings margin increased 20 basis points due to a reduction in SG&A
as a percent of sales, behind lower spending from the Company's focus on marketing efficiencies.
Beauty, Hair and Personal Care net sales decreased 2% to $19.5 billion in 2014. Unit volume was
in line with the prior year period as overall market growth was offset by share declines from the
impacts of competitive activity. Organic sales were flat. Unfavorable foreign exchange reduced net
sales by 2%. Global market share of the Beauty, Hair and Personal Care segment decreased 0.4
points. Volume increased low single
Volume in Hair Care and Color was flat with a decrease in developed regions offset by an
increase in developing regions. Global market share of the hair care category decreased nearly
half a point.
Volume in Skin and Personal Care increased low single digits due to product and commercial
innovation and market growth for personal cleansing and deodorants, partially offset by a
decrease in facial skin care due to competitive activity. Global market share of the skin and
personal care category decreased nearly half a point.
Volume in Cosmetics increased low single digits in both developed and developing markets
due to market growth and product innovation. Global market share of the cosmetics category
decreased slightly.
Volume in Salon Professional decreased mid-single digits due to competitive activity and
European market contraction.
Volume in Prestige decreased low single digits due to minor brand divestitures.
Net earnings increased 11% to $2.7 billion due to a 160 basis point increase in net earnings
margin. Net earnings margin increased due to a decrease in SG&A and a gain on a minor brand
divestiture (Pert in Latin America), partially offset by gross margin contraction. SG&A decreased
primarily due to a reduction in marketing spending resulting from optimization efforts. Gross
margin decreased slightly due to the impact of foreign exchange and negative geographic and
product mix, partially offset by manufacturing cost savings.
GROOMING
($ millions)
Volume
Net sales
Net earnings
% of net sales
2015
N/A
$7,441
$1,787
24.0%
Change vs. 2014
(3)%
(7)%
(9)%
(40) bps
2014
N/A
$8,009
$1,954
24.4%
Change vs. 2013
1%
%
6%
150 bps
Grooming net sales decreased 7% to $7.4 billion in 2015 on a 3% decrease in unit volume. Organic
sales increased 1%. Price increases in blades and razors and appliances contributed 4% to net sales
while unfavorable foreign exchange reduced net sales by 8%. Global market share of the
Grooming segment decreased 0.1 points versus year ago. Volume decreased low single digits in
both developed and developing regions.
Shave Care volume decreased low single digits due to a mid-single-digit decline in developed
regions from lower trade inventory levels and a low single digit-decrease in developing
regions following increased pricing. Global market share of the blades and razors category
was up slightly.
Volume in Electronic Hair Removal increased mid-single digits due to mid-single-digit
growth in developed markets and low single-digit growth in developing markets behind
product innovation and market growth. Global market share of the electronic hair removal
category was flat.
Net earnings decreased 9% to $1.8 billion due to the decline in net sales and a 40 basis-point
decrease in net earnings margin. Net earnings margin decreased due to higher SG&A spending as a
percent of sales. Decreased spending due to marketing efficiencies and overhead reductions did not
keep pace with the currency-driven reduction in net sales. Gross margin was unchanged as
negative geographic mix from a disproportionate decline in developed regions was offset by
manufacturing cost savings.
Grooming net sales were flat at $8.0 billion in 2014 on a 1% increase in unit volume. Organic sales
were up 3%. Price increases in Blades and Razors and Appliances contributed 4% to net sales
growth. Unfavorable geographic and product mix reduced net sales by 2% due to disproportionate
growth in developing regions and mid-tier products, both of which have lower than segment
average selling prices. Unfavorable foreign exchange reduced net sales by 3%. Global market
share of the Grooming segment increased 0.2 points. Volume increased mid-single digits in
developing regions partially offset by a low-single-digit decrease in developed regions.
Shave Care volume increased low single digits due to a mid-single-digit growth in developing
regions from innovation and market growth, partially offset by a low single-digit decrease in
developed regions due to market contraction. Global market share of the blades and razors
category was up slightly.
Volume in Appliances decreased low single digits due to the sale of the Braun household
appliances business. Organic volume increased mid-single digits driven by developing
markets due to market growth, product innovation on men's shavers and shipments to build
inventory to support initiatives and new distributors. Global market share of the appliances
category was down less than half a point.
Net earnings increased 6% to $2.0 billion due to a 150 basis-point increase in net earnings margin.
Net earnings margin increased primarily due to a reduction in SG&A spending which was driven
by a decrease in marketing spending. Gross margin increased slightly as the benefits of pricing and
manufacturing cost savings more than offset the negative impacts of foreign exchange and
geographic and product mix.
HEALTH CARE
($ millions)
Volume
Net sales
Net earnings
% of net sales
2015
N/A
$7,713
$1,167
15.1%
Change vs. 2014
(1)%
(1)%
8%
120 bps
2014
N/A
$7,798
$1,083
13.9%
Change vs. 2013
2%
1%
(1)%
(30) bps
Health Care net sales declined 1% to $7.7 billion in 2015 on a 1% decline in unit volume. Organic
sales increased 4%. Favorable geographic and product mix increased net sales 3%, primarily
driven by Oral Care growth in developed markets, which has higher average sales prices. Increased
pricing added 2% to net sales. Unfavorable foreign exchange reduced net sales by 5%. Global
market share of the Health Care segment decreased 0.3 points. Volume increased low single digits
in developed regions but decreased mid-single digits in developing regions.
Oral Care volume decreased low single digits as a mid-single-digit decline in developing
regions due to competitive activity and following increased pricing was partially offset by a
low single-digit increase in developed regions from product innovation. Global market share
of the oral care category was flat.
Volume in Personal Health Care decreased low single digits due to a low single-digit decrease
in developed regions from competitive activity. Volume in developing markets was
unchanged. Global market share of the personal health care category was down about a point.
Net earnings increased 8% to $1.2 billion as the reduction in net sales was more than offset by a
120-basis point increase in net earnings margin. Net earnings margin increased due to gross margin
expansion and reduced SG&A spending as a percentage of net sales. Gross margin increased
primarily due to the impact of higher pricing and manufacturing cost savings. SG&A declined as a
percentage of net sales due to a focus on marketing spending efficiencies.
Health Care net sales increased 1% to $7.8 billion in 2014 on a 2% increase in unit volume.
Organic sales increased 2%. Price increases across the businesses contributed 1% to net sales
growth. Disproportionate growth in developing regions drove unfavorable geographic mix
reducing net sales by 1%. Unfavorable foreign exchange reduced net sales by 1%. Global market
share of the Health Care segment increased 0.2 points. Volume increased low single digits in both
developed and developing regions.
Oral Care volume increased low single digits due to a mid-single-digit increase in developing
regions behind geographic market expansion and market growth and a low single-digit
increase in developed regions from innovation. Global market share of the oral care category
increased less than half a point.
Volume in Personal Health Care decreased low single digits due to a weak cough and cold
season which was only partially offset by innovation and market expansion.
Net earnings decreased 1% to $1.1 billion as the increase in net sales was more than offset by a 30basis point decrease in net earnings margin. Net earnings margin decreased due to gross margin
contraction, partially offset by lower overheads. Gross margin decreased due to the impact of
foreign exchange and negative geographic and product mix, partially offset by manufacturing cost
savings and pricing.
FABRIC CARE AND HOME CARE

($ millions)
Volume
Net sales
Net earnings
% of net sales
2015
N/A
$22,277
$2,635
11.8%
Change vs. 2014
1%
(5)%
(5)%
0 bps
2014
N/A
$23,509
$2,771
11.8%
Change vs. 2013
4%
%
(2)%
(30) bps
Fabric Care and Home Care net sales decreased 5% to $22.3 billion in 2015 on a 1% increase in
unit volume. Organic sales increased 2%. Unfavorable foreign exchange reduced net sales by 6%,
while pricing added 1% to net sales, mix was neutral, and minor brand divestitures had a negative
impact of about 1%. Global market share of the Fabric Care and Home Care segment decreased
0.1 points. Volume increased low single digits in developed regions and was unchanged in
developing regions.
Fabric Care volume increased low single digits due to low single-digit growth in developed
regions behind market growth and product innovation. Volume was unchanged in developing
regions. Global market share of the fabric care category was flat.
Home Care volume was unchanged as decreases due to competitive activity, mainly in
developed markets, were offset by increases from product innovation and expanded
distribution. Global market share of the home care category was down nearly half a point.
Net earnings decreased 5% to $2.6 billion due to the net sales reduction. Gross margin was
unchanged as negative product mix impacts from investments to expand new innovations globally
were offset by manufacturing cost savings. SG&A as a percent of net sales was unchanged as
lower spending due to marketing and overhead efficiencies kept pace with reduced sales.
Fabric Care and Home Care net sales were unchanged at $23.5 billion in 2014 on a 4% increase in
unit volume. Organic sales were up 4%. Unfavorable foreign exchange reduced net sales by 3%.
Reduced pricing decreased net sales by 1%. Global market share of the Fabric Care and Home
Care segment increased 0.1 points. Volume increased high single digits in developing regions and
low single digits in developed regions.
Fabric Care volume increased mid-single digits driven by a high single-digit volume increase
in developing regions behind market growth and innovation, and a low single-digit increase in
developed regions due to product innovation. Global market share of the fabric care category
was flat.
Home Care volume increased mid-single digits driven by a high single-digit increase in
developing markets from distribution expansion and market growth, and from a low single
digit increase in developed regions due to product innovation. Global market share of the
home care category was up less than half a point.
Net earnings decreased 2% to $2.8 billion due to a 30-basis point decrease in net earnings margin.
Net earnings margin decreased due to gross margin contraction partially offset by a decrease in
SG&A as a percentage of sales. Gross margin decreased due to unfavorable geographic and
product mix and the impact of foreign exchange, which was partially offset by manufacturing cost
savings. SG&A as a percentage of net sales decreased due to marketing and overhead efficiencies.
BABY, FEMININE AND FAMILY CARE
Volume
Net sales
Net earnings
% of net sales
($ millions)
2015
N/A
$20,247
$2,938
14.5%
Change vs. 2014
(1)%
(3)%
%
50 bps
2014
N/A
$20,950
$2,940
14.0%
Change vs. 2013
4%
2%
(4)%
(90) bps
Baby, Feminine and Family Care net sales were down 3% to $20.2 billion in 2015 on a 1% decline
in unit volume. Organic sales were up 3%. Price increases, primarily in Baby Care, increased net
sales by 2%. Favorable geographic mix from higher developed market volume in both Feminine
Care and Baby Care and from product mix in Feminine Care increased net sales by 2%.
Unfavorable foreign exchange reduced net sales by 6%. Global market share of the Baby,
Feminine and Family Care segment decreased 0.6 points. Volume increased low single digits in
developed regions and decreased high single digits in developing regions.
Volume in Baby Care decreased low single digits due to a mid-single-digit decrease in
developing regions following increased pricing, partially offset by a low single-digit increase
in developed regions from product innovation. Global market share of the baby care category
decreased less than a point.
Volume in Feminine Care decreased low single digits as high single-digit decline in
developing regions due to competition and increased pricing was partially offset by a midsingle-digit increase in developed regions from product innovation, including the entry into
the female adult incontinence category. Global market share of the feminine care category was
flat.
Volume in Family Care was unchanged as low single-digit growth in developed regions was
offset by a double-digit decline in developing regions due to discontinuation of lower priced
product offerings. In the U.S., all-outlet share of the family care category decreased less than a
point.
Net earnings were unchanged at $2.9 billion as the reduction in net sales was offset by a 50-basis
point increase in net earnings margin. Net earnings margin increased due to higher gross margin,
partially offset by an increase in SG&A as a percent of net sales. The increase in gross margin was
driven by higher pricing and manufacturing cost savings, partially offset by foreign exchange.
SG&A as a percent of net sales increased as spending reductions did not keep pace with the
currency-driven decline in sales.
Baby, Feminine and Family Care net sales increased 2% to $21.0 billion in 2014 on 4% volume
growth. Organic sales were up 4% on 3% organic volume growth. Price increases primarily in
Baby Care increased net sales by 1%. Unfavorable foreign exchange reduced net sales by 3%.
Global market share of the Baby, Feminine and Family Care segment decreased 0.3 points.
Volume increased low single digits in developed regions and mid-single digits in developing
regions.
Volume in Baby Care increased mid-single digits due to a mid-single-digit increase in

developing regions, from market growth and product innovation and a mid-single-digit
increase in developed regions due to the buyout of our joint venture partner in Iberia and
product innovation in North America, partially offset by competitive activity. Global market
share of the baby care category decreased slightly.
Volume in Feminine Care increased mid-single digits due to a mid-single-digit increase in
developed regions, from the buyout of our joint venture partner in Iberia and innovation, and a
low single-digit increase in developing regions from market growth and innovation. Organic
volume was up low single digits. Global market share of the feminine care category decreased
less than half a point.
Volume in Family Care increased low single digits due to product innovation on Charmin and
Bounty and lower pricing, partially offset by competitive activity. In the U.S., all-outlet share
of the family care category decreased less than half point.
Net earnings decreased 4% to $2.9 billion as the increase in net sales was more than offset by a 90basis point decrease in net earnings margin. Net earnings margin decreased primarily due to gross
margin contraction. Gross margin decreased due to the impact of foreign exchange, higher
commodity cost and unfavorable product and geographic mix from disproportionate growth in
developing regions and mid-tier products, both of which have lower gross margins than the
segment average, partially offset by manufacturing cost savings and pricing.
CORPORATE
($ millions)
Net sales
Net earnings
2015
$466
$(2,181)
Change vs. 2014
(37)%
N/A
2014
$737
$(169)
Change vs. 2013
31%
N/A
Corporate includes certain operating and non-operating activities not allocated to specific business
units. These include: the incidental businesses managed at the corporate level; financing and
investing activities; other general corporate items; the historical gains and losses related to certain
divested brands and categories; certain asset impairment charges; certain balance sheet impacts
from significant foreign exchange devaluations; and certain restructuring-type activities to
maintain a competitive cost structure, including manufacturing and workforce optimization.
Corporate also includes reconciling items to adjust the accounting policies
used in the segments to U.S. GAAP. The most significant reconciling item is income taxes to
adjust from blended statutory tax rates that are reflected in the segments to the overall Company
effective tax rate.
Net sales in Corporate decreased by $271 million in the current year primarily due to the prior year
divestiture of the MDVIP business. Corporate net expenses from continuing operations increased
$2.0 billion in 2015, primarily due the charge related to the deconsolidation of the Venezuelan
subsidiaries, increased foreign exchange transactional charges and incremental restructuring
charges, which were partially offset by gains on minor brand divestitures.
Net sales in Corporate increased by $173 million in 2014. Corporate net earnings from continuing
operations improved by $164 million in 2014, primarily due to reduced net after-tax goodwill and
intangible asset impairment charges (which totaled $290 million in 2013 but were zero in 2014),
lower 2014 restructuring and overhead spending and lower overall Company effective tax rate,
partially offset by the holding gain in 2013 from the buyout of our Iberian joint venture partner.
Additional discussion of the items impacting net earnings in Corporate are included in the Results
of Operations section.
Productivity and Cost Savings Plan
In 2012, the Company initiated a productivity and cost savings plan to reduce costs and better
leverage scale in the areas of supply chain, research and development, marketing and overheads.
The plan was designed to accelerate cost reductions by streamlining management decision making,
manufacturing and other work processes to fund the Company's growth strategy.
As part of this plan, the Company expects to incur in excess of $5.0 billion in before-tax
restructuring costs over a six-year period (from fiscal 2012 through fiscal 2017). Approximately
78% of the costs have been incurred through the end of fiscal 2015. Savings generated from the
restructuring costs are difficult to estimate, given the nature of the activities, the corollary benefits
achieved (e.g., enrollment reduction achieved via normal attrition), the timing of the execution and
the degree of reinvestment. Overall, these costs and other non-manufacturing enrollment
reductions are expected to deliver approximately $3.0 billion in annual before-tax gross savings.
The cumulative before-tax savings realized through 2015 were approximately $2.1 billion .
Restructuring accruals of $389 million as of June 30, 2015 are classified as current liabilities.
Approximately 70% of the restructuring charges incurred during fiscal 2015 either have been or
will be settled with cash. Consistent with our historical policies for ongoing restructuring-type
activities, the resulting charges are funded by and included within Corporate for segment reporting.
In addition to our restructuring programs, we have additional ongoing savings efforts in our supply
chain, marketing and overhead areas that yield additional benefits to our operating margins.
Refer to Note 3 to our Consolidated Financial Statements for more details on the restructuring
program and to the Operating Costs section of this MD&A for more information about the total
benefit to operating margins from our total savings efforts.
CASH FLOW, FINANCIAL CONDITION AND LIQUIDITY
We believe our financial condition continues to be of high quality, as evidenced by our ability to
generate substantial cash from operations and ready access to capital markets at competitive rates.
Operating cash flow provides the primary source of cash to fund operating needs and capital
expenditures. Excess operating cash is used first to fund shareholder dividends. Other discretionary
uses include share repurchases and acquisitions to complement our portfolio of businesses, brands
and geographies. As necessary, we may supplement operating cash flow with debt to fund these
activities. The overall cash position of the Company reflects our strong business results and a
global cash management strategy that takes into account liquidity management, economic factors
and tax considerations.
Operating Cash Flow
Operating cash flow was $14.6 billion in 2015, a 5% increase from the prior year. Operating cash
flows resulted primarily from net earnings, adjusted for non-cash items (depreciation and
amortization, stock-based compensation, deferred income taxes, impairment charges, gains on sale
of businesses and the Venezuela deconsolidation charge) and a decrease in working capital,
partially offset by the impact of other operating assets and liabilities. Reduced accounts receivable
generated $349 million of cash due to changes in customer terms and improved collection results.
The number of days sales outstanding decreased 5 days due to foreign exchange impacts and
improvements in collection results and customer terms. Lower inventory generated $313 million of
cash mainly due to supply chain optimizations and lower commodity costs. Inventory days on
hand decreased 7 days due to foreign exchange impacts, supply chain optimizations and lower
commodity costs. Accounts payable, accrued and other liabilities increased, generating $928
million in operating cash flow primarily driven by extended payment terms. Other operating assets
and liabilities utilized $976 million of cash primarily to eliminate the deferred tax impacts
associated with the Pet Care divestiture.
Operating cash flow was $14.0 billion in 2014, a 6% decrease from the prior year, which was
primarily driven by a $1.0 billion discretionary contribution into a foreign pension plan. Operating
cash flows resulted primarily from net earnings, adjusted for non-cash items (depreciation and
amortization, stock-based compensation, deferred income taxes and gains on sale of businesses)
partially offset by the impact of other operating assets and liabilities. Working capital changes did
not have a significant impact on operating cash flow in 2014.
Reduced accounts receivable generated $87 million of cash primarily due to improved collection
results, which, along with the timing and mix of sales late in the period, drove a 1 day decrease in
accounts receivable days sales outstanding. Inventory changes did not significantly impact
operating cash flow as inventory management improvement efforts offset inventory needed to
support product initiatives and build stock to support capacity expansions and manufacturing
sourcing changes. Inventory days on hand decreased by 3 days primarily due to inventory
management improvement efforts. Accounts payable, accrued and other liabilities also did not
significantly impact operating cash flow. Other operating assets and liabilities utilized $1.6 billion
of cash, primarily driven by $1.0 billion of cash used for a discretionary contribution into a foreign
pension plan.
Adjusted Free Cash Flow. We view adjusted free cash flow as an important measure because it is
a factor impacting the amount of cash available for dividends, share repurchases, acquisitions and
other discretionary investment. It is defined as operating cash flow less capital expenditures and
excluding certain divestiture impacts (tax payments in the current year for the Pet Care divestiture)
and is one of the measures used to evaluate senior management and determine their at-risk
compensation.
Adjusted free cash flow was $11.6 billion in 2015, an increase of 15% versus the prior year. The
increase was driven by the increase in operating cash flows. Adjusted free cash flow productivity,
defined as the ratio of adjusted free cash flow to net earnings excluding impairment charges on the
Batteries business and the Venezuelan deconsolidation charge, was 102% in 2015.
Adjusted free cash flow was $10.1 billion in 2014, a decrease of 7% versus the prior year. The
decrease was driven by the decrease in operating cash flows, which was primarily due to a $1.0
billion discretionary contribution into a foreign pension plan. Adjusted free cash flow productivity,
defined as the ratio of adjusted free cash flow to net earnings excluding impairment charges from
divested businesses, was 86% in 2014.
Investing Cash Flow
Net investing activities consumed $2.9 billion in cash in 2015 mainly due to capital spending, net
purchases of available-for-sale securities and a reduction in cash due to Venezuela
deconsolidation, partially offset by asset sales.
Net investing activities consumed $4.1 billion in cash in 2014 mainly due to capital spending and
cash paid for investments in available-for-sale securities, partially offset by asset sales.
Capital Spending. We manage capital spending to support our business growth plans and have
cost controls to deliver our cash generation targets. Capital expenditures, primarily to
support capacity expansion, innovation and cost efficiencies, were $3.7 billion in 2015 and $3.8
billion in 2014. Capital spending as a percentage of net sales increased 10 basis points to 4.9% in
2015. Capital spending as a percentage of net sales in 2014 decreased 10 basis points versus 2013
to 4.8%.
Acquisitions. Acquisition activity was not material in 2015 or 2014.
Proceeds from Divestitures and Other Asset Sales. Proceeds from asset sales in 2015 contributed
$4.5 billion in cash, primarily from the sale of our Pet Care business, the sale of our Chinese
battery venture, and other minor brand divestitures. Proceeds from asset sales contributed $570
million in cash in 2014 mainly due to minor brand divestiture activities, including MDVIP, the
Pert business in Latin America and the bleach business in Europe, IMEA and Latin America.
Financing Cash Flow
Dividend Payments. Our first discretionary use of cash is dividend payments. Dividends per
common share increased 6% to $2.59 per share in 2015. Total dividend payments to common and
preferred shareholders were $7.3 billion in 2015 and $6.9 billion in 2014. In April 2015, the Board
of Directors declared an increase in our quarterly dividend from $0.6436 to $0.6629 per share on
Common Stock and Series A and B ESOP Convertible Class A Preferred Stock. This represents a
3% increase compared to the prior quarterly dividend and is the 59th consecutive year that our
dividend has increased. We have paid a dividend for 125 years, every year since our incorporation
in 1890.
Long-Term and Short-Term Debt. We maintain debt levels we consider appropriate after
evaluating a number of factors, including cash flow expectations, cash requirements for ongoing
operations, investment and financing plans (including acquisitions and share repurchase activities)
and the overall cost of capital. Total debt was $30.4 billion as of June 30, 2015 and $35.4 billion as
of June 30, 2014. Our total debt decreased in 2015 mainly due to debt maturities, partially offset
by debt issuances.
Treasury Purchases. Total share repurchases were $4.6 billion in 2015 and $6.0 billion in 2014.
Liquidity
At June 30, 2015, our current liabilities exceeded current assets by $144 million ($2.5 billion,
excluding current assets and current liabilities of the Batteries business held for sale), largely due
to short-term borrowings under our commercial paper program. We anticipate being able to
support our short-term liquidity and operating needs largely through cash generated from
operations. The Company regularly assesses its cash needs and the available sources to fund these
needs. As of June 30, 2015, $11.0 billion of the Companys cash, cash equivalents and marketable
securities is held off-shore by foreign subsidiaries. Amounts held by foreign subsidiaries are
generally subject to U.S. income taxation on repatriation to the U.S. We do not expect restrictions
or taxes on repatriation of cash held outside of the U.S. to have a material effect on our
overall liquidity, financial condition or the results of operations for the foreseeable future. We
utilize short- and long-term debt to fund discretionary items, such as acquisitions and share
repurchases. We have strong short- and long-term debt ratings, which have enabled and should
continue to enable us to refinance our debt as it becomes due at favorable rates in commercial
paper and bond markets. In addition, we have agreements with a diverse group of financial
institutions that, if needed, should provide sufficient credit funding to meet short-term financing
requirements.
On June 30, 2015, our short-term credit ratings were P-1 (Moody's) and A-1+ (Standard & Poor's),
while our long-term credit ratings are Aa3 (Moody's) and AA- (Standard & Poor's), all with a
stable outlook.
We maintain bank credit facilities to support our ongoing commercial paper program. The current
facility is an $11.0 billion facility split between a $7.0 billion five-year facility and a $4.0 billion
364-day facility, which expire in August 2018 and July 2016, respectively. The 364-day facility
can be extended for certain periods of time as specified in the terms of the credit agreement. These
facilities are currently undrawn and we anticipate that they will remain largely undrawn for the
foreseeable future. These credit facilities do not have cross-default or ratings triggers, nor do they
have material adverse events clauses, except at the time of signing. In addition to these credit
facilities, we have an automatically effective registration statement on Form S-3 filed with the SEC
that is available for registered offerings of short- or long-term debt securities. For additional details
on debt see Note 4.
Guarantees and Other Off-Balance Sheet Arrangements
We do not have guarantees or other off-balance sheet financing arrangements, including variable
interest entities, which we believe could have a material impact on financial condition or liquidity.
Contractual Commitments
The following table provides information on the amount and payable date of our contractual commitments as of June 30, 2015 .
Total
Amounts in millions
RECORDED LIABILITIES
Total debt
Capital leases
Uncertain tax positions (1)
OTHER
Interest payments relating to long-term debt
Operating leases (2)
Minimum pension funding (3)
Purchase obligations (4)
TOTAL CONTRACTUAL COMMITMENTS
(1)
(2)
(3)
(4)
Less Than 1 Year
30,185
52
445
6,925
1,617
656
1,507
41,387
1-3 Years
11,985
20
445
699
249
215
586
14,199
3,403
23
1,277
435
441
449
6,028
3-5 Years
4,276
7
1,017
371
242
5,913
After 5 Years
10,521
2
3,932
562
230
15,247
As of June 30, 2015 , the Company's Consolidated Balance Sheet reflects a liability for uncertain tax positions of $1.5 billion, including $366 million of interest and penalties. Due to the high degree of uncertainty regarding
the timing of future cash outflows of liabilities for uncertain tax positions beyond one year, a reasonable estimate of the period of cash settlement beyond twelve months from the balance sheet date of June 30, 2015 , cannot
be made.
Operating lease obligations are shown net of guaranteed sublease income.
Represents future pension payments to comply with local funding requirements. These future pension payments assume the Company continues to meet its future statutory funding requirements. Considering the current
economic environment in which the Company operates, the Company believes its cash flows are adequate to meet the future statutory funding requirements. The projected payments beyond fiscal year 2018 are not currently
determinable.
Primarily reflects future contractual payments under various take-or-pay arrangements entered into as part of the normal course of business. Commitments made under take-or-pay obligations represent future purchases in line
with expected usage to obtain favorable pricing. This includes service contracts for information technology, human resources management and facilities management activities that have been outsourced. While the amounts
listed represent contractual obligations, we do not believe it is likely that the full contractual amount would be paid if the underlying contracts were canceled prior to maturity. In such cases, we generally are able to negotiate
new contracts or cancellation penalties, resulting in a reduced payment. The amounts do not include other contractual purchase obligations that are not take-or-pay arrangements. Such contractual purchase obligations are
primarily purchase orders at fair value that are part of normal operations and are reflected in historical operating cash flow trends. We do not believe such purchase obligations will adversely affect our liquidity position.
SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES
In preparing our financial statements in accordance with U.S. GAAP, there are certain accounting
policies that may require a choice between acceptable accounting methods or may require
substantial judgment or estimation in their application. These include income taxes, certain
employee benefits and goodwill and intangible assets. We believe these accounting policies, and
others set forth in Note 1 to the Consolidated Financial Statements, should be reviewed as they are
integral to understanding the results of operations and financial condition of the Company.
The Company has discussed the selection of significant accounting policies and the effect of
estimates with the Audit Committee of the Company's Board of Directors.
Income Taxes
Our annual tax rate is determined based on our income, statutory tax rates and the tax impacts of
items treated differently for tax purposes than for financial reporting purposes. Also inherent in
determining our annual tax rate are judgments and assumptions regarding the recoverability of
certain deferred tax balances, primarily net operating loss and other carryforwards, and our ability
to uphold certain tax positions.
Realization of net operating losses and other carryforwards is dependent upon generating sufficient
taxable income in the appropriate jurisdiction prior to the expiration of the carryforward periods,
which involves business plans, planning opportunities and expectations about future outcomes.
Although realization is not assured, management believes it is more likely than not that our
deferred tax assets, net of valuation allowances, will be realized.
We operate in multiple jurisdictions with complex tax policy and regulatory environments. In
certain of these jurisdictions, we may take tax positions that management believes are supportable,
but are potentially subject to successful challenge by the applicable taxing authority. These
interpretational differences with the respective governmental taxing authorities can be impacted by
the local economic and fiscal environment. We evaluate our tax positions and establish liabilities
in accordance with the applicable accounting guidance on uncertainty in income taxes. We review
these tax uncertainties in light of changing facts and circumstances, such as the
progress of tax audits, and adjust them accordingly. We have a number of audits in process in
various jurisdictions. Although the resolution of these tax positions is uncertain, based on currently
available information, we believe that the ultimate outcomes will not have a material adverse effect
on our financial position, results of operations or cash flows.
Because there are a number of estimates and assumptions inherent in calculating the various
components of our tax provision, certain changes or future events such as changes in tax
legislation, geographic mix of earnings, completion of tax audits or earnings repatriation plans
could have an impact on those estimates and our effective tax rate. For additional details on the
Company's income taxes, see Note 10 to the Consolidated Financial Statements.
Employee Benefits
We sponsor various post-employment benefits throughout the world. These include pension plans,
both defined contribution plans and defined benefit plans, and other post-employment benefit
(OPEB) plans, consisting primarily of health care and life insurance for retirees. For accounting
purposes, the defined benefit pension and OPEB plans require assumptions to estimate the
projected and accumulated benefit obligations, including the following variables: discount rate;
expected salary increases; certain employee-related factors, such as turnover, retirement age and
mortality; expected return on assets; and health care cost trend rates. These and other assumptions
affect the annual expense and obligations recognized for the underlying plans. Our assumptions
reflect our historical experiences and management's best judgment regarding future expectations.
As permitted by U.S. GAAP, the net amount by which actual results differ from our assumptions is
deferred. If this net deferred amount exceeds 10% of the greater of plan assets or liabilities, a
portion of the deferred amount is included in expense for the following year. The cost or benefit of
plan changes, such as increasing or decreasing benefits for prior employee service (prior service
cost), is deferred and included in expense on a straight-line basis over the average remaining
service period of the employees expected to receive benefits.
The expected return on plan assets assumption impacts our defined benefit expense, since many of
our defined benefit pension plans and our primary OPEB plan are partially funded. The process for
setting the expected rates of return is described in Note 9 to the Consolidated Financial Statements.
For 2015, the average return on assets assumptions for pension plan assets and OPEB assets was
7.2% and 8.3%, respectively. A change in the rate of return of 100 basis points for both pension
and OPEB assets would impact annual after-tax benefit expense by approximately $101 million.
Since pension and OPEB liabilities are measured on a discounted basis, the discount rate impacts
our plan obligations and expenses. Discount rates used for our U.S. defined benefit pension and
OPEB plans are based on a yield curve constructed from a portfolio of high quality bonds for
which the timing and amount of cash outflows approximate the estimated payouts of the plan. For
our international plans, the discount rates are
set by benchmarking against investment grade corporate bonds rated AA or better. The average
discount rate on the defined benefit pension plans and OPEB plans of 3.1% and 4.5%, respectively,
represents a weighted average of local rates in countries where such plans exist. A 100-basis point
change in the pension discount rate would impact annual after-tax defined benefit pension expense
by approximately $195 million. A change in the OPEB discount rate of 100 basis points would
impact annual after-tax OPEB expense by approximately $60 million. For additional details on our
defined benefit pension and OPEB plans, see Note 9 to the Consolidated Financial Statements.
Goodwill and Intangible Assets
Significant judgment is required to estimate the fair value of intangible assets and in assigning
their respective useful lives. Accordingly, we typically obtain the assistance of third-party
valuation specialists for significant tangible and intangible assets. The fair value estimates are
based on available historical information and on future expectations and assumptions deemed
reasonable by management, but are inherently uncertain.
We typically use an income method to estimate the fair value of intangible assets, which is based
on forecasts of the expected future cash flows attributable to the respective assets. Significant
estimates and assumptions inherent in the valuations reflect a consideration of other marketplace
participants, and include the amount and timing of future cash flows (including expected growth
rates and profitability), the underlying product or technology life cycles, economic barriers to
entry, a brand's relative market position and the discount rate applied to the cash flows.
Unanticipated market or macroeconomic events and circumstances may occur, which could affect
the accuracy or validity of the estimates and assumptions.
Determining the useful life of an intangible asset also requires judgment. Certain brand intangible
assets are expected to have indefinite lives based on their history and our plans to continue to
support and build the acquired brands. Other acquired intangible assets (e.g., certain trademarks or
brands, customer relationships, patents and technologies) are expected to have determinable useful
lives. Our assessment as to brands that have an indefinite life and those that have a determinable
life is based on a number of factors including competitive environment, market share, brand
history, underlying product life cycles, operating plans and the macroeconomic environment of the
countries in which the brands are sold. Our estimates of the useful lives of determinable-lived
intangible assets are primarily based on these same factors. All of our acquired technology and
customer-related intangible assets are expected to have determinable useful lives.
The costs of determinable-lived intangible assets are amortized to expense over their estimated
lives. The value of indefinite-lived intangible assets and residual goodwill is not amortized, but is
tested at least annually for impairment. Our impairment testing for goodwill is performed
separately from our impairment testing of indefinite-lived intangible assets. We
test goodwill for impairment by reviewing the book value compared to the fair value at the
reporting unit level. We test individual indefinite-lived intangible assets by comparing the book
values of each asset to the estimated fair value. We determine the fair value of our reporting units
and indefinite-lived intangible assets based on the income approach. Under the income approach,
we calculate the fair value of our reporting units and indefinite-lived intangible assets based on the
present value of estimated future cash flows. Considerable management judgment is necessary to
evaluate the impact of operating and macroeconomic changes and to estimate future cash flows to
measure fair value. Assumptions used in our impairment evaluations, such as forecasted growth
rates and cost of capital, are consistent with internal projections and operating plans. We believe
such assumptions and estimates are also comparable to those that would be used by other
marketplace participants.
With the exception of our Appliances and Batteries businesses, all of our reporting units have fair
values that significantly exceed recorded values. However, future changes in the judgments,
assumptions and estimates that are used in our impairment testing for goodwill and indefinite-lived
intangible assets, including discount and tax rates or future cash flow projections, could result in
significantly different estimates of the fair values. In addition, any potential change in the strategic
plans for these businesses due to the refocusing of our business portfolio could impact these
judgments, assumptions and estimates, in turn, impacting our fair value. A significant reduction in
the estimated fair values could result in impairment charges that could materially affect the
financial statements in any given year. The recorded value of goodwill and intangible assets from
recently impaired businesses and recently acquired businesses are derived from more recent
business operating plans and macroeconomic environmental conditions and therefore are more
susceptible to an adverse change that could require an impairment charge.
Prior to 2013, our Appliances reporting unit incurred an impairment charge to reduce the goodwill
carrying amount to its estimated fair value. During 2013, the estimated fair value of our
Appliances reporting unit declined further, below the carrying amount resulting from the prior
impairment. Therefore, we recorded an additional non-cash before and after-tax impairment charge
of $259 million in fiscal 2013. Additionally, our 2013 impairment testing for Appliances indicated
a decline in the fair value of our Braun trade name intangible asset below its carrying value. This
resulted in a non-cash, before-tax impairment charge of $49 million ( $31 million after-tax) to
reduce the carrying amount of this asset to its estimated fair value. The impairment of the
Appliances business in fiscal 2013 was due to the devaluation of currency in Japan, a key country
that generates a significant portion of the earnings of the Appliances business, relative to the
currencies in which the underlying net assets are recorded.
As of June 30, 2015, the Appliances business has remaining goodwill of $299 million and
remaining intangible assets of $706 million . As a result of the impairments, the estimated fair
value of our Appliances business slightly exceeds its
respective carrying value. Our 2015 valuation of the Appliances business has it returning to sales
and earnings growth rates consistent with our long-term business plans. However, the currency in
Japan has continued to devalue relative to the currencies in which the related assets are recorded,
reducing the fair value cushion in the Appliances business to approximately 5% .
During 2015, we determined that the estimated fair value of our Batteries reporting unit was less
than its carrying amount, resulting in a series of impairment charges. The underlying fair value
assessment was initially triggered by an agreement in September 2014 to sell the China-based
battery joint venture and a related decision to pursue options to exit the remainder of the Batteries
business. The results of our annual goodwill impairment testing during fiscal 2014 had indicated a
decline in the fair value of the Batteries reporting unit due to lower long-term market growth
assumptions in certain key geographies. At that time, the estimated fair value of the Batteries
business continued to exceed its underlying carrying value, but the fair value cushion had been
reduced to about 5% . The agreement to sell the China-based battery joint venture was at a
transaction value that was below the earnings multiple implied from the prior valuation of our
Batteries business, which effectively eliminated our fair value cushion. As a result, the remaining
business unit cash flows no longer supported the remaining carrying amount of the Batteries
business. Due largely to these factors, we recorded an initial non-cash, before and after-tax
impairment charge of $863 million to reduce the carrying amount of goodwill for the Batteries
business unit to its estimated fair value. These same factors resulted in a decline in the fair value of
our Duracell trade name intangible asset below its carrying value. This resulted in a non-cash,
before-tax impairment charge of $110 million ( $69 million after tax) to reduce the carrying
amount of this asset to its estimated fair value.
In November 2014, the Company reached an agreement to divest the remaining Batteries business
via a split transaction in which the Company will exchange a recapitalized Duracell Company for
Berkshire Hathaway's (BH) shares of P&G stock (see Note 13). Based on the terms of the
agreement and the value of BH's shares of P&G stock at the agreement date, and changes thereto
through June 30, 2015, the Company recorded additional non-cash, before and after-tax
impairment charges totaling $1.2 billion. All of the fiscal 2015 impairment charges in the Batteries
business are included as part of discontinued operations.
The business unit valuations used to test goodwill and intangible assets for impairment are
dependent on a number of significant estimates and assumptions, including macroeconomic
conditions, overall category growth rates, competitive activities, cost containment and margin
expansion and Company business plans. We believe these estimates and assumptions are
reasonable. Changes to or a failure to achieve these business plans or a further deterioration of the
macroeconomic conditions could result in a valuation that would trigger an additional impairment
of the goodwill and intangible assets of these businesses. In addition, we also
considered the structure and value of the divestiture agreement with BH in the impairment testing
for Batteries. If the value of BHs shares of the Company declines further before the transaction
closing dates, we may need to record additional non-cash impairment charges as part of
discontinued operations in the future.
See Note 2 to our Consolidated Financial Statements for additional discussion on goodwill and
intangible asset impairment testing results.
New Accounting Pronouncements
Refer to Note 1 to the Consolidated Financial Statements for recently adopted accounting
pronouncements and recently issued accounting pronouncements not yet adopted as of June 30,
2015 .
OTHER INFORMATION
Hedging and Derivative Financial Instruments
As a multinational company with diverse product offerings, we are exposed to market risks, such
as changes in interest rates, currency exchange rates and commodity prices. We evaluate exposures
on a centralized basis to take advantage of natural exposure correlation and netting. Except within
financing operations, we leverage the Company's diversified portfolio of exposures as a natural
hedge and prioritize operational hedging activities over financial market instruments. To the extent
we choose to further manage volatility associated with the net exposures, we enter into various
financial transactions which we account for using the applicable accounting guidance for
derivative instruments and hedging activities. These financial transactions are governed by our
policies covering acceptable counterparty exposure, instrument types and other hedging practices.
Note 5 to the Consolidated Financial Statements includes a detailed discussion of our accounting
policies for derivative instruments.
Derivative positions are monitored using techniques including market valuation, sensitivity
analysis and value-at-risk modeling. The tests for interest rate, currency rate and commodity
derivative positions discussed below are based on the CorporateManager value-at-risk model
using a one-year horizon and a 95% confidence level. The model incorporates the impact of
correlation (the degree to which exposures move together over time) and diversification (from
holding multiple currency, commodity and interest rate instruments) and assumes that financial
returns are normally distributed. Estimates of volatility and correlations of market factors are
drawn from the RiskMetrics dataset as of June 30, 2015 . In cases where data is unavailable in
RiskMetrics, a reasonable proxy is included.
Our market risk exposures relative to interest rates, currency rates and commodity prices, as
discussed below, have not changed materially versus the previous reporting period. In addition, we
are not aware of any facts or circumstances that would significantly impact such exposures in the
near term.
Interest Rate Exposure on Financial Instruments. Interest rate swaps are used to hedge
exposures to interest rate movement on underlying debt obligations. Certain interest rate swaps
denominated in foreign currencies are designated to hedge exposures to currency exchange rate
movements on our investments in foreign operations. These currency interest rate swaps are
designated as hedges of the Company's foreign net investments.
Based on our interest rate exposure as of and during the year ended June 30, 2015 , including
derivative and other instruments sensitive to interest rates, we believe a near-term change in
interest rates, at a 95% confidence level based on historical interest rate movements, would not
materially affect our financial statements.
Currency Rate Exposure on Financial Instruments. Because we manufacture and sell products
and finance operations in a number of countries throughout the world, we are exposed to the
impact on revenue and expenses of movements in currency exchange rates. Corporate policy
prescribes the range of allowable hedging activity. To manage the exchange rate risk associated
with the financing of our operations, we primarily use forward contracts with maturities of less
than 18 months. In addition, we enter into certain currency swaps with maturities of up to five
years to hedge our exposure to exchange rate movements on intercompany financing transactions.
Based on our currency rate exposure on derivative and other instruments as of and during the year
ended June 30, 2015 , we believe, at a 95% confidence level based on historical currency rate
movements, the impact of a near-term change in currency rates would not materially affect our
financial statements.
Commodity Price Exposure on Financial Instruments. We use raw materials that are subject to
price volatility caused by weather, supply conditions, political and economic variables and other
unpredictable factors. We may use futures, options and swap contracts to manage the volatility
related to the above exposures.
As of and during the years ended June 30, 2015 and June 30, 2014 , we did not have any
commodity hedging activity.
Measures Not Defined By U.S. GAAP
Our discussion of financial results includes several "non-GAAP" financial measures. We believe
these measures provide our investors with additional information about our underlying results and
trends, as well as insight to some of the metrics used to evaluate management. When used in the
MD&A, we have provided the comparable U.S. GAAP measure in the discussion. These measures
include:
Organic Sales Growth. Organic sales growth is a non-GAAP measure of sales growth excluding
the impacts of acquisitions, divestitures and foreign exchange from year-over-year comparisons.
We believe this provides investors with a more complete understanding of underlying sales trends
by providing sales growth on a consistent basis. Organic sales is also one of the measures used to
evaluate senior management and is a factor in determining their at-risk compensation.
The following tables provide a numerical reconciliation of organic sales growth to reported net
sales growth:
The table below provides a reconciliation of reported diluted net earnings per share from continuing
operations to Core EPS:
Year ended June 30, 2015
Beauty, Hair and Personal

Care
Grooming
Health Care
Fabric Care and Home
Care
Baby, Feminine and
Family Care
TOTAL COMPANY
Year ended June 30, 2014
Beauty, Hair and Personal

Care
Grooming
Health Care
Fabric Care and Home
Care
Baby, Feminine and
Family Care
TOTAL COMPANY
Net Sales
Growth
Foreign
Exchange Impact
Acquisition/Divestiture
Impact*
Organic Sales
Growth
(7)%
(7)%
(1)%
5%
8%
5%
1%
0%
0%
(1)%
1%
4%
(5)%
6%
1%
2%
Diluted net earnings per share - continuing operations

Incremental restructuring charges
Venezuela balance sheet devaluation impacts
Charges for European legal matters
Gain on purchase of balance of Iberian JV
Impairment charges
Venezuelan deconsolidation
(3)%
6%
0%
3%
CORE EPS
(5)%
Net Sales
Growth
6%
Foreign
Exchange Impact
0%
Acquisition/Divestiture
Impact*
1%
Organic Sales
Growth
(2)%
0%
1%
2%
3%
1%
0%
0%
0%
0%
3%
2%
0%
3%
1%
4%
2%
3%
(1)%
4%
0%
3%
0%
3%
Acquisition/Divestiture Impact includes rounding impacts necessary to reconcile net sales to organic
sales.
Core EPS. This is a measure of the Company's diluted net earnings per share from continuing
operations excluding certain items that are not judged to be part of the Company's sustainable
results or trends. This includes:
Years ended June 30
charges in each period presented for 1) incremental restructuring due to increased focus
on productivity and cost savings, 2) the impacts from foreign exchange policy changes
and the devaluations of the official foreign currency exchange rate in Venezuela, and 3)
for certain European legal matters;
a holding gain in 2013 on the purchase of the balance of our Iberian joint venture;
impairment charges in 2013 for goodwill and indefinite-lived intangible assets; and
a charge in 2015 for the Venezuelan deconsolidation .
We do not view these items to be part of our sustainable results. We believe the Core EPS measure
provides an important perspective of underlying business trends and results and provides a more
comparable measure of year-on-year earnings per share growth. Core EPS is also one of the
measures used to evaluate senior management and is a factor in determining their at-risk
compensation.
Rounding
2015
2014
$3.06
0.20
0.04
0.01
0.71
$4.02
Core EPS Growth
2013
$3.86
0.12
0.09
0.02
(2)%
$4.09
$3.71
0.17
0.08
0.05
(0.21)
0.10
(0.01)
5%
$3.89
6%
Note - All reconciling items are presented net of tax. Tax effects are calculated consistent with the nature of the
underlying transaction.
Adjusted Free Cash Flow. Adjusted free cash flow is defined as operating cash flow less capital
expenditures and excluding certain divestiture impacts (tax payments in the current year for the Pet Care
divestiture). We view adjusted free cash flow as an important measure because it is one factor in
determining the amount of cash available for dividends, share repurchases, acquisitions and other
discretionary investments. Adjusted free cash flow is also one of the measures used to evaluate senior
management and is a factor in determining their at-risk compensation. The following table provides a
numerical reconciliation of adjusted free cash flow ($ millions):
2015
2014
2013
Operating
Cash Flow
14,608 $
13,958
14,873
Capital
Spending
(3,736) $
(3,848)
(4,008)
Free
Cash Flow
Cash Tax Payment Pet Care Sale
10,872 $
10,110
10,865
729 $
Adjusted Free
Cash Flow
11,601
10,110
10,865
Adjusted Free Cash Flow Productivity. Adjusted free cash flow productivity is defined as the ratio of
adjusted free cash flow to net earnings excluding impairment charges on the Batteries business and the
Venezuelan deconsolidation charge. Adjusted free cash flow productivity is also one of the measures
used to evaluate senior management and is a factor in determining their at-risk compensation.
The following table provides a numerical reconciliation of adjusted free cash flow productivity ($
millions):
2015
2014
2013
Net
Earnings
Impairment & Deconsolidation Charges
7,144 $
11,785
11,402
Net Earnings Excluding

Impairment &
Deconsolid- ation
Charges
4,187 $
11,331 $
11,785
11,402
Adjusted Free
Cash Flow
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
11,601
10,110
10,865
Adjusted Free
Cash Flow
Productivity
102%
86%
95%
The information required by this item is incorporated by reference to the section entitled Other
Information under Management's Disclosure and Analysis, and Note 5 to the Consolidated Financial
Statements.
Item 8. Financial Statements and Supplementary Data.
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING
At The Procter & Gamble Company, we take great pride in our long history of doing what's right. If
you analyze what's made our Company successful over the years, you may focus on our brands, our
marketing strategies, our organization design and our ability to innovate. But if you really want to
get at what drives our Company's success, the place to look is our people. Our people are deeply
committed to our Purpose, Values and Principles. It is this commitment to doing what's right that
unites us.
This commitment to doing what's right is embodied in our financial reporting. High-quality financial
reporting is our responsibility, one we execute with integrity, and within both the letter and spirit of
the law.
High-quality financial reporting is characterized by accuracy, objectivity and transparency.

Management is responsible for maintaining an effective system of internal controls over financial
reporting to deliver those characteristics in all material respects. The Board of Directors, through its
Audit Committee, provides oversight. We have engaged Deloitte & Touche LLP to audit our
Consolidated Financial Statements, on which they have issued an unqualified opinion.
Our commitment to providing timely, accurate and understandable information to investors
encompasses:
Communicating expectations to employees . Every employee, from senior management on down, is

required to be trained on the Company's Worldwide Business Conduct Manual , which sets forth the
Company's commitment to conduct its business affairs with high ethical standards. Every employee
is held personally accountable for compliance and is provided several means of reporting any
concerns about violations of the Worldwide Business Conduct Manual , which is available on our
website at www.pg.com.
Maintaining a strong internal control environment . Our system of internal controls includes
written policies and procedures, segregation of duties and the careful selection and development of
employees. The system is designed to provide reasonable assurance that transactions are executed as
authorized and appropriately recorded, that assets are safeguarded and that accounting records are
sufficiently reliable to permit the preparation of financial statements conforming in all material
respects with accounting principles generally accepted in the United States of America. We monitor
these internal controls through control self-assessments conducted by business unit management. In
addition to performing financial and compliance audits around the world, our Global Internal Audit
organization provides training and continuously improves internal control processes. Appropriate
actions are taken by management to correct any identified control deficiencies.
Executing financial stewardship . We maintain specific programs and activities to ensure that
employees understand
their fiduciary responsibilities to shareholders. This ongoing effort encompasses financial discipline
in strategic and daily business decisions and brings particular focus to maintaining accurate financial
reporting and effective controls through process improvement, skill development and oversight.
Exerting rigorous oversight of the business . We continuously review business results and strategic
choices. Our Global Leadership Council is actively involved - from understanding strategies to
reviewing key initiatives, financial performance and control assessments. The intent is to ensure we
remain objective, identify potential issues, continuously challenge each other and ensure recognition
and rewards are appropriately aligned with results.
Engaging our Disclosure Committee . We maintain disclosure controls and procedures designed to
ensure that information required to be disclosed is recorded, processed, summarized and reported
timely and accurately. Our Disclosure Committee is a group of senior-level executives responsible
for evaluating disclosure implications of significant business activities and events. The Committee
reports its findings to the CEO and CFO, providing an effective process to evaluate our external
disclosure obligations.
Strong and effective corporate governance from our Board of Directors . We have an active,
capable and diligent Board that meets the required standards for independence, and we welcome the
Board's oversight. Our Audit Committee comprises independent directors with significant financial
knowledge and experience. We review significant accounting policies, financial reporting and
internal control matters with them and encourage their independent discussions with external
auditors. Our corporate governance guidelines, as well as the charter of the Audit Committee and
certain other committees of our Board, are available on our website at www.pg.com.
P&G has a strong history of doing what's right. Our employees embrace our Purpose, Values and
Principles. We take responsibility for the quality and accuracy of our financial reporting. We present
this information proudly, with the expectation that those who use it will understand our Company,
recognize our commitment to performance with integrity and share our confidence in P&G's future.
/s/ A. G. Lafley
A. G. Lafley
Chairman of the Board, President and Chief Executive Officer

/s/ Jon R. Moeller
Jon R. Moeller
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL

REPORTING
Management is responsible for establishing and maintaining adequate internal control over financial
reporting of The Procter & Gamble Company (as defined in Rule 13a-15(f) under the Securities
Exchange Act of 1934, as amended). Our internal control over financial reporting is designed to
provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting
principles in the United States of America.
Strong internal controls is an objective that is reinforced through our Worldwide Business Conduct
Manual , which sets forth our commitment to conduct business with integrity, and within both the
letter and the spirit of the law. The Company's internal control over financial reporting includes a
Control Self-Assessment Program that is conducted annually for critical financial reporting areas of
the Company and is audited by the internal audit function. Management takes the appropriate action
to correct any identified control deficiencies. Because of its inherent limitations, any system of
internal control over financial reporting, no matter how well designed, may not prevent or detect
misstatements due to the possibility that a control can be circumvented or overridden or that
misstatements due to error or fraud may occur that are not detected. Also, because of changes in
conditions, internal control effectiveness may vary over time.
Management assessed the effectiveness of the Company's internal control over financial reporting as
of June 30, 2015 , using criteria established in Internal Control - Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and
concluded that the Company maintained effective internal control over financial reporting as of
June 30, 2015 , based on these criteria.
Deloitte & Touche LLP, an independent registered public accounting firm, has audited the
effectiveness of the Company's internal control over financial reporting as of June 30, 2015 , as
stated in their report which is included herein.
/s/ A. G. Lafley
A. G. Lafley

/s/ Jon R. Moeller
Jon R. Moeller

August 7, 2015
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
The Procter & Gamble Company
We have audited the accompanying Consolidated Balance Sheets of The Procter & Gamble
Company and subsidiaries (the "Company") as of June 30, 2015 and 2014 , and the related
Consolidated Statements of Earnings, Comprehensive Income, Shareholders' Equity, and Cash Flows
for each of the three years in the period ended June 30, 2015 . These financial statements are the
responsibility of the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such Consolidated Financial Statements present fairly, in all material respects, the
financial position of The Procter & Gamble Company and subsidiaries at June 30, 2015 and 2014 ,
and the results of their operations and their cash flows for each of the three years in the period ended
June 30, 2015 , in conformity with accounting principles generally accepted in the United States of
America.
We have also audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the Company's internal control over financial reporting as of
June 30, 2015 , based on the criteria established in Internal Control - Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report
dated August 7, 2015 expressed an unqualified opinion on the Company's internal control over
financial reporting.
/s/ Deloitte & Touche LLP
Cincinnati, Ohio
August 7, 2015
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
We have audited the internal control over financial reporting of The Procter & Gamble Company and
subsidiaries (the "Company") as of June 30, 2015 , based on criteria established in Internal Control Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission. The Company's management is responsible for maintaining effective
internal control over financial reporting and for its assessment of the effectiveness of internal control
over financial reporting, included in the accompanying Management's Report on Internal Control
over Financial Reporting. Our responsibility is to express an opinion on the Company's internal
control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects. Our audit included obtaining an understanding of internal control
over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the
design and operating effectiveness of internal control based on the assessed risk, and performing
such other procedures as we considered necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinion.
A company's internal control over financial reporting is a process designed by, or under the
supervision of, the company's principal executive and principal financial officers, or persons
performing similar functions, and effected by the company's board of directors, management, and
other personnel to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles. A company's internal control over financial reporting includes those policies
and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately
and fairly reflect the transactions and dispositions of the assets of the company; (2) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management
and directors of the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company's assets that could have a
material effect on the financial statements.
Because of the inherent limitations of internal control over financial reporting, including the
possibility of collusion or improper management override of controls, material misstatements due to
error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation
of the effectiveness of the internal control over financial reporting to future periods are subject to the
risk that the controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
In our opinion, the Company maintained, in all material respects, effective internal control over
financial reporting as of June 30, 2015 , based on the criteria established in Internal Control Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission.
We have also audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the Consolidated Financial Statements of the Company as of and
for the year ended June 30, 2015 and our report dated August 7, 2015 expressed an unqualified
opinion on those financial statements.
Cincinnati, Ohio
August 7, 2015
Consolidated Statements of Earnings

Amounts in millions except per share amounts; Years ended June 30
NET SALES
Cost of products sold
Selling, general and administrative expense
Goodwill and indefinite-lived intangible asset impairment charges
Venezuela deconsolidation charge
76,279
38,876
23,585
2,028
11,790
OPERATING INCOME
Interest expense
Interest income
Other non-operating income, net
NET EARNINGS FROM CONTINUING OPERATIONS

NET EARNINGS
2013
80,116
39,991
26,000
308
13,817
667
88
941
11,846
14,337
14,179
8,930
11,318
10,953
7,144
11,785
11,402
3,019
(1,786)
NET EARNINGS/(LOSS) FROM DISCONTINUED OPERATIONS
80,510
41,010
24,760
710
101
206
2,916
Income taxes on continuing operations
2014
14,740
626
151
531
EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
Less: Net earnings attributable to noncontrolling interests
2015
108
3,226
467
142
449
90
NET EARNINGS ATTRIBUTABLE TO PROCTER & GAMBLE
7,036
11,643
11,312
BASIC NET EARNINGS PER COMMON SHARE: (1)

Earnings/(loss) from discontinued operations
3.16
(0.66)
4.19
3.87
0.17
DILUTED NET EARNINGS PER COMMON SHARE: (1)

2.50
4.03
0.16
3.06
(0.62)
3.86
0.15
2.59
2.45
BASIC NET EARNINGS PER COMMON SHARE
DILUTED NET EARNINGS PER COMMON SHARE

DIVIDENDS PER COMMON SHARE
(1)
Basic net earnings per common share and diluted net earnings per common share are calculated on net earnings attributable to Procter & Gamble.
See accompanying Notes to Consolidated Financial Statements.
2.44
4.01
4.04
3.71
0.15
3.86
2.29
Consolidated Statements of Comprehensive Income

Amounts in millions; Years ended June 30
NET EARNINGS
OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAX
Financial statement translation
Unrealized gains/(losses) on hedges (net of $739, $(209) and $92 tax, respectively)
Unrealized gains/(losses) on investment securities (net of $0, $(4) and $(5) tax, respectively)
Unrealized gains/(losses) on defined benefit retirement plans (net of $328, $(356) and $637 tax, respectively)
108
1,918
11,785
150
11,472
11,402
1,834
11,622
$
2013
710
144
(24)
1,004
(163)
2,026
2014
1,044
(347)
9
(869)
(5,118)
TOTAL COMPREHENSIVE INCOME
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO PROCTER & GAMBLE
7,144
(7,220)
1,234
24
844
TOTAL OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAX

Less: Total comprehensive income attributable to noncontrolling interests
2015
13,236
$
94
13,142
Consolidated Balance Sheets

2015
Assets
CURRENT ASSETS
Cash and cash equivalents
Available-for-sale investment securities
Accounts receivable
INVENTORIES
Materials and supplies
Work in process
Finished goods
Total inventories
Deferred income taxes
Prepaid expenses and other current assets
Assets held for sale
TOTAL CURRENT ASSETS

PROPERTY, PLANT AND EQUIPMENT, NET
GOODWILL
TRADEMARKS AND OTHER INTANGIBLE ASSETS, NET
OTHER NONCURRENT ASSETS
TOTAL ASSETS
Liabilities and Shareholders' Equity

CURRENT LIABILITIES
Accounts payable
Accrued and other liabilities
Liabilities held for sale
Debt due within one year
8,558
2,128
6,386
1,392
550
3,512
1,742
684
4,333
29,646
31,617
20,268
47,316
26,829
5,436
6,759
1,092
3,845
2,849
22,304
53,704
30,843
5,798
129,495
144,266
8,257
8,325
1,187
12,021
8,461
8,999
660
15,606
29,790
33,726
18,329
9,531
8,795
19,811
10,218
10,535
66,445
TOTAL LIABILITIES
SHAREHOLDERS' EQUITY
Convertible Class A preferred stock, stated value $1 per share (600 shares authorized)
Non-Voting Class B preferred stock, stated value $1 per share (200 shares authorized)
Common stock, stated value $1 per share (10,000 shares authorized; shares issued: 2015 - 4,009.2, 2014 - 4,009.2)
Additional paid-in capital
Reserve for ESOP debt retirement
Accumulated other comprehensive income/(loss)
Treasury stock, at cost (shares held: 2015 - 1,294.7, 2014 - 1,298.4)
Retained earnings
Noncontrolling interest
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
6,845
4,767
4,861
5,454
1,356
2,853
3,510
TOTAL CURRENT LIABILITIES

LONG-TERM DEBT
DEFERRED INCOME TAXES
OTHER NONCURRENT LIABILITIES
TOTAL SHAREHOLDERS' EQUITY
2014
74,290
1,077
4,009
63,852
(1,320)
(12,780)
(77,226)
84,807
631
$
63,050
129,495
1,111
4,009
63,911
(1,340)
(7,662)
(75,805)
84,990
762
$
69,976
144,266
Consolidated Statements of Shareholders' Equity
Dollars in millions; Shares in thousands
BALANCE JUNE 30, 2012

Net earnings
Common Shares
Outstanding
2,748,033
Common Stock
4,008
Add-itional
Preferred Stock Paid-In Capital
1,195
63,181
Reserve for ESOP

Debt Retirement
(1,357) $
Accumu-lated
Other
Comp-rehensive
Income/(Loss)
(9,333) $
Treasury Stock
(69,604) $
1,834
Other comprehensive income

Dividends to shareholders:
Treasury purchases
Employee plan issuances
Preferred stock conversions

ESOP debt impacts
Noncontrolling interest, net

Net earnings
(84,234)
70,923
7,605
2,742,327
4,009
352
(58)
$
1,137
(5,986)
(2)
63,538
51
5
$
(1,352) $
(7,499) $
(71,966) $
(163)

ESOP debt impacts

Net earnings
(74,987)
40,288
3,178
2,710,806
364
(26)
$
4,009
1,111
(6,005)
63,911
22
12
$
(1,340) $
(7,662) $
(75,805) $
(5,118)

ESOP debt impacts
90
(54,670)
54,100
4,335
2,714,571
156
(34)
$
4,009
1,077
(4,604)
(219)
63,852
30
20
$
(1,320) $
(12,780) $
(77,226) $
64,035
11,402
(6,275)
(244)
(244)
(5,986)
3,926
55
80,197
11,643
(41)
645
142
60
(43)
68,709
11,785
(163)
(6,658)
(253)
(253)
(6,005)
2,508
61
84,990
7,036
(25)
762
108
73
(20)
69,976
7,144
(5,118)
(7,028)
(259)
(259)
(4,604)
3,153
Total
1,834
(7,028)
Common
Treasury purchases
596
2,144
Other comprehensive loss
Preferred, net of tax benefits
Non-controlling
Interest
(6,658)
Common
Treasury purchases
11,312
3,573
Other comprehensive loss
75,349
(6,275)
Common
Retained
Earnings
3,309
68
84,807
(239)
631
88
(458)
63,050
Consolidated Statements of Cash Flows

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR

OPERATING ACTIVITIES
Net earnings
Depreciation and amortization
Share-based compensation expense
Deferred income taxes
Gain on sale and purchase of businesses
Goodwill and indefinite-lived intangible asset impairment charges
Change in accounts receivable
Change in inventories
Change in accounts payable, accrued and other liabilities
Change in other operating assets and liabilities
Other
Assets acquired through non-cash capital leases are immaterial for all periods.
5,947
2013
4,436
11,785
3,141
360
(44)
(154)
87
8
1
(1,557)
331
11,402
2,982
346
(307)
(916)
308
(415)
(225)
1,253
68
377
(3,736)
4,497
(908)
(137)
(3,647)
1,203
(163)
(3,848)
570
(24)
(568)
24
(261)
(4,008)
584
(1,145)
(1,605)
(121)
(7,287)
(2,580)
2,138
(3,512)
(4,604)
2,826
(6,911)
3,304
4,334
(4,095)
(6,005)
2,094
(6,519)
3,406
2,331
(3,752)
(5,986)
3,449
13,958
(1,713)
14,873
(4,107)
(6,295)
(7,279)
(411)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
2014
7,144
3,134
337
(803)
(766)
2,028
2,174
349
313
928
(976)
746
(13,019)
TOTAL FINANCING ACTIVITIES
SUPPLEMENTAL DISCLOSURE
Cash payments for:
Interest
Income taxes
(2,891)
TOTAL INVESTING ACTIVITIES

FINANCING ACTIVITIES
Dividends to shareholders
Change in short-term debt
Additions to long-term debt
Reductions of long-term debt
Treasury stock purchases
Impact of stock options and other
CASH AND CASH EQUIVALENTS, END OF YEAR
8,558
14,608
TOTAL OPERATING ACTIVITIES

INVESTING ACTIVITIES
Capital expenditures
Proceeds from asset sales
Cash related to deconsolidated Venezuela operations
Acquisitions, net of cash acquired
Purchases of short-term investments
Proceeds from sales of short-term investments
Change in other investments
CHANGE IN CASH AND CASH EQUIVALENTS
2015
(7,071)
39
6,845
678
4,558
2,611
8,558
686
3,320
1,511
5,947
683
3,780
Notes to Consolidated Financial Statements

NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations
The Procter & Gamble Company's (the "Company," "Procter & Gamble," "we" or "us") business is
focused on providing branded consumer packaged goods of superior quality and value. Our
products are sold in more than 180 countries and territories primarily through retail operations
including mass merchandisers, grocery stores, membership club stores, drug stores, department
stores, salons, e-commerce, high-frequency stores and pharmacies. We have on-the-ground
operations in approximately 70 countries.
Basis of Presentation
The Consolidated Financial Statements include the Company and its controlled subsidiaries.
Intercompany transactions are eliminated. Prior year amounts have been reclassified to conform
with current year presentation for amounts related to discontinued operations (see Note 13) and
segment reporting (see Note 12).
Prior to June 30, 2015 , we included the results of our Venezuelan operations in our Consolidated
Financial Statements using the consolidation method of accounting. The Companys Venezuelan
earnings and cash flows are reflected in the historical Consolidated Financial Statements using a
combination of the official exchange rates, with imports of certain essential finished goods
reflected at the CENCOEX rate of 6.30 bolivars per U.S. dollar and the remaining business,
primarily related to our on-the-ground manufacturing and other business activities, reflected at the
SICAD rate, which generally operated in a range of approximately 12 to 13 bolivars per U.S.
dollar. Evolving conditions in Venezuela, including currency exchange regulations, other operating
controls and restrictions, reduced access to dollars through official currency exchange markets and
local market dynamics, have resulted in an other-than-temporary lack of exchangeability between
the Venezuelan bolivar and U.S. dollar, and have restricted our Venezuelan operations ability to
pay dividends and satisfy certain other obligations denominated in U.S. dollars.
While we continue to have access to dollars through the CENCOEX market for certain finished
goods and raw materials imports, the currency and other controls in Venezuela have significantly
limited our ability to realize the benefits from earnings of the Companys on-the-ground
Venezuelan operations and to access the resulting liquidity provided by those operations. We
expect that this condition will continue for the foreseeable future. For accounting purposes, this
lack of exchangeability and evolving conditions has resulted in a lack of control over our
Venezuelan subsidiaries. Therefore, in accordance with the applicable accounting standards for
consolidation, we deconsolidated our Venezuelan subsidiaries and began accounting for our
investment in those subsidiaries using the cost method of accounting.
This change, which we made effective June 30, 2015 , resulted in a fourth quarter fiscal 2015 onetime after-tax charge of $2.1 billion . This charge included the write-off of our investment in our
Venezuelan subsidiaries, foreign currency translation losses of $255 previously recorded in
accumulated other comprehensive income and the write-off of certain intercompany receivables
due from Venezuela subsidiaries, which was triggered by the decision to deconsolidate those
subsidiaries. Our Venezuelan operations cash balance of $908 at June 30, 2015 (previously
measured using a combination of CENCOEX and SICAD exchange rates), is no longer reported in
Cash and cash equivalents.
In future periods, our financial results will only include sales of finished goods to our Venezuelan
subsidiaries to the extent we receive cash payments from those subsidiaries (expected to be largely
through the CENCOEX exchange market). Accordingly, we will not include the results of our onthe-ground Venezuelan subsidiaries. Any dividends from our Venezuelan subsidiaries will be
recorded as operating income upon receipt of the cash.
Use of Estimates
Preparation of financial statements in conformity with accounting principles generally accepted in

the United States of America (U.S. GAAP) requires management to make estimates and
assumptions that affect the amounts reported in the Consolidated Financial Statements and
accompanying disclosures. These estimates are based on management's best knowledge of current
events and actions the Company may undertake in the future. Estimates are used in accounting for,
among other items, consumer and trade promotion accruals, restructuring reserves, pensions, postemployment benefits, stock options, valuation of acquired intangible assets, useful lives for
depreciation and amortization of long-lived assets, future cash flows associated with impairment
testing for goodwill, indefinite-lived intangible assets and other long-lived assets, deferred tax
assets, uncertain income tax positions and contingencies. Actual results may ultimately differ from
estimates, although management does not generally believe such differences would materially
affect the financial statements in any individual year. However, in regard to ongoing impairment
testing of goodwill and indefinite-lived intangible assets, significant deterioration in future cash
flow projections or other assumptions used in estimating fair values versus those anticipated at the
time of the initial valuations, could result in impairment charges that materially affect the financial
statements in a given year.
Revenue Recognition
Sales are recognized when revenue is realized or realizable and has been earned. Revenue
transactions represent sales of inventory. The revenue recorded is presented net of sales and other
taxes we collect on behalf of governmental authorities. The revenue includes shipping and
handling costs, which generally are included in the list price to the customer. Our policy is to
recognize revenue when title to the product, ownership and risk of loss transfer to the customer,
which can be on the date of shipment or the date of receipt by the customer.
Amounts in millions of dollars except per share amounts or as otherwise specified.
A provision for payment discounts and product return allowances is recorded as a reduction of
sales in the same period the revenue is recognized.
Trade promotions, consisting primarily of customer pricing allowances, merchandising funds and
consumer coupons, are offered through various programs to customers and consumers. Sales are
recorded net of trade promotion spending, which is recognized as incurred, generally at the time of
the sale. Most of these arrangements have terms of approximately one year. Accruals for expected
payouts under these programs are included as accrued marketing and promotion in the Accrued
and other liabilities line item in the Consolidated Balance Sheets.
Cost of Products Sold
Cost of products sold is primarily comprised of direct materials and supplies consumed in the
manufacture of product, as well as manufacturing labor, depreciation expense and direct overhead
expense necessary to acquire and convert the purchased materials and supplies into finished
product. Cost of products sold also includes the cost to distribute products to customers, inbound
freight costs, internal transfer costs, warehousing costs and other shipping and handling activity.
Selling, General and Administrative Expense
Selling, general and administrative expense (SG&A) is primarily comprised of marketing

expenses, selling expenses, research and development costs, administrative and other indirect
overhead costs, depreciation and amortization expense on non-manufacturing assets and other
miscellaneous operating items. Research and development costs are charged to expense as incurred
and were $2.0 billion in 2015 and 2014 and $1.9 billion in 2013 . Advertising costs, charged to
expense as incurred, include worldwide television, print, radio, internet and in-store advertising
expenses and were $8.3 billion in 2015 , $9.0 billion in 2014 and $9.4 billion in 2013 . Nonadvertising related components of the Company's total marketing spending include costs
associated with consumer promotions, product sampling and sales aids, which are included in
SG&A, as well as coupons and customer trade funds, which are recorded as reductions to net sales.
Other Non-Operating Income, Net
Other non-operating income, net, primarily includes net acquisition and divestiture gains and
investment income.
Currency Translation
Financial statements of operating subsidiaries outside the U.S. generally are measured using the
local currency as the functional currency. Adjustments to translate those statements into U.S.
dollars are recorded in Other comprehensive income (OCI). For subsidiaries operating in highly
inflationary economies, the U.S. dollar is the functional currency. Re-measurement adjustments for
financial statements in highly inflationary economies and other transactional exchange gains and
losses are reflected in earnings.
Cash Flow Presentation
The Consolidated Statements of Cash Flows are prepared using the indirect method, which
reconciles net earnings to cash flow
from operating activities. Cash flows from foreign currency transactions and operations are
translated at an average exchange rate for the period. Cash flows from hedging activities are
included in the same category as the items being hedged. Cash flows from derivative instruments
designated as net investment hedges are classified as financing activities. Realized gains and losses
from non-qualifying derivative instruments used to hedge currency exposures resulting from
intercompany financing transactions are also classified as financing activities. Cash flows from
other derivative instruments used to manage interest, commodity or other currency exposures are
classified as operating activities. Cash payments related to income taxes are classified as operating
activities. Cash flows from the Company's discontinued operations are included in the
Consolidated Statements of Cash Flows.
Investments
Investment securities consist of readily marketable debt and equity securities. Unrealized gains or
losses from investments classified as trading, if any, are charged to earnings. Unrealized gains or
losses on securities classified as available-for-sale are generally recorded in OCI. If an availablefor-sale security is other than temporarily impaired, the loss is charged to either earnings or OCI
depending on our intent and ability to retain the security until we recover the full cost basis and the
extent of the loss attributable to the creditworthiness of the issuer. Investment securities are
included as Available-for-sale investment securities and Other noncurrent assets in the
Consolidated Balance Sheets.
Investments in certain companies over which we exert significant influence, but do not control the
financial and operating decisions, are accounted for as equity method investments. Other
investments that are not controlled, and over which we do not have the ability to exercise
significant influence, are accounted for under the cost method. Both equity and cost method
investments are included as Other noncurrent assets in the Consolidated Balance Sheets.
Inventory Valuation
Inventories are valued at the lower of cost or market value. Product-related inventories are
primarily maintained on the first-in, first-out method. Minor amounts of product inventories,
including certain cosmetics and commodities, are maintained on the last-in, first-out method. The
cost of spare part inventories is maintained using the average-cost method.
Property, Plant and Equipment
Property, plant and equipment is recorded at cost reduced by accumulated depreciation.

Depreciation expense is recognized over the assets' estimated useful lives using the straight-line
method. Machinery and equipment includes office furniture and fixtures ( 15 -year life), computer
equipment and capitalized software ( 3 - to 5 -year lives) and manufacturing equipment ( 3 - to 20 year lives). Buildings are depreciated over an estimated useful life of 40 years. Estimated useful
lives are periodically reviewed and, when appropriate, changes are made prospectively. When
certain events or changes in operating conditions occur, asset lives may be adjusted and an
impairment assessment may be performed on the recoverability of the carrying amounts.

Goodwill and Other Intangible Assets
Goodwill and indefinite-lived intangible assets are not amortized, but are evaluated for impairment
annually or more often if indicators of a potential impairment are present. Our annual impairment
testing of goodwill is performed separately from our impairment testing of indefinite-lived
intangible assets.
We have acquired brands that have been determined to have indefinite lives. We evaluate a
number of factors to determine whether an indefinite life is appropriate, including the competitive
environment, market share, brand history, product life cycles, operating plans and the
macroeconomic environment of the countries in which the brands are sold. When certain events or
changes in operating conditions occur, an impairment assessment is performed and indefinite-lived
assets may be adjusted to a determinable life.
The cost of intangible assets with determinable useful lives is amortized to reflect the pattern of
economic benefits consumed, either on a straight-line or accelerated basis over the estimated
periods benefited. Patents, technology and other intangible assets with contractual terms are
generally amortized over their respective legal or contractual lives. Customer relationships, brands
and other non-contractual intangible assets with determinable lives are amortized over periods
generally ranging from 5 to 30 years. When certain events or changes in operating conditions
occur, an impairment
assessment is performed and remaining lives of intangible assets with determinable lives may be
adjusted.
For additional details on goodwill and intangible assets see Note 2.
Fair Values of Financial Instruments
Certain financial instruments are required to be recorded at fair value. Changes in assumptions or
estimation methods could affect the fair value estimates; however, we do not believe any such
changes would have a material impact on our financial condition, results of operations or cash
flows. Other financial instruments, including cash equivalents, certain investments and short-term
debt, are recorded at cost, which approximates fair value. The fair values of long-term debt and
financial instruments are disclosed in Note 5.
New Accounting Pronouncements and Policies
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic
606). This guidance outlines a single, comprehensive model for accounting for revenue from
contracts with customers. We will adopt the standard no later than July 1, 2018. While we are
currently assessing the impact of the new standard, we do not expect this new guidance to have a
material impact on our Consolidated Financial Statements.
No other new accounting pronouncement issued or effective during the fiscal year had or is
expected to have a material impact on the Consolidated Financial Statements.
NOTE 2
GOODWILL AND INTANGIBLE ASSETS
The change in the net carrying amount of goodwill by reportable segment was as follows:
GOODWILL at JUNE 30, 2013 - Gross
Accumulated impairment losses at June 30, 2013
GOODWILL at JUNE 30, 2013 - Net
Acquisitions and divestitures
Goodwill impairment charges
Translation and other
Acquisitions and divestitures
Goodwill impairment charges
Translation and other
Beauty, Hair and

Personal Care
17,094 $
(431)
16,663
377
17,471
(431)
17,040
(136)
(1,506)
$
15,829
(431)
15,398 $
Grooming
21,775 $
(1,158)
20,617
322
22,097
(1,158)
20,939
(1,320)
20,777
(1,158)
19,619 $
Health Care
Fabric Care and Baby, Feminine and

Home Care
Family Care
6,185 $
1,973 $
4,828 $
6,280
1,981
4,910
6,185
95
6,280
(6)
(398)
5,876
5,876 $
1,973
(3)
11
1,981
(3)
(104)
1,874
1,874 $
Corporate
56,777
(1,589)
2,554
55,293
(1,589)
4,828
82
4,922
(2,445)
77
4,910
(361)
2,554
(449)
(2,064)
(41)
4,549
4,549 $
Total Company
4,922 $
2,064
(2,064)
55,188
(2,448)
964
53,704
(594)
(2,064)
(3,730)
50,969
(3,653)
47,316
During 2015, we determined that the estimated fair value of our Batteries reporting unit was less
than its carrying amount, resulting in a series of impairment charges. The underlying fair value
assessment was initially triggered by an agreement in September 2014 to sell the China-based
battery joint venture and a related decision to pursue options to exit the remainder of the Batteries
business. The agreement to sell the China-based battery joint venture was at a transaction value
that was below the earnings multiple implied from the prior valuation of our Batteries business,
which effectively eliminated our fair value cushion. As a result, the remaining business unit cash
flows no longer supported the remaining carrying amount of the Batteries business. Due largely to
these factors, we recorded an initial non-cash, before and after-tax impairment charge of $863 to
reduce the carrying amount of goodwill for the Batteries business unit to its estimated fair value.
These same factors resulted in a decline in the fair value of our Duracell trade name intangible
asset below its carrying value. This resulted in a non-cash, before-tax impairment charge of $110 (
$69 after tax) to reduce the carrying amount of this asset to its estimated fair value.
In November 2014, the Company reached an agreement to divest the Batteries business via a split
transaction in which the Company will exchange a recapitalized Duracell Company for Berkshire
Hathaway's (BH) shares of P&G stock (see Note 13). Based on the terms of the agreement and the
value of BH's shares of P&G stock as of the transaction date and changes thereto through June 30,
2015, the Company recorded additional non-cash, before and after-tax impairment charges totaling
$1.2 billion. All of the fiscal 2015 impairment charges in the Batteries business are included as
part of discontinued operations. The Batteries goodwill is included in Corporate in the preceding
table as of June 30, 2013 and 2014. The remaining Batteries goodwill at June 30, 2015 is reported
in Assets held for sale in the Consolidated Balance Sheet. The remaining change in goodwill
during fiscal 2015 was primarily due to currency translation across all reportable segments.
On July 31, 2014, the Company completed the divestiture of its Pet Care operations in North
America, Latin America and other selected countries. In December 2014, the Company completed
the divestiture of its Pet Care operations in the other markets, primarily the European union
countries. The Pet Care business was accounted for as a discontinued operation as of June 30,
2014. As a result, the Pet Care goodwill is included in Corporate in the preceding table as of June
30, 2013. Pet Care goodwill and intangible assets at June 30, 2014 were reported in Assets held for
sale in accordance with the accounting principles for discontinued operations. The remaining
change in goodwill during fiscal 2014 was primarily due to currency translation across all
reportable segments.
All of the goodwill and indefinite-lived intangible asset impairment charges that are not reflected
in discontinued operations are included in Corporate for segment reporting.
The goodwill and intangible asset valuations are dependent on a number of significant estimates
and assumptions, including macroeconomic conditions, overall category growth rates, competitive
activities, cost containment and margin expansion
and Company business plans. We believe these estimates and assumptions are reasonable and are
comparable to those that would be used by other marketplace participants. However, actual events
and results could differ substantially from those used in our valuations. To the extent such factors
result in a failure to achieve the level of projected cash flows used to estimate fair value, we may
need to record additional non-cash impairment charges in the future. We also considered the
structure and value of the divestiture agreement with BH in the impairment testing for Batteries. If
the value of BHs shares of the Company declines further before the transaction closing date, we
may need to record additional non-cash impairment charges as part of discontinued operations in
the future.
Identifiable intangible assets were comprised of:
Gross
Carrying
Amount
Years ended June 30
2015
INTANGIBLE ASSETS WITH DETERMINABLE LIVES

Brands
$
3,678 $
(2,200) $
Patents and
technology
Customer
relationships
Other
Accumulated
Amortization
4,154 $
(2,205)
2,627
(2,036)
2,850
(2,082)
1,621
307
(659)
(156)
2,002
355
(763)
(164)
(5,051)
INTANGIBLE ASSETS WITH INDEFINITE LIVES

23,647
Brands
$
31,880 $
(5,051)
TOTAL
TOTAL
2014
Gross
Carrying
Amount
Accumulated
Amortization
8,233 $
9,361 $
(5,214)
26,696
36,057 $
(5,214)
Due to the divestiture of the Batteries and Pet Care businesses, intangible assets specific to the
Batteries and Pet Care businesses are reported in Assets held for sale in accordance with the
accounting principles for assets held for sale as of June 30, 2015 and 2014 .
Amortization expense of intangible assets was as follows:
Years ended June 30
Intangible asset amortization
2015
457
2014
Estimated amortization expense over the next five fiscal years is as follows:
Years ending June 30
Estimated amortization expense
2016
388 $
2017
350 $
2018
322 $
514
2019
These estimates do not reflect the impact of future foreign exchange rate changes.
299 $
2013
528
2020
271
NOTE 3
SUPPLEMENTAL FINANCIAL INFORMATION
The components of property, plant and equipment were as follows:

2015
Years ended June 30
PROPERTY, PLANT AND EQUIPMENT

Buildings
Machinery and equipment
Land
Construction in progress
TOTAL PROPERTY, PLANT AND EQUIPMENT
Accumulated depreciation
PROPERTY, PLANT AND EQUIPMENT, NET
2014
7,209
30,346
795
2,997
20,268
41,347
(21,079)
Selected components of current and noncurrent liabilities were as follows:

2015
Years ended June 30
ACCRUED AND OTHER LIABILITIES - CURRENT

Marketing and promotion
Compensation expenses
Restructuring reserves
Taxes payable
Legal and environmental
Other
TOTAL
OTHER NONCURRENT LIABILITIES

Pension benefits
Other postretirement benefits
Uncertain tax positions
Other
TOTAL
$
$
8,022
32,398
893
3,114
44,427
(22,123)
22,304
2014
2,901
1,455
389
845
208
2,527
8,325
5,583
1,414
1,016
782
8,795
3,290
1,647
381
711
399
2,571
8,999
5,984
1,906
1,843
802
10,535
RESTRUCTURING PROGRAM
The Company has historically incurred an ongoing annual level of restructuring-type activities to
maintain a competitive cost structure, including manufacturing and workforce optimization.
Before-tax costs incurred under the ongoing program have generally ranged from $250 to $500
annually. In fiscal 2012, the Company initiated an incremental restructuring program as part of a
productivity and cost savings plan to reduce costs in the areas of supply chain, research and
development, marketing and overheads. The productivity and cost savings plan was designed to
accelerate cost reductions by streamlining management decision making, manufacturing and other
work processes in order to help fund the Company's growth strategy.
through fiscal 2017), including costs incurred as part of the ongoing and incremental restructuring
program. Through the end of fiscal 2015, we have incurred $3.9 billion of the total expected
restructuring charges under the program. The program includes a non-manufacturing overhead
enrollment reduction target of approximately 25% - 30% through fiscal 2017. This has been
updated from the previous non-manufacturing overhead enrollment reduction target of
approximately 16% - 22% through fiscal 2016, which we expect to exceed. Through fiscal 2015,
the Company has reduced non-manufacturing enrollment by approximately 12,600 , or
approximately 21% ( 22% as of July 1, 2015). The reductions are enabled by the elimination of
duplicate work, simplification through the use of technology and optimization of various
functional and business organizations and the Company's global footprint. In addition, the plan
includes integration of newly acquired companies and the optimization of the supply chain and
other manufacturing processes.
Restructuring costs incurred consist primarily of costs to separate employees, asset-related costs to
exit facilities and other costs as outlined below. The Company incurred total restructuring charges
of approximately $1,068 and $806 for the years ended June 30, 2015 and 2014, respectively.
Approximately $427 and $358 of these charges were recorded in SG&A for the years ended June
30, 2015 and 2014, respectively and approximately $628 and $399 of these charges were recorded
in Cost of products sold, respectively. The remainder is included in discontinued operations. Since
the inception of this restructuring program, the Company has incurred charges of approximately
$3.9 billion . Approximately $2.0 billion of these charges were related to separations, $954 were
asset-related and $944 were related to other restructuring-type costs. The following table presents
restructuring activity for the years ended June 30, 2015 and 2014:
Amounts in millions
RESERVE JUNE 30, 2013 $

Charges
Cash spent
Charges against assets
RESERVE JUNE 30, 2014
Charges
Cash spent
Charges against assets
RESERVE JUNE 30, 2015 $
Separation Costs
Separations
Asset-Related Costs
296 $
378
(321)
$
179
(179)
362 $
353
516
(507)
289
(289)
Other
27 $
249
(248)
28
263
(264)
27 $
Total
323
806
(569)
(179)
381
1,068
(771)
(289)
389
Employee separation charges for the years ended June 30, 2015 and 2014 related to severance
packages for approximately 4,820 and 2,730 employees, respectively. For the years ended June 30,
2015 and 2014, these severance packages included
The Company expects to incur in excess of $5 billion in before-tax restructuring costs over a six
year period (from fiscal 2012
approximately 2,340 and 1,640 non-manufacturing employees, respectively. These separations

were primarily in North America and Western Europe. The packages were predominantly
voluntary and the amounts were calculated based on salary levels and past service periods.
Severance costs related to voluntary separations are generally charged to earnings when the
employee accepts the offer. Since its inception, the restructuring program has incurred separation
charges related to approximately 14,300 employees, of which approximately 8,620 are nonmanufacturing overhead personnel.
NOTE 4
Asset-related costs consist of both asset write-downs and accelerated depreciation. Asset writedowns relate to the establishment of a new fair value basis for assets held-for-sale or disposal.
These assets were written down to the lower of their current carrying basis or amounts expected to
be realized upon disposal, less minor disposal costs. Charges for accelerated depreciation relate to
long-lived assets that will be taken out of service prior to the end of their normal service period.
These assets relate primarily to manufacturing consolidations and technology standardization. The
asset-related charges will not have a significant impact on future depreciation charges.
TOTAL
Asset-Related Costs
Other Costs
Other restructuring-type charges are incurred as a direct result of the restructuring program. Such
charges primarily include employee relocation related to separations and office consolidations,
termination of contracts related to supply chain redesign and the cost to change internal systems
and processes to support the underlying organizational changes.
Consistent with our historical policies for ongoing restructuring-type activities, the restructuring
program charges are funded by and included within Corporate for both management and segment
reporting. Accordingly, all charges under the program are included within the Corporate reportable
segment. However, for informative purposes, the following table summarizes the total
restructuring costs related to our reportable segments:
Years ended June 30

Grooming
Health Care
Corporate (1)
Total Company
(1)
2015
166
57
32
197
192
424
1,068
2014
83
20
10
119
155
419
806
Corporate includes costs related to allocated overheads, including charges related to our Sales and
Market Operations, Global Business Services and Corporate Functions activities and costs related to
discontinued operations from our Pet Care and Batteries businesses.
SHORT-TERM AND LONG-TERM DEBT

2015
Years ended June 30
DEBT DUE WITHIN ONE YEAR

Current portion of long-term debt
Commercial paper
Other
Short-term weighted average interest rates (1)
(1)
2014
2,772
12,021
8,807
442
0.3%
4,307
10,818
481
15,606
Short-term weighted average interest rates include the effects of interest rate swaps discussed in Note 5.
2015
Years ended June 30
LONG-TERM DEBT
3.15% USD note due September 2015
0.7%
2014
500
500
1.80% USD note due November 2015
1,000
1,000
1.45% USD note due August 2016
1,000
1,000
4.85% USD note due December 2015
700
700
500
Floating rate USD note due November 2016
500
500
500
5.13% EUR note due October 2017
1,231
1,501
4.70% USD note due February 2019
1,250
1,250
1,000
550
0.28% JPY note due May 2020
4.13% EUR note due December 2020
819
839
1,023
1,119
1,365
1,000
1,000
2.00% EUR note due August 2022

4.88% EUR note due May 2027
640
1,000
1,000
1,119
6.25% GBP note due January 2030
1,365
786
851
500
500
600
5.55% USD note due March 2037

Capital lease obligations
600
1,400
1,400
2,394
(2,772)
5,521
(4,307)
52
All other long-term debt
Current portion of long-term debt
83
$18,329
TOTAL
Long-term weighted average interest rates (2)
(2)
671
572
(1)
(1)
818
9.36% ESOP debentures due 2015-2021

2.00% EUR note due November 2021
1,000
3.2%
$19,811
3.2%
Debt issued by the ESOP is guaranteed by the Company and must be recorded as debt of the Company, as
discussed in Note 9.
Long-term weighted average interest rates include the effects of interest rate swaps discussed in Note 5.
Long-term debt maturities during the next five fiscal years are as follows:
Debt maturities
2016
$2,772
2017
$2,094
2018
$1,330
2019
$2,355
2020
$1,929
The Procter & Gamble Company fully and unconditionally guarantees the registered debt and securities
issued by its 100% owned finance subsidiaries.
NOTE 5
RISK MANAGEMENT ACTIVITIES AND FAIR VALUE MEASUREMENTS
As a multinational company with diverse product offerings, we are exposed to market risks, such
as changes in interest rates, currency exchange rates and commodity prices. We evaluate exposures
on a centralized basis to take advantage of natural exposure correlation and netting. To the extent
we choose to manage volatility associated with the net exposures, we enter into various financial
transactions that we account for using the applicable accounting guidance for derivative
instruments and hedging activities. These financial transactions are governed by our policies
covering acceptable counterparty exposure, instrument types and other hedging practices.
At inception, we formally designate and document qualifying instruments as hedges of underlying
exposures. We formally assess, at inception and at least quarterly thereafter, whether the financial
instruments used in hedging transactions are effective at offsetting changes in either the fair value
or cash flows of the related underlying exposures. Fluctuations in the value of these instruments
generally are offset by changes in the fair value or cash flows of the underlying exposures being
hedged. This is driven by the high degree of effectiveness between the exposure being hedged and
the hedging instrument. The ineffective portion of a change in the fair value of a qualifying
instrument is immediately recognized in earnings. The amount of ineffectiveness recognized was
immaterial for all years presented.
Credit Risk Management
We have counterparty credit guidelines and normally enter into transactions with investment grade
financial institutions, to the extent commercially viable. Counterparty exposures are monitored
daily and downgrades in counterparty credit ratings are reviewed on a timely basis. We have not
incurred, and do not expect to incur, material credit losses on our risk management or other
financial instruments.
Substantially all of the Company's financial instruments used in hedging transactions are governed
by industry standard netting and collateral agreements with counterparties. If the Company's credit
rating were to fall below the levels stipulated in the agreements, the counterparties could demand
either collateralization or termination of the arrangements. The aggregate fair value of the
instruments covered by these contractual features that are in a net liability position as of June 30,
2015 , was not material. The Company has not been required to post collateral as a result of these
contractual features.
Interest Rate Risk Management
Our policy is to manage interest cost using a mixture of fixed-rate and variable-rate debt. To
manage this risk in a cost-efficient manner, we enter into interest rate swaps whereby we agree to
exchange with the counterparty, at specified intervals, the difference between fixed and variable
interest amounts calculated by reference to a notional amount.
Interest rate swaps that meet specific accounting criteria are accounted for as fair value or cash
flow hedges. For fair value hedges, the changes in the fair value of both the hedging instruments
and the underlying debt obligations are immediately recognized in interest expense. For cash flow
hedges, the effective portion of the changes in fair value of the hedging instrument is reported in
OCI and reclassified into interest expense over the life of the underlying debt obligation. The
ineffective portion for both cash flow and fair value hedges, which was not material for any year
presented, was immediately recognized in interest expense.
Foreign Currency Risk Management
We manufacture and sell our products and finance operations in a number of countries throughout
the world. As a result, we are exposed to movements in foreign currency exchange rates.
To manage the exchange rate risk primarily associated with the financing of our operations, we
have historically used a combination of forward contracts, options and currency swaps. As of
June 30, 2015 , we had currency swaps with original maturities up to five years , which are
intended to offset the effect of exchange rate fluctuations on intercompany loans denominated in
foreign currencies. These swaps are accounted for as cash flow hedges. The effective portion of the
changes in fair value of these instruments is reported in OCI and reclassified into SG&A and
interest expense in the same period or periods during which the related hedged transactions affect
earnings. The ineffective portion, which was not material for any year presented, was immediately
recognized in SG&A.
The change in fair values of certain non-qualifying instruments used to manage foreign exchange
exposure of intercompany financing transactions and certain balance sheet items subject to
revaluation are immediately recognized in earnings, substantially offsetting the foreign currency
mark-to-market impact of the related exposures.
Net Investment Hedging
We hedge certain net investment positions in foreign subsidiaries. To accomplish this, we either
borrow directly in foreign currencies and designate all or a portion of the foreign currency debt as
a hedge of the applicable net investment position or we enter into foreign currency swaps that are
designated as hedges of net investments. Changes in the fair value of these instruments are
recognized in OCI to offset the change in the value of the net investment being hedged. The
ineffective portion of these hedges, which was not material in any year presented, was immediately
recognized in interest expense.
Commodity Risk Management
Certain raw materials used in our products or production processes are subject to price volatility
caused by weather, supply conditions, political and economic variables and other unpredictable
factors. To manage the volatility related to anticipated purchases of certain of these materials, we
have historically, on a limited basis, used futures and options with maturities generally less than
one year and swap contracts with maturities up to five years . As of and during the years ended
June 30, 2015 and 2014 , we did not have any commodity hedging activity.
When applying fair value principles in the valuation of assets and liabilities, we are required to
maximize the use of quoted market prices and minimize the use of unobservable inputs. The
Company has not changed its valuation techniques used in measuring the fair value of any
financial assets or liabilities during the year. Our fair value estimates take into consideration the
credit risk of both the Company and our counterparties.
Insurance
We self-insure for most insurable risks. However, we purchase insurance for Directors and
Officers Liability and certain other coverage where it is required by law or by contract.
Fair Value Hierarchy
When active market quotes are not available for financial assets and liabilities, we use industry
standard valuation models. Where applicable, these models project future cash flows and discount
the future amounts to a present value using market-based observable inputs including credit risk,
interest rate curves, foreign currency rates and forward and spot prices for currencies. In
circumstances where market-based observable inputs are not available, management judgment is
used to develop assumptions to estimate fair value. Generally, the fair value of our Level 3
instruments is estimated as the net present value of expected future cash flows based on external
inputs.
Accounting guidance on fair value measurements for certain financial assets and liabilities requires
that financial assets and liabilities carried at fair value be classified and disclosed in one of the
following categories:
Level 1: Quoted market prices in active markets for identical assets or liabilities.
Level 2: Observable market-based inputs or unobservable inputs that are corroborated by
market data.
Level 3: Unobservable inputs reflecting the reporting entity's own assumptions or external
inputs from inactive markets.
The following table sets forth the Company's financial assets and liabilities as of June 30, 2015 and 2014 that were measured at fair value on a recurring basis during the period, segregated by level within the fair value
hierarchy:
ASSETS RECORDED AT FAIR VALUE
Investments:
U.S. government securities
Corporate bond securities
Other investments
Derivatives relating to:
Foreign currency hedges
Other foreign currency instruments (1)
Interest rates
Net investment hedges
TOTAL ASSETS RECORDED AT FAIR VALUE (2)

LIABILITIES RECORDED AT FAIR VALUE
Derivatives relating to:

Other foreign currency instruments (1)
Interest rates
TOTAL LIABILITIES RECORDED AT FAIR VALUE (3)

FAIR VALUE OF LONG-TERM DEBT (4)
(1)
(2)
(3)
(4)
Level 1
2015
Years ended June 30
$
$
$
$
20,947
2014
Level 2
2015
3,495
1,272
312
13
172
96
2014
Level 3
2015
1,631
497
187
24
197
49
24
2014
Total
2015
24
3,495
1,272
30
312
13
172
96
2014
1,631
497
30
187
24
197
49
5,360
2,585
24
24
5,390
2,615
68
13
1
66
29
1
68
13
1
66
29
1
24,747
2,182
1,682
23,129
82
96
82
96
26,429
Other foreign currency instruments are comprised of foreign currency financial instruments that do not qualify as hedges.
All derivative assets are presented in Prepaid expenses and other current assets and Other noncurrent assets. Investment securities are presented in Available-for-sale investment securities and Other noncurrent assets. The
amortized cost of the U.S. government securities with maturities less than one year was $700 and $0 as of June 30, 2015 and 2014, respectively. The amortized cost of the U.S. government securities with maturities between
one and five years was $2,789 and $1,649 as of June 30, 2015 and 2014, respectively. The amortized cost of Corporate bond securities with maturities of less than a year was $221 and $39 as of June 30, 2015 and 2014,
respectively. The amortized cost of Corporate bond securities with maturities between one and five years was $1,052 and $458 as of June 30, 2015 and 2014, respectively. Fair values are generally estimated based upon
quoted market prices for similar instruments.
All derivative liabilities are presented in Accrued and other liabilities or Other noncurrent liabilities.
Long-term debt includes the current portion ( $2,776 and $4,400 as of June 30, 2015 and 2014, respectively) of debt instruments. Certain long-term debt is recorded at fair value. Certain long-term debt is not recorded at fair
value on a recurring basis, but is measured at fair value for disclosure purposes. Fair values are generally estimated based on quoted market prices for identical or similar instruments.
The Company recognizes transfers between levels within the fair value hierarchy, if any, at the end of each quarter. There were no transfers between levels during the periods presented. In addition, there was
no significant activity within the Level 3 assets and liabilities during the periods presented. Except for the impairment charges related to our Batteries business (see Note 2), there were no significant assets or
liabilities that were re-measured at fair value on a non-recurring basis during the years ended June 30, 2015 and 2014 .
Disclosures about Derivative Instruments
The notional amounts and fair values of qualifying and non-qualifying financial instruments used
in hedging transactions as of June 30, 2015 and 2014 are as follows:
Years ended June 30
Notional Amount
2015
2014
DERIVATIVES IN CASH FLOW HEDGING RELATIONSHIPS

$
951 $
951 $
Foreign currency contracts
Fair Value Asset/(Liability)
DERIVATIVES IN FAIR VALUE HEDGING RELATIONSHIPS

$
7,208 $
9,738 $
Interest rate contracts
2015
2014
312 $
187
159 $
168
DERIVATIVES IN NET INVESTMENT HEDGING RELATIONSHIPS

$
537 $
831 $
95 $
DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
$
6,610 $
12,111 $
(55) $
48
(42)
The total notional amount of contracts outstanding at the end of the period is indicative of the level
of the Company's derivative activity during the period. The change in the notional balance of
foreign currency contracts not designated as hedging instruments during the period reflects
changes in the level of intercompany financing activity.
Years ended June 30
Amount of Gain/(Loss)
Recognized in AOCI
on Derivatives (Effective Portion)
2015

$
(1)
5
2014
3
14
$
4
$
TOTAL
$
60
$
17
30
During the next 12 months, the amount of the June 30, 2015 , AOCI balance that will be
reclassified to earnings is expected to be immaterial. The amounts of gains and losses included in
earnings from qualifying and non-qualifying financial instruments used in hedging transactions for
the years ended June 30, 2015 and 2014 were as follows:
Years ended June 30
2015
Reclassified from
AOCI into Earnings

$
6
152
$
158
TOTAL
Years ended June 30
2015
$
TOTAL
$
(1) $
DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
$
(987) $
Foreign currency contracts (1)
(1)
6
38
Recognized in Earnings
DERIVATIVES IN FAIR VALUE HEDGING RELATIONSHIPS

$
(9)
9
Debt
2014
44
2014
36
(37)
(1)
123
The gain or loss on non-qualifying foreign currency contracts substantially offsets the foreign currency
mark-to-market impact of the related exposure.
NOTE 6
ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)
The table below presents the changes in Accumulated other comprehensive income/(loss) (AOCI), including the reclassifications out of Accumulated other comprehensive income/(loss) by component:
Changes in Accumulated Other Comprehensive Income/(Loss) by Component
BALANCE at JUNE 30, 2013
OCI before reclassifications (1)
Amounts reclassified from AOCI (2) (5)
Net current period OCI
(1)
(2)
(3)
(4)
(5)
(6)
(3,529)
(305)
(42)
Investment Securities
(347)
Net current period OCI

OCI before reclassifications (3)
Amounts reclassified from AOCI (4) (5) (6)
Hedges
1,234
(2,642)
Pension and Other Retiree Benefits
(3,876)
1,390
(156)
$
(27)
20
(11)
24
6
(869)
(18)
26
(2)
$
(4,296)
(1,113)
244
844
(4,321)
353
1,044
1,044
(5,165)
563
281
$
Financial Statement Translation
(7,220)
(5,823)
(7,499)
(354)
191
(163)
1,397
(7,475)
255
$
Total
(7,662)
(5,496)
378
$
(5,118)
(12,780)
Net of tax (benefit) / expense of $(207) , $3 and $(450) for gains/losses on hedges, investment securities and pension and other retiree benefit items, respectively, for the period ended June 30, 2014 .
Net of tax (benefit) / expense of $(2) , $(7) , and $94 for gains/losses on hedges, investment securities and pension and other retiree benefit items, respectively, for the period ended June 30, 2014 .
Net of tax (benefit) / expense of $741 , $1 , and $219 for gains/losses on hedges, investment securities and pension and other retiree benefit items, respectively, for the period ended June 30, 2015 .
Net of tax (benefit) / expense of $(2) , $(1) , and $109 for gains/losses on hedges, investment securities and pension and other retiree benefit items, respectively, for the period ended June 30, 2015 .
See Note 5 for classification of gains and losses from hedges in the Consolidated Statements of Earnings. Gains and losses on investment securities are reclassified from AOCI into Other non-operating income, net. Gains and
losses on pension and other retiree benefits are reclassified from AOCI into Cost of products sold and SG&A, and are included in the computation of net periodic pension cost (see Note 9 for additional details).
Amounts reclassified from AOCI for financial statement translation relate to the foreign currency losses written off as part of the deconsolidation of our Venezuelan subsidiaries. These losses were reclassified into Venezuela
deconsolidation charge on the Consolidated Statements of Earnings.
NOTE 7
EARNINGS PER SHARE
Net earnings attributable to Procter & Gamble less preferred dividends (net of related tax benefits) are divided by the weighted average number of common shares outstanding during the year to calculate
basic net earnings per common share. Diluted net earnings per common share are calculated to give effect to stock options and other stock-based awards (see Note 8) and assume conversion of preferred
stock (see Note 9).
Net earnings attributable to Procter & Gamble and common shares used to calculate basic and diluted net earnings per share were as follows:
Years ended June 30
CONSOLIDATED AMOUNTS
Net earnings/(loss)
$
Net earnings attributable to noncontrolling interests
Net earnings/(loss) attributable to P&G (Diluted)
Preferred dividends, net of tax
Net earnings/(loss) attributable to P&G available
$
to common shareholders (Basic)
SHARES IN MILLIONS
Basic weighted average common shares outstanding
Effect of dilutive securities
Conversion of preferred shares (1)
Exercise of stock options and other unvested
equity awards (2)
Diluted weighted average common shares
outstanding
PER SHARE AMOUNTS
Basic net earnings/(loss) per common share (3)
Diluted net earnings/(loss) per common share (3)
(1)
(2)
(3)
$
$
Continuing
Operations
8,930 $
(100)
8,830
(259)
8,571 $
2015
Dis-continued
Operations
(1,786) $
(8)
(1,794)
(1,794) $
Total
7,144
(108)
6,777
7,036
(259)
Continuing
Operations
11,318 $
(121)
11,197
(253)
10,944 $
2014
Dis-continued
Operations
467 $
(21)
446
446 $
Total
11,785
(142)
11,390
11,643
(253)
Continuing
Operations
10,953 $
(93)
10,860
(244)
10,616 $
2013
Dis-continued
Operations
449 $
3
452
452 $
Total
11,402
(90)
11,312
(244)
11,068
2,711.7
2,711.7
2,711.7
2,719.8
2,719.8
2,719.8
2,742.9
2,742.9
2,742.9
108.6
108.6
108.6
112.3
112.3
112.3
116.8
116.8
116.8
63.3
63.3
63.3
72.6
72.6
72.6
70.9
70.9
70.9
2,883.6
2,883.6
2,883.6
2,904.7
2,904.7
2,904.7
2,930.6
2,930.6
2,930.6
3.16 $
3.06 $
(0.66) $
(0.62) $
2.50
2.44
$
$
4.03 $
3.86 $
0.16 $
0.15 $
4.19
4.01
$
$
3.87 $
3.71 $
0.17 $
0.15 $
4.04
3.86
Despite being included currently in Diluted net earnings per common share, the actual conversion to common stock occurs when the preferred shares are sold. Shares may only be sold after being allocated to the ESOP
participants pursuant to the repayment of the ESOP's obligations through 2035.
Approximately 8 million in 2015 , 9 million in 2014 and 12 million in 2013 of the Company's outstanding stock options were not included in the Diluted net earnings per share calculation because the options were out of the
money or to do so would have been antidilutive (i.e., the total proceeds upon exercise would have exceeded the market value of the underlying common shares).
Basic net earnings per common share and diluted net earnings per common share are calculated on net earnings attributable to Procter & Gamble.
NOTE 8
STOCK-BASED COMPENSATION
We have stock-based compensation plans under which we annually grant stock option, restricted
stock, restricted stock unit (RSU) and performance stock unit (PSU) awards to key managers and
directors. Exercise prices on options granted have been, and continue to be, set equal to the market
price of the underlying shares on the date of the grant. Since September 2002, the key manager
stock option awards granted vest after
three years and have a 10 -year life. The key manager stock option awards granted from July 1998
through August 2002 vested after three years and have a 15 -year life. Key managers can elect to
receive up to the entire value of their option award in RSUs. Key manager RSUs vest and are
settled in shares of common stock five years from the grant date. The awards provided to the
Company's directors are in the form of restricted stock and RSUs. In addition to our key manager
and director grants, we make other minor stock option and RSU
grants to employees for which the terms are not substantially different than key manager awards.
Senior-level executives receive PSU awards. Under this program, the number of PSUs that will
vest three years after the respective grant date is based on the Company's performance relative to
pre-established performance goals during that three year period.
A total of 185 million shares of common stock were authorized for issuance under stock-based
compensation plan approved by shareholders in 2014. The number of shares available for award
under the 2014 plan includes the shares previously authorized but not awarded under the
shareholder approved plans in 2003 and 2009. A total of 156 million shares remain available for
grant under the 2014 plan.
Total stock-based compensation expense for stock option grants was $223 , $246 and $249 for
2015 , 2014 and 2013 , respectively. Total compensation expense for restricted stock, RSUs and
PSUs was $114 , $114 and $97 in 2015 , 2014 and 2013 , respectively. The total income tax
benefit recognized in the income statement for stock options, restricted stock, RSUs and PSUs was
$109 , $127 and $96 in 2015 , 2014 and 2013 , respectively.
In calculating the compensation expense for stock options granted, we utilize a binomial latticebased valuation model. Assumptions utilized in the model, which are evaluated and revised to
reflect market conditions and experience, were as follows:
Years ended June 30
Interest rate
Weighted average interest
rate
Dividend yield
Expected volatility
Weighted average
volatility
Expected life in years
0.1
11
2015
2.1%
2.0%
3.1%
15%
0.1
15
2014
2.8%
2.5%
3.1%
17%
15%
8.3
16%
8.2
0.2
14
2013
2.0%
1.8%
2.9%
15%
15%
8.9
Lattice-based option valuation models incorporate ranges of assumptions for inputs and those
ranges are disclosed in the preceding table. Expected volatilities are based on a combination of
historical volatility of our stock and implied volatilities of call options on our stock. We use
historical data to estimate option exercise and employee termination patterns within the valuation
model. The expected life of options granted is derived from the output of the option valuation
model and represents the average period of time that options granted are expected to be
outstanding. The interest rate for periods within the contractual life of the options is based on the
U.S. Treasury yield curve in effect at the time of grant.
A summary of options, RSUs and PSUs outstanding under the plans as of June 30, 2015 and
activity during the year then ended is presented below:
Options
Outstanding, beginning of
year
Granted
Exercised
Canceled
OUTSTANDING, END OF
YEAR
EXERCISABLE
Options (in
thousands)
Weighted Avg.
Exercise Price
291,626 $
23,066
(53,294)
(1,106)
59.74
84.97
50.60
70.46
260,292 $
63.74
188,959 $
57.68
Weighted Avg.
Contract-ual Life
in Years
Aggregate
Intrinsic Value
4.9 $
3.4 $
3,971
3,895
The weighted average grant-date fair value of options granted was $9.38 , $10.01 and $8.19 per
share in 2015 , 2014 and 2013 , respectively. The total intrinsic value of options exercised was
$1,814 , $1,152 and $1,759 in 2015 , 2014 and 2013 , respectively. The total grant-date fair value
of options that vested during 2015 , 2014 and 2013 was $241 , $319 and $352 , respectively. At
June 30, 2015 , there was $205 of compensation cost that has not yet been recognized related to
stock option grants. That cost is expected to be recognized over a remaining weighted average
period of 1.9 years. Cash received from options exercised was $2,631 , $1,938 and $3,294 in 2015
, 2014 and 2013 , respectively. The actual tax benefit realized for the tax deductions from option
exercises totaled $519 , $338 and $575 in 2015 , 2014 and 2013 , respectively.
RSUs
Weighted-Average
Grant-Date Fair
Other stock-based awards Units (in thousands)
Value
Non-vested at July 1,
2014
Granted
Vested
Forfeited
Non-vested at June
30, 2015
PSUs
Units (in thousands)
Weighted-Average
Grant-Date Fair
Value
4,902 $
1,451
(1,212)
(133)
61.74
69.25
59.22
64.74
1,883 $
575
(1,251)
(19)
66.53
77.47
63.96
69.82
5,008 $
64.78
1,188 $
74.48
At June 30, 2015 , there was $197 of compensation cost that has not yet been recognized related to
restricted stock, RSUs and PSUs. That cost is expected to be recognized over a remaining
weighted average period of 2.9 years. The total fair value of shares vested was $79 , $95 and $51
in 2015 , 2014 and 2013 , respectively.
We have no specific policy to repurchase common shares to mitigate the dilutive impact of
options, RSUs and PSUs. However, we have historically made adequate discretionary purchases,
based on cash availability, market trends and other factors, to offset the impacts of such activity.
NOTE 9
POSTRETIREMENT BENEFITS AND EMPLOYEE STOCK OWNERSHIP PLAN

We offer various postretirement benefits to our employees.
Defined Contribution Retirement Plans
We have defined contribution plans which cover the majority of our U.S. employees, as well as
employees in certain other countries. These plans are fully funded. We generally make
contributions to participants' accounts based on individual base salaries and years of service. Total
global defined contribution expense was $305 , $311 and $314 in 2015 , 2014 and 2013 ,
respectively.
The primary U.S. defined contribution plan (the U.S. DC plan) comprises the majority of the
expense for the Company's defined contribution plans. For the U.S. DC plan, the contribution rate
is set annually. Total contributions for this plan approximated 14% of total participants' annual
wages and salaries in 2015 and 15% in 2014 and 2013 .
We maintain The Procter & Gamble Profit Sharing Trust (Trust) and Employee Stock Ownership
Plan (ESOP) to
provide a portion of the funding for the U.S. DC plan and other retiree benefits (described below).
Operating details of the ESOP are provided at the end of this Note. The fair value of the ESOP
Series A shares allocated to participants reduces our cash contribution required to fund the U.S.
DC plan.
Defined Benefit Retirement Plans and Other Retiree Benefits
We offer defined benefit retirement pension plans to certain employees. These benefits relate
primarily to local plans outside the U.S. and, to a lesser extent, plans assumed in previous
acquisitions covering U.S. employees.
We also provide certain other retiree benefits, primarily health care and life insurance, for the
majority of our U.S. employees who become eligible for these benefits when they meet minimum
age and service requirements. Generally, the health care plans require cost sharing with retirees
and pay a stated percentage of expenses, reduced by deductibles and other coverages. These
benefits are primarily funded by ESOP Series B shares and certain other assets contributed by the
Company.
Obligation and Funded Status . The following provides a reconciliation of benefit obligations, plan assets and funded status of these defined benefit plans:
2015
Years ended June 30
CHANGE IN BENEFIT OBLIGATION

Benefit obligation at beginning of year (3)
Service cost
Interest cost
Participants' contributions
Amendments
Actuarial loss/(gain)
Acquisitions
Special termination benefits
Currency translation and other
Benefit payments
BENEFIT OBLIGATION AT END OF YEAR (3)

CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning of year
Actual return on plan assets
Employer contributions
Participants' contributions
ESOP debt impacts (4)
Benefit payments
FAIR VALUE OF PLAN ASSETS AT END OF YEAR

FUNDED STATUS
(1)
(2)
(3)
(4)
$
$
$
$
Pension Benefits (1)
17,053
317
545
19
17
524
7
11
(1,908)
(634)
15,951
11,098
1,016
262
19
(1,156)
(634)
(5,346)
10,605
Other Retiree Benefits (2)
2014
2015
14,514
298
590
20
4
1,365
5
797
(540)
8,561
964
1,549
20
544
(540)
(5,955)
17,053
11,098
Primarily non-U.S.-based defined benefit retirement plans.

Primarily U.S.-based other postretirement benefit plans.
For the pension benefit plans, the benefit obligation is the projected benefit obligation. For other retiree benefit plans, the benefit obligation is the accumulated postretirement benefit obligation.
Represents the net impact of ESOP debt service requirements, which is netted against plan assets for other retiree benefits.
2014
5,505
156
240
71
(325)
(399)
23
(134)
(233)
4,904
3,574
10
18
71
(6)
36
(233)
(1,434)
3,470
5,289
149
256
72
(5)
(46)
9
20
(239)
5,505
3,553
124
31
72
33
(239)
3,574
(1,931)
The underfunding of pension benefits is primarily a function of the different funding incentives that exist outside of the U.S. In certain countries, there are no legal requirements or financial incentives
provided to companies to pre-fund pension obligations prior to their due date. In these instances, benefit payments are typically paid directly from the Company's cash as they become due.
2015
Years ended June 30
CLASSIFICATION OF NET AMOUNT RECOGNIZED
Noncurrent assets
Current liabilities
Noncurrent liabilities
NET AMOUNT RECOGNIZED
Net actuarial loss

Prior service cost/(credit)
AMOUNTS RECOGNIZED IN ACCUMULATED OTHER COMPREHENSIVE INCOME (AOCI)
NET AMOUNTS RECOGNIZED IN AOCI
Pension Benefits
276
(39)
(5,583)
(5,346)
4,488
300
4,788
Other Retiree Benefits
2014
2015
69
(40)
(5,984)
(5,955)
5,169
344
5,513
2014
(20)
(1,414)
(1,434)
1,731
(346)
1,385
(25)
(1,906)
(1,931)
1,871
(39)
1,832
The accumulated benefit obligation for all defined benefit pension plans was $14,239 and $14,949 as of June 30, 2015 and 2014 , respectively. Pension plans with accumulated benefit obligations in excess
of plan assets and plans with projected benefit obligations in excess of plan assets consisted of the following:
Years ended June 30
Projected benefit obligation

Accumulated benefit obligation
Fair value of plan assets
Accumulated Benefit Obligation Exceeds the Fair Value of Plan

Assets
2015
Net Periodic Benefit Cost . Components of the net periodic benefit cost were as follows:
Service cost
Interest cost
Expected return on plan assets
Prior service cost/(credit) amortization
Net actuarial loss amortization
Special termination benefits
Curtailments, settlements and other
317
545
(732)
30
275
11
298
590
(701)
26
214
5
2015
2013
432
Projected Benefit Obligation Exceeds the Fair Value of Plan Assets
14,229
12,406
8,353
2014
446
GROSS BENEFIT COST
Dividends on ESOP preferred stock
Pension Benefits
2015
Years ended June 30
AMOUNTS RECOGNIZED IN NET PERIODIC BENEFIT COST
13,411
11,918
7,931
2014
300
560
(587)
18
213
39
4
547
446
432
Net actuarial loss/(gain) - current year

Prior service cost/(credit) - current year
Amortization of net actuarial loss
Amortization of prior service (cost)/credit
240
17
(275)
(30)
(677)
1,102
4
(214)
(26)
245
NET AMOUNTS RECOGNIZED IN PERIODIC BENEFIT COST AND AOCI
(279)
1,543
CHANGE IN PLAN ASSETS AND BENEFIT OBLIGATIONS RECOGNIZED IN AOCI
TOTAL CHANGE IN AOCI
(725)
1,111
2014
156
240
(406)
(20)
105
23
98
NET PERIODIC BENEFIT COST/(CREDIT)
2014
2015
547
14,057
12,419
8,435
(58)
2013
127
40
(3)
(325)
(105)
20
(34)
(407)
(447)
149
256
(385)
(20)
118
9
(64)
63
215
(5)
(118)
20
2
114
177
15,325
13,279
9,301
190
260
(382)
(20)
199
18
265
(70)
195
Amounts expected to be amortized from AOCI into net periodic benefit cost during the year ending June 30, 2016 , are as follows:
Net actuarial loss
Prior service cost/(credit)
Pension Benefits
270 $
30
78
(52)
Assumptions . We determine our actuarial assumptions on an annual basis. These assumptions are weighted to reflect each country that may have an impact on the cost of providing retirement benefits. As of
June 30, 2015, we updated our assumptions for revised mortality projections for the measurement of U.S. retirement benefit obligations that reflect longevity improvements of plan participants, resulting in
an increase to future pension expense and to our benefit obligation. The weighted average assumptions used to determine benefit obligations recorded on the Consolidated Balance Sheets as of June 30, were
as follows: (1)
2015
Discount rate
Rate of compensation increase
Health care cost trend rates assumed for next year
Rate to which the health care cost trend rate is assumed to decline (ultimate trend rate)
Year that the rate reaches the ultimate trend rate
(1)
Determined as of end of year.
Pension Benefits
3.1%
3.1%
N/A
N/A
N/A
2014
2015
3.5%
3.2%
N/A
N/A
N/A
4.5%
N/A
6.8%
5.0%
2021
2014
4.4%
N/A
6.8%
5.0%
2021
The weighted average assumptions used to determine net benefit cost recorded on the Consolidated Statement of Earnings for the years ended June 30, were as follows: (1)
Years ended June 30
Discount rate
Expected return on plan assets
Rate of compensation increase
(1)
Determined as of beginning of year and adjusted for acquisitions.
2015
3.5%
7.2%
3.2%
Pension Benefits
2014
4.0%
7.2%
3.2%
2013
4.2%
7.3%
3.3%
2015

2014
4.4%
8.3%
N/A
4.8%
8.3%
N/A
2013
4.3%
8.3%
N/A
Several factors are considered in developing the estimate for the long-term expected rate of return on plan assets. For the defined benefit retirement plans, these factors include historical rates of return of
broad equity and bond indices and projected long-term rates of return obtained from pension investment consultants. The expected long-term rates of return for plan assets are 8 - 9% for equities and 5 - 6%
for bonds. For other retiree benefit plans, the expected long-term rate of return reflects that the assets are comprised primarily of Company stock. The expected rate of return on Company stock is based on
the long-term projected return of 8.5% and reflects the historical pattern of returns.
Assumed health care cost trend rates could have a significant effect on the amounts reported for the other retiree benefit plans. A one percentage point change in assumed health care cost trend rates would
have the following effects:
Effect on the total service and interest cost components
Effect on the accumulated postretirement benefit obligation
One-Percentage
Point Increase
81
824
One-Percentage
Point Decrease
(62)
(642)
Plan Assets . Our investment objective for defined benefit retirement plan assets is to meet the plans' benefit obligations, while minimizing the potential for future required Company plan contributions. The
investment strategies focus on asset class diversification, liquidity to meet benefit payments and an appropriate balance of long-term investment return and risk. Target ranges for asset allocations are
determined by matching the actuarial projections of the plans' future liabilities and benefit payments with expected long-term rates of return on the assets, taking into account investment return volatility and
correlations across asset classes. Plan assets are diversified across several investment managers and are generally invested in liquid funds that are selected to track broad market equity and bond indices.
Investment risk is carefully controlled with plan assets rebalanced to target allocations on a periodic basis and with continual monitoring of investment managers' performance relative to the investment
guidelines established with each investment manager.
Our target asset allocation for the year ended June 30, 2015 , and actual asset allocation by asset category as of June 30, 2015 and 2014 , were as follows:
Target Asset Allocation
Asset Category
Cash
Debt securities
Equity securities
Other Retiree
Benefits
Pension Benefits
TOTAL
2%
51%
47%
100%
2015
2%
3%
95%
100%
Pension Benefits
2%
50%
48%
Actual Asset Allocation at June 30

2014
100%
2015
1%
51%
48%
100%
1%
5%
94%
2014
100%
1%
6%
93%
100%
The following tables set forth the fair value of the Company's plan assets as of June 30, 2015 and 2014 segregated by level within the fair value hierarchy (refer to Note 5 for further discussion on the fair
value hierarchy and fair value principles). Common collective funds are valued using the net asset value reported by the managers of the funds and as supported by the unit prices of actual purchase and sale
transactions. Company stock listed as Level 2 in the hierarchy represents preferred shares which are valued based on the value of Company common stock. The majority of our Level 3 pension assets are
insurance contracts. Their fair values are based on their cash equivalent or models that project future cash flows and discount the future amounts to a present value using market-based observable inputs,
including credit risk and interest rate curves.
2015
Years ended June 30
ASSETS AT FAIR VALUE

Collective fund - equity
Collective fund - fixed income
Other
TOTAL ASSETS AT FAIR VALUE
TOTAL ASSETS AT FAIR VALUE
154
158
36
36
2014
Level 2
2015
79
$
Level 1
2015
Years ended June 30
ASSETS AT FAIR VALUE

Company stock
Common collective fund - equity
Common collective fund - fixed income
Other
Level 1
84
2014
112
5,054
5,162
10,328
30
30
3,239
17
178
3,434
2014
$
Level 2
2015
Pension Benefits
5,336
5,539
10,875
Level 3
2015
119
119

2014
3,304
18
217
3,539
2015
139
$
Level 3
2015
2014
139
2014
266
5,054
5,162
123
10,605
2015
5
5
36
3,239
17
178
3,470
Total
$
Total
2014
79
5,336
5,539
144
11,098
2014
30
3,304
18
217
5
3,574
There was no significant activity within the Level 3 pension and other retiree benefits plan assets during the years presented.
Cash Flows . Management's best estimate of cash requirements and discretionary contributions for
the defined benefit retirement plans and other retiree benefit plans for the year ending June 30,
2016 , is $215 and $34 , respectively. For the defined benefit retirement plans, this is comprised of
$96 in expected benefit payments from the Company directly to participants of unfunded plans and
$119 of expected contributions to funded plans. For other retiree benefit plans, this is comprised of
$27 in expected benefit payments from the Company directly to participants of unfunded plans and
$7 of
expected contributions to funded plans. Expected contributions are dependent on many variables,
including the variability of the market value of the plan assets as compared to the benefit
obligation and other market or regulatory conditions. In addition, we take into consideration our
business investment opportunities and resulting cash requirements. Accordingly, actual funding
may differ significantly from current estimates.
Total benefit payments expected to be paid to participants, which include payments funded from
the Company's assets and payments from the plans are as follows:
EXPECTED BENEFIT PAYMENTS

2016
$
2017
2018
2019
2020
2021 - 2025
Employee Stock Ownership Plan
Pension
Benefits
Other Retiree
Benefits
533 $
542
560
572
587
3,403
The series A and B preferred shares of the ESOP are allocated to employees based on debt service
requirements. The number of preferred shares outstanding at June 30 was as follows:
2015
Shares in thousands
182
196
210
223
235
1,334
We maintain the ESOP to provide funding for certain employee benefits discussed in the preceding
paragraphs.
The ESOP borrowed $1.0 billion in 1989 and the proceeds were used to purchase Series A ESOP
Convertible Class A Preferred Stock to fund a portion of the U.S. DC plan. Principal and interest
requirements of the borrowing were paid by the Trust from dividends on the preferred shares and
from advances provided by the Company. The original borrowing of $1.0 billion has been repaid
in full, and advances from the Company of $86 remain outstanding at June 30, 2015 . Each share is
convertible at the option of the holder into one share of the Company's common stock. The
dividend for the current year was equal to the common stock dividend of $2.59 per share. The
liquidation value is $6.82 per share.
In 1991, the ESOP borrowed an additional $1.0 billion . The proceeds were used to purchase
Series B ESOP Convertible Class A Preferred Stock to fund a portion of retiree health care
benefits. These shares, net of the ESOP's debt, are considered plan assets of the other retiree
benefits plan discussed above. Debt service requirements are funded by preferred stock dividends,
cash contributions and advances provided by the Company, of which $662 is outstanding at
June 30, 2015 . Each share is convertible at the option of the holder into one share of the
Company's common stock. The dividend for the current year was equal to the common stock
dividend of $2.59 per share. The liquidation value is $12.96 per share.
Our ESOP accounting practices are consistent with current ESOP accounting guidance, including
the permissible continuation of certain provisions from prior accounting guidance. ESOP debt,
which is guaranteed by the Company, is recorded as debt (see Note 4) with an offset to the reserve
for ESOP debt retirement, which is presented within shareholders' equity. Advances to the ESOP
by the Company are recorded as an increase in the reserve for ESOP debt retirement. Interest
incurred on the ESOP debt is recorded as interest expense. Dividends on all preferred shares, net of
related tax benefits, are charged to retained earnings.
Allocated
Unallocated
2014
42,044
7,228
49,272
TOTAL SERIES A
Allocated
Unallocated
45,535
9,843
52,939
23,074
34,096
55,378
22,085
35,753
57,170
TOTAL SERIES B
2013
44,465
8,474
21,278
37,300
57,838
58,578
For purposes of calculating diluted net earnings per common share, the preferred shares held by
the ESOP are considered converted from inception.
NOTE 10
INCOME TAXES
Income taxes are recognized for the amount of taxes payable for the current year and for the
impact of deferred tax assets and liabilities, which represent future tax consequences of events that
have been recognized differently in the financial statements than for tax purposes. Deferred tax
assets and liabilities are established using the enacted statutory tax rates and are adjusted for any
changes in such rates in the period of change.
Earnings from continuing operations before income taxes consisted of the following:
Years ended June 30
United States
International
TOTAL
$
$
2015
8,863
2,983
11,846
$
$
Income taxes on continuing operations consisted of the following:

2015
Years ended June 30
CURRENT TAX EXPENSE

U.S. federal
International
U.S. state and local
TOTAL TAX EXPENSE
2,272
1,195
252
14,337
$
$
(803)
2,916
1,524
1,301
237
8,020
6,159
14,179
(43)
3,019
1,745
1,502
278
3,525
142
(185)
$
2013
2013
3,062
(611)
(192)
$
8,816
5,521
2014
3,719
DEFERRED TAX EXPENSE

U.S. federal
International and other
2014
185
(484)
$
(299)
3,226
A reconciliation of the U.S. federal statutory income tax rate to our actual income tax rate on
continuing operations is provided below:
Years ended June 30
U.S. federal statutory income tax rate

Country mix impacts of foreign operations
Changes in uncertain tax positions
Impairment adjustments
Holding gain on joint venture buy-out
Other
EFFECTIVE INCOME TAX RATE
2015
35.0 %
(13.9)%
(0.8)%
%
%
6.2 %
(1.9)%
24.6 %
2014
35.0 %
(11.1)%
(1.6)%
%
%
%
(1.2)%
21.1 %
2013
35.0 %
(7.8)%
(1.9)%
0.6 %
(1.5)%
%
(1.6)%
22.8 %
Changes in uncertain tax positions represent changes in our net liability related to prior year tax
positions. Country mix impacts of foreign operations includes the effects of foreign subsidiaries'
earnings taxed at rates other than the U.S. statutory rate, the U.S. tax impacts of non-U.S. earnings
repatriation and any net impacts of intercompany transactions.
Tax costs charged to shareholders' equity totaled $634 for the year ended June 30, 2015 . This
primarily relates to the tax effects of net investment hedges and the impact of certain adjustments
to pension obligations recorded in stockholders' equity, partially offset by excess tax benefits from
the exercise of stock options. Tax benefits to shareholders' equity totaled $716 for the year ended
June 30, 2014 . This primarily relates to the tax effects of net investment hedges, excess tax
benefits from the exercise of stock options and the impacts of certain adjustments to pension and
other retiree benefit obligations recorded in shareholders' equity.
We have undistributed earnings of foreign subsidiaries of approximately $45.0 billion at June 30,
2015 , for which deferred taxes have not been provided. Such earnings are considered indefinitely
invested in the foreign subsidiaries. If such earnings were repatriated, additional tax expense may
result. However, the calculation of the amount of deferred U.S. income tax on these earnings is not
practicable because of the large number of assumptions necessary to compute the tax.
A reconciliation of the beginning and ending liability for uncertain tax positions is as follows:
Years ended June 30
BEGINNING OF YEAR
Increases in tax positions for prior years
Decreases in tax positions for prior years
Increases in tax positions for current year
Settlements with taxing authorities
Lapse in statute of limitations
Currency translation
END OF YEAR
2015
1,437 $
87
(146)
118
(250)
(27)
(123)
1,096
2014
1,600 $
146
(296)
142
(135)
(33)
13
1,437
2013
1,773
162
(225)
188
(195)
(98)
(5)
1,600
Included in the total liability for uncertain tax positions at June 30, 2015 , is $510 that, depending
on the ultimate resolution, could impact the effective tax rate in future periods.
The Company is present in approximately 140 taxable jurisdictions and, at any point in time, has
60 - 70 jurisdictional audits underway at various stages of completion. We evaluate our tax
positions and establish liabilities for uncertain tax positions that may be challenged by local
authorities and may not be fully sustained, despite our belief that the underlying tax positions are
fully supportable. Uncertain tax positions are reviewed on an ongoing basis and are adjusted in
light of changing facts and circumstances, including progress of tax audits, developments in case
law and closing of statute of limitations. Such adjustments are reflected in the tax provision as
appropriate. We have tax years open ranging from 2002 and forward. We are generally not able to
reliably estimate the ultimate settlement amounts until the close of the audit. Based on information
currently available, we anticipate that over the next 12 month period, audit activity could be
completed related to uncertain tax positions in multiple jurisdictions for which we have accrued
existing liabilities of approximately $445 , including interest and penalties.
Accounting pronouncements require that, without discretion, we recognize the additional accrual
of any possible related interest and penalties relating to the underlying uncertain tax position in
income tax expense, unless the Company qualifies for a specific exception. As of June 30, 2015 ,
2014 and 2013 , we had accrued interest of $347 , $411 and $413 and accrued penalties of $19 ,
$32 and $34 , respectively, which are not included in the above table. During the fiscal years ended
June 30, 2015 , 2014 and 2013 , we recognized $15 , $(6) and $24 in interest benefit/(expense) and
$13 , $2 and $32 in penalties benefit, respectively. The net benefits recognized resulted primarily
from the favorable resolution of tax positions for prior years.
Deferred income tax assets and liabilities were comprised of the following:
2015
Years ended June 30
DEFERRED TAX ASSETS

Pension and postretirement benefits
Loss and other carryforwards
Stock-based compensation
Advance payments
Accrued marketing and promotion
Unrealized loss on financial and foreign exchange
transactions
Fixed assets
Inventory
Accrued interest and taxes
Goodwill and other intangible assets
Other
Valuation allowances
TOTAL
DEFERRED TAX LIABILITIES

Goodwill and other intangible assets
Fixed assets
Unrealized gain on financial and foreign exchange
transactions
Other
TOTAL
In certain situations, we guarantee loans for suppliers and customers. The total amount of
guarantees issued under such arrangements is not material.
2014
1,839
1,014
949
281
266
183
139
49
48
25
814
(324)
2,045
1,211
1,060
258
352
115
35
66
49
809
(384)
5,283
5,616
10,136
1,590
11,428
1,665
353
149
12,228
43
101
13,237
Net operating loss carryforwards were $3.1 billion and $3.6 billion at June 30, 2015 and 2014 ,
respectively. If unused, $1.2 billion will expire between 2015 and 2034. The remainder, totaling
$1.9 billion at June 30, 2015 , may be carried forward indefinitely.
NOTE 11
COMMITMENTS AND CONTINGENCIES

Guarantees
In conjunction with certain transactions, primarily divestitures, we may provide routine

indemnifications (e.g., indemnification for representations and warranties and retention of
previously existing environmental, tax and employee liabilities) for which terms range in duration
and, in some circumstances, are not explicitly defined. The maximum obligation under some
indemnifications is also not explicitly stated and, as a result, the overall amount of these
obligations cannot be reasonably estimated. Other than obligations recorded as liabilities at the
time of divestiture, we have not made significant payments for these indemnifications. We believe
that if we were to incur a loss on any of these matters, the loss would not have a material effect on
our financial position, results of operations or cash flows.
Off-Balance Sheet Arrangements
We do not have off-balance sheet financing arrangements, including variable interest entities, that
have a material impact on our financial statements.
Purchase Commitments and Operating Leases
We have purchase commitments for materials, supplies, services and property, plant and
equipment as part of the normal course of business. Commitments made under take-or-pay
obligations are as follows:
Purchase obligations
2016
586 $
2017
280 $
2018
169 $
2019
132 $
2020
110 $
Thereafter
230
Such amounts represent future purchases in line with expected usage to obtain favorable pricing.
This includes purchase commitments related to service contracts for information technology,
human resources management and facilities management activities that have been outsourced to
third-party suppliers. Due to the proprietary nature of many of our materials and processes, certain
supply contracts contain penalty provisions for early termination. We do not expect to incur
penalty payments under these provisions that would materially affect our financial position, results
of operations or cash flows.
We also lease certain property and equipment for varying periods. Future minimum rental
commitments under non-cancelable operating leases, net of guaranteed sublease income, are as
follows:
Operating leases
Litigation
2016
249 $
2017
225 $
2018
210 $
2019
194 $
2020
177 $
Thereafter
562
We are subject to various legal proceedings and claims arising out of our business which cover a
wide range of matters such as antitrust, trade and other governmental regulations, product liability,
patent and trademark, advertising, contracts, environmental, labor and employment and income
taxes.
As previously disclosed, the Company has had a number of antitrust matters in Europe. These
matters involve a number of other consumer products companies and/or retail customers. Several
regulatory authorities in Europe have issued separate decisions pursuant to their investigations
alleging that the Company, along with several other companies, engaged in violations of
competition laws in those countries. Many of these matters have concluded and the fines have been
paid. For ongoing matters, the Company has accrued liabilities for competition law violations from
these European cases totaling $38 as of June 30, 2015 . While the ultimate resolution of
ongoing matters for which we have accrued liabilities may result in fines or costs in excess of the
amounts reserved, it is difficult to estimate such amounts at this time. Currently, however, we do
not expect any such incremental losses to materially impact our financial statements in the periods
in which they are accrued and paid, respectively.
With respect to other litigation and claims, while considerable uncertainty exists, in the opinion of
management and our counsel, the ultimate resolution of the various lawsuits and claims will not
materially affect our financial position, results of operations or cash flows.
We are also subject to contingencies pursuant to environmental laws and regulations that in the
future may require us to take action to correct the effects on the environment of prior
manufacturing and waste disposal practices. Based on currently available information, we do not
believe the ultimate resolution of environmental remediation will have a material effect on our
financial position, results of operations or cash flows.
NOTE 12
SEGMENT INFORMATION
Our Global Business Units (GBUs) are organized into four industry-based sectors, comprised of 1)
Global Beauty, 2) Global Health and Grooming, 3) Global Fabric and Home Care and 4) Global
Baby, Feminine and Family Care. The Company completed the divestiture of its Pet Care business
during the current fiscal year. On November 13, 2014, the Company announced that it plans to
divest the Batteries business via a transaction with Berkshire Hathaway. The Company expects to
complete the Batteries transaction in the beginning of calendar year 2016, pending necessary
regulatory approvals. These GBUs are reported as discontinued operations for all periods presented
(see Note 13).
Under U.S. GAAP, the remaining GBUs underlying the four sectors are aggregated into five
reportable segments: 1) Beauty, Hair and Personal Care , 2) Grooming , 3) Health Care , 4) Fabric
Care and Home Care and 5) Baby, Feminine and Family Care . Our five reportable segments are
comprised of:
Beauty, Hair and Personal Care : Skin and Personal Care (Antiperspirant and Deodorant,
Personal Cleansing, Skin Care); Cosmetics; Hair Care and Color; Prestige (SKII, Fragrances);
Salon Professional;
Grooming : Shave Care (Female Blades & Razors, Male Blades & Razors, Pre- and PostShave Products, Other Shave Care); Electronic Hair Removal;
Health Care : Personal Health Care (Gastrointestinal, Rapid Diagnostics, Respiratory,
Vitamins/Minerals/Supplements, Other Personal Health Care); Oral Care (Toothbrush,
Toothpaste, Other Oral Care);
Fabric Care and Home Care : Fabric Care (Laundry Additives, Fabric Enhancers, Laundry
Detergents); Home Care (Air Care, Dish Care, Surface Care, P&G Professional); and
Baby, Feminine and Family Care : Baby Care (Baby Wipes, Diapers and Pants); Feminine
Care (Adult
Incontinence, Feminine Care); Family Care (Paper Towels, Tissues, Toilet Paper).
The accounting policies of the segments are generally the same as those described in Note 1.
Differences between these policies and U.S. GAAP primarily reflect income taxes, which are
reflected in the segments using applicable blended statutory rates. Adjustments to arrive at our
effective tax rate are included in Corporate.
Corporate includes certain operating and non-operating activities that are not reflected in the
operating results used internally to measure and evaluate the businesses, as well as items to adjust
management reporting principles to U.S. GAAP. Operating activities in Corporate include the
results of incidental businesses managed at the corporate level. Operating elements also include
certain employee benefit costs, the costs of certain restructuring-type activities to maintain a
competitive cost structure, including manufacturing and workforce optimization and other general
Corporate items. The non-operating elements in Corporate primarily include interest expense,
certain acquisition and divestiture gains and interest and investing income.
Total assets for the reportable segments include those assets managed by the reportable segment,
primarily inventory, fixed assets and intangible assets. Other assets, primarily cash, accounts
receivable, investment securities and goodwill, are included in Corporate.
Our business units are comprised of similar product categories. Nine business units individually
accounted for 5% or more of consolidated net sales as follows:
Years ended June 30
Fabric Care
Baby Care
Hair Care and Color
Shave Care
Home Care
Family Care
Oral Care
Feminine Care
Skin and Personal Care
All Other
TOTAL
% of Sales by Business Unit*

2015
20%
14%
11%
9%
8%
7%
7%
6%
6%
12%
100%
% of sales by business unit excludes sales held in Corporate.
2014
21%
14%
11%
9%
8%
7%
7%
6%
6%
11%
100%
2013
21%
13%
12%
9%
8%
7%
7%
6%
6%
11%
100%
The Company had net sales in the U.S. of $28.3 billion , $28.3 billion and $28.1 billion for the
years ended June 30, 2015 , 2014 and 2013 , respectively. Long-lived assets in the U.S. totaled
$8.4 billion and $8.7 billion as of June 30, 2015 and 2014 , respectively. Long-lived assets consists
of property, plant and equipment. No other country's net sales or long-lived assets exceed 10% of
the Company totals.
Our largest customer, Wal-Mart Stores, Inc. and its affiliates, accounted for approximately 14% of
consolidated net sales in 2015 , 2014 and 2013 .
Global Segment Results

BEAUTY, HAIR AND PERSONAL CARE
GROOMING
HEALTH CARE
FABRIC CARE AND HOME CARE
BABY, FEMININE AND FAMILY CARE
CORPORATE (1)
TOTAL COMPANY
(1)
2015
2014
2013
2015
2014
2013
2015
2014
2013
2015
2014
2013
2015
2014
2013
2015
2014
2013
2015
2014
2013
Net Sales
18,135
19,507
19,956
7,441
8,009
8,038
7,713
7,798
7,684
22,277
23,509
23,395
20,247
20,950
20,479
466
737
564
76,279
80,510
80,116
Earnings/(Loss)
from
Continuing
Operations
Before
Income Taxes
3,379
3,530
3,215
2,374
2,589
2,458
1,700
1,597
1,582
4,061
4,266
4,379
4,317
4,310
4,507
(3,985)
(1,955)
(1,962)
11,846
14,337
14,179
Net Earnings/(Loss)
from Continuing
Operations
2,584
2,739
2,474
1,787
1,954
1,837
1,167
1,083
1,093
2,635
2,771
2,835
2,938
2,940
3,047
(2,181)
(169)
(333)
8,930
11,318
10,953
Depreciation
and
Amortization
377
394
375
540
576
603
202
199
191
547
539
544
924
908
837
544
525
432
3,134
3,141
2,982
Total
Assets
7,429
8,576
8,396
23,090
23,767
23,971
5,212
5,879
5,933
7,155
7,938
7,658
10,109
10,946
10,926
76,500
87,160
82,379
129,495
144,266
139,263
Capital
Expenditures
The Corporate reportable segment includes depreciation and amortization, total assets and capital expenditures of the Pet Care business prior to its divestiture during fiscal year 2015 and of the Batteries business.
NOTE 13
DISCONTINUED OPERATIONS
During the quarter ended December 31, 2014, the Company divested its interest in a China-based
battery joint venture, resulting in proceeds of approximately $560 . In November 2014, the
Company reached an agreement to divest the remainder of its Batteries business to Berkshire
Hathaway (BH) via a split transaction, in which the Company will exchange a recapitalized
Duracell Company for BH's shares of P&G stock. As of the date the transaction was signed, BH's
shares were valued at approximately $4.7 billion . As of June 30, 2015, this value has declined to
approximately $4.1 billion . The Company expects to contribute approximately $1.8 billion in cash
to the Duracell Company in the pre-transaction recapitalization, subject to final working capital
adjustments. The Company recorded goodwill and indefinite-lived asset impairment charges
during the fiscal year ended June 30, 2015 which reflected the total estimated proceeds from the
divestiture transactions (see Note 2). Since the number of shares of P&G stock the Company will
receive in the Batteries
524
502
541
372
369
378
218
253
248
986
1,057
985
1,337
1,317
1,560
299
350
296
3,736
3,848
4,008
transaction is fixed, the total value to be received in the transaction will be based on the Company's
share price as of the closing date, which is expected to occur in the beginning of calendar 2016 .
Accordingly, any further increase or decrease in the Company's share price before the closing date
will ultimately be reflected in earnings from discontinued operations as a gain or loss.
The Batteries business had historically been part of the Company's Fabric Care and Home Care
reportable segment. In accordance with applicable accounting guidance for the disposal of longlived assets, the results of the Batteries business are presented as discontinued operations and, as
such, have been excluded from both continuing operations and segment results for all periods
presented. Additionally, the Batteries balance sheet positions as of June 30, 2015 are presented as
Assets and Liabilities held for sale in the Consolidated Balance Sheets.
On July 31, 2014, the Company completed the divestiture of its Pet Care operations in North
America, Latin America, and other selected countries to Mars, Incorporated (Mars) for $2.9
billion in an all-cash transaction. Under the terms of the agreement, Mars acquired our branded pet
care products, our manufacturing sites in the United States and the majority of the employees
working in the Pet Care business. The agreement included an option for Mars to acquire the Pet
Care business in several additional countries, which were substantially completed as of June 30,
2015. The European Union countries were not included in the agreement with Mars. In December
2014, the Company completed the divestiture of its Pet Care operations in Western Europe to
Spectrum Brands in an all-cash transaction. Under the terms of the agreement, Spectrum Brands
acquired our branded pet care products, our manufacturing site in the Netherlands, and the
majority of the
employees working in the Western Europe Pet Care business. The one-time after-tax impact of
these transactions is not material.
The Pet Care business had historically been part of the Companys Health Care reportable
segment. In accordance with applicable accounting guidance for the disposal of long-lived assets,
the results of the Pet Care business are presented as discontinued operations and, as such, have
been excluded from both continuing operations and segment results for all periods presented.
Additionally, the Pet Care balance sheet positions as of June 30, 2014 are presented as assets and
liabilities held for sale in the Consolidated Balance Sheets.
Following is selected financial information included in net earnings from discontinued operations for the Batteries and Pet Care businesses:
Batteries
Pet Care
Total
2015
2014
2013
2015
2014
2013
2015
2014
2013
Net Sales
2,226
2,552
2,465
251
1,475
1,586
2,477
4,027
4,051
Earnings Before
Impairment Charges and
Income Taxes
479
548
513
130
151
479
678
664
Impairment Charges
(2,174)
(2,174)
Income Tax Expense
The major components of assets and liabilities of the Pet Care and Batteries businesses held for sale were as follows:
(140)
(159)
(165)
(4)
(52)
(50)
(144)
(211)
(215)
Gain on Sale Before

Income Taxes
195
195
Income Tax Expense on

Sales
(142)
(142)
Batteries
Cash
Accounts receivable
Inventories
Prepaid expenses and other assets
Property, plant and equipment, net
Goodwill and intangible assets, net
Other noncurrent assets
Accounts payable
Accrued and other liabilities
Long-term debt
Noncurrent deferred tax liabilities
Total assets held for sale
Total liabilities held for sale
June 30, 2015
Net Earnings from

Discontinued Operations
(1,835)
389
348
49
78
101
(1,786)
467
449
Pet Care
25
245
304
28
496
2,389
23
3,510
195
194
18
780
1,187
June 30, 2014
122
14
441
2,258
14
2,849
63
13
584
660
NOTE 14
SUBSEQUENT EVENT
On July 9, 2015 , the Company announced the signing of a definitive agreement to divest four
product categories, comprised of 43 of its beauty brands (Beauty Brands), which will be merged
with Coty, Inc. (Coty). While the ultimate form of the transaction has not yet been decided, the
Companys current preference is for a Reverse Morris Trust split-off transaction in which P&G
shareholders could elect to participate in an exchange offer to exchange P&G shares for Coty
shares. The transaction includes the global salon professional hair care and color, retail hair color,
cosmetics and fine fragrance businesses, along with select hair styling brands. Combined, the
Beauty Brands had $5.5 billion in net sales for the year ended June 30, 2015 . The Company
expects to close the transaction in the second half of calendar year 2016 , pending regulatory
approvals.
transaction will be determined at closing, based on Cotys stock price and outstanding shares and
equity grants as of the date of signing, the value of the transaction was approximately $15.0
billion . The value is comprised of approximately 413 million shares, or 52% of the diluted equity
of the newly combined company, valued at approximately $13.1 billion and the assumption of debt
of $1.9 billion by the entity holding the beauty businesses immediately prior to close of the
transaction. The assumed debt is expected to vary between $3.9 billion and $1.9 billion ,
depending on a $22.06 to $27.06 per share collar of Cotys stock based on the trading price prior to
the close of the transaction, but will be subject to other contractual valuation adjustments.
Beginning in the quarter ending September 30, 2015 , the Beauty Brands will be reported as
discontinued operations in our Consolidated Financial Statements, with prior year periods restated
to reflect the same treatment.
Cotys offer for the Beauty Brands, which was accepted by the Company, was $12.5 billion .
While the final value of the
NOTE 15
QUARTERLY RESULTS (UNAUDITED)

Quarters Ended
NET SALES
OPERATING INCOME
(1)
GROSS MARGIN
NET EARNINGS:
Net earnings from continuing operations (1)
Net earnings/(loss) from discontinued operations
DILUTED NET EARNINGS PER COMMON SHARE: (2)
Net earnings
(1)
(2)
2014-2015
2013-2014
2014-2015
2013-2014
2014-2015
2013-2014
2014-2015
2013-2014
2014-2015
2013-2014
2014-2015
2013-2014
2014-2015
2013-2014
2014-2015
2013-2014
2014-2015
2013-2014
Sep 30
20,186
20,174
3,778
3,970
49.4%
49.4%
2,840
2,934
(820)
123
1,990
3,027
0.97
1.00
(0.28)
0.04
0.69
1.04
Dec 31
20,161
21,099
3,947
4,302
50.0%
50.4%
2,975
3,297
(577)
175
2,372
3,428
1.02
1.12
(0.20)
0.06
0.82
1.18
Mar 31
18,142
19,641
3,135
3,306
48.6%
48.9%
2,475
2,531
(287)
105
2,153
2,609
0.85
0.87
(0.10)
0.03
0.75
0.90
Jun 30
Total Year
17,790
19,596
930
3,162
48.0%
47.5%
640
2,556
(102)
64
521
2,579
8,930
11,318
(1,786)
467
7,036
11,643
0.22
0.87
(0.04)
0.02
0.18
0.89
3.06
3.86
(0.62)
0.15
2.44
4.01
The Company recorded a one-time Venezuela deconsolidation charge of $2.0 billion before tax ( $2.1 billion after tax) in the quarter-ended June 30, 2015. This impact is discussed more fully in Note 1.
Diluted net earnings per share is calculated on earnings attributable to Procter & Gamble.
76,279
80,510
11,790
14,740
49.0%
49.1%
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported
within the time periods specified in Securities and Exchange Commission rules and forms, and
(2) accumulated and communicated to our management, including Messrs. Lafley and Moeller, to
allow their timely decisions regarding required disclosure.
Not applicable.
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures.
The Company's President and Chief Executive Officer, A. G. Lafley, and the Company's Chief
Financial Officer, Jon R. Moeller, performed an evaluation of the Company's disclosure controls
and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of
1934 (Exchange Act)) as of the end of the period covered by this Annual Report on Form 10-K.
Messrs. Lafley and Moeller have concluded that the Company's disclosure controls and procedures
were effective to ensure that information required to be disclosed in reports
Changes in Internal Control over Financial Reporting.
There were no changes in our internal control over financial reporting that occurred during the
Company's fourth fiscal quarter that have materially affected, or are reasonably likely to materially
affect, the Company's internal control over financial reporting.
Item 9B. Other Information.
Not applicable.
PART III
Item 10. Directors, Executive Officers and Corporate Governance.
The Board of Directors has determined that the following members of the Audit Committee are
independent and are Audit Committee financial experts as defined by SEC rules: Ms. Patricia A.
Woertz (Chair) and Mr. Kenneth I. Chenault.
The information required by this item is incorporated by reference to the following sections of the
2015 Proxy Statement filed pursuant to Regulation 14A: the section entitled Election of Directors;
the section entitled Corporate Governance, up to but not including the subsection entitled Board
Engagement and Attendance; the subsections of the Corporate Governance section entitled Code
of Ethics and entitled Shareholder Recommendations of Board Nominees and Committee Process
for Recommending Board Nominees; and the section entitled Section 16(a) Beneficial Ownership
Reporting Compliance. Pursuant to Instruction 3 of Item 401(b) of Regulation S-K, Executive
Officers of the Registrant are reported in Part I of this report.
Item 11. Executive Compensation.
2015 Proxy Statement
filed pursuant to Regulation 14A: the subsections of the Corporate Governance section entitled
Committees of the Board and entitled Compensation Committee Interlocks and Insider
Participation; and the portion beginning with the section entitled Director Compensation up to but
not including the section entitled Security Ownership of Management and Certain Beneficial
Owners.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters.
The following table gives information about the Company's common stock that may be issued
upon the exercise of options, warrants and rights under all of the Company's equity compensation
plans as of June 30, 2015 . The table includes the following plans: The Procter & Gamble 1992
Stock Plan; The Procter & Gamble 1993 Non-Employee Directors' Stock Plan; The Procter &
Gamble Future Shares Plan; The Procter & Gamble 2001 Stock and Incentive Compensation Plan;
The Procter & Gamble 2003 Non-Employee Directors' Stock Plan; The Gillette Company 2004
Long-Term Incentive Plan; The Procter & Gamble 2009 Stock and Incentive Compensation Plan;
The Procter & Gamble 2013 Non-Employee Directors' Stock Plan; and The Procter & Gamble
2014 Stock and Incentive Compensation Plan.
(a)
Number of securities to be issued upon
exercise of outstanding options,
warrants and rights
Plan Category
Equity compensation plans approved by security holders (1)

Options
Restricted Stock Units (RSUs)/Performance Stock Units (PSUs)
Equity compensation plans not approved by security holders
Options
(3)
GRAND TOTAL
(1)
(2)
(3)
(4)
(5)
(c)
Number of securities
remaining available for
future issuance under
equity compensation plans
(excluding securities
reflected in column (a))
(b)
Weighted-average exercise
price of outstanding
options, warrants and
rights
254,163,681
11,087,436
$63.8297
N/A
6,128,201
59.8356
271,379,318
$63.7357
(2)
(2)
(4)
(5)
156,065,007
Includes The Procter & Gamble 1992 Stock Plan; The Procter & Gamble 1993 Non-Employee Directors' Stock Plan; The Procter & Gamble 2001 Stock and Incentive Compensation Plan; The Procter & Gamble 2003 NonEmployee Directors' Stock Plan; The Procter & Gamble 2009 Stock and Incentive Compensation Plan; The Procter & Gamble 2013 Non-Employee Directors' Stock Plan; and The Procter & Gamble 2014 Stock and Incentive
Compensation Plan.
Of the plans listed in (1), only The Procter & Gamble 2014 Stock and Incentive Compensation Plan allow for future grants of securities. The maximum number of shares that may be granted under this plan is 185 million
shares. Stock options and stock appreciation rights are counted on a one for one basis while full value awards (such as RSUs and PSUs) will be counted as 5 shares for each share awarded. Total shares available for future
issuance under this plan is 156 million.
Includes The Procter & Gamble Future Shares Plan and The Gillette Company 2004 Long-Term Incentive Plan.
None of the plans listed in (3) allow for future grants of securities.
Weighted average exercise price of outstanding options only.
The Procter & Gamble Future Shares Plan
On October 14, 1997, the Company's Board of Directors approved The Procter & Gamble Future
Shares Plan pursuant to which options to purchase shares of the Company's common stock may be
granted to employees worldwide. The purpose of this plan is to advance the interests of the
Company by giving substantially all employees a stake in the Company's future growth and
success and to strengthen the alignment of interests between employees and the Company's
shareholders through increased ownership of shares of the Company's stock. The plan has not been
submitted to shareholders for approval.
Subject to adjustment for changes in the Company's capitalization, the number of shares to be
granted under the plan is not to exceed 17 million shares. Under the plan's regulations, recipients
are granted options to acquire 100 shares of the Company's common stock at an exercise price
equal to the average price of the Company's common stock on the date of the grant. These options
vest five years after the date of grant and expire ten years following the date of grant. If a recipient
leaves the employ of the Company prior to the vesting date for a reason other than disability,
retirement or special separation (as defined in the plan), then the award is forfeited.
At the time of the first grant following Board approval of the plan, each employee of the Company
not eligible for an award under the 1992 Stock Plan was granted options for 100 shares. From the
date of this first grant through June 30, 2003, each new employee of the Company has also
received options for 100 shares. Following the grant of options on June 30, 2003,
the Company suspended this part of the plan. The plan terminated on October 13, 2007.
The Gillette Company 2004 Long-Term Incentive Plan
Shareholders of The Gillette Company approved The Gillette Company 2004 Long-Term Incentive
Plan on May 20, 2004, and the plan was assumed by the Company upon the merger between The
Procter & Gamble Company and The Gillette Company. All options became immediately vested
and exercisable on October 1, 2005 as a result of the merger. After the merger, all outstanding
options became options to purchase shares of The Procter & Gamble Company subject to an
exchange ratio of .975 shares of P&G stock per share of Gillette stock. Only employees previously
employed by The Gillette Company prior to October 1, 2005 are eligible to receive grants under
this plan.
The plan was designed to attract, retain and motivate employees of The Gillette Company and,
until the effective date of the merger between The Gillette Company and The Procter & Gamble
Company, non-employee members of the Gillette Board of Directors. Under the plan, eligible
participants are: (i) granted or offered the right to purchase stock options, (ii) granted stock
appreciation rights and/or (iii) granted shares of the Company's common stock or restricted stock
units (and dividend equivalents). Subject to adjustment for changes in the Company's
capitalization and the addition of any shares authorized but not issued or redeemed under The
Gillette Company 1971 Stock Option Plan, the number of shares to be granted under the plan is not
to exceed 19,000,000 shares.
Except in the case of death of the recipient, all stock options and stock appreciation rights must
expire no later than ten years from the date of grant. The exercise price for all stock options
granted under the plan must be equal to or greater than the fair market value of the Company's
stock on the date of grant. Any common stock awarded under the plan may be subject to
restrictions on sale or transfer while the recipient is employed, as the committee administering the
plan may determine.
If a recipient of a grant leaves the Company while holding an unexercised option or right: (1) any
unexercisable portions immediately become void, except in the case of death, retirement, special
separation (as those terms are defined in the plan) or any grants as to which the Compensation
Committee of the Board of Directors has waived the termination provisions; and (2) any
exercisable portions immediately become void, except in the case of death, retirement, special
separation, voluntary resignation that is not for Good Reason (as those terms are defined in the
plan) or any grants as to which the Compensation Committee of the Board of Directors has waived
the termination provisions.
Regulation 14A, beginning with the section entitled Security Ownership of Management and
Certain Beneficial Owners and up to but not including the section entitled Section 16(a) Beneficial
Ownership Reporting Compliance.
Item 13. Certain Relationships and Related Transactions and Director Independence.
2015 Proxy Statement filed pursuant to Regulation 14A: the sections entitled Director
Independence and Review and Approval of Transactions with Related Persons.
Item 14. Principal Accountant Fees and Services.
The information required by this item is incorporated by reference to the 2015 Proxy Statement
filed pursuant to Regulation 14A, beginning with the section entitled Report of the Audit
Committee and ending with the section entitled Services Provided by Deloitte.
Additional information required by this item is incorporated by reference to the 2015 Proxy
Statement filed pursuant to
Item 15. Exhibits and Financial Statement Schedules.
PART IV
1.
Financial Statements:
Management's Report on Internal Control over Financial Reporting

Report of Independent Registered Public Accounting Firm on Internal Control over Financial
Reporting
Report of Independent Registered Public Accounting Firm on Consolidated Financial
Statements
Consolidated Statements of Earnings - for years ended June 30, 2015 , 2014 and 2013
The following Consolidated Financial Statements of The Procter & Gamble Company and
subsidiaries, management's report and the reports of the independent registered public accounting
firm are incorporated by reference in Part II, Item 8 of this Form 10-K.
2.
Consolidated Statements of Other Comprehensive Income - for years ended June 30, 2015 ,
2014 and 2013
Consolidated Balance Sheets - as of June 30, 2015 and 2014
Consolidated Statements of Shareholders' Equity - for years ended June 30, 2015 , 2014 and
2013
Consolidated Statements of Cash Flows - for years ended June 30, 2015 , 2014 and 2013
Notes to Consolidated Financial Statements
Financial Statement Schedules:
These schedules are omitted because of the absence of the conditions under which they are
required or because the information is set forth in the Consolidated Financial Statements or Notes
thereto.
EXHIBITS
Exhibit
(2-1) -
Transaction Agreement dated as of July 8, 2015 among The Procter & Gamble Company, Coty Inc., Galleria Co. and Green Acquisition Sub Inc. + **
Exhibit
(3-1) -
Amended Articles of Incorporation (as amended by shareholders at the annual meeting on October 11, 2011) (Incorporated by reference to Exhibit (3-1) of the Company's Form 10-Q for the
quarter ended September 30, 2011).
(3-2) -
Regulations (as approved by the Board of Directors on October 14, 2014, pursuant to authority granted by shareholders at the annual meeting on October 13, 2009) (Incorporated by reference
to Exhibit (3-2) of the Company's Form 10-Q for the quarter ended September 30, 2014).
(4-1) -
Indenture, dated as of September 3, 2009, between the Company and Deutsche Bank Trust Company Americas, as Trustee. +
(4-2) -
Indenture, dated as of September 3, 2009, among Procter & Gamble International Funding SCA,
the Company and Deutsche Bank Trust Company Americas, as Trustee. +
Exhibit
Exhibit (10-1) -
The Procter & Gamble 2001 Stock and Incentive Compensation Plan (as amended on August 17, 2007), which was originally adopted by shareholders at the annual meeting on October 9,
2001 (Incorporated by reference to Exhibit (10-1) of the Company's Form 10-Q for the quarter ended March 31, 2013), and related correspondence and terms and conditions (Incorporated by
reference to Exhibit (10-1) of the Company's Form 10-Q for the quarter ended December 31, 2013).*
(10-2) -
The Procter & Gamble 1992 Stock Plan (as amended December 11, 2001), which was originally adopted by the shareholders at the annual meeting on October 12, 1992 (Incorporated by
reference to Exhibit (10-2) of the Company's Annual Report on Form 10-K for the year ended June 30, 2013).*
(10-3) -
The Procter & Gamble Executive Group Life Insurance Policy (Incorporated by reference to Exhibit (10-3) of the Company's Annual Report on Form 10-K for the year ended June 30, 2013).*
(10-4) -
The Procter & Gamble Deferred Compensation Plan for Directors (as amended December 12, 2006), which was originally adopted by the Board of Directors on September 9, 1980
(Incorporated by reference to Exhibit (10-4) of the Company's Annual Report on Form 10-K for the year ended June 30, 2012).*
(10-5) -
The Procter & Gamble 1993 Non-Employee Directors' Stock Plan (as amended September 10, 2002), which was originally adopted by the shareholders at the annual meeting on October 11,
1994 (Incorporated by reference to Exhibit (10-5) of the Company's Annual Report on Form 10-K for the year ended June 30, 2013).*
(10-6) -
The Procter & Gamble 1992 Stock Plan (Belgian Version) (as amended December 11, 2001), which was originally adopted by the Board of Directors on February 14, 1997 (Incorporated by
(10-7) -
The Procter & Gamble Future Shares Plan (as adjusted for the stock split effective May 21, 2004), which was originally adopted by the Board of Directors on October 14, 1997.* +
(10-8) -
The Procter & Gamble 2003 Non-Employee Directors' Stock Plan (as amended in August 2007), which was originally adopted by the shareholders at the annual meeting on October 14, 2003,
and related correspondence and terms and conditions (Incorporated by reference to Exhibit (10-1) of the Company's Form 10-Q for the quarter ended September 30, 2012).*
(10-9) -
The Procter & Gamble Company Executive Deferred Compensation Plan (Incorporated by reference to Exhibit (10-4) of the Company's Form 10-Q for the quarter ended December 31,
2013).*
(10-10) -
Summary of the Company's Short Term Achievement Reward Program (Incorporated by reference to Exhibit (10-3) of the Company's Form 10-Q for the quarter ended September 30, 2014)
and related correspondence and terms and conditions (Incorporated by reference to Exhibit (10-4) of the Company's Form 10-Q for the quarter ended December 31, 2012).*
(10-11) -
Company's Forms of Separation Agreement & Release (Incorporated by reference to Exhibit (10-1) of the Company's Form 10-Q for the quarter ended March 31, 2015).*
(10-12) -
Summary of personal benefits available to certain officers and non-employee directors (Incorporated by reference to Exhibit (10-1) of the Company's Form 10-Q for the quarter ended
September 30, 2013).*
(10-13) -
The Gillette Company 2004 Long-Term Incentive Plan (as amended on August 14, 2007) (Incorporated by reference to Exhibit (10-4) of the Company's Form 10-Q for the quarter ended
(10-14) -
The Gillette Company Executive Life Insurance Program (Incorporated by reference to Exhibit (10-15) of the Company's Annual Report on Form 10-K for the year ended June 30, 2012).*
(10-15) -
The Gillette Company Personal Financial Planning Reimbursement Program (Incorporated by reference to Exhibit (10-16) of the Company's Annual Report on Form 10-K for the year ended
June 30, 2012) .*
(10-16) -
The Gillette Company Senior Executive Financial Planning Program (Incorporated by reference to Exhibit (10-17) of the Company's Annual Report on Form 10-K for the year ended June 30,
2012).*
(10-17) -
The Gillette Company Estate Preservation (Incorporated by reference to Exhibit (10-18) of the Company's Annual Report on Form 10-K for the year ended June 30, 2012).*
(10-18) -
The Gillette Company Deferred Compensation Plan (Incorporated by reference to Exhibit (10-19) of the Company's Annual Report on Form 10-K for the year ended June 30, 2012).*
(10-19) -
Senior Executive Recoupment Policy (Incorporated by reference to Exhibit (10-20) of the Company's Annual Report on Form 10-K for the year ended June 30, 2012).*
(10-20) -
The Gillette Company Deferred Compensation Plan (for salary deferrals prior to January 1, 2005) as amended through August 21, 2006 (Incorporated by reference to Exhibit (10-21) of the
Company's Annual Report on Form 10-K for the year ended June 30, 2012).*
(10-21) -
The Procter & Gamble 2009 Stock and Incentive Compensation Plan, which was originally adopted by shareholders at the annual meeting on October 13, 2009 (Incorporated by reference to Exhibit
(10-3) of the Company's Form 10-Q for the quarter ended December 31, 2011), and the Regulations of the Compensation and Leadership Development Committee for The Procter & Gamble 2009 Stock
and Incentive Compensation Plan, The Procter & Gamble 2001 Stock and Incentive Compensation Plan, The Procter & Gamble 1992 Stock Plan, The Procter & Gamble 1992 Stock Plan (Belgium
Version), The Gillette Company 2004 Long-Term Incentive Plan and the Gillette Company 1971 Stock Option Plan (Incorporated by reference to Exhibit (10-1) of the Company's Form 10-Q for the
quarter ended December 31, 2012).*
(10-22) -
The Procter & Gamble 2009 Stock and Incentive Compensation Plan - Additional terms and conditions and related correspondence (Incorporated by reference to Exhibit (10-2) of the
Company Form 10-Q for the quarter ended December 31, 2013).*
(10-23) -
The Procter & Gamble Performance Stock Program Summary (Incorporated by reference to Exhibit (10-4) of the Company's Form 10-Q for the quarter ended September 30, 2014) and related
terms and conditions (Incorporated by reference to Exhibit (10-24) of the Company's Annual Report on Form 10-K for the year ended June 30, 2012). *
(10-24) -
The Procter & Gamble 2013 Non-Employee Directors' Stock Plan (Incorporated by reference to Exhibit 10-3 of the Company's Form 10-Q for the quarter ended December 31, 2013). *
(10-25) -
The Procter & Gamble 2014 Stock and Incentive Compensation Plan, which was originally adopted by shareholders at the annual meeting on October 14, 2014 (Incorporated by reference to Exhibit
(10-1) of the Company's Form 10-Q for the quarter ended September 30, 2014), and the Regulations of the Compensation and Leadership Development Committee for The Procter & Gamble 2014 Stock
and Incentive Compensation Plan (Incorporated by reference to Exhibit (10-2) of the Company's Form 10-Q for the quarter ended March 31, 2015).*
(10-26) -
The Procter & Gamble 2014 Stock and Incentive Compensation Plan - Additional terms and conditions (Incorporated by reference to Exhibit (10-2) of the Company's Form 10-Q for the
quarter ended December 31, 2014), and The Procter & Gamble 2014 Stock and Incentive Compensation Plan - Related correspondence (Incorporated by reference to Exhibit (10-3) of the
Company's Form 10-Q for the quarter ended December 31, 2014).*
Exhibit
(12) -
Exhibit
(21) -
Subsidiaries of the Registrant. +
Exhibit
(23) -
Consent of Independent Registered Public Accounting Firm. +
Exhibit
(31) -
Rule 13a-14(a)/15d-14(a) Certifications. +
Exhibit
(32) -
Section 1350 Certifications. +
Exhibit (99-1) 101.INS (1)
Computation of Ratio of Earnings to Fixed Charges. +
Summary of Directors and Officers Insurance Program. +

XBRL Instance Document
101.SCH (1)
101.CAL (1)
101.DEF (1)
101.LAB (1)
101.PRE (1)
XBRL Taxonomy Extension Schema Document

XBRL Taxonomy Extension Calculation Linkbase Document
XBRL Taxonomy Definition Linkbase Document
XBRL Taxonomy Extension Label Linkbase Document
XBRL Taxonomy Extension Presentation Linkbase Document
(1)
*
**
Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or
Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability.
Compensatory plan or arrangement
Filed herewith.
Schedules and similar attachments have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish supplementary to the Securities and Exchange Commission a copy of
any omitted schedule or similar attachment upon request.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized
in the city of Cincinnati, State of Ohio.
By
/s/ A.G. LAFLEY

(A.G. Lafley)
August 7, 2015
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons in the capacities and on the dates indicated.
Signature
Title
Date
/ S / A.G. LAFLEY
(A.G. Lafley)

(Principal Executive Officer)
August 7, 2015
/ S / JON R. MOELLER
(Jon R. Moeller)

(Principal Financial Officer)
August 7, 2015
Senior Vice President, Comptroller & Treasurer (Principal

Accounting Officer)
August 7, 2015
Director
August 7, 2015
Director
August 7, 2015
/ S / KENNETH I. CHENAULT
(Kenneth I. Chenault)
Director
August 7, 2015
/ S / SCOTT D. COOK
(Scott D. Cook)
Director
August 7, 2015
/ S / SUSAN DESMOND-HELLMANN
(Susan Desmond-Hellmann)
Director
August 7, 2015
/ S / TERRY J. LUNDGREN
(Terry J. Lundgren)
Director
August 7, 2015
/ S / W. JAMES MCNERNEY, JR.

(W. James McNerney, Jr.)
Director
August 7, 2015
/S/ DAVID S. TAYLOR

(David S. Taylor)
Director
August 7, 2015
/ S / MARGARET C. WHITMAN
(Margaret C. Whitman)
Director
August 7, 2015
/ S / MARY AGNES WILDEROTTER

(Mary Agnes Wilderotter)
Director
August 7, 2015
/ S / PATRICIA A. WOERTZ
(Patricia A. Woertz)
Director
August 7, 2015
/ S / ERNESTO ZEDILLO
(Ernesto Zedillo)
Director
August 7, 2015
/ S / VALARIE L. SHEPPARD
(Valarie L. Sheppard)
/s/ FRANCIS S. BLAKE
(Francis S. Blake)
/ S / ANGELA F. BRALY
(Angela F. Braly)
EXHIBIT INDEX
Exhibit
(2-1) -
Transaction Agreement dated as of July 8, 2015 among The Procter & Gamble Company, Coty Inc., Galleria Co. and Green Acquisition Sub Inc.
Exhibit
(3-1) -
Amended Articles of Incorporation (as amended by shareholders at the annual meeting on October 11, 2011) (Incorporated by reference to Exhibit (3-1) of the Company's Form 10-Q for the
quarter ended September 30, 2011).
(3-2) -
Regulations (as approved by the Board of Directors on October 14, 2014, pursuant to authority granted by shareholders at the annual meeting on October 13, 2009) (Incorporated by reference
to Exhibit (3-2) of the Company's Form 10-Q for the quarter ended September 30, 2014).
(4-1) -
Indenture, dated as of September 3, 2009, between the Company and Deutsche Bank Trust Company Americas, as Trustee.
(4-2) -
Indenture, dated as of September 3, 2009, among Procter & Gamble International Funding SCA,
the Company and Deutsche Bank Trust Company Americas, as Trustee.
Exhibit
Exhibit
(10-1) -
The Procter & Gamble 2001 Stock and Incentive Compensation Plan (as amended on August 17, 2007), which was originally adopted by shareholders at the annual meeting on October 9,
2001 (Incorporated by reference to Exhibit (10-1) of the Company's Form 10-Q for the quarter ended March 31, 2013), and related correspondence and terms and conditions (Incorporated by
reference to Exhibit (10-1) of the Company's Form 10-Q for the quarter ended December 31, 2013).*
(10-2) -
The Procter & Gamble 1992 Stock Plan (as amended December 11, 2001), which was originally adopted by the shareholders at the annual meeting on October 12, 1992 (Incorporated by
reference to Exhibit (10-2) of the Companys Annual Report on Form 10-K for the year ended June 30, 2013).*
(10-3) -
The Procter & Gamble Executive Group Life Insurance Policy (Incorporated by reference to Exhibit (10-3) of the Company's Annual Report on Form 10-K for the year ended June 30, 2013).*
(10-4) -
The Procter & Gamble Deferred Compensation Plan for Directors (as amended December 12, 2006), which was originally adopted by the Board of Directors on September 9, 1980
(Incorporated by reference to Exhibit (10-4) of the Company's Annual Report on Form 10-K for the year ended June 30, 2012).*
(10-5) -
The Procter & Gamble 1993 Non-Employee Directors' Stock Plan (as amended September 10, 2002), which was originally adopted by the shareholders at the annual meeting on October 11,
1994 (Incorporated by reference to Exhibit (10-5) of the Company's Annual Report on Form 10-K for the year ended June 30, 2013).*
(10-6) -
The Procter & Gamble 1992 Stock Plan (Belgian Version) (as amended December 11, 2001), which was originally adopted by the Board of Directors on February 14, 1997 (Incorporated by
(10-7) -
The Procter & Gamble Future Shares Plan (as adjusted for the stock split effective May 21, 2004), which was originally adopted by the Board of Directors on October 14, 1997.*
(10-8) -
The Procter & Gamble 2003 Non-Employee Directors' Stock Plan (as amended in August 2007), which was originally adopted by the shareholders at the annual meeting on October 14, 2003,
and related correspondence and terms and conditions (Incorporated by reference to Exhibit (10-1) of the Company's Form 10-Q for the quarter ended September 30, 2012).*
(10-9) -
The Procter & Gamble Company Executive Deferred Compensation Plan (Incorporated by reference to Exhibit (10-4) of the Company's Form 10-Q for the quarter ended December 31,
2013).*
(10-10) -
Summary of the Company's Short Term Achievement Reward Program (Incorporated by reference to Exhibit (10-3) of the Company's Form 10-Q for the quarter ended September 30, 2014)
and related correspondence and terms and conditions (Incorporated by reference to Exhibit (10-4) of the Company's Form 10-Q for the quarter ended December 31, 2012).*
(10-11) -
Company's Forms of Separation Agreement & Release (Incorporated by reference to Exhibit (10-1) of the Company's Form 10-Q for the quarter ended March 31, 2015).*
(10-12) -
Summary of personal benefits available to certain officers and non-employee directors (Incorporated by reference to Exhibit (10-1) of the Company's Form 10-Q for the quarter ended
(10-13) -
The Gillette Company 2004 Long-Term Incentive Plan (as amended on August 14, 2007) (Incorporated by reference to Exhibit (10-4) of the Company's Form 10-Q for the quarter ended
(10-14) -
The Gillette Company Executive Life Insurance Program (Incorporated by reference to Exhibit (10-15) of the Company's Annual Report on Form 10-K for the year ended June 30, 2012).*
(10-15) -
The Gillette Company Personal Financial Planning Reimbursement Program (Incorporated by reference to Exhibit (10-16) of the Company's Annual Report on Form 10-K for the year ended
June 30, 2012) .*
(10-16) -
The Gillette Company Senior Executive Financial Planning Program (Incorporated by reference to Exhibit (10-17) of the Company's Annual Report on Form 10-K for the year ended June 30,
2012).*
(10-17) -
The Gillette Company Estate Preservation (Incorporated by reference to Exhibit (10-18) of the Company's Annual Report on Form 10-K for the year ended June 30, 2012).*
(10-18) -
The Gillette Company Deferred Compensation Plan (Incorporated by reference to Exhibit (10-19) of the Company's Annual Report on Form 10-K for the year ended June 30, 2012).*
(10-19) -
Senior Executive Recoupment Policy (Incorporated by reference to Exhibit (10-20) of the Company's Annual Report on Form 10-K for the year ended June 30, 2012).*
(10-20) -
The Gillette Company Deferred Compensation Plan (for salary deferrals prior to January 1, 2005) as amended through August 21, 2006 (Incorporated by reference to Exhibit (10-21) of the
Company's Annual Report on Form 10-K for the year ended June 30, 2012).*
(10-21) -
The Procter & Gamble 2009 Stock and Incentive Compensation Plan, which was originally adopted by shareholders at the annual meeting on October 13, 2009 (Incorporated by reference to
Exhibit (10-3) of the Company's Form 10-Q for the quarter ended December 31, 2011), and the Regulations of the Compensation and Leadership Development Committee for The Procter &
Gamble 2009 Stock and Incentive Compensation Plan, The Procter & Gamble 2001 Stock and Incentive Compensation Plan, The Procter & Gamble 1992 Stock Plan, The Procter & Gamble
1992 Stock Plan (Belgium Version), The Gillette Company 2004 Long-Term Incentive Plan and the Gillette Company 1971 Stock Option Plan (Incorporated by reference to Exhibit (10-1) of
the Company's Form 10-Q for the quarter ended December 31, 2012).*
(10-22) -
The Procter & Gamble 2009 Stock and Incentive Compensation Plan - Additional terms and conditions and related correspondence (Incorporated by reference to Exhibit (10-2) of the
Company Form 10-Q for the quarter ended December 31, 2013).*
(10-23) -
The Procter & Gamble Performance Stock Program Summary (Incorporated by reference to Exhibit (10-4) of the Company's Form 10-Q for the quarter ended September 30, 2014) and related
terms and conditions (Incorporated by reference to Exhibit (10-24) of the Company's Annual Report on Form 10-K for the year ended June 30, 2012). *
(10-24) -
The Procter & Gamble 2013 Non-Employee Directors' Stock Plan (Incorporated by reference to Exhibit 10-3 of the Company's Form 10-Q for the quarter ended December 31, 2013). *
(10-25) -
The Procter & Gamble 2014 Stock and Incentive Compensation Plan, which was originally adopted by shareholders at the annual meeting on October 14, 2014 (Incorporated by reference to
Exhibit (10-1) of the Company's Form 10-Q for the quarter ended September 30, 2014), and the Regulations of the Compensation and Leadership Development Committee for The Procter &
Gamble 2014 Stock and Incentive Compensation Plan (Incorporated by reference to Exhibit (10-2) of the Company's Form 10-Q for the quarter ended March 31, 2015).*
(10-26) -
The Procter & Gamble 2014 Stock and Incentive Compensation Plan - Additional terms and conditions (Incorporated by reference to Exhibit (10-2) of the Company's Form 10-Q for the
quarter ended December 31, 2014), and The Procter & Gamble 2014 Stock and Incentive Compensation Plan - Related correspondence (Incorporated by reference to Exhibit (10-3) of the
Company's Form 10-Q for the quarter ended December 31, 2014).*
Exhibit
(12) -
Exhibit
(21) -
Subsidiaries of the Registrant.
Exhibit
(23) -
Consent of Independent Registered Public Accounting Firm.
Exhibit
(31) -
Rule 13a-14(a)/15d-14(a) Certifications.
Exhibit
(32) -
Section 1350 Certifications.
Exhibit (99-1) -
Computation of Ratio of Earnings to Fixed Charges.
Summary of Directors and Officers Insurance Program.
101.INS (1)
XBRL Instance Document
101.SCH (1)
XBRL Taxonomy Extension Schema Document
101.CAL (1)
XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF (1)
XBRL Taxonomy Definition Linkbase Document
101.LAB (1)
XBRL Taxonomy Extension Label Linkbase Document
101.PRE (1)
(1)
*
XBRL Taxonomy Extension Presentation Linkbase Document
Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities
Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability.
Compensatory plan or arrangement
EXHIBIT (2-1)
TRANSACTION AGREEMENT
between
THE PROCTER & GAMBLE COMPANY,

GALLERIA CO.,
COTY INC.
and
GREEN ACQUISITION SUB INC.
dated as of
July 8, 2015
TABLE OF CONTENTS
I.
GALLERIA TRANSFER AND RESTRUCTURING; RECAPITALIZATION OF

SPLITCO ................................................................................................................. 3
1.01
1.02
1.03
1.04
1.08
1.09
1.10
1.11
1.12
1.13
1.14
Transfer and Restructuring ........................................................................... 3

Transfer of Assets ......................................................................................... 3
Assumption of Liabilities ............................................................................. 4
Transfer of Excluded Assets; Excluded Liabilities ...................................... 4
1.05 Galleria Assets ................................................................................. 4
Galleria Liabilities ....................................................................................... 8
Termination of Intercompany Agreements; Settlement of Intercompany
Accounts ......................................................................................................10
Transfers In Violation of Law or Required Consents .................................. 10
Retained Elements of Mercury Business ..................................................... 12
Evidence of Transfer of Galleria Assets and Galleria Liabilities ................. 12
Transfer of Excluded Assets and Assumption of Excluded Liabilities ........ 12
Galleria Transfer - Deliveries ....................................................................... 13
Recapitalization of SplitCo .......................................................................... 14
Waiver of Bulk-Sales Laws ......................................................................... 15
2.01
2.02
2.03
2.04
2.05
2.06
2.07
2.08
2.09
2.10
2.11
2.12
2.13
2.14
2.15
Form and Manner of Distribution ................................................................

The Distribution ...........................................................................................
Plan of Reorganization .................................................................................
The Merger ...................................................................................................
Amendment of Acquirors Certificate .........................................................
Closing of the Merger ..................................................................................
Conversion of Capital Stock in the Merger .................................................
Exchange of Certificates ..............................................................................
Exchange Procedures ...................................................................................
No Further Ownership Rights in SplitCo Common Stock ..........................
No Fractional Shares ....................................................................................
Distributions With Respect To Unexchanged Shares ..................................
Withholding Rights ......................................................................................
No Liability ..................................................................................................
Closing Date Adjustment - Cut-Off Date Working Capital .........................
15
16
17
17
18
18
18
19
19
20
20
20
21
21
21
3.01
3.02
3.03
3.04
3.05
3.06
3.07
Due Organization, Good Standing and Corporate Power ............................

Authorization of Agreement ........................................................................
Consents and Approvals; No Violations ......................................................
Capital Structure; SplitCo ............................................................................
Intellectual Property .....................................................................................
Litigation ......................................................................................................
Compliance With Laws ................................................................................
23
23
23
24
25
26
26
1.06
1.07
II.
III.
THE DISTRIBUTION AND MERGER ..................................................................
REPRESENTATIONS AND WARRANTIES OF PARENT ...................................
15
22
IV.
3.08
3.09
3.10
3.11
3.12
3.13
3.14
3.15
3.16
3.17
3.18
3.19
3.20
Contracts ...................................................................................................... 26
Employees and Employee Benefits ............................................................. 28
Financial Statements; Absence of Changes; Undisclosed Liabilities .......... 31
Taxes ............................................................................................................ 33
Brokers or Finders Fee .............................................................................. 33
Title to Properties; Security Interests ........................................................... 33
Sufficiency; Condition of Assets ................................................................. 33
Information To Be Supplied ......................................................................... 34
Real Property ............................................................................................... 35
Environmental Matters ................................................................................. 36
Mercury Business Perfume Oils .................................................................. 36
Ancillary Fragrances .................................................................................... 37
No Other Representations or Warranties; Disclaimer; Acknowledgement by Acquiror .......................................................................................................
4.01
4.02
4.03
4.04
4.05
4.06
4.07
4.08
4.09
4.10
4.11
Due Organization, Good Standing and Corporate Power ............................ 38

Authorization of Agreement ........................................................................ 39
Consents and Approvals; No Violations ...................................................... 39
Brokers or Finders Fee .............................................................................. 39
Capitalization ............................................................................................... 40
Intellectual Property ..................................................................................... 41
Litigation ...................................................................................................... 42
Compliance With Laws ................................................................................ 42
Contracts ...................................................................................................... 43
Employee Benefits ....................................................................................... 45
Acquiror SEC Filings; Financial Statements; Absence of Changes; Undisclosed
Liabilities ..................................................................................................... 46
Taxes ............................................................................................................ 47
Title to Properties; Security Interests ............................................................ 48
Information To Be Supplied ......................................................................... 48
Voting Requirements; Board Approval ........................................................ 48
Fairness Opinion .......................................................................................... 48
Real Property ............................................................................................... 49
Environmental Matters ................................................................................. 49
No Other Representations or Warranties; Acknowledgment by
Parent ...........................................................................................................50
REPRESENTATIONS AND WARRANTIES OF ACQUIROR .............................
4.12
4.13
4.14
4.15
4.16
4.17
4.18
4.19
V.
COVENANTS .........................................................................................................
5.01
5.02
5.03
5.04
5.05
38
50
Conduct of Galleria Business Pending the Closing ..................................... 50

Further Assurances; Efforts To Obtain Consents; Antitrust
Clearance ......................................................................................................55
Public Announcements ................................................................................. 58
Notification of Certain Matters .................................................................... 59
Financial Statements .................................................................................... 59
37
VI.
VII.
5.06
5.07
5.08
5.09
5.10
5.11
5.12
5.13
5.14
5.15
5.16
5.17
5.18
5.19
5.20
5.21
5.22
5.23
5.24
5.25
5.26
5.27
5.28
5.29
5.30
Conduct of Acquiror Pending The Closing ..................................................

Access ..........................................................................................................
Acquiror Stockholder Consent; Preparation of SEC Filings .......................
No Solicitation .............................................................................................
NYSE Listing ...............................................................................................
Required Amendments .................................................................................
Capital Transactions .....................................................................................
Agreement for Exchange of Information .....................................................
Privileged Matters ........................................................................................
Restriction on Hiring ....................................................................................
Intellectual Property Assignment/Recordation ............................................
Use of Parent Names and Marks ..................................................................
Removal of Tangible Assets .........................................................................
Works Council Cooperation .........................................................................
Insurance Matters .........................................................................................
Restructuring of Galleria Business; Transition Plan ....................................
Confidentiality .............................................................................................
Certain Material Contracts ...........................................................................
Mercury Business Perfume Oils ..................................................................
Ancillary Fragrances ....................................................................................
Continuing Employee Restrictions ..............................................................
Facilities Split Plan ......................................................................................
Wind-down of Max Factor Gold Business ..................................................
Diamond Technology ...................................................................................
Non-Compete Restrictions ...........................................................................
59
62
64
65
68
68
68
72
73
74
75
76
77
78
79
80
83
84
86
86
87
88
88
88
88
6.01
6.02
6.03
6.04
6.05
6.06
6.07
6.08
6.09
Identification of Employees .........................................................................

Continuity of Employment ..........................................................................
Establishing Galleria Group Plans ...............................................................
Terms of Employment ..................................................................................
Bonuses and Incentives ................................................................................
Credit for Service with Parent ......................................................................
Workers Compensation ...............................................................................
WARN Act ...................................................................................................
Miscellaneous ..............................................................................................
90
91
92
93
98
98
99
99
99
7.01
7.02
7.03
7.04
Joint Conditions ........................................................................................... 100

Conditions to the Obligation of Acquiror .................................................... 101
Conditions to the Obligation of Parent ........................................................ 102
Additional Conditions to Each Partys Obligation To Effect the
Merger ..........................................................................................................104
Frustration of Conditions ............................................................................. 104
EMPLOYEE MATTERS .........................................................................................
CONDITIONS .........................................................................................................
7.05
90
100
VIII.
IX.
X.
XI.
TERMINATION AND ABANDONMENT .............................................................
104
8.01
8.02
8.03
Basis for Termination ................................................................................... 104

Notice of Termination; Return of Documents; Continuing Confidentiality Obligation ....................................................................................................
Effect of Termination ................................................................................... 106
9.01
9.02
9.03
9.04
9.05
9.06
9.07
Release of Pre-Business Transfer Time Claims ...........................................

Indemnification by Acquiror and the Galleria Group ..................................
Indemnification by Parent ............................................................................
Calculation and Other Provisions Relating to Indemnity Payments ............
Procedures for Defense, Settlement and Indemnification of Claims ...........
Additional Matters .......................................................................................
Exclusive Remedy .......................................................................................
106
107
108
108
110
112
113
10.01
10.02
10.03
10.04
10.05
10.06
10.07
10.08
10.09
10.10
10.11
10.12
10.13
10.14
10.15
10.16
10.17
Non-Survival of Representations and Warranties ........................................

Expenses ......................................................................................................
Entire Agreement .........................................................................................
Governing Law; Jurisdiction; Waiver of Jury Trial .....................................
Notices .........................................................................................................
Amendments and Waivers ...........................................................................
No Third-Party Beneficiaries .......................................................................
Assignability ................................................................................................
Construction .................................................................................................
Severability ..................................................................................................
Counterparts .................................................................................................
Specific Performance ...................................................................................
Disclosure Letters ........................................................................................
Waiver ..........................................................................................................
Dispute Resolution .......................................................................................
Obligations of Affiliates ...............................................................................
No Recourse Against Debt Financing Sources ............................................
114
114
117
117
118
119
120
120
120
121
121
121
122
122
122
123
123
MUTUAL RELEASES; INDEMNIFICATION ......................................................
MISCELLANEOUS ................................................................................................
DEFINITIONS .........................................................................................................
106
114
123
105
EXHIBITS
Exhibit A
Exhibit B-1
Exhibit B-2
Exhibit C
Exhibit D
Exhibit E
Exhibit F
Exhibit G
Exhibit H
Exhibit I
Exhibit J
Exhibit K
Exhibit L
Exhibit M
Exhibit N-1
Exhibit N-2
Exhibit O-1
Exhibit O-2
Exhibit P
Exhibit Q
Acquiror Certificate
Parent Transaction Announcement
Acquiror Transaction Announcement
Stockholder Consent
Transition Services
Minimum Tender Condition Formula
Target Working Capital Statement
Cut-Off Date Adjustment Statement Format
Tax Matters Agreement
Transition Services Agreement
Form of Acquiror Letter of Representation
Form of Parent Letter of Representation
Galleria Commitment Letter
Acquiror Commitment Letter
Parent Shared Technology License Agreement
SplitCo Shared Technology License Agreement
Parent Trademark License Agreement
SplitCo Trademark License Agreement
Form of Coexistence Agreement
Sample Calculation of Fully Diluted Basis
SCHEDULES
PARENT DISCLOSURES
Schedule 1.05(a)(i)
Schedule 1.05(a)(iii)
Schedule 1.05(a)(iv)
Schedule 1.05(a)(vii)
Schedule 1.05(a)(x)
Schedule 1.05(a)(xiii)
Schedule 1.05(a)(xix)
Schedule 1.05(b)(i)
Schedule 1.05(b)(ii)
Schedule 1.06(a)(xi)
Schedule 1.06(b)(i)
Schedule 1.09
Section 1.10
Section 3.03
Section 3.05
Section 3.06
Section 3.07
Galleria Business Equipment

Galleria Facilities
Galleria Entities
Galleria IP Assets
Galleria Software
Galleria Business Acquired Plan Assets
Galleria Bank Accounts
Excluded Assets
Excluded IP Assets
Assumed Liabilities
Excluded Liabilities
Retained Elements of the Mercury Business
Parent Transfer Documents
Consents and Approvals
Intellectual Property
Litigation
Compliance With Laws
Section 3.08(a)
Section 3.08(b)
Section 3.08(c)
Section 3.08(d)
Section 3.09
Section 3.10
Section 3.11
Section 3.14
Section 3.16
Section 3.17
Section 3.18(a)
Section 3.18(b)
Section 3.19(a)(i)
Section 3.19(a)(ii)
Section 3.19(b)(i)
Section 3.19(b)(ii)
Section 5.01
Section 5.13(c)
Section 5.21(f)
Section 5.30(a)(iii)
Section 5.30(b)(iii)
Section 6.01
Section 6.04(b)(i)
Section 6.04(c)
Section 6.04(g)
Section 6.04(h)
Section 7.01(c)
Section 10.02
Section 11.01(a)
Section 11.01(b)
Section 11.01(d)
ACQUIROR DISCLOSURES
Section 4.03
Section 4.06
Section 4.07
Section 4.08
Section 4.09
Section 4.10
Section 4.17
Section 4.19
Section 5.06
Section 8.01
Section 11.01(a)
Section 11.01(c)
Galleria Material Contracts

Shared Business Contracts
Enforceability / Absence of Breach
Contracts to be Provided
Employee Matters
Financial Statements
Tax Matters
Sufficiency; Condition of Assets
Real Property
Environmental Matters
Exclusive Third-Party Perfume Oils
Exclusive Parent Perfume Oils
Exclusive Third-Party Ancillary Fragrances
Non-Exclusive Third-Party Ancillary Fragrances
Exclusive Parent Ancillary Fragrances
Non-Exclusive Parent Ancillary Fragrances
Conduct of Galleria Business Pending the Closing
Marketing Activities
Excluded Technologies
Non-Compete Restrictions
Parent Out-of-Scope Products
Identification of Employees
Compensation and Benefits
Severance
Expatriate Packages
Localized Employees
Notifications
Transition Process
Knowledge of Parent
Accounting Principles
Excluded Employees
Consents and Approvals; No Violations
Intellectual Property
Litigation
Compliance With Laws
Contracts
Employee Benefits
Real Property
Environmental Matters
Conduct of Acquiror Pending The Closing
Acquiror Stockholder Consent
Knowledge
Acquiror MAE
This Transaction Agreement (this Agreement ), dated July 8, 2015, is among The Procter & Gamble Company, an Ohio corporation ( Parent ), Galleria Co., a
Delaware corporation ( SplitCo ), Coty Inc., a Delaware corporation ( Acquiror ) and Green Acquisition Sub Inc., a Delaware corporation and wholly-owned subsidiary
of Acquiror ( Merger Sub ).
RECITALS
1.
Parent is engaged, directly and indirectly through certain of its Subsidiaries, in the Galleria Business.
3.
Parent has caused SplitCo to be formed in order to facilitate such separation and divestiture.
2.
Parent has determined that it would be appropriate and desirable to separate the Galleria Business from Parent and to divest the Galleria Business in the
manner contemplated hereby.
4.
Parent currently owns all of the issued and outstanding shares of common stock, par value $0.01 per share, of SplitCo (the SplitCo Common Stock ).
5.
Parent has determined that, subject to the terms and conditions herein, it would be appropriate and desirable for Parent and certain of its Subsidiaries to,
directly or indirectly, Convey to SplitCo or the Galleria Entities, as applicable, certain Assets of the Galleria Business in exchange for (i) the assumption by SplitCo or the
other members of the Galleria Group, as applicable, of certain Liabilities of the Galleria Business and (ii) Parents receipt of shares of SplitCo Common Stock and the
Recapitalization Amount, all as provided herein.
6.
The Parties contemplate that the Galleria Business will be transferred to SplitCo as provided herein, and in connection therewith the Recapitalization will
take place, including SplitCos entry into the Galleria Credit Facility and SplitCos payment of the Recapitalization Amount.
1
7.
The Parties contemplate that, immediately following the Galleria Transfer and Recapitalization, Parent will either (i) distribute all of the shares of SplitCo
Common Stock to Parent shareholders without consideration on a pro rata basis (a One-Step Spin-Off ) or (ii) consummate an offer to exchange (an Exchange Offer )
shares of SplitCo Common Stock for currently outstanding shares of Parents common stock ( Parent Common Stock ) and, in the event that Parents shareholders
subscribe for less than all of the SplitCo Common Stock in the Exchange Offer, subject to the terms and conditions of this Agreement, Parent will distribute, pro rata to its
shareholders, any unsubscribed SplitCo Common Stock on the Distribution Date immediately following the consummation of the Exchange Offer so that Parent may be
treated for U.S. federal income Tax purposes as having distributed all of the SplitCo Common Stock to its shareholders (the Clean-Up Spin-Off ).
8.
The disposition by Parent of 100% of the SplitCo Common Stock, whether by way of the One-Step Spin-Off or the Exchange Offer (followed by any
Clean-Up Spin-Off) is referred to herein as the Distribution .
9.
Immediately after the Distribution, Merger Sub, a wholly-owned Subsidiary of Acquiror, will merge with and into SplitCo and SplitCo Common Stock
will be converted into shares of Class A Common Stock ( Acquiror New Common Stock ) on the terms and subject to the conditions set forth in this Agreement.
10.
into SplitCo.
The Boards of Directors of Parent, SplitCo, Acquiror and Merger Sub have each approved and declared advisable the Merger of Merger Sub with and
11.
No later than 24 hours following execution of this Agreement, it is anticipated that the holders of shares of common stock of Acquiror representing at
least a majority of the voting power of Acquiror will execute and deliver to Acquiror a written consent, in accordance with and pursuant to Section 228 of the DGCL,
approving (i) the issuance of shares of Acquiror New Common Stock pursuant to the terms of this Agreement, (ii) increasing the number of authorized shares of capital
stock of Acquiror and (iii) amending the Acquirors certificate of incorporation. Contemporaneously with the execution hereof, JAB Cosmetics B.V., as the sole record and
beneficial owner of all of the outstanding shares of Class B Common Stock, is entering into a letter agreement with Parent regarding the conversion of all such shares into
shares of Class A Common Stock as of two Business Days prior to the Closing, subject to the terms and conditions set forth in such letter agreement (the JAB Letter
Agreement ).
12.
It is intended that (i) the Galleria Transfer, together with the Distribution, qualify as a reorganization under Section 368(a) of the Code, (ii) the
Distribution, as such, qualify as a distribution of SplitCo Common Stock to Parents shareholders pursuant to Section 355 of the Code, (iii) the Merger qualify as a tax-free
reorganization pursuant to Section 368(a) of the Code, (iv) any Parent Cash Distribution qualify as money distributed to Parent creditors in connection with the
reorganization for purposes of Section 361(b)(3) of the Code, and (v) the execution of this Agreement constitute a plan of reorganization under Treasury Regulation Section
1.368-2(g).
2
13.
Pursuant to the plan of reorganization and within one year after the Distribution Date, Parent will effect any Parent Cash Distribution to Parents
creditors in retirement of outstanding Parent Indebtedness in the manner described in this Agreement.
14.
Simultaneously with the execution of this Agreement, Parent and Acquiror are entering into the Split Plan Agreement.
Accordingly, the Parties agree as follows:

I.
GALLERIA TRANSFER AND RESTRUCTURING; RECAPITALIZATION OF SPLITCO
1.01 Transfer and Restructuring . (a) Overview . Prior to consummating the Distribution and Merger as contemplated in Article II , Parent and SplitCo will
effect a reorganization of the Galleria Business. This reorganization will include the Galleria Transfer and a restructuring of the Galleria Business as contemplated by
Section 5.21 (the Galleria Transfer, together with the activities set forth in Sections 5.21 , 6.02 and 6.03 , collectively, the Restructuring ).
(b)
SplitCo . SplitCo was formed as a Delaware corporation and will hold and conduct, directly and indirectly through its Subsidiaries, the Galleria Business.
Parent will not cause or permit SplitCo to engage in any activity not contemplated by this Agreement, and prior to the Closing SplitCo will not operate any business other
than the Galleria Business. In connection with the Restructuring, SplitCo and/or one or more of its Subsidiaries will become the owner of the Galleria Assets and will
assume the Galleria Liabilities.
(c)
Business Transfer Time . Subject to the satisfaction and waiver of the conditions set forth in Article VII , the effective time and date of each Conveyance
and assumption of any Asset or Liability in accordance with this Article I in connection with the Galleria Transfer will be 12:01 a.m., Eastern Time, on the anticipated
Closing Date (such time, the Business Transfer Time , and such date the Business Transfer Date ).
1.02 Transfer of Assets . Except as provided in Section 1.08 , effective as of the Business Transfer Time, Parent will assign, transfer, convey and deliver (
Convey ) (or will cause any applicable Subsidiary of Parent to Convey) to SplitCo and/or its Subsidiaries, and SplitCo will accept from Parent and will cause its applicable
Subsidiaries to accept, all of Parents and its applicable Subsidiaries respective right, title and interest in and to all Galleria Assets (other than any Galleria Assets that are
already held as of the Business Transfer Time by SplitCo or one of its Subsidiaries, which Galleria Asset will continue to be held by SplitCo or such Subsidiary), free and
clear of all Securities Interests (other than Permitted Encumbrances).
3
1.03 Assumption of Liabilities . Effective as of the Business Transfer Time, Parent will Convey (or will cause any applicable Subsidiary of Parent to Convey) to
SplitCo, and SplitCo will assume, perform and fulfill when due and, to the extent applicable, comply with, or will cause any applicable Subsidiary to assume, perform and
fulfill when due and, to the extent applicable, comply with, all of the Galleria Liabilities, in accordance with their respective terms (other than any Galleria Liability that as
of the Business Transfer Time is already a Liability of SplitCo or one of its Subsidiaries, which Galleria Liability will continue to be a Liability of SplitCo or such
Subsidiary). As between members of the Parent Group, on the one hand, and members of the Galleria Group, on the other hand, the members of the Galleria Group will be
solely responsible for all Galleria Liabilities as of the Business Transfer Time, on a joint and several basis.
1.04 Transfer of Excluded Assets; Excluded Liabilities . Except as provided in Section 1.08 , prior to the Business Transfer Time, (a) Parent will cause any
applicable Galleria Entity to Convey to Parent or a Subsidiary of Parent any Excluded Assets that it owns, leases or has any right to use, and Parent will accept from such
member of the Galleria Group, and will cause an applicable Subsidiary of Parent (other than a Galleria Entity) to accept, all such respective right, title and interest in and to
any and all of such Excluded Assets and (b) Parent will cause any applicable Galleria Entity to Convey any Excluded Liability for which it is otherwise responsible to
Parent or a Subsidiary of Parent (other than a Galleria Entity), and Parent will assume, perform and fulfill when due, and to the extent applicable, comply with, or will cause
the applicable Subsidiary of Parent to assume, perform and fulfill when due and, to the extent applicable, comply with, all of such Excluded Liabilities in accordance with
their respective terms.
1.05 Galleria Assets . (a) For purposes of this Agreement and subject to the exclusions set forth in Section 1.05(b) and Section 1.09 , Galleria Assets means
all Assets owned or held by any member of the Parent Group that are included in any of clauses (i)-(xix) below or that are otherwise primarily used or held for primary use
in the Galleria Business (or, in the case of the Non-Color Caldera Business portion of the Galleria Business, exclusively used or held for exclusive use in the Non-Color
Caldera Business) and that are not otherwise addressed in such clauses, in each case whether now existing or hereafter acquired prior to the Business Transfer Time (other
than any such Assets that are Conveyed or otherwise disposed of after the date hereof and prior to the Business Transfer Time not in violation of Section 5.01 ):
(i)
(A) all computers and other electronic data processing equipment, fixtures, machinery, molds, tools (including special and general tools), pucks,
push plates, star wheels, prototypes, models, equipment, manufacturing equipment, process, packaging and related utilities, furniture, office equipment and other tangible
personal property primarily used or held for primary use in the Galleria Business (or, in the case of the Non-Color Caldera Business portion of the Galleria Business,
exclusively used or held for exclusive use in the Non-Color Caldera Business), (B) computers, smartphones and similar communications equipment provided by the Parent
Group in connection with a Continuing Employees performance of services, (C) all motor vehicle and other transportation equipment primarily used or held for primary
use in the Galleria Business (or, in the case of the Non-Color Caldera Business portion of the Galleria Business, exclusively used or held
4
for exclusive use in the Non-Color Caldera Business) or provided for the use of a Continuing Employee, including those motor vehicles and other transportation equipment
listed on Schedule 1.05(a)(i) (as such list may be updated from time to time in Parents sole discretion), and (D) the items listed on Schedule 1.05(a)(i) .
(ii)
all product inventories, raw and packaging materials, Store Room Inventory, Goods in Transit, parts, work-in-process, finished goods and
products, in each case to the extent it is primarily used or held for primary use in the Galleria Business (or, in the case of the Non-Color Caldera Business portion of the
Galleria Business, exclusively used or held for exclusive use in the Non-Color Caldera Business) (the Galleria Inventory );
(iii)
all Real Property Interests in the land and facilities primarily used or held for primary use in the Galleria Business (or, in the case of the NonColor Caldera Business portion of the Galleria Business, exclusively used or held for exclusive use in the Non-Color Caldera Business), including the items listed on
Schedule 1.05(a)(iii) , together with the improvements, structures and fixtures located thereon (the Galleria Facilities );
(iv)
all issued and outstanding capital stock or other equity interests of the Persons listed on Schedule 1.05(a)(iv) , including any entities that may be
designated as Galleria Entities pursuant to Section 5.21 (such capital stock or other equity interests, the Galleria Entity Interests and, such Persons, the Galleria
Entities );
Contracts;
(v)
subject to Section 5.23 , all interests, rights, claims and benefits of Parent and any of its Subsidiaries pursuant to, and associated with, all Galleria
(vi)
all of the Governmental Approvals that are primarily used or held for primary use in the Galleria Business (or, in the case of the Non-Color
Caldera Business portion of the Galleria Business, exclusively used or held for exclusive use in the Non-Color Caldera Business);
(vii)
all Intellectual Property primarily used or held for primary use in the Galleria Business (or, in the case of the Non-Color Caldera Business
portion of the Galleria Business, exclusively used or held for exclusive use in the Non-Color Caldera Business) and the Intellectual Property otherwise listed on Schedule
1.05(a)(vii) , including all goodwill related to any of the foregoing and all rights to sue or recover and retain damages and costs and attorneys fees for infringement,
misappropriation or other violation of any of the foregoing, whether occurring prior to, on or after the Business Transfer Time (all of the foregoing, the Galleria IP Assets
);
(viii)
(A) all business and employment records primarily related to the Galleria Business (or, in the case of the Non-Color Caldera Business portion
of the Galleria Business, exclusively used or held for exclusive use in the Non-Color Caldera Business), including the corporate minute books and related stock records of
the Galleria Entities, (B) all of the separate financial statements, books of account and Tax records of SplitCo and the Galleria Entities or other financial and Tax records
primarily relating to the Galleria Business (or, in the case of the Non-Color Caldera Business portion of the Galleria Business, exclusively related to the Non-Color Caldera
Business), the Galleria Assets and the Galleria Liabilities that do not form part of the general
5
ledger of Parent or any of its Affiliates (other than SplitCo and the Galleria Entities), (C) to the extent within Parents possession, all prosecution files, certificates, notices
and registrations pertaining to the Intellectual Property listed on Schedule 1.05(a)(vii) , and (D) all other books, records, ledgers, files, documents and correspondence,
whether in paper, microfilm, microfiche, computer tape or disc, magnetic tape or any other form, and that in any such case are primarily related to the Galleria Business (or,
in the case of the Non-Color Caldera Business portion of the Galleria Business, exclusively related to the Non-Color Caldera Business) (collectively, the Galleria Books
and Records ); provided , however , that (1) none of clauses (A)-(D) will include Intellectual Property in any such records, writings or other materials (which is the subject
of clause (vii), above), (2) Parent will be entitled to retain a copy of the Galleria Books and Records, which will be subject to the provisions of Section 5.14 , (3) neither
clause (A) nor (D) will be deemed to include any books, records or other items or portions thereof (x) that are subject to restrictions on transfer pursuant to applicable Laws
regarding personally identifiable information or Parents privacy policies regarding personally identifiable information or with respect to which transfer would require any
Governmental Approval under applicable Law, or (y) that are personnel records that relate to any employees who are not Continuing Employees, and (4) in no event will
Galleria Books and Records include any Consolidated Tax Return;
(ix)
the benefits of all prepaid expenses and other current assets, including prepaid leases and prepaid rentals, in each case to the extent primarily
related to or held for primary use in the Galleria Business;
(x)
all software (in source code, object code and all source materials) primarily used or held for primary use in the Galleria Business (or, in the case
of the Non-Color Caldera Business portion of the Galleria Business, exclusively used or held for exclusive use in the Non-Color Caldera Business) or otherwise listed on
Schedule 1.05(a)(x) (all of the foregoing, the Galleria Software );
(xi)
all goodwill of the Galleria Business;
(xii)
all rights to past, present and future causes of action, lawsuits, judgments, claims, counterclaims and demands arising out of the conduct of or
otherwise primarily related to the Galleria Business (or, in the case of the Non-Color Caldera Business portion of the Galleria Business, exclusively related to the NonColor Caldera Business);
(xiii)
all Assets in respect of the Galleria Business Acquired Plans, as determined in accordance with Schedule 1.05(a)(xiii) (the Galleria Business
Acquired Plan Assets ) and any Assets in respect of any and all Galleria Group Plans;
(xiv)
the right to enforce the Parent Groups rights in (A) the confidentiality provisions of any confidentiality, non-disclosure or other similar
Contracts that are not otherwise Galleria Contracts to the extent such provisions relate to confidential information of the Galleria Business and (B) any Intellectual Property
assignment, license or non-assertion provisions of any Intellectual Property assignment Contract that is not otherwise a Galleria Contract to the extent such provisions relate
to the Galleria IP Assets;
6
(xv)
all rights of SplitCo and the Galleria Entities under this Agreement or any Ancillary Agreement and the certificates, instruments and Transfer
Documents delivered in connection herewith;
(xvi)
(A) any cash and cash equivalents held by SplitCo and the Galleria Entities (including in bank and other deposit accounts of the Galleria
Entities) and (B) any security deposits and customer deposits primarily used or held for primary use in the Galleria Business;
(xvii)
all accounts receivable that are either (A) primarily related to the Galleria Business and held by SplitCo or any Galleria Entity or (B) primarily
related to the Salon Professional Business;
(xviii)
(xix)
any other Assets reflected in the Cut-Off Date Adjustment Statement; and
all of the bank accounts of SplitCo and the Galleria Entities listed on Schedule 1.05(a)(xix) .
(b)
Notwithstanding Section 1.05(a) or any other provision hereof, the Galleria Assets will not in any event include any of the following Assets (the
Excluded Assets ):
(i)
(ii)
the Assets listed or described on Schedule 1.05(b)(i) ;

the Excluded IP Assets;
(iii)
all Assets in respect of any and all Compensation and Benefit Plans, all Assets corresponding to any Liabilities allocated to Parent or any of its
Affiliates or for which Parent is expressly liable pursuant to Article VI and all Assets in respect of all other compensation and benefit plans sponsored by the Parent Group,
in each case other than (A) the Galleria Business Acquired Plan Assets and (B) any Assets in respect of any and all Galleria Group Plans;
(iv)
all financial and Tax records relating to the Galleria Business that form part of the general ledger of Parent or any of its Subsidiaries (other than
the members of the Galleria Group), any work papers of Parents auditors and any other Tax records (including accounting records) of Parent or any of its Subsidiaries
(other than the members of the Galleria Group); provided that Parent will provide to Acquiror upon written request from Acquiror, copies of any portions of such financial
and Tax records (other than Consolidated Tax Returns and supporting Tax workpapers related thereto) that relate solely to the Galleria Entities, the Galleria Assets, the
Galleria Liabilities or the Galleria Business;
(v)
subject to Section 5.20 , all rights to insurance policies or practices of Parent and its Subsidiaries (including any captive insurance policies,
fronted insurance policies, surety bonds or corporate insurance policies or practices, or any form of self-insurance whatsoever), any refunds paid or payable in connection
with the cancellation or discontinuance of any such policies or practices and any claims made under such policies;
7
(vi)
other than rights to enforce the provisions of any confidentiality, non-disclosure or other similar Contracts to the extent related to the Galleria
Business or as provided in Section 1.05(a) and the corresponding sections of the Parent Disclosure Letter, all records prepared by or on behalf of Parent or its Subsidiaries
relating to the negotiation of the transactions contemplated by this Agreement and all records prepared by or on behalf of Parent or its Subsidiaries in connection with the
potential divestiture of all or a part of the Galleria Business or any other business or Asset of Parent or its Subsidiaries, including (A) proposals received from third parties
and analyses relating to such transactions and (B) without limiting Section 5.14 , confidential communications with legal counsel representing Parent or its Affiliates and
the right to assert the attorney-client privilege with respect thereto;
(vii)
all rights of Parent or its Affiliates (other than members of the Galleria Group) under this Agreement or any Ancillary Agreement and the
certificates, instruments and Transfer Documents delivered in connection therewith;
(viii)
Group.
(ix)
the LINC Facility; and
any and all Assets that are expressly contemplated by this Agreement as Assets to be retained by Parent or any other member of the Parent
1.06 Galleria Liabilities . (a) For the purposes of this Agreement, Galleria Liabilities will mean each of the following, regardless of when or where such
Liabilities arose or arise, or whether the facts on which they are based occurred prior to or subsequent to the Business Transfer Time, or where or against whom such
Liabilities are asserted or determined or whether asserted or determined prior to the date hereof:
(i)
all Liabilities that are reflected in the Cut-Off Date Adjustment Statement and that remain outstanding as of the Closing;
(ii)
any and all Liabilities of Parent and its Affiliates (including the members of the Galleria Group) to the extent arising out of, relating to or
otherwise in respect of, the ownership or use of the Galleria Assets or the operation or the conduct of the Galleria Business, whether before, at or after the Business Transfer
Time;
(iii)
all Liabilities that are provided by this Agreement or any Ancillary Agreement as Liabilities to be assumed by SplitCo or any other member of
the Galleria Group and all Liabilities of SplitCo or any other member of the Galleria Group under this Agreement or any Ancillary Agreement, including (A) Liabilities in
connection with the collection of amounts due under loans outstanding to Continuing Employees as of the Business Transfer Time (other than loans under a Tax-qualified
Compensation and Benefit Plan), and (B) all Liabilities allocated to or expressly assumed by any member of the Galleria Group pursuant to Article VI ;
8
(iv)
subject to Section 5.23 , all Liabilities under the Galleria Contracts with respect to performance of the Galleria Contracts;
(v)
all Liabilities to the extent relating to, resulting from or arising out of advertising time or space (including television, print, radio and point of
sale) used or to be used in the Galleria Business;
(vi)
all Liabilities to the extent relating to, resulting from or arising out of trade and consumer promotions, in-store promotions, coupon campaigns,
loyalty programs and gift card campaigns of the Galleria Business;
(vii)
all Liabilities to the extent relating to, resulting from or arising out of product returns, recalls of products of the Galleria Business or fulfilling
warranty claims and similar repair and replacement commitments in respect of products of the Galleria Business;
(viii)
all Liabilities to the extent relating to, resulting from or arising out of (A) any Environmental Conditions that result from or arise out of the
operation or conduct of the Galleria Business, (B) any Release of Hazardous Materials that occurs at any of the Galleria Facilities, to the extent such Release results from or
arises out of the operation or conduct of the Galleria Business, or (C) any violation of or remediation or other requirements under any Environmental Law resulting from
the operation or conduct of the Galleria Business;
(ix)
(x)
(xi)
all Liabilities under the Galleria Credit Facility;
all Liabilities to the extent relating to German Inventorship Laws with respect to the Galleria IP Assets; and
all Liabilities listed on Schedule 1.06(a)(xi) .
(b)
Notwithstanding anything to the contrary in this Agreement, the Galleria Liabilities will not include the following Liabilities (such Liabilities, the
Excluded Liabilities ):
(i)
all Liabilities listed or described on Schedule 1.06(b)(i) ;
(ii)
all Liabilities to the extent relating to, resulting from or arising out of any Excluded Asset, except to the extent expressly identified as Galleria
Liabilities in Section 1.06(a) ;
(iii)
all Liabilities to the extent relating to, resulting from or arising out of any accounts payable that are not held by SplitCo or any Galleria Entity or
accounts payable that are not related to the Galleria Business; and
(iv)
all Liabilities that are expressly contemplated by this Agreement or any Ancillary Agreement as Liabilities to be retained or assumed by Parent
or any other member of the Parent Group, and all Liabilities of any member of the Parent Group under this Agreement or any of the Ancillary Agreements.
9
1.07 Termination of Intercompany Agreements; Settlement of Intercompany Accounts . (a) SplitCo, on behalf of itself and each other member of the
Galleria Group, on the one hand, and Parent, on behalf of itself and each other member of the Parent Group, on the other hand, hereby terminate any and all Contracts
between or among SplitCo or any member of the Galleria Group, on the one hand, and Parent or any member of the Parent Group, on the other hand, effective without
further action as of the Business Transfer Time. No such Contract (including any provision thereof which purports to survive termination) will be of any further force or
effect after the Business Transfer Time and all parties will be released from all Liabilities thereunder. Each Party will, at the reasonable request of any other Party, take, or
cause to be taken, such other actions as may be necessary to effect the foregoing.
(b)
Parent will cause all of the intercompany receivables, payables, loans and other accounts, rights and Liabilities between SplitCo and any other member of
the Galleria Group, on the one hand, and Parent or any other member of the Parent Group, on the other hand, in existence as of immediately prior to the Business Transfer
Time (collectively, the Intercompany Accounts ) to be settled such that, as of the Business Transfer Time, there are no Intercompany Accounts outstanding.
1.08 Transfers In Violation of Law or Required Consents . (a) Except as otherwise provided in Section 1.09 , if and to the extent that the consummation of the
Galleria Transfer or Conveyance of Excluded Assets would be a violation of applicable Laws or require any Consent in connection with the transactions contemplated
hereby that has not been obtained as of the Business Transfer Time, then, notwithstanding any other provision hereof, such Conveyance of the applicable Galleria Asset or
Excluded Asset will automatically be deferred and will not occur until all legal impediments are removed or such Consents have been obtained. Notwithstanding the
foregoing, any such Asset will still be considered a Galleria Asset or Excluded Asset, as applicable, and the Person retaining such Asset will thereafter hold such Asset in
trust for the benefit, insofar as reasonably possible, of the Person entitled thereto (and at such Persons sole expense) until the consummation of the Conveyance thereof.
The Parties will use their respective Commercially Reasonable Efforts to (i) continue to seek to remove any legal impediments or secure any contractual Consents required
from third parties necessary to Convey such Asset and (ii) develop and implement arrangements to place the Person entitled to receive such Asset, insofar as reasonably
possible and to the extent not prohibited by applicable Law or the relevant Contract, in the same position as if such Asset had been Conveyed as contemplated hereby such
that all the benefits and burdens relating to such Asset, including possession, use, risk of loss, potential for gain, any Tax Liabilities in respect thereof and dominion, control
and command over such Asset, are to inure from and after the Business Transfer Time to such Person. If and when the applicable legal or contractual impediments are
removed or the applicable Consents are obtained, the Conveyance of the applicable Asset will be effected in accordance with the terms of this Agreement or such
applicable Ancillary Agreement. The obligations set forth in this Section 1.08 will terminate on the two-year anniversary of the Closing. Nothing in this Section 1.08(a) will
be deemed to (A) constitute or require a waiver by any of the Parties of any of the closing conditions set forth in Article VII , including the receipt of the Governmental
Approvals or (B) apply to any Shared Business Contract, it being understood that Shared Business Contracts are governed by Section 1.08(b) .
10
(b)
Shared Business Contracts . (i) Parent will use Commercially Reasonable Efforts to deliver a true, correct and complete list of its Shared Business
Contracts existing as of the date of this Agreement no later than 90 days after the date hereof (except in connection with any Contract the existence or terms of which are
confidential) that are not set forth on Section 3.08(b) of the Parent Disclosure Letter. With respect to purchases of raw materials and packaging materials that are not
covered or governed by a Contract other than a purchase order or other similar arrangement, Parent may satisfy this obligation by identifying the relevant raw material or
packaging material and providing a reasonably detailed description of the arrangement utilized to purchase such material.
(ii) Parent shall use Commercially Reasonable Efforts to cause each Shared Business Contract to be assigned in relevant part to a Galleria Entity on or
prior to the Business Transfer Time or to appropriately amend such Shared Business Contract to the extent permitted by applicable Law or the relevant Shared Business
Contract so that Acquiror or its Affiliates will, at and following the Closing, be entitled to the rights and benefits inuring to the Galleria Business under such Shared
Business Contracts, and any such amended Shared Business Contract will be treated by the Parties as a separate Contract for all purposes. In addition, Parent will provide
Acquiror with contact information for such third parties and introduce representatives of the Acquiror Group to Parents contacts at such third parties.
(c) Notwithstanding anything in this Section 1.08 to the contrary, no member of the Parent Group nor any of its Affiliates will be required to undertake any action
or arrangement contemplated by this Section 1.08 (i) if Parent determines, in its sole discretion, that such arrangement or action would materially increase the likelihood
that the Intended Tax-Free Treatment would not apply to the transactions contemplated hereby, or (ii) if such arrangement is not in compliance with applicable Law (or the
relevant Shared Business Contract).
11
1.09
Retained Elements of Mercury Business . The Parent and Acquiror will implement the provisions set forth on Schedule 1.09 .
1.10 Evidence of Transfer of Galleria Assets and Galleria Liabilities . In furtherance of the Conveyance of Galleria Assets and assumption of Galleria
Liabilities provided in Sections 1.02 and 1.03 , on the Business Transfer Date, (a) Parent will execute and deliver, and will cause its Subsidiaries to execute and deliver,
such bills of sale, stock powers, certificates of title, deeds, assignments of Contracts and other instruments of Conveyance, including the real property transfer documents
described in Section 1.10 of the Parent Disclosure Letter (in each case to the extent applicable and in a form that is consistent with the terms and conditions of this
Agreement, and otherwise customary or statutorily required in the jurisdiction in which the relevant Assets are located), as necessary to evidence the Conveyance of all of
Parents and its Subsidiaries right, title and interest in and to the Galleria Assets to SplitCo and the other members of the Galleria Group (it being understood that no such
bill of sale, stock power, certificate of title, deed, assignment or other instrument of Conveyance will require Parent or any of its Affiliates to make any additional
representations, warranties or covenants, expressed or implied, not contained in this Agreement except to the extent required to comply with applicable local Law, in which
case the Parties will enter into such supplemental agreements or arrangements as are effective to preserve the allocation of economic benefits and burdens contemplated by
this Agreement) and (b) SplitCo will execute and deliver such assumptions of Galleria Liabilities and other instruments of assumption (in each case in a form that is
consistent with the terms and conditions of this Agreement, and otherwise customary or statutorily required in the jurisdiction in which the relevant Liabilities are located)
as and to the extent reasonably necessary to evidence the valid and effective assumption of the Galleria Liabilities by SplitCo or the applicable members of the Galleria
Group. All of the foregoing documents contemplated by this Section 1.10 will be referred to collectively herein as the Parent Transfer Documents .
1.11 Transfer of Excluded Assets and Assumption of Excluded Liabilities . In furtherance of the Conveyance of Excluded Assets and assumption of Excluded
Liabilities provided in Section 1.04 , on the Business Transfer Date, (a) SplitCo will execute and deliver, and will cause its Subsidiaries to execute and deliver, such bills of
sale, stock powers, certificates of title, deeds, assignments of Contracts and other instruments of Conveyance (in each case to the extent applicable and in a form that is
consistent with the terms and conditions of this Agreement, and otherwise customary or statutorily required in the jurisdiction in which the relevant Assets are located), as
necessary, to evidence the Conveyance of all of SplitCos and its Subsidiaries right, title and interest in and to the Excluded Assets to Parent and the other members of the
Parent Group (it being understood that no such bill of sale, stock power, certificate of title, deed, assignment or other instrument of Conveyance will require SplitCo or any
of its Affiliates to make any additional representations, warranties or covenants, expressed or implied, not contained in this Agreement except to the extent required to
comply with applicable local Law, in which case the Parties will enter into such supplemental agreements or arrangements as are effective to preserve the allocation of
economic benefits and burdens contemplated by this Agreement) and (b) Parent will execute and deliver such assumptions of Excluded Liabilities and other instruments of
assumption (in each case
12
in a form that is consistent with the terms and conditions of this Agreement, and otherwise customary or statutorily required in the jurisdiction in which the relevant
Liabilities are located) as and to the extent reasonably necessary to evidence the valid and effective assumption of the Excluded Liabilities by Parent or the applicable
member of the Parent Group. All of the foregoing documents contemplated by this Section 1.11 will be referred to collectively herein as the Galleria Transfer Documents
and, together with the Parent Transfer Documents, the Transfer Documents .
1.12 Galleria Transfer - Deliveries . (a) Documents To Be Delivered by Parent . On the Business Transfer Date, Parent will deliver, or will cause its appropriate
Subsidiaries to deliver, to SplitCo all of the following instruments:
party thereto;
(i)
the Ancillary Agreements to which Parent or any other member of the Parent Group is a Party, duly executed by the members of the Parent Group
(ii)
the Transfer Documents as described in Section 1.10 and Section 1.11 ;
(iv)
the certificate contemplated by Section 7.02(d) .
(iii)
resignations (or evidence of removal) of each of the individuals who serve as an officer or director of members of the Galleria Group in their
capacity as such and the resignations of any other Persons that will be employees of any member of the Galleria Group after the Business Transfer Time and that are
directors or officers of any member of the Galleria Group, to the extent requested by Acquiror, in each case effective as of the Effective Time; and
(b)
Documents To Be Delivered by SplitCo and Acquiror . On the Business Transfer Date, SplitCo and Acquiror, as applicable, will deliver, or will cause
their Subsidiaries to deliver, as appropriate, to Parent all of the following instruments:
(i)
in each case where any member of the Galleria Group is a party to any Ancillary Agreement, a counterpart of such Ancillary Agreement duly
executed by the member of the Galleria Group party thereto;
(ii)
the Transfer Documents as described in Section 1.10 and Section 1.11 ;
(iv)
the certificate contemplated by Section 7.03(h) .
(iii)
resignations (or evidence of removal) of each of the individuals who serve as an officer or director of members of the Parent Group in their
capacity as such and the resignations of any other Persons that will be employees of any member of the Galleria Group after the Business Transfer Time and that are
directors or officers of any member of the Parent Group, to the extent requested by Parent, in each case effective as of the Effective Time; and
13
1.13 Recapitalization of SplitCo . Subject to the terms and conditions set forth herein (including the creation of the Galleria Credit Facility as contemplated by
Section 5.12 ), Parent and SplitCo will cause the following to occur:
(a)
General . At the Business Transfer Time, in partial consideration for the Conveyance of Assets contemplated by Section 1.02 , SplitCo will:
issue and deliver to Parent a number of shares of SplitCo Common Stock equal to (1) the Galleria Stock Amount, less (2) the number of shares of
SplitCo Common Stock outstanding immediately prior to the issuance of SplitCo Common Stock pursuant to this Section 1.13 (the Galleria Stock Issuance );
(i)
(ii)
subject to Section 1.13(c) , distribute to Parent any remaining portion of the Recapitalization Amount not previously distributed to Parent
pursuant to Section 1.13(c) in cash in immediately available funds to an account specified for this purpose by Parent; and
(iii)
assume the Galleria Liabilities in accordance with the requirements of this Agreement.
(b)
Credit Facility . At the Business Transfer Time, or within seven days prior to the Business Transfer Time, SplitCo, together with the other members of
the Galleria Group, will enter into a credit facility with a third-party creditor, with total available credit in the principal amount of $4,500,000,000 (subject to adjustment as
contemplated by Section 5.12 ) in accordance with the Galleria Credit Documents (such credit facility, the Galleria Credit Facility , and the entry into the Galleria Credit
Facility, together with the Galleria Stock Issuance and the Recapitalization Amount, the Recapitalization ).
(c)
Cash Distribution . At the Business Transfer Time, or within seven days prior to the Business Transfer Time, SplitCo will (i) borrow funds under the
Galleria Credit Facility in an amount equal to the Recapitalization Amount, (ii) in its discretion, subject to Section 5.21(g) , use all or a portion of such borrowed proceeds
to fund the purchase, directly or indirectly, of Galleria Assets from one or more Subsidiaries of Parent, and (iii) promptly distribute to Parent any amount remaining after
funding any such Galleria Asset purchases pursuant to clause (ii) immediately above. Parent will maintain any such funds distributed from SplitCo in a segregated account,
and will take into account for Tax purposes all items of income, gain, deduction or loss associated with the funds while maintained in this segregated account. Pursuant to
the plan of reorganization and as soon as practicable following the Distribution Date, Parent will distribute any funds received from SplitCo pursuant to this Section 1.13(c)
, and all remaining amounts in the above-described segregated account, to Parents creditors in retirement of outstanding Parent indebtedness (any such distribution, the
Parent Cash Distribution ). Prior to effecting any Parent Cash Distribution, Parent will adopt a corporate resolution specifying that such distribution will be made from the
funds maintained in the segregated account referenced in this Section 1.13(c) .
14
1.14 Waiver of Bulk-Sales Laws . Each of Parent and SplitCo hereby waives compliance by each member of their respective Group with the requirements and
provisions of the bulk-sale or bulk-transfer Laws of any jurisdiction that may otherwise be applicable with respect to the Conveyance of any or all of the Assets to any
member of the Parent Group or Galleria Group, as applicable.
II.
THE DISTRIBUTION AND MERGER
2.01 Form and Manner of Distribution . (a) Parent may elect, in its sole discretion, to effect the Distribution in the form of either (i) so long as Parent
reasonably believes the condition set forth in Section 7.03(d) would be capable of being satisfied, a One-Step Spin-Off or (ii) an Exchange Offer (including any Clean-Up
Spin-Off, as set forth below).
(b)
If Parent elects to effect the Distribution in the form of a One-Step Spin-Off, the Board of Directors of Parent, in accordance with applicable Law, will
establish (or designate Persons to establish) a Record Date and the Distribution Date. All shares of SplitCo Common Stock held by Parent on the Distribution Date will be
distributed to the Record Holders in the manner determined by Parent and in accordance with Section 2.02(e) .
(c)
If Parent elects to effect the Distribution as an Exchange Offer, Parent will determine in its sole discretion the terms and conditions of such Exchange
Offer, including the number of shares of SplitCo Common Stock that will be offered for each validly tendered share of Parent Common Stock, the period during which such
Exchange Offer will remain open, the procedures for the tender and exchange of shares and all other terms and conditions of such Exchange Offer, which will comply with
securities Law requirements applicable to such Exchange Offer; provided , that in any event, Parent shall extend the expiration date of such Exchange Offer for one or more
consecutive increments of not more than 20 Business Days each (the length of such period to be determined by Parent in consultation with Acquiror), if, as of any otherwise
scheduled expiration of the Exchange Offer, any condition to the Exchange Offer or the closing of the Merger, other than those conditions that are to be satisfied on the date
the expiration of the Exchange Offer or the closing of the Merger, has not been satisfied or waived (to the extent permitted under applicable Laws), it being understood that
no such extension shall extend the expiration date of such Exchange Offer to a time later than, the earlier of (1) the date that is 60 Business Days after the satisfaction of all
conditions to such Exchange Offer and the closing of the Merger, other than the Minimum Condition and those conditions that are to be satisfied on the date of expiration
of the Exchange Offer or the closing of the Merger, (2) the termination of this Agreement in accordance with its terms and (3) the End Date. In the event that Parents
shareholders subscribe for less than all of the SplitCo Common Stock in the Exchange Offer, subject to the terms and conditions of this Agreement (including the
satisfaction of the Minimum Condition), Parent will consummate the Clean-Up Spin-Off on the Distribution Date immediately following the consummation of the
Exchange Offer.
15
2.02 The Distribution . (a) To the extent the Distribution is effected as a One-Step Spin-Off, subject to the terms thereof, in accordance with Section 2.02(e) ,
each Record Holder will be entitled to receive for each share of Parent Common Stock held by such Record Holder a number of shares of SplitCo Common Stock equal to
the total number of shares of SplitCo Common Stock held by Parent on the Distribution Date, multiplied by a fraction, the numerator of which is the number of shares of
Parent Common Stock held by such Record Holder and the denominator of which is the total amount of Parent Common Stock outstanding on the Distribution Date.
(b)
Subject to the terms thereof, to the extent the Distribution is effected as an Exchange Offer, each Parent shareholder may elect in the Exchange Offer to
exchange a number of shares of Parent Common Stock held by such Parent shareholder for shares of SplitCo Common Stock subject to the terms and conditions set forth in
the SplitCo Form 10/S-4.
(c)
Parent and SplitCo, as the case may be, will instruct the transfer agent or the Exchange Agent in the Distribution, as applicable, to deduct and withhold
from the consideration otherwise required to be distributed pursuant to this Agreement such amounts as are required to be deducted and withheld from such consideration
under the Code or any provision of state, local or foreign Tax Law. Any withheld amounts will be treated for all purposes of this Agreement as having been distributed to
the Persons otherwise entitled thereto.
(d)
The terms and conditions of any Clean-Up Spin-Off will be as determined by Parent in its sole discretion, provided that, subject to the terms and
conditions of this Agreement, (i) any SplitCo Common Stock that is not subscribed for in the Exchange Offer must be distributed to the Parents shareholders in the CleanUp Spin-Off, and (ii) such Clean-Up Spin-Off must take place on the Distribution Date immediately following the consummation of the Exchange Offer so that Parent may
be treated for U.S. federal income Tax purposes as having distributed all of the SplitCo Common Stock to Parents shareholders.
(e)
Upon the consummation of the One-Step Spin-Off or the Exchange Offer, Parent will deliver to the Exchange Agent a global certificate representing the
SplitCo Common Stock distributed in the One-Step Spin-Off or exchanged in the Exchange Offer, as the case may be, for the account of the Parent shareholders that are
entitled thereto. Upon a Clean-Up Spin-Off, if any, Parent will deliver to the Exchange Agent an additional global certificate representing the SplitCo Common Stock
distributed in the Clean-Up Spin-Off for the account of the Parent shareholders that are entitled thereto. The Exchange Agent will hold such certificate or certificates, as the
case may be, for the account of the Parent shareholders pending the Merger.
16
2.03 Plan of Reorganization . This Agreement will constitute a plan of reorganization for the transactions contemplated by this Agreement under Treasury
Regulation Section 1.368-2(g). Pursuant to the plan of reorganization, (a) Parent will complete the Distribution through either (i) a One-Step Spin-Off or (ii) the Exchange
Offer and, subject to the terms and conditions of this Agreement, any Clean-Up Spin-Off (as described above) and (b) immediately following the Distribution, Merger Sub
will merge with and into SplitCo with SplitCo surviving.
2.04 The Merger . (a) On the terms and subject to the conditions of this Agreement, Merger Sub will be merged (the Merger ) with and into SplitCo in
accordance with the provisions of the DGCL. Immediately following the Merger, SplitCo will continue as the surviving corporation (the Surviving Corporation ) and
will be a direct, wholly owned Subsidiary of Acquiror, and the separate corporate existence of Merger Sub will cease.
(b)
The Merger will be consummated by the filing of a certificate of merger (the Certificate of Merger ) with the Secretary of State of the State of
Delaware, in such form as required by, and executed in accordance with, the relevant provisions of the DGCL (the date and time of the filing of the Certificate of Merger
with the Secretary of State of the State of Delaware, or such later time as is specified in the Certificate of Merger and as is agreed to by Parent and Acquiror, the Effective
Time ).
(c)
The Merger will have the effects set forth in this Agreement and, to the extent not otherwise addressed herein, the applicable provisions of the DGCL.
Without limiting the generality of the foregoing and subject thereto, at the Effective Time, all the property, rights, privileges, immunities, powers and franchises of SplitCo
and Merger Sub will vest in SplitCo as the Surviving Corporation and all debts, liabilities and duties of SplitCo (including all of the obligations under the Galleria Credit
Facility) and Merger Sub will become the debts, liabilities and duties of SplitCo as the Surviving Corporation.
(d)
The text of the certificate of incorporation of the Surviving Corporation in effect at the Effective Time will, by virtue of the Merger, be amended and
restated so as to be identical to the certificate of incorporation of Merger Sub as in effect immediately prior to the Effective Time (except that the name of the corporation
set forth in the certificate of incorporation of the Surviving Corporation will continue to be Galleria Co. ), until thereafter changed or amended as provided therein or by
applicable Law. The bylaws of Merger Sub, as in effect immediately prior to the Effective Time, will be the bylaws of the Surviving Corporation until thereafter changed or
amended as provided therein or by applicable Law.
(e)
The initial directors of the Surviving Corporation at the Effective Time will be the directors of Merger Sub. The initial officers of the Surviving
Corporation at the Effective Time will be the officers of SplitCo at the Effective Time (after taking into account the resignations contemplated by Section 1.12(a)(iii) ).
Each of such initial officers and directors of the Surviving Corporation will hold office from the Effective Time until their respective successors are duly elected or
appointed and qualified in the manner provided by the certificate of incorporation and bylaws of the Surviving Corporation or as otherwise provided by Law.
17
2.05 Amendment of Acquirors Certificate . Acquiror will present to its stockholders for approval by written consent in lieu of a meeting, as part of the
Acquiror Stockholder Approval, a proposal to amend, effective as of immediately prior to the Effective Time, Acquirors Amended and Restated Certificate of
Incorporation ( Acquiror Certificate ), in the form attached hereto as Exhibit A , to provide for the issuance of Acquiror New Common Stock and the increase in the
number of total authorized shares of capital stock of Acquiror, and, to the extent the Acquiror Stockholder Approval is so obtained, such certificate of incorporation will be
the certificate of incorporation of Acquiror from and after the Effective Time until thereafter changed or amended as provided therein or by applicable Law.
2.06 Closing of the Merger . On the terms and subject to the conditions set forth in this Agreement, the consummation of the Merger (the Closing ) will take
place at Jones Day, 222 East 41st Street, New York, New York, at 10:00 a.m., local time, on the last Business Day of the calendar month in which the satisfaction or waiver
of the conditions set forth in Article VII (other than those conditions that by their nature or pursuant to the terms of this Agreement are to be satisfied at or immediately
prior to the Closing, but subject to the satisfaction or, where permitted, the waiver of those conditions), it being understood that the Parties will work together in good faith
to seek to cause such conditions to be satisfied, and for the Closing to occur, prior to July 31, 2016. The date on which the Closing occurs is referred to as the Closing
Date . For accounting purposes, the Closing will be deemed to have occurred as of 11:59:59 pm local time on the Closing Date.
2.07 Conversion of Capital Stock in the Merger . At the Effective Time, by virtue of the Merger and without any action on the part of SplitCo, Acquiror or the
holders of the following securities:
(a)
Corporation.
Each share of Merger Sub Common Stock will be converted into and become one fully paid and nonassessable share of common stock of the Surviving
(b)
Subject to Section 2.11 in respect of fractional shares, each issued share of SplitCo Common Stock will be converted into the right to receive one fully
paid and nonassessable share of Acquiror New Common Stock (such one for one exchange ratio, the Exchange Ratio ). The shares of Acquiror New Common Stock to
be issued upon the conversion of shares of SplitCo Common Stock pursuant to this Section 2.07 and cash in lieu of fractional shares as contemplated by Section 2.11 are
referred to collectively as Merger Consideration . As of the Effective Time, all such shares of SplitCo Common Stock will no longer be outstanding and will
automatically be canceled and retired and will cease to exist, and any holder of a certificate representing any such shares of SplitCo Common Stock will cease to have any
rights with respect thereto, except the right to receive Merger Consideration upon surrender of such certificate, without interest. The issuance of Acquiror New Common
Stock in connection with the Merger is referred to as the Acquiror Stock Issuance .
18
2.08 Exchange of Certificates . (a) Pursuant to Section 2.02(e) , the Exchange Agent will hold, for the account of the relevant Parent shareholders, the global
certificate(s) representing all of the outstanding shares of SplitCo Common Stock distributed in the Distribution. Such shares of SplitCo Common Stock will be converted
into shares of Acquiror New Common Stock in accordance with the terms of this Article II .
(b)
Prior to the Closing, Parent will appoint a bank or trust company reasonably acceptable to Acquiror as exchange agent (the Exchange Agent ). Prior to
or at the Effective Time, or as reasonably requested by Parent, Acquiror will deposit with the Exchange Agent, for the benefit of the holders of shares of SplitCo Common
Stock, for exchange in accordance with this Article II through the Exchange Agent, evidence in book entry form representing the shares of Acquiror New Common Stock
issuable pursuant to this Article II in exchange for outstanding shares of SplitCo Common Stock (such shares of Acquiror New Common Stock, together with any
dividends or distributions with respect thereto, being hereafter referred to as the Exchange Fund ). For the purposes of such deposit, Acquiror will assume that there will
not be any fractional shares of Acquiror New Common Stock. Acquiror will make available to the Exchange Agent, for addition to the Exchange Fund, from time to time as
needed or as reasonably requested by Parent, cash sufficient to pay cash in lieu of fractional shares in accordance with Section 2.11 . The Exchange Agent will, pursuant to
irrevocable instructions, deliver the Acquiror New Common Stock to be issued pursuant to this Article II out of the Exchange Fund. The Exchange Fund will not be used
for any other purpose.
2.09 Exchange Procedures . As soon as reasonably practicable after the Effective Time of the Merger, and to the extent not previously distributed in connection
with the Distribution, the Exchange Agent will mail to any holder of record of outstanding shares of SplitCo Common Stock whose shares were converted into the right to
receive the Merger Consideration pursuant to Section 2.07 (a) a letter of transmittal and (b) instructions for use in effecting the exchange of any shares of SplitCo Common
Stock for Merger Consideration. Upon delivery to the Exchange Agent of the letter of transmittal, duly executed, and such other documents as may reasonably be required
by the Exchange Agent, the holder of such SplitCo Common Stock will be entitled to receive in exchange therefor the Merger Consideration (together with cash in lieu of
fractional shares) that such holder has the right to receive pursuant to the provisions of this Article II , and the respective SplitCo Common Stock will forthwith be canceled.
Until exchanged as contemplated by this Section 2.09 , any SplitCo Common Stock will be deemed at any time after the Effective Time to represent only the right to
receive upon such exchange Merger Consideration as contemplated by this Section 2.09 . No interest will be paid or accrue on any cash payable upon exchange of any
SplitCo Common Stock.
19
2.10 No Further Ownership Rights in SplitCo Common Stock . The Merger Consideration issued (and paid) in accordance with the terms of this Article II
upon conversion of any shares of SplitCo Common Stock will be deemed to have been issued (and paid) in full satisfaction of all rights pertaining to such shares of SplitCo
Common Stock, and after the Effective Time there will be no further registration of transfers on the stock transfer books of the Surviving Corporation of shares of SplitCo
Common Stock that were outstanding immediately prior to the Effective Time. If, after the Effective Time, any certificates formerly representing shares of SplitCo
Common Stock are presented to the Surviving Corporation or the Exchange Agent for any reason, they will be cancelled and exchanged as provided in this Article II .
2.11 No Fractional Shares . (a) No certificates or scrip representing fractional shares of Acquiror New Common Stock will be issued upon the conversion of
SplitCo Common Stock pursuant to Section 2.07 , and such fractional share interests will not entitle the owner thereof to vote or to any rights of a holder of Acquiror
Common Stock. For purposes of this Section 2.11 , all fractional shares to which a single record holder would be entitled will be aggregated, and calculations will be
rounded to three decimal places.
(b)
Fractional shares of Acquiror New Common Stock that would otherwise be allocable to any former holders of SplitCo Common Stock in the Merger will
be aggregated, and no holder of SplitCo Common Stock will receive cash equal to or greater than the value of one full share of Acquiror New Common Stock. The
Exchange Agent will cause the whole shares obtained thereby to be sold, in the open market or otherwise as reasonably directed by Parent, and in no case later than 20
Business Days after the Effective Time. The Exchange Agent will make available the net proceeds thereof, after deducting any required withholding Taxes and brokerage
charges, commissions and transfer Taxes, on a pro rata basis, without interest, as soon as practicable to the holders of SplitCo Common Stock entitled to receive such cash.
Payment of cash in lieu of fractional shares of Acquiror Common Stock will be made solely for the purpose of avoiding the expense and inconvenience to Acquiror of
issuing fractional shares of Acquiror New Common Stock and will not represent separately bargained-for consideration.
2.12 Distributions With Respect To Unexchanged Shares . No dividends or other distributions with respect to Acquiror New Common Stock with a record
date after the Effective Time will be paid to the holder of any SplitCo Common Stock with respect to the shares of Acquiror New Common Stock issuable upon exchange
thereof, and no cash payment in lieu of fractional shares will be paid to any such holder pursuant to Section 2.11 , until, in each case, the exchange of such SplitCo
Common Stock in accordance with this Article II . Subject to applicable Law, following the exchange of any such SplitCo Common Stock, there will be paid to the holder
of the certificate representing whole shares of Acquiror New Common Stock issued in exchange therefor, without interest, (i) at the time of such surrender, the amount of
any cash payable in lieu of a fractional share of Acquiror New Common Stock to which such holder is entitled pursuant to Section 2.11 and the amount of dividends or
other distributions with a record date after the Effective Time theretofore paid with respect to such whole shares of Acquiror New Common Stock and (ii) at the appropriate
payment date, the amount of dividends or other distributions with a record date after the Effective
20
Time but prior to such surrender and a payment date subsequent to such exchange payable with respect to such whole shares of Acquiror New Common Stock.
2.13 Withholding Rights . Acquiror, the Surviving Corporation, the Exchange Agent and the transfer agent, as the case may be, will deduct and withhold from
the consideration otherwise required to be distributed pursuant to this Agreement such amounts as may be required to be deducted and withheld under the Code or any
provision of state, local or foreign Tax Law. Any withheld amounts will be treated for all purposes of this Agreement as having been distributed to the Persons otherwise
entitled hereto.
2.14 No Liability . None of the Parties, the Exchange Agent and the transfer agent will be liable to any Person in respect of any shares of SplitCo Common Stock
or Acquiror New Common Stock (or in either case for any dividends or distributions with respect thereto) or cash from the Exchange Fund delivered to a public official
pursuant to any abandoned property, escheat or similar Law.
2.15 Closing Date Adjustment - Cut-Off Date Working Capital . (a) Not later than the 10 th Business Day following the Cut-Off Date, Parent will provide to
Acquiror its good faith estimate of the Cut-Off Date Working Capital (if such amount exceeds the Working Capital Target, the absolute value of the difference is the
Working Capital Excess , and if such amount is less than the Working Capital Target, the absolute value of the difference is the Working Capital Deficit ). Such
statement (as such statement is finally determined pursuant to this Section 2.15 , the Cut-Off Date Adjustment Statement ) will be prepared (A) in a manner and format
consistent with the Cut-Off Date Adjustment Statement Format and (B) using the most current and most reliable financial information reasonably available to Parent in the
Ordinary Course of Parents operations.
(b)
Acquiror will review the Cut-Off Date Adjustment Statement and, if Acquiror disagrees with any item set forth in such statement, it will provide written
notice to Parent (an Acquiror Objection ) within five Business Days following receipt of the Cut-Off Date Adjustment Statement, and Parent and Acquiror will attempt
to resolve in good faith any such disagreements as soon as practicable.
(c)
If Parent and Acquiror are unable to resolve any of their disputes with respect to the Cut-Off Date Adjustment Statement within two Business Days
following Parents receipt of the Acquiror Objection pursuant to Section 2.15(b) , either Party may refer the remaining disputed items to Ernst & Young LLP or another
independent accounting firm mutually selected by Parent and Acquiror (the Accounting Firm ) to make a written determination as to each then-remaining disputed item,
which written determination will be final and binding on the Parties as to each such disputed item. The Accounting Firm will act as an arbitrator and not an expert and will
address only those items that are in dispute. With respect to any item of the Cut-Off Date Adjustment Statement for which a determination is to be made by the Accounting
Firm, the Accounting Firm may only assign a value that is equal to the value for such item claimed by either Party. The Parties
21
will use their Commercially Reasonable Efforts to have the Accounting Firm make its determination within five Business Days of being engaged (and in any event prior to
Closing). The fees and expenses of the Accounting Firm shall be allocated between Parent, on the one hand, and Acquiror, on the other hand, based upon the percentage
which the portion of the disputed items not awarded to each party bears to the amount actually contested by such party. The fees and disbursements of the Representatives
of each Party incurred in connection with their preparation of the Cut-Off Date Adjustment Statement and preparation or review of any Acquiror Objection, as applicable,
will be borne by such Party.
(d)
The Cut-Off Date Adjustment Statement will become final and binding on the Parties upon the earliest of (i) if no Acquiror Objection has been given, the
expiration of the period within which Acquiror must make its objection pursuant to Section 2.15(b) , (ii) the agreement in writing by Parent and Acquiror that the Cut-Off
Date Adjustment Statement, together with any modifications thereto agreed by Parent and Acquiror, is final and binding, and (iii) the date on which the Accounting Firm
issues its written determination with respect to any dispute relating to such Cut-Off Date Adjustment Statement pursuant to Section 2.15(c) .
(e)
If, as finally determined pursuant to Section 2.15(d) , (i) there is a Working Capital Excess that is greater than 5.0% of the Working Capital Target (the
Working Capital Band Amount ), then the Recapitalization Amount will be increased by an amount equal to the Working Capital Excess, (ii) there is a Working Capital
Deficit that is greater than the Working Capital Band Amount, then the Recapitalization Amount will be decreased by an amount equal to the Working Capital Deficit and
(iii) there is a Working Capital Excess or a Working Capital Deficit that is equal to or less than the Working Capital Band Amount, then the Recapitalization Amount shall
not be increased or decreased by this Section 2.15 .
(f)
In furtherance of this Section 2.15 , upon the request of Acquiror, Parent will promptly provide to Acquiror and its accountants access during normal
business hours to the books and records and any other information, and to any employees of Parent or any other member of the Parent Group, that Acquiror determines is
reasonably necessary for Acquiror to review the Cut-Off Date Adjustment Statement.
III.
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent hereby represents and warrants to Acquiror that, except as (i) set forth in the applicable section or subsection of the Parent Disclosure Letter (interpreted as
contemplated by Section 10.13 ) or (ii) to the extent disclosed in, and reasonably apparent from, any report, schedule, form or other document filed with, or furnished to, the
Commission by Parent or SplitCo and publicly available prior to the date of this Agreement (other than any forward-looking disclosures set forth in any risk factor section,
any disclosures in any section relating to forward-looking statements and any other similar disclosures included therein to the extent that they are primarily cautionary in
nature) and as provided in Section 3.20 Acquiror acknowledges:
22
3.01 Due Organization, Good Standing and Corporate Power . Each of Parent, SplitCo and the Galleria Entities is a corporation duly organized, validly
existing and in good standing under the Laws of its jurisdiction of incorporation. Parent and its Subsidiaries have the requisite corporate power and authority to own, lease
and operate their properties that will be contributed to SplitCo or the Galleria Entities and to carry on the Galleria Business as now being conducted and to enter into and
perform its obligations under this Agreement or the Ancillary Agreements to which it is, or will be, a party and to consummate the transactions contemplated hereby and
thereby. Parent and each of its Subsidiaries is duly qualified to do business and is in good standing in each jurisdiction in which the property owned, leased or operated by
the Galleria Business that will be contributed to SplitCo or the Galleria Entities or the nature of the Galleria Business conducted by it makes such qualification or licensing
necessary, except in such jurisdictions where the failure to be so qualified or licensed and in good standing has not been and would not reasonably be expected to be,
individually or in the aggregate, material to the Galleria Business.
3.02 Authorization of Agreement . The execution, delivery and performance of this Agreement and the Ancillary Agreements by each of Parent and SplitCo, as
applicable, and the consummation by each of them of the transactions contemplated hereby and thereby, have been duly authorized and approved by their respective boards
of directors (and this Agreement has been adopted by Parent as the sole stockholder of SplitCo) and no other corporate or shareholder action on the part of Parent or
SplitCo is necessary to authorize the execution, delivery and performance of this Agreement and the Ancillary Agreements to which it is, or will be at the Business Transfer
Time, a party, or the consummation of the transactions contemplated hereby and thereby. This Agreement and the Ancillary Agreements, when executed, will be duly
executed and delivered by each of Parent and SplitCo, as applicable, and each is (or when executed will be) a valid and binding obligation of each of Parent and SplitCo
enforceable against each of Parent and SplitCo, as applicable, in accordance with its terms, except to the extent that its enforceability may be subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar Law affecting the enforcement of creditors rights generally and by general equitable principles (such
exception, the Enforceability Exception ).
3.03 Consents and Approvals; No Violations . Assuming (a) the filings required under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended
(the HSR Act ), are made and the waiting periods thereunder (if applicable) have been terminated or expired and any Governmental Approvals required under any other
Antitrust Law have been obtained or satisfied, (b) the Governmental Approvals required to Convey any Real Property or Governmental Permits to Acquiror have been
made or obtained, (c) the applicable requirements of the Securities Act and the Exchange Act are met, (d) the requirements under any applicable state securities or blue sky
Laws are met, (e) the requirements of the NYSE in respect of the listing of the shares of Acquiror New Common Stock to be issued hereunder are met and (f) the filing of
the Certificate of Merger and other appropriate merger documents, if any, as required by the DGCL, and the filing of the Acquiror Certificate with the Secretary of State of
the State of Delaware pursuant to Section 2.05 , are made, the execution and delivery of this Agreement and the Ancillary Agreements by Parent and SplitCo, the
consummation by Parent and SplitCo of the transactions contemplated hereby and
23
thereby do not and will not (i) violate or conflict with any provision of their respective certificates or articles of incorporation, bylaws or code of regulations (or the
comparable governing documents), (ii) violate or conflict with any Law or Order of any Governmental Authority applicable to Parent or any of its Subsidiaries or by which
any of their respective properties or assets that will be contributed to SplitCo or that are owned by the Galleria Entities as of the Business Transfer Time may be bound, (iii)
require any Governmental Approval, or (iv) result in a violation or breach of, conflict with, constitute (with or without due notice or lapse of time or both) a default under
or give rise to any right of termination, cancellation or acceleration, or give rise to any obligation, right of termination, cancellation, acceleration or increase of any
obligation or a loss of a material benefit under, any of the terms, conditions or provisions of any Galleria Material Contract, excluding in the case of clauses (ii) through (iv)
above, (x) conflicts, violations, approvals, breaches, defaults, rights of terminations, cancellations, accelerations, increases or losses which would not reasonably be
expected, individually or in the aggregate, to be material to the Galleria Business and (y) any Security Interests created in connection with the Galleria Credit Facility.
3.04 Capital Structure; SplitCo . (a) On the date of this Agreement, the authorized capital stock of SplitCo consisted solely of 1,000 shares of SplitCo Common
Stock, of which 100 shares of SplitCo Common Stock were outstanding. On the date of this Agreement and immediately prior to the Distribution, all of the outstanding
shares of SplitCo Common Stock are and will be owned directly by Parent free and clear of any Security Interest other than Permitted Encumbrances. Immediately
following the Distribution, (i) there will be outstanding a number of shares of SplitCo Common Stock equal to the Galleria Stock Amount, (ii) no shares of SplitCo
Common Stock will be held in SplitCos treasury and (iii) no bonds, debentures, notes or other indebtedness of SplitCo or any of its Subsidiaries having the right to vote (or
convertible into, or exchangeable for, securities having the right to vote) on any matters on which holders of SplitCo Common Stock or the holders of capital stock of any
of SplitCos Subsidiaries may vote will be outstanding. All outstanding shares of SplitCo Common Stock are, and all such shares that may be issued prior to the Effective
Time as contemplated by this Agreement will be when issued, duly authorized, validly issued, fully paid and nonassessable. As of the date of this Agreement, there are no
outstanding or authorized options, warrants, rights, subscriptions, claims of any character, agreements, obligations, convertible or exchangeable securities, or other
commitments, contingent or otherwise, relating to SplitCo Common Stock or any capital stock equivalent or other nominal interest in SplitCo or any of its Subsidiaries
which relate to SplitCo (collectively, Galleria Equity Interests ) pursuant to which SplitCo or any of its Subsidiaries is or may become obligated to issue shares of its
capital stock or other equity interests or any securities convertible into, exchangeable for, or evidencing the right to subscribe for, any Galleria Equity Interests. There are
no outstanding obligations of SplitCo to repurchase, redeem or otherwise acquire any outstanding securities of Galleria Equity Interests.
(b)
Immediately prior to commencing the Restructuring, SplitCo will have no Assets, other than the capital contribution with which such entity was
incorporated, and no Liabilities, other than de minimis Liabilities arising under or in connection with its incorporation and Liabilities arising under or in connection with
this Agreement or any other Ancillary Agreement to which SplitCo is or will be a party as contemplated hereby.
24
3.05 Intellectual Property . (a) Parent or a Subsidiary of Parent (including a Galleria Entity) is the sole owner of the Galleria IP Assets, free and clear of any
Security Interests other than Permitted Encumbrances.
(b)
Section 1.05(a)(vii) of the Parent Disclosure Letter sets forth a list of material Galleria IP Assets that constitute Registered Intellectual Property,
including for each such item listed, as applicable, its (i) territory, (ii) application serial number and date, (iii) issue number and date, and (iv) title or mark. All registration,
maintenance and renewal fees, issue fees and annuities due to any Governmental Authority in respect of such Galleria IP Assets as of the date hereof have been paid. None
of such Galleria IP Assets is licensed to any third party or is subject to any material restrictions on its disclosure, ownership, license or transfer, except pursuant to a
Galleria Material Contract listed in Section 3.08(a)(v) of the Parent Disclosure Letter.
(c)
Except as would not, individually or in the aggregate, be material to the Galleria Business, to the Knowledge of Parent, the Galleria Business as currently
conducted by Parent and its Subsidiaries does not, and, assuming the Consents set forth on Section 3.03 of the Parent Disclosure Letter are obtained, the Galleria Business
immediately following the Closing will not, infringe, misappropriate or otherwise violate any enforceable Intellectual Property right of any third party. Except as would not,
individually or in the aggregate, be material to the Galleria Business, during the past two years, no third party has made any written claim or demand or instituted any
Action against Parent or any of its Subsidiaries, or to the Knowledge of Parent threatened the same in writing, and neither Parent nor any of its Subsidiaries has received
any written notice of such a claim, demand or Action, that (i) challenges the rights of Parent and its Subsidiaries in respect of any of the Intellectual Property used in the
Galleria Business or (ii) asserts that the operation of the Galleria Business is or was infringing, misappropriating or otherwise violating the Intellectual Property rights of
any third party. None of the Intellectual Property used in the Galleria Business is subject to any outstanding Order applicable to the Galleria Business that materially limits
the use of such Intellectual Property in the Galleria Business as currently conducted by Parent and its Subsidiaries. To the Knowledge of Parent, no Person is engaging in
any activity that materially infringes, misappropriates or otherwise violates any of the Galleria IP Assets.
(d)
Notwithstanding whether any other representations or warranties in this Article III could be read to apply to matters involving Intellectual Property, the
representations and warranties set forth in Section 3.02 , Section 3.03 , Section 3.05 , 3.08(a) (and Sections 3.08(b) , 3.08(c) and 3.08(d) as applicable thereto), Section 3.10
, Section 3.11 , Section 3.12 , Section 3.14(a) (and 3.14(c) as applicable thereto), Section 3.15 , Section 3.18 and Section 3.19 constitute the sole and exclusive
representations and warranties under this Article III with respect to Intellectual Property.
25
3.06 Litigation . There are no Actions in respect of which Parent has been duly served with a complaint or otherwise given written notice (or to the Knowledge of
Parent, oral notice) that are pending against Parent or any of its Subsidiaries, or, to the Knowledge of Parent, threatened against Parent or any of its Subsidiaries (or any of
their respective properties, rights or franchises), at Law or in equity, or before or by any Governmental Authority, that have been or would reasonably be expected to be,
individually or in the aggregate, material to the Galleria Business. Neither Parent nor any of its Subsidiaries is subject to any Order applicable to any Galleria Entity or the
Galleria Business, other than any Order generally applicable to the businesses in which the Galleria Business operates, that would reasonably be expected to affect, in any
material respect, individually or in the aggregate, the Galleria Business.
3.07 Compliance With Laws . (a) Except as has not been and would not reasonably be expected to be material to the Galleria Business, the Galleria Business is
being conducted in compliance with applicable Laws. None of the Governmental Approvals required for the continued conduct of the Galleria Business as such business is
currently being conducted will lapse, terminate, expire or otherwise be impaired as a result of the consummation of the transactions contemplated hereby or by the
Ancillary Agreements, except as has not been and would not reasonably be expected to be material to the Galleria Business.
(b)
Notwithstanding the foregoing, the representations and warranties set forth in this Section 3.07 do not apply to Intellectual Property, employees and
employee benefits, Taxes or environmental matters, which are addressed in Sections 3.05 , 3.09 , 3.11 (except as set forth therein) and 3.17 , respectively.
3.08 Contracts . (a) Section 3.08(a) of the Parent Disclosure Letter contains a list of each Galleria Contract that is in effect as of the date of this Agreement and
that falls in one or more of the following categories (collectively, whether or not scheduled, the Galleria Material Contracts ):
(i)
a Contract containing covenants binding upon Parent or its Subsidiaries that restrict during any period of time the ability of Parent or any of its
Subsidiaries to compete or engage in any business or geographic area and that would bind SplitCo or any of its Affiliates (including the Galleria Entities) following the
Business Transfer Time;
(ii)
a Contract containing any most favored nations, exclusivity or similar right or undertaking in favor of any party other than Parent and its
Subsidiaries with respect to any material goods or services purchased or sold by Parent or its Subsidiaries and that would bind SplitCo or any of its Affiliates (including the
Galleria Entities) following the Business Transfer Time;
(iii)
a lease, sublease or similar Contract with any Person under which Parent or any of its Subsidiaries is a lessor or sublessor of, or makes available
for use to any Person, any Galleria Facilities;
26
(iv)
a lease, sublease or similar Contract with any Person under which (A) Parent or any of its Subsidiaries is lessee of, or holds or uses, any material
machinery, equipment, vehicle or other tangible personal property owned by any Person or (B) Parent or any of its Subsidiaries is a lessor or sublessor of, or makes
available for use by any Person, any material tangible personal property owned or leased by Parent or its Subsidiaries, in any such case which has an aggregate future
liability or receivable, as the case may be, in excess of $10,000,000 in any calendar year and is not terminable by Parent or such Subsidiary by notice of not more than 60
days for a cost, individually or together with any similar Contract, of less than $10,000,000;
(v)
a license or sublicense or other Contract under which Parent or any of its Subsidiaries is licensee or licensor, or sub-licensee or sub-licensor of, or
otherwise grants or is granted a right to use any material Intellectual Property used or held for use in the Galleria Business other than licenses to any shrink wrap, click wrap
or other software that is generally commercially available and not customized;
(vi)
a Contract for the sale of any Galleria Entity or material Galleria Asset or collection of Galleria Assets that are material to the Galleria Business
in the aggregate, other than Contracts entered into in the Ordinary Course of the Galleria Business that provide for the sale of Galleria Inventory (including any finished
goods or work-in-process) or obsolete equipment;
(vii)
a Contract relating primarily to the Galleria Business (or, in the case of the Non-Color Caldera Business portion of the Galleria Business,
relating exclusively to the Non-Color Caldera Business) involving the payment of more than $10,000,000 for the purchase of materials, supplies, goods, services,
equipment or other assets and that is (A) with any vendor from whom Parent or any of its Subsidiaries purchased more than $10,000,000, in the aggregate in respect of the
Galleria Business, in the fiscal year ended June 30, 2014, or would reasonably be expected to provide for the purchase of more than $10,000,000 in the aggregate in respect
of the Galleria Business, in the fiscal year ended June 30, 2015 or any future 12-month period ended June 30 and (B) not terminable at will by Parent or any of its
Subsidiaries (or by the Galleria Group following the Business Transfer Time) on less than 60 days notice without penalty;
(viii)
a Contract with a customer of the Galleria Business that involves, or would reasonably be expected to involve, (A) the payment of more than
$10,000,000 by such customer to the Galleria Business in the fiscal year ended June 30, 2014 or any future 12-month period ended June 30 (other than purchase orders
submitted in the Ordinary Course of the Galleria Business) or (B) the payment of more than $10,000,000 to such customer by the Galleria Business in the fiscal year ended
June 30, 2014 or any future 12-month period ended June 30 pursuant to a joint business plan or other similar incentive arrangement;
(ix)
a Contract relating to any Indebtedness to a third party that individually is in excess of $5,000,000;
(x)
a Contract under which (A) any Person has directly or indirectly guaranteed or assumed Indebtedness, liabilities or obligations of a Galleria Entity
or of the Galleria Business or (B) a Galleria Entity or the Galleria Business has directly or indirectly guaranteed or assumed
27
Indebtedness, Liabilities or obligations of another Person, in each case in excess of $5,000,000 individually or $10,000,000 in the aggregate;
(xi)
a material settlement or compromise of any suit, claim, proceeding or dispute relating to the Galleria Business or any Galleria Entity that would
materially and adversely impact the Galleria Business at or following the Business Transfer Time;
(xii)
(b)
(xiii)
a Contract establishing or providing for any material partnership, strategic alliance, joint venture or material collaboration; and
any other Contract not made in the Ordinary Course of the Galleria Business that is material to the Galleria Business.
Section 3.08(b) of the Parent Disclosure Letter contains a list of each Shared Business Contract that is in effect as of the date of this Agreement.
(c)
Each Galleria Material Contract is valid, binding and in full force and effect and is enforceable by and against Parent or one of its Subsidiaries in
accordance with its terms, except as has not been and would not reasonably be expected to be material to the Galleria Business. Each of Parent and its Subsidiaries has
performed all obligations required to be performed by it to date under the Galleria Material Contracts to which it is a party and is not in breach of or default thereunder and,
to the Knowledge of Parent, no other party to any Galleria Material Contract is in breach of or default thereunder, in each case in any respect that would reasonably be
expected to be, individually or in the aggregate, material to the Galleria Business.
(d)
Subject to Section 5.23 , Parent has made available to Acquiror a true and correct copy of each Galleria Material Contract (or, if such Contract is not in
written form, a true and correct summary of the material terms thereof).
3.09 Employees and Employee Benefits . (a) Section 6.01 of the Parent Disclosure Letter sets forth, as of the relevant date of presentation, a true and complete
list of each In-Scope Employees unique identification number that has been randomly assigned, function, base salary or hourly wage rate, most recent annual equity
compensation award, cash bonus target, employer, home country, host country, employment site, age, credited service date, employment status and whether such employee
is a Choice Employee, an Expatriate Employee or a Localized Employee.
(b)
Since June 30, 2012, (i) there has not been any labor strike, work stoppage or lockout with respect to the Galleria Business, (ii) no member of the Parent
Group has received written notice of any pending or threatened unfair labor practice charges against the Galleria Business that are pending before the National Labor
Relations Board or any other state, local or foreign Governmental Authority, and (iii) no member of the Parent Group has received written notice of any pending or
threatened suits, actions or other proceedings in connection with the Galleria Business brought by or on behalf of any applicant for employment, any current or former
employee or any class of the foregoing before any Governmental Authority responsible for the enforcement of employment
28
practices Laws, except, in the case of each of clauses (i), (ii) and (iii) above, for any such matters that have not been and would not reasonably be expected to be,
individually or in the aggregate, material to the Galleria Business.
(c)
(i) The Galleria Group is neither party to, nor bound by, any labor agreement, collective bargaining agreement, or any other material labor-related
agreements or arrangements with any labor union, labor organization, works council, or employee representative group; (ii) there are no labor agreements, collective
bargaining agreements or any other material labor-related agreements or arrangements that pertain to any In-Scope Employees; and (iii) no In-Scope Employees are
represented by any labor organization with respect to their employment with the Parent Group.
(d)
To Parents Knowledge, with respect to the In-Scope Employees, (i) no labor union, labor organization, works council, or other employee representative
group has made a pending demand for recognition or certification, and (ii) there are no representation or certification proceedings or petitions seeking a representation
proceeding presently pending or threatened in writing to be brought or filed with the National Labor Relations Board or any other labor relations tribunal or authority. The
Parent Group has no Knowledge of any labor union organizing activities with respect to any In-Scope Employees.
(e)
As of the date of this Agreement, Parent has no actual Knowledge (without the obligation to conduct due inquiry) of any In-Scope Employee or Choice
Employee being in material violation of any term of any employment agreement, nondisclosure agreement, common law nondisclosure obligation, fiduciary duty,
noncompetition agreement, restrictive covenant or other obligation to a former employer of any such employee relating (i) to the right of any such employee to be
employed by the Parent Group or (ii) to the knowledge or use of trade secrets or proprietary information.
(f)
As of the date of this Agreement, Parent has no actual Knowledge (without the obligation to conduct due inquiry) that any In-Scope Employee or Choice
Employee with a seniority level of Band 4 or higher (as such employment bands are commonly referred to within Parents organization as of the date of this Agreement)
intends to terminate his or her employment.
(g)
No Compensation and Benefit Plan, other than the Galleria Business Acquired Plans or the Galleria Group Plans, is sponsored or maintained by any
member of the Galleria Group, except as would not give rise to a Galleria Liability.
(h)
(i) No Liability under Title IV of ERISA has been incurred by Parent or any of its ERISA Affiliates which has not been satisfied in full, other than
Pension Benefit Guaranty Corporation ( PBGC ) premiums that are not past due, and (ii) no event has occurred and no circumstance exists that could result in Parent or
its ERISA Affiliates incurring a Liability under Title IV of ERISA that would result in any material Liability to Acquiror or, after the Closing, to the Galleria Group.
29
(i)
With respect to each Galleria Business Acquired Plan, (i) all statutory contributions due from Parent or any of its Subsidiaries have been made and all
amounts and Liabilities have been properly accrued and (ii) there are no actions, suits or claims pending (other than routine claims for benefits) or, to the Knowledge of
Parent, threatened with respect to such Galleria Business Acquired Plan, except, in the case of each of clauses (i)-(ii) above, as would not result in a material Liability to
Acquiror.
(j)
Parent has made available to Acquiror copies or summaries of the material terms of all of the material Compensation and Benefit Plans (including any
material amendments thereto).
(k)
Each Compensation and Benefit Plan has been maintained, operated and administered in all respects in accordance with its terms and in compliance in all
respects with all applicable Laws except, in each case, as would not result in material Liability to Acquiror.
(l)
The attachments to Section 6.04(c) of the Parent Disclosure Letter set forth the severance plans, policies and practices of Parent or its Subsidiaries
applicable to the Galleria Business as in effect on the date of this Agreement. The severance plans, policies and practices of Parent or its Subsidiaries applicable to the
Galleria Business have not been amended or implemented during the 12 months immediately preceding the date of this Agreement for purposes of the transactions
contemplated by this Agreement.
(m)
Neither the execution nor delivery of this Agreement nor the consummation of the contemplated transactions under this Agreement will, whether alone
or in combination with any other event, (i) result in the accelerated vesting or payment of, or any increase in, any compensation to any In-Scope Employee or (ii) result in
the entitlement of any In-Scope Employee or, to the Knowledge of Parent, independent contractor or consultant of the Galleria Business, in either case, to any material
severance or termination pay or benefits other than as set forth in the attachments to Section 6.04(c) of the Parent Disclosure Letter.
30
3.10 Financial Statements; Absence of Changes; Undisclosed Liabilities . (a) Attached as Section 3.10(a) of the Parent Disclosure Letter are copies of (i) the
combined audited financial statements of the Mercury Business, including the balance sheets as of June 30, 2014 and June 30, 2013, and the income statements of the
Mercury Business for the fiscal years ended June 30, 2014 and June 30, 2013, together with all related footnotes and schedules thereto (collectively, the Audited Mercury
Financial Statements ) and (ii) the unaudited selected balance sheet line items of the Mercury Business as of March 31, 2015 and the unaudited management profit and loss
statement of the Mercury Business for the nine-month period then ended (collectively, the Unaudited Mercury Financial Statements and together with the Audited
Mercury Financial Statements, the Mercury Financial Statements ). Notwithstanding anything to the contrary in this Agreement or any Ancillary Agreement, the
Mercury Financial Statements (i) will reflect the Mercury Business without giving effect to Section 1.09 and (ii) will include the following brands that are not Mercury
Brands: Laura Biagiotti, Rochas, Naomi Campbell and Puma.
(b)
Attached as Section 3.10(b) of the Parent Disclosure Letter are copies of (i) the combined audited financial statements of the Kosmos Business, including
the balance sheets as of June 30, 2014 and June 30, 2013, and the income statements of the Kosmos Business for the fiscal years ended June 30, 2014 and June 30, 2013,
together with all related footnotes and schedules thereto (collectively, the Audited Kosmos Financial Statements ) and (ii) the unaudited selected balance sheet line items
of the Kosmos Business as of March 31, 2015 and the unaudited management profit and loss statement of the Kosmos Business for the nine-month period then ended
(collectively, the Unaudited Kosmos Financial Statements ).
(c)
Attached as Section 3.10(c) of the Parent Disclosure Letter are copies of (i) the combined audited financial statements of the Salon Professional Business,
including the balance sheets as of June 30, 2014 and June 30, 2013, and the income statements of the Salon Professional Business for the fiscal years ended June 30, 2014
and June 30, 2013, together with all related footnotes and schedules thereto (collectively, the Audited Salon Professional Financial Statements ) and (ii) the unaudited
selected balance sheet line items of the Salon Professional Business as of March 31, 2015 and the unaudited management profit and loss statement of the Salon Professional
Business for the nine-month period then ended (collectively, the Unaudited Salon Professional Financial Statements ).
(d)
Attached as Section 3.10(d) of the Parent Disclosure Letter are copies of (i) the combined unaudited financial statements of the Retail Color Business,
including the balance sheets as of June 30, 2014 and June 30, 2013, and the income statements of the Retail Color Business for the fiscal years ended June 30, 2014 and
June 30, 2013, together with all related footnotes and schedules thereto (together with the Audited Mercury Financial Statements, the Audited Kosmos Financial Statements
and the Audited Salon Professional Financial Statements, the Full Year Financial Statements ) and (ii) the unaudited selected balance sheet line items of the Retail Color
Business as of March 31, 2015 and the unaudited management profit and loss statement of the Retail Color Business for the nine-month period then ended (together with
the Unaudited Mercury Financial Statements, the Unaudited Kosmos Financial Statements, the Unaudited Salon Professional Financial Statements, the Partial Year
Financial Statements and, collectively with the Full Year Financial Statements, the Financial Statements ).
31
(e)
The Financial Statements were derived from the books and records of Parent and its Subsidiaries and were prepared in accordance with GAAP,
consistently applied, as at the dates and for the periods presented (except, in the case of the Partial Year Financial Statements, for the absence of footnote disclosures and
normal and recurring adjustments), and the Full Year Financial Statements and, with respect to the items presented therein, the Partial Year Financial Statements present
fairly in all material respects the financial position and results of operations of the Galleria Business (excluding the Retail Styling Business) as at the dates and for the
periods presented on the basis by which the Financial Statements were prepared (subject, in the case of the Partial Year Financial Statements, to normal and recurring
adjustments).
(f)
Attached as Section 3.10(f) of the Parent Disclosure Letter are copies of (i) the unaudited management profit and loss statement for the Retail Styling
Business for the fiscal years ended June 30, 2014 and June 30, 2013 and (ii) the unaudited management profit and loss statement for the Retail Styling Business for the
nine-month period ended March 31, 2015 (the financial information referred to in clauses (i) and (ii) collectively, the Retail Styling Unaudited Financial Information ).
The Retail Styling Unaudited Financial Information was derived from the books and records of Parent and its Subsidiaries and was prepared in good faith with the same
level of skill and care as that utilized in the standard procedures of the Retail Styling Business and of Parent and its Subsidiaries and, with respect to the items presented
therein, the Retail Styling Unaudited Financial Information presents fairly in all material respects the line items presented therein, subject to the limitations and
qualifications set forth therein.
(g)
Since March 31, 2015, there has not occurred any event, occurrence or condition which has had or would reasonably be expected to have, individually or
in the aggregate, a Galleria Business MAE.
(h)
Except for such matters as would not be reasonably expected to have a Galleria Business MAE, since March 31, 2015, the Galleria Business has been
conducted in the Ordinary Course of the Galleria Business.
(i)
There are no Liabilities of the Galleria Business or any member of the Galleria Group other than any such Liabilities (i) that would not be required to be
reflected in financial statements (or the notes thereto) of the Galleria Business that were prepared in accordance with GAAP, (ii) that are specifically reserved against on the
Financial Statements or reflected in the notes thereto, (iii) that have been incurred since March 31, 2015 in the Ordinary Course of the Galleria Business, (iv) that are
Excluded Liabilities or (v) that are Liabilities that relate to the Retail Styling Business.
(j)
Since March 31, 2015, Parent and each of its Subsidiaries has not taken or failed to take any action that, had such action been taken or failed to have been
taken after the date hereof, would have required Acquirors consent under Section 5.01(b)(ii)(B) of this Agreement.
32
3.11 Taxes . Except as would not reasonably be expected to have a Galleria Business MAE, (a) no Security Interests for Taxes exist (other than Permitted
Encumbrances), and no outstanding claims for Taxes have been asserted in writing, with respect to the Galleria Business, the Galleria Assets or the Galleria Liabilities, (b)
Parent and its Subsidiaries have paid all Taxes required to be paid by them with respect to the Galleria Business, the Galleria Assets and the Galleria Liabilities, (c) neither
SplitCo nor any of its Subsidiaries has distributed stock of another Person or had its stock distributed by another Person in a transaction (other than the Distribution or a
transaction effected in connection therewith) that was intended to be governed in whole or in part by Section 355 of the Code in the two years prior to the date of this
Agreement, and (d) neither Parent nor SplitCo has taken or agreed to take any action or knows of any fact, agreement, plan or other circumstance that has prevented, or
would reasonably be expected to prevent, the Intended Tax-Free Treatment. Except for the representations and warranties in Section 3.09 and Section 3.10 , the
representations and warranties contained in this Section 3.11 constitute the sole and exclusive representations and warranties of Parent relating to Taxes.
3.12 Brokers or Finders Fee . Neither Parent nor any of its Subsidiaries has any liability or obligation to pay any fees or commissions to any broker, finder or
other similar agent with respect to the transactions contemplated by this Agreement for which SplitCo or Acquiror or any of its Affiliates (including the Galleria Entities)
could become liable or obligated.
3.13 Title to Properties; Security Interests . Except as would not, individually or in the aggregate, be material to the Galleria Business, Parent and its
Subsidiaries have good and valid title to, or, if applicable, valid leasehold interests in, or valid license or right to use, all Galleria Assets (other than the Owned Real
Property, the title of which is the subject of Section 3.16(c) ), in each case as such property is currently being used, subject to no Security Interests other than Permitted
Encumbrances.
3.14 Sufficiency; Condition of Assets . (a) Except as set forth in Section 3.14 of the Parent Disclosure Letter, the Galleria Assets, including any Assets acquired
after the date hereof and prior to the Closing for primary use by the Galleria Business (or, in the case of the Non-Color Caldera Business, for exclusive use in the Non-Color
Caldera Business) in connection with the Restructuring and the implementation of the Transition Plan, together with the Assets for which access thereto is otherwise
provided in this Agreement or in the Ancillary Agreements, including in Section 1.08 , Section 5.23 , Section 5.24 and Section 5.25 of this Agreement, are sufficient to
conduct each of the Adjusted Galleria Business (taken as a whole), the Mercury Business (excluding the Retained Businesses), the Kosmos Business, the Salon Professional
Business, the Retail Color Business and the Retail Styling Business, in each case immediately after the Business Transfer Time, in substantially the same manner as which
each such business is being conducted on the date hereof, including the sourcing, manufacturing, distributing and developing of the products of each such business in all
material respects as such products are currently being sourced, manufactured, distributed and developed by each such business, as applicable, in substantially the same
quantities and to such specifications currently manufactured by each such business, as applicable, in all material
33
respects , by Parent and its Subsidiaries in all material respects (it being understood, however, that as a result of the Restructuring or the implementation of the Transition
Plan, (A) the Galleria Assets may differ in some respects from the Assets utilized to conduct the Galleria Business prior to the Closing and (B) the method in which the
Galleria Assets are utilized to conduct the Galleria Business immediately following the Closing may be different than prior to the Closing). Notwithstanding the foregoing,
for purposes of determining the accuracy of this representation, the impacts of any restructuring decisions made pursuant to the Transition Plan or otherwise made with the
consent of the Acquiror, including any Acquiror consent to the alteration or elimination of certain activities of the Galleria Business and the extent to which any Assets are
not made available to SplitCo after the Restructuring as a result of decisions or actions to which Acquiror consented prior to Closing, will not be considered.
(b)
The tangible Galleria Assets are in good condition in all material respects, reasonable wear and tear excepted, except as would not materially adversely
affect the continued production of the products of the Galleria Business in the quality and quantity as such products are being manufactured and sold by the Galleria
Business as of the date of this Agreement in all material respects. The plants, buildings and structures included in the Galleria Assets are structurally sound in all material
respects, have access to public roads or valid easements for such ingress and egress and have access to water supply, storm and sanitary sewer facilities, telephone, gas and
electrical connections, fire protection, drainage and other similar systems, in each case as necessary to permit the use of such plants, buildings and structures in the conduct
of the Galleria Business in all material respects as currently conducted.
(c)
Notwithstanding anything to the contrary, the representations and warranties set forth in this Section 3.14 will not be deemed to be a representation or
warranty that any of such activities can or will be conducted without infringement, other violation or use of the Intellectual Property of any Third Party, and the Parties
hereby acknowledge that, to the extent any such representation or warranty is made, it is exclusively in Section 3.05(c) .
3.15 Information To Be Supplied . The information supplied or to be supplied by Parent for inclusion in the Acquiror Filings to be filed with the Commission
will not, on the date of its filing or, in the case of the Acquiror Form S-4 or the SplitCo Form 10/S-4, at the time it becomes effective under the Securities Act or Exchange
Act, as applicable, or on the date the Information Statement is mailed to the Acquiror Stockholders, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading.
34
3.16 Real Property . (a) Section 3.16(a) of the Parent Disclosure Letter sets forth a list of (i) all material real property and interests in material real property
owned in fee by Parent or any of its Subsidiaries that is primarily used in connection with the Galleria Business (or, in the case of the Non-Color Caldera Business,
exclusively used in connection with the Non-Color Caldera Business) (the Owned Real Property ) as of the date hereof, (ii) any material real property leases, subleases,
licenses or occupancy agreements to which the Parent or any of its Subsidiaries is a party, whether as a lessor or a lessee that is primarily used in the Galleria Business (or,
in the case of the Non-Color Caldera Business, exclusively used in connection with the Non-Color Caldera Business) (the Real Property Leases , and such real property,
the Leased Real Property ) as of the date hereof, and (iii) any other real property that is owned in fee or leased, subleased, licensed or otherwise used by Parent or any of
its Subsidiaries and utilized by Parent or any of its Subsidiaries to manufacture, distribute or sell the products of the Galleria Business that is material to, but is not primarily
used in, the Galleria Business (or, in the case of the Non-Color Caldera Business, exclusively used in connection with the Non-Color Caldera Business) ( Other
Operational Real Property ) as of the date hereof.
(b)
True, complete (in all material respects) and correct copies of all Real Property Leases have been made available to Acquiror prior to the date of this
Agreement. Each Real Property Lease is unmodified except as set forth in any amendments delivered to Acquiror, true, complete and correct copies of which have been
made available to Acquiror prior to the date of this Agreement, in the case of such amendments in existence as of such date, and promptly following entry into any other
amendments and in no event later than five Business Days prior to the Closing Date, in the case of such amendments entered into after the date of this Agreement, and there
are no understandings, oral or written, between the parties to any Real Property Lease which in any manner vary the obligations or rights of any party thereunder. Each Real
Property Lease is a legal, valid and binding agreement and is in full force and effect and enforceable by Parent or such Subsidiary in accordance with its terms. Except as
has not been and would not reasonably be expected to be material to the Galleria Business, (i) each of Parent and its Subsidiaries has performed all obligations required to
be performed by it to date under the Real Property Leases to which it is a party and there are no disputes with respect to any Real Property Lease, (ii) neither Parent nor any
of its Subsidiaries is in breach or default under any of the Real Property Leases nor, to the Knowledge of Parent, is any other party in breach or default under any such Real
Property Lease and (iii) no event has occurred or failed to occur which, with the delivery of notice, the passage of time or both, would constitute such a breach or default of
such Real Property Lease.
(c)
Except as would not, individually or in the aggregate, be material to the Galleria Business, Parent or a Subsidiary of Parent has good, valid and
marketable fee simple title to all Owned Real Property and such good, valid and marketable fee simple title is not subject to any Security Interests other than Permitted
Encumbrances.
(d)
No parcel of Owned Real Property or, to the Knowledge of Parent, no parcel of Leased Real Property is subject to any Order to be sold or being
condemned, expropriated or otherwise taken by any public authority with or without payment of compensation therefor nor, to the Knowledge of Parent, has any
condemnation, expropriation or taking been proposed, except as would not be material to the Galleria Business.
35
(e)
As of the date hereof, neither Parent nor any of its Subsidiaries has received any written notice from any landlord under any of the Real Property Leases
indicating that it will not be exercising any renewal options under the Real Property Leases.
3.17
Business:
Environmental Matters . (a) Except as is not, and would not reasonably be expected to be, individually or in the aggregate, material to the Galleria
(i)
insofar as it relates to the Galleria Business (including the Owned Real Property, Leased Real Property and Other Operational Real Property
(collectively, the Real Property )), Parent and each of its Subsidiaries, are in compliance with all Environmental Laws (which compliance includes the possession by
Parent and each of its Subsidiaries of all Governmental Approvals required pursuant to Environmental Law and compliance with the terms and conditions thereof);
(ii)
there is no material Environmental Claim (with which Parent has been given written notice or of which Parent otherwise has Knowledge) pending
or, to the Knowledge of Parent, threatened against Parent, any of its Subsidiaries or, to the Knowledge of Parent, against any Person whose liability for such Environmental
Claims Parent or any of its Subsidiaries has or may have retained or assumed either contractually or by operation of law;
(iii)
neither Parent nor any of its Subsidiaries has entered into or is subject to any outstanding Order under any Environmental Law regarding either
the Galleria Business or any Real Property insofar as it relates to the Galleria Business; and
(iv)
neither Parent nor any of its Subsidiaries has Released any Hazardous Materials at or from any Real Property in a manner that requires
remediation under any Environmental Law.
(b)
The representations and warranties contained in this Section 3.17 and in Sections 3.03 and 3.10 constitute the sole and exclusive representations and
warranties of Parent relating to compliance with or Liability under any Environmental Law or Releases of Hazardous Materials.
3.18 Mercury Business Perfume Oils . (a) Section 3.18(a) of the Parent Disclosure Letter sets forth (i) a complete and accurate list of the externally developed
perfume oils that are used in the Mercury Fragrance Products as of the date hereof (the Exclusive Third-Party Perfume Oils ) and (ii) for each Exclusive Third-Party
Perfume Oil (A) the name of the perfume oil supplier (each, an Existing Perfume Oil Supplier and, collectively, the Existing Perfume Oil Suppliers ) used by Parent
or any of Parents Affiliates as of the date hereof and (B) the name of the Mercury Fragrance Products in which such Exclusive Third-Party Perfume Oil is used as of the
date hereof. The Exclusive Third-Party Perfume Oils are exclusively used in the Mercury Business and no other perfume oils (other than Exclusive Parent Perfume Oils)
are used in the Mercury Fragrance Products as of the date hereof.
36
(c)
Section 3.18(b) of the Parent Disclosure Letter sets forth a complete and accurate list of (i) Parents internally developed perfume oils that are
used in the Mercury Fragrance Products as of the date hereof (the Exclusive Parent Perfume Oils and, together with the Exclusive Third-Party Perfume Oils, the
Perfume Oils ) and (ii) the name of the Mercury Fragrance Products in which such Exclusive Parent Perfume Oil is used as of the date hereof. The Exclusive Parent
Perfume Oils are exclusively used in the Mercury Business and no other perfume oils (other than Exclusive Third-Party Perfume Oils) are used in the Mercury Fragrance
Products as of the date hereof.
3.19 Ancillary Fragrances . (a) Sections 3.19(a)(i) and 3.19(a)(ii) of the Parent Disclosure Letter set forth (i) a complete and accurate list of the externally
developed fragrances that are currently used in the Non-Mercury Products and Non-Hydroalcoholic Products as of the date hereof (the Third-Party Ancillary Fragrances
) and (ii) for each Third-Party Ancillary Fragrance, the name of the fragrance supplier (each, an Existing Ancillary Fragrance Supplier and, collectively, the Existing
Ancillary Fragrance Suppliers ) used by Parent or any of Parents Affiliates as of the date hereof. The Third-Party Ancillary Fragrances set forth on Section 3.19(a)(i) of
the Parent Disclosure Letter are the Exclusive Third-Party Ancillary Fragrances . The Third-Party Ancillary Fragrances set forth on Section 3.19(a)(ii) of the Parent
Disclosure Letter are the Non-Exclusive Third-Party Ancillary Fragrances .
(b)
Sections 3.19(b)(i) and Section 3.19(b)(ii) of the Parent Disclosure Letter set forth a complete and accurate list of Parents internally developed
fragrances that are used in the Non-Mercury Products and the Non-Hydroalcoholic Products as of the date hereof (the Parent Ancillary Fragrances and, together with the
Third-Party Ancillary Fragrances, the Non-Hydroalcoholic Fragrances ). The Parent Ancillary Fragrances set forth on Section 3.19(b)(i) of the Parent Disclosure Letter
are the Exclusive Parent Ancillary Fragrances . The Parent Ancillary Fragrances set forth on Section 3.19(b)(ii) of the Parent Disclosure Letter are the Non-Exclusive
Parent Ancillary Fragrances .
3.20 No Other Representations or Warranties; Disclaimer; Acknowledgement by Acquiror . Except for the representations and warranties of Parent
expressly set forth in this Article III and the Ancillary Agreements, neither Parent nor any other Person makes any other express or implied representation or warranty on
behalf of Parent or any of its Subsidiaries (including SplitCo) with respect to SplitCo, its Subsidiaries, the Galleria Assets, the Galleria Business or the transactions
contemplated by this Agreement and the Ancillary Agreements or the accuracy or completeness of the information concerning the Galleria Business provided by Parent or
any of its Subsidiaries. The representations and warranties made in this Agreement and the Ancillary Agreements with respect to SplitCo, its Subsidiaries, the Galleria
Assets, the Galleria Business and the transactions contemplated by this Agreement and the Ancillary Agreements are in lieu of all other representations and warranties of
Parent and its Subsidiaries might have given Acquiror, including implied warranties of merchantability and implied warranties of fitness for a particular purpose. Acquiror,
on its own behalf and on behalf of its respective Subsidiaries and Affiliates (including after the Closing, SplitCo), acknowledges that all other warranties that Parent and its
Subsidiaries gave or
37
might have given, or which might be provided or implied by applicable Law or commercial practice, with respect to SplitCo, its Subsidiaries, the Galleria Assets, the
Galleria Business, are hereby expressly excluded. Acquiror, on its own behalf and on behalf of its respective Subsidiaries and Affiliates (including after the Closing,
SplitCo), acknowledges that, except as provided herein, neither Parent nor any of its Subsidiaries nor any other Person acting on their behalf will have or be subject to any
Liability or indemnification obligation to Acquiror or any other Person acting on its behalf resulting from the distribution in written or oral communication to Acquiror, or
use by Acquiror of, any information, documents, projections, forecasts or other material made available to Acquiror, confidential information memoranda or management
interviews and presentations in expectation of the transactions contemplated by this Agreement and the Ancillary Agreements. For the avoidance of doubt, this Section 3.20
will not have any effect on any representation or warranty made by Parent or any member of the Parent Group in this Agreement or any Ancillary Agreement.
IV.
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
Acquiror hereby represents and warrants to Parent that, except as (i) set forth in the applicable section or subsection of the Acquiror Disclosure Letter (interpreted as
contemplated by Section 10.13 ) or (ii) to the extent disclosed in, and reasonably apparent from, any report, schedule, form or other document filed with, or furnished to, the
Commission by Acquiror and publicly available prior to the date of this Agreement (other than any forward-looking disclosures set forth in any risk factor section, any
disclosures in any section relating to forward-looking statements and any other similar disclosures included therein to the extent that they are primarily cautionary in nature)
and as provided in Section 4.19 Parent acknowledges:
4.01 Due Organization, Good Standing and Corporate Power . Acquiror and each of its Subsidiaries is a corporation or limited liability company or the
equivalent thereof duly organized, validly existing and in good standing under the Laws of the jurisdiction of its incorporation, and has the requisite corporate power and
authority to own, lease and operate its properties, to carry on its business as now being conducted, and to enter into and perform its obligations under this Agreement or the
Ancillary Agreements to which it is, or will be, a party and to consummate the transactions contemplated hereby and thereby. Acquiror and each of its Subsidiaries is duly
qualified or licensed to do business and is in good standing in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification necessary, except in such jurisdictions where the failure to be so qualified or licensed and in good standing has not been or would not
reasonably be expected to be, individually or in the aggregate, material to the Acquirors business.
38
4.02
Authorization of Agreement . The execution, delivery and performance of this Agreement and the Ancillary Agreements by Acquiror, and the
consummation by Acquiror of the transactions contemplated hereby and thereby, have been duly authorized and approved by its board of directors (and this Agreement has
been adopted by Acquiror as the sole stockholder of Merger Sub), and no other corporate or stockholder action on the part of Acquiror or any member of the Acquiror
Group is necessary to authorize the execution, delivery and performance of this Agreement and the Ancillary Agreements or the consummation of the transactions
contemplated hereby or thereby. This Agreement has been, and the Ancillary Agreements, when executed, will be, duly executed and delivered by Acquiror and, to the
extent it is a party thereto, each is (or when executed will be) a valid and binding obligation of Acquiror and Merger Sub enforceable against Acquiror and Merger Sub in
accordance with its terms, subject to the Enforceability Exception.
4.03 Consents and Approvals; No Violations . Assuming that (a) the filings required under the HSR Act are made and all applicable waiting periods thereunder
have been terminated or expired and any Governmental Approvals required under any other Antitrust Law have been obtained or satisfied, (b) the applicable requirements
of the Securities Act and the Exchange Act are met, (c) the requirements under any applicable state securities or blue sky Laws are met, (d) the requirements of the NYSE
in respect of the listing of the shares of Acquiror New Common Stock to be issued hereunder are met, (e) the filing of the Certificate of Merger and other appropriate
merger documents, if any, as required by the DGCL, and the filing of the Acquiror Certificate with the Secretary of State of the State of Delaware pursuant to Section 2.05
are made and (f) the Acquiror Stockholder Approval is obtained, the execution and delivery of this Agreement and the Ancillary Agreements by Acquiror and Merger Sub
and the consummation by Acquiror and Merger Sub of the transactions contemplated hereby and thereby do not and will not (i) violate or conflict with any provision of the
certificate of incorporation or bylaws (or the comparable governing documents) of Acquiror or any member of the Acquiror Group, (ii) violate or conflict with any Law or
Order of any Governmental Authority applicable to Acquiror or any member of the Acquiror Group or by which any of its or their properties or assets may be bound, (iii)
require any Governmental Approval, or (iv) result in a violation or breach of, conflict with, constitute (with or without due notice or lapse of time or both) a default under
or give rise to any right of termination, cancellation or acceleration under or give rise to any obligation, right of termination, cancellation, acceleration or increase of any
obligation or a loss of a material benefit under, any of the terms, conditions or provisions of any Contract to which any member of the Acquiror Group is a party, excluding
in the case of clauses (ii) through (iv) above, conflicts, violations, approvals, breaches, defaults, rights of terminations, cancellations, accelerations, increases or losses
which would not reasonably be expected, individually or in the aggregate, to be material to the Acquirors business.
4.04 Brokers or Finders Fee . Neither Acquiror nor any of its Subsidiaries has any liability or obligation to pay any fees or commissions to any broker, finder
or other similar agent with respect to the transactions contemplated by this Agreement or the Ancillary Agreements for which Parent or any of its Subsidiaries could
become liable or obligated.
39
4.05 Capitalization . (a) The authorized capital stock of Acquiror consists of 1,187,754,370 shares of all classes of stock, of which 800,000,000 shares are
designated as Class A Common Stock, 367,754,370 are designated as Class B Common Stock and 20,000,000 shares are designated as preferred stock, par value $0.01 per
share ( Acquiror Preferred Stock ), each as of the date hereof, and, assuming receipt of the Acquiror Stockholder Approval and the filing of the amendment to the
Amended and Restated Certificate of Acquiror with the Secretary of State of the State of Delaware, as of the Closing Date, the authorized shares of Class A Common Stock
will increase to 1,000,000,000. As of the close of business on June 30, 2015, there were 360,862,168 shares of Acquiror Common Stock issued and outstanding, of which
98,799,798 shares were designated as Class A Common Stock and 262,062,370 shares were designated as Class B Common Stock, there were 1,889,187 shares of Acquiror
Preferred Stock (designated as Series A Preferred Stock, the Series A Preferred Stock ) issued and outstanding, and 14,027,924 shares of Class A Common Stock were
reserved for issuance upon the exercise of outstanding options (the Acquiror Options ) for Acquiror Common Stock and, between such date and the date hereof, Acquiror
has not issued shares of Acquiror Common Stock other than pursuant to the exercise of such options to purchase shares of Acquiror Common Stock. All issued and
outstanding shares of Acquiror Common Stock have been duly authorized and validly issued and are fully paid and nonassessable.
(b)
As of the date of this Agreement, there is no outstanding Acquiror Capital Stock other than those shares of Acquiror Capital Stock referenced in the
second sentence of Section 4.05(a) , 4,295,566 restricted stock units granted pursuant to the Acquiror Compensation and Benefit Plans and 49,432 phantom units granted
pursuant to the Non-Plan Phantom Unit Award agreements ( Phantom Units ). As of the date on which the Galleria Stock Amount is calculated through the Closing Date,
there will be no outstanding Acquiror Capital Stock other than Class A Common Stock (including restricted stock units convertible into Class A Common Stock, Acquiror
Options and Phantom Units), the shares of Class B Common Stock that will be converted into Class A Common Stock prior to the Closing as contemplated by the JAB
Letter Agreement and the Series A Preferred Stock.
(c)
As of the date of this Agreement, and except for the Acquiror Options, there are no outstanding or authorized options, warrants, rights, subscriptions,
claims of any character, agreements, obligations, convertible or exchangeable securities, or other commitments, contingent or otherwise pursuant to which Acquiror or any
of its Subsidiaries is or may become obligated to issue shares of any Acquiror Capital Stock or any securities convertible into, exchangeable for, or evidencing the right to
subscribe for, any Acquiror Capital Stock (collectively, Acquiror Equity Interests ). There are no outstanding obligations of Acquiror to repurchase, redeem or otherwise
acquire any outstanding Acquiror Capital Stock or Acquiror Equity Interests. All of the Acquiror Equity Interests outstanding as of the date hereof and outstanding as of the
Closing are, and will be, exercisable, exchangeable or convertible into Class A Common Stock in accordance with the terms thereof on a one-for-one basis, other than the
Series A Preferred Stock.
(d)
The authorized capital stock of Merger Sub consists of 1,000 shares of common stock, par value $0.01 per share ( Merger Sub Common Stock ). As of
the date hereof, there were 100 shares of Merger Sub Common Stock issued and outstanding, all of which are owned by Acquiror.
40
(e)
As of the date of this Agreement, no member of the Acquiror Group has any Indebtedness except for the Indebtedness that is reflected on the balance
sheet of the Acquiror included in the Quarterly Report on Form 10-Q of the Acquiror for the quarter ended March 31, 2015, filed with the Commission on May 7, 2015 (to
the extent reflected thereon).
(f)
plus
As of the date on which the Galleria Stock Amount is calculated through the Closing Date, the Fully Diluted Basis will be equal to:
(i)
374,890,092, representing the aggregate number of shares of Acquiror Common Stock and Acquiror Options outstanding as of the date hereof,
(ii)
4,295,566, representing the aggregate number of restricted stock units outstanding on the date hereof, plus
(iv)
49,432, representing the aggregate number of Phantom Units outstanding on the date hereof, plus
(iii)
the number of Acquiror Options or restricted stock units convertible into Class A Common Stock that are issued after the date hereof and prior to
the date on which the Galleria Stock Amount is calculated, which, in the aggregate, will be no greater than 15,000,000, as contemplated by Section 5.06 ,
(v)
1,889,187, representing the aggregate number of shares of Series A Preferred Stock outstanding on the date hereof, plus such additional number
of shares of Series A Preferred Stock that may be issued after the date hereof and prior to the date on which the Galleria Stock Amount is calculated, which will be no
greater than 1,000,000, as contemplated by Section 5.06 .
(g) As of the date of this Agreement, there are no voting trusts, poison pills or other similar stockholder rights plans, agreements, understandings or Contracts
to which Acquiror or any of its Subsidiaries is a party.
4.06 Intellectual Property . (a) Except as would not, individually or in the aggregate, be material to the Acquirors business, to the Knowledge of Acquiror, the
Acquirors business as currently conducted by Acquiror and its Subsidiaries does not, and Acquirors business immediately following the Closing (other than the Galleria
Business) will not, infringe, misappropriate or otherwise violate any enforceable Intellectual Property right of any third party. Except as would not, individually or in the
aggregate, be material to the Acquirors business, during the past two years, no third party has made any written claim or demand or instituted any litigation against
Acquiror or any of its Subsidiaries, or to the Knowledge of Acquiror threatened the same in writing, and neither Acquiror nor any of its Subsidiaries has received any
written notice of such a claim, demand or litigation, that (i) challenges the rights of Acquiror and its Subsidiaries in respect of any of the Intellectual Property utilized by
them or (ii) asserts that Acquiror or any of its Subsidiaries is or was infringing, misappropriating or otherwise violating the Intellectual Property rights of any
41
third party. None of the Intellectual Property utilized by Acquiror or its Subsidiaries is subject to any outstanding Order that materially limits the use of such Intellectual
Property by Acquiror and its Subsidiaries as currently used by Acquiror and its Subsidiaries. To the Knowledge of Acquiror, no Person is engaging in any activity that
materially infringes, misappropriates or otherwise violates any of the Intellectual Property of Acquiror or its Subsidiaries.
(d)
Notwithstanding whether any other representations or warranties in this Article IV could be read to apply to matters involving Intellectual Property, the
representations and warranties set forth in Section 4.02 , Section 4.03 , Section 4.06 , Section 4.09(a) (and Section 4.09(b) , Section 4.09(c) and Section 4.09(d) , as
applicable thereto), Section 4.11 , Section 4.12 , Section 4.14 and Section 4.16 constitute the sole and exclusive representations and warranties under this Article IV with
respect to Intellectual Property.
4.07 Litigation . There are no Actions pending against Acquiror or any of its Subsidiaries or, to the Knowledge of Acquiror, threatened against Acquiror or any
of its Subsidiaries (or any of their respective properties, rights or franchises), at law or in equity, or before or by any Governmental Authority, that is or would reasonably
be expected to be, individually or in the aggregate, material to the Acquirors business. Neither Acquiror nor any of its Subsidiaries is subject to any Order that is or would
reasonably to be, individually or in the aggregate, material to the Acquirors business.
4.08 Compliance With Laws . (a) Except as has not been and would not reasonably be expected to be material to the Acquirors business, Acquiror and its
Subsidiaries are conducting their business in compliance with applicable Laws. None of the Governmental Approvals required for the continued conduct of the Acquirors
business as such business is currently being conducted will lapse, terminate, expire or otherwise be impaired as a result of the consummation of the transactions
contemplated hereby or by the Ancillary Agreements, except as has not been and would not reasonably be expected to be material to the Acquirors business.
(e)
Notwithstanding the foregoing, the representations and warranties set forth in this Section 4.08 do not apply to Intellectual Property, employees and
employee benefits, Taxes or environmental matters, which are addressed in Sections 4.06 , 4.10 , 4.12 (except as set forth therein) and 4.18 , respectively.
42
4.09 Contracts . (a) Section 4.09(a) of the Acquiror Disclosure Letter contains a list of each Contract to which Acquiror or any of its Subsidiaries is a party or by
which any of them or any of their properties or assets may be bound that is in effect as of the date of this Agreement and that falls in one or more of the following
categories (collectively, whether or not scheduled, the Acquiror Material Contracts ):
(i)
a Contract containing covenants binding upon Acquiror or its Subsidiaries that restrict during any period of time the ability of Acquiror or any of
its Subsidiaries to compete or engage in any business or geographic area;
(ii)
a Contract containing any most favored nations, exclusivity or similar right or undertaking in favor of any party other than Acquiror and its
Subsidiaries with respect to any material goods or services purchased or sold by Acquiror or its Subsidiaries;
(iii)
a lease, sublease or similar Contract with any Person under which Acquiror or any of its Subsidiaries is a lessor or sublessor of, or makes
available for use to any Person, any real property;
(iv)
a lease, sublease or similar Contract with any Person under which (A) Acquiror or any of its Subsidiaries is lessee of, or holds or uses, any
material machinery, equipment, vehicle or other tangible personal property owned by any Person or (B) Acquiror or any of its Subsidiaries is a lessor or sublessor of, or
makes available for use by any Person, any material tangible personal property owned or leased by Acquiror or its Subsidiaries, in any such case which has an aggregate
future liability or receivable, as the case may be, in excess of $10,000,000 in any calendar year and is not terminable by Acquiror or such Subsidiary by notice of not more
than 60 days for a cost, individually or together with any similar Contract, of less than $10,000,000;
(v)
a license or sublicense or other Contract under which Acquiror or any of its Subsidiaries is licensee or licensor, or sub-licensee or sub-licensor of,
or otherwise grants or is granted a right to use any material Intellectual Property used or held for use in the Acquiror Groups business other than licenses to any shrink
wrap, click wrap or other software that is generally commercially available and not customized;
(vi)
a Contract for the sale of any Subsidiary or material asset or collection of assets that are material to the Acquiror Group in the aggregate, other
than Contracts entered into in the Ordinary Course of the Acquiror Groups business that provide for the sale of inventories (including any finished goods or work-inprocess) or obsolete equipment;
(vii)
a Contract involving the payment of more than $10,000,000 for the purchase of materials, supplies, goods, services, equipment or other assets
and that is (A) with any vendor from whom Acquiror or any of its Subsidiaries purchased more than $10,000,000, in the aggregate, in the fiscal year ended June 30, 2014,
or would reasonably be expected to provide for the purchase of more than $10,000,000 in the aggregate, in the fiscal year ended June 30, 2015 or any future 12-month
period ended June 30 and (B) not terminable at will by Acquiror or any of its Subsidiaries on less than 60 days notice without penalty;
43
(viii)
a Contract with a customer of Acquiror or any of its Subsidiaries that involves, or would reasonably be expected to involve, (A) the payment of
more than $10,000,000 by such customer to the Acquiror Group in the fiscal year ended June 30, 2014 or any future 12-month period ended June 30 (other than purchase
orders submitted in the Ordinary Course of the Acquiror Groups business) or (B) the payment of more than $10,000,000 to such customer by the Acquiror Group in the
fiscal year ended June 30, 2014 or any future 12-month period ended June 30 pursuant to a joint business plan or other similar incentive arrangement;
(ix)
a Contract relating to any Indebtedness to a third party that individually is in excess of $5,000,000;
(xi)
a material settlement or compromise of any suit, claim, proceeding or dispute that would materially and adversely impact Acquiror or any of its
(xii)
a Contract establishing or providing for any material partnership, strategic alliance, joint venture or material collaboration;
(xiv)
a Contract that constitutes a Material Contract of Acquiror as such term is defined in Item 601(b)(10) of Regulation S-K promulgated by the
(x)
a Contract under which (A) any Person has directly or indirectly guaranteed or assumed Indebtedness, liabilities or obligations of a Acquiror or
any of its Subsidiaries or (B) Acquiror or any of its Subsidiaries has directly or indirectly guaranteed or assumed Indebtedness, Liabilities or obligations of another Person,
in each case in excess of $5,000,000 individually or $10,000,000 in the aggregate;
Subsidiaries;
(xiii)
Commission.
any other Contract not made in the Ordinary Course of the Acquiror Groups business that is material to Acquiror and its Subsidiaries; and
(b)
Each Acquiror Material Contract is valid, binding and in full force and effect and is enforceable by and against Acquiror or one of its Subsidiaries in
accordance with its terms, except as has not been and would not reasonably be expected to be material to Acquiror and its Subsidiaries. Each of Acquiror and its
Subsidiaries has performed all obligations required to be performed by it to date under the Acquiror Material Contracts to which it is a party and is not in breach of or
default thereunder in any respect that would reasonably be expected to be, individually or in the aggregate, material to the Acquirors business.
(c)
Acquiror has made available to Parent a true and correct copy of each Acquiror Material Contract (or, if such Contract is not in written form, a true and
correct summary of the material terms thereof).
44
4.10 Employee Benefits . (a) Since June 30, 2012, (i) there has not been any labor strike, work stoppage or lockout with respect to the business of Acquiror and
its Subsidiaries, (ii) neither Acquiror nor Merger Sub has received written notice of any pending or threatened unfair labor practice charges against Acquiror or any of its
Subsidiaries that are pending before the National Labor Relations Board or any other state, local or foreign Governmental Authority, and (iii) neither Acquiror nor Merger
Sub has received written notice of any pending or threatened suits, actions or other proceedings in connection with the business of Acquiror or any of its Subsidiaries
brought by or on behalf of any applicant for employment, any current or former employee or any class of the foregoing before any Governmental Authority responsible for
the enforcement of employment practices Laws, except, in the case of each of clauses (i), (ii) and (iii) above, for any such matters that have not been and would not
reasonably be expected to be, individually or in the aggregate, material to the Acquirors business.
(b)
To Acquirors Knowledge, with respect to the employees of the Acquiror Group, (i) no labor union, labor organization, works council, or other employee
representative group has made a pending demand for recognition or certification, and (ii) there are no representation or certification proceedings or petitions seeking a
representation proceeding presently pending or threatened in writing to be brought or filed with the National Labor Relations Board or any other labor relations tribunal or
authority. Neither Acquiror nor Merger Sub has Knowledge of any labor union organizing activities with respect to any employees of the Acquiror Group.
(c)
As of the date of this Agreement, Acquiror has no actual Knowledge (without the obligation to conduct due inquiry) of any employee of the Acquiror
Group being in material violation of any term of any employment agreement, nondisclosure agreement, common law nondisclosure obligation, fiduciary duty,
noncompetition agreement, restrictive covenant or other obligation to a former employer of any such employee relating (i) to the right of any such employee to be
employed by the Acquiror Group or (ii) to the knowledge or use of trade secrets or proprietary information.
(d)
(i) No Liability under Title IV of ERISA has been incurred by Acquiror or any of its ERISA Affiliates which has not been satisfied in full, other than
PBGC premiums that are not past due and (ii) no event has occurred and no circumstance exists that could result in Acquiror or its ERISA Affiliates incurring a Liability
under Title IV of ERISA, that would result in any material Liability to Parent.
(e)
With respect to each Acquiror Compensation and Benefit Plan, (i) all statutory contributions due from Acquiror or any of its Subsidiaries have been made
and all amounts and Liabilities have been properly accrued and (ii) there are no actions, suits or claims pending (other than routine claims for benefits) or, to the Knowledge
of Acquiror, threatened with respect to such Acquiror Compensation and Benefit Plan, except, in the case of each of clauses (i)-(ii) above, as would not result in a material
Liability to Parent.
(f)
Acquiror has made available to Parent copies or summaries of the material terms of all of the material Acquiror Compensation and Benefit Plans
(including any material amendments thereto).
45
(g)
Each Acquiror Compensation and Benefit Plan has been maintained, operated and administered in all respects in accordance with its terms and in
compliance in all respects with all applicable Laws except, in each case, as would not result in material Liability to Parent.
(h)
Neither the execution nor delivery of this Agreement nor the consummation of the contemplated transactions under this Agreement will, whether alone or
in combination with any other event, (i) result in the accelerated vesting or payment of, or any increase in, any compensation to any employee of the Acquiror Group or (ii)
result in the entitlement of any employee or, to the Knowledge of Acquiror, independent contractor or consultant of the Acquiror Group, in either case, to any material
severance or termination pay or benefits.
4.11 Acquiror SEC Filings; Financial Statements; Absence of Changes; Undisclosed Liabilities . (a) Acquiror has timely filed, and will after the date of this
Agreement timely file, all registration statements, prospectuses, forms, reports and documents and related exhibits required to be filed by it under the Securities Act or the
Exchange Act, as the case may be, from and after December 31, 2012 (collectively, including all Commission filings filed after the date of this Agreement and prior to the
Closing, the Acquiror SEC Filings ). The Acquiror SEC Filings (i) were prepared or will after the date of this Agreement be prepared in all material respects in
accordance with the requirements of the Securities Act or the Exchange Act, as the case may be, and (ii) did not at the time they were filed and will not when filed after the
date of this Agreement contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they were made, not misleading. No Subsidiary of Acquiror is subject to the periodic reporting
requirements of the Exchange Act.
(b)
Each of the consolidated financial statements of Acquiror (including, in each case, any notes thereto) contained in the Acquiror SEC Filings were
prepared in accordance with GAAP, consistently applied, as at the dates and for the periods presented (except as may be indicated in the notes thereto and except with
respect to unaudited statements as permitted by Form 10-Q under the Exchange Act and the absence of footnote disclosures and normal and recurring adjustments), and
each presented fairly in all material respects the consolidated financial position and results of operations of Acquiror and its consolidated Subsidiaries as at the dates and for
the periods presented therein (subject, in the case of unaudited statements, to normal and recurring adjustments). The books and records of Acquiror and its Subsidiaries
have been and are being, maintained in accordance with GAAP and any other applicable legal and accounting requirements.
(c)
Since March 31, 2015, there has not occurred any event, occurrence or condition which has had or would reasonably be expected to have, individually or
in the aggregate, an Acquiror MAE.
(d)
Except for such matters as would not be reasonably expected to have an Acquiror MAE, since March 31, 2015, Acquiror and its Subsidiaries have been
operated in the Ordinary Course of the Acquiror Groups business.
46
(e)
There are no Liabilities of any member of the Acquiror Group other than any such Liabilities (i) that would not be required to be reflected in financial
statements (or the notes thereto) of the Acquirors business that were prepared in accordance with GAAP, (ii) are specifically reserved against on the financial statements
included in the Quarterly Report on Form 10-Q of the Acquiror for the quarter ended March 31, 2015, filed with the Commission on May 7, 2015, or the notes thereto, (iii)
have been incurred since March 31, 2015 in the Ordinary Course of Acquirors business, or (iv) have been incurred since March 31, 2015 outside of the Ordinary Course of
Acquirors business but that are immaterial, taken as a whole.
(f)
Since June 13, 2013, there has not occurred an Acquiror SEC Event.
(g)
Since March 31, 2015, the Acquiror has not taken or failed to take any action that, had such action been taken or failed to have been taken after the date
hereof, would have required Parents consent under Section 5.06(b)(iii)(B) of this Agreement, except as expressly provided for by this Agreement or any Ancillary
Agreement.
4.12 Taxes . Except for such matters as would not reasonably be expected to have an Acquiror MAE, (a) no Security Interests for Taxes exist (other than
Permitted Encumbrances), and no outstanding claims for Taxes have been asserted in writing, with respect to, Acquiror or any of its Subsidiaries, (b) Acquiror and its
Subsidiaries have paid all Taxes required to be paid by them, (c) neither Acquiror nor any of its Subsidiaries has distributed stock of another Person or had its stock
distributed by another Person in a transaction that was intended to be governed in whole or in part by Section 355 of the Code in the two years prior to the date of this
Agreement, and (d) neither Acquiror nor any of its Subsidiaries has taken or agreed to take any action or knows of any fact, agreement, plan or other circumstance that has
prevented, or would reasonably be expected to prevent, the Intended Tax-Free Treatment. Except for the representations and warranties in Section 4.10 and Section 4.11 ,
the representations and warranties contained in this Section 4.12 constitute the sole and exclusive representations and warranties of Acquiror relating to Taxes.
47
4.13 Title to Properties; Security Interests . Except as would not, individually or in the aggregate, be material to the Acquirors business, Acquiror and its
Subsidiaries have good and valid title to, or, if applicable, valid leasehold interests in or valid license or right to use, all of their assets (other than the Acquiror Owned Real
Property, the title of which is the subject of Section 4.17(b) ), in each case as such property is currently being used, subject to no Security Interests other than Permitted
Encumbrances.
4.14 Information To Be Supplied . The information supplied or to be supplied by Acquiror for inclusion in the Acquiror Filings to be filed with the Commission
will not, on the date of its filing or, in the case of the Acquiror Form S-4 or the SplitCo Form 10/S-4, at the time it becomes effective under the Securities Act or Exchange
Act, as applicable, or on the dates the Information Statement is mailed to the Acquiror Stockholders, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading.
4.15 Voting Requirements; Board Approval . (a) The affirmative vote or written consent of the holders of shares of Acquiror Common Stock representing at
least a majority of the voting power of Acquiror ( Acquiror Stockholder Approval ) is the only vote of any class or series of Acquiror Capital Stock or Merger Subs
capital stock necessary to approve this Agreement, the Ancillary Agreements and the transactions contemplated hereby and thereby, including the Acquiror Stock Issuance,
increase in the number of authorized shares of Acquiror Capital Stock and amendment to the Acquirors certificate of incorporation. The delivery of the Stockholder
Consent will constitute Acquiror Stockholder Approval.
(b)
The board of directors of Acquiror and Merger Sub have, at a meeting duly called and held, by unanimous vote, (i) approved this Agreement, the
Ancillary Agreements and the transactions contemplated hereby and thereby and (ii) resolved to recommend that the Acquiror Stockholders authorize the transactions
contemplated hereby and approve the Acquiror Stock Issuance, increase in the number of authorized shares of Acquiror Capital Stock and amendment to the Acquirors
certificate of incorporation. Acquiror, in its capacity as the sole stockholder of Merger Sub, has approved and adopted this Agreement.
4.16 Fairness Opinion . Acquiror has received the opinions of Barclays Capital Inc. and Morgan Stanley & Co. LLC, each dated July 8, 2015, each to the effect
that, as of such date, and based upon and subject to the conditions set forth in such opinion, the Exchange Ratio is fair, from a financial point of view, to Acquiror.
48
4.17 Real Property . (a) Section 4.17(a) of the Acquiror Disclosure Letter sets forth a list of (i) all real property and interests in material real property owned in
fee by Acquiror or any of its Subsidiaries (the Acquiror Owned Real Property ), and (ii) any material real property leases, subleases, licenses or occupancy agreements to
which the Acquiror or any of its Subsidiaries is a party, whether as a lessor or a lessee (the Acquiror Real Property Leases , and such real property, the Acquiror Leased
Real Property ).
(b)
Except as would not, individually or in the aggregate, be material to the Acquiror business, Acquiror or a Subsidiary of Acquiror has good, valid and
marketable fee simple title to all Acquiror Owned Real Property, and such good, valid and marketable fee simple title is not subject to any Security Interests except for
Permitted Encumbrances.
(c)
No parcel of Acquiror Owned Real Property or, to the Knowledge of Acquiror, no parcel of Acquiror Leased Real Property is subject to any Order to be
sold or being condemned, expropriated or otherwise taken by any public authority with or without payment of compensation therefor nor, to the Knowledge of Acquiror,
has any condemnation, expropriation or taking been proposed, except as set forth on Section 4.17(c) of the Parent Disclosure Letter.
(d)
As of the date hereof, neither Acquiror nor any of its Subsidiaries has received any notice from any landlord under any of the Acquiror Real Property
Leases indicating that it will not be exercising any renewal options under the Acquiror Real Property Leases.
4.18
business:
Environmental Matters . (a) Except as is not, and would not reasonably be expected to be, individually or in the aggregate, material to the Acquirors
(i)
Acquiror and each of its Subsidiaries, are in compliance with all Environmental Laws (which compliance includes the possession by Acquiror and
each of its Subsidiaries of all Governmental Approvals required pursuant to Environmental Law and compliance with the terms and conditions thereof);
(ii)
there is no material Environmental Claim (with which Acquiror has been given written notice or of which Acquiror otherwise has Knowledge)
pending or, to the Knowledge of Acquiror, threatened against Acquiror, any of its Subsidiaries or, to the Knowledge of Acquiror, against any Person whose liability for
such Environmental Claims Acquiror or any of its Subsidiaries has or may have retained or assumed either contractually or by operation of law;
(iii)
neither Acquiror nor any of its Subsidiaries has entered into or is subject to any outstanding Order under any Environmental Law; and
(iv)
neither Acquiror nor any of its Subsidiaries has Released any Hazardous Materials at or from any Acquiror Owned Real Property or Acquiror
Leased Real Property in a manner that requires remediation under any Environmental Law.
49
(b)
The representations and warranties contained in this Section 4.18 and in Sections 4.03 and 4.11 constitute the sole and exclusive representations and
warranties of Acquiror relating to compliance with or Liability under any Environmental Law or Releases of Hazardous Materials.
4.19 No Other Representations or Warranties; Acknowledgment by Parent . Except for the representations and warranties of Acquiror expressly set forth in
this Article IV and in the Ancillary Agreements, neither Acquiror nor any other Person makes any other express or implied representation or warranty on behalf of Acquiror
or any of its Subsidiaries with respect to Acquiror or the transactions contemplated by this Agreement and the Ancillary Agreements or the accuracy or completeness of the
information concerning the Acquiror Group provided by Acquiror or any of its Subsidiaries. The representations and warranties made in this Agreement and the Ancillary
Agreements with respect to Acquiror and the transactions contemplated by this Agreement and the Ancillary Agreements are in lieu of all other representations and
warranties Acquiror and its Subsidiaries might have given Parent, including implied warranties of merchantability and implied warranties of fitness for a particular purpose.
Parent, on its own behalf and on behalf of its respective Subsidiaries and Affiliates (including prior to the Closing, SplitCo), acknowledges that all other warranties that
Acquiror and its Subsidiaries gave or might have given, or which might be provided or implied by applicable Law or commercial practice, with respect to Acquiror are
hereby expressly excluded. Parent, on its own behalf and on behalf of its respective Subsidiaries and Affiliates (including prior to the Closing, SplitCo), acknowledges that,
except as provided herein, neither Acquiror nor any of its Subsidiaries nor any other Person acting on their behalf will have or be subject to any Liability or indemnification
obligation to Parent or any other Person acting on its behalf resulting from the distribution in written or oral communication to Parent, or use by Parent of, any information,
documents, projections, forecasts or other material made available to Parent, confidential information memoranda or management interviews and presentations in
expectation of the transactions contemplated by this Agreement and the Ancillary Agreements. For the avoidance of doubt, this Section 4.19 will not have any effect on any
representation or warranty made by Acquiror or any member of the Acquiror Group in this Agreement or any Ancillary Agreement.
50
V.
COVENANTS
5.01 Conduct of Galleria Business Pending the Closing . (a) Except as expressly provided by this Agreement or any Ancillary Agreement, as set forth on
Section 5.01 of the Parent Disclosure Letter, as required in connection with the Restructuring or as expressly set forth in the Transition Plan, as required by applicable Law
or as expressly consented to in writing by Acquiror (such consent not to be unreasonably withheld, conditioned or delayed), from the date of this Agreement until the
Closing (the Pre-Closing Period ), Parent and each of its Subsidiaries will use its respective Commercially Reasonable Efforts to, (i) conduct the Galleria Business in the
Ordinary Course of the Galleria Business in all material respects, (ii) preserve (other than the sale of Assets in the Ordinary Course of the Galleria Business) the material
Galleria Assets, (iii) preserve in all material respects the material business relationships of the Galleria Business with customers, suppliers, manufacturers, distributors and
others with whom the Galleria Business deals in the Ordinary Course of the Galleria Business, and (iv) maintain the goodwill and reputation of the Galleria Business in all
material respects, including through advertising, marketing and promoting the products of the Galleria Business in the Ordinary Course of the Galleria Business.
Notwithstanding anything in this Section 5.01 to the contrary, during the Pre-Closing Period, Parent may, without breach of this Agreement, take such actions as it
determines in good faith are commercially reasonable to (w) respond to events resulting, in whole or in part, from the announcement of this Agreement and to preserve the
Galleria Business and existing material employee, customer and supplier relationships (including replacing any employees of the Galleria Business who cease to be
employed by Parent and its Subsidiaries), (x) consummate the transactions set forth on Section 5.01 of the Parent Disclosure Letter, (y) seek to receive any Consent in
respect of the Mercury Licenses and (z) to prepare for the separation, retention or disposition of a Retained Business.
(b)
Without limiting the generality of Section 5.01(a) , and except as otherwise expressly provided in this Agreement, as set forth on Section 5.01 of the
Parent Disclosure Letter, as required in connection with the Restructuring or as expressly set forth in the Transition Plan, as required by applicable Law, as required to
prepare for the separation, retention or disposition of any portion of the Mercury Business that Parent reasonably anticipates will be a Retained Business, or as expressly
consented to in writing by Acquiror (such consent not to be unreasonably withheld, conditioned or delayed), during the Pre-Closing Period, Parent will not, nor will it
permit any of its Subsidiaries to:
(i)
(A) sell, pledge, dispose of, transfer, lease, license, guarantee, encumber or authorize the sale, pledge, disposition, transfer, lease, license,
guarantee or encumbrance of any Assets that are (or would otherwise be) material Galleria Assets (excluding the Galleria IP Assets, provision for which is made in Section
5.01(b)(vii) and Section 5.01(b)(viii) ), other than any dividend of cash from a Galleria Entity or any sale of Galleria Inventory (including any finished goods or work-inprocess) or obsolete equipment or obsolete inventory in the Ordinary Course of the Galleria Business, or (B) except in accordance with the Split Plan Agreement, move any
material Galleria Assets located at the Galleria Facilities out of the Galleria Facilities other than in the
51
Ordinary Course of the Galleria Business, provided that such move will not affect whether or not an Asset is an Galleria Asset;
(ii)
(A) acquire (including by merger, consolidation or acquisition of stock or assets) any interest in any Person or any division thereof or any assets
that would be Galleria Assets, other than (x) in the Ordinary Course of the Galleria Business or (y) acquisitions of assets outside the Ordinary Course of the Galleria
Business in an aggregate amount not to exceed $200,000,000 (and provided that no such acquisitions would reasonably be expected to delay or impede the consummation
of the transactions contemplated hereby); or (B) other than Liabilities that would not be included in the Galleria Liabilities, incur any Indebtedness for borrowed money or
issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, the obligations of any Person for borrowed money,
except for (1) Indebtedness for borrowed money incurred in the Ordinary Course of the Galleria Business or in connection with transactions otherwise permitted by this
Agreement or the Ancillary Agreements, (2) Indebtedness incurred to refinance any existing Indebtedness or (3) other Indebtedness for borrowed money under existing
credit facilities;
(iii)
A) issue, sell, transfer, pledge or dispose of any shares of SplitCo Common Stock or any Galleria Equity Interests or (B) split, combine,
reclassify, redeem, repurchase, acquire (directly or indirectly) or encumber any shares of SplitCo Common Stock or Galleria Equity Interests;
(iv)
in the case of each of the following to the extent it relates solely to the Galleria Business, the Galleria Assets, the Galleria Liabilities or any
Galleria Entity, (A) make a material change in its accounting or Tax reporting principles, methods or policies, except as required by a change in GAAP, (B) make, change
or revoke any material Tax election or method of accounting on which Tax reporting is based, (C) settle or compromise any material Tax claim or Liability, or enter into
any material Tax closing agreement, or (D) amend any Tax Return if, with respect to clauses (B), (C) and (D), any such action would increase the Tax obligations of
SplitCo or any of its Subsidiaries following the Closing;
(v)
(A) adopt, amend or terminate any Compensation and Benefit Plans, (B) increase the salaries, wage rates, target bonus opportunities, equity-based
compensation, employee benefits or perquisites of any Galleria Business Employee, (C) grant or pay any benefit or amount not required under any Compensation and
Benefit Plan to any Galleria Business Employee, (D) grant or pay any severance or termination pay or increase in any manner the severance or termination pay of any
Galleria Business Employee or (E) take any action to accelerate the vesting or payment of any compensation or benefit under any Compensation and Benefit Plan to any
Galleria Business Employee, in each case of (A), (B), (C), (D) or (E), except (1) in the Ordinary Course as applicable generally to Parent Group employees in the relevant
jurisdictions, (2) in connection with the adoption or amendment of Compensation and Benefit Plans (or other practices) that are applicable generally to Parent Group
employees in the relevant jurisdictions, or (3) as required (x) to comply with applicable Law, (y) by the terms of any Compensation and Benefit Plan in effect on the date
hereof or (z) by the terms of any agreement of Parent or any of its Subsidiaries that is in effect on the date
52
hereof, the existence of which agreement does not constitute a breach of any representation, warranty or covenant in this Agreement;
(vi)
(A) amend, modify, terminate (partially or completely), grant any waiver under or give any consent with respect to, or enter into any agreement
to amend, modify, terminate (partially or completely), grant any waiver under or give any consent with respect to, any of the Galleria Material Contracts or enter into or
assume any Contract that if in effect on the date hereof would be a Galleria Material Contract, in each case, other than in the Ordinary Course of the Galleria Business, or
(B) amend, modify, terminate (partially or completely), grant any waiver under or give any consent with respect to, or enter into or assume any agreement to amend,
modify, terminate (partially or completely), grant any waiver under or give any consent with respect to, any of the Shared Business Contracts in a manner that materially
adversely impacts the Galleria Business, or enter into any Contract that if in effect on the date hereof would be a Shared Business Contract, in each case except in the
Ordinary Course of Parents businesses that are covered by such Shared Business Contract (including the Galleria Business);
(vii)
license, grant any rights to or transfer any of the material Galleria IP Assets or other material Intellectual Property owned, used or held for use
by the Galleria Business, other than grants of licenses in the Ordinary Course of the Galleria Business;
(viii)
abandon, cancel, let lapse, fail to renew, fail to continue to prosecute, protect or defend or otherwise dispose of any of the material Galleria IP
Assets that are Registered Intellectual Property or otherwise material to the Galleria Business other than failures to continue to prosecute, protect or defend in the Ordinary
Course of the Galleria Business;
(ix)
enter into any settlement, or offer or propose to enter into any settlement, or otherwise compromise or waive any material claims or rights of the
Galleria Business, in each case that would materially and adversely affect the Galleria Business or any Galleria Entity or limit the ability of SplitCo to conduct the Galleria
Business following the Closing in any geographic area or in any other material respect;
(x)
(xi)
adopt a plan of complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of any Galleria Entity;
amend the certificate of incorporation, bylaws or other governance documents of any Galleria Entity;
(xii)
hire or transfer any individual to become an In-Scope Employee except (A) in the Ordinary Course of the Galleria Business with respect to any
employee who is at, or hired into, the Band 3 level (as such employment bands are commonly referred to within Parents organization as of the date of this Agreement) or
below, and (B) with respect to any employee who is at, or hired into, the Band 4 level or above (1) to fill a position within the Adjusted Galleria Business existing on the
date of this Agreement (a Replacement Hire ) or (2) to fill a new position added to the Adjusted Galleria Business after the date of this agreement (a Non-Replacement
Hire ), provided that , in either case, Parent uses Commercially Reasonable Efforts to fill the relevant
53
position in clause (1) or clause (2) with an individual whose employment in such role would not require the establishment of a new Expatriate Package or Localization
Package, and provided further that except as otherwise required by applicable Law or unless Parent determines in its sole discretion that such arrangement or action would
materially increase the likelihood that the Intended Tax-Free Treatment would not apply to the transactions contemplated hereby, no Non-Replacement Hire shall be an
In-Scope Employee for purposes of this Agreement unless Acquiror elects, within 30 days following Acquirors receipt of notice of such employees hire or transfer, that
such Non-Replacement Hire be included as an In-Scope Employee;
(xiii)
transfer or terminate the employment of any In-Scope Employee except (A) in the Ordinary Course of the Galleria Business with respect to any
employee who is at, or hired into, the Band 3 level or below or (B) with respect to any termination of the employment of an In-Scope Employee for cause;
(xiv)
establish or enter into any Expatriate Package or Localization Package for any In-Scope Employee or Choice Employee other than:
(A)
with respect to individuals hired or transferred as permitted under clause (xii)(B) above, or
(xv)
change the status of any In-Scope Employee that is Band 3 level or above to a Choice Employee;
(B)
with respect to any employee who is at, or hired into, the Band 3 level or below, provided that, Parent uses Commercially Reasonable Efforts
to fill the relevant position with an individual whose employment in such role would not require the establishment of a new Expatriate Package or
Localization Package, and provided further , that except as otherwise required by applicable Law or unless Parent determines in its sole discretion that such
arrangement or action would materially increase the likelihood that the Intended Tax-Free Treatment would not apply to the transactions contemplated
hereby, if such position was previously held by an employee who did not have an Expatriate Package or Localization Package, then the individual filling
such position will be a Choice Employee unless Acquiror elects within 30 days following Acquirors receipt of notice of such employees hire or transfer
that such employee will not be an In-Scope Employee;
(xvi) make any change in any material method of accounting or accounting practice or policy with respect to the Galleria Business or any Galleria Entity,
except as otherwise permitted under Section 5.01(b)(iv) or as required by applicable Law or GAAP; or
(xvii)
agree, in writing or otherwise, to take any of the foregoing actions.
(c)
From the Cut-Off Date until the Closing, except as expressly provided by this Agreement, as set forth in Section 5.01(c) of the Parent Disclosure Letter,
as required in connection with the Restructuring or as expressly set forth in the Transition Plan, as required by applicable
54
Law or as expressly consented to in writing by Acquiror, Parent will cause the Galleria Business to manage its levels of Assets and Liabilities in the line item categories
included in the Target Working Capital Statement in the Ordinary Course of the Galleria Business. Parent will cause the Galleria Entities, collectively, to hold an amount in
cash or cash equivalents as of the Closing that, in the aggregate, is at least equal to the amount of cash and cash equivalents that are included in the calculation of Cut-Off
Date Working Capital, as such amount is finally determined pursuant to Section 2.15(d) .
(d)
Parent and Acquiror acknowledge and agree that (i) nothing contained in this Agreement is intended to give (and does not give) Acquiror, directly or
indirectly, the right to control or direct the operations of the Galleria Business or SplitCo or the Galleria Entities prior to the Closing, and (ii) prior to the Closing, Parent
will, consistent with the terms and conditions of this Agreement, control the operations of the Galleria Business and the Galleria Group.
5.02 Further Assurances; Efforts To Obtain Consents; Antitrust Clearance . (a) Generally . In addition to the actions specifically provided for elsewhere in
this Agreement or in any Ancillary Agreement, each of the Parties will cooperate with each other and use (and will cause their respective Subsidiaries and Affiliates to use)
their reasonable best efforts, prior to, at and after the Closing Date, to take, or to cause to be taken, all actions, and to do, or to cause to be done, all things reasonably
necessary on its part under applicable Law or contractual obligations to consummate and make effective the transactions contemplated by this Agreement and the Ancillary
Agreements as promptly as practicable, including, if applicable, forming legal entities, opening bank accounts and reaffirming any consents, approvals or waivers
previously granted; provided , however , that (i) with respect to the matters that are the subject of Section 1.08 , such matters will be governed by that Section instead of this
Section 5.02(a) following the Closing, (ii) except as otherwise provided in Section 5.02(b) - (c) , neither Parent nor Acquiror will be required to make any non-de minimis
payments, incur any non-de minimis Liability or offer or grant any non-de minimis accommodation (financial or otherwise) to any third party in connection with obtaining
any Consent or Governmental Approval, (iii) subject to Section 1.09 , the Acquiror will be solely responsible for obtaining the Consents required in respect of the Mercury
Licenses (provided that Parent will reasonably cooperate with Acquirors requests in respect thereof) and (iv) for the avoidance of doubt, this Section 5.02 will not be
deemed to limit in any respect Parents exercise of discretion under Section 2.01 or Section 2.02 .
(b)
Requisite Antitrust Filings . Parent and Acquiror will comply fully with all applicable notification, reporting and other requirements of applicable
Antitrust Laws in connection with the transactions contemplated by this Agreement. Parent and Acquiror, as soon as practicable after the date of this Agreement, and in any
event within 15 days after the date of this Agreement, will furnish to the other on an outside-counsel basis such necessary information and assistance as the other may
reasonably request so as to enable the Parties to evaluate which jurisdictions may require, under Antitrust Laws, notification or reporting of the transactions contemplated
by this Agreement and the Ancillary Agreements. As soon as practicable after the end of such 15-day period, and in any case, within 30 days of the date of this Agreement,
each of Parent and Acquiror will determine and identify in writing a list of jurisdictions (the Identified Jurisdictions ), where in its reasonable
55
opinion, based on such exchange of information and assistance and the advice of appropriately qualified outside counsel, a failure to file would be reasonably likely to
expose it to a risk of financial penalties or other sanctions (including post-Closing sanctions or remedies such as the unwinding of the transactions). Parent and Acquiror, as
soon as practicable after the end of such 30 day period, will file the required notifications with the appropriate Governmental Authorities in the Identified Jurisdictions
pursuant to and in compliance with the HSR Act and make other filings under Antitrust Laws in those jurisdictions. In the event that Parent and Acquiror are unable to
agree on the list of Identified Jurisdictions within 30 days of the date of this Agreement, then Parent and Acquiror will submit their respective lists of Identified
Jurisdictions on which they disagree (each, a Potential Identified Jurisdiction ) to an internationally recognized law firm having expertise in antitrust matters and with no
material relationships with either Parent or Acquiror (such law firm to be agreed by Parent and Acquiror in good faith and if they are unable to agree, to be drawn by lot
from up to three such firms submitted by each of Parent and Acquiror). Parent and Acquiror will use their respective Commercially Reasonable Efforts to cause the selected
firm to select any additional Identified Jurisdictions from the Potential Identified Jurisdictions within ten Business Days, based solely on the information that has been
shared between the Parties pursuant to, and the standards set forth in, this Section 5.02(b) . Parent and Acquirors agreed list of Identified Jurisdictions, plus any additional
jurisdictions identified by such law firm, will be the Identified Jurisdictions . Parent and Acquiror will share the costs and expenses of the law firm equally. Parent and
Acquiror will as soon as practicable file any additional information reasonably requested by any Governmental Authority in connection with any Antitrust Law.
(c)
Efforts To Obtain Antitrust Approvals . (i) Parent and Acquiror will each use reasonable best efforts to obtain, or terminate, as the case may be, as soon
as practicable, the Governmental Approvals required by any Antitrust Law (the Antitrust Approvals ) that may be or become necessary for the performance of its
obligations under this Agreement, the Ancillary Agreements and the consummation of the transactions contemplated hereby and thereby and will cooperate fully with each
other in promptly seeking to obtain such Antitrust Approvals or terminate any waiting period thereunder, all such actions to be effective prior to the Closing. Acquiror and
Parent will cooperate in connection with the antitrust defense of the transactions contemplated hereby in any investigation or litigation by, or negotiations with, any
Governmental Authority or other Person relating to the transactions contemplated hereby or regulatory filings under applicable Antitrust Laws. Without limiting the
foregoing and subject to applicable legal limitations and the instructions of any Governmental Authority, each of Parent and Acquiror agrees with respect to obtaining any
Antitrust Approval to (A) cooperate and consult with each other, (B) furnish to the other such necessary information and assistance as the other may reasonably request in
connection with its preparation of any notifications or filings, (C) keep each other apprised of the status of matters relating to the completion of the transactions
contemplated thereby, including promptly furnishing the other with copies of notices or other communications received by such party from, or given by such party to, any
third party or any Governmental Authority with respect to such transactions, (D) permit the other Party to review and consider in good faith the other partys reasonable
comments in any communication to be given by it to any Governmental Authority with respect to obtaining the necessary Antitrust Approvals, (E) provide prompt notice to
the other Party of any meeting or substantive discussion, either in person or by telephone, with any Governmental Authority in connection with the transactions
contemplated hereby, and (F) not participate in any
56
meeting or substantive discussion, either in person or by telephone, with any Governmental Authority in connection with the transactions contemplated hereby unless, to
the extent not prohibited by such Governmental Authority, it gives the other party the opportunity to attend, participate and observe; provided that Parent and Acquiror shall
not be required to provide the other with information to the extent that it is commercially sensitive; provided , further, that such commercially sensitive information will be
made available only to legal counsel of the recipient Party and the recipient Party shall procure that such legal counsel shall not further disclose such information without
the prior written consent of the relevant disclosing Party.
(ii)
Subject to the last sentence of this clause (ii) and to Section 5.02(c)(iii) , in furtherance and not in limitation of the covenants contained in Section
5.02(c)(i) or any other provision of this Agreement, Acquiror will offer to take (and if such offer is accepted, commit to take) all necessary steps to eliminate impediments
under any Antitrust Law that may be asserted by any Governmental Authority with respect to the transactions contemplated hereby so as to permit such transactions to be
consummated as promptly as practicable and to prevent a prohibition decision or the entry of any Order (or if such Order is so entered, to eliminate such Order or otherwise
cause it to be satisfied or cease to be a restraint on such transactions) sought by any Governmental Authority or private Person under any Antitrust Law that would result in
the failure of any condition to the obligations of the Parties to consummate the transactions contemplated hereby to be satisfied. Such steps may include, whether effected
by consent decree, hold separate order or otherwise, (A) the sale, divestiture or disposition of such assets or businesses of Acquiror or, effective as of the Closing, such
assets of the Galleria Business and (B) committing to take any action which Acquiror is capable of taking, including agreements that limit Acquirors freedom of action
with respect to, or its ability to retain, any of the Galleria Business, services or assets of Acquiror or any of its Affiliates or any Assets of the Galleria Business.
Notwithstanding the foregoing, (1) in no case will Acquiror (or, if applicable, Parent) be required pursuant to this clause (ii) to offer or commit to take any step that is not
conditioned upon the occurrence of the Closing, (2) in no event will Acquiror offer or commit to take, or cause or permit SplitCo or any of its Subsidiaries to offer or
commit to take, any action prohibited under the Tax Matters Agreement and (3) nothing in this clause (ii) will be deemed to modify the arrangements set forth in Schedule
1.09 in respect of the Mercury Licenses.
(iii)
Notwithstanding any other provision of this Agreement (but subject to compliance with Acquirors obligation to use reasonable best efforts to
obtain, or terminate, the Antitrust Approvals as soon as practicable pursuant to Section 5.02(c)(i) ), Acquiror will (A) have the right to determine and direct the strategy and
process by which the parties will seek, and to make the final decision on which steps to take in obtaining, the Antitrust Approvals and (B) take the lead in all joint meetings
and communications with any Governmental Authority.
(d)
With respect to any Retained Licenses, the Retained Businesses and any Assets that are Excluded Assets by virtue of Section 1.09 , all obligations under
this Section 5.02 will cease as of any Retained Business Cut-Off Date. Notwithstanding the foregoing, prior to any Retained Business Cut-Off Date, this Section 5.02 will
remain in full force and effect with respect to all elements of the Galleria Business that had not yet become Retained Businesses without giving effect to Section 1.09 .
57
5.03 Public Announcements . The press release(s) announcing the execution and delivery of this Agreement and the transactions contemplated hereby will be in
the forms attached as Exhibits B-1 and B-2 (the Transaction Announcement ). The Parties further agree that the Acquiror investor presentation to be made in connection
with the announcement of the transactions contemplated by this Agreement will be in substantially the form previously agreed to by Parent and Acquiror and that both the
initial press release and the investor presentation concerning the transactions contemplated hereby will be filed by Acquiror as exhibits to a Form 8-K filing promptly after
the execution of this Agreement. From the date hereof through the Closing, and without limiting the effect of Section 5.12 , neither Parent nor Acquiror will publish any
press releases or make other public statements (including to securities analysts) that contradicts the Transaction Announcement with respect to this Agreement, the
Ancillary Agreements and the transactions contemplated hereby (or the portion thereof relating to this Agreement, the Ancillary Agreements and the transactions
contemplated hereby), except as such Party determines in good faith is required by Law or by obligations pursuant to any listing agreement with any national securities
exchange after consultation with counsel (in which case, such Party will consult with the other Party to the extent reasonably practicable under the circumstances prior to
making such disclosure and will only disclose that information that is required by Law based upon advice of counsel), without the prior approval of the other Party, such
approval not to be unreasonably withheld, conditioned or delayed.
58
5.04 Notification of Certain Matters . Each of Parent and Acquiror will give prompt written notice to the other of (a) any notice or other communication from
any Person alleging that the Consent of such Person is or may be required in connection with the transactions contemplated hereby and (b) any Action commenced or
threatened in writing against, relating to or involving or otherwise affecting it or any of its Affiliates that relate to the consummation of the transactions contemplated
hereby.
5.05 Financial Statements . (a) As soon as reasonably practicable following the Final Retained Business Cut-Off Date and using its Commercially Reasonable
Efforts to deliver within 60 Business Days of the Final Retained Business Cut-Off Date, Parent will provide Acquiror with the combined audited financial statements of the
Adjusted Galleria Business, including the balance sheets of June 30, 2015, June 30, 2014 and June 30, 2013, and the income statements of the Adjusted Galleria Business
for the fiscal years ended June 30, 2015, June 30, 2014 and June 30, 2013, together with the notes thereto and accompanied by unqualified opinions of the independent
accountants.
(b)
Parent will also provide Acquiror with (i) quarterly combined unaudited financial statements of the Adjusted Galleria Business as of and for each fiscal
quarter no later than 60 days after the end of each fiscal quarter, beginning with the fiscal quarter ending September 30, 2015, including the balance sheets and the income
statement of the Adjusted Galleria Business, together with the notes thereto, and (ii) the combined audited financial statements of the Adjusted Galleria Business as of and
for the fiscal year ending on June 30, 2016 no later than 90 days after the end of such fiscal year, including the balance sheets and the income statement of the Adjusted
Galleria Business, together with the notes thereto and accompanied by unqualified opinions of the independent accountants.
5.06 Conduct of Acquiror Pending The Closing . (a) Except as expressly provided by this Agreement or any Ancillary Agreement, as set forth on Section 5.06
of the Acquiror Disclosure Letter, as required by applicable Law or as expressly consented to in writing by Parent (such consent not to be unreasonably withheld,
conditioned or delayed), during the Pre-Closing Period Acquiror and each of its Subsidiaries will use its respective Commercially Reasonable Efforts to, (i) conduct the
Acquirors business in the Ordinary Course of the Acquirors business in all material respects, (ii) preserve (other than the sale of Assets in the Ordinary Course of the
Acquirors business) the material Assets of the Acquiror and its Subsidiaries, (iii) preserve in all material respects the material business relationships of the Acquiror
business with customers, suppliers, manufacturers, distributors and others with whom the Acquiror business deals in the Ordinary Course of the Acquiror business, and (iv)
maintain the goodwill and reputation of the Acquiror business in all material respects, including through advertising, marketing and promoting the products of the Acquiror
business in the Ordinary Course of the Acquiror business. Notwithstanding the preceding sentence, during the Pre-Closing Period, Acquiror may, without breach of this
Agreement, take such actions as it determines in good faith are commercially reasonable to (w) respond to events resulting, in whole or in part, from the announcement of
this Agreement, (x) consummate transactions set forth on Section 5.06 of the Acquiror Disclosure Letter, (y) preserve the Acquiror business and existing material
employee, customer and supplier relationships (including replacing any employees of the
59
Acquiror business who cease to be employed by Acquiror and its Subsidiaries) and (z) seek to receive any Consent in respect of the Mercury Licenses.
(b)
Without limiting the generality of Section 5.06(a) , and except as otherwise provided in this Agreement, as set forth on Section 5.06 of the Acquiror
Disclosure Letter, as required by applicable Law or as expressly consented to in writing by Parent (such consent not to be unreasonably withheld, conditioned or delayed),
during the Pre-Closing Period, Acquiror will not, nor will it permit any of its Subsidiaries to:
(i)
sell, pledge, dispose of, transfer, lease, license, guarantee, encumber or authorize the sale, pledge, disposition, transfer, lease, license, guarantee or
encumbrance of any Assets that are (or would otherwise be) material to the Acquiror business (excluding Assets constituting Intellectual Property, provision for which is
made in Section 5.06(b)(vii) and Section 5.06(b)(viii) ), other than any sale of product inventories, raw and packaging materials, Store Room Inventory, Goods in Transit,
parts, work-in-process, finished goods and products, in each case to the extent it is primarily used or held for primary use in the Acquirors business (including any finished
goods or work-in-process) or obsolete equipment or obsolete inventory in the Ordinary Course of the Acquiror business;
(ii)
declare, set aside, make or pay any dividends or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital
stock (other than (x) regular annual cash dividends not in excess of $0.25 per share of Acquiror Common Stock declared and paid in the Ordinary Course and consistent
with past practice, and (y) dividends payable by controlled Subsidiary of Acquiror to Acquiror or another wholly owned Subsidiary of Acquiror), enter any agreement with
respect to the voting of Acquiror Capital Stock or purchase or otherwise acquire, directly or indirectly, any Acquiror Capital Stock or Acquiror Equity Interests;
(iii)
(A) acquire (including by merger, consolidation or acquisition of stock or assets) any interest in any Person or any division thereof or any Assets,
other than (x) in the Ordinary Course of the Acquiror business or (y) acquisitions of assets outside the Ordinary Course of the Acquirors business in an aggregate amount
not to exceed $200,000,000 (and provided that no such acquisitions would reasonably be expected to delay or impede the consummation of the transactions contemplated
hereby); or (B) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become
responsible for, the obligations of any Person for borrowed money, except for (1) indebtedness for borrowed money incurred in the Ordinary Course of the Acquiror
business or in connection with the transactions otherwise permitted by this Agreement or the Ancillary Agreements, (2) indebtedness incurred to refinance any existing
Indebtedness or (3) other indebtedness for borrowed money under existing credit facilities (without any increase in the aggregate amount outstanding over the amount
outstanding thereunder on the date of the Transaction Agreement);
(iv)
(A) issue, sell, transfer, pledge, retire, extinguish, terminate or dispose of any shares of Acquiror Common Stock, other Acquiror Capital Stock,
equity securities of Acquirors subsidiaries or Acquiror Equity Interests, other than in connection with the Acquiror Stock Issuance, (B) split, combine, reclassify, redeem,
repurchase, acquire (directly or indirectly) or encumber any
60
shares of Acquiror Common Stock or any other Acquiror Capital Stock or equity securities of Acquirors subsidiaries, or (C) fail to take any such actions as may be
necessary to make the representation set forth in the last sentence of Section 4.05(b) true and correct;
(v)
A) make a material change in its accounting or Tax reporting principles, methods or policies, except as required by a change in GAAP, (B) make,
change or revoke any material Tax election or method of accounting on which Tax reporting is based, (C) settle or compromise any material Tax claim or Liability, or (D)
amend any material Tax Return;
(vi)
(A) adopt, amend or terminate any Acquiror Compensation and Benefit Plans, (B) increase the salaries, wage rates, target bonus opportunities,
equity-based compensation, employee benefits or perquisites of any Acquiror Group employee, (C) grant or pay any benefit or amount not required under any Acquiror
Compensation and Benefit Plan to any Acquiror Group employee, (D) grant or pay any severance or termination pay or increase in any manner the severance or termination
pay of any Acquiror Group employee or (E) take any action to accelerate the vesting or payment of any compensation or benefit under any Acquiror Compensation and
Benefit Plan to any Acquiror Group employee, in each case of (A), (B), (C), (D) or (E), except (1) in the Ordinary Course as applicable generally to Acquiror Group
employees in the relevant jurisdictions, (2) in connection with the adoption or amendment of Acquiror Compensation and Benefit Plans (or other practices) that are
applicable generally to Acquiror Group employees in the relevant jurisdictions, or (3) as required (x) to comply with applicable Law, (y) by the terms of any Acquiror
Compensation and Benefit Plan in effect on the date hereof or (z) by the terms of any agreement of Acquiror or any of its Subsidiaries that is in effect on the date hereof,
the existence of which agreement does not constitute a breach of any representation, warranty or covenant in this Agreement; provided , further , that in no event shall
Acquiror issue or grant any Acquiror Capital Stock or Acquiror Equity Interests during the period of time between the date as of which the Galleria Stock Amount is
determined and the Closing;
(vii)
license, grant any rights to or transfer any material Intellectual Property owned, used or held for use by the Acquiror business, other than grants
of licenses in the Ordinary Course of the Acquiror business;
(viii)
abandon, cancel, let lapse, fail to renew, fail to continue to prosecute, protect or defend or otherwise dispose of any of the material Assets that
constitute Intellectual Property of the Acquiror business other than failures to continue to prosecute, protect or defend in the Ordinary Course of the Acquiror business;
(ix)
enter into any settlement, or offer or propose to enter into any settlement, or otherwise compromise or waive any material claims or rights of the
Acquiror business, in each case that would materially and adversely affect the Acquiror business or limit the ability of the Acquiror Group to conduct the Acquiror business
following the Closing in any geographic area or in any other material respect;
Subsidiaries;
(x)
adopt a plan of complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of the Acquiror or any of its
61
(xi)
amend the certificate of incorporation, bylaws or other governance documents of the Acquiror or any of its Subsidiaries, except as expressly
contemplated by this Agreement;
(xii)
make any change in any material method of accounting or accounting practice or policy with respect to the Acquiror business or the business of
any of Acquirors subsidiaries, except as otherwise permitted under Section 5.06(b)(v) or as required by applicable Law or GAAP;
(xiii)
fail to comply with any requirements or other obligations under any securities Laws that are applicable to Acquiror, including in respect of any
reports, registration statements or other documents that are filed (or are required to be filed) with the Commission or any other Governmental Authority (including in
respect of any reports that may be or are furnished rather than filed) that would materially and adversely affect the Acquiror business or limit the ability of the Acquiror
Group to consummate the transactions contemplated hereunder or otherwise conduct the Acquiror business following the Closing in any geographic area or in any other
material respect;
(xiv)
agree, in writing or otherwise, to take any of the foregoing actions.
(c)
Parent and Acquiror acknowledge and agree that nothing contained in this Agreement is intended to give (and does not give) Parent, directly or
indirectly, the right to control or direct the operations of the Acquirors business or Acquiror or its Affiliates prior to the Closing.
5.07 Access . (a) From the date hereof to the Closing, to the extent permitted by Law, each of Parent and Acquiror will allow all designated Representatives of the
other Party access to the extent reasonably practicable upon reasonable notice to the books, records, files, correspondence, audits and properties pertaining to the business
and affairs of the Galleria Business and Acquiror and its Subsidiaries including as to matters that might arise outside the Ordinary Course of the Galleria Business or the
business of the Acquiror Group; provided , however , that (i) no investigation pursuant to this Section 5.07 will affect any representation or warranty given by any Party
hereunder or any closing condition, indemnity obligation or other provision and (ii) notwithstanding the provision of information or investigation by any Party, no Party
will be deemed to make any representation or warranty except as expressly set forth in this Agreement. Notwithstanding the foregoing, (A) no Party will be required to
provide any information which it determines in good faith it may not provide to the other Party by reason of applicable Law (including any information in confidential
personnel files), or which such Party determines in good faith constitutes information protected by attorney-client or other similar privilege; provided , however , that if any
information is so prohibited to be provided, the applicable Party will use Commercially Reasonable Efforts to take those actions reasonably necessary so that such Party is
able to provide such information to the other Party as promptly as possible and (B) no Party will be required to provide access to any of its properties in a manner that will
result in damage to such property or for the purpose of performing any invasive onsite procedure or investigation such as a Phase II Environmental Site Assessment or other
invasive onsite environmental sampling, investigation or study, without the other Partys written consent, which may be granted or denied in its discretion. Each of Parent
and
62
Acquiror agrees that it will not, and will cause its respective Representatives not to, use any information obtained pursuant to this Section 5.07 for any purpose unrelated to
this Agreement and the Ancillary Agreements. All information provided by a Party to the other Party hereunder will be kept confidential to the same extent as would be
applicable if the Confidentiality Agreement were in effect.
(b)
Without limiting the generality of the foregoing:
(i)
each of Parent and Acquiror will deliver or otherwise make available for inspection to the other Party within 60 days after the date of this
Agreement true, complete and correct copies and results of any material reports, data, investigations, audits, assessments (including Phase I environmental site assessments
and Phase II environmental site assessments) studies, analyses, tests or monitoring in the possession of or reasonably available to Parent or Acquiror, as applicable, or any
of their respective Subsidiaries that were prepared during the five years prior to the date of this Agreement pertaining to: (i) any unresolved Environmental Claims; (ii) any
Hazardous Materials in, on, beneath or adjacent to any Real Property or any property formerly owned, operated or leased by Parent or Acquiror or any of their respective
Subsidiaries; or (iii) Parents or Acquirors or any of their respective Subsidiaries compliance with applicable Environmental Laws, in each case relating to, resulting from
or arising out of the operation or conduct of the Galleria Business (in the case of Parent) or the Acquirors business (in the case of Acquiror); and
(ii)
after the date hereof and prior to the Closing, Parent will deliver such information as Acquiror may reasonably request regarding the identity of
the Mercury Fragrance Products and Non-Mercury Fragrance Products and Non-Hydroalcoholic Products in which Parent Ancillary Fragrances are utilized, including a
listing of the names of such products, such delivery to be made reasonably promptly.
63
5.08 Acquiror Stockholder Consent; Preparation of SEC Filings . (a) No later than 24 hours after the execution of this Agreement and in lieu of calling a
meeting of the Acquirors shareholders, Acquiror shall submit a form of irrevocable written consent attached hereto as Exhibit C to a shareholder representing at least
50.1% of the voting power represented by the outstanding shares of Acquiror Common Stock (such written consent, as duly executed and delivered by such shareholder, the
Stockholder Consent ). As soon as practicable upon receipt of the Stockholder Consent, Acquiror will provide Parent with a copy of such Stockholder Consent. In
connection with the Stockholder Consent, Acquiror shall take all actions necessary to comply, and shall comply in all respects, with the DGCL, the Acquirors certificate of
incorporation and the Acquiror Bylaws.
(b)
As soon as reasonably practicable following the date of this Agreement and after the financial statements referenced in Section 5.05 have become
available, Parent and Acquiror will jointly prepare, and (i) Acquiror will file with the Commission a Registration Statement on Form S-4 (the Acquiror Form S-4 ) to
register the shares of Acquiror New Common Stock to be issued in the Merger, and prepare and file with the Commission an information statement of the type
contemplated by Rule 14c-2 promulgated under the Exchange Act related to the Transaction and this Agreement (as amended or supplemented from time to time, the
Information Statement ), (ii) SplitCo will file with the Commission a registration statement on Form 10 and/or a registration statement on Form S-4 (the SplitCo Form
10/S-4 ) to register the shares of SplitCo Common Stock to be distributed in the Distribution, (iii) Parent will file with the Commission a Schedule TO (the Schedule TO
, together with the Acquiror Form S-4, the Information Statement and the SplitCo Form 10/S-4, the SEC Filings ) if Parent elects to effect the Distribution in whole or
in part by means of an Exchange Offer and (iv) the Parties will file such other appropriate documents as may be applicable. Each of Parent and Acquiror will use their
reasonable best efforts to have the SEC Filings cleared or declared effective, as applicable, under the Exchange Act or Securities Act, as applicable, as promptly as
practicable after such filing (including by responding to comments by the Commission and subject to the satisfaction or waiver of the applicable conditions in Article VII
and it being understood that the SEC Filings will not be filed until after the financial statements referenced in Section 5.05 have become available). As promptly as
practicable after the Information Statement shall have been cleared by the Commission (or after 10 calendar days have passed since the filing of the preliminary
Information Statement with the Commission without notice from the Commission of its intent to review the Information Statement), Acquiror shall cause the Information
Statement to be mailed to its shareholders and to be filed as required. Each of Acquiror and Parent will also take any action (other than qualifying to do business in any
jurisdiction in which it is not now so qualified) required to be taken under any applicable state securities Laws in connection with, in the case of Acquiror, the issuance of
Acquiror New Common Stock in the Merger and, in the case of Parent, the issuance of SplitCo Common Stock in the Distribution.
(c)
Parent will furnish all information concerning Parent and SplitCo, and Acquiror will furnish all information concerning Acquiror and Merger Sub, as may
be reasonably requested in connection with any such action and the preparation, filing and distribution of each of the SEC Filings. Each of Parent and Acquiror shall
otherwise promptly cooperate as the other Party may reasonably request in connection with the preparation and filing of each of the SEC Filings, including, without
limitation, assistance with the preparation of the pro forma financial information as necessary. No filing of, or amendment or supplement to the Information Statement or
the Acquiror
64
Form S-4 will be made by Acquiror, no filing of, or amendment or supplement to, the SplitCo Form 10/S-4 will be made by SplitCo and no filing of, or amendment or
supplement to, the Schedule TO will be made by Parent, in each case without providing the other Parties a reasonable opportunity to review and comment thereon. If at any
time prior to the Effective Time any information relating to Parent or Acquiror or any of their respective Affiliates, officers or directors should be discovered by Parent or
Acquiror which should be set forth in an amendment or supplement to any of the Information Statement, as applicable, the Acquiror Form S-4, the SplitCo Form 10/S-4 or
the Schedule TO, so that any such document would not include any misstatement of a material fact or omit to state any material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not misleading, the Party which discovers such information will promptly notify the other Parties and an
appropriate amendment or supplement describing such information will be promptly filed with the Commission and, to the extent required by Law, disseminated to the
applicable stockholders. The Parties will notify each other promptly of the receipt of any comments from the Commission or its staff and of any request by the Commission
or its staff for amendments or supplements to any of the SEC Filings or for additional information and will supply each other with copies of all correspondence between it
or any of its representative, on the one hand, and the Commission or its staff, on the other hand, with respect thereto and will respond as promptly as practicable to any such
comments or requests.
5.09 No Solicitation . (a) Acquiror will, and will cause its Representatives to, cease immediately any discussions and negotiations regarding any proposal that
constitutes, or may reasonably be expected to lead to, an Acquiror Takeover Proposal. Except as provided in Section 5.09(b) , Acquiror will not, nor will it authorize or
permit any of its Subsidiaries to, nor will it authorize or permit any Representative of Acquiror or any of its Subsidiaries to (and will instruct such Representatives not to),
directly or indirectly (i) solicit, initiate or encourage the submission of any Acquiror Takeover Proposal or (ii) participate in any discussions or negotiations regarding, or
furnish to any Person any information with respect to, or take any other action to facilitate any inquiries or the making of any proposal that constitutes, or may reasonably
be expected to lead to, any Acquiror Takeover Proposal. Without limiting the foregoing, it is agreed that any violation of the restrictions set forth in the two preceding
sentences by any Representative or Affiliate of Acquiror or any of its Subsidiaries, whether or not such Person is purporting to act on behalf of Acquiror or any of its
Subsidiaries or otherwise, will be deemed to be a breach of this Section 5.09 by Acquiror.
(b)
Notwithstanding the provisions of Section 5.09(a) , prior to receipt of the Acquiror Stockholder Approval, Acquiror may, if the failure to take such action
would be inconsistent with the fiduciary duties of the Board of Directors of Acquiror to the stockholders of Acquiror under applicable Law, as determined in good faith by
such board after consulting with outside legal counsel, in response to a Qualifying Acquiror Takeover Proposal (and subject to compliance with the provisions of this
Section 5.09 ):
(i)
furnish information with respect to Acquiror to the Person making such Qualifying Acquiror Takeover Proposal and its Representatives pursuant
to a confidentiality agreement not less restrictive of the other Party than the Confidentiality Agreement (provided that
65
all such information has previously been provided to Parent or is provided to Parent prior to or substantially concurrent with the time it is provided to such Person); and
(ii)
participate in discussions and negotiations with such Person and its Representatives regarding such Qualifying Acquiror Takeover Proposal.
(c)
Neither the Board of Directors of Acquiror nor any committee thereof may (i) withdraw or modify in a manner adverse to Parent or SplitCo, or publicly
propose to withdraw or modify in a manner adverse to Parent or SplitCo, the approval, recommendation or declaration of advisability by the Board of Directors of Acquiror
of this Agreement, the Ancillary Agreements or any of the transactions contemplated hereby or thereby, including the Acquiror Stockholder Approval, (ii) approve, adopt
or recommend, or permit Acquiror or any of its Subsidiaries to enter into, any letter of intent, agreement in principle, acquisition agreement, option agreement, joint venture
agreement, merger agreement or similar agreement relating to any Acquiror Takeover Proposal, or (iii) approve, adopt or recommend, or publicly propose to approve, adopt
or recommend, any Acquiror Takeover Proposal. Notwithstanding the foregoing, if, prior to receipt of the Acquiror Stockholder Approval, the Board of Directors of
Acquiror receives an Acquiror Superior Proposal and as a result thereof the Board of Directors of Acquiror determines in good faith, after consulting with outside legal
counsel, that the failure to take such action would be inconsistent with its fiduciary duties to the stockholders of Acquiror under applicable Law, then, on the fifth Business
Day following Parents receipt of written notice from Acquiror, the Board of Directors of Acquiror may withdraw or modify its recommendation of the Acquiror
Stockholder Approval and, in connection therewith, recommend such Acquiror Superior Proposal; provided that, during such five-Business Day period, Acquiror will be
obligated to negotiate in good faith with Parent and SplitCo any modification to this Agreement proposed by Parent or SplitCo; provided , further , that in the event of any
material change to the material terms of such Acquiror Superior Proposal, Acquiror shall have delivered to Parent an additional notice and the notice period shall have
recommenced.
(d)
Acquiror will, as promptly as reasonably practicable (and in any case within 24 hours), advise Parent orally and in writing of any Acquiror Takeover
Proposal or any inquiry with respect to or that could reasonably be expected to lead to any Acquiror Takeover Proposal, and the identity of the Person making any such
Acquiror Takeover Proposal or inquiry and the material terms of any such Acquiror Takeover Proposal or inquiry. Acquiror will (i) keep Parent reasonably informed of the
status including any change to the material terms of any such Acquiror Takeover Proposal or inquiry and (ii) provide to Parent as promptly as reasonably practicable (and in
any case within 24 hours) after receipt or delivery thereof with copies of all correspondence and other written material sent or provided to Acquiror from any third party in
connection with any Acquiror Takeover Proposal or sent or provided by Acquiror to any third party in connection with any Acquiror Takeover Proposal.
(e)
Nothing contained in this Section 5.09 will prohibit Acquiror from taking and disclosing to its stockholders a position contemplated by Rules 14d-9 or
14e-2(a) promulgated under the Exchange Act or from making any required disclosure to Acquirors stockholders if, in the good faith judgment of the Board of Directors of
Acquiror after consulting with outside legal counsel, failure so to disclose would be inconsistent with its obligations under applicable Law; provided ,
66
however , that this Section 5.09(e) will not eliminate or modify (x) Acquirors obligations under the proviso in Section 5.09(b) or (y) the effect that taking and disclosing
any such position would otherwise have under this Agreement (including under Section 8.01(d)(i) ).
(f)
For purposes of this Agreement:
(i)
Acquiror Takeover Proposal means (A) any proposal for a merger, consolidation, dissolution, recapitalization or other business combination
involving Acquiror, (B) any proposal or offer for the issuance by Acquiror of over 15% of its equity securities as consideration for the assets or securities of another Person,
or (C) any proposal or offer to acquire in any manner, directly or indirectly, over 15% of the equity securities or consolidated assets of Acquiror, or assets or business that
constitute over 15% of the consolidated revenues or net income of Acquiror, in each case other than the transactions contemplated hereby.
(ii)
Qualifying Acquiror Takeover Proposal means a bona fide, written Acquiror Takeover Proposal that (A) is made by a Person the Board of
Directors of Acquiror determines, in good faith, after consulting with outside counsel and independent financial advisors, is reasonably capable of making an Acquiror
Superior Proposal, (B) the Board of Directors of Acquiror determines, in good faith, after consulting with its independent financial advisor, constitutes or is reasonably
likely to lead to an Acquiror Superior Proposal, and (C) that was not solicited by Acquiror and did not otherwise result from a breach of this Section 5.09 .
(iii)
Acquiror Superior Proposal means any bona fide proposal made by a third party to acquire more than 50% of the equity securities or all or
substantially all the assets of Acquiror, pursuant to a tender or exchange offer, a merger, a consolidation, a liquidation or dissolution, a recapitalization, a sale of all or
substantially all its assets or otherwise, on terms which the Board of Directors of Acquiror determines in its good-faith judgment after consulting with its independent
financial advisor (A) to be superior from a financial point of view to the holders of Acquiror Common Stock than the transactions contemplated hereby, taking into account
all the terms and conditions of such proposal and this Agreement (including any proposal by Parent to amend the terms of the transactions contemplated hereby) and (B) is
reasonably capable of being completed, taking into account all financial, regulatory, legal and other aspects of such proposal.
67
5.10 NYSE Listing . Acquiror will use its reasonable best efforts to cause the shares of Acquiror Common Stock to be issued in connection with the Merger to be
listed on the NYSE as of the Effective Time, subject to official notice of issuance.
5.11 Required Amendments . Except as otherwise provided in respect of amendments to the Transition Plan (and any resulting changes to the Transition
Services Agreement and the schedules thereto) in Section 5.21 , the Parties will cooperate and negotiate in good faith with respect to any amendment to the Transaction
Documents reasonably requested by a Party in order to enable its counsel to deliver the written opinion(s) contemplated by Sections 7.02 or 7.03 of this Agreement, as the
case may be (any such amendment, a Proposed Amendment ). Neither Party will withhold its consent to a Proposed Amendment that (i) does not result in any change in
the Merger Consideration, (ii) is not materially adverse to the interests of any Party, and (iii) does not unreasonably impede or delay consummation of the Distribution or
the Merger. Any Proposed Amendment that the Parties consent to will be reflected through the execution of appropriate written amendments to the applicable Transaction
Documents.
5.12 Capital Transactions . (a) Galleria Commitment Letter . Attached hereto as Exhibit L is a true and complete fully executed copy of the commitment letter
relating to the Galleria Credit Facility (the Galleria Commitment Letter ). The Galleria Credit Facility will remain outstanding, without amendment and without
amortization, for at least one year following the Closing Date; provided , however , that, if SplitCo receives a Bank Letter, SplitCo will be permitted to refinance the
Galleria Facility with new debt (the Refinanced Facility ) that has substantially similar terms, the same maturity date, and the same prepayment restrictions as the
Galleria Credit Facility. SplitCo must be the primary obligor on the Refinanced Facility and must remain the primary obligor on the Refinanced Facility at all times during
such remaining term. After the Closing, Acquiror shall be permitted to guarantee SplitCos obligations under the Galleria Credit Facility or the Refinanced Facility, if, in
each case, SplitCo receives a Bank Letter. To the extent any prepayments of the Galleria Credit Facility or the Refinanced Facility are permitted hereunder, such
prepayments will be made, in each case, solely (I) out of SplitCos and its Subsidiaries operating cash flows generated on or after the Closing Date or (II) as otherwise
required by the terms of the Galleria Credit Facility or the Refinanced Facility, as applicable.
(b)
Creation of Galleria Credit Facility . Parent will cause SplitCo to use its Commercially Reasonable Efforts to take, or cause to be taken, all actions and
do, or cause to be done, all things necessary, proper or advisable to arrange and obtain the Galleria Financing on the terms and conditions described in the Galleria
Commitment Letter, including using its Commercially Reasonable Efforts to, negotiate and enter into the Galleria Credit Documents on the terms and conditions
contemplated by the Galleria Commitment Letter and after reasonable consultation with Acquiror. If any portion of the Galleria Financing becomes, or would reasonably be
expected to become, unavailable on the terms and conditions contemplated in the Galleria Commitment Letter (after taking into account, and exercising, any flex terms), or
if the monies borrowed under the Galleria Financing are insufficient to fund the payment of the Recapitalization Amount by SplitCo, then, notwithstanding anything to the
contrary herein:
68
(i)
if any portion of the Galleria Financing becomes, or would reasonably be expected to become, unavailable on such terms and conditions, SplitCo
will seek to obtain alternative financing (and in such circumstance if alternative financing is available, SplitCo may obtain such alternative financing), including from
alternative sources, in an amount sufficient to replace any unavailable portion of the Galleria Financing on terms and conditions that are substantially similar in all material
respects to the terms of the Galleria Commitment Letter and after reasonable consultation with Acquiror; and
(ii)
if the Galleria Financing is insufficient to so fund the payment of the Recapitalization Amount by SplitCo, SplitCo will seek to obtain additional
financing (and in such circumstance if additional financing is available, SplitCo may obtain such additional financing), including from alternative sources, in an amount
sufficient to borrow such additional monies as may be necessary to fund such shortfall, which additional financing will be on the most favorable terms reasonably available
under the circumstances and after reasonable consultation with Acquiror (and, in a circumstance in which the amount of the Galleria Financing reflected in the Galleria
Commitment Letter, together with any additional financing obtained pursuant to this clause (ii), is insufficient to so fund the payment of the Recapitalization Amount, the
Parties will negotiate in good faith so as to provide Parent with equivalent value) (the arrangements in clauses (i) and (ii) collectively, an Alternative Financing );
provided that the terms of any such Alternative Financing must be consistent with the Intended Tax-Free Treatment as determined by Parent in its sole discretion. All
references herein to the Galleria Financing will be deemed to include such Alternative Financing and all references to Galleria Credit Documents will include the applicable
documents for the Alternative Financing.
(c)
Cooperation Regarding Galleria Credit Facility . Each of Parent and Acquiror will reasonably cooperate with SplitCo in connection with completing the
Galleria Financing, including (i) using (and causing their respective Subsidiaries to use) Commercially Reasonable Efforts to assist SplitCo in satisfying all conditions
precedent to be satisfied by SplitCo or any Galleria Subsidiary in the Galleria Credit Documents, (ii) providing information regarding the Galleria Business that is
reasonably requested by the Debt Financing Sources and their representatives, including such information required by the Galleria Commitment Letter, (iii) permitting the
Debt Financing Sources and their representatives access to the Galleria Business and the relevant businesses of Acquiror and its Subsidiaries, respectively, (iv) participating
in, and assisting with, marketing efforts related to the Galleria Credit Facility, including causing its management team and other representatives to participate in (A)
meetings with prospective lenders, (B) bank meetings in connection with the financing and (C) meetings with ratings agencies and other parties deemed appropriate, (v)
causing members of their respective accounting firms to participate in drafting sessions related to the offering materials, if any, for the financing contemplated by the
Galleria Credit Documents and (vi) delivery of documentation and other information required by regulatory authorities under applicable know your customer and antimoney laundering rules and regulations, including without limitation the PATRIOT Act (as may be amended from time to time). Parent hereby consents to the use of all
logos associated with the Galleria Business in connection with obtaining the Galleria Credit Facility; provided , however , that such logos are used solely in a manner
69
that is not intended to or reasonably likely to harm or disparage the Galleria Business, Parent, SplitCo or any of their Subsidiaries.
(d)
Cooperation Regarding Distribution . Acquiror will cooperate with Parent in connection with the preparation of all documents and the making of all
filings required in connection with the Distribution. Parent will be permitted to reasonably direct and control the efforts of the Parties in connection with the Distribution,
and Acquiror will use its reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all other things reasonably necessary to facilitate the
Distribution as reasonably directed by Parent. Without limiting the generality of the foregoing, Acquiror will and will cause its employees, advisors, agents, accountants,
counsel and other representatives to, as reasonably directed by Parent, cooperate in and take the following actions: (i) participating in meetings, drafting sessions, due
diligence sessions, management presentation sessions, and road shows in connection with the Distribution (including any marketing efforts), (ii) furnishing to any dealer
manager or other similar agent participating in the Distribution (A) cold comfort letters from Acquirors independent public accountants in customary form and covering
such matters as are customary for an underwritten public offering (including with respect to events subsequent to the date of financial statements included in any offering
document) and (B) opinions and negative assurance letters of Acquirors counsel in customary form and covering such matters as may be reasonably requested, and (iii)
furnishing all historical and forward-looking financial and other pertinent financial and other information that is available to Acquiror and is reasonably required in
connection with the Distribution and permitting the prospective underwriters and other parties involved in the Distribution to evaluate Acquirors current assets, cash
management and accounting systems, and policies and procedures relating thereto, for the purpose of establishing necessary arrangements with respect to the Distribution.
Without limiting the foregoing, (x) Acquiror will participate, as reasonably requested by Parent, in a two-week equity road show to take place prior to the consummation
of the Distribution (which may be for a shorter period, at Parents option), and will make available individual members of its senior personnel (including its CEO and CFO)
for participation in this road show as reasonably requested and specified by Parent, (y) Acquiror will make available individual members of its senior personnel for
participation as reasonably requested and specified by Parent for participation in meeting with analysts (both sell-side and otherwise) and will reasonably coordinate and
cooperate with Parent in connection with such meetings, and (z) the Parties will perform the marketing activities set forth in Section 5.13(c) of the Parent Disclosure Letter
as provided therein.
(e)
Acquiror Refinancing . Attached hereto as Exhibit M is a true and complete fully executed copy of the commitment letter relating to the Acquiror
Financing (the Acquiror Commitment Letter ). From the date hereof through the Closing Date, each of Parent and SplitCo will cooperate in a commercially reasonable
manner with Acquiror in connection with the efforts of Acquiror to complete the Acquiror Financing, including (i) providing information regarding the Galleria Business
that is reasonably requested by the Debt Financing Sources and their representatives, including such information required by the Acquiror Commitment Letter, (ii)
permitting the Debt Financing Sources and their representatives reasonable access to the Galleria Business, (iii) participating in, and assisting with, marketing efforts
related to such refinancing, including causing management team and other representatives to participate in (A) meetings with prospective lenders, (B) bank meetings in
connection with any refinancing and (C) meetings with
70
ratings agencies and other parties deemed appropriate and (iv) delivery of documentation and other information required by regulatory authorities under applicable know
your customer and anti-money laundering rules and regulations, including without limitation the PATRIOT Act. Parent hereby consents to the use of all logos associated
with the Galleria Business in connection with obtaining the Acquiror Financing; provided , however , that such logos are used solely in a manner that is not intended to or
reasonably likely to harm or disparage the Galleria Business, Parent, SplitCo or any of their Subsidiaries. Acquiror will use its Commercially Reasonable Efforts to take, or
cause to be taken, all actions and do, or cause to be done, all things necessary, proper or advisable to arrange and obtain the Acquiror Financing on the terms and conditions
described in the Acquiror Commitment Letter, including using its Commercially Reasonable Efforts to (x) negotiate and enter into the credit agreement and related
agreements and documents in respect thereof on the terms and conditions contemplated by the Acquiror Commitment Letter, (y) obtain the financing contemplated thereby
(which will be deemed to include exercising any flex terms if necessary) and (z) obtain alternate refinancing if any portion of the Acquiror Financing becomes, or would
reasonably be expected to become, unavailable; provided , further , that Acquiror shall have the right to modify or waive any of its rights under the Acquiror Commitment
Letter, and/or substitute other debt financing for all or any portion of the Acquiror Financing from the same and/or alternative financing sources, in order to obtain more
favorable terms with respect thereto, to the extent that such terms are, at such time, generally available in the market to companies that are similarly situated from a credit
perspective to Acquiror; provided , however , that Acquiror shall provide written notice to Parent at least 5 Business Days prior to any such proposed modification or
waiver; and provided , further , however , that any such modification to or waiver of any provision of the Acquiror Commitment Letter or such substitute debt financing for
all or a portion of the Acquiror Financing shall not (i) reduce the aggregate amount of the Acquiror Financing (such that the aggregate funds that would be available to
Acquiror would not be sufficient to provide the funds required to consummate such refinancing), (ii) add or expand the conditions precedent or contingencies to the funding
of the Acquiror Debt Financing as set forth in the Acquiror Commitment Letter, (iii) materially increase the likelihood that the Intended Tax-Free Treatment would not
apply to the transactions contemplated hereby, as determined by Parent in its sole discretion or (iv) unreasonably impede or delay the satisfaction of the conditions set forth
in Article VII .
71
5.13 Agreement for Exchange of Information . (a) Generally . (i) Except as otherwise provided in the Transition Services Agreement or as prohibited by
applicable Law, each Party, on behalf of its respective Group, will provide, or cause to be provided, to the other Partys Group, at any time after the Closing Date and until
the sixth anniversary of the Closing Date, as soon as reasonably practicable after written request therefor, any Shared Information in its possession or under its control.
Each of Parent and Acquiror agree to make their respective personnel available during regular business hours to discuss the Information exchanged pursuant to this Section
5.13 .
(ii)
Each Party will provide to the other such Information as the other may from time to time reasonably request in order to prepare its financial
statements and satisfy its public reporting obligations.
(iii)
Prior to the Closing, each Party will take measures that it determines in good faith to be appropriate to ensure that any competitively sensitive
Shared Information from one Party is not disclosed to the other Partys personnel involved in a competing business.
(b)
Ownership of Information . Any Information owned by a Party that is provided to the other Party pursuant to this Section 5.13 remains the property of
the Party that owned and provided such Information. Each Party will, and will cause members of their respective Groups to, remove and destroy any hard drives or other
electronic data storage devices from any computer or server that is reasonably likely to contain Information that is protected by this Section 5.13 and that is transferred or
sold to a third party or otherwise disposed of in accordance with Section 5.13(c) , unless required by Law or bona fide document retention policies to retain such materials.
(c)
Record Retention . Each Party agrees to use its Commercially Reasonable Efforts to retain all Information that relates to the operations of SplitCo and the
Galleria Business in its respective possession or control at the Business Transfer Time in accordance with their respective then-existing document retention policies, as such
policies may be amended from time to time.
(d)
Other Agreements Providing for Exchange of Information . The rights and obligations granted under this Section 5.13 are subject to any specific
limitations, qualifications or additional provisions on the sharing, exchange or confidential treatment of Information set forth in this Agreement and any Ancillary
Agreement.
(e)
Compensation for Providing Information . The Party requesting Information will reimburse the other Party for the reasonable out-of-pocket costs, if any,
of creating, gathering and copying such Information, to the extent that such costs are incurred for the benefit of the requesting Party.
(f)
Production of Witnesses; Records; Cooperation . (i) After the Closing Date, except in the case of any Action by one Party or its Affiliates against another
Party or its Affiliates, each Party will use its Commercially Reasonable Efforts to make available to each other Party, upon written request, the former, current and future
directors, officers, employees, other personnel and agents of the members of its respective Group as witnesses and any books, records or other documents within its control
or which it otherwise has the ability to make available, to the extent
72
that any such Person (giving consideration to business demands of such directors, officers, employees, other personnel and agents) or books, records or other documents are
reasonably requested in connection with any Action in which the requesting Party may from time to time be involved.
(ii)
If an Indemnifying Party chooses to defend or to seek to compromise or settle any Third-Party Claim, the other Party will use Commercially
Reasonable Efforts to make available to such Indemnifying Party, upon written request, the former, current and future directors, officers, employees, other personnel and
agents of the members of its respective Group as witnesses and any books, records or other documents within its control or which it otherwise has the ability to make
available, to the extent that any such Person (giving consideration to business demands of such directors, officers, employees, other personnel and agents) or books, records
or other documents are reasonably requested in connection with such defense, settlement or compromise, or the prosecution, evaluation or pursuit thereof, as the case may
be.
(iii)
The obligation of the Parties to provide witnesses pursuant to this Section 5.13 is intended to be interpreted in a manner so as to facilitate
cooperation and will include the obligation to provide as witnesses managers and other officers without regard to whether the witness or the employer of the witness could
assert a possible business conflict.
(g)
Restrictions . Except as expressly provided in this Agreement or any Ancillary Agreement, no Party or member of such Partys Group grants or confers
rights of license in any Information owned by any member of such Partys Group to any member of the other Partys Group hereunder.
5.14 Privileged Matters . (a) As to all communications among counsel for Parent or the Parent Group (including Jones Day and in-house counsel of Parent or the
Parent Group), Parent and any other member of the Parent Group that relate in any way to the transactions contemplated by this Agreement or to Excluded Liabilities
(collectively, the Privileged Communications ), the attorney-client privilege and the expectation of client confidence belongs to Parent and may be controlled by Parent
and will not pass to or be claimed by Acquiror, SplitCo, any Galleria Entity or any of their respective Affiliates. The Privileged Communications are the property of Parent,
and from and after the Closing none of Acquiror, SplitCo, any Galleria Entity, any other member of the Acquiror Group or any Person purporting to act on behalf of or
through the Acquiror (including a Continuing Employee), SplitCo, any Galleria Entity or any other member of the Acquiror Group will seek to obtain such
communications, whether by seeking a waiver of the attorney-client privilege or through other means. As to any such Privileged Communications prior to the Closing Date,
Acquiror, SplitCo, each Galleria Entity and each other member of the Acquiror Group, together with any of their respective Affiliates, successors or assigns, further agree
that no such Person may use or rely on any of the Privileged Communications in any action against or involving any of the Parties after the Closing. The Privileged
Communications may be used by Parent or any other member of the Parent Group in connection with any dispute that relates in any way to the transactions contemplated
by this Agreement, including in any claim for indemnification brought by Acquiror. Notwithstanding the foregoing, in the event that a dispute arises between Acquiror,
SplitCo any
73
Galleria Entity or any of their Affiliates and a third party (other than a Party or any of their respective Affiliates) after the Closing, Acquiror may assert the attorney-client
privilege to prevent disclosure of confidential communications by counsel for Parent or the Parent Group to such third party; provided , however , that neither Acquiror nor
any of its Affiliates may waive such privilege without the prior written consent of Parent.
(b)
Upon receipt by Acquiror or any of its Affiliates of any subpoena, discovery or other request from any third party that actually or arguably calls for the
production or disclosure of Privileged Communications or if Acquiror or any of its Affiliates obtains knowledge that any current or former employee of Acquiror receives
any subpoena, discovery or other request from any third party that actually or arguably calls for the production or disclosure of Privileged Communications Acquiror will
promptly notify Parent of the existence of the request and will provide Parent a reasonable opportunity to assert any rights it may have under this Section 5.14 or otherwise
to prevent the production or disclosure of Privileged Communications. Acquiror will not, and will cause its Affiliates not to, produce or disclose to any third party any of
the Privileged Communications under this Section 5.14 unless (i) Parent has provided its express written consent to such production or disclosure or (ii) a court of
competent jurisdiction has entered an Order finding that the Privileged Communications are not entitled to protection from disclosure under any applicable privilege,
doctrine or rule.
(c)
The access to Information, witnesses and individuals being granted pursuant to Section 5.13 and the disclosure to Parent and Acquiror of Privileged
Communications relating to the Galleria Business pursuant to this Agreement in connection with the transactions contemplated hereby will not be asserted by Parent or
Acquiror to constitute, or otherwise deemed, a waiver of any Privilege that has been or may be asserted under this Section 5.14 or otherwise. Nothing in this Agreement
will operate to reduce, minimize or condition the rights granted to Parent and Acquiror in, or the obligations imposed upon Parent and Acquiror by, this Section 5.14 .
5.15 Restriction on Hiring . (a) Parent agrees that for a period of 24 months from the Closing Date, Parent will not, and will cause each other member of the
Parent Group not to, without obtaining the prior written consent of Acquiror, directly or indirectly, employ any Continuing Employee (after giving effect to any employee
transfers contemplated in this Agreement); provided , however , that any member of the Parent Group may hire any such Person if such Persons employment has been
terminated by the Acquiror Group for any reason or such Person has been given notice of such termination, in either case, prior to any direct or indirect solicitation by any
member of the Parent Group (other than solicitations by means of a general media advertisement).
(b)
Acquiror agrees that for a period of 12 months from the Closing Date, Acquiror will not, and will cause each other member of the Acquiror Group not to,
without obtaining the prior written consent of Parent, directly or indirectly, employ any employee of Parent or any member of the Parent Group who held a position with a
seniority level of Band 3 or higher (as such employment bands are commonly referred to within Parents organization as of the date of this Agreement) and with whom
Acquiror had direct contact through face-to-face meetings or conference calls during the course of negotiating the transactions contemplated by this Agreement or the
74
Ancillary Agreements (other than as expressly contemplated by this Agreement with respect to employees of the Galleria Business); provided , however , that any member
of the Acquiror Group may hire any such Person if such Persons employment has been terminated by the Parent Group for any reason whatsoever or such Person has been
given notice of such termination, in either case, prior to any direct or indirect solicitation by any member of the Acquiror Group (other than solicitations by means of a
general media advertisement).
(c)
Parent agrees that for a period of 12 months from the Closing Date, Parent will not, and will cause each other member of the Parent Group not to, without
obtaining the prior written consent of Acquiror, directly or indirectly, employ any employee of Acquiror or any member of the Acquiror Group who held a position with a
seniority level of Level F or higher (as such employment bands are commonly referred to within Acquirors organization as of the date of this Agreement) and with
whom Parent had direct contact through face-to-face meetings or conference calls during the course of negotiating the transactions contemplated by this Agreement or the
Ancillary Agreements; provided , however , that any member of the Parent Group may hire any such Person if such Persons employment has been terminated by the
Acquiror Group for any reason whatsoever or such Person has been given notice of such termination, in either case, prior to any direct or indirect solicitation by any
member of the Parent Group (other than solicitations by means of a general media advertisement).
5.16 Intellectual Property Assignment/Recordation . Each Party will be responsible for, and will pay all expenses (whether incurred before or after the
Business Transfer Time) involved in notarization, authentication, legalization or consularization of the signatures of any of the representatives of its Group on any of the
Transfer Documents relating to the transfer of Intellectual Property. Acquiror will be responsible for, and will pay, all expenses (whether incurred before or after the
Business Transfer Time) relating to, the recording of any such Transfer Documents relating to the transfer of Intellectual Property from any member of the Parent Group to
any member of the Acquiror Group with any Governmental Authorities as may be necessary or appropriate (other than expenses with respect to correcting or updating
information that, immediately prior to the Closing Date, is incorrect or has not been updated with any Governmental Authorities concerning the Registered Intellectual
Property immediately prior to the Closing Date and which is required to be corrected or updated in order to validly and effectively transfer such Registered Intellectual
Property from a member of the Parent Group (other than any Galleria Group members) to a member of the Galleria Group, which shall be corrected and paid for by Parent).
75
5.17 Use of Parent Names and Marks . (a) Parent Names and Marks means the names and marks P&G and Procter & Gamble(in any style or design),
and any Trademark derived from, confusingly similar to or including any of the foregoing. Subject to the terms and conditions of this Section 5.17 , Parent, on behalf of
itself and its Affiliates as necessary, hereby grants to SplitCo and the Galleria Entities a limited, non-transferable, non-sublicensable (except to the extent licensed to third
parties by the Parent Group in the Galleria Business prior to the Closing), non-exclusive, royalty-free license, for the six-month period following the Closing Date (the
Transition Period ), to use the Parent Names and Marks in connection with the Galleria Business in the manner set forth in Section 5.17(d) . Acquiror and SplitCo will use
Commercially Reasonable Efforts to transition from use of the Parent Names and Marks as soon as reasonably practicable and in any event prior to expiration of the
Transition Period. Except as expressly provided in this Section 5.17 or Section 5.27 , Parent reserves for itself and its Affiliates all rights in the Parent Names and Marks,
and no other rights therein are granted to SplitCo, any Galleria Entity, member of the Acquiror Group or any of their respective Affiliates, whether by implication, estoppel
or otherwise. All use of the Parent Names and Marks by the Galleria Entities will inure to the benefit of Parent and its Affiliates.
(b)
As soon as practicable following the Closing Date, and in any event prior to the expiration of the Transition Period, Acquiror will, and will cause the
other members of the Acquiror Group (including SplitCo and the Galleria Entities) to, (i) change the name of any Galleria Entity whose name includes any Parent Names
and Marks to a name that does not include any of the Parent Names and Marks, (ii) remove all publicly accessible references to Parent Names and Marks from any internet
or other electronic communications vehicles, including internet domain names and from the content of any internet websites within the Galleria Assets, and remove all links
to any internet domains of Parent or any of its Affiliates from any of the foregoing, (iii) remove or irreversibly cover or modify all Parent Names and Marks from or destroy
any packaging bearing any of the Parent Names and Marks, except that SplitCo and the Galleria Entities may continue to sell inventories of finished goods existing or inprocess as of the Closing Date and included in the Galleria Assets until the expiration of the applicable shelf lives of such products; provided , however , that Acquiror and
its Affiliates use their Commercially Reasonable Efforts to sell such existing inventories prior to the sale of subsequently manufactured or packaged products, and (iv)
remove or irreversibly cover or modify all Parent Names and Marks from or destroy any product literature, store displays and similar publicly accessible materials bearing
any of the Parent Names and Marks.
(c)
For all other uses of the Parent Names and Marks not specifically identified in Section 5.17(b) (e.g., signage, business cards and stationery), for up to 90
days after the Closing Date, in each applicable jurisdiction, SplitCo and the Galleria Entities may continue to use the Parent Names and Marks on the same materials and in
substantially the same manner as used by the Galleria Business during the 90-day period preceding the Closing. In each applicable jurisdiction, as soon as practicable
following the Closing Date, and, in any event within 90 days after the Closing Date, Acquiror will, and will cause the other members of the Acquiror Group to, remove or
irreversibly cover or modify all Parent Names and Marks from or destroy any such other publicly accessible materials bearing any of the Parent Names and Marks.
(d)
In no event will SplitCo or any of the Galleria Entities use, and Acquiror will, and will cause the other members of the Acquiror Group to not use, any of
the Parent Names and Marks
76
that are subject to the license under this Section 5.17 after the Closing in any manner or for any purpose other than in the same or substantially same manner that such
Parent Names and Marks were being used by the Galleria Business during the 12-month period preceding the Closing. Without limiting the generality or effect of the
foregoing, all products sold by the Galleria Business using any Parent Name or Mark will be of high quality, consistent in nature and quality with such products as sold by
the Galleria Business in the 12-month period preceding Closing. Parent reserves the right to reasonably inspect the Galleria Business quality control of the products sold
bearing and uses of a Parent Name or Mark and other compliance with the terms of the license granted under this Section 5.17 , in each of the foregoing cases, upon
reasonable prior written notice to Acquiror and during normal business hours.
(e)
The license granted under this Section 5.17 may be terminated by written notice if Acquiror, SplitCo or any Galleria Entity is in material breach of any
provision hereof that remains uncured for more than ten days after written notice thereof from Parent, provided that such termination shall not be effective if Acquiror,
SplitCo or the Galleria Entity, as applicable, is using Commercially Reasonable Efforts to cure or otherwise remedy such breach. Upon such termination of the license
granted hereunder for any reason, Acquiror and its Affiliates will not use any of the Parent Names and Marks hereunder.
(f)
For purposes of clarity, nothing in this Section 5.17 shall preclude any uses of the Parent Names and Marks that are required or otherwise not prohibited
under applicable Law (e.g., fair use).
5.18 Removal of Tangible Assets . (a) Prior to the Business Transfer Time, the Parties will discuss in good faith the process and timing for moving to a Galleria
Facility all tangible Galleria Assets that are located at any facilities of any member of the Parent Group that are not Galleria Facilities and are reasonably able to be moved,
including the feasibility of moving such Galleria Assets prior to the Business Transfer Time. Following such discussions, Parent will determine whether such Galleria
Assets should be moved prior to or at the Business Transfer Time, and Parent will cause such Galleria Assets to be moved at the applicable time from such facilities to a
Galleria Facility (except, in the case of any Galleria Assets that are utilized by Parent in connection with the performance of a service under the Transition Services
Agreement, which will be removed as promptly as reasonably practicable following the termination of such service and in accordance with the Transition Services
Agreement). Any move of Galleria Assets pursuant to this Section 5.18 , whether prior to or after the Business Transfer Time, will be in a manner so as not to cause
substantial damage to such Galleria Assets; provided , that Acquiror will be responsible for the installation of such property within SplitCos facilities.
(b)
Except as may be otherwise provided in the Transition Services Agreement or otherwise agreed to by the Parties, all tangible Excluded Assets (if any)
that are located at any of the Galleria Facilities will be removed from such facilities prior to the Closing, at Parents expense and in a manner so as not to unreasonably
interfere with the operations of any member of the Acquiror Group and to not cause substantial damage to such Galleria Facility; provided , that Parent will remove any
Excluded Assets that remain at any such Galleria Facilities in connection with the
77
performance of services under the Transition Services Agreement as promptly as reasonably practicable after the termination of such service pursuant to the same terms and
conditions stated above in this Section 5.18(b) .
5.19 Works Council Cooperation . To the extent required by applicable Law or labor agreement or any agreement with employee representatives, in each case
in connection with the transfer of the In-Scope Employees to employment with SplitCo and its Subsidiaries and the other transactions contemplated hereby, Parent will, or
will cause one of its Subsidiaries to, make any notifications to, and consultations with, works councils, economic committees, unions or similar bodies with respect to the
In-Scope Employees. Parent and Acquiror will each provide, and will cause each of their Subsidiaries to provide, and will use their reasonable best efforts to cause each of
their respective representatives, including legal, human resources and regulatory, to provide, all cooperation reasonably requested by the other Party in connection with
satisfying its obligations with respect to any works council, economic committee, union or similar body, including all notifications and consultations and other processes
(including meetings with any such body) necessary to effectuate the transfer of the In-Scope Employees to employment with SplitCo and its Subsidiaries at the Business
Transfer Time and the other transactions contemplated hereby, which will include any required notifications and consultations and other processes required to either (a)
obtain an opinion or acknowledgment from any works council, economic committee, union or similar body or (b) establish that the Parties are permitted to effect the
transactions contemplated hereby without such opinion or acknowledgment. Such cooperation will include the provision of any information and consultation required by
applicable Law, the terms of any Contract or as reasonably requested by the other Party. Each of Acquiror and Parent will make available its representatives at such times
and in such places as the other Party may reasonably request for purposes of discussions with representatives of any such works council, economic committee, union or
similar body. Parent and its Subsidiaries will promptly notify Acquiror (and provide copies) of any binding commitments or final agreements with any works council,
economic committee, union or similar body in the information and/or consultation or other procedures with respect to the In-Scope Employees in respect of the transactions
contemplated hereby. Parent and its Subsidiaries will not make any binding commitment or final agreement with any such works council, economic committee, union or
similar body (or in each case, to any representatives thereof) for which the Acquiror Group may be liable after the Closing, without the written consent of Acquiror, which
will not be unreasonably withheld, conditioned or delayed.
78
5.20 Insurance Matters . From and after the Closing, Acquiror will not, and will cause its Affiliates not to, assert any claim against any insurance policies or
practices of Parent and its Affiliates under any captive insurance policies, fronted insurance policies, surety bonds or corporate insurance policies or practices, or any form
of self-insurance whatsoever; provided , however , that (a) Parent and Acquiror agree that all claims with respect to insured events occurring prior to the Closing will be
administered in accordance with the terms of Parents or its Subsidiaries third-party policies, if any, and coverage applicable to such claims, (b) Acquiror will receive the
benefit of such third-party policies with respect to such claims to the extent losses occurring prior to the Closing related to Galleria Assets are covered notwithstanding the
consummation of the transactions contemplated by this Agreement, and (c) Parent will receive the benefit of such policies with respect to such claims to the extent losses
related to Liabilities other than Galleria Liabilities are covered notwithstanding the consummation of the transactions contemplated by this Agreement and provided that in
the case of clauses (b) and (c) such recovery will be net of any deductibles or self-insured retention amounts, costs of any retroactive insurance premiums or other amounts
paid or expenses incurred in connection with any insured claims made after the Closing under any such policies that relate to the period prior to Closing or any amounts
paid by Parent pursuant to Article IX in respect of the applicable Liabilities (it being understood that Parent will have the right to determine whether or not to make any
claim against Parents insurance policies).
79
5.21 Restructuring of Galleria Business; Transition Plan . (a) Transition Plan . During the 90-day period immediately following the date of this Agreement,
Parent and Acquiror will develop a plan as provided in this Section 5.21 (as the same may be amended or supplemented from time to time, the Transition Plan ) that sets
forth reasonable detail regarding (i) the establishment prior to the Closing of such internal functions of SplitCo as may be necessary so as to allow Acquiror to operate
SplitCo immediately after the Closing in a commercially reasonable manner in all material respects (which may take into account the functions that will be provided by
Acquirors existing business and resources and also the transition services that are referenced in Exhibit D or otherwise permitted by clause (ii) of this sentence), and (ii)
preparation for the receipt of the transition services referenced in Exhibit D ; provided , however , that Acquiror may reasonably request other services if such services are
not expressly listed as Excluded on Exhibit D , but Exhibit D shall be amended solely to the extent that Parent determines, in its sole discretion, such amendment would
not materially increase the likelihood that the Intended Tax-Free Treatment would not apply to the transactions contemplated hereby.
(b)
Preparation of Transition Plan . Parent and Acquiror will provide to each other no later than 5 days after the date of this Agreement the names of their
transition team leaders. Within 30 days of the date of this Agreement, Parent will prepare a draft Transition Plan and present such plan to Acquiror (the Original Proposal
). The Parties will discuss in good faith during the 30 day period following the delivery of the Original Proposal to Acquiror any desired changes to the Original Proposal;
provided , that no such proposed amendment will result in an increase by more than a de minimis amount in the nature and scope of the services ultimately provided by
Parent to SplitCo pursuant to the transition services described in Exhibit D , as such may be amended from time to time in accordance with Section 5.21(a) . In the event of
any disagreement with respect to the preparation of the Transition Plan that continues to be unresolved at the end of this second 30 day period, each of Parent and Acquiror
will refer such disagreement to an executive officer of Parent and Acquiror (as applicable), which executive officers will negotiate in good faith to resolve such
disagreement within 30 days. In the event that such negotiations are unable to resolve such disagreement, then the Transition Plan will be completed as proposed by Parent
(after taking into account any points of agreement between Parent and Acquiror), provided , that the Transition Plan must be commercially reasonable, consistent with the
Intended Tax-Free Treatment and reasonably capable of completion by the End Date.
(c)
Proposed Changes After Transition Plan Is Finalized . After the Transition Plan is completed as contemplated by Section 5.21(b) , either Parent or
Acquiror can propose amendments to such Transition Plan. The adoption of such amendments will be subject to the consent of the other Party after good faith
consideration, taking into account the impacts of such a change on the Intended Tax-Free Treatment and the ability to complete the Closing by the End Date; provided ,
however , that no such proposed amendment will result in an increase by more than a de minimis amount in the nature and scope of the services ultimately provided by
Parent to SplitCo pursuant to the transition services described in Exhibit D , as such may be amended from time to time in accordance with Section 5.21(a) .
(d)
Execution of Transition Plan . Parent will, and will cause the other members of the Parent Group to, commence implementation of the Transition Plan
promptly after the Transition
80
Plan is finalized as contemplated by Section 5.21(b) , and will use Commercially Reasonable Efforts to complete the Transition Plan no later than the Business Transfer
Time. Parent will provide Acquiror with monthly reports on the progress of implementation of the Transition Plan and expenditures in connection therewith, together with
reasonable detail regarding such expenditures. In the event that an action proposed to be taken by Parent or any of its Subsidiaries in connection with the Restructuring
would be permitted or prohibited pursuant to Section 5.01 but would conflict with a provision of the Transition Plan, the Transition Plan will control.
(e)
Transfer of Accounts Receivable . Prior to the Cut-Off Date and prior to the Closing, Parent will cause (i) all accounts receivable that are either (A)
primarily related to the Galleria Business and held by SplitCo or any Galleria Entity or (B) primarily related to the Salon Professional Business and (ii) all other rights to
payment and security for payments to the extent they relate to the Galleria Business to be held by a member of the Galleria Group.
(f)
Set-Up of UPC/EAN Codes; Packaging; Transition of Parent Names and Marks . In connection with the Restructuring and implementation of the
Transition Plan, Parent will commence, prior to the Closing, Commercially Reasonable Efforts to (i) establish UPC, EAN and similar codes for the Galleria Entities insofar
as such entities do not currently have their own such codes, (ii) modify the packaging and related written materials of the Galleria Business used to advertise, promote,
market and sell its products so as to remove any Parent Names and Marks that appear on such packaging and materials, (iii) commence the changes contemplated in Section
5.17 prior to the Closing, all of the foregoing in reasonable consultation and cooperation with Acquiror (it being understood that the activities referenced in this Section
5.21(f)(i)-(iii) may not be completed as of the Closing, in which case, in addition to use of the Parent Names and Marks permitted pursuant to Section 5.17 , the Galleria
Entities will be permitted to use the UPC, EAN and similar codes of the Parent Group for a reasonable period of time following the Closing) and (iv) establish for the
Galleria Entities an accumulation of inventory of all Products incorporating or manufactured using any of the Excluded Technologies set forth on Section 5.21(f) of the
Parent Disclosure Letter that will not be licensed (other than pursuant to a sell-off license) to SplitCo following the Closing, which accumulation is sufficient to meet sales
of such Products from the Closing through the 2016 holiday season, as measured by the average sales of such Products during the corresponding period in the three (3)
years prior to Closing. To the extent that any inventory build-up contemplated by such clause (iv) would take place between the Cut-Off Date and the Closing Date, the
Cut-Off Date Working Capital will include Parents good faith projection of the amount of such inventory that would be present as of the Closing Date.
(g)
Control of Galleria Entity Structuring . Authorized representatives of Parent and Acquiror will use their reasonable best efforts to meet, within 30 days
and then again within 60 days after the date hereof, to discuss (i) the material Galleria Assets that are held and the material Galleria Liabilities that are owed, as of such
date, by Parent or any of its Affiliates and that will be held by, transferred to or assumed by, as the case may be, a Galleria Entity prior to the Closing, and (ii) any Tax or
other objectives that Acquiror desires that Parent take into account in effecting the Galleria Transfer (the Acquiror Restructuring Goals ). Parent will use its reasonable
best efforts to provide Acquiror, not more than 90 days after the date hereof, with schedules identifying or describing any (1) Galleria Assets that are held, and Galleria
Liabilities that are owed, as of such
81
date by Parent or any of its Affiliates and that will be held by, transferred to or assumed by, as the case may be, a Galleria Entity prior to the Closing and (2) any Excluded
Assets that are held, and Retained Liabilities that are owed, as of such date by the Galleria Entities and that will be transferred to or assumed by, as the case may be, Parent
or any of its Affiliates (other than a Galleria Entity) prior to the Closing (the schedules described in clause (1) and clause (2) immediately above, collectively, the
Restructuring Schedules ). Within 15 days after receipt of the Restructuring Schedules, Acquiror will notify Parent in writing of any revisions to the Acquiror
Restructuring Goals, and Parent will, after giving good faith consideration to the Acquiror Restructuring Goals as revised herein, (x) preliminarily determine, in its sole
discretion, the manner in which each Galleria Asset and Galleria Liability is Conveyed to SplitCo or any of its Subsidiaries, including whether a particular Galleria Asset is
contributed or Galleria Liability is Conveyed directly to SplitCo or another member of the Galleria Group or is included as an asset or liability of an entity whose equity
interests are contributed to SplitCo (collectively, the Galleria Entity Structuring ), and (y) use its reasonable best efforts to provide Acquiror, within 45 days after receipt
of Acquirors written notification regarding any revisions to the Acquiror Restructuring Goals, with a reasonably detailed step plan illustrating the steps pursuant to which
Parent believes as of such date that Parent will implement the Galleria Entity Structuring (such step plan, the Galleria Entity Structuring Step Plan ). Within 30 days after
receipt of the Galleria Entity Structuring Step Plan, Acquiror will notify Parent in writing of any comments to such plan. Parent will: (i) consult with Acquiror in good faith
regarding Acquirors written comments to the Galleria Entity Structuring Step Plan, (ii) provide Acquiror with an opportunity to review any contemplated revisions to the
Galleria Entity Structuring Step Plan; (iii) in its sole discretion, finalize the Galleria Entity Structuring and (iv) promptly provide a copy of the final Galleria Entity
Structuring Step Plan to Acquiror.
(h)
Transition Services Agreement . As soon as reasonably practicable after determination of the Transition Plan, the Parties will negotiate in good faith the
schedule of services for the Transition Services Agreement to be entered into by and between Parent and SplitCo at the Closing, for the provision of the services and access
contemplated by the Transition Services Agreement, Section 5.21(a) and Exhibit D for a term of six months following the Closing Date, plus any extension of such term
expressly permitted under the Transition Services Agreement. Notwithstanding anything to the contrary contained in this Agreement, none of Parent or any of its Affiliates
will make any substantive business decisions with respect to the Galleria Business in performing any services for SplitCo pursuant to the Transition Services Agreement.
(i)
Restructuring Documentation . Parent will provide any proposed agreements, certificates of formation or other governing documents, instruments of
conveyance and other similar documents relating to the Restructuring (collectively, the Restructuring Documents ) to Acquiror for its review a reasonable amount of
time prior to execution of each such Restructuring Document (or, if not executed, prior to the effectiveness of each such Restructuring Document). Parent will, in good
faith, consider any reasonable request by Acquiror in such Restructuring Documents, provided that, to the extent Acquiror has not informed Parent of any requested
changes within five Business Days of its receipt of any Restructuring Document, such Restructuring Document will be deemed to be satisfactory. All Restructuring
Documents will be consistent with the terms of the Agreement and will not impose any additional Liabilities or obligations on SplitCo, Acquiror or any other party beyond
those contemplated in this Agreement. For the avoidance of doubt, nothing
82
in this Agreement will be deemed to permit Acquiror to control or direct any aspect of the Galleria Entity Structuring, which will be determined by Parent as provided in
Section 5.21(g) .
5.22 Confidentiality . (a) The Parties acknowledge that in connection with the transactions contemplated hereby, the Parties have disclosed to each other
Information which the Parties consider proprietary and confidential ( Confidential Information ). For the avoidance of doubt, any information disclosed by or on behalf of
the Parties under the Confidentiality Agreement that is subject to the confidentiality obligations contained therein will be, and will be deemed to be, Confidential
Information for purposes of this Agreement and will be subject to all of the terms and conditions of this Agreement, including the restrictions on the disclosure of such
Confidential Information contained herein. The Parties agree that, after the Closing, Information that constitutes an Galleria Asset will be Confidential Information of
Acquiror and Acquiror will not be subject to this Section 5.22 (except for Section 5.22(c) ) with respect to such information, and Parent will be deemed to be the Receiving
Party of such Confidential Information for purposes of Section 5.22(b) .
(b)
Each Party receiving Confidential Information (the Receiving Party ) recognizes and acknowledges:
(i)
that Confidential Information of the other Party may be commercially valuable proprietary products of such Party, the design and development of
which may have involved the expenditure of substantial amounts of money and the use of skilled development experts over a long period of time and which afford such
Party a commercial advantage over its competitors;
(ii)
that the loss of this competitive advantage due to unauthorized disclosure or use of Confidential Information of such Party may cause great injury
and harm to such Party; and
(iii)
that the restrictions imposed upon the Parties under this Section 5.22 are necessary to protect the secrecy of Confidential Information and to
prevent the occurrence of such injury and harm. The Parties agree that:
(A)
disclosure of Confidential Information will be received and held in confidence by the Receiving Party and that such Receiving Party will not,
without the prior written consent of the Party from whom such Confidential Information was obtained (the Disclosing Party ), disclose, divulge or permit
any Person to obtain any Confidential Information disclosed by the Disclosing Party (whether or not such Confidential Information is in written or tangible
form), other than to Subsidiaries of the Receiving Party and their employees and agents, in each case, who have a need to know such Confidential
Information and who are bound in writing by duties of confidentiality and non-use obligations with respect to such Confidential Information no less
protective of the Disclosing Party than those set forth herein;
(B)
the Receiving Party will take such steps as may be reasonably necessary to prevent the disclosure of Confidential Information to others; and
83
(c)
(C)
the Receiving Party will use the Information only in connection with the transactions contemplated hereby to perform its and its Groups
obligations, or to exercise its rights, under this Agreement and the Ancillary Agreements.
The commitments set forth above will not extend to any portion of Confidential Information:
(i)
which is already known to the Receiving Party other than any member of Parent Group with respect to Confidential Information related to the
Galleria Business or any of the Galleria Entities, or is information generally available to the public;
(ii)
which, hereafter, through no act on the part of the Receiving Party or its Representatives becomes generally available to the public;
(iii)
which corresponds in substance to a disclosure furnished to the Receiving Party by any third party having a bona fide right to do so and not
having any confidential obligation, direct or indirect, to the Disclosing Party with respect to the same; or
(iv)
which is required to be disclosed by Law; provided that the Receiving Party provides reasonable prior written notice of such required disclosure
to the Disclosing Party following the Receiving Partys knowledge of such requirement in order to provide the Disclosing Party with an opportunity to prevent or limit such
disclosure by seeking a protective order or other appropriate remedy at the sole expense of the Disclosing Party.
5.23 Certain Material Contracts . (a) Parent has not, prior to the execution of this Agreement, made available to Acquiror copies or summaries of certain
Galleria Material Contracts or Shared Business Contracts required to be listed or described in Section 3.08(a) or Section 3.08(b) of the Parent Disclosure Letter (the ToBe-Delivered Galleria Material Contracts ). Notwithstanding any other provision of this Agreement, but subject to Parents compliance with the provisions of this Section
5.23 , Parents failure to identify or make the To-Be-Delivered Galleria Material Contracts available to Acquiror does not constitute a breach of Sections 3.08(a) , 3.08(b) or
3.08(d) . Nothing in this Section 5.23 will be deemed to limit or otherwise alter Parents obligations, to the extent of Parents Knowledge, to list all of the Galleria Material
Contracts on Section 3.08 of the Parent Disclosure Letter on the date hereof pursuant to the terms of this Agreement.
(b)
Parent will use reasonable best efforts to furnish a true, complete and correct copy (or summary of the material terms) of each To-Be-Delivered Galleria
Material Contract (other than any To-Be-Delivered Galleria Material Contract the terms or existence of which is confidential) existing as of the date of this Agreement to
Acquiror as promptly as reasonably practicable after the date hereof and, in any event, within 60 days following the date hereof.
84
(c)
If any To-Be-Delivered Galleria Material Contract constitutes a Galleria Material Contract of the type referred to in subparagraphs (i), (ii), (iii), (vi), (xi),
(xii) or (xiii) of Section 3.08(a) (other than (1) distribution agreements that were identified or described on Section 3.08 of the Parent Disclosure Letter that meet such
description solely because they contain an exclusivity provision in respect of a material service and therefore fall within clause (i) or (ii) of Section 3.08(a) and (2) any ToBe-Delivered Galleria Material Contract the terms or existence of which is confidential), then Acquiror will have the right to notify Parent within 30 days after the delivery
of each such Contract (or description of the material terms of such Contract) that it elects not to assume such To-Be-Delivered Galleria Material Contract. With respect to
any To-Be-Delivered Galleria Material Contract a copy (or description of material terms) of which is not delivered to Acquiror within the 60-day period referenced in subparagraph (b), this 30-day election period will commence at the end of such 60-day period.
(d)
Any To-Be-Delivered Galleria Material Contracts that Acquiror elects not to assume as provided above, together with, unless otherwise agreed by
Acquiror, any To-Be-Delivered Galleria Material Contracts (other than any To-Be-Delivered Galleria Material Contract the terms or existence of which is confidential) that
are not delivered to Acquiror in accordance with Section 5.23(b) will not constitute Galleria Contracts hereunder and will not be Conveyed to Acquiror or any of its
Affiliates pursuant hereto. Subject to the other provisions of this Agreement, all other To-Be-Delivered Galleria Material Contracts (including any To-Be-Delivered
Galleria Material Contract the terms or existence of which is confidential) will constitute Galleria Contracts hereunder and will be Conveyed to Acquiror or its Affiliates in
accordance with the terms of this Agreement; provided , however , that Acquiror will not decline to assume any such To-Be-Delivered Galleria Material Contract if Parent
determines, in its sole discretion, that doing so would materially increase the likelihood that the Intended Tax-Free Treatment would not apply to the transactions
contemplated hereby.
85
5.24 Mercury Business Perfume Oils . (a) With respect to the Exclusive Third-Party Perfume Oils, in addition to its obligations under Section 1.08(b) , Parent
hereby agrees to waive (which waiver will be effective at the Business Transfer Time) any exclusivity provision in Parents supply agreements with the relevant Existing
Perfume Oil Suppliers that is necessary to allow SplitCo to attempt to negotiate its own independent relationship with such Existing Perfume Oil Supplier who can, subject
to SplitCo reaching a mutually agreeable arrangement with such Existing Perfume Oil Suppliers, supply the Exclusive Third-Party Perfume Oils directly to SplitCo on an
exclusive basis.
(b)
At the Business Transfer Time, Parent will provide SplitCo with the formula cards relating to the Exclusive Parent Perfume Oils and SplitCo will be
entitled to use such formula cards without further compensation. In addition to its obligations under Section 1.08(b) , Parent hereby agrees to waive (which waiver will be
effective at the Business Transfer Time) any exclusivity provision in Parents supply agreements with any applicable supplier that supplies the ingredients required to
produce the Exclusive Parent Perfume Oils to the extent necessary to allow SplitCo to attempt to negotiate its own independent relationship with such suppliers.
(c)
Following the Business Transfer Time, the Parent Group shall not (i) use the Exclusive Parent Perfume Oils or the Exclusive Third-Party Perfume Oils or
(ii) until the fifth anniversary of the Closing, and without limitation to any Intellectual Property rights of the Galleria Group, intentionally replicate the scent thereof
(excluding in each case, for the avoidance of doubt, any such Perfume Oils that are used in a Retained Business).
(d)
Notwithstanding anything to the contrary in this Agreement, SplitCo will not receive access to any Perfume Oils that are exclusively related to any
Retained Business.
5.25 Ancillary Fragrances . (a) With respect to the Exclusive Third-Party Ancillary Fragrances, in addition to its obligations under Section 1.08(b) , Parent
hereby agrees to waive (which waiver will be effective as of the Business Transfer Date) any exclusivity provision in the Parent Groups supply agreements with the
relevant Existing Ancillary Fragrance Suppliers that is necessary to allow SplitCo to attempt to negotiate its own independent relationship with such Existing Ancillary
Fragrance Suppliers that can, subject to SplitCo reaching a mutually agreeable arrangement with such Existing Ancillary Fragrance Suppliers, supply the Exclusive ThirdParty Ancillary Fragrances directly to SplitCo on an exclusive basis for use by SplitCo in products marketed under the same primary brand name as the Non-Mercury
Products or Non-Hydroalcoholic Products that use the applicable Exclusive Third-Party Ancillary Fragrances as of the date of this Agreement.
(b)
With respect to the Non-Exclusive Third-Party Ancillary Fragrances, in addition to its obligations under Section 1.08(b) , Parent hereby agrees to waive
(which waiver will be effective as of the Business Transfer Date) any exclusivity provision in the Parent Groups supply agreements with the relevant Existing Ancillary
Fragrance Suppliers that is necessary to allow SplitCo to attempt to negotiate its own independent relationship with such Existing Ancillary Fragrance Supplier that can,
subject to SplitCo reaching a mutually agreeable arrangement with such Existing Ancillary
86
Fragrance Supplier, supply the Non-Exclusive Third-Party Ancillary Fragrances directly to SplitCo on a non-exclusive basis for use by SplitCo in products marketed under
the same primary brand name as the applicable Non-Mercury Products or Non-Hydroalcoholic Products that use the Non-Exclusive Third-Party Ancillary Fragrances as of
the date of this Agreement.
(c)
At the Business Transfer Time, Parent will provide SplitCo with the formula cards relating to the Exclusive Parent Ancillary Fragrances and SplitCo will
be entitled to use such formula cards without further compensation, and Parent will destroy any copies in its possession of such formula cards. At the Business Transfer
Time, Parent will provide SplitCo with the formula cards relating to the Non-Exclusive Parent Ancillary Fragrances and SplitCo will be entitled to use such formula cards
without further compensation, and Parent and SplitCo will each maintain the confidentiality of such formula cards.
(d)
Acquiror acknowledges and agrees that (i) SplitCos right to use the Non-Exclusive Third-Party Ancillary Fragrances is non-exclusive, (ii) after the
Business Transfer Time, Parent and Parents Affiliates may use the Non-Exclusive Third-Party Ancillary Fragrances and Non-Exclusive Parent Ancillary Fragrances in
their current or future products under other brand names in their other businesses or sell, assign, transfer, deliver, license or otherwise permit the use of the Non-Exclusive
Third-Party Ancillary Fragrances or the Non-Exclusive Parent Ancillary Fragrances by Third Parties in other products, and (iii) after the Business Transfer Time, Parent
and Parents Affiliates may develop new fragrances with characteristics similar to the Non-Hydroalcoholic Fragrances in their other businesses.
(e)
Following the Business Transfer Time, the Parent Group shall not use the Exclusive Parent Ancillary Fragrances or Exclusive Third-Party Ancillary
Fragrances (excluding, for the avoidance of doubt, any such Ancillary Fragrances that are used in a Retained Business).
(f)
Notwithstanding anything to the contrary in this Agreement, SplitCo will not receive access to any Non-Hydroalcoholic Fragrances that are exclusively
related to any Retained Business.
5.26 Continuing Employee Restrictions . Without the prior written consent of Parent, and to the extent permitted by applicable Law, during the 12-month
period following the Closing Date, the Acquiror Group will not permit any Continuing Employee to, and will cause each Continuing Employee not to, directly or indirectly,
engage in any activity with, or provide any services to, including as a director, manager, supervisor, employee, advisor, consultant or otherwise, any member of the
Acquiror Group in connection with the manufacture, development, advertising, promotion or sale of any product which is the same as or similar to or competitive with any
product of Parent and its Affiliates (including any existing product as well as any product known to the Continuing Employee, as a consequence of the Continuing
Employees employment with Parent or its Affiliates, to be in development) that is manufactured, marketed or sold in the Retail Channel during such 12-month period,
other than products manufactured, marketed or sold by the Galleria Business outside of the Retail Channel and otherwise to the extent not restricted by the terms of this
Agreement or any other Transaction Document.
87
5.27 Facilities Split Plan . Following the date hereof, Parent and Acquiror will develop a plan in accordance with the terms and conditions set forth in the Split
Plan Agreement to separate the Split Facilities from their existing combined sites so that the Split Facilities can be transferred as herein contemplated. Parent and Acquiror
will bear the costs of implementation of the Split Plan equally; provided , however , that (a) prior to the Closing, Parent may, in good faith, update any estimates of the
costs and expenses reasonably expected to be incurred by each of the Parties to separate the Split Facilities as contemplated by this Section 5.27 (such amounts, the Split
Plan Costs ), (b) prior to the Closing, the Recapitalization Amount will be increased or decreased, as applicable, by the net amount of any adjustments necessary to achieve
a 50%/50% sharing of the Split Plan Costs (taking into account any updated estimates as contemplated by the preceding clause (a)), and (c) no reimbursement payments
will be made by one Party to the other in respect of Split Plan Costs after the Closing.
5.28 Wind-down of Max Factor Gold Business . Between the date hereof and the Closing Date, the Parent Group will wind-down its Max Factor Gold business
and will cease production of any new Max Factor Gold business products under the Trademark contained in the Galleria IP Assets and used in connection with the Kosmos
Business by the Closing Date.
5.29 Diamond Technology . From the date hereof until the Business Transfer Time, Parent will dedicate the equivalent of three full-time employees to attempt to
develop a replacement or substitute Technology for the Diamond Technology, for purposes of securing a replacement or substitute that is substantially similar or superior to
the Diamond Technology for use in Care Products (the Substitute Diamond Technology ).
5.30 Non-Compete Restrictions . (a) Parent Group General Restrictions . For the period beginning on the Closing Date and ending on the third anniversary of
the Closing Date (the Restricted Period ), Parent will not, and will cause its Affiliates not to, without the prior consent of Acquiror, directly or indirectly (it being
understood that in respect of Covered Salon Products, indirect sales will be prohibited only insofar as they take place at the direction of a member of the Parent Group
through an agent of any member of the Parent Group) engage in, anywhere in the world, the sourcing, manufacturing, development, advertising, promotion, sale,
distribution or marketing of: (a) Color Products; (b) Covered Salon Products; (c) Covered Fine Fragrance Products; or (d) Covered Color Cosmetics Products (collectively,
the Restricted Business ); provided , however , that the foregoing will not restrict Parent or its Affiliates from: (i) owning, directly or indirectly, solely as an investment,
securities of any Person engaged in a Restricted Business if neither Parent, nor any of its controlled Affiliates, beneficially own (as defined in Rule 13d-3 under the
Exchange Act) more than 10% of any class of securities of such Person; (ii) making any acquisition of any business or Person that engages in a Restricted Business (the
Target ), if the annual net sales attributable to the Restricted Business for the Targets most recent fiscal year constitute less than 30% of the total net sales of the Target for
such year, provided , however , that if such net sales of the Restricted Business for the Targets most recent fiscal year exceed $200 million and the closing of the
acquisition of the Target occurs more than 12 months prior to the end
88
of the Restricted Period, then Parent will (x) provide Acquiror the right to make a proposal to purchase such Retained Business within 60 days following Parent providing
notice to Acquiror of such closing, and, if Acquiror makes such a proposal, to negotiate the terms of such a purchase in good faith for the remainder of such 60 day period
and (y) in the event Acquiror declines to make such a proposal (or if Parent and Acquiror do not enter into an agreement with respect to the sale of such Retained Business
within such 60 day period or agree to extend such period), use Commercially Reasonable Efforts to sell or otherwise dispose of the portion of the Targets business that
engages in the Restricted Business and Parent will be required to either sell or cease to operate the portion of the Targets business that engages in the Restricted Business
as promptly as practicable, but in any event within 18 months of the closing of the acquisition of the Target; (iii) licensing any Patents or Trade Secrets that are applicable
to the other businesses owned by the Parent Group to any Person (even if such Person owns a Restricted Business) so long as, subject to the limitations set forth in Schedule
5.30(a) of the Parent Disclosure Letter, any license of such Patents or Trade Secrets to such Person does not permit such Person to use or sublicense such Patents or Trade
Secrets in such Restricted Business and Parent will (and will cause its Affiliates to) use Commercially Reasonable Efforts to enforce such restrictions; or (iv) providing any
transitional services or supply to any Person arising from the divestiture of one or more of Parents businesses. The parties agree that the covenants included in this Section
5.30(a) are, taken as a whole, reasonable in their geographic and temporal coverage and no party will raise any issue of geographic or temporal reasonableness in any
proceeding to enforce such covenant. Parent acknowledges and agrees that in the event of a breach by Parent of the provisions of this Section 5.30(a) , monetary damages
will not constitute a sufficient remedy. Consequently, in the event of any such breach, Acquiror may, in addition to any other rights and remedies existing in its favor, apply
to any court of law or equity of competent jurisdiction for specific performance and/or injunctive relief or other relief in order to enforce or prevent any violation of the
provisions hereof.
(b)
(i)
Exceptions . Notwithstanding any other provision hereof, Section 5.30(a) will not prohibit, restrict or prevent any of the following:
the operation of the Existing Parent Business;
(ii)
the operation of the Restricted Business by Parent to the extent such Restricted Business is permitted to be retained by Parent pursuant to
Section 5.30(a)(ii) or Section 5.30(a)(iii) , as applicable;
(iii)
the sourcing, manufacturing, development, advertising, promotion, sale, distribution or marketing of any products that are included in the
categories specified on Section 5.30(b)(iii) of the Parent Disclosure Letter (such products, collectively, the Parent Out-of-Scope Products ); or
(iv)
subject to Section 1.09 , the continuation, operation, development, transfer or transition of the Retained Business.
89
VI.
EMPLOYEE MATTERS
6.01 Identification of Employees . (a) Parent will update the lists of In-Scope Employees set forth on Section 6.01 of the Parent Disclosure Letter (i) within 20
days following the date of this Agreement, (ii) from time to time thereafter in Parents sole discretion and (iii) no later than ten days prior to the Closing Date, in each case,
in order to reflect terminations, allocation of Parent Group employees at the Split Facilities, transfers, new hires, changes in active status, changes to Choice Employee
status, accidental or inadvertent errors or omissions and changes resulting from the implementation of the Restructuring and the implementation of the Transition Plan and
the other transactions contemplated by this Agreement, highlighting such changes. Subject to applicable Laws, including following Parents receipt of a valid waiver or
consent from the applicable employee where applicable Law requires, Parent will also include the names of In-Scope Employees who hold a position with a seniority level
of Band 3 or higher (as such employment bands are commonly referred to within Parents organization as of the date of this Agreement) in its updates to the lists of InScope Employees set forth on Section 6.01 of the Parent Disclosure Letter. Notwithstanding anything to the contrary in this Agreement or any Ancillary Agreement, and to
the extent permitted by applicable Law, Parent may, in its sole discretion, cause the employment of any In-Scope Employee to be transferred to any member of the Galleria
Group at any time prior to the Closing. Notwithstanding anything to the contrary in this Agreement or any Ancillary Agreement, and to the extent permitted by applicable
Law, Parent shall cause the employment of any employee of any member of the Galleria Group (other than any In-Scope Employee) to be transferred to any member of the
Parent Group (other than any member of the Galleria Group) at any time prior to the Closing.
(b)
Within 45 days following the date of this Agreement, Parent will provide to Acquiror a true and complete list, on an In-Scope Employee by In-Scope
Employee basis, of all equity and equity based awards of Parent (collectively, the Parent Awards ) held by each In-Scope Employee with an employment level of Band
4 or higher (as such employment bands are commonly referred to within Parents organization) as of the date of this Agreement, and such list will also provide the dates of
grant, expiration date, the number of shares underlying such Parent Awards, and the applicable exercise or base price per share.
(c)
Within 45 days following the date of this Agreement, Parent will provide to Acquiror a list indicating the visa or similar work authorization status of each
Expatriate Employee working pursuant to such a local visa or similar authorization as of the date of this Agreement.
(d)
Within 60 days following the date of this Agreement, Parent will provide to Acquiror a true and complete list of each material Compensation and Benefit
Plan. Within 60 days following the date of this Agreement, Parent will make available to Acquiror a true and complete copy of Parents expatriate policy and with respect
to each Galleria Business Acquired Plan, Parent will make available to Acquiror copies of (i) the plan document, including any amendments thereto, (ii) if applicable, the
most recent annual report on Form 5500 required to be filed with the IRS or any comparable report required to be filed with a Governmental Authority, (iii) the most recent
actuarial valuation report, if applicable, for the applicable plan and (iv) if applicable, the most recent IRS determination letter or any comparable letter from a Governmental
Authority regarding the tax90
qualified status of any such plan with a tax-qualified trust if assets will be transferred from such trust to a trust of a Galleria Group Plan pursuant to Schedule 1.05(a)(xiii) .
6.02 Continuity of Employment . (a) Parent and Acquiror hereby acknowledge that it is in their mutual best interest for there to be continuity of employment by
the Galleria Group following the Closing with respect to (i) each In-Scope Employee (other than any Choice Employee) and (ii) each Choice Employee who agrees to
continue employment with the Galleria Group as of the Closing (in each case, other than any employee whose employment with Parent and its Subsidiaries terminated prior
to the Closing) (collectively, Galleria Business Employees ).
(b)
As soon as reasonably practicable, but in any event prior to the Closing Date (or such time as is required by applicable Law or as is required in
connection with notifications to, or consultations with, unions or works councils), (i) SplitCo will, or will cause one of its Subsidiaries to, make an offer of employment to
each In-Scope Employee unless such In-Scope Employee is employed by a Galleria Entity or such In-Scope Employees employment will otherwise transfer to the Galleria
Group pursuant to the transactions contemplated by this Agreement or applicable Law and (ii) SplitCo will, or will cause one of its Subsidiaries to, present its terms and
conditions of employment (including base salary, target bonus opportunity and other terms and conditions in respect of post-Closing compensation and benefits) to all InScope Employees (regardless of whether described in clause (i) of this sentence), which employee offers and terms and conditions will be consistent with the provisions of
Section 6.04 . Prior to making such offers and presenting such terms and conditions, SplitCo will provide Parent and Acquiror with a reasonable opportunity to review and
comment on its proposed terms and conditions. Subject to applicable Law, Parent, SplitCo and Acquiror will reasonably cooperate in connection with the presentation of
such employment offers and terms and conditions of employment to the In-Scope Employees, including with respect to the timing thereof. The Parties acknowledge that
any In-Scope Employee (including any Choice Employee) may elect not to continue employment with the Galleria Group. Each Galleria Business Employee who continues
employment or accepts employment with a member of the Galleria Group (the applicable entity, the Employing Entity ) immediately following the Closing is referred to
herein as a Continuing Employee . Each Continuing Employee whose home country is in the United States is referred to as a US Continuing Employee , and each
Continuing Employee whose home country is outside of the United States is referred to as a Non-US Continuing Employee .
(c)
Nothing herein will be construed as a representation or guarantee by Parent or any of its Subsidiaries that (i) some or all of the In-Scope Employees will
accept employment with the Galleria Group or (ii) some or all of the In-Scope Employees will become employed by or continue in employment with the Galleria Group for
any period of time; provided , however , that, unless prohibited by applicable Law, if an In-Scope Employee (other than any Choice Employee) refuses employment with
the Galleria Group (the terms and conditions of which employment are consistent with the provisions of Section 6.04 ), Parent will or will cause its Subsidiaries to
terminate the employment of such employee with Parent and its Subsidiaries at or prior to the Closing Date and, notwithstanding Section 5.15 , but subject to applicable
Law, Parent will not hire any such employee for 24 months following such termination.
91
(d)
With respect to any Galleria Business Employee who is working in any country pursuant to a local visa or similar authorization as of the Closing,
Acquiror, the Galleria Group and Parent will use their Commercially Reasonable Efforts to allow such Galleria Business Employee to transfer to a member of the Galleria
Group in such country at or prior to the Closing. Notwithstanding anything to the contrary, to the extent permitted under applicable Law, if such transfer measures are not
completed as of the Closing Date, such Galleria Business Employee will remain an employee of Parent or its Subsidiaries, and will not transfer employment to Acquiror or
any of its Affiliates until such transfer measures are completed (each, a Delayed Transfer Employee ). Each Delayed Transfer Employee will not be considered a
Continuing Employee unless and until such transfer measures are completed prior to the second anniversary of the Closing, and Parent may determine not to transfer such
Person if Parent determines, in its sole discretion, that doing so would materially increase the likelihood that the Intended Tax-Free Treatment would not apply to the
transactions contemplated hereby. Acquiror and SplitCo will cause the Galleria Group to provide each Continuing Employee who is working in any host country listed on
Section 6.01 of the Parent Disclosure Letter (as updated pursuant to Section 6.01 ) pursuant to a local visa or similar authorization with not less than 90 days advance notice
of any termination by the Galleria Group of the employees employment occurring while the employee is working pursuant to such local visa or similar authorization.
(e)
Within 60 days prior to the Closing Date, Parent will, and will cause its Subsidiaries to, and Acquiror will, and will cause its Subsidiaries to, cooperate to
identify and effect the transfer to a member of the Galleria Group of any individual retained as an independent contractor whose services are required to transfer to a
member of the Galleria Group as of the Closing pursuant to applicable Law.
6.03 Establishing Galleria Group Plans . (a) Establishing Plans . Prior to the Closing, Parent and Acquiror will mutually cooperate pursuant to the Transition
Plan process as set forth in Section 5.21 of this Agreement in order to establish any compensation and benefit plans for the Galleria Group (the Galleria Group Plans ).
The Galleria Group Plans will be sponsored and maintained by the Galleria Group. The Galleria Group Plans will have terms and conditions that meet the requirements of
Section 6.04 , provided , however , that the requirements of Section 6.04 will be applied as if those requirements were applied prior to the Closing and as if they were
applied by reference to any terms and conditions in effect immediately before the Galleria Business Employees are employed by the Galleria Group. The Galleria Group
will be responsible for all Liabilities and obligations under COBRA and applicable state or similar Laws with respect to any qualifying event (within the meaning of
Section 4980B of the Code) of any Galleria Business Employees or their eligible dependents occurring on or after the date such individuals commence participation in a
group health plan sponsored by a member of the Galleria Group or, if earlier, the Closing Date.
(b)
Galleria Business Acquired Plans . Acquiror and SplitCo will cause one or more Galleria Group Plans to assume the liabilities associated with the
Galleria Business Acquired Plans as provided on Section 1.05(a)(xiii) of the Parent Disclosure Letter. Parent will cause the transfer
92
of assets in respect of such liabilities as provided on Section 1.05(a)(xiii) of the Parent Disclosure Letter.
6.04 Terms of Employment . (a) Place of Employment . During the two-year period that begins as of the Closing or such shorter period as such Continuing
Employee remains an employee of an Employing Entity following the Closing (the Continuation Period ), Acquiror and SplitCo will cause the Galleria Group to provide
to each Continuing Employee employment in a position with a primary place of employment that is not greater than 50 miles (or such lesser number of miles in a relevant
jurisdiction as may be established pursuant to applicable Law) from such Continuing Employees primary place of employment immediately prior to the Closing; provided ,
however , that if a Continuing Employee is a party to a written agreement with a member of the Parent Group as of the date of this Agreement that includes a mobility
provision pursuant to which such Continuing Employee may be relocated by his or her employer at any time, then, to the extent such mobility provision remains in effect
with respect to such Continuing Employee, the 50 mile (or less) restriction set forth in this Section 6.04(a) will not apply to such Continuing Employee to the extent such
restriction is inconsistent with such mobility provision in such agreement.
(b)
(i)
Compensation and Benefits .
Parent and Acquiror will implement the provisions set forth on Schedule 6.04(b)(i) .
(ii)
If Acquiror and SplitCo fail to comply with their obligations under Section 6.04 in any material respect with respect to any Continuing Employee
during the Continuation Period, such Continuing Employee will be eligible to resign and receive severance benefits pursuant to Section 6.04(c) .
(iii)
Notwithstanding anything to the contrary set forth herein, all issuances of equity-based compensation by Acquiror or any Affiliate thereof will be
subject to compliance with all applicable requirements of the Tax Matters Agreement.
(c)
Severance . Without limiting the generality of Section 6.04(b) but subject to Section 6.04(i)(iii) and Section 1.06(b)(i) , with respect to each Continuing
Employee who incurs a Qualifying Termination during the Continuation Period, Acquiror and SplitCo will cause the Galleria Group to provide such employee with the
severance payments and benefits set forth on Section 6.04(c) of the Parent Disclosure Letter, and under the applicable formula set forth on the attachment to Section 6.04(c)
of the Parent Disclosure Letter. As a condition to the payment of any such severance to any Continuing Employee, such Continuing Employee must provide a general
waiver and release of claims in a form substantially similar to the form used for similarly situated Galleria Group employees (except that such release must also include a
provision for general waiver and release of claims for the benefit of Parent and its Affiliates) and such release must be effective. Except as otherwise required by applicable
Law, the payment of any severance pursuant to this Section 6.04(c) will be made on the 60th day following the date of termination of employment (or,
93
if applicable, at such times as permitted under Section 409A of the Code so as to avoid such payment from being subject to any penalties under Section 409A of the Code).
(d)
Compensation Consultant Process . The determination of whether Acquiror and SplitCo are in compliance with Section 6.04(b)(i) will be made by Parent
and Acquiror based on proposed terms and conditions provided by SplitCo at least 60 days prior to the date on which it is expected that offers and terms and conditions of
employment will be presented to employees pursuant to Section 6.02(b) . If Parent and Acquiror are unable to agree within 20 Business Days following Acquirors receipt
of the applicable information, the determination will be made within ten additional Business Days by an internationally recognized compensation consultant designated by
Parent (at Parents cost), subject to the approval of a compensation consultant designated by Acquiror (at Acquirors cost), which approval may only be withheld if
Acquirors compensation consultant reasonably believes that Parents compensation consultant has used unreasonable assumptions or otherwise made an error. In the event
such approval is not provided within ten Business Days following the receipt of the applicable information by Acquirors compensation consultant, the compensation
consultants designated by Acquiror and Parent will discuss such comparison in good faith for ten Business Days and seek to reach an agreement. If such compensation
consultants are unable to do so, they will jointly select a third compensation consultant, which third compensation consultant will make such comparability determination
within ten Business Days after the expiration of such ten-Business Day discussion period, which comparability determination will be binding (the process described in this
sentence and the three preceding sentences, the Compensation Consultant Process ). Parent and Acquiror will share equally the cost of any such third compensation
consultant. If the Compensation Consultant Process finally determines that Acquiror and SplitCo have not complied with Section 6.04(b)(i) (such difference, the
Compensation Gap ), then Acquiror and SplitCo will cause the Galleria Group to either adjust the compensation or benefits of each applicable Continuing Employee so
that they are in compliance with Section 6.04(b)(i) or provide each applicable Continuing Employee for the duration of the Continuation Period (including any prior portion
of the Continuation Period during which Acquiror and SplitCo have not been in compliance with Section 6.04(b)(i) ) a cash payment amount (on a net after-Tax basis)
determined by the Compensation Consultant Process to be equal to the Compensation Gap (such cash payment amount, the Compensation Gap Payment ). Each
Compensation Gap Payment will be paid on the same schedule as the applicable Continuing Employees regular base pay (with the first Compensation Gap Payment
including amounts in respect of any prior portion of the Continuation Period during which Acquiror and SplitCo have not been in compliance with Section 6.04(b)(i) ).
(e)
Welfare Plans . To the extent permitted by applicable Law, Acquiror and SplitCo will cause each benefit plan of the Galleria Group in which any
Continuing Employee participates that is a health or welfare benefit plan (collectively, Acquiror Welfare Plans ) to (i) waive all limitations as to preexisting conditions,
exclusions and service conditions with respect to participation and coverage requirements applicable to Continuing Employees, other than limitations that were in effect
with respect to such Continuing Employees as of the Closing Date under the corresponding Compensation and Benefit Plan or Galleria Group Plan, (ii) honor any
payments, charges and expenses of such Continuing Employees (and their eligible dependents) that were applied toward the deductible and out-of-pocket maximums under
the corresponding Compensation
94
and Benefit Plan or Galleria Group Plan in satisfying any applicable deductibles, out-of-pocket maximums or co-payments under a corresponding Acquiror Welfare Plan
during the same plan year in which such payments, charges and expenses were made, and (iii) waive any waiting period limitation or evidence of insurability requirement
that would otherwise be applicable to a Continuing Employee following the Closing Date to the extent such employee had satisfied any similar limitation under the
corresponding Compensation and Benefit Plan or Galleria Group Plan.
(f)
Earned Vacation . Unless otherwise required by applicable Law, Acquiror and SplitCo will cause the Galleria Group to credit each Continuing Employee
the amount of accrued and unpaid hours of vacation, personal hours or days earned and sick leave (together, the Transferred Leave ) applicable to such Continuing
Employee as of the Closing and Parent or SplitCo will provide to Acquiror as of the Closing Date a schedule indicating for each Continuing Employee the type and number
of days of Transferred Leave; provided , however , subject to applicable Law, Acquiror will credit such Transferred Leave only to the extent reflected as part of the Cut-Off
Date Adjustment Statement. Acquiror and SplitCo will cause the Galleria Group to ensure that such Transferred Leave (i) is not subject to forfeiture, to the same extent not
subject to forfeiture under the policies of Parent and its Subsidiaries governing such Transferred Leave prior to the Closing and (ii) does not count toward any maximum
accrual amount under any plan, program or policy maintained by the Galleria Group after the Closing for the purpose of providing vacation, personal days or hours or sick
leave (collectively, the Galleria Leave Plan ); provided , however , if a Continuing Employee has Transferred Leave in excess of the applicable maximum under the
Galleria Leave Plan, once the Continuing Employee uses the type and number of days of Transferred Leave equal to the applicable maximum accrual under the Galleria
Leave Plan, then such Continuing Employees remaining Transferred Leave will be subject to the applicable maximum accrual under the Galleria Leave Plan. Subject to
applicable Law, Acquiror will have the option either to pay cash to a Continuing Employee following the Closing in cancellation of all or a portion of the Transferred
Leave that is in excess of the applicable maximum accrual under the Galleria Leave Plan or to permit such Continuing Employee to use such excess Transferred Leave. If
applicable Law does not allow for Transferred Leave with respect to any Continuing Employee, Acquiror and SplitCo will cause the Galleria Group to allow such
Continuing Employee to use any leave time following the Closing that was scheduled with Parent or its Subsidiaries prior to the Closing (on an unpaid basis in the event
that such Continuing Employee has not accrued enough paid leave time at the time of such post-Closing absence).
(g)
Expatriate Employees . Without limiting the generality of Section 6.04(b) , with respect to Continuing Employees who, as of the Closing, receive specific
expatriate payments or benefits from Parent or its Subsidiaries (an Expatriate Package , and each such employee, an Expatriate Employee ), Acquiror and SplitCo will
cause the Galleria Group during the Continuation Period to (i) maintain a comparable Expatriate Package for each such Expatriate Employee until such Expatriate
Employee (A) returns to his or her home country (excluding any temporary return) or (B) ceases to be employed with Acquiror or one of its Subsidiaries provided that such
Expatriate Employee is returned to his or her home country and (ii) pay the costs of repatriation for each Expatriate Employee to the same extent and on the same terms as
provided for in Parents or its applicable Subsidiarys policies and practices, as applicable, immediately prior to the Closing; provided , however , Acquiror will maintain
and pay for such repatriation only to the
95
extent such Expatriate Employee and such Expatriate Package are listed on Section 6.04(g)(i) of the Parent Disclosure Letter. Parent may update Section 6.04(g)(i) of the
Parent Disclosure Letter from time to time prior to the Closing Date in order to reflect transfers and new hires in accordance with Section 5.01(b)(xii)-(xiv) . Following the
Continuation Period, Acquiror and SplitCo will cause the Galleria Group to provide expatriate payments and benefits to such Continuing Employees in accordance with the
policies of the Galleria Group as in effect from time to time, but in any event Acquiror or SplitCo will provide at least the minimum repatriation benefits as set forth on
Section 6.04(g)(ii) of the Parent Disclosure Letter.
(h)
Localized Employees . Without limiting the generality of Section 6.04(b) , with respect to Continuing Employees who, prior to the Closing, have been
localized other than in their original home country and receive specific benefits from Parent or its Subsidiaries relating to their localized status (a Localization Package ,
and each such employee, a Localized Employee ), Acquiror and SplitCo will cause the Galleria Group during the Continuation Period to maintain a comparable
Localization Package (excluding, except as otherwise required by applicable Law, the International Retirement Arrangement and the International Pension Protection
Program) for each such Localized Employee until his or her employment terminates only to the extent such Localized Employees are listed on Section 6.04(h) of the Parent
Disclosure Letter. Parent may update Section 6.04(h) of the Parent Disclosure Letter from time to time prior to the Closing Date in order to reflect transfers and new hires
in accordance with Section 5.01(b)(xii)-(xiv) . Following the Continuation Period, Acquiror and SplitCo will cause the Galleria Group to provide a Localization Package to
such Continuing Employees in accordance with the policies of the Galleria Group as in effect from time to time.
(i)
Special Rules for Non-US Employees . Notwithstanding anything to the contrary contained in this Agreement, any In-Scope Employee who is employed
by a member of the Parent Group in a non-US jurisdiction immediately prior to the Closing, and who is required by applicable Law to transfer to a member of the Galleria
Group in connection with the transactions contemplated by this Agreement and the Ancillary Agreements, will transfer automatically on the Closing Date to SplitCo or a
member of the Galleria Group in accordance with such applicable Law and will be deemed to be a Continuing Employee and a Non-US Continuing Employee.
Notwithstanding anything to the contrary herein, the following terms will apply to all Non-US Continuing Employees:
(i)
To the extent that (A) the applicable Law of any jurisdiction, (B) any applicable collective bargaining agreement or other applicable agreement
with a works council or economic committee, or (C) any applicable employment agreement, would require Acquiror or its Affiliates (including a member of the Galleria
Group) to provide any more favorable terms of employment to any Non-US Continuing Employee than those otherwise provided for by this Section 6.04 (or extend the
period of time for which such standards are met), in connection with the Conveyance of the Galleria Business to SplitCo, then Acquiror and SplitCo will cause the Galleria
Group to provide such Non-US Continuing Employee with such more favorable term, and otherwise provide terms of employment in accordance with this Section 6.04 .
(ii)
between Parent and its
Acquiror and Parent agree that to the extent provided under the applicable Laws of certain foreign jurisdictions, (A) any employment agreements
96
Affiliates, on the one hand, and any Non-US Continuing Employee, on the other hand, and (B) any collective bargaining agreements applicable to the Non-US Continuing
Employees in such jurisdictions, will in each case have effect after the Closing as if originally made between Acquiror and the other parties to such employment agreement
or collective bargaining agreement.
(iii)
Any Liabilities for severance pay or benefits (whether statutory, contractual or otherwise) to an In-Scope Employee arising from (A) the
termination of such In-Scope Employee (other than a Choice Employee) from employment with any member of the Parent Group or the Galleria Group as a result of the
transactions contemplated by this Agreement or (B) the termination of any Continuing Employee from employment with any member of the Acquiror Group on or after the
Closing Date will be Galleria Liabilities and will be the sole responsibility of Acquiror; provided , however , subject to applicable Law, to the extent Parent, SplitCo,
Acquiror or any of its Affiliates are required to pay any such severance pay or benefits, such severance pay and benefits shall offset any severance pay and benefits that
would otherwise be required to be paid to such Continuing Employee following the Closing.
97
6.05 Bonuses and Incentives . (a) Except as otherwise set forth in Section 6.05(b) , Parent will retain all obligations to the Galleria Business Employees,
including Continuing Employees, with respect to the bonuses and incentives under Parents Short Term Achievement Reward (STAR) bonus program, Long-Term
Incentive (LTI) program, Key Manager Stock Option Program and any other cash, annual, long-term, equity or similar incentive program of Parent in which the Continuing
Employees participate for the plan year in which the Closing Date occurs that are attributable to the period of such participation prior to the Closing; provided , however ,
that, if requested by Parent, Acquiror and SplitCo will cause the Galleria Group to make all cash payments in respect of any such program so long as Parent transfers to the
Galleria Group, as of the Closing, all amounts payable in respect of such cash obligations that are attributable to the period prior to the Closing during which the Continuing
Employees participated in such program and any associated Taxes payable by the Galleria Group in connection with such cash payments (but Parent will not be liable for
any Tax withholding except to the extent it is required to remit any such Tax withheld from any such bonuses and incentives to the appropriate Governmental Authority).
(b)
Notwithstanding Section 6.05(a) , Acquiror and SplitCo will cause the Galleria Group to pay to each Continuing Employee any 13th month, 14th month,
jubilee or similar payment, as applicable, that would next be payable following the Closing at such time as Parent or its Subsidiary would have made such payments (for
example, if the Closing takes place on September 30, 2015, and a 13th month payment would have been paid on December 31, 2015, then the Galleria Group will make
such payment on December 31, 2015) in an amount not less than the applicable amount included in respect thereof as part of the Cut-Off Date Adjustment Statement (to the
extent such amount included in respect thereof as part of the Cut-Off Date Adjustment Statement remains unpaid as of the Closing Date), in each instance regardless of the
applicable Continuing Employees employment status on the relevant payment date and irrespective of whether applicable Law requires such payment(s).
6.06 Credit for Service with Parent . Where applicable, Acquiror and its Affiliates (including the Galleria Group) will provide credit for each Continuing
Employees length of service with Parent and its Affiliates (including, prior to Closing, the Galleria Group) for all purposes (including eligibility, vesting and level of
benefits) under (a) each plan, program, policy or arrangement of Acquiror and its Affiliates to the same extent such service was recognized under a similar plan, program,
policy or arrangement of Parent or any of its Affiliates, and (b) applicable Law (including the Family and Medical Leave Act of 1993) in each case, except that such prior
service credit will not be required to the extent that it results in a duplication of benefits provided by Parent (including any duplication of benefits under a defined benefit
pension plan); provided , however , that Acquiror and its Affiliates (including the Galleria Group) will (i) not be required to provide prior service credit pursuant to this
Section 6.06 for purposes of determining benefit accruals under any defined benefit pension plan for any time period prior to the Closing except with respect to the Galleria
Business Acquired Plans and (ii) to the extent that, in Acquirors sole discretion, any Continuing Employee becomes eligible to participate in a defined benefit pension plan
following the Closing, provide prior service credit for all purposes other than as set forth in clause (i) above, including the calculation of benefit accruals for any time that
elapses after the Closing or, if later,
98
the date on which such Continuing Employee becomes eligible to participate in such a defined benefit pension plan.
6.07 Workers Compensation . Parent will retain the obligation for any workers compensation benefits payable to or on behalf of the US Continuing
Employees (and the Non-US Continuing Employees to the extent workers compensation benefits are applicable under the Laws of the relevant jurisdiction) with respect to
any events, illnesses, injuries or conditions arising on or prior to the Closing Date. Acquiror and its Subsidiaries will assume and be responsible for all workers
compensation benefits payable to or on behalf of the US Continuing Employees (and the Non-US Continuing Employees to the extent workers compensation benefits are
applicable under the Laws of the relevant jurisdiction) with respect to any events, illnesses, injuries or conditions arising after the Closing Date, including any illnesses,
injuries or conditions arising after the Closing Date that are aggravations or reinjuries of illnesses, injuries or conditions arising on or prior to the Closing Date.
6.08 WARN Act . Acquiror and SplitCo will cause the Galleria Group to (a) provide any required notice under the Worker Adjustment and Retraining
Notification Act or any other similar Law (the WARN Act ) and (b) otherwise comply with the WARN Act with respect to any plant closing or mass layoff (as
defined in the WARN Act) or group termination or similar event affecting Continuing Employees (including as a result of the consummation of the transactions
contemplated by this Agreement and the Ancillary Agreements) and occurring from and after the Closing. Acquiror will not, and will not permit any of its Affiliates
(including the Galleria Group) to, take any action on or after the Closing Date that would cause any termination of employment by Parent or its Affiliates of any employees
of the Galleria Business or any Galleria Entity occurring prior to the Closing to constitute a plant closing, mass layoff or group termination or similar event under the
WARN Act, or to create any Liability or penalty to Parent or any of its Affiliates for any employment terminations under applicable Law. Parent or its Affiliates will notify
Acquiror of any involuntary terminations of any U.S. employees of the Galleria Business or any member of the Galleria Group that occur during the 90-day period prior to
the Closing.
6.09 Miscellaneous . (a) Following the date of this Agreement, Parent (and its Subsidiaries) and Acquiror (and its Subsidiaries) will reasonably cooperate and use
Commercially Reasonable Efforts in all matters reasonably necessary to effect the transactions contemplated by this Article VI , including (i) exchanging information and
data, including (A) reports prepared in connection with bonus plan participation and related data of Continuing Employees and all other information reasonably necessary
for the Parent Group or the Acquiror Group to comply with the covenants contained in this Article VI and (B) information relating to workers compensation, employee
benefits and employee benefit plan coverages, including information and data that is necessary to support or perform the Compensation Consultant Process or that is
otherwise reasonably requested in connection with the Compensation Consultant Process (in each case, except to the extent prohibited by applicable Law or to the extent
that such information and data relates to performance ratings or assessments of employees of Parent and its Subsidiaries), (ii) making any
99
and all required filings and notices, (iii) making any and all required communications with Galleria Business Employees and (iv) obtaining any Governmental Approvals
required hereunder.
(b)
Parent shall coordinate with Acquiror to arrange for one or more town hall meetings to allow Acquiror the opportunity to communicate with available InScope Employees and Choice Employees as soon as practicable following the execution of this Agreement. Between the date hereof and the Closing Date, any
communications between Acquiror and any employees of Parent and its Affiliates regarding terms of employment, employee benefits or otherwise regarding employment
with the Galleria Group will be conducted at the times and through processes approved by Parent, such approval not to be unreasonably withheld. Such processes will
provide adequate access to the Galleria Business Employees and allow all reasonable means of communication with such employees by Acquiror and its Subsidiaries;
provided , however , that any communications with Galleria Business Employees or any other employees of Parent or its Affiliates will be limited to employee benefit
matters relating to Galleria Business Employees, future organization design and staffing.
(c)
Without limiting the obligations of Acquiror and SplitCo under this Article VI with respect to the Continuing Employees, this Article VI will not (i)
constitute or be treated as an amendment of, or undertaking to amend any employee benefit plan in which Parents or any of its Affiliates, or Acquirors or any of its
Subsidiaries, employees participate or (ii) prohibit Acquiror or any of its Subsidiaries (including the Galleria Group) from amending any employee benefit plan in which
Acquirors or such Subsidiarys employees participate.
(d)
Acquiror will comply with its obligations, if any, to provide notice to or consult with any union or works council representing its employees or the
employees of its Subsidiaries.
VII.
CONDITIONS
7.01 Joint Conditions . The obligations of Parent and SplitCo to effect the Galleria Transfer, the Recapitalization, the Distribution and the Merger and the
obligations of Acquiror and Merger Sub to effect the Merger are subject to the satisfaction or waiver of the following conditions:
(a)
no preliminary or permanent injunction or other Order shall have been issued that would make unlawful the consummation of the transactions
contemplated hereby and no Governmental Authority shall have instituted any Action (which remains pending at what would otherwise be the Closing Date) before any
Governmental Authority of competent jurisdiction seeking to restrain, enjoin or otherwise prohibit consummation of the Merger and the other transactions contemplated
hereby;
(b)
(i) all waiting periods under the HSR Act applicable to the transactions contemplated by this Agreement shall have terminated or expired and (ii) all other
applicable pre-closing Governmental Approvals in the Identified Jurisdictions shall have been obtained;
100
(c)
the notifications, information and consultations, and co-determinations, to and with the works councils, economic committees, unions and any other
representative bodies identified on Section 7.01(c) of the Parent Disclosure Letter shall have been made and all required consultations shall have been conducted and
completed;
(d)
(e)
the Acquiror Stockholder Approval shall have been obtained;
the Acquiror New Common Stock to be issued in the Merger shall have been authorized for listing on the NYSE, subject to notice of official issuance;
(f)
each of the Acquiror Form S-4 and the SplitCo Form 10/S-4 (or the SplitCo Form 10, if Parent elects to effect the Distribution solely as a One-Step SpinOff) shall have become effective under the Securities Act and shall not be the subject of any stop order or proceedings seeking a stop order, and (i) if the Distribution is
effected in whole or in part as an Exchange Offer, the applicable offer period and any extensions thereof in the Exchange Offer required by applicable securities Law shall
have expired or (ii) if the Distribution is effected in whole or in part as a One-Step Spin-Off, the applicable notice periods required by applicable stock exchange rules or
securities Laws shall have expired; and
(g)
the Information Statement shall have been mailed to the Acquirors stockholders in accordance with Section 5.08 at least 20 days prior to the Closing
Date and the Acquiror Stock Issuance and amendment to the Acquirors certificate of incorporation shall be permitted by Regulation 14C of the Exchange Act (including
Rule 14c-2 promulgated under the Exchange Act) and the requirements of the NYSE.
7.02 Conditions to the Obligation of Acquiror . The obligation of Acquiror and Merger Sub to effect the Merger is subject to the satisfaction of each of the
following conditions (each of which is for the exclusive benefit of Acquiror and may be waived by Acquiror unless otherwise provided in this Agreement):
(a)
all covenants of Parent under this Agreement and the Ancillary Agreements to be performed on or before the Closing shall have been duly performed by
Parent in all material respects;
(b)
(i) the representations and warranties of Parent in this Agreement (other than the representations and warranties in Section 3.04 and Section 3.10(g) ),
which for purposes of this clause (i) will be read as though none of them contained any materiality or Galleria Business MAE qualifications (but not disregarding
limitations of representations to Galleria Material Contracts or qualifications to the extent they qualify as an affirmative requirement to list specified items on a section of
the Parent Disclosure Letter as set forth in Sections 3.05(b) , 3.08 , 3.09(g) and 3.15 ), shall be true and correct in all respects as of the Closing with the same effect as if
made at and as of the Closing (except that any representation and warranty in any Section that is made as of a date other than the date of this Agreement shall be true and
correct in all respects as of the specified date), except where the failure of the representations and warranties to be true and correct in all respects would not in the aggregate
have a Galleria Business MAE, (ii) the representations and warranties
101
of Parent in Section 3.10(g) shall be true and correct in all respects as of the Closing with the same effect as if made at and as of the Closing, and (iii) the representations
and warranties of Parent in Section 3.04 shall be true and correct in all but de minimis respects;
(c)
Acquiror shall have received a written opinion, dated as of the Closing Date, from McDermott Will & Emery LLP, tax counsel to Acquiror, to the effect
that the Merger will be treated for federal income tax purposes as a reorganization within the meaning of Section 368(a) of the Code. In rendering the foregoing opinion,
counsel will be permitted to rely upon and assume the accuracy of customary representations provided by (i) Acquiror and Merger Sub and (ii) Parent, substantially in the
form of the representation letters attached hereto on Exhibit J and Exhibit K , respectively; and
(d)
Acquiror shall have received a certificate of Parent addressed to Acquiror and dated the Closing Date, signed on behalf of Parent by an officer of Parent
(on Parents behalf and without personal liability), confirming the matters set forth in Section 7.02(a) and Section 7.02(b) .
7.03 Conditions to the Obligation of Parent . The obligation of Parent and SplitCo to effect the Galleria Transfer, the Recapitalization, the Distribution and the
Merger is subject to the satisfaction of each of the following conditions (each of which is for the exclusive benefit of Parent and may be waived by Parent unless otherwise
provided in this Agreement):
(a)
all covenants of Acquiror under this Agreement and the Ancillary Agreements to be performed on or before the Closing Date shall have been duly
performed by Acquiror in all material respects;
(b)
(i) the representations and warranties of Acquiror in Section 4.05 of this Agreement shall be true and correct in all material respects, (ii) the
representations and warranties of Acquiror in Section 4.11(c) shall be true and correct in all respects as of the Closing with the same effect as if made at and as of the
Closing and (iii) all other representations and warranties of Acquiror in this Agreement (which for purposes of this paragraph will be read as though none of them contained
any materiality or Acquiror MAE qualifications) shall be true and correct in all respects as of the Closing with the same effect as if made at and as of the Closing (except
that any representation and warranty in any Section that is made as of a date other than the date of this Agreement shall be true and correct in all respects as of the specified
date), except where the failure of the representations and warranties to be true and correct in all respects would not have in the aggregate an Acquiror MAE;
(c)
Parent shall have received a written opinion, dated as of the Closing Date, from Cadwalader, Wickersham & Taft LLP, counsel to Parent, to the effect
that the Merger will be treated for federal income tax purposes as a reorganization within the meaning of Section 368(a) of the Code. In rendering the foregoing opinion,
counsel will be permitted to rely upon and assume the accuracy of customary representations provided by (i) Acquiror and Merger Sub and (ii) Parent, substantially in the
form of the representation letters attached hereto on Exhibit J and Exhibit K , respectively;
102
(d)
Parent shall have received a written opinion, dated as of the Closing Date, from Cadwalader, Wickersham & Taft LLP, counsel to Parent, to the effect
that (i) the Galleria Transfer, taken together with the Distribution, should qualify as a tax-free reorganization pursuant to Section 368(a)(1)(D) of the Code, (ii) the
Distribution, as such, should qualify as a distribution of SplitCo stock to Parent stockholders pursuant to Section 355 of the Code and (iii) the Merger should not cause
Section 355(e) of the Code to apply to the Distribution. In rendering the foregoing opinion, counsel will be permitted to rely upon and assume the accuracy of customary
representations provided by (i) Acquiror and Merger Sub and (ii) Parent;
(e)
subject to the obligation to extend the expiration date of the Exchange Offer pursuant to the proviso in the first sentence of Section 2.01(c) , if Parent
elects to effect the Distribution by way of an Exchange Offer, shareholders of Parent shall have validly tendered and not properly withdrawn before the expiration of the
Exchange Offer enough shares of Parent Common Stock such that Parent will distribute to its shareholders in the Exchange Offer a percentage of the shares of SplitCo
Common Stock issued to Parent in the Galleria Stock Issuance that exceeds the percentage derived from the formula set forth on Exhibit E (the Minimum Condition );
provided , however , that, at any time prior to the Closing Date, Parent, in its reasonable judgment and after consultation with Acquiror, may reapply the formula set forth
on Exhibit E using updated information reflecting the then current data or otherwise increase the Minimum Condition by the minimum amount necessary, in each case, to
ensure that the equation set forth in such Exhibit is satisfied;
(f)
Acquiror shall have irrevocably confirmed to Parent in writing that each condition to Acquirors obligation to effect the Closing of the transactions
contemplated by this Agreement, as provided in Section 7.01 and Section 7.02 of this Agreement, shall have been satisfied or waived (other than those conditions that, by
their nature, are to be satisfied contemporaneously with the Closing);
(g)
an Acquiror SEC Event shall not have occurred;
(h)
Parent shall have received a certificate of Acquiror addressed to Parent and dated the Closing Date, signed on behalf of Acquiror by an officer of
Acquiror (on Acquirors behalf and without personal liability), confirming the matters set forth in Section 7.03(a) and Section 7.03(b) ; and
(i)
there shall be no shares of Acquiror Capital Stock (including Acquiror Common Stock) outstanding other than shares of Class A Common Stock
(including restricted stock units convertible into Class A Common Stock, Acquiror Options and Phantom Units) and Series A Preferred Stock.
103
7.04 Additional Conditions to Each Partys Obligation To Effect the Merger . The obligations of Parent, SplitCo, Acquiror and Merger Sub to effect the
Merger are subject to the satisfaction or waiver of the following conditions:
(a)
(b)
the Galleria Transfer and the Recapitalization shall have been consummated in accordance with and subject to the terms of this Agreement; and
the Distribution shall have been consummated in accordance with and subject to the terms of this Agreement.
7.05 Frustration of Conditions . Neither Parent nor Acquiror may rely on the failure of any condition set forth in Section 7.01 , Section 7.02 , Section 7.03 or
Section 7.04 as the case may be, to be satisfied to excuse it from its obligation to effect the transactions contemplated hereby if such failure was caused by such Partys
breach of its obligations under this Agreement.
VIII.
TERMINATION AND ABANDONMENT

8.01
(a)
(b)
Basis for Termination . This Agreement may be terminated and the transactions contemplated hereby abandoned at any time prior to the Closing Date:
by mutual written consent of Parent and Acquiror;
by either Parent or Acquiror:
(i)
if the Closing does not occur on or prior to January 31, 2017 (the End Date ), unless the failure of the Closing to occur by such date is due to
the failure of the Party seeking to terminate this Agreement to perform or observe in all material respects the covenants of such Party set forth herein; or
(ii)
if (A) there is any Law that makes consummation of the transactions hereunder illegal or otherwise prohibited (other than those having only an
immaterial effect and that do not impose criminal liability or penalties) or (B) any Governmental Authority having competent jurisdiction has issued an Order or taken any
other action (which the terminating Party must have complied with its obligations hereunder to resist, resolve or lift) permanently restraining, enjoining or otherwise
prohibiting any material component of the transactions contemplated hereunder, and such Order or other action becomes final and non-appealable;
(c)
by Parent:
(i)
if Acquiror or Merger Sub breaches any of its representations and warranties or covenants contained in this Agreement, which breach (A) would
give rise to the failure of a
104
condition set forth in Section 7.01 or Section 7.03 and (B) cannot be or has not been cured within 60 days after the giving of written notice to Acquiror of such breach (or, if
earlier, the End Date);
waivable;
(ii)
if any of the conditions set forth in Section 7.01 or Section 7.03 becomes incapable of fulfillment, and has not been waived by Parent to the extent
(iii)
if Parent has commenced an Exchange Offer in accordance with Section 2.01(c) and, following all extensions required under this Agreement,
such Exchange Offer is not consummated as a result of the failure of the Minimum Condition to be satisfied on the applicable scheduled expiration date of such Exchange
Offer;
(iv)
if the Stockholder Consent contemplated by Section 5.08 , duly executed by the Persons set forth on Section 8.01 of the Acquiror Disclosure
Letter and representing at least 50.1% of the voting power represented by all outstanding shares of Acquiror Common Stock, shall not have been delivered to Parent and
Acquiror within 24 hours following the time of execution of this Agreement; or
(d)
by Acquiror:
(i)
if Parent or SplitCo breaches any of its representations and warranties or covenants contained in this Agreement, which breach (A) would give rise
to the failure of a condition set forth in Section 7.01 or Section 7.02 and (B) cannot be or has not been cured within 60 days after the giving of written notice to Parent of
such breach (or, if earlier, the End Date); or
(ii)
extent waivable;
if any of the conditions set forth in Section 7.01 or Section 7.02 becomes incapable of fulfillment, and has not been waived by Acquiror to the
provided , however , that the Party seeking termination pursuant to clause (c)(i), (c)(ii), (d)(i) or (d)(ii) is not in material breach of any of its representations, warranties or
covenants contained in this Agreement.
8.02 Notice of Termination; Return of Documents; Continuing Confidentiality Obligation . In the event of a termination of this Agreement by Parent or
Acquiror pursuant to this Article VIII , written notice thereof will be given to the other Party and the transactions contemplated by this Agreement and the Ancillary
Agreements will terminate, without further action by any Party. If the transactions contemplated by this Agreement and the Ancillary Agreements are terminated as
provided herein, (a) Acquiror and Merger Sub will return to Parent or destroy all documents and copies and other material received from Parent and its Subsidiaries and its
and their Representatives relating to the transactions contemplated hereby and by the Ancillary Agreements, whether so obtained before or after the execution hereof, (b)
Parent and SplitCo will return to Acquiror or destroy all documents and copies and other material received from Acquiror and its Subsidiaries and its and their
Representatives relating to the transactions contemplated hereby and by the Ancillary Agreements, whether so obtained before or after the execution hereof, and (c)
105
notwithstanding anything herein to the contrary, the Confidentiality Agreement will be deemed to be reinstated and will be deemed to apply as if it had not originally been
terminated pursuant to Section 10.03 .
8.03 Effect of Termination . (a) If this Agreement is duly terminated and the transactions contemplated hereby are abandoned as described in this Article VIII ,
this Agreement will become void and of no further force and effect, except for the provisions of Section 5.03 relating to publicity, Section 8.02 , this Section 8.03 , Articles
X and XI containing general provisions and definitions, respectively, except that nothing in this Article VIII will be deemed to release any Party from any Liability for any
Deliberate Breach by such Party of the terms and provisions of this Agreement or to impair the right of any Party to compel specific performance by another Party of its
obligations under this Agreement that specifically survive such termination as set forth in the immediately preceding sentence.
For the avoidance of doubt, receipt by Parent of a payment or reimbursement pursuant to Section 8.03(b) will not limit the ability of Parent to sue for any breach of
Section 5.09 or collect damages arising from any such breach (except, in the case of calculation of damages, to the extent a court would otherwise take such payment or
reimbursement into account in assessing damages for such breach).
(b)
Acquiror will pay to Parent a fee of $400 million if Parent terminates this Agreement pursuant to Section 8.01(c)(iv) .
Any fee due under this Section 8.03(b) will be paid by wire transfer of immediately available funds (to an account specified by Parent) and will be paid by Acquiror
promptly following termination of this Agreement. Upon payment of the termination fee in accordance with this Section 8.03(b) , Acquiror will have no further Liability to
Parent at Law or in equity under this Agreement except as specifically set forth in Section 8.03(a) .
IX.
MUTUAL RELEASES; INDEMNIFICATION
9.01 Release of Pre-Business Transfer Time Claims . (a) SplitCo Release . Except as provided in Section 9.01(c) , effective as of the Business Transfer Time,
SplitCo does hereby, for itself and each other member of the Galleria Group, and their respective successors and assigns, remise, release and forever discharge the Parent
Indemnitees from any and all Liabilities whatsoever, whether at Law or in equity (including any right of contribution), whether arising under any Contract, by operation of
Law or otherwise, existing or arising from any acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur at or before the Business
Transfer Time or any conditions existing or alleged to have existed at or before the Business Transfer Time, including in connection with the transactions and all other
activities to implement the Galleria Transfer.
106
(b)
Parent Release . Except as provided in Section 9.01(c) , effective as of the Business Transfer Time, Parent does hereby, for itself and each other member
of the Parent Group, and their respective successors and assigns, remise, release and forever discharge the Acquiror Indemnitees from any and all Liabilities whatsoever,
whether at Law or in equity (including any right of contribution), whether arising under any Contract, by operation of Law or otherwise, existing or arising from any acts or
events occurring or failing to occur or alleged to have occurred or to have failed to occur at or before the Business Transfer Time or any conditions existing or alleged to
have existed at or before the Business Transfer Time, including in connection with the transactions and all other activities to implement any of the Galleria Transfer.
(c)
No Impairment . Nothing contained in Section 9.01(a) or Section 9.01(b) will limit or otherwise affect any Partys rights or obligations pursuant to or
contemplated by this Agreement or any Ancillary Agreements, in each case in accordance with its terms.
(d)
No Actions as to Released Claims . Neither SplitCo nor Acquiror will, and each will cause each of their respective Affiliates not to, make any claim or
demand, or commence any Action asserting any claim or demand, including any claim of contribution or any indemnification, against Parent or any member of the Parent
Group, or any other Person released pursuant to Section 9.01(a) , with respect to any Liabilities released pursuant to Section 9.01(a) . Parent will not, and will cause each
other member of the Parent Group not to, make any claim or demand, or commence any Action asserting any claim or demand, including any claim of contribution or any
indemnification, against SplitCo, Acquiror or any of their respective Affiliates, or any other Person released pursuant to Section 9.01(b) , with respect to any Liabilities
released pursuant to Section 9.01(b) .
9.02 Indemnification by Acquiror and the Galleria Group . Without limiting or otherwise affecting the indemnity provisions of any Ancillary Agreement, but
subject to the limitations set forth in this Article IX , from and after the Closing Date, Acquiror, SplitCo and each of the Galleria Entities will, on a joint and several basis,
indemnify, defend (or, where applicable, pay the defense costs for) and hold harmless the Parent Indemnitees from and against any and all Losses that result from or arise
out of, whether prior to or following the Closing, any of the following items (without duplication):
(a)
any Galleria Liability and any Liability of the Galleria Entities, including the failure of SplitCo or any other member of the Galleria Group or any other
Person to pay, perform, fulfill, discharge and, to the extent applicable, comply with, in due course and in full, any such Liabilities;
(b)
any breach by Acquiror, SplitCo or any other member of the Galleria Group of any covenant to be performed by such Persons pursuant to this Agreement
or any Ancillary Agreement subsequent to the Effective Time; and
(c)
any breach by Acquiror or any of its Affiliates of their obligations in respect of the Surviving Transaction Agreement Items.
107
9.03 Indemnification by Parent . Without limiting or otherwise affecting the indemnity provisions of any Ancillary Agreement but subject to the limitations set
forth in this Article IX , from and after the Closing, Parent will, and will cause each other member of the Parent Group to, indemnify, defend (or, where applicable, pay the
defense costs for) and hold harmless the Acquiror Indemnitees from and against any and all Losses that result from, relate to or arise out of, whether prior to or following
the Closing, any of the following items (without duplication):
(a)
any Excluded Liability, including the failure of Parent or any other member of the Parent Group or any other Person to pay, perform, fulfill, discharge,
and, to the extent applicable, comply with, in due course and in full, such Excluded Liabilities;
(b)
any breach by Parent or any other member of the Parent Group of any covenant to be performed by such Persons pursuant to this Agreement or any
Ancillary Agreement subsequent to the Effective Time; and
(c)
any breach by Parent or any of its Affiliates of their obligations in respect of the Surviving Transaction Agreement Items.
9.04 Calculation and Other Provisions Relating to Indemnity Payments . (a) Insurance . The amount of any Loss for which indemnification is provided
under this Article IX will be net of any amounts actually recovered by the Indemnitee or its Affiliates under third-party, non-captive insurance policies with respect to such
Loss (less the cost to collect the proceeds of such insurance). If any Loss resulting in indemnification under Sections 9.02 or 9.03 relates to a claim by an Indemnitee or its
Affiliates that is covered by one or more third-party, non-captive insurance policies held by the Indemnitee or its Affiliates, the Indemnitee will use and will cause its
Affiliates to use Commercially Reasonable Efforts to pursue claims against the applicable insurers for coverage of such Loss under such policies. Any indemnity payment
hereunder will initially be made without regard to this Section 9.04(a) , and if the Indemnitee or its Affiliates actually receive a full or partial recovery under such insurance
policies following payment of indemnification by the Indemnifying Party in respect of such Loss, then the Indemnitee will refund amounts received from the Indemnifying
Party up to the amount of indemnification actually received from the Indemnifying Party with respect to such Loss (less the cost to collect the proceeds of such insurance).
(b)
Taxes . In the absence of a Final Determination to the contrary and except for any post-Distribution interest, any amount payable by SplitCo to Parent
under this Agreement will be treated as occurring immediately prior to the transactions contemplated hereby, as an inter-company distribution, and any amount payable by
Parent to SplitCo under this Agreement will be treated as occurring immediately prior to the transactions contemplated hereby, as a contribution to capital. Notwithstanding
the foregoing, the amount that any Indemnifying Party is or may be required to provide indemnification to or on behalf of any Indemnitee pursuant to this Agreement will
be (i) decreased to offset any Tax benefit realized by the Indemnitee (or an Affiliate thereof) arising from the incurrence or payment of the relevant indemnified item and
(ii) increased to offset any Tax cost incurred by the Indemnitee (or an Affiliate thereof) arising from the receipt of any indemnification payments hereunder, unless in the
case of clause (ii) such amount is already included in the applicable
108
calculation of Losses. Any indemnity payment hereunder will initially be made without regard to this Section 9.04(b) and will be reduced or increased, as the case may be,
to reflect any applicable Tax benefit or Tax cost within 30 days after the Indemnitee (or an Affiliate thereof) realizes such Tax benefit or incurs such Tax cost, respectively.
In the event of a Final Determination relating to the Indemnitees (or an Affiliates) incurrence or payment of an indemnified item or receipt of an indemnity payment
pursuant to this Section 9.04(b) , the Indemnitee will, within 30 days of such Final Determination, provide the other Party with notice thereof and supporting documentation
addressing, in reasonable detail, the amount of any reduction or increase in Taxes of the Indemnitee (or its Affiliate) resulting from such Final Determination, and the
Parties will promptly make any payments necessary to reflect the relevant reduction or increase in Tax liability.
(c)
Items Included in Cut-Off Date Adjustment Statement . Notwithstanding any other provision hereof, the Acquiror Parties will have no right to make any
claims against Parent for indemnification hereunder in respect of any Liability (i) to the extent that the Liability was specifically reflected on the Cut-Off Date Adjustment
Statement or (ii) to the extent it would result in a duplicative payment or benefit to the Acquiror Parties of amounts recovered pursuant to Section 2.15 .
(d)
Claims Relating To Restructuring or Transition Plan . In the event that Acquiror waives the closing condition in Section 7.02(a) in respect of Parents
performance of its covenants relating to specific components or steps in the development or implementation of the Restructuring or Transition Plan, then no Acquiror
Indemnitee will be entitled to seek indemnity under, and Parent will have no obligation to indemnify any Acquiror Indemnitee with respect to, Section 9.03(b) insofar as it
relates to the performance by Parent of such covenants in respect of which such condition was waived.
109
9.05 Procedures for Defense, Settlement and Indemnification of Claims . (a) Direct Claims. All claims made hereunder by (i) any member of the Parent
Group, on the one hand, against Acquiror or any member of the Galleria Group, on the other hand, or (ii) by any Acquiror or any member of the Galleria Group, on the one
hand, against Parent or any member of the Parent Group, on the other hand (collectively, Direct Claims ), will be subject to the limitations and dispute resolution
procedures set forth in Section 10.15 . If an Indemnitee receives notice or otherwise learns of any matter that may be the subject of a Direct Claim, such Indemnitee will
give the Indemnifying Party prompt written notice thereof but in any event within 15 days after receiving such notice or otherwise learning of such matter. Any such notice
will describe the matter in reasonable detail, stating the nature, basis for indemnification and the amount thereof, to the extent known, along with copies of any relevant
documents evidencing such matter. Notwithstanding the foregoing, the delay or failure of any Indemnitee or other Person to give notice as provided in this Section 9.05(a)
will not relieve the Indemnifying Party of its obligations under this Article IX , except to the extent that such Indemnifying Party is prejudiced by such delay or failure to
give notice.
(b)
Third-Party Claims . (i) Notice of Claims . If an Indemnitee receives notice or otherwise learns of the assertion by a Person (including any Governmental
Authority) which is not a member of the Parent Group or the Acquiror Group (including after the Closing, the Galleria Group) of any claim or of the commencement by any
such Person of any Action with respect to which an Indemnifying Party may be obligated to provide indemnification (collectively, a Third-Party Claim ), such
Indemnitee will give such Indemnifying Party prompt written notice (a Claims Notice ) thereof but in any event within 15 days after becoming aware of such Third-Party
Claim. Any such notice will describe the Third-Party Claim in reasonable detail, stating the nature, basis for indemnification and the amount thereof, to the extent known,
along with copies of any relevant documents evidencing such Third-Party Claim. Notwithstanding the foregoing, the delay or failure of any Indemnitee or other Person to
give notice as provided in this Section 9.05(b) will not relieve the Indemnifying Party of its obligations under this Article IX , except to the extent that such Indemnifying
Party is prejudiced by such delay or failure to give notice.
(ii)
Opportunity to Defend . The Indemnifying Party has the right, exercisable by written notice to the Indemnitee within 90 days after receipt of a
Claims Notice from the Indemnitee of the commencement or assertion of any Third-Party Claim in respect of which indemnity may be sought under this Article IX , to
assume and conduct the defense of such Third-Party Claim in accordance with the limits set forth in this Agreement with counsel selected by the Indemnifying Party and
reasonably acceptable to the Indemnitee; provided , however , that (A) the Third-Party Claim does not relate to or arise in connection with any criminal proceeding, action,
indictment, allegation or investigation, (B) the Third-Party Claim solely seeks (and continues to seek) monetary damages or equitable or corrective relief (with or without
monetary damages, fines or penalties) which equitable relief would not reasonably be expected to adversely affect in any material respect the operations of (1) Parent or its
Affiliates, if Acquiror is the Indemnifying Party or (2) Acquiror or its Affiliates (including after the Closing, any member of the Galleria Group), if Parent is the
Indemnifying Party, and (C) the Indemnifying Party expressly agrees with the Indemnitee in writing to be fully responsible for all of the Losses that arise from the ThirdParty Claim, subject to the limitations thereon set forth in this Article IX (the conditions set forth in clauses
110
(A) through (C) are, collectively, the Litigation Conditions ). For purposes of clause (C) of the preceding sentence, if a Third-Party Claim consists of multiple claims by
a plaintiff or group of plaintiffs, and it is reasonably practicable for an Indemnifying Party to control the defense of a subset of such claims, the Indemnifying Party may
elect to agree to be fully responsible subject to the limitations thereon set forth in this Article IX , for only all of the Losses that arise from such subset of claims, and may
elect to control the defense of only such subset of claims; provided , that the other Litigation Conditions set forth in clauses (A), (B) and (C) of the preceding sentence are
satisfied. If the Indemnifying Party does not assume the defense of a Third-Party Claim in accordance with this Section 9.05(b) , the Indemnitee may continue to defend the
Third-Party Claim. If the Indemnifying Party has assumed the defense of a Third-Party Claim as provided in this Section 9.05(b) , the Indemnifying Party will not be liable
for any legal expenses subsequently incurred by the Indemnitee in connection with the defense of the Third-Party Claim; provided , however , that if (x) any of the
Litigation Conditions ceases to be met, (y) the Indemnifying Party fails to take reasonable steps necessary to defend diligently such Third-Party Claim, or (z) in the
reasonable judgment of the Indemnitee based on the advice of counsel, there exists an actual or potential conflict of interest between the Indemnifying Party and the
Indemnitee with respect to such Third-Party Claim, the Indemnitee may assume its own defense, and the Indemnifying Party will be liable for all reasonable costs or
expenses thereafter incurred in connection with such defense. The Indemnifying Party or the Indemnitee, as the case may be, has the right to participate in (but, subject to
the prior sentence, not control), at its own expense, the defense of any Third-Party Claim that the other is defending as provided in this Agreement. The Indemnifying Party,
if it has assumed the defense of any Third-Party Claim as provided in this Agreement, may not, without the prior written consent of the Indemnitee, consent to a settlement
of, or the entry of any judgment arising from, any such Third-Party Claim unless such settlement or judgment includes as an unconditional term thereof the giving by the
claimant or the plaintiff to the Indemnitee of a complete release from all liability in respect of such Third-Party Claim and unless such settlement or judgment does not
impose injunctive or other non-monetary equitable relief against the Indemnitee or its Affiliates, or their respective businesses. The Indemnitee has the right to settle any
Third-Party Claim, the defense of which has not been assumed by the Indemnifying Party, with the prior written consent of the Indemnifying Party, not to be unreasonably
withheld, conditioned or delayed. Notwithstanding the foregoing, in connection with the defense of any Third-Party Claim, Parent will have the right to assert, prosecute,
settle and receive the proceeds of any counter-claims or affirmative defenses of the Parent Group that are otherwise an Galleria Asset.
(c)
Without limiting any provision of this Section 9.05 , each of the Parties will reasonably cooperate, and will cause each of its respective Affiliates to
reasonably cooperate, with each other in the defense of any claim that the Galleria Business infringes Intellectual Property of any third Person, and no Party will knowingly
acknowledge, or permit any member of its respective Group to acknowledge, the validity or infringing use of any Intellectual Property of a third Person in a manner as to
which such Party has actual knowledge that so doing will be materially inconsistent with the defense of such infringement, validity or similar claim or challenge except as
required by Law. For the avoidance of doubt, nothing herein will preclude truthful testimony by Parent or any of its representatives or employees, and such truthful
testimony will not be deemed a breach hereof.
111
(d)
In the event Acquiror promptly notifies Parent in writing that Parent or one of its Affiliates has challenged the validity of any Intellectual Property of the
Galleria Business, Parent will withdraw or cause such challenge to be withdrawn within five Business Days following receipt of such written notice from Acquiror.
9.06 Additional Matters . (a) Cooperation in Defense and Settlement . With respect to any Third-Party Claim for which Acquiror or SplitCo, on the one hand,
and Parent, on the other hand, may have Liability under this Agreement or any of the Ancillary Agreements, the Parties agree to cooperate fully and maintain a joint
defense (in a manner that will preserve the attorney-client privilege, joint defense or other privilege with respect thereto) so as to minimize such Liabilities and defense
costs associated therewith. The Party that is not responsible for managing the defense of such Third-Party Claims will, upon reasonable request, be consulted with respect to
significant matters relating thereto and may retain counsel to monitor or assist in the defense of such claims at its own cost.
(b)
Certain Actions . Notwithstanding anything to the contrary set forth in this Article IX , Parent may elect to have exclusive authority and control over the
investigation, prosecution, defense and appeal of any and all Actions pending at the Business Transfer Time which relate to or arise out of the Galleria Business, the
Galleria Assets or the Galleria Liabilities and as to which a member of the Parent Group is also a plaintiff or named as a target or defendant thereunder (but excluding any
such Actions which solely relate to or solely arise in connection with the Galleria Business, the Galleria Assets or the Galleria Liabilities); provided , however , that, (i)
Parent will defend or prosecute, as applicable, such Actions in good faith, (ii) Parent will reasonably consult with SplitCo on a regular basis with respect to strategy and
developments with respect to any such Action, (iii) SplitCo will have the right to participate in (but not control) the defense or prosecution, as applicable, of such Action,
and (iv) Parent must obtain the written consent of SplitCo, such consent not to be unreasonably withheld, conditioned or delayed, to settle or compromise or consent to the
entry of judgment with respect to such Action if Parent is a defendant and such settlement, consent or judgment would require SplitCo to abandon its rights, change its
business practices or incur any Liabilities with respect thereto or if Parent is a plaintiff and the resolution involves a judgment that is less than was being sought in respect
of the Galleria Business. After any such compromise, settlement, consent to entry of judgment or entry of judgment, Parent and SplitCo will agree upon a reasonable
allocation to SplitCo and SplitCo will be responsible for or receive, as the case may be, SplitCos proportionate share of any such compromise, settlement, consent or
judgment attributable to the Galleria Business, the Galleria Assets or the Galleria Liabilities, including its proportionate share of the reasonable costs and expenses
associated with defending same.
(c)
Reasonable Minimization of Losses . To the extent any remedial, corrective or other ameliorative action is required to be taken by an Indemnitee in
respect of a matter that is the subject of an indemnification claim hereunder, the Indemnitee will only be entitled for indemnification in respect of those actions that would
be necessary to perform the minimum necessary remediation, correction or amelioration to remedy the breach or Liability, as the case may be, at the lowest reasonable cost.
112
(d)
Substitution . In the event of an Action that involves solely matters that are indemnifiable and in which the Indemnifying Party is not a named defendant,
if either the Indemnitee or the Indemnifying Party so requests, the Parties will endeavor to substitute the Indemnifying Party for the named defendant. If such substitution or
addition cannot be achieved for any reason or is not requested, the rights and obligations of the Parties regarding indemnification and the management of the defense of
claims as set forth in this Article IX will not be affected.
(e)
Subrogation . In the event of payment by or on behalf of any Indemnifying Party to or on behalf of any Indemnitee in connection with any Third-Party
Claim, such Indemnifying Party will be subrogated to and will stand in the place of such Indemnitee, in whole or in part based upon whether the Indemnifying Party has
paid all or only part of the Indemnitees Liability, as to any events or circumstances in respect of which such Indemnitee may have any right, defense or claim relating to
such Third-Party Claim against any claimant or plaintiff asserting such Third-Party Claim or against any other Person. Such Indemnitee will cooperate with such
Indemnifying Party in a reasonable manner, and at the cost and expense of such Indemnifying Party, in prosecuting any subrogated right, defense or claim.
(f)
Not Applicable To Taxes . Except for Section 9.04(b) and as otherwise specifically provided herein, this Agreement, including Section 1.06(a) and
Section 1.06(b) , will not apply to Taxes (which are covered by the Tax Matters Agreement).
9.07 Exclusive Remedy . (a) From and after the Closing, the sole and exclusive remedy of a Party with respect to any and all claims relating to this Agreement,
the Galleria Business, the Galleria Assets, the Galleria Liabilities, the Excluded Liabilities, the Galleria Entities or the transactions contemplated by this Agreement (other
than claims of, or causes of action arising from, Fraud and except for seeking specific performance or other equitable relief to require a Party to perform its obligations
under this Agreement to the extent permitted hereunder and thereunder and except as otherwise provided herein or in any Ancillary Agreement) will be pursuant to the
indemnification provisions set forth in this Article IX or, in the case of indemnification claims for Taxes addressed in the Tax Matters Agreement, the Tax Matters
Agreement. In furtherance of the foregoing, each Party hereby waives, from and after the Closing, any and all rights, claims and causes of action (other than pursuant to the
indemnification provisions set forth in this Article IX and the Tax Matters Agreement and other than claims of, or causes of action arising from, Fraud and except for
seeking specific performance or other equitable relief to require a Party to perform its obligations under this Agreement to the extent permitted hereunder and except as
otherwise provided in any Ancillary Agreement) that such Party or its Affiliates may have against the other Party or any of its Affiliates, or their respective directors,
officers and employees, arising under or based upon any applicable Laws and arising out of the transactions contemplated by this Agreement.
(b)
Notwithstanding any other provision hereof, from and after the Closing, the sole and exclusive remedy of the Parent Group and Acquiror Group with
respect to any and all indemnification claims for Taxes addressed in the Tax Matters Agreement will be as set forth in the Tax Matters Agreement.
113
X.
MISCELLANEOUS
10.01 Non-Survival of Representations and Warranties . Except as provided in the next sentence, none of the representations, warranties and agreements in
this Agreement will survive the Closing. Notwithstanding the preceding sentence, for purposes of the indemnification obligations set forth in Section 9.02 and Section 9.03
, (a) the agreements contained in this Agreement in Article II and Article X that by their terms are to be performed in whole or in part after the Closing will survive the
Closing until they have been performed in accordance with their terms, (b) the representations and warranties set forth in Section 3.15 and Section 4.14 will survive until
the one year anniversary of the Closing (the items in clauses (a) and (b), collectively, the Surviving Transaction Agreement Items ) and (c) the representations and
warranties set forth in Section 3.11 and Section 4.12 will survive as provided in the Tax Matters Agreement.
10.02 Expenses . (a) General Rule . Except as otherwise provided in this Agreement, including in Sections 1.09 , 2.15 , 5.02 and this 10.02 , or any of the
Ancillary Agreements, all fees and expenses incurred in connection with the transactions contemplated hereby and thereby will be paid by the Party incurring such fees or
expenses.
(b)
Antitrust Filing Fees . Acquiror will be responsible for and pay any requisite filing fee in respect of any notification submitted pursuant any Antitrust
Laws, including the HSR Act.
(c)
Printing Expenses . Acquiror and Parent will share equally the fees and expenses of printers utilized by the Parties in connection with the preparation of
the filings with the Commission contemplated by Section 5.08 .
(d)
Galleria Indebtedness Expenses . Acquiror will reimburse Parent for all costs and expenses incurred by Parent or any of its Subsidiaries in connection
with the Galleria Financing, including any rating agency evaluation or maintenance fees, commitment fees, ticking fees, upfront fees, closing fees and administrative agent
fees, interest payments made prior to the Closing Date (in respect of any monies borrowed under the Galleria Credit Facility prior to the Closing and placed into an escrow
or similar account as contemplated by the Galleria Commitment Letter), professional fees and expenses, and other fees paid pursuant to fee letters and arrangements entered
into in connection with the Galleria Credit Facility (the Galleria Debt Expenses ).
(e)
Expenses Associated With Transition Arrangements And Other Certain Matters Related To Preparation For Closing . This Section 10.02(e) governs the
allocation of responsibility for costs and expenses undertaken by the Parent Group in connection with the activities contemplated by Section 5.18 (Removal of Tangible
Assets), 5.21(d) (Execution of Transition Plan), 5.21(f) (Set-Up of UPC/EAN Codes, etc.), 5.21(g) (Control of Galleria Entity Structuring) and Section 5.27 (Facilities Split
Plan) (the Covered Expenses ).
114
(i)
General Principles . Except as otherwise expressly provided in this Agreement, responsibility for the Covered Expenses will be apportioned
between Parent and Acquiror as follows:
(A)
costs and expenses that are incurred by Parent Group for the purpose of optimizing the Parent Groups retained operations as a result of the
divestiture of the Galleria Business for the post-closing benefit of the Parent Group, such as for example the elimination of stranded overhead resources at
facilities other than the Galleria Facilities, the optimization of facilities to be retained by the Parent Group and the removal of Excluded Assets from Galleria
Facilities, will be 100% the responsibility of Parent;
(B)
costs and expenses that are incurred by Parent Group, at the direction of or in consultation with the Acquiror Group, for the purpose of benefiting
the future operations of the Galleria Group or the Acquiror Group (beyond assets that constitute Galleria Assets or employees who are In-Scope Employees,
in each case, as of the date hereof), such as for example by adding ongoing capability or functionality to the Galleria Business that does not exist as of the
date of this Agreement, acquiring new facilities, hiring individuals for newly created positions or non-transferring functions such as sales force employees,
moving employees to new locations or shipping and installing Galleria Assets in new locations, will be 100% the responsibility of Acquiror; and
(C)
costs and expenses that are incurred by Parent Group for the purpose of facilitating the transaction, such as for example the removal of the
tangible Galleria Assets contemplated by Section 5.18 , the implementation of the Split Plan Agreement contemplated by Section 5.27 , and the expense
contemplated in connection with preparing to deliver the anticipated business services under the Transition Services Agreement and/or the migration of the
services to the systems of Acquiror, will be shared 50%/50% between Parent and Acquiror.
(ii)
Attached as Schedule 10.02 is a preliminary listing of activities contemplated for the transition process and the currently contemplated division of
responsibility for the costs and expenses associated therewith. Each of the Parties acknowledges that the ultimate activities to be undertaken, and allocation of
responsibilities, may be subject to change based on the results of the transition planning discussions contemplated by Section 5.21(a) , but that Schedule 10.02 is meant to
be a good faith indication of their intent.
(f)
Mechanics of Reimbursement Payments . Any reimbursement amount that may be payable in respect of Section 10.02(d) or Section 10.02(e) will be
effected in the following manner: (i) to the extent Covered Expenses or Galleria Debt Expenses that would be the responsibility of Acquiror are incurred by any member of
the Galleria Group, were outstanding as of the Cut-Off Date and remain outstanding as of the Business Transfer Time (such as accounts payable or accrued expenses), such
Covered Expenses and Galleria Debt Expenses will remain as outstanding Liabilities of the Galleria Group and will not be taken into account in the calculation of Cut-Off
Date Working
115
Capital, as contemplated by the definition of Cut-Off Date Working Capital, and (ii) in respect of any other Covered Expenses or Galleria Debt Expenses that would be the
responsibility of Acquiror, the Recapitalization Amount will be increased by such amount of Covered Expenses or Galleria Debt Expenses (and, in respect of any such
Covered Expenses or Galleria Debt Expenses that have not been determined as of the 10 th Business Day prior to the Closing Date (including in respect of costs that have
been incurred but not invoiced), the Recapitalization Amount will be an adjusted by an amount equal to Parents good faith estimate of such undetermined costs). Parent
will not be required to incur any costs after the Closing that constitute Covered Expenses for which the Acquiror has any responsibility hereunder except to the extent that
the Parties agree on such costs prior to the Closing (in which case, the Recapitalization Amount will be increased by an amount equal to such agreed-upon future costs).
(g)
Effect of Termination . In the event that this Agreement is terminated, the reimbursement contemplated by Section 10.02(f) will be paid by Acquiror to
Parent no later than five Business Days following such termination; provided , however , that Acquiror will have no obligation to reimburse Parent for such fees and
expenses if this Agreement is terminated by Acquiror pursuant to Section 8.01(d)(i) .
(h)
No Post-Closing Payments . In no case will any reimbursement payments contemplated by this Section 10.02 take place after the Closing. Each of the
Parties will settle all such payments at or prior to the Closing (whether effected through the calculation of the Recapitalization Amount or otherwise) as provided in this
Section 10.02 .
(i)
Agreement.
Taxes . Notwithstanding anything to the contrary in this Section 10.02 , responsibility for Taxes will be allocated as set forth in the Tax Matters
(j)
Efforts to Minimize Shared Costs . Each of the Parties will cooperate in good faith with the other Parties to minimize any costs and expenses that, by
operation of this Agreement would not be borne solely by such Party (it being understood that this provision will not be deemed to require the Parties to proceed more
slowly towards consummating the transactions contemplated hereby if doing so would reduce costs and expenses).
116
10.03 Entire Agreement . This Agreement and the Ancillary Agreements, including any related annexes, schedules and exhibits, as well as any other agreements
and documents referred to herein and therein, will together constitute the entire agreement between the Parties with respect to the subject matter hereof and thereof and will
supersede all prior negotiations, agreements and understandings of the Parties of any nature, whether oral or written, with respect to such subject matter, including the
Confidentiality Agreement, which is hereby terminated and of no further force or effect, subject to Section 8.03 . If there is a conflict between any provision of this
Agreement and a provision of any Ancillary Agreement, the provision of this Agreement will control unless specifically provided otherwise in this Agreement.
10.04 Governing Law; Jurisdiction; Waiver of Jury Trial . (a) The validity, interpretation and enforcement of this Agreement will be governed by the Laws
of the State of Delaware, without regard to the conflict of Laws provisions thereof that would cause the Laws of another state to apply. Notwithstanding anything herein to
the contrary, and without limiting anything set forth in Section 10.17 , each of the parties hereto agrees that it will not bring or support any suit, action or other proceeding
(whether at law, in equity, in contract, in tort or otherwise) against any Debt Financing Source in any way relating to this Agreement or any of the transactions
contemplated by this Agreement (including any related financing), including any dispute arising out of or relating in any way to the Galleria Financing or Acquiror
Financing or the performance thereof, in any forum other than any New York State court or federal court sitting in the County of New York and the Borough Manhattan
(and appellate courts thereof). The parties hereto further agree that all of the provisions of this Section 10.04 relating to waiver of jury trial shall apply to any suit, action or
other proceeding referenced in the preceding sentence.
(b)
By execution and delivery of this Agreement, each Party irrevocably (i) submits and consents to the personal jurisdiction of the state and federal courts of
the State of Delaware for itself and in respect of its property in the event that any dispute arises out of this Agreement or any of the transactions contemplated hereby, (ii)
agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court and (iii) agrees that it will not bring any
action relating to this Agreement or any of the transactions contemplated hereby in any other court. Subject to compliance with the provisions of Section 10.15 , if
applicable, each of the Parties irrevocably and unconditionally waives (and agrees not to plead or claim) any objection to the laying of venue of any dispute arising out of
this Agreement or any of the transactions contemplated hereby in the state and federal courts of the State of Delaware, or that any such dispute brought in any such court
has been brought in an inconvenient or improper forum. The Parties further agree that the mailing by certified or registered mail, return receipt requested, of any process
required by any such court will constitute valid and lawful service of process against them, without necessity for service by any other means provided by statute or rule of
court.
(c)
EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY
TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT
IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR
117
RELATING TO THIS AGREEMENT AND ANY OF THE AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY (INCLUDING AGAINST ANY DEBT FINANCING SOURCE). EACH PARTY CERTIFIES AND ACKNOWLEDGES
THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE EITHER OF SUCH WAIVERS, (II) IT UNDERSTANDS AND HAS
CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS, (III) IT MAKES SUCH WAIVERS VOLUNTARILY AND (IV) IT HAS BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.04(c) .
10.05 Notices . All notices, requests, permissions, waivers and other communications hereunder will be in writing and will be deemed to have been duly given (a)
when sent, if sent by facsimile, (b) when delivered, if delivered personally to the intended recipient and (c) one Business Day following sending by overnight delivery via
an international courier service and, in each case, addressed to a Party at the following address for such Party:
(i)
if to Parent:
One Procter & Gamble Plaza
Cincinnati, OH 45202
Attention: Corporate Secretary
Attention: Jason Muncy
Associate General Counsel - Global Transactions
Facsimile: (513) 386-1927
with a copy to (which will not constitute notice):

Jones Day
222 East 41st Street
New York, NY 10017
Attention: Robert A. Profusek
Peter E. Izanec
Facsimile: (212) 755-7306
(ii)
If to Acquiror:
Coty Inc.
350 Fifth Avenue
New York, NY 10018
Attention: Chief Financial Officer
Facsimile: (212) 389-7538
with copies to (which will not constitute notice):

118
Coty Inc.
350 Fifth Avenue
New York, NY 10018
Attention: General Counsel
Facsimile: (212) 479-4328
and
Skadden Arps Slate Meagher & Flom LLP
Four Times Square
New York, NY 10036
Attention: Paul T. Schnell
Sean C. Doyle
Facsimile: (212) 735-2000
or to such other address(es) as may be furnished in writing by any such Party to the other Party in accordance with the provisions of this Section 10.05 . Any notice to
Parent will be deemed notice to all members of the Parent Group, and any notice to Acquiror will be deemed notice to all members of the Galleria Group.
10.06 Amendments and Waivers . (a) This Agreement may be amended and any provision of this Agreement may be waived; provided , however , that any such
amendment or waiver will become and remain binding upon a Party only if such amendment or waiver is set forth in a writing executed by such Party. No course of dealing
between or among any Persons having any interest in this Agreement will be deemed effective to modify, amend or discharge any part of this Agreement or any rights or
obligations of any Party under or by reason of this Agreement. Notwithstanding anything to the contrary contained herein, Sections 10.04 , 10.07 , 10.08 , 10.17 and this
Section 10.06 (and any provision of this Agreement to the extent an amendment, modification, waiver or termination of such provision would modify the substance of any
of the foregoing provisions) may not be amended, modified, waived or terminated in a manner that impacts or is adverse in any respect to any Debt Financing Source
without the prior written consent of such Debt Financing Source.
(b)
No delay or failure in exercising any right, power or remedy hereunder will affect or operate as a waiver thereof; nor will any single or partial exercise
thereof or any abandonment or discontinuance of steps to enforce such a right, power or remedy preclude any further exercise thereof or of any other right, power or
remedy. Except and solely to the extent set forth in Section 9.07 , the rights and remedies hereunder are cumulative and not exclusive of any rights or remedies that any
Party would otherwise have.
119
10.07 No Third-Party Beneficiaries . This Agreement is solely for the benefit of the Parties (and with respect to Sections 10.04 , 10.06 , 10.08 , 10.17 and this
Section 10.07 , the Debt Financing Sources) and does not confer on third parties (including any employees of any member of the Parent Group or the Acquiror Group) any
remedy, claim, reimbursement, claim of action or other right in addition to those existing without reference to this Agreement; provided , however , that this Section 10.07
does not limit any rights of Parent to enforce specifically the performance of the terms and provisions of Article VI .
10.08 Assignability . No Party may assign its rights or delegate its duties under this Agreement without the written consent of the other Party, except that a Party
may assign its rights or delegate its duties under this Agreement to a member of its Group, provided that (a) such Person agrees in writing to be bound by the terms and
conditions contained in this Agreement and (b) such assignment or delegation will not relieve any Party of its indemnification obligations or other obligations under this
Agreement and (c) after the Closing, the Acquiror may assign its rights or delegate its duties under this Agreement to any lender party to the Acquiror Commitment Letter
as collateral security, unless, in each case, Parent determines, in its sole discretion, that such assignment or delegation would materially increase the likelihood that the
Intended Tax-Free Treatment would not apply to the transactions contemplated hereby. Any attempted assignment or delegation in contravention of the foregoing will be
void.
10.09 Construction . The descriptive headings herein are inserted for convenience of reference only and are not intended to be a substantive part of or to affect
the meaning or interpretation of this Agreement. Whenever required by the context, any pronoun used in this Agreement or the Parent Disclosure Letter or Acquiror
Disclosure Letter will include the corresponding masculine, feminine or neuter forms, and the singular forms of nouns, pronouns, and verbs will include the plural and vice
versa. Reference to any agreement, document or instrument means such agreement, document or instrument as amended or otherwise modified from time to time in
accordance with the terms thereof, and if applicable hereof. References in this Agreement to any document, instrument or agreement (including this Agreement) includes
and incorporates all exhibits, disclosure letters, schedules and other attachments thereto. Unless the context otherwise requires, any references to an Exhibit, Section or
Article will be to an Exhibit, Section or Article to or of this Agreement, and will be deemed to include any provisions or matters set forth in any corresponding schedule
or section of the Acquiror Disclosure Letter or Parent Disclosure Letter. The use of the words include or including in this Agreement or the Parent Disclosure Letter or
the Acquiror Disclosure Letter will be deemed to be followed by the words without limitation. The use of the word covenant or agreement, when referring to a
covenant or agreement contained herein, will mean covenant and agreement. The use of the words or, either or any will not be exclusive. Days means calendar
days unless specified as Business Days. References to statutes will include all regulations promulgated thereunder, and references to statutes or regulations will be
construed to include all statutory and regulatory provisions consolidating, amending or replacing the statute or regulation as of the date hereof. The Parties have participated
jointly in the negotiation and drafting of this Agreement and the Ancillary Agreements. In the event an ambiguity or question of intent or interpretation arises, this
Agreement will be construed as if drafted jointly
120
by the Parties, and no presumption or burden of proof will arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement.
Except as otherwise expressly provided elsewhere in this Agreement or any Ancillary Agreement, any provision herein which contemplates the agreement, approval or
consent of, or exercise of any right of, a Party, such Party may give or withhold such agreement, approval or consent, or exercise such right, in its sole and absolute
discretion, the Parties hereby expressly disclaiming any implied duty of good faith and fair dealing or similar concept.
10.10 Severability . The Parties agree that (a) the provisions of this Agreement will be severable in the event that for any reason whatsoever any of the provisions
hereof are invalid, void or otherwise unenforceable, (b) any such invalid, void or otherwise unenforceable provisions will be replaced by other provisions which are as
similar as possible in terms to such invalid, void or otherwise unenforceable provisions but are valid and enforceable and (c) the remaining provisions will remain valid and
enforceable to the fullest extent permitted by applicable Law.
10.11 Counterparts . This Agreement may be executed in multiple counterparts (any one of which need not contain the signatures of more than one Party), each
of which will be deemed to be an original but all of which taken together will constitute one and the same agreement. This Agreement, and any amendments hereto, to the
extent signed and delivered by means of a facsimile machine or other electronic transmission, will be treated in all manner and respects as an original agreement and will be
considered to have the same binding legal effects as if it were the original signed version thereof delivered in person. At the request of any Party, the other Party will reexecute original forms thereof and deliver them to the requesting Party.
10.12 Specific Performance . The Parties agree that irreparable damage would occur if any provision of this Agreement was not performed in accordance with
its specific terms or was otherwise breached. It is accordingly agreed that the Parties will be entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the performance of the terms and provisions of this Agreement (including the performance by Acquiror and its Affiliates of the employmentrelated obligations set forth in Article VI ) without proof of actual damages, this being in addition to any other remedy to which any Party is entitled at Law or in equity.
Each Party further agrees that no other Party or any other Person will be required to obtain, furnish or post any bond or similar instrument in connection with or as a
condition to obtaining any remedy referred to in this Section 10.12 , and each Party irrevocably waives any right it may have to require the obtaining, furnishing or posting
of any such bond or similar instrument.
121
10.13 Disclosure Letters . There may be included in the Parent Disclosure Letter or the Acquiror Disclosure Letter items and information that are not material,
and such inclusion will not be deemed to be an acknowledgment or agreement that any such item or information (or any non-disclosed item or information of comparable
or greater significance) is material, or to affect the interpretation of such term for purposes of this Agreement. Matters reflected in the Parent Disclosure Letter and the
Acquiror Disclosure Letter are not necessarily limited to matters required by this Agreement to be disclosed therein. The Parent Disclosure Letter and the Acquiror
Disclosure Letter set forth items of disclosure with specific reference to the particular Section or subsection of this Agreement to which the information in the Parent
Disclosure Letter or the Acquiror Disclosure Letter, as applicable, relates; provided , however , that any information set forth in one section of such disclosure letter will be
deemed to apply to each other section or subsection thereof to which its relevance is reasonably apparent on its face.
10.14 Waiver . Acquiror acknowledges, on behalf of itself and its Affiliates, that Jones Day has represented, is representing and will continue to represent Parent
in connection with the transactions contemplated by this Agreement and the Ancillary Agreements, and that Jones Day will only represent the interests of Parent in
connection with such transactions. Acquiror waives, on behalf of itself and its Affiliates, any conflict of interest that it or they may assert against Jones Day in connection
with such representation and agrees not to challenge Jones Days representation of Parent with respect to such transactions or to assert that a conflict of interest exists with
respect to such representation. Without limiting the generality of the foregoing, Acquiror agrees, on behalf of itself and its Affiliates, that Jones Day may represent Parent in
any litigation, arbitration, mediation or other Action against or involving Acquiror or any of its Affiliates, arising out of or in connection with such transactions.
10.15 Dispute Resolution . Except as otherwise specifically provided in this Agreement or in any Ancillary Agreement and subject to Section 10.12 , the
procedures set forth in this Section 10.15 will govern dispute resolution of any Direct Claim under Section 9.05 (a Dispute ). Acquiror, on the one hand, and Parent, on
the other hand, will first refer any such Dispute for resolution to either the Chairman of the Board of Directors of Acquiror or the Chief Financial Officer of Parent (or their
designees) by delivering to the other Party a written notice of the referral (a Dispute Escalation Notice ). Following receipt of a Dispute Escalation Notice, each of the
Parties will cause their respective officer or designee to negotiate in good faith to resolve the Dispute. If such officers or designees are unable to resolve the Dispute within
40 Business Days after the date of the Dispute Escalation Notice, either Party will have the right to commence litigation in accordance with Section 10.04 . The Parties
agree that all discussions, negotiations and other Information exchanged between the Parties during the foregoing escalation proceedings will be without prejudice to the
legal position of a Party in any subsequent Action and kept confidential and protected against disclosure.
122
10.16 Obligations of Affiliates . Each of Parent and Acquiror will cause all of the members of its Group to comply with their respective obligations or
representations or warranties under this Agreement and the Ancillary Agreements (whether or not any such members of its Group are parties to this Agreement or Ancillary
Agreements). Parent hereby guarantees to Acquiror the performance of the other members of the Parent Group of their respective obligations under this Agreement and the
other Ancillary Agreements, and Acquiror hereby guarantees to Parent the performance of the other members of the Acquiror Group of their respective obligations under
this Agreement and Ancillary Agreements.
10.17 No Recourse Against Debt Financing Sources . Without limiting any other provision in this Agreement, this Agreement may only be enforced against
any claims or causes of action that may be based upon, arise out of or relate to this Agreement, or the negotiations, execution or performance of this Agreement, may only
be made against the parties hereto, and no Debt Financing Source shall have any liability for any obligations or liabilities of the parties hereto or for any claim (whether in
tort, contract or otherwise) based on, in respect of or by reason of the transactions contemplated hereby or in respect of any oral representations made or alleged to be made
in connection herewith. Parent, SplitCo and Acquiror agree not to, and to cause their respective Affiliates not to, seek to enforce this Agreement against, make any claims
for breach of this Agreement against or seek to recover monetary damages in connection with any such asserted breach of this Agreement from any Debt Financing Source.
Parent and SplitCo agree not to, and to cause their respective Affiliates not to, seek to enforce the Acquiror Commitment Letter against, make any claims for breach of the
Acquiror Commitment Letter against or seek to recover monetary damages in connection with any such asserted breach of the Acquiror Commitment Letter from, or
otherwise sue in connection with the Acquiror Commitment Letter, the Debt Financing Sources. Nothing in this Section 10.17 shall in any way limit or qualify the
obligations and liabilities of the parties to the Galleria Commitment Letter, respectively, and the Acquiror Commitment Letter to each other or in connection therewith.
XI.
DEFINITIONS
For purposes of this Agreement, the following terms, when utilized in a capitalized form, will have the following meanings:
Accounting Firm has the meaning set forth in Section 2.15(c) .
Accounting Principles has the meaning set forth in the definition of Working Capital .
Acquiror has the meaning set forth in the preamble to this Agreement.
Acquiror Average Price means, as of any date of determination, the average (measured as an arithmetic mean) of the daily volume weighted averages of the
trading prices of the Acquiror Common Stock, as such prices are reported on the NYSE Composite Tape, for (x) in the case of any determinations of the Acquiror Average
Price for purposes of the definition of Acquiror SEC Event, the fifteen consecutive Trading Days ending on such date of determination (other than (1)
123
if the date of determination is the Commencement Date and the related Disclosure Date is less than 15 consecutive Trading Days before such Commencement Date, in
which case the measurement period will begin on the Trading Day following the Disclosure Date and end on the Commencement Date, and (2) if the date of determination
is the 10 th trading day after the date on which the Acquiror makes a GAAP Compliant Confirmation, in which case the measurement period will be the 10 consecutive
Trading Days ending on such date of determination), and (y) in all other cases, the five consecutive Trading Days ending on such date of determination; provided ,
however , that if an ex-dividend date is set for the Acquiror Common Stock during such period, then the trading price for a share of Acquiror Common Stock for each day
during the portion of such period that precedes such ex-dividend date will be reduced by the amount of the dividend payable on a share of Acquiror Common Stock.
Acquiror Base Stock Price means $24.56 per share.
Acquiror Capital Stock means any shares of common stock (including Acquiror Common Stock), preferred stock (including the Series A Preferred Stock),
restricted stock, restricted stock units, stock appreciation rights, stock-based performance units, phantom units (including the Phantom Units), capital stock equivalents or
similar synthetic instruments or other capital stock or nominal interests in Acquiror, including any stock, other securities or interests that could be designated as equity for
purposes of Section 355 of the Code.
Acquiror Certificate has the meaning set forth in Section 2.05 .
Acquiror Collar Stock Price has the meaning set forth in the definition of Recapitalization Amount .
Acquiror Commitment Letter has the meaning set forth in Section 5.12(e) .
Acquiror Common Stock means the Class A Common Stock and the Class B Common Stock.
Acquiror Compensation and Benefit Plans means all written (a) salary, bonus, vacation, deferred compensation, pension, retirement, profit-sharing, thrift,
savings, overtime, employee stock ownership, stock bonus, stock purchase, restricted stock, stock option, equity-based, incentive, retention, severance or change-in-control
plans or other similar plans, policies, arrangements or agreements, (b) employment agreements, (c) medical, dental, disability, health and life insurance plans, sickness
benefit plans and (d) other employee benefit and fringe benefit plans, policies, arrangements or agreements and each employee benefit plan as defined in Section 3(3) of
ERISA (whether or not subject to ERISA), in the case of each of clauses (a) through (d), sponsored, maintained or contributed to by Acquiror or any of its ERISA Affiliates
(i) for the benefit of any of the Acquiror Group employees or any of their beneficiaries or (ii) pursuant to which Parent or any of its Subsidiaries would have any Liability
subsequent to the Closing in respect of periods on or prior to the Closing, excluding in the case of clauses (i) and (ii) any plans, policies, arrangements or agreements not
sponsored by Acquiror or any of its Subsidiaries to which contributions by an employer are mandated by a Governmental Authority or by law, rules, regulations, orders or
decrees.
124
Acquiror Disclosure Letter means the disclosure letter delivered by Acquiror to Parent immediately prior to the execution of this Agreement.
Acquiror Equity Interests has the meaning set forth in Section 4.05(c) .
Acquiror Filings means, collectively, the SplitCo Form 10/S-4, the Schedule TO, the Information Statement and the Acquiror Form S-4.
Acquiror Financing means the debt financing to refinance any of Acquirors currently outstanding Indebtedness, including the receipt of funds as contemplated
by the Acquiror Commitment Letter.
Acquiror Form S-4 has the meaning set forth in Section 5.08(b) .
Acquiror Group means Acquiror and each of its Affiliates, including, after the Closing, the Galleria Group.
Acquiror Indemnitees means Acquiror, each member of the Acquiror Group and each of their respective successors and assigns, and all Persons who are or have
been stockholders, directors, partners, managers, managing members, officers, agents, representatives or employees of any member of the Acquiror Group (in each case, in
their respective capacities as such).
Acquiror Leased Real Property has the meaning set forth in Section 4.17(a) .
Acquiror MAE means (i) any circumstance, change, development, condition or event that, individually or in the aggregate, has had or would reasonably be
expected to have a material adverse effect on the business, financial condition or results of operations of Acquiror and its Subsidiaries taken as a whole; or (ii) a change
described on Section 11.01(c) of the Acquiror Disclosure Letter; provided , however , that any such effect resulting or arising from or relating to any of the following
matters will not be considered when determining whether there has been, or would reasonably be expected to be, an Acquiror MAE: (a) general conditions in the industry in
which Acquiror competes, (b) any conditions in the United States general economy or the general economy in other geographic areas in which Acquiror operates or
proposes to operate, (c) political conditions, including acts of war (whether or not declared), armed hostilities, acts of terrorism or developments or changes therein, (d) any
conditions resulting from natural disasters, (e) compliance by Acquiror and Merger Sub with its covenants or obligations in this Agreement, (f) the failure of the financial or
operating performance of Acquiror to meet internal forecasts or budgets for any period prior to, on or after the date of this Agreement (but the underlying reason for the
failure to meet such forecasts or budgets may be considered provided that they do not fall under another clause of this proviso), (g) any action taken or omitted to be taken
at the request or with the consent of Parent, (h) effects or conditions resulting from the announcement of this Agreement or the transactions contemplated thereby, including
any employee departures and any actions taken by customers, suppliers, distributors or licensors of Acquiror to terminate, discontinue or not renew their Contracts with
Acquiror or its Subsidiaries or otherwise withhold any Consent necessary in respect of such Contracts, (i) any deterioration in the business, financial condition or results of
operations of the Acquirors business that occurs subsequent to the date of this Agreement and prior to the Closing Date, except that such
125
deterioration will be considered to the extent it arises out of any (1) breach by Acquiror of its covenants under this Agreement, (2) extraordinary event of a nature described
in clauses (c) or (d) (but only to the extent that such extraordinary event disproportionately affects the Acquirors business as compared to similarly situated businesses
operating in the markets in the United States and other geographic areas in which the Acquirors business operates), or (3) a product recall required under applicable Law
(but only to the extent such product recall disproportionately affects the Acquirors business as compared to similarly situated businesses operating in the United States and
other geographic areas in which the Acquirors business operates), or (j) changes in applicable Laws or GAAP; provided , further , that with respect to clauses (a), (b), (c),
(d) or (j), such matters will be considered to the extent that they disproportionately affect Acquiror as compared to similarly situated businesses generally operating in the
same industry in the United States and other geographic areas in which Acquiror operates.
Acquiror Material Contract has the meaning set forth in Section 4.09(a) .
Acquiror New Common Stock has the meaning set forth in the recitals to this Agreement.
Acquiror Objection has the meaning set forth in Section 2.15(b) .
Acquiror Options has the meaning set forth in Section 4.05(a) .
Acquiror Owned Real Property has the meaning set forth in Section 4.17(a) .
Acquiror Preferred Stock has the meaning set forth in Section 4.05(a) .
Acquiror Real Property Leases has the meaning set forth in Section 4.17(a) .
Acquiror Restructuring Goals has the meaning set forth in Section 5.21(g) .
Acquiror SEC Event means the occurrence of one or more of the following events:
(i)
Acquiror shall have published or become obligated to publish a press release or file or become obligated to file a report with the
Commission to the effect that Acquirors prior financial statements or reports filed with the Commission may no longer be relied upon;
(ii)
Acquiror shall have failed to timely file (after giving effect to the extension provided pursuant to Rule 12b-25 under the Exchange
Act if a Form 12b-25 is timely filed by the Acquiror) with the Commission any of its Annual Reports on Form 10-K or Quarterly Reports on Form 10-Q that
are required to be filed after the date hereof and prior to the Closing;
(iii)
Acquiror shall have made a filing that discloses (or the Acquiror shall have become required to disclose) the existence of any
material weaknesses in the effectiveness of Acquirors internal control over financial
126
reporting (as such concept is defined in Rule 1-02(a) of Regulation S-X, as of the requisite date;
(iv)
Acquiror shall have publicly announced or disclosed that the audit committee of Acquirors Board of Directors (or other similarly
empowered committee of the board or the board itself) is conducting an investigation with respect to the material reliability or accuracy of Acquirors
financial statements;
(v)
Acquiror or any Governmental Authority shall have publicly announced or disclosed that a Governmental Authority is conducting
an investigation with respect to the material reliability or accuracy of Acquirors financial statements; or
(vi)
Acquiror or any of its directors or executive officers shall have been named as a party to any criminal proceeding with respect to
alleged criminal conduct where such conduct relates to the business of Acquiror;
provided , that (A) no event resulting from, relating to or arising out of matters disclosed in the Acquiror SEC Filings publicly filed or furnished with the Commission at
least two Business Days prior to the date of this Agreement (other than any forward-looking disclosures set forth in any risk factor section, any disclosures in any section
relating to forward looking-statements and any other similar disclosures included therein to the extent that they are primarily cautionary in nature or in the general
description of accounting principles in the footnotes to the audited or unaudited financial statements included in any Acquiror SEC Filings) or Section 11.01 of the Acquiror
Disclosure Letter shall be an Acquiror SEC Event and (B):
(x)
in the case of clause (i) above, at least one of the following must also be true:
1.
Acquiror shall have failed to remedy the underlying issues and publicly confirmed that the financial statements filed or published with the
Commission prior thereto fairly present, in all material respects, the Acquirors consolidated financial condition and results of operations of the Acquiror
Group (such confirmation, the GAAP Compliant Confirmation ) within 120 days of the date on which it published or became obligated to publish or filed
or become obligated to file the press release or report referenced in clause (i); or
2.
if both (x) the Acquiror Average Price is less than or equal to 80% of the Acquiror Average Price on the trading day immediately preceding such
Disclosure Date (and such decline in the trading prices of the Acquiror Common Stock underlying such calculated decline in the Acquiror Average Price is
disproportionate in a non-de minimis respect to a decline in the performance of the Standard & Poors 500 Index calculated in the same manner) and (y) the
Acquiror Average Price is less than $20.00, on any one of the following days: any of the 40 th through 50 th trading days following the Disclosure Date, the 10
th
trading day after the date on which the Acquiror makes the GAAP Compliant Confirmation and, if the Disclosure Date is
127
(y)
(z)
less than 40 trading days prior to the Commencement Date, the Commencement Date (this clause (B), the Minimum Price Decline Requirement );
in the case of clause (ii) above, at least one of the following must also be true:
(A)
Acquiror shall have failed to cure the relevant problem within 120 days of the date on which the event referenced in clause (ii) takes place by, as
applicable, filing the late Annual Report on Form 10-K or Quarterly Report on Form 10-Q with the Commission; or
(B)
the Minimum Price Decline Requirement shall have occurred; and
in the case of clauses (iii), (iv), (v) and (vi), the Minimum Price Decline Requirement shall have occurred ( provided , that for purposes of this clause (z), the only
measurement dates for the Minimum Price Decline Requirement will be (1) the 45 th trading day after the Disclosure Date and (2) if the Disclosure Date is less than
45 Trading Days prior to the Commencement Date, the Commencement Date).
Acquiror SEC Filings has the meaning set forth in Section 4.11(a) .
Acquiror Stockholder Approval has the meaning set forth in Section 4.15(a) .
Acquiror Stockholders means the holders of Acquiror Common Stock.
Acquiror Stock Issuance has the meaning set forth in Section 2.07(b) .
Acquiror Superior Proposal has the meaning set forth in Section 5.09(f)(iii) .
Acquiror Takeover Proposal has the meaning set forth in Section 5.09(f)(i) .
Acquiror Welfare Plans has the meaning set forth in Section 6.04(e) .
Action means any demand, charge, claim, action, suit, counter suit, arbitration, mediation, hearing, inquiry, proceeding, audit, review, complaint, litigation or
investigation, sanction, summons, demand, subpoena, examination, citation, audit, review or proceeding of any nature whether administrative, civil, criminal, regulatory or
otherwise, by or before any Governmental Authority.
Adjusted Galleria Business means the Galleria Business less the Retained Licenses, any Retained Business and any Assets or Liabilities that are Excluded Assets
or Excluded Liabilities pursuant to Section 1.09 .
Affiliate means, with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with such other Person as
of the date on which, or at any time during the period for which, the determination of affiliation is being made. For purposes of this definition, the term control
(including, with correlative meanings, the terms controlled by and under common control with), as used with respect to any Person means the
128
possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting
securities, by Contract or otherwise. For the avoidance of doubt, (a) Affiliates of Parent will include SplitCo and the Galleria Entities prior to the Closing, and (b) Affiliates
of Acquiror will include SplitCo and the Galleria Entities after the Closing.
Agreement has the meaning set forth in the preamble to this Agreement.
Alternative Financing has the meaning set forth in Section 5.12(b)(ii) .
Ancillary Agreements means (a) the Tax Matters Agreement, the Transition Services Agreement, the Split Plan Agreement, the Parent Shared Technology
License Agreement, the SplitCo Shared Technology License Agreement, the Parent Trademark License Agreement, the SplitCo Trademark License Agreement and the
Coexistence Agreement, and (b) to the extent required pursuant to Schedule 1.09 , the SplitCo Retained Business Technology License, the Reverse Transitional Supply
Agreement and the Reverse Transitional Distribution Services Agreement.
Antitrust Approvals has the meaning set forth in Section 5.02(c)(i) .
Antitrust Laws means the Sherman Act, the Clayton Act, the HSR Act, the Federal Trade Commission Act and all other Laws relating to merger control or
competition law or are otherwise designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade.
Assets means assets, properties and rights (including goodwill), wherever located (including in the possession of vendors or other third-parties or elsewhere),
whether real, personal or mixed, tangible, intangible or contingent, in each case whether or not recorded or reflected or required to be recorded or reflected on the books and
records or financial statements of any Person.
Audited Kosmos Financial Statements has the meaning set forth in Section 3.10(b) .
Audited Mercury Financial Statements has the meaning set forth in Section 3.10(a) .
Audited Salon Professional Financial Statements has the meaning set forth in Section 3.10(c) .
Bank Letter means a letter from a financial institution stating its view, subject to reasonable and customary assumptions, that SplitCo could be expected to
borrow the principal amount of the Galleria Credit Facility or the Refinanced Facility, as the case may be, without a guarantee or other form of credit support from
Acquiror, provided that such financing may be on terms less favorable than those contained in the Galleria Credit Facility or the Refinanced Facility, as the case may be.
Beauty Store means a Physical Location that either (a) requires a Regulated Professional to provide proof that the individual is a Regulated Professional in order
to receive a discounted price on Products or (b) a cash and carry store in Europe that exclusively sells beauty products (e.g., cosmetics, fragrances, Products) and primarily
serves Professionals of the type which Parent currently sells Products (e.g., Bleue Libellule).
129
Business Day means any day that is not a Saturday, a Sunday or other day that is a statutory holiday under the federal Laws of the United States.
Business Transfer Date has the meaning set forth in Section 1.01(c) .
Business Transfer Time has the meaning set forth in Section 1.01(c) .
Caldera Business means (a) Parents business of sourcing, manufacturing, marketing, selling, distributing and developing (i) Products for sale in the Salon
Professional Channel anywhere in the world (the Salon Professional Business ), and (ii) Color Products for sale in the Retail Channel anywhere in the world (the Retail
Color Business ), and (b) the Retail Styling Business.
Care Products means products that either (a) have the primary purpose of cleaning human hair through the application of a composition with anionic, non-ionic
or zwitterionic surfactants or (b) have the primary purpose of providing lubricity and protection to human hair cuticles through the application of either a rinse-off or leaveon composition containing cationic surfactants, waxes, long-chain fatty alcohols or silicones or oils.
Cause means (a) a material violation of the Galleria Groups generally applicable written employment rules or policies (including a violation of applicable Law
in the course of employment and insubordination as described in such rules and policies), (b) a material breach of a fiduciary duty, (c) a conviction of, or a plea of guilty or
nolo contendere to, a crime for which a custodial sentence may be applied or (d) a material failure to perform his or her duties (other than any such failure resulting from
the Continuing Employees good faith effort to perform his or her duties); provided , however , that Cause specifically excludes redundancy, surplus enrollment,
restructuring of the Galleria Group or its operations or any other economic related reasons. Parent agrees that any termination of employment by Acquiror, SplitCo or any
of their Subsidiaries of a Continuing Employee for Cause will be final and not subject to challenge by Parent.
Certificate of Merger has the meaning set forth in Section 2.04(b) .
Choice Employee means an In-Scope Employee who is identified as a Choice Employee on Section 6.01 of the Parent Disclosure Letter, as it may be updated
from time to time, or who is designated as a Choice Employee pursuant to Section 5.01(b)(xiv)(B) .
Claims Notice has the meaning set forth in Section 9.05(b)(i) .
Class A Common Stock means the Class A Common Stock, par value $0.01 per share, of Acquiror.
Class B Common Stock means the Class B Common Stock, par value $0.01 per share, of Acquiror.
Clean-Up Spin-Off has the meaning set forth in the recitals.
Closing has the meaning set forth in Section 2.06 .
130
Closing Date has the meaning set forth in Section 2.06 .

Code means the Internal Revenue Code of 1986, as amended.
Coexistence Agreement means a Coexistence Agreement in substantially the form attached hereto as Exhibit P . From and after the Business Transfer Time, the
Coexistence Agreement will refer to such agreement executed and delivered pursuant to this Agreement, as amended or modified in accordance with its terms.
Color Products means products that either (a) utilize oxidative dye chemistry along with dyes for the purpose of changing the color of human hair or (b) contain
one or more direct dye materials for the purpose of changing the natural color of human hair, excluding in the case of clause (b), Care Products and Styling Products.
Commencement Date means the time that (1) the Commission has indicated (which indication may be oral) that it is prepared to declare the SplitCo Form 10/S-4
effective and (2) if an Exchange Offer is being undertaken, (A) the Commission has indicated (which indication may be oral) that it is prepared to declare the Acquiror
Form S-4 effective and (B) the Parent is prepared to commence the Exchange Offer in compliance with the terms of this Agreement.
Commercially Reasonable Efforts means, with respect to the efforts to be expended by a Party with respect to any objective under this Agreement, reasonable,
diligent good faith efforts to accomplish such objective as such Party would normally use to accomplish a similar objective as expeditiously as reasonably possible under
similar circumstances exercising reasonable business judgment, it being understood and agreed that such efforts will include the exertion of efforts and utilization of
resources that would be used by such Party in support of one of its own wholly owned businesses; provided , however , that Commercially Reasonable Efforts will not
require a Party (a) to make non-de minimis payments to unaffiliated third parties (except as set forth in this Agreement), to incur non-de minimis Liabilities to unaffiliated
third parties or to grant any non-de minimis concessions or accommodations unless the other Party agrees to reimburse and make whole such Party to its reasonable
satisfaction for such Liabilities, concessions or accommodations requested to be made by the other Party (such reimbursement and make whole to be made promptly after
the determination thereof following the Closing or, with respect to items incurred after the Closing, promptly thereafter), (b) to violate any Law or (c) except with respect to
the consummation of the Galleria Financing or the Acquiror Financing, to initiate any litigation or arbitration.
Commission means the Securities and Exchange Commission.
Compensation and Benefit Plans means all written (a) salary, bonus, vacation, deferred compensation, pension, retirement, profit-sharing, thrift, savings,
overtime, employee stock ownership, stock bonus, stock purchase, restricted stock, stock option, equity-based, incentive, retention, severance or change-in-control plans or
other similar plans, policies, arrangements or agreements, (b) employment agreements, (c) medical, dental, disability, health and life insurance plans, sickness benefit plans
and (d) other employee benefit and fringe benefit plans, policies, arrangements or agreements and each employee benefit plan as defined in Section 3(3) of ERISA
(whether or not subject to ERISA), in the case of each of clauses (a) through (d), sponsored,
131
maintained or contributed to by Parent or its ERISA Affiliates (i) for the benefit of any Galleria Business Employees or any of their beneficiaries or (ii) pursuant to which
Acquiror or any of its Subsidiaries would have any Liability subsequent to the Closing in respect of periods on or prior to the Closing, excluding in the case of clauses (i)
and (ii) any plans, policies, arrangements or agreements not sponsored by Parent or any of its Subsidiaries to which contributions by an employer are mandated by a
Governmental Authority or by law, rules, regulations, orders or decrees.
Compensation Consultant Process has the meaning set forth in Section 6.04(d) .
Compensation Gap has the meaning set forth in Section 6.04(d) .
Compensation Gap Payment has the meaning set forth in Section 6.04(d) .
Confidential Information has the meaning set forth in Section 5.22(a) .
Confidentiality Agreement means the Non-Disclosure Agreement, dated November 14, 2014, between Parent and an Affiliate of Acquiror.
Consents means any consents, waivers or approvals from, or notification requirements to, or authorizations by, any third parties.
Consolidated Tax Return means any Tax Returns with respect to any federal, state, provincial, local or foreign income Taxes that are paid on an affiliated,
consolidated, combined, unitary or similar basis and that include one or more Galleria Entities, on the one hand, and Parent or any of its Affiliates (other than any of the
Galleria Entities), on the other hand.
Continuation Period has the meaning set forth in Section 6.04(a) .
Continuing Employee has the meaning set forth in Section 6.02(b) .
Contracts means any contract, agreement, lease, sublease, license, sales order, purchase order, loan, credit agreement, bond, debenture, note, mortgage,
indenture, guarantee, undertaking, instrument, arrangement, understanding or other commitment, whether written or oral, that is binding on any Person or any part of its
property under applicable Law.
Convey has the meaning set forth in Section 1.02 . Variants of this term such as Conveyance will have correlative meanings.
Copyrights has the meaning set forth in the definition of Intellectual Property .
Covered Color Cosmetics Products means lip color, lipstick (excluding lip balm), lip liner, lip gloss, lip stain, nail polish, mascara, eye liner, eye shadow, eye
pencil, brow pencil products which are intended to be applied to the human face or nails primarily for the purpose of temporarily altering the visual appearance of the skin
or nails by adding color until such products are removed and without the primary purpose of affecting the bodys structure or functions.
Covered Expenses has the meaning set forth in Section 10.02(e) .
132
Covered Fine Fragrance Products means concentrated, volatile, hydroalcoholic liquids that are (a) solely intended for use on the human body to impart an
agreeable, attractive and/or pleasant smell, (b) are sold in an individual non-pressurized container and (c) are sold and labeled as a perfume, eau de parfum, eau de toilette,
eau de cologne or cologne. Notwithstanding the foregoing, the definition of Covered Fine Fragrance Products does not include (1) colognes sold under any of the Parent
Groups brands under which colognes are sold as of the date hereof and (2) body sprays sold under any of the Parent Groups brands as of the date hereof.
Covered Salon Products means Care Products or Styling Products sold directly (or indirectly at the direction of a member of the Parent Group through an agent
of any member of the Parent Group) to Salons.
Cut-Off Date means the date that is the last Business Day of the month that is the month prior to the month in which the anticipated Closing Date occurs (for
example, if the Closing Date is expected to be June 30, 2016, then the Cut-Off Date would be May 31, 2016).
Cut-Off Date Adjustment Statement has the meaning set forth in Section 2.15(a) .
Cut-Off Date Adjustment Statement Format means the document attached hereto as Exhibit G .
Cut-Off Date Working Capital means the amount of Working Capital as of the Cut-Off Date, calculated in accordance with Section 2.15 . For purposes of
calculating the Cut-Off Date Working Capital, the Liabilities in respect of items that would otherwise be included in Working Capital but that are the responsibility of the
Acquiror under the cost-sharing provisions of this Agreement (including Section 10.02 ) will not be included in the calculation.
Debt Financing Sources means the Persons that have committed to provide of have otherwise entered into agreements (including the Galleria Commitment
Letter or the Acquiror Commitment Letter, as applicable), in each case, in connection with the Galleria Financing or the Acquiror Financing (as applicable) or any other
financing in connection with the transactions contemplated hereby, and any joinder agreements, indentures or credit agreements entered into pursuant thereto, including the
lenders party to the Galleria Commitment Letter or the Acquiror Commitment Letter, as applicable, together with their Affiliates and any of their respective former, current
or future general or limited partners, direct or indirect stockholders, managers, members, Affiliates, officers, directors, employees, agents, representatives, successors and
assigns.
Delayed Transfer Employee has the meaning set forth in Section 6.02(d) .
Deliberate Breach means (a) a material breach of a representation or warranty that the Party making the representation or warranty had Knowledge was false at
the time such representation or warranty was made or (b) a material breach of a covenant by a Party where such Party had Knowledge at the time that the action so taken or
omitted to be taken by such Party constituted a breach of such covenant.
Designs has the meaning set forth in the definition of Intellectual Property.
133
DGCL means the General Corporation Law of the State of Delaware.

Diamond Technology means all Technology that is owned by a member of the Parent Group and that covers the proprietary blend of materials referred to
internally by the Parent Group as the Diamond 3-ingredient cocktail, including the formulation for such blend.
Direct Claims has the meaning set forth in Section 9.05(a) .
Disclosing Party has the meaning set forth in Section 5.22(b)(iii)(A) .
Disclosure Date means, in respect of the relevant Acquiror SEC Event, the earlier of (1) the date on which such event is publicly disclosed, (2) the date on which
there are widely publicized rumors or other similar market speculation of the occurrence of the event or (3) in respect of the events referenced in clause (ii) of the definition
of Acquiror SEC Event, the date on which the relevant filing was required to be filed with the Commission (after giving effect to any extension provided pursuant to Rule
12b-25 under the Exchange Act).
Discount Customers means TJ Maxx, Big Lots, Marshalls and Burlington Coat Factory.
Disposition has the meaning set forth in Schedule 1.09 .
Disposition Event has the meaning set forth in Schedule 1.09 .
Dispute has the meaning set forth in Section 10.15 .
Dispute Escalation Notice has the meaning set forth in Section 10.15 .
Distribution has the meaning set forth in the recitals.
Distribution Date means, as applicable (i) in the event that Parent elects to effect the Distribution in the form of a One-Step Spin-Off, the date selected by the
Board of Directors of Parent or its designee for the distribution of SplitCo Common Stock to Parent shareholders in connection with the One-Step Spin-Off and (ii) in the
event that Parent elects to effect the Distribution in the form of an Exchange Offer, the date of the initial transfer of SplitCo Common Stock to Parent shareholders in
connection with the Exchange Offer, in accordance with the terms and conditions of the Exchange Offer as determined by Parent in its sole discretion and disclosed in the
SplitCo Form 10/S-4.
Effective Time has the meaning set forth in Section 2.04(b) .
Employing Entity has the meaning set forth in Section 6.02(b) .
End Date has the meaning set forth in Section 8.01(b)(i) .
Enforceability Exception has the meaning set forth in Section 3.02 .
134
Environmental Claim means any Action by any Person alleging or that may reasonably be expected to result in Liability (including Liability for investigatory
costs, cleanup costs, governmental oversight or response costs, natural resource damages, fines or penalties) arising out of, based on, resulting from or relating to any
Environmental Conditions or any noncompliance with any Environmental Laws.
Environmental Conditions means the presence in the environment, including the soil, groundwater, surface water or ambient air, of any Hazardous Materials at a
level which exceeds the applicable standard or threshold under applicable Environmental Law or otherwise requires investigation or remediation (including investigation,
study, health or risk assessment, monitoring, removal, treatment or transport) under any applicable Environmental Laws.
Environmental Laws means all Laws of any Governmental Authority that relate to pollution, the protection of the environment and natural resources (including
ambient air, surface water, ground water, land surface or subsurface strata) or the effect of the environment on human health and safety, including Laws or any other
binding legal obligation in effect now or in the future relating to the Release of Hazardous Materials, or otherwise relating to the treatment, storage, disposal, transport or
handling of Hazardous Materials, or to the exposure of any individual to a release of Hazardous Materials.
Equivalent Equity Value means, with respect to a Continuing Employee, an amount equal to the grant date value of the most recent annual equity-based award
provided by Parent and its Subsidiaries to such employee immediately prior to the Closing or in the case of a Continuing Employee at or above Band 4 level immediately
prior to the Closing who has not yet received an annual equity-based award from Parent and its Subsidiaries because he or she was newly hired into such Band or newly
promoted into a new Band level, the median target grant date value applicable for the Continuing Employees Band level and geographical location under Parents
compensation policies immediately prior to the Closing.
ERISA means the Employee Retirement Income Security Act of 1974.
ERISA Affiliate means, with respect to an entity, any trade or business (whether or not incorporated) (a) under common control (within the meaning of Section
4001(b)(1) of ERISA) with such entity or (b) which, together with such entity, is treated as a single employer under Section 414(t) of the Code.
Exchange Act means the Securities Exchange Act of 1934.
Exchange Agent has the meaning set forth in Section 2.08(b) .
Exchange Fund has the meaning set forth in Section 2.08(b) .
Exchange Offer has the meaning set forth in the recitals.
Exchange Ratio has the meaning set forth in Section 2.07(b) .
Excluded Assets has the meaning set forth in Section 1.05(b) .
135
Excluded Employee means any employee of Parent or one of its Affiliates listed or described on Section 11.01(d) of the Parent Disclosure Letter.
Excluded IP Assets means (a) all UPC, EAN codes, IP addresses and any other codes or numbers that contain Parent Names, Marks and identifiers, (b) any
Intellectual Property utilized for the provision of any of the services under the Transition Services Agreement, (c) any Intellectual Property utilized for the provision of any
of the services set forth on the annex attached to Section 3.14 of the Parent Disclosure Letter, (d) the Excluded Technologies and (e) the Trademarks P&G and Procter &
Gamble, similar Trademarks and any other Trademark that includes the name of Parent or any of its Affiliates (excluding the Trademarks set forth on Section 1.05(a)(vii)
of the Parent Disclosure Letter).
Excluded Liabilities has the meaning set forth in Section 1.06(b) .
Excluded Technologies means all Intellectual Property to the extent related to the Technologies set forth on Section 1.05(b)(ii) of the Parent Disclosure Letter.
Exclusive Parent Ancillary Fragrances has the meaning set forth in Section 3.19(b) .
Exclusive Parent Perfume Oils has the meaning set forth in Section 3.18(b) .
Exclusive Third-Party Ancillary Fragrances has the meaning set forth in Section 3.19(a) .
Exclusive Third-Party Perfume Oils has the meaning set forth in Section 3.18(a) .
Existing Ancillary Fragrance Supplier has the meaning set forth in 3.19(a) .
Existing Parent Business means the Parent Groups business, as conducted as of the date hereof, of sourcing, manufacturing, development, advertising,
promotion, sale, distribution or marketing of any products sold under any of the Parent Groups brands that exist as of the date hereof (excluding the Galleria Business),
including (a) the Vidal Sassoon-branded academies in China owned or leased by Parent, (b) products sold under Parents OLAY or SK-II brands (including foundation,
primer, beauty or blemish balms, color correcting creams, daily defense creams and concealer products) and (c) Parents innovation project code-named Project
Dreamworks.
Existing Perfume Oil Suppliers has the meaning set forth in Section 3.18(a) .
Expatriate Employee has the meaning set forth in Section 6.04(g) .
Expatriate Package has the meaning set forth in Section 6.04(g) .
Final Determination has the meaning set forth in the Tax Matters Agreement.
Final Retained Business Cut-Off Date means the date on which all of the Retained Businesses have been finally identified as provided in Schedule 1.09 , unless
the Parties agree otherwise.
136
Financial Statements has the meaning set forth in Section 3.10(d) .

Fraud means a knowing, actual and deliberate fraud in the making of, and with respect to material facts in, the representations and warranties set forth in this
Agreement, which in each case satisfies all of the elements of common law fraud under applicable Law.
Full Year Financial Statements has the meaning set forth in Section 3.10(d) .
Fully Diluted Basis means, in each case as of the date on which the Galleria Stock Amount is determined:
(a)
the aggregate number of shares of Class A Common Stock and Series A Preferred Stock that are outstanding on such date, plus
(b) the aggregate number of Acquiror Equity Interests, other than Series A Preferred Stock, that are outstanding on such date (including restricted stock units,
Phantom Units, Acquiror Options and any shares of Class B Common Stock that will be converted into Class A Common Stock as contemplated by the JAB Letter
Agreement) of any nature whatsoever, whether contingent, vested or unvested, or otherwise (and without giving effect to any cashless exercise or similar features);
in each case other than, for the avoidance of doubt, the shares of the Acquiror New Common Stock issued or to be issued in the Merger. A sample calculation of Fully
Diluted Basis is attached hereto as Exhibit Q .
FY 13-14 NOS means the net outside sales of the relevant business for Parents fiscal year ended June 30, 2014, calculated in a manner consistent, where
applicable, with the practices utilized by Parent in connection with its preparation of its financial statements prepared in accordance with generally accepted accounting
practices and filed with the Commission.
GAAP means United States generally accepted accounting principles, as consistently applied by Parent (when referring to the Galleria Business) or Acquiror
(when referring to the Acquirors business).
GAAP Compliant Confirmation has the meaning set forth in the definition of Acquiror SEC Event .
Galleria Assets has the meaning set forth in Section 1.05(a) .
Galleria Books and Records has the meaning set forth in Section 1.05(a)(viii) .
Galleria Business means, collectively, the Caldera Business, the Kosmos Business and the Mercury Business.
Galleria Business Acquired Plan Assets has the meaning set forth in Section 1.05(a)(xiii) .
Galleria Business Acquired Plans has the meaning set forth on Schedule 1.05(a)(xiii) .
137
Galleria Business Employees has the meaning set forth in Section 6.02(a) .
Galleria Business MAE means any circumstance, change, development, condition or event that, individually or in the aggregate, has or would reasonably be
expected to have a material adverse effect on the business, financial condition or results of operations of the Galleria Business taken as a whole; provided , however , that
any such effect resulting or arising from or relating to any of the following matters will not be considered when determining whether there has been, or would reasonably be
expected to be, a Galleria Business MAE: (a) general conditions in the industry in which the Galleria Business competes, (b) any conditions in the United States general
economy or the general economy in other geographic areas in which the Galleria Business operates or proposes to operate, (c) political conditions, including acts of war
(whether or not declared), armed hostilities, acts of terrorism or developments or changes therein, (d) any conditions resulting from natural disasters, (e) compliance by
Parent with its covenants or obligations in this Agreement, (f) the failure of the financial or operating performance of the Galleria Business to meet internal forecasts or
budgets for any period prior to, on or after the date of this Agreement (but the underlying reason for the failure to meet such forecasts or budgets may be considered
provided that they do not fall under another clause of this proviso), (g) any action taken or omitted to be taken at the request or with the consent of Acquiror, (h) effects or
conditions resulting from the announcement of this Agreement or the transactions contemplated thereby, including any employee departures and any actions taken by
customers, suppliers, distributors, licensors or talent of the Galleria Business to terminate, discontinue or not renew their Contracts with the Galleria Business or otherwise
withhold any Consent necessary in respect of such Contracts, (i) any deterioration in the business, financial condition or results of operations of the Galleria Business that
occurs subsequent to the date of this Agreement and prior to the Closing Date, except that such deterioration will be considered to the extent it arises out of any (1) breach
by Parent of its covenants under this Agreement, (2) extraordinary event of a nature described in clauses (c) or (d) (but only to the extent that such extraordinary event
disproportionately affects the Galleria Business as compared to similarly situated businesses operating in the markets in the United States and other geographic areas in
which the Galleria Business operates) or (3) a product recall required under applicable Law (but only to the extent such product recall disproportionately affects the Galleria
Business as compared to similarly situated businesses operating in the United States and other geographic areas in which the Galleria Business operates), or (j) changes in
applicable Laws or GAAP; provided , further , that with respect to clauses (a), (b), (c), (d) or (j), such matters will be considered to the extent that they disproportionately
affect the Galleria Business as compared to similarly situated businesses generally operating in the United States and other geographic areas in which the Galleria Business
operates. All references to the Galleria Business within this definition of Galleria Business MAE will be deemed to exclude any Retained Business.
Galleria Commitment Letter has the meaning set forth in Section 5.12(a) .
Galleria Contracts means the following Contracts to which Parent or any member of Parent Group is a Party or by which it or any of its Assets is bound, except
for any such Contract that is explicitly retained by Parent or any member of the Parent Group pursuant to any provision of this Agreement or any Ancillary Agreement: (a)
any Contract identified on Section 3.08(a) of the Parent Disclosure Letter and (b) any other Contract that primarily relates to the Galleria Business (or, in
138
the case of the Non-Color Caldera Business portion of the Galleria Business, exclusively relates to the Non-Color Caldera Business), other than those terminated pursuant
to Section 1.07 .
Galleria Credit Documents means the credit agreement and related agreements and documents to be prepared and entered into as contemplated by the Galleria
Commitment Letter.
Galleria Credit Facility has the meaning set forth in Section 1.13(b) .
Galleria Debt Expenses has the meaning set forth in Section 10.02(d) .
Galleria Entities has the meaning set forth in Section 1.05(a)(iv) .
Galleria Entity Interests has the meaning set forth in Section 1.05(a)(iv) .
Galleria Entity Structuring has the meaning set forth in Section 5.21(g) .
Galleria Entity Structuring Step Plan has the meaning set forth in Section 5.21(g) .
Galleria Equity Interests has the meaning set forth in Section 3.04(a) .
Galleria Facilities has the meaning set forth in Section 1.05(a)(iii) .
Galleria Financing means the receipt of funds under the Galleria Credit Facility as contemplated by Section 1.13(b) .
Galleria Group means SplitCo and each of its Subsidiaries. Each of the Galleria Entities will be deemed to be members of the Galleria Group as of the Business
Transfer Time.
Galleria Group Plans has the meaning set forth in Section 6.03(a) .
Galleria Inventory has the meaning set forth in Section 1.05(a)(ii) .
Galleria IP Assets has the meaning set forth in Section 1.05(a)(vii) .
Galleria Leave Plan has the meaning set forth in Section 6.04(f) .
Galleria Liabilities has the meaning set forth in Section 1.06(a) .
Galleria Material Contracts has the meaning set forth in Section 3.08(a) .
Galleria Software has the meaning set forth in Section 1.05(a)(x) .
Galleria Stock Amount means a number of shares of Acquiror New Common Stock equal to the product of (i) thirteen twelfths (13/12) and (ii) the Fully Diluted
Basis as of the latest practicable day prior to the Commencement Date. For illustrative purposes only, if the Fully Diluted Basis of Acquiror Common Stock on the latest
practicable day prior to the Commencement Date was 397,124,277 shares, then the Galleria Stock Amount would be calculated as follows: (13 12) * 397,124,277 =
430,217,967.
139
Galleria Stock Issuance has the meaning set forth in Section 1.13(a)(i) .
Galleria Transfer means the contribution of the Galleria Assets by Parent to SplitCo in partial consideration for the Galleria Stock Issuance, the distribution to
Parent of the Recapitalization Amount and the assumption of the Galleria Liabilities, in each case, in accordance with the requirements of this Agreement.
Galleria Transfer Documents has the meaning set forth in Section 1.11 .
German Inventorship Laws means Germanys Employee Inventions Act (Gesetz ber Arbeitnehmererfindungen (ArbnErfG) ).
Goods in Transit means goods that have left a Parent site and were recorded by Parent as sales in its accounting systems, but that have not been received by
customers (and, because the title and risk of loss of the goods only transfers to the customer when received for these specific orders, therefore cannot be reflected as sales in
accordance with GAAP). For purposes of this Agreement, Goods in Transit will be calculated in the same manner as calculated in the Audited Financial Statements.
Governmental Approvals means any notices, reports or other filings to be made to, or any Consents, registrations, permits, orders, clearances, terminations or
expirations of waiting periods or authorizations to be obtained from, any Governmental Authority, including the Antitrust Approvals.
Governmental Authority means any federal, state, local, provincial, foreign or international court, tribunal, judicial or arbitral body, government, department,
commission, board, bureau, agency, official or other regulatory, administrative or governmental authority or any national securities exchange.
Governmental Permits means any licenses, registrations, permits, orders, clearances, or other authorizations of any Governmental Authority.
Group means the Parent Group, the Acquiror Group or the Galleria Group, as the context requires.
Hazardous Materials means chemicals, pollutants, contaminants, wastes, toxic substances, radioactive and biological materials, hazardous substances, asbestos
and asbestos-containing materials, petroleum and petroleum products or any fraction thereof, including such substances referred to by such terms as defined in any
Environmental Laws or any other substance or material that is regulated by, or may form the basis for liability under, any Environmental Laws.
HSR Act has the meaning set forth in Section 3.03 .
Identified Jurisdictions has the meaning set forth in Section 5.02(b) .
Indebtedness means and includes as to any Person (a) indebtedness for borrowed money or indebtedness issued or incurred in substitution or exchange for
indebtedness for borrowed money,
140
(b) amounts owing as deferred purchase price for property or services, (c) indebtedness evidenced by any note, bond, debenture, mortgage or other debt instrument or debt
security, (d) obligations or commitments to repay deposits or other amounts advanced by and owing to third parties, (e) net payment obligations under any interest rate,
currency or other hedging agreement, (f) obligations of such Person as lessee under leases that have been, or should be, in accordance with GAAP, recorded as capital
leases or (g) guarantees or other contingent liabilities (including so called take-or-pay or keep-well agreements) with respect to any indebtedness, obligation, claim or
liability of any other Person of a type described in clauses (a) through (f) above.
Indemnifying Party means any Party which may be obligated to provide indemnification to an Indemnitee pursuant to Article IX or any other section of this
Agreement.
Indemnitee means any Person which may be entitled to indemnification from an Indemnifying Party pursuant to Article IX or any other section of this
Agreement.
Information means information in written, oral, electronic or other tangible or intangible forms, stored in any medium, including studies, reports, records, books,
Contracts, instruments, surveys, discoveries, ideas, concepts, know-how, techniques, designs, specifications, drawings, blueprints, diagrams, models, prototypes, samples,
flow charts, data, computer data, disks, diskettes, tapes, computer programs or other software, marketing plans, customer names, communications by or to attorneys
(including attorney-client privileged communications), memos and other materials prepared by attorneys or under their direction (including attorney work product), and
other technical, financial, employee or business information or data, but in any case excluding back-up tapes.
Information Statement has the meaning set forth in Section 5.08 .
In-Scope Employees means (a) any employee of Parent or its Subsidiaries whose employment with the Parent Group is 50% or more dedicated to the Adjusted
Galleria Business as of the date of this Agreement and as of immediately prior to the Closing, (b) any employee of Parent or its Subsidiaries hired or transferred into the
Adjusted Galleria Business after the date of this Agreement in accordance with Section 5.01(b)(xii) or in connection with the implementation of the Restructuring, the
Transition Plan, or the other transactions contemplated by this Agreement if such employees employment with the Parent Group is 50% or more dedicated to the Adjusted
Galleria Business as of the date of such hire or transfer and as of immediately prior to the Closing, (c) any Plant/DC Employee or (d) any other employee of Parent or its
Subsidiaries that shall be mutually agreed upon by Parent and Acquiror and, in the case of (a), (b) and (c) above, is (i) on active status as an employee or (ii) is on approved
leave of absence, disability or long-term inactive status, but excluding, in the case of (a), (b), (c) or (d) above, any Excluded Employee.
Intellectual Property means, in any and all jurisdictions throughout the world, all (a) patents, patent applications, inventors certificates, utility models, statutory
invention registrations, and other indicia of ownership of an invention, discovery or improvement issued by an Governmental Authority, including reissues, divisionals,
continuations, continuations-in-part, extensions, reexaminations and other pre-grant and post-grant forms of the foregoing (collectively, Patents ), (b) trademarks, service
marks, trade dress, slogans, logos, symbols, trade names, brand names and other identifiers of source or goodwill recognized by any Governmental Authority, including
141
registrations and applications for registration thereof and including the goodwill symbolized thereby or associated therewith (collectively, Trademarks ), and Internet
domain names and associated uniform resource locators and social media addresses and accounts, (c) copyrights, whether in published and unpublished works of
authorship, registrations, applications, renewals and extensions therefor, mask works, and any and all similar rights recognized in a work of authorship by a Governmental
Authority (collectively, Copyrights ), (d) any trade secret rights in any inventions, discoveries, improvements, trade secrets and all other confidential or proprietary
Information (including know-how, data, formulas, processes and procedures, research records, records of inventions, test information, and market surveys), and all rights to
limit the use or disclosure thereof (collectively, Trade Secrets ), (e) registered and unregistered design rights (collectively, Designs ), (f) rights of privacy and publicity
and (g) any and all other intellectual or industrial property rights recognized by any Governmental Authority under the Laws of any country throughout the world.
Intended Tax-Free Treatment means that (i) the Galleria Transfer, taken together with the Distribution, qualifies as a tax-free reorganization pursuant to Section
368(a)(1)(D) of the Code, (ii) the Distribution, as such, qualifies as a distribution of SplitCo Common Stock to Parent shareholders pursuant to Section 355 of the Code,
pursuant to which no gain or loss should be recognized for U.S. federal income tax purposes and (iii) the Merger qualifies as a tax-free reorganization pursuant to Section
368(a) of the Code pursuant to which no gain or loss will be recognized by SplitCo shareholders for U.S. federal income tax purposes, except to the extent of cash received
in lieu of fractional shares.
Intercompany Accounts has the meaning set forth in Section 1.07(b) .
IRS means the United States Internal Revenue Service.
JAB Letter Agreement has the meaning given to such term in the Recitals.
Knowledge means, in the case of Acquiror, the knowledge of each of the Persons listed on Section 11.01(a) of the Acquiror Disclosure Letter as of the date of
the representation after inquiry deemed reasonable by each such Person, and, in the case of Parent, the knowledge of each of the Persons listed on Section 11.01(a) of the
Parent Disclosure Letter as of the date of the representation after inquiry deemed reasonable by each such Person.
Kosmos Brands means the CoverGirl and Max Factor brands owned by Parent and its Subsidiaries (but excluding the Max Factor Gold brand).
Kosmos Business means Parents business of sourcing, manufacturing, marketing, selling, distributing and developing (a) products intended to be applied to the
human body for altering the appearance without affecting the bodys structure or functions, including lip color, lipstick, lip liner, lip gloss, lip stain, foundations (including
liquid, solid, semi-solid and powder foundations), powder make-up, blushes, concealer, primer, bronzer, mascaras, eye shadows, eye liners and eye pencils, brow pencils,
nail polish and face contouring creams, sticks and lotions, (b) products intended to remove cosmetics and makeup products from the human body, including makeup
removers for the eyes, face and lips, (c) products intended to apply cosmetics and makeup products to the human
142
body, including eye shadow applicators, powder puffs, sponge puffs, blush brushes, powder brushes and other brushes and tools designed for the application of cosmetics
and makeup products and (d) products intended to enhance the usefulness or longevity of cosmetics and makeup products (including eye and lip pencil sharpeners), in each
case, marketed under the Kosmos Brands.
Law means any statute, law, ordinance, regulation, rule, code or other requirement of, or Order issued by, a Governmental Authority.
Leased Real Property has the meaning set forth in Section 3.16(a) .
Liabilities means all debts, liabilities, guarantees, assurances and commitments, whether fixed, contingent or absolute, asserted or unasserted, matured or
unmatured, liquidated or unliquidated, accrued or not accrued, known or unknown, due or to become due, whenever or however arising (including whether arising out of
any Contract or tort based on negligence, strict liability or relating to Taxes payable by a Person in connection with compensatory payments to employees or independent
contractors) and whether or not the same would be required by generally accepted principles and accounting policies to be reflected in financial statements or disclosed in
the notes thereto.
Licensor has the meaning set forth in Schedule 1.09 .
LINC Facility means the Egham Innovation Center, located at Whitehall Lane in Egham (Surrey), United Kingdom (and sometimes referred to by Parent as the
London Innovation Center ).
Listed Customers means AAFES (Army and Air Force Exchange Services), NEXCOM (Navy Exchange Commissary) and physical stores operated by Sephora
USA, Inc., or its Affiliates, in China.
Litigation Conditions has the meaning set forth in Section 9.05(b)(ii) .
Localization Package has the meaning set forth in Section 6.04(h) .
Localized Employee has the meaning set forth in Section 6.04(h) .
Losses means liabilities, damages, penalties, judgments, assessments, losses, costs and expenses in any case, whether arising under strict liability or otherwise
(including reasonable attorneys fees and expenses); provided , however , that Losses will not include any punitive, exemplary, special or similar damages, indirect
damages, consequential damages that are not reasonably foreseeable, damages based on diminution in value or damages computed on a multiple of earnings, cash flow or
another financial measure, in each case, except to the extent awarded by a court of competent jurisdiction in connection with a Third-Party Claim.
Mercury Ancillary Products has the meaning set forth in the definition of Mercury Business .
Mercury Brands means each of following brands (and derivations thereof) which are licensed in by Parent or one of its Subsidiaries from a third party licensor:
Hugo Boss, Dolce &
143
Gabbana, Gucci, Lacoste, Alexander McQueen, Stella McCartney, James Bond, Bruno Banani, Christina Aguilera, Gabriela Sabatini, Mexx and Escada.
Mercury Business means Parents business of sourcing, manufacturing, packaging, marketing, selling, distributing, merchandising and developing the following:
(a) fine fragrance products, including parfum, eau de parfum, eau de toilette, after shave lotion and colognes in various presentations, in each case, marketed under a
Mercury Brand ( Mercury Fragrance Products ); (b) to the extent applicable, aftershave balm, bath oil, body cream, body spray, body lotion, body butter, body scrub,
body souffle, deodorant (aerosol, stick or vapor), hair mist, massage gel and shower gel that are sold separately or together with Mercury Fragrance Products under a
Mercury Brand ( Mercury Ancillary Products ); (c) to the extent applicable, creams, gels, cleansers, toners, serums and moisturizers to be applied to the skin, especially
the face or hands, marketed under either the Gucci or Dolce & Gabbana brand ( Mercury Skin Care Products ); and (d) to the extent applicable, products intended to be
applied to the human body for cleansing, beautifying or promoting attractiveness, including cosmetics for the face (including primer, foundation and pressed powder), lips
(including lipsticks, lip gloss and lip pencils), eyes (including mascara, eyeliner, eye shadow and eyebrow pencils) and nails (including nail polish), as well as relevant
applicators and accessories (including brushes and spatulas), in each case, marketed under either the Gucci or Dolce & Gabbana brand ( Mercury Cosmetic Products ).
Mercury Consents has the meaning set forth in Schedule 1.09 .
Mercury Cosmetic Products has the meaning set forth in the definition of Mercury Business.
Mercury Financial Statements has the meaning set forth in Section 3.10(a) .
Mercury Fragrance Products has the meaning set forth in the definition of Mercury Business .
Mercury License has the meaning set forth in Schedule 1.09 .
Mercury Skin Care Products has the meaning set forth in the definition of Mercury Business .
Merger has the meaning set forth in Section 2.04(a) .
Merger Consideration has the meaning set forth in Section 2.07(b) .
Merger Sub has the meaning set forth in the preamble.
Merger Sub Common Stock has the meaning set forth in Section 4.05(d) .
Minimum Condition has the meaning set forth in Section 7.03(e) .
Minimum Price Decline Requirement has the meaning set forth in the definition of Acquiror SEC Event .
144
Non-Color Caldera Business means the Caldera Business but excluding the (i) Retail Color Business and (ii) Parents business of sourcing, manufacturing,
marketing, selling, distributing and developing Color Products sold in the Salon Professional Channel.
Non-Exclusive Parent Ancillary Fragrances has the meaning set forth in Section 3.19(b) .
Non-Exclusive Third-Party Ancillary Fragrances has the meaning set forth in Section 3.19(a) .
Non-Hydroalcoholic Fragrances has the meaning set forth in Section 3.19(b) .
Non-Hydroalcoholic Products means the Mercury Ancillary Products, Mercury Skin Care Products and Mercury Cosmetic Products.
Non-Mercury Products means products of the Kosmos Business and products of the Caldera Business.
Non-Replacement Hire has the meaning set forth in Section 5.01(b)(xii) .
Non-US Continuing Employee has the meaning set forth in Section 6.02(b) .
NYSE means the New York Stock Exchange.
NYSE Composite Tape means the NYSE Composite Transactions Tape as reported by Bloomberg Financial Markets (or such other source as the Parties may
agree in writing).
One-Step Spin-Off has the meaning set forth in the recitals.
Order means any orders, judgments, injunctions, awards, decrees, writs or other legally enforceable requirement handed down, adopted or imposed by, including
any consent decree, settlement agreement or similar written agreement with, any Governmental Authority.
Ordinary Course means, with respect to an action taken by any Person, an action that is materially (a) consistent in nature, scope and magnitude with the past
practices of such Person and is taken in the ordinary course of the normal operations of such Person or (b) similar in nature, scope and magnitude to actions customarily
taken, without any separate or special authorization, in the ordinary course of the normal operations of other Persons that are in the same size and line of business as such
Person.
Original Proposal has the meaning set forth in Section 5.21(b) .
Other Operational Real Property has the meaning set forth in Section 3.16(a) .
Owned Real Property has the meaning set forth in Section 3.16(a) .
Parent has the meaning set forth in the preamble to this Agreement.
Parent Ancillary Fragrances has the meaning set forth in Section 3.19(b) .
145
Parent Awards has the meaning set forth in Section 6.01(b) .

Parent Cash Distribution has the meaning set forth in Section 1.13(c) .
Parent Common Stock has the meaning set forth in the recitals.
Parent Disclosure Letter means the disclosure letter delivered by Parent to Acquiror immediately prior to the execution of this Agreement.
Parent Group means Parent and each of its Subsidiaries, but excluding any member of the Galleria Group.
Parent Indemnitees means Parent, each member of the Parent Group and all Persons who are or have been stockholders, directors, partners, managers, managing
members, officers, agents, representatives or employees of any member of the Parent Group (in each case, in their respective capacities as such).
Parent Names and Marks has the meaning set forth in Section 5.17(a) .
Parent Out-of-Scope Products has the meaning set forth in Section 5.30(b)(iii) .
Parent Shared Technology License Agreement means a Parent Shared Technology License Agreement substantially in the form of Exhibit N-1 . From and after
the Business Transfer Time, the Parent Shared Technology License Agreement will refer to such agreement executed and delivered pursuant to this Agreement, as amended
or modified in accordance with its terms.
Parent Trademark License Agreement means a Parent Trademark License Agreement substantially in the form of Exhibit O-1 . From and after the Business
Transfer Time, the Parent Trademark License Agreement will refer to such agreement executed and delivered pursuant to this Agreement, as amended or modified in
accordance with its terms.
Parent Transfer Documents has the meaning set forth in Section 1.10 .
Partial Year Financial Statements has the meaning set forth in Section 3.10(d) .
Parties means Parent, SplitCo, Acquiror and Merger Sub.
Patent has the meaning set forth in the definition of Intellectual Property .
PBGC has the meaning set forth in Section 3.09(h) .
Perfume Oils has the meaning set forth in Section 3.18(b) .
Permitted Encumbrances means (a) Security Interests consisting of zoning or planning restrictions, easements, permits and other restrictions or limitations on the
use of real property or irregularities in title thereto which do not materially interfere with the use of the property in the Galleria Business, (b) Security Interests for current
Taxes, assessments or similar governmental
146
charges or levies not yet due or which are being contested in good faith and for which adequate accruals or reserves have been established on the Audited Financial
Statements, (c) mechanics, workmens, materialmens, carriers, repairers, warehousemens and similar other Security Interests arising or incurred in the Ordinary Course,
(d) with respect to Acquiror, Security Interests securing obligations pursuant to credit documents of Acquiror in connection with any financing or refinancing of Acquiror,
(e) liens on the Leased Real Property in favor of the landlord of such Leased Real Property, whether contractual, statutory or otherwise and (f) any Security Interest against
any landlords interest in the fee property that is subject to a Real Property Lease.
Person means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization or other entity or organization or a Governmental Authority.
Phantom Units has the meaning set forth in Section 4.05(b).
Physical Location means any structure that can be physically entered, including any structure or location that is separately located within a larger structure to the
extent it is independently owned or operated and held out to consumers as independent (but does not include separate aisles or sections within a structure that are part of the
larger facility and share common sales check-outs).
Plant/DC Employee means any employee of Parent or its Subsidiaries employed at Parents (i) manufacturing facilities located in (1) Cologne, Germany, (2)
Seaton, United Kingdom, (3) Hunt Valley, Maryland, (4) Nenagh, Ireland, (5) Sarreguemines, France (including the warehouse space located at this facility), (6)
Rothenkirchen, Germany, (7) Huenfeld, Germany, and (8) Dzerzhinsk, Russia, (ii) the distribution centers located in (1) Bournemouth, United Kingdom, and (2)
Weiterstadt, Germany and (iii) the warehouse space located at the Wella Athens Headquarters in Athens, Greece.
Potential Identified Jurisdictions has the meaning set forth in Section 5.02(b) .
Pre-Closing Period has the meaning set forth in Section 5.01(a) .
Privileged Communications has the meaning set forth in Section 5.14(a) .
Product means any Care Product, Color Product or Styling Product.
Professional means any individual who is a qualified, or in the bona fide business of performing work as a, hairdresser, cosmetologist, barber stylist or
esthetician.
Professional Store means (a) any Physical Location that requires a Regulated Professional to provide proof that the individual is a Regulated Professional or
operates a Salon that employs or rents booths to Professionals in order to purchase products or (b) any Beauty Store.
Proposed Amendment has the meaning set forth in Section 5.11 .
Qualifying Acquiror Takeover Proposal has the meaning set forth in Section 5.09(f)(ii) .
147
Qualifying Termination means (a) a termination by a member of the Galleria Group of the Continuing Employees employment other than for Cause or (b) a
termination by a Continuing Employee of his or her employment as determined in Section 6.04(b)(ii) ; provided , however , that with respect to any termination of
employment pursuant to clause (b), the employee must: (i) within 90 days following its occurrence, deliver to the Galleria Group a written explanation specifying the basis
for the employees termination of employment, (ii) give the Galleria Group an opportunity to cure its failure within 20 days following delivery of such explanation, and (iii)
provided that the Galleria Group has failed to cure its failure within such 20-day cure period, terminate employment within 20 days following the expiration of such cure
period.
Real Property has the meaning set forth in Section 3.17(a)(i) .
Real Property Interests means all interests in real property of whatever nature, including easements, whether as owner or holder of a Security Interest, lessor,
sublessor, lessee, sublessee or otherwise.
Real Property Leases has the meaning set forth in Section 3.16(a) .
Recapitalization has the meaning set forth in Section 1.13(b) .
Recapitalization Amount means $2,900,000,000; provided , however , that (a) if the Acquiror Average Price on the Trading Day which is two clear Trading
Days prior to either the date of the commencement of the Exchange Offer or the date of the distribution of the SplitCo Common Stock pursuant to a One-Step Spin-Off, as
applicable (such price, the Acquiror Collar Stock Price ) is greater than the Acquiror Base Stock Price, then the Recapitalization Amount will be reduced by an amount
equal to (i) (A) the Acquiror Collar Stock Price (provided that if such number is more than $27.06 per share, $27.06 per share will be used for this value) minus (B) the
Acquiror Base Stock Price, times (ii) the Galleria Stock Amount, and (b) if the Acquiror Collar Stock Price is less than the Acquiror Base Stock Price, then the
Recapitalization Amount will be increased by an amount equal to (i)(A) the Acquiror Base Stock Price minus (B) the Acquiror Collar Stock Price (provided that if such
number is less than $22.06 per share, $22.06 per share will be used for this value), times (ii) the Galleria Stock Amount. The Recapitalization Amount will be further
subject to adjustment as contemplated by Section 1.09 (including Schedule 1.09 ), Section 2.15 and Section 10.02 .
Receiving Party has the meaning set forth in Section 5.22(b) .
Record Date means, with respect to a One-Step Spin-Off or a Clean-Up Spin-Off, the close of business on the date to be determined by Parents Board of
Directors as the record date for determining shareholders of Parent entitled to receive shares of SplitCo Common Stock in such spin-off.
Record Holders means the holders of record of Parent Common Stock as of the close of business on the Record Date.
Refinanced Facility has the meaning set forth in Section 5.12(a) .
148
Registered Intellectual Property means any active Copyright registration or application for registration, Design registration or application for registration, Patent,
Trademark registration or application for registration, Internet domain name registration or social media address or account.
Regulated Professionals means Professionals that work in a jurisdiction that requires such individual to be licensed.
Release means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping or disposing into surface water,
groundwater, land surface or subsurface strata or ambient air (including the abandonment or discarding of barrels, containers and other closed receptacles containing any
Hazardous Materials).
Replacement Hire has the meaning set forth in Section 5.01(b)(xii) .
Representatives means with respect to any Person, such Persons and any of its Subsidiaries officers, employees, agents, advisors, directors and other
representatives.
Restricted Business has the meaning set forth in Section 5.30(a) .
Restricted Period has the meaning set forth in Section 5.30(a) .
Restructuring has the meaning set forth in Section 1.01(a) .
Restructuring Documents has the meaning set forth in Section 5.21(i) .
Restructuring Schedules has the meaning set forth in Section 5.21(g) .
Retail Channel means any source of sales (a) from any Physical Location that is not (i) a Salon (other than a Salon that is branded by reference to Frederic
Fekkai or located in China and branded Vidal Sassoon) or (ii) a Professional Store (other than a Beauty Store, Discount Customer or Listed Customer), including grocery
store, drug stores, department stores, warehouse clubs and all-purpose superstores, or (b) from any e-commerce, mail or catalogue that is not a Salon E-Commerce Site.
Retail Color Business has the meaning set forth in the definition of Caldera Business .
Retail Styling Business means Parents business of sourcing, manufacturing, marketing, selling, distributing and developing Styling Products for sale in the
Retail Channel that are branded under one of the Styling Marks.
Retail Styling Unaudited Financial Information has the meaning set forth in Section 3.10(f) .
Retained Business has the meaning set forth in Schedule 1.09 .
Retained Business Cut-Off Date means, in respect of any Retained Business, the date on which the related Mercury License becomes a Retained License as
provided in Schedule 1.09 .
149
Retained Contracts has the meaning set forth in Schedule 1.09 .

Retained Employee means any person who is not an In-Scope Employee but who would be an In-Scope Employee but for the provisions of Section 1.09
(including Schedule 1.09 ).
Retained Inventory has the meaning set forth in Schedule 1.09
Retained License has the meaning set forth in Schedule 1.09 .
Reverse Transitional Distribution Services Agreement has the meaning set forth in Schedule 1.09 .
Reverse Transitional Supply Agreement has the meaning set forth in Schedule 1.09 .
Salon means (a) any hairdresser salon, spa, beauty salon, barber shop or other Physical Location operated by, in whole or in part, employing or renting, leasing
or otherwise making available booths to one or more Professionals to provide services relating to hair care, coloring, cleansing, conditioning, cutting, perming, shampooing,
styling or other related services and (b) any licensed hairdresser, beauty or barber school that trains Professionals on their premises.
Salon E-Commerce Site means an electronic commerce website that is either (a) operated by a Salon or Professional Store for resale of Products sold to such
Salon or Professional Store or (b) operated for the sale of Products to a Salon or Professional Store.
Salon Professional Business has the meaning set forth in the definition of Caldera Business .
Salon Professional Channel means (a) the sale of Products to Salons, whether for use by Professionals or purchase by customers of the Salons, (b) the sale of
Products to Professional Stores, (c) the sale of Products via Salon E-Commerce Sites, (d) the sale to Listed Customers of the same Products sold to customers identified in
clause (a) above and (e) the sale to Discount Customers of existing inventory of Products of the Salon Professional Business that have been previously announced to Salons
and Professional Stores as discontinued.
Schedule TO has the meaning set forth in Section 5.08 .
SEC Filings has the meaning set forth in Section 5.08(b) .
Securities Act means the Securities Act of 1933.
Security Interest means, whether arising under any Contract or otherwise, any mortgage, security interest, pledge, lien, charge, claim, option, indenture, right to
acquire, right of first refusal, deed of trust, licenses to third parties, leases to third parties, security agreements, voting or other restriction, right-of-way, covenant, condition,
easement, encroachment, title defect, restriction on transfer or other encumbrance and other restrictions, conditions or limitations on the ownership, possession or use of any
real, personal, tangible or intangible property.
150
Series A Preferred Stock has the meaning set forth in Section 4.05(a) .
Shared Business Contracts means (a) the Contracts between Parent or its Affiliates, on the one hand, and unrelated third parties, on the other hand, that are not
primarily related to the Galleria Business (or, in the case of the Non-Color Caldera Business portion of the Galleria Business, exclusively related to the Non-Color Caldera
Business) and pursuant to which either (i) the Galleria Business received (including as accounts receivable) or paid (including as accounts payable) an aggregate amount of
at least $5,000,000 in the 12 month period ended June 30, 2014, or (ii) the Galleria Business received or would reasonably be expected to receive (including as accounts
receivable) or pay (including as accounts payable) an aggregate amount of at least $5,000,000 in any future 12 month period ended June 30, (b) the Galleria Business
receives material Intellectual Property rights which are not Excluded IP Assets and (c) the Contracts set forth on Section 3.08(b) of the Parent Disclosure Letter under
Shared Business Contracts; provided , however , that from and after any Retained Business Cut-Off Date, all references to the Galleria Business in this definition of
Shared Business Contracts shall be deemed to be references to the then-current Adjusted Galleria Business and any Shared Business Contract listed on Section 3.08(b) of
the Parent Disclosure Letter that does not relate to the Adjusted Galleria Business will be deemed to be automatically removed from Section 3.08(b) of the Parent
Disclosure Letter.
Shared Information means (a) all Information provided by any member of the Galleria Group to a member of the Parent Group prior to the Business Transfer
Time, (b) any Information in the possession or under the control of such respective Group that relates to the operation of the Galleria Business prior to the Business
Transfer Time and that the requesting Party reasonably needs (i) to comply with reporting, disclosure, filing or other requirements imposed on the requesting Party
(including under applicable securities and Tax Laws) by a Governmental Authority having jurisdiction over the requesting Party, (ii) for use in any other judicial,
regulatory, administrative or other proceeding or in order to satisfy audit, accounting, claims, regulatory, litigation or other similar requirements, in each case other than
claims or allegations that one Party to this Agreement has against the other, (iii) subject to the foregoing clause (ii) above, to comply with its obligations under this
Agreement or any Ancillary Agreement, or (iv) to the extent such Information and cooperation is necessary to comply with such reporting, filing and disclosure obligations,
for the preparation of financial statements or completing an audit, and as reasonably necessary to conduct the ongoing businesses of Parent or the Galleria Business (after
the removal of any Retained Business, as applicable), as the case may be, and (c) any Information that is reasonably necessary for the conduct of the Adjusted Galleria
Business (except for any information relating to performance ratings or assessments of employees of the Parent Group and Continuing Employees (including performance
history, reports prepared in connection with bonus plan participation and related data, other than individual bonus opportunities based on target bonus as a percentage of
base salary)).
Split Facilities means the Galleria Business manufacturing facilities in Mariscala, Mexico, and Bangkok, Thailand.
Split Plan Agreement means the Split Plan Agreement, entered into as of the date of this Agreement, as amended or modified in accordance with its terms.
Split Plan Costs has the meaning set forth in Section 5.27 .
151
SplitCo has the meaning set forth in the preamble.

SplitCo Common Stock has the meaning set forth in the recitals.
SplitCo Form 10/S-4 has the meaning set forth in Section 5.08 .
SplitCo Retained Business Technology License has the meaning set forth in Schedule 1.09 .
SplitCo Shared Technology License Agreement means a SplitCo Shared Technology License Agreement substantially in the form of Exhibit N-1 . From and
after the Business Transfer Time, the SplitCo Shared Technology License Agreement will refer to such agreement executed and delivered pursuant to this Agreement, as
amended or modified in accordance with its terms.
SplitCo Trademark License Agreement means a SplitCo Trademark License Agreement substantially in the form of Exhibit N-2 . From and after the Business
Transfer Time, the SplitCo Trademark License Agreement will refer to such agreement executed and delivered pursuant to this Agreement, as amended or modified in
accordance with its terms.
Stockholder Consent has the meaning set forth in Section 5.08(a) .
Store Room Inventory means the value of spare parts for machinery and equipment and items such as lubrication oils for machinery, cleaning materials and
supply items which are (a) consumed in the production process and (b) either (i) acquired for less than $5,000 or (ii) have an intended design life of less than 12 months.
Styling Marks means Wella, or any derivative of the Wella name (e.g., WellaFlex or Wella Forte), Silvikrin, Shockwaves, Londa and New Wave.
Styling Products means products designed to provide or maintain manageability or structure to or of human hair through the application of compositions
containing film forming polymers or solvents, applied to the hair using non-aerosol sprayable liquids, aerosol sprayable liquids, aerosol foams, gels, waxes or creams.
Subsidiary of any Person means another Person (other than a natural Person), of which such Person owns directly or indirectly (a) an aggregate amount of the
voting securities, other voting ownership or voting partnership interests to elect 50% of the Board of Directors or other governing body or (b) if there are no such voting
interests, 50% or more of the equity interests therein. For the avoidance of doubt, (i) Subsidiaries of Parent will include SplitCo and the Galleria Entities prior to the
Closing and (ii) Subsidiaries of Acquiror will include SplitCo and the Galleria Entities after the Closing.
Substitute Diamond Technology has the meaning set forth in Section 5.29 .
Surviving Corporation has the meaning set forth in Section 2.04(a) .
Surviving Transaction Agreement Items has the meaning set forth in Section 10.01 .
152
Target has the meaning set forth in Section 5.30(a) .

Target Working Capital Statement means the document attached hereto as Exhibit F .
Tax has the meaning set forth in the Tax Matters Agreement .
Tax Matters Agreement means the Tax Matters Agreement in substantially the form attached hereto as Exhibit H . From and after the Business Transfer Time,
the Tax Matters Agreement will refer to such agreement executed and delivered pursuant to this Agreement, as amended or modified in accordance with its terms.
Tax Return has the meaning set forth in the Tax Matters Agreement .
Third Party means any Person (including any Governmental Authority) who is not a member of the Parent Group or Acquiror Group (including after the
Closing, the Galleria Entities).
Third-Party Ancillary Fragrances has the meaning set forth in Section 3.19(a) .
Third-Party Claim has the meaning set forth in Section 9.05(b)(i) .
To-Be-Delivered Galleria Material Contracts has the meaning set forth in Section 5.23(a) .
Trade Secrets has the meaning set forth in the definition of Intellectual Property .
Trademarks has the meaning set forth in the definition of Intellectual Property .
Trading Day means any day on which there are sales of Acquiror Common Stock on the NYSE Composite Tape.
Transaction Announcement has the meaning set forth in Section 5.03 .
Transaction Documents means, collectively, this Agreement, the Ancillary Agreements and the Transfer Documents.
Transfer Documents has the meaning set forth in Section 1.11 .
Transferred Leave has the meaning set forth in Section 6.04(f) .
Transition Period has the meaning set forth in Section 5.17(a) .
Transition Plan has the meaning set forth in Section 5.21(a) .
Transition Services Agreement means a Transition Services Agreement in substantially the form attached hereto as Exhibit I . From and after the Business
Transfer Time, the Transition Services Agreement will refer to such agreement executed and delivered pursuant to this Agreement, as amended or modified in accordance
with its terms.
153
Unaudited Kosmos Financial Statements has the meaning set forth in Section 3.10(b) .
Unaudited Mercury Financial Statements has the meaning set forth in Section 3.10(a) .
Unaudited Salon Professional Financial Statements has the meaning set forth in Section 3.10(c) .
US Continuing Employee has the meaning set forth in Section 6.02(b) .
WARN Act has the meaning set forth in Section 6.08 .
Working Capital means the sum of the line item amounts specified under the caption Operating Assets of the Galleria Business in the Target Working Capital
Statement less the sum of the line item amounts specified as Operating Liabilities of the Galleria Business in the Target Working Capital Statement, calculated in the
same manner in which such amount was calculated in the Target Working Capital Statement, utilizing the same account classifications and accounting principles, policies
and practices used in the preparation of the Full Year Financial Statements, the Target Working Capital Statement and as set forth on Section 11.01(b) of the Parent
Disclosure Letter (the Accounting Principles ).
Working Capital Band Amount has the meaning set forth in Section 2.15(e) .
Working Capital Deficit has the meaning set forth in Section 2.15(a) .
Working Capital Excess has the meaning set forth in Section 2.15(a) .
Working Capital Target means the arithmetic average of the Working Capital of the Galleria Business as of the following dates: September 30, 2013, December
31, 2013, March 31, 2014, and June 30, 2014, as set forth in the Target Working Capital Statement (as so indicated on such statement, and prior to the adjustments
described below, $791,237,000), subject only to the following two adjustments:
(1) In the event that there are Retained Businesses, such four working capital amounts will be reduced as follows: (a) the inventory amounts attributable to the
Retained Businesses in the Inventory line of the quarter-end calculations in the Target Working Capital Statement will be removed and (b) other working capital line
items in each of the quarter-end calculations the Target Working Capital Statement will be reduced by a percentage equal to the FY 13-14 NOS of the Retained Businesses
divided by the total FY 13-14 NOS of the Galleria Business.
(2) After taking into the account the adjustments, if any, pursuant to clause (1) above, such four quarterly working capital amounts will be recalculated utilizing
the foreign exchange rates that are in effect as of the Cut-Off Date.
[ Signature Page Follows ]
154
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the day and year first above written.
By: _________________________________
Name:
Title:
GALLERIA CO.
By: _________________________________
Name:
Title:
COTY INC.
By: _________________________________
Name:
Title:
GREEN ACQUISITION SUB, INC.

By: _________________________________
Name:
Title:
EXHIBIT (4-1)
INDENTURE BETWEEN THE PROCTER & GAMBLE COMPANY AND DEUTSCHE BANK TRUST COMPANY AMERICAS

TO
Deutsche Bank Trust Company Americas,
Trustee
____________
Indenture
Dated as of September 3, 2009

____________

Certain Sections of this Indenture relating to
Sections 310 through 318, inclusive, of the
Trust Indenture Act of 1939
Trust Indenture
Act Sections
Indenture Sections
310(a)(1)..............................................................................................................................609
(a)(2)..............................................................................................................................609
(a)(3)............................................................................................................................. Not Applicable
(a)(4)............................................................................................................................. Not Applicable
(a)(5).............................................................................................................................609
(b)................................................................................................................................. 608
610
311(a).................................................................................................................................. 613
(b).................................................................................................................................. 613
312(a).................................................................................................................................. 701
702(a)
(b).................................................................................................................................. 702(b)
(c)................................................................................................................................. 702(c)
313(a).................................................................................................................................. 703(a)
(b).................................................................................................................................. 703(a)
(c).................................................................................................................................. 703(a)
(d).................................................................................................................................. 703(b)
314(a).................................................................................................................................. 704
(a)(4)............................................................................................................................. 101
1007
(b).................................................................................................................................. Not Applicable
(c)(1).............................................................................................................................. 102
(c)(2).............................................................................................................................. 102
(c)(3).............................................................................................................................. Not Applicable
(d).................................................................................................................................. Not Applicable
(e) .................................................................................................................................. 102
315(a).................................................................................................................................. 601
(b).................................................................................................................................. 602
(c) .................................................................................................................................. 601
(d).................................................................................................................................. 601
(e) .................................................................................................................................. 514
316(a).................................................................................................................................. 101
(a)(1)(A)........................................................................................................................ 502
512
(a)(1)(B)........................................................................................................................ 513
(a)(2).............................................................................................................................. Not Applicable
(b)...................................................................................................................................508
(c) ...................................................................................................................................104(c)
317(a)(1)............................................................................................................................. 503
(a)(2)...............................................................................................................................504
(b)...................................................................................................................................1003
318(a)...................................................................................................................................107
_______________
Note: This reconciliation and tie shall not, for any purpose, be deemed to be a part of the Indenture.
TABLE OF CONTENTS
Page
PARTIES............................................................................................................................................ 1 RECITALS OF THE
COMPANY...................................................................................................... 1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101.
SECTION 102.
SECTION 103.
SECTION 104.
SECTION 105.
SECTION 106.
SECTION 107.
SECTION 108.
SECTION 109.
SECTION 110.
SECTION 111.
SECTION 112.
SECTION 113.
SECTION 114.
Definitions...................................................................................................... 1
Compliance Certificates and Opinions.......................................................... 7
Form of Documents Delivered to Trustee...................................................... 8
Acts of Holders; Record Dates...................................................................... 8
Notices, Etc., to Trustee and Company.......................................................... 9
Notice of Holders; Waiver.............................................................................. 10
Conflict with Trust Indenture Act.................................................................. 10
Effect of Headings and Table of Contents..................................................... 10
Successors and Assigns.................................................................................. 10
Separability Clause........................................................................................ 10
Benefits of Indenture...................................................................................... 11
Governing Law............................................................................................... 11
Legal Holidays............................................................................................... 11
USA Patriot Act..............................................................................................11
ARTICLE TWO
SECURITY FORMS
SECTION 201.
SECTION 202.
SECTION 203.
SECTION 204.
SECTION 205.
Forms Generally.............................................................................................
Form of Face of Security................................................................................
Form of Reverse of Security..........................................................................
Form of Legend for Book-Entry Securities...................................................
Form of Trustees Certificate of Authentication............................................
11
12
14
17
17
ARTICLE THREE
THE SECURITIES
SECTION 301.
SECTION 302.
SECTION 303.
SECTION 304.
SECTION 305.
SECTION 306.
SECTION 307.
SECTION 308.
SECTION 309.
SECTION 310.
SECTION 311.
Amount Unlimited; Issuable in Series........................................................... 18

Denominations............................................................................................... 20
Execution, Authentication, Delivery and Dating........................................... 20
Temporary Securities..................................................................................... 21
Registration, Registration of Transfer and Exchange.................................... 22
Mutilated, Destroyed, Lost and Stolen Securities.......................................... 23
Payment of Interest; Interest Rights Preserved.............................................. 24
Persons Deemed Owners................................................................................25
Cancellation....................................................................................................25
Computation of Interest................................................................................. 26
CUSIP and ISIN Numbers............................................................................. 26
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401.
SECTION 402.
SECTION 403.
Satisfaction and Discharge of Indenture........................................................ 26

Application of Trust Money........................................................................... 27
Defeasance and Discharge of Securities of any Series.................................. 28
ARTICLE FIVE
REMEDIES
SECTION 501.
SECTION 502.
SECTION 503.
SECTION 504.
SECTION 505.
SECTION 506.
SECTION 507.
SECTION 508.
SECTION 509.
SECTION 510.
SECTION 511.
SECTION 512.
SECTION 513.
SECTION 514.
SECTION 515.
Events of Default........................................................................................... 29
Acceleration of Maturity; Rescission and Annulment................................... 30
Collection of Indebtedness and Suits for Enforcement by Trustee................ 31
Trustee May File Proofs of Claim.................................................................. 32
Trustee May Enforce Claims Without Possession of Securities.................... 32
Application of Money Collected.................................................................... 32
Limitation on Suits......................................................................................... 33
Unconditional Right of Holders to Receive Principal, Premium and
Interest............................................................................................................ 33
Restoration of Rights and Remedies.............................................................. 34
Rights and Remedies Cumulative.................................................................. 34
Delay or Omission Not Waiver...................................................................... 34
Control by Holders......................................................................................... 34
Waiver of Past Defaults..................................................................................35
Undertaking for Costs.................................................................................... 35
Waiver of Stay or Extension Laws................................................................ 35
ARTICLE SIX
THE TRUSTEE
SECTION 601.
SECTION 602.
SECTION 603.
SECTION 604.
SECTION 605.
SECTION 606.
SECTION 607.
SECTION 608.
SECTION 609.
SECTION 610.
SECTION 611.
SECTION 612.
SECTION 613.
SECTION 614.
Certain Duties and Responsibilities............................................................... 35

Notice of Defaults.......................................................................................... 36
Certain Rights of Trustee............................................................................... 36
Not Responsible for Recitals or Issuance of Securities................................. 37
May Hold Securities...................................................................................... 37
Money Held in Trust...................................................................................... 37
Compensation and Reimbursement............................................................... 37
Disqualification; Conflicting Interests........................................................... 38
Corporate Trust Required; Eligibility............................................................. 38
Resignation and Removal; Appointment of Successor.................................. 38
Acceptance of Appointment by Successor..................................................... 39
Merger, Conversion, Consolidation or Succession to Business..................... 40
Preferential Collection of Claims Against Company. ................................... 41
Appointment of Authenticating Agent........................................................... 41
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701.
SECTION 702.
SECTION 703.
SECTION 704.
Company to Furnish Trustee Names and Addresses of Holders.................... 42

Preservation of Information; Communications to Holders............................ 43
Reports by Trustee......................................................................................... 43
Reports by Company...................................................................................... 43
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801.
SECTION 802.
Company May Consolidate, Etc. Only on Certain Terms.............................. 44

Successor Substituted..................................................................................... 44
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901.
SECTION 902.
SECTION 903.
SECTION 904.
SECTION 905.
SECTION 906.
Supplemental Indentures Without Consent of Holders..................................

Supplemental Indentures with Consent of Holders.......................................
Execution of Supplemental Indentures..........................................................
Effect of Supplemental Indentures.................................................................
Conformity with Trust Indenture Act.............................................................
References in Securities to Supplemental Indentures....................................
45
46
47
47
47
47
ARTICLE TEN
COVENANTS
SECTION 1001.
SECTION 1002.
SECTION 1003.
SECTION 1004.
SECTION 1005.
SECTION 1006.
SECTION 1007.
SECTION 1008.
Payment of Principal, Premium and Interest.................................................

Maintenance of Office or Agency..................................................................
Money for Securities Payments to Be Held in Trust......................................
Limitation on Liens........................................................................................
Limitation on Sales and Leasebacks..............................................................
Defeasance of Certain Obligations................................................................
Statement by Officers as to Default...............................................................
Waiver of Certain Covenants.........................................................................
47
48
48
49
50
51
52
52
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101.
SECTION 1102.
SECTION 1103.
SECTION 1104.
SECTION 1105.
SECTION 1106.
SECTION 1107.
Applicability of Article.................................................................................. 52
Election to Redeem; Notice to Trustee...........................................................53
Selection by Trustee of Securities to Be Redeemed...................................... 53
Notice of Redemption.................................................................................... 53
Deposit of Redemption Price......................................................................... 54
Securities Payable on Redemption Date........................................................ 54
Securities Redeemed in Part.......................................................................... 54
ARTICLE TWELVE
SINKING FUNDS
SECTION 1201.
SECTION 1202.
SECTION 1203.
Satisfaction of Sinking Fund Payments with Securities................................ 55
Redemption of Securities for Sinking Fund................................................... 55
INDENTURE, dated as of September 3, 2009, between THE PROCTER & GAMBLE COMPANY, a corporation duly organized and existing under the laws of the
State of Ohio (herein called the Company), having its principal office at One Procter & Gamble Plaza, Cincinnati, Ohio 45202, and Deutsche Bank Trust Company
Americas, a New York banking corporation, having its principal corporate office at 60 Wall Street, MSNYC60-2710, New York, New York 10005, Attention: Trust &
Securities Services, as Trustee (herein called the Trustee).
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of its unsecured debentures, notes or
other evidences of indebtedness (herein called the Securities), to be issued in one or more series as in this Indenture provided.
All things necessary to make this Indenture a valid agreement of the Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Securities or of series thereof, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101.
Definitions.
For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires:
(1)
(2)
them therein;
(3)
indicated;
the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular;
all other terms used herein which are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to
the phrase in writing as used herein shall be deemed to include .pdf attachments and other electronic means of transmission, unless otherwise
(4)
all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting
principles, and, except as otherwise herein expressly provided, the term generally accepted accounting principles with respect to any
1
computation required or permitted hereunder shall mean such accounting principles as are generally accepted at the date of such computation; and
(5)
the words herein, hereof and hereunder and other words of similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
Certain terms used principally in Article Six, are defined in that Article.
Act, when used with respect to any Holder, has the meaning specified is Section 104.
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 the purposes of this definition, control when used with respect to any specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms controlling and controlled have
meanings correlative to the foregoing.
Attributable Debt means, as to any particular lease under which any Person is at the time liable, at any date as of which the amount thereof is to be determined, the
lesser of (i) the fair market value of the Principal Domestic Manufacturing Property sold and leased back at the time of entering into a sale and leaseback transaction as
defined in Section 1005 (as set forth in an Officers Certificate), and (ii) the total net amount of rent required to be paid by such Person under such lease during the
remaining term thereof, discounted from the respective due dates thereof to such date at the rate of 10% per annum compounded annually. The net amount of rent required
to be paid under any such lease for any such period shall be the amount of the rent payable by the lessee with respect to such period, after excluding amounts required to be
paid on account of maintenance and repairs, insurance, taxes, assessments, water rates and similar charges. In the case of any lease which is terminable by the lessee upon
the payment of a penalty, such net amount shall also include the amount of such penalty, but no rent shall be considered as required to be paid under such lease subsequent
to the first date upon which it may be so terminated.
series.
Authenticating Agent means any Person authorized by the Trustee pursuant to Section 614 to act on behalf of the Trustee to authenticate Securities of one or more
Board of Directors means either the board of directors of the Company or any duly authorized committee of that board.
Board Resolution means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of
Directors and to be in full force and effect on the date of such certification, and delivered to the Trustee. References to any matter in this Indenture being established in, by
or pursuant to a Board Resolution shall include actions taken pursuant to authority granted by one or more Board Resolutions.
Book-Entry Security means a Security bearing the legend specified in Section 204 evidencing all or part of a series of Securities, authenticated and delivered to
the Depository for such series or its nominee, and registered in the name of such Depository or nominee.
2
Business Day, when used with respect to any Place of Payment, means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in that Place of Payment are authorized or obligated by law or executive order to close, or as such term is otherwise specified with respect to a series of
Securities.
Commission means the Securities and Exchange Commission, as from time to time constituted, created under the United States Securities Exchange Act of 1934,
as amended (the Exchange Act), or, if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it
under the Trust Indenture Act, then the body performing such duties at such time.
Company means the Person named as the Company in the first paragraph of this instrument until a successor Person shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter Company shall mean such successor Person.
Company Request or Company Order means a written request or order signed in the name of the Company by its Chairman of the Board, Chief Executive
Officer, Chief Financial Officer, Chief Operating Officer, a Vice Chairman, a President or a Vice President, or an officer certified by an Assistant Secretary as having a
similar level of authority, and by its Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered to the Trustee.
Consolidated Net Tangible Assets means total assets of the Company, less net goodwill and other intangible assets, less total current liabilities (as set forth on the
most recent balance sheet of the Company and calculated based on positions as reported in the consolidated financial statements of the Company in accordance with
generally accepted accounting principles).
Corporate Trust Office means the office of the Trustee in the city of New York, New York, at which at any particular time its corporate trust business shall be
administered, which as of the date of this Indenture is - the address of the Trustee set forth in Section 105.
corporation means a corporation, association, company, joint-stock company or business trust.
Debt has the meaning specified in Section 1004.
Defaulted Interest has the meaning specified in Section 307.
Depository means, with respect to the Securities of any series issuable or issued in whole or in part in the form of one or more Book-Entry Securities, the Person
designated as Depository by the Company pursuant to Section 301 which must be a clearing agency registered under the Exchange Act, and if at any time there is more than
one such Person, Depository shall mean the Depository with respect to the Securities of that series.
Domestic Subsidiary means a Subsidiary of the Company except a Subsidiary (a) which neither transacts any substantial portion of its business nor regularly
maintains any substantial portion of its fixed assets within the States of the United States, or (b) which is engaged primarily in financing the operations of the Company or
its Subsidiaries, or both, outside the States of the United States.
3
Event of Default has the meaning specified in Section 501.
Funded Debt means all indebtedness for money borrowed having a maturity of more than 12 months from its date of creation.
Holder means a Person in whose name a Security is registered in the Security Register.
Indenture means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof, including, for all purposes of this instrument, and any such supplemental indenture, the provisions of the
Trust Indenture Act that are deemed to be a part of and govern this instrument and any such supplemental indenture, respectively. The term Indenture shall also include
the terms of particular series of Securities established as contemplated by Section 301.
interest, when used with respect to an Original Issue Discount Security which by its terms bears interest only after Maturity, means interest payable after Maturity.
Interest Payment Date, when used with respect to any Security, means the Stated Maturity of an installment of interest on such Security.
Maturity, when used with respect to any Security, means the date on which the principal of such Security or an installment of principal becomes due and payable
as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise.
Mortgage or Mortgages has the meaning specified in Section 1004.
Officers Certificate means a certificate signed by the Chairman of the Board, Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, a Vice
Chairman, a President or a Vice President, or an officer certified by an Assistant Secretary as having a similar level of authority, and by the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary, of the Company, and delivered to the Trustee. One of the officers signing an Officers Certificate given pursuant to
Section 1007 shall be the principal executive, financial or accounting officer of the Company.
Opinion of Counsel means a written opinion of counsel, who may be counsel for the Company, and who shall be reasonably acceptable to the Trustee.
Original Issue Discount Security means any Security which provides for an amount less than the principal amount thereof to be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section 502.
Outstanding, when used with respect to Securities, means, as of the date of determination, all Securities theretofore authenticated and delivered under this
Indenture, except :
(i)
Securities theretofore cancelled by the Trustee or delivered to the Trustee for cancellation;
4
(ii)
Securities for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent
(other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such
Securities in accordance with Section 401; provided , that if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee has been made;
(iii)
Securities for whose payment or redemption money or U.S. Government Obligations in the necessary amount has been theretofore deposited
with the Trustee (or another trustee satisfying the requirements of Section 609) in trust for the Holders of such Securities in accordance with Section 403; and
(iv)
Securities which have been paid pursuant to Section 306 or in exchange for or in lieu of which other Securities have been authenticated and
delivered pursuant to this Indenture, other than any such Securities in respect of which there shall have been presented to the Trustee proof satisfactory to it that
such Securities are held by a bona fide purchaser in whose hands such Securities are valid obligations of the Company;
provided , however , that in determining whether the Holders of the requisite principal amount of the Outstanding Securities have given any request, demand, authorization,
direction, notice, consent or waiver hereunder, (i) the principal amount of an Original Issue Discount Security that shall be deemed to be Outstanding shall be the amount of
the principal thereof that would be due and payable as of the date of such determination upon acceleration of the Maturity thereof pursuant to Section 502, (ii) the principal
amount of a Security denominated in one or more foreign currencies or currency units shall be the U.S. dollar equivalent, determined in the manner provided as
contemplated by Section 301 on the date of original issuance of such Security, of the principal amount (or, in the case of an Original Issue Discount Security, the U.S.
dollar equivalent on the date of original issuance of such Security of the amount determined as provided in (i) above) of such Security, and (iii) Securities owned by the
Company or any other obligor upon the Securities or any Affiliate of the Company or of such other obligor shall be disregarded and deemed not to be Outstanding, except
that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities
which the Trustee knows to be so owned shall be so disregarded. Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgees right so to act with respect to such Securities and that the pledgee is not the Company or any other obligor upon
the Securities or any Affiliate of the Company or of such other obligor.
Paying Agent means any Person authorized by the Company to pay the principal of or any premium or interest on any Securities on behalf of the Company.
Person means any individual, corporation, partnership, joint venture, trust, unincorporated organization or government or any agency or political subdivision
thereof.
5
Place of Payment, when used with respect to the Securities of any series, means the place or places where the principal of and any premium and interest on the
Securities of that series are payable as specified as contemplated by Section 301.
Predecessor Security of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular
Security; and, for the purposes of this definition, any Security authenticated and delivered under Section 306 in exchange for or in lieu of a mutilated, destroyed, lost or
stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security.
Principal Domestic Manufacturing Property means any building, structure or other facility, together with the land upon which it is erected and fixtures comprising
a part thereof, used primarily for manufacturing or processing and located in the United States, owned or leased by the Company or any Subsidiary of the Company, the
gross book value (without deduction of any depreciation reserves) of which on the date as of which the determination is being made exceeds 1.0% of Consolidated Net
Tangible Assets, other than any such building, structure or other facility or portion thereof (i) which is financed by obligations the interest on which is exempt from U.S.
federal income tax pursuant to Section 103 of the Internal Revenue Code of 1986, as amended (or any predecessor or successor provision thereof), or (ii) which, in the
opinion of the Board of Directors, is not of material importance to the total business conducted by the Company and its Subsidiaries as an entirety.
Redemption Date, when used with respect to any Security to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture.
Redemption Price, when used with respect to any Security to be redeemed, means the price at which it is to be redeemed pursuant to this Indenture.
Regular Record Date for the interest payable on any Interest Payment Date on the Securities of any series means the date specified for that purpose as
contemplated by Section 301.
Securities has the meaning stated in the first recital of this Indenture and more particularly means any Securities authenticated and delivered under this Indenture.
Security Register and Security Registrar have the respective meanings specified in Section 305.
Special Record Date for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 307.
Stated Maturity, when used with respect to any Security or any installment of principal thereof or interest thereon, means the date specified in such Security as the
fixed date on which the principal of such Security or such installment of principal or interest is due and payable.
Subsidiary means a corporation more than 50% of the outstanding voting stock of which is owned, directly or indirectly, by the Company or by one or more other
Subsidiaries, or by the Company and one or more other Subsidiaries. For the purposes of this definition, voting stock means stock which ordinarily
6
has voting power for the election of directors, whether at all times or only so long as no senior class of stock has such voting power by reason of any contingency.
Trustee means the Person named as the Trustee in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter Trustee shall mean or include each Person who is then a Trustee hereunder, and if at any time there is more than
one such Person, Trustee as used with respect to the Securities of any series shall mean the Trustee with respect to Securities of that series.
Trust Indenture Act means the Trust Indenture Act of 1939 as in force at the date as of which this instrument was executed; provided , however , that in the event
the Trust Indenture Act of 1939 is amended after such date, Trust Indenture Act means, to the extent required by any such amendment, the Trust Indenture Act of 1939 as
so amended.
U.S. Government Obligations means securities which are (i) direct obligations of the United States of America for the payment of which its full faith and credit is
pledged or (ii) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case, are not . callable or redeemable at the option of the
issuer thereof, and shall also include a depository receipt issued by a bank or trust company as custodian with respect to any such U.S. Government Obligation or a specific
payment of interest on or principal of any such U.S. Government Obligation held by such custodian for the account of the holder of a depository receipt; provided that
(except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount
received by the custodian in respect of the U.S. Government Obligation or the specific payment of interest on or principal of the U.S. Government Obligation evidenced by
such depository receipt.
Vice President, when used with respect to the Company or the Trustee, means any vice president, whether or not designated by a number or a word or words
added before or after the title vice president.
SECTION 102.
Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall furnish to the Trustee
such certificates and opinions as may be required under the Trust Indenture Act. Each such certificate or opinion shall be given in the form of an Officers Certificate, if to
be given by an officer of the Company, or an Opinion of Counsel, if to be given by counsel, and shall comply with the requirements of the Trust Indenture Act and any
other requirements set forth in this Indenture.
Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include
(1)
a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto;
7
(2)
a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3)
a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been complied with; and
(4)
SECTION 103.
a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with.
Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person or that they be so certified or covered by only one document, but one such Person may certify or give an
opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one
or several documents.
Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by,
counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon
which his or her certificate or opinion is based are erroneous. Any such certificate or opinion of counsel may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of
the Company, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters
are erroneous.
Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this
Indenture, they may, but need not, be consolidated and form one instrument.
SECTION 104.
Acts of Holders; Record Dates.
(a)
Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be
embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by agent duly appointed in writing; and, except as
herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly
required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the Act of the
Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of
this Indenture and (subject to Section 601) conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section.
8
(b)
The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing
acknowledged to him the execution thereof. Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall
also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may
also be proved in any other manner which the Trustee deems sufficient.
(c)
The Company may, in the circumstances permitted by the Trust Indenture Act, fix any day as the record date for the purpose of determining the Holders
of Securities of any series entitled to give or take any request, demand, authorization, direction, notice, consent, waiver or other action, or to vote on any action, authorized
or permitted to be given or taken by Holders of Securities of such series. If not set by the Company prior to the first solicitation of a Holder of Securities of such series
made by any Person in respect of any such action, or, in the case of any such vote, prior to such vote, the record date for any such action or vote shall be the 30th day (or, if
later, the date of the most recent list of Holders required to be provided pursuant to Section 701) prior to such first solicitation or vote, as the case may be. With regard to
any record date for action to be taken by the Holders of one or more series of Securities, only the Holders of Securities of such series on such date (or their duly designated
proxies) shall be entitled to give or take, or vote on, the relevant action.
(d)
The ownership of Securities shall be proved by the Security Register.
(e)
Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Security shall bind every future Holder of the
same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted
or suffered to be done by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Security.
SECTION 105.
Notices, Etc., to Trustee and Company.
Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Indenture to be made
upon, given or furnished to, or filed with,
(1)
the Trustee by any Holder or by the Company shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or
with the Trustee at its Corporate Trust Office, Deutsche Bank Trust Company Americas, 60 Wall Street, MSNYC60-2710, New York, New York 10005, Attention:
Trust & Securities Services, or
(2)
the Company by the Trustee or by any Holder shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if in
writing and mailed, first-class postage prepaid, to the Company addressed to it at the address of its principal office specified in the first paragraph of this instrument
or at any other address previously furnished in writing to the Trustee by the Company.
9
SECTION106.
Notice of Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class postage prepaid, to each Holder affected by such event, at his address as it appears in the Security Register, not later than the latest date (if any), and
not earlier than the earliest date (if any), prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such
notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Indenture
provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall
be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice by mail, then such
notification as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder.
SECTION 107.
Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with a provision of the Trust Indenture Act that is required under such Act to be a part of and govern this
Indenture, the Trust Indenture Act provision shall control. If any provision of this Indenture modifies or excludes any provision of the Trust Indenture Act that may be so
modified or excluded, the latter provision shall be deemed to apply to this Indenture as so modified or to be excluded, as the case may be.
SECTION 108.
Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof.
SECTION 109.
Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall bind its successors and assigns, whether so expressed or not.
SECTION 110.
Separability Clause.
In case any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
10
SECTION 111.
Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder and the
Holders, any benefit or any legal or equitable right, remedy or claim under this Indenture.
SECTION 112.
Governing Law.
This Indenture and the Securities shall be governed by and construed in accordance with the laws of the State of New York.
SECTION 113.
Legal Holidays.
In any case where any Interest Payment Date, Redemption Date or Stated Maturity of any Security shall not be a Business Day at any Place of Payment, then
(notwithstanding any other provision of this Indenture or of the Securities (other than a provision of the Securities of any series which specifically states otherwise))
payment of interest or principal (and premium, if any) need not be made at such Place of Payment on such date, but may be made on the next succeeding Business Day at
such Place of Payment with the same force and effect as if made on the Interest Payment Date or Redemption Date, or at the Stated Maturity, provided that no interest shall
accrue for the period from and after such Interest Payment Date, Redemption Date or Stated Maturity, as the case may be.
SECTION 114.
USA Patriot Act.
The parties hereto acknowledge that in accordance with Section 326 of the USA Patriot Act, the Trustee, like all financial institutions, is required to obtain, verify,
and record information that identifies each person or legal entity that establishes a relationship or opens an account. The Company agrees that it will provide the Trustee
with such information that is in its possession, or is obtainable by the Company without unreasonable burden or expense, as the Trustee may reasonably request, no more
frequently than on an annual basis, in order for the Trustee to satisfy the requirements of the USA Patriot Act.
ARTICLE TWO
SECURITY FORMS
SECTION 201.
Forms Generally.
The Securities of each series shall be substantially the form set forth in this Article, or in such other form as shall be established by or pursuant to a Board
Resolution or in one or more indentures supplemental hereto, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to
comply with the rules of any securities exchange or as may, consistently herewith, be determined by the officers executing such Securities, as evidenced by their execution
of the Securities. If the form of Securities of any series is established by action taken pursuant to a Board Resolution, a copy of an appropriate record of such action
11
shall be certified by the Secretary or an Assistant Secretary of the Company and delivered to the Trustee at or prior to the delivery of the Company Order contemplated by
Section 303 for the authentication and delivery of such Securities.
The definitive Securities shall be printed, lithographed or engraved on steel engraved borders or may be produced in any other manner, all as determined by the
officers executing such Securities, as evidenced by their execution of such Securities.
SECTION 202.
Form of Face of Security.
[if the Security is an Original Issue Discount Security, insert- THIS NOTE WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR PURPOSES OF
SECTIONS 1272, 1273 AND 1275 OF THE UNITED STATES INTERNAL REVENUE CODE OF 1986, AS AMENDED. [THE ISSUE PRICE OF THIS NOTE WAS
___% OF ITS PRINCIPAL AMOUNT; THE TOTAL AMOUNT OF ORIGINAL ISSUE DISCOUNT IS $____ PER NOTE WITH A PRINCIPAL AMOUNT OF $___;
THE ISSUE DATE IS _____20__; AND THE YIELD TO MATURITY IS ___%.] [THE ISSUE PRICE, ISSUE DATE, TOTAL AMOUNT OF ORIGINAL ISSUE
DISCOUNT AND YIELD TO MATURITY OF THIS NOTE MAY BE OBTAINED BY CONTACTING THE COMPANY AT [One Procter & Gamble Plaza, Cincinnati,
Ohio 45202].]
[if the Security is an Original Issue Discount Security that is subject to the rules of Treasury regulations section 1.1275-4(b) ] [THE ISSUE PRICE OF THIS NOTE
WAS _____% OF ITS PRINCIPAL AMOUNT AT ISSUANCE; THE TOTAL AMOUNT OF ORIGINAL ISSUE DISCOUNT IS $____ PER NOTE WITH A
PRINCIPAL AMOUNT OF $___ AT ISSUANCE, DETERMINED WITHOUT TAKING INTO ACCOUNT ANY ADJUSTMENTS PURSUANT TO TREASURY
REGULATION SECTION 1.1275-4(b); THE ISSUE DATE IS _____20__; THE COMPARABLE YIELD IS ___%; AND THE PROJECTED PAYMENT SCHEDULE
IS ATTACHED HERETO AS EXHIBIT ___.] [THE ISSUE PRICE, ISSUE DATE, TOTAL AMOUNT OF ORIGINAL ISSUE DISCOUNT, COMPARABLE YIELD
AND PROJECTED PAYMENT SCHEDULE WITH RESPECT TO THIS NOTE MAY BE OBTAINED BY CONTACTING THE COMPANY AT [One Procter &
Gamble Plaza, Cincinnati, Ohio 45202].]
..
No. ..
[$] ..
CUSIP: [
The Procter & Gamble Company, a corporation duly organized and existing under the laws of Ohio (herein called the Company, which term includes any
successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to or registered assigns, the principal
sum of [Dollars] on [ if the Security
is to bear Interest prior
12
to Maturity, Interest- , and to pay interest thereon from or from the most recent Interest Payment Date to which interest has been paid or duly provided for,
semi-annually on .. and in each year, commencing .., at the rate of . . . % per annum, until the principal hereof is paid or
made available for payment [ if applicable, insert- , and (to the extent that the payment of such interest shall be legally enforceable) at the rate of % per annum on any
overdue principal and premium and on any overdue installment of interest]. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date
will, as provided in such Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the
Regular Record Date for such interest, which shall be the or .. (in each case, whether or not a Business Day), immediately preceding
the related Interest Payment Date; provided, however, that interest payable on any Maturity date shall be payable to the Person to whom the principal of the Securities shall
be payable. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be
paid to the Person on whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities of this series not less than 10 days prior to such Special Record
Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be
listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture].
[ If the Security is not to bear interest prior to the Maturity, insert- The principal of this Security shall not bear interest except in the case of a default in payment of
principal upon acceleration, upon redemption or at Stated Maturity and in such case the overdue principal of this Security shall bear interest at the rate of ..% per annum
(to the extent that the payment of such interest shall be legally enforceable), which shall accrue from the date of such default in payment to the date payment of such
principal has been made or duly provided for. Interest on any overdue principal shall be payable on demand. Any such interest on any overdue principal that is not so paid
on demand shall bear interest at the rate of ..% per annum (to the extent that the payment of such interest shall be legally enforceable), which shall accrue from the date
of such demand for payment to the date payment of such interest has been made or duly provided for, and such interest shall also be payable on demand.]
Payment of the principal of (and premium, if any) and [ if applicable, insert- any such] interest on this Security will be made at the office or agency of the Company
maintained for that purpose in .., in [such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and
private debts] [ if applicable, insert- ; provided , however , that at the option of the Company payment of interest may be made by check mailed to the address of the Person
entitled thereto in whose name this Security (or one or more Predecessor Securities) are registered at the close of business on the Regular Record Date at such address as
shall appear in the Security Register or by wire transfer of immediately available funds to an account specified in writing by such Holder to the Company and the Trustee
prior to the relevant record date].
13
Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same
effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be
entitled to any benefit under the Indenture or be valid or obligatory for any purpose.
Dated:
IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.

By..
ATTEST
By..
SECTION 203.
Form of Reverse of Security.
This Security is one of a duly authorized issue of securities of the Company (herein called the Securities), issued and to be issued in one or more series under an
Indenture, dated as of September 3, 2009 (herein called the Indenture), between the Company and Deutsche Bank Trust Company Americas, as Trustee (herein called the
Trustee, which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities and of the terms
upon which the Securities are, and are to be, authenticated and delivered. This Security is one of the series designated on the face hereof[, limited in aggregate principal
amount to [$]..].
[ If applicable, insert- The Securities of this series are subject to redemption upon not less than 30 days notice by mail, [ if applicable, insert- (1) on
. in any year commencing with the year .. and ending with the year . through operation of the sinking fund for this series at a Redemption Price equal
to 100% of the principal amount, and (2)] at any time [on or after ., 20], as a whole or in part, at the election of the Company, at the following Redemption
Prices (expressed as percentages of the principal amount): If redeemed [on or before , %, and if redeemed] during the 12-month period beginning
. of the years indicated,
Year
Redemption Price
Year
14
Redemption Price
and thereafter at a Redemption Price equal to .% of the principal amount, together in the case of any such redemption [ if applicable, insert- (whether through operation
of the sinking fund or otherwise)] with accrued interest to the Redemption Date, but interest installments whose Stated Maturity is on or prior to such Redemption Date will
be payable to the Holders of such Securities, or one or more Predecessor Securities, of record at the close of business on the relevant Record Dates referred to on the face
hereof, all as provided in the Indenture.]
[ If applicable, insert- The Securities of this series are subject to redemption upon not less than 30 days notice by mail, (1) on .. in any year
commencing with the year . and ending with the year . through operation of the sinking fund for this series at the Redemption Prices for redemption through operation
of the sinking fund (expressed as percentages of the principal amount) set forth in the table below, and (2) at any time [on or after .], as a whole or in part, at
the election of the Company, at the Redemption Prices for redemption otherwise than through operation of the sinking fund (expressed as percentages of the principal
amount) set forth in the table below: If redeemed during the 12-month period beginning of the years indicated.
Year
Redemption Price For Redemption Through

Operation of the Sinking Fund
Redemption Price For Redemption Otherwise Than

Through Operation of the Sinking Fund
and thereafter at a Redemption Price equal to .% of the principal amount, together in the case of any such redemption (whether through operation of the sinking fund or
otherwise) with accrued interest to the Redemption Date, but interest installments whose Stated Maturity is on or prior to such Redemption Date will be payable to the
Holders of such Securities, or one or more Predecessor Securities, of record at the close of business on the relevant Record Dates referred to on the face hereof, all as
provided in the Indenture.]
[Notwithstanding the foregoing, the Company may not, prior to , redeem any Securities of this series as contemplated by [Clause (2) of] the
preceding paragraph as a part of, or in anticipation of, any refunding operation by the application, directly or indirectly, of moneys borrowed having an interest cost to the
Company (calculated in accordance with generally accepted financial practice) of less than .% per annum.]
[The sinking fund for this series provides for the redemption on . in each year beginning with the year .. and ending with the year .. of [not less
than $ (mandatory sinking fund) and not more than] $.. aggregate principal amount of Securities of this series. Securities of this series acquired or redeemed by
the Company otherwise than through [mandatory] sinking fund payments may be credited against subsequent [mandatory] sinking fund payments otherwise required to be
made [in the inverse order in which they become due].]
15
[ If the Security is subject to redemption, insert- In the event of redemption of this Security in part only, a new Security or Securities of this series and of like tenor
for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof.]
[ If the Security is not an Original Issue Discount Security, insert- If an Event of Default with respect to Securities of this series shall occur and be continuing, the
principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture.]
[ If the Security is an Original Issue Discount Security, insert- If an Event of Default with respect to Securities of this series shall occur and be continuing, an
amount of principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture. Such amount shall be equal
to- insert formula for determining the amount . Upon payment (i) of the amount of principal so declared due and payable and (ii) of interest on any overdue principal and
overdue interest (in each case to the extent that the payment of such interest shall be legally enforceable), all of the Companys obligations in respect of the payment of the
principal of and interest, if any, on the Securities of this series shall terminate.]
The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and
the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of at
least a majority in principal amount of the Securities at the time Outstanding of each series to be affected. The Indenture also contains provisions permitting the Holders of
at least a majority in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance
by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of
this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and
unconditional, to pay the principal of and any premium and interest on this Security at the times, place and rate, and in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registerable in the Security Register, upon surrender of
this Security for registration of transfer at the office or agency of the Company in any place where the principal of and any premium and interest on this Security are
payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder
hereof or his attorney duly authorized in writing, and thereupon one or more new Securities of this series and of like tenor, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or transferees.
16
The Securities of this series are issuable only in registered form without coupons in denominations of [$]. and any integral multiple of [$]. in excess
thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of
Securities of this series and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or
other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in
whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such
agent shall be affected by notice to the contrary.
All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture.
SECTION 204 .
Form of Legend for Book-Entry Securities .
Any Book-Entry Security authenticated and delivered hereunder shall bear a legend in substantially the following form:
This Security is a Book-Entry Security within the meaning of the Indenture hereinafter referred to and is registered in the name of a Depository or a
nominee of a Depository or a successor depository. This Security is not exchangeable for Securities registered in the name of a Person other than the Depository or
its nominee except in the limited circumstances described in the Indenture, and no transfer of this Security (other than a transfer of this Security as a whole by the
Depository to a nominee of the Depository or by a nominee of the Depository to the Depository or another nominee of the Depository) may be registered except in
the limited circumstances described in the Indenture.
SECTION 205.
Form of Trustees Certificate of Authentication .
The Trustees certificates of authentication shall be in substantially the following form:
This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.
DEUTSCHE BANK TRUST COMPANY AMERICAS

As Trustee
17
By ...
Authorized Officer
ARTICLE THREE
THE SECURITIES
SECTION 301.
Amount Unlimited; Issuable in Series .
The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be established in or pursuant to a Board Resolution and, subject to Section 303, set forth, or
determined in the manner provided, in an Officers Certificate, or established in one or more indentures supplemental hereto, prior to the issuance of Securities of any
series,
(1)
the title of the Securities of the series (which shall distinguish the Securities of the series from Securities of any other series);
(2)
any limit upon the aggregate principal amount of the Securities of the series which may be authenticated and delivered under this Indenture
(except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of the series pursuant to Section
304, 305, 306, 906 or 1107 and except for any Securities which, pursuant to Section 303, are deemed never to have been authenticated and delivered hereunder);
(3)
the Person to whom any interest on a Security of the series shall be payable, if other than the Person in whose name that Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest;
(4)
the date or dates on which the principal of the Securities of the series is payable;
(6)
the place or places where the principal of and any premium and interest on Securities of the series shall be payable;
(5)
the rate or rates at which the Securities of the series shall bear interest, or the method or methods by which such rate or rates shall be determined,
if any, the date or dates from which such interest shall accrue, the Interest Payment Dates on which any such interest shall be payable and the Regular Record Date
for any interest payable on any Interest Payment Date;
(7)
the period or periods within which, the price or prices at which and the terms and conditions upon which Securities of the series may be
redeemed, in whole or in part, at the option of the Company;
18
(8)
the obligation, if any, of the Company to redeem or purchase Securities of the series pursuant to any sinking fund or analogous provisions or at
the option of a Holder thereof and the period or periods within which, the price or prices at which and the terms and conditions upon which Securities of the series
shall be redeemed or purchased, in whole or in part, pursuant to such obligation;
(9)
if other than minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof, the denominations in which Securities of the
series shall be issuable;
(10)
(11)
the application, if any, of Section 403 to the Securities of the series;
(12)
the currency, currencies or currency units in which payment of the principal of and any premium and interest on any Securities of the series shall
be payable if other than the currency of the United States of America and the manner of determining the equivalent thereof in the currency of the United States of
America for purposes of the definition of Outstanding in Section 101;
(13)
if the amount of payments of principal of or any premium or interest on any Securities of the series may be determined with reference to an
index, the manner in which such amounts shall be determined;
(14)
whether the Securities of the series shall be issued in whole or in part in the form of one or more Book-Entry Securities and, in such case, the
Depository with respect to such Book-Entry Security or Securities and the circumstances under which any such Book-Entry Security may be registered for transfer
or exchange, or authenticated and delivered, in the name of a Person other than such Depository or its nominee, if other than as set forth in Section 305;
(15)
if other than the principal of or any premium or interest on any Securities of the series is to be payable, at the election of the Company or a
Holder thereof, in one or more currencies or currency units other than that or those in which the Securities are stated to be payable, the currency, currencies or
currency units in which payment of the principal of and any premium and interest on Securities of such series as to which such election is made shall be payable,
and the periods within which and the terms and conditions upon which such election is to be made;
(16)
if other than the entire principal amount thereof, the portion of the principal amount of Securities of the series which shall be payable upon
declaration of acceleration of the Maturity thereof pursuant to Section 502;
(17)
any deletions, modifications of or additions to the Events of Default or the covenants of the Company set forth herein, and any definitions
related thereto, with respect to Securities of the series;
19
(18)
(19)
if the Securities of the series are to be listed on any securities exchange, the securities exchange upon which such Securities shall be listed;
any other terms of the series (which terms shall not be inconsistent with the provisions of this Indenture, except as permitted by Section 901(5)).
All Securities of any one series shall be substantially identical except as to denomination and except as may otherwise be provided in or pursuant to the Board
Resolution referred to above and (subject to Section 303) set forth, or determined in the manner provided, in the Officers Certificate referred to above or in any such
indenture supplemental hereto.
SECTION 302.
Denominations .
The Securities of each series shall be issuable in registered form without coupons in such denominations as shall be specified as contemplated by Section 301. In the
absence of any such provisions with respect to the Securities of any series, the Securities of such series shall be issuable in minimum denominations of $2,000 and any
integral multiple of $1,000 in excess thereof.
SECTION 303.
Execution, Authentication, Delivery and Dating .
The Securities shall be executed on behalf of the Company by its Chairman of the Board, Chief Executive Officer, Chief Financial Officer, Chief Operating Officer,
a Vice Chairman, a President or one of its Vice Presidents, or an officer certified by an Assistant Secretary as having a similar level of authority, attested by its Treasurer,
one of its Assistant Treasurers, its Secretary or one of its Assistant Secretaries. The signature of any of these officers on the Securities may be manual, facsimile, in the
form of a .pdf attachment or by other means of electronic transmission.
Securities bearing the signatures of individuals who were, at the time of executing such Securities, the proper officers of the Company, shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities.
At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities of any series executed by the Company to
the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities, and the Trustee in accordance with the Company
Order shall authenticate and deliver such Securities. If the form or terms of the Securities of the series have been established in or pursuant to one or more Board
Resolutions as permitted by Sections 201 and 301, in authenticating such Securities, and accepting the additional responsibilities under this Indenture in relation to such
Securities, the Trustee shall be entitled to receive, and (subject to Section 601) shall be fully protected in relying upon, an Opinion of Counsel stating,
(a)
if the form of such Securities has been established by or pursuant to Board Resolutions as permitted by Section 201, that such form has been
established in conformity with the provisions of this Indenture;
20
(b)
if the terms of such Securities have been established by or pursuant to Board Resolutions as permitted by Section 301, that such terms have been
(c)
that such Securities, when authenticated and delivered by the Trustee and issued by the Company in the manner and subject to any conditions specified in
such Opinion of Counsel, will constitute valid and binding obligations of the Company enforceable in accordance with their terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors rights and to general equity principles; and
with.
(d)
all conditions precedent provided for in this Indenture relating to the authentication and delivery of the Securities by the Trustee have been complied
If such form or terms have been so established, the Trustee shall not be required to authenticate such Securities if the issue of such Securities pursuant to this
Indenture will adversely affect the Trustees own rights, duties or immunities under the Securities and this Indenture or otherwise in a manner which is not reasonably
acceptable to the Trustee.
Notwithstanding the provisions of Section 301 and of the preceding paragraph, if all Securities of a series are not to be originally issued at one time, it shall not be
necessary to deliver the Officers Certificate otherwise required pursuant to Section 301 or the Company Order and Opinion of Counsel otherwise required pursuant to such
preceding paragraph at or prior to the time of authentication of each Security of such series if such documents are delivered at or prior to the authentication upon original
issuance of the first Security of such series to be issued.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Security a certificate of
authentication substantially in the form provided for herein executed by the Trustee by manual signature, and such certificate upon any Security shall be conclusive
evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder. Notwithstanding the foregoing, if any Security shall have been
authenticated and delivered hereunder but never issued and sold by the Company, and the Company shall deliver such Security to the Trustee for cancellation as provided
in Section 309, for all purposes of this Indenture such Security shall be deemed never to have been authenticated and delivered hereunder and shall never be entitled to the
benefits of this Indenture.
SECTION 304.
Temporary Securities .
Pending the preparation of definitive Securities of any series, the Company may execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Securities which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the
definitive Securities in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such
Securities may determine, as evidenced by their execution of such Securities.
21
If temporary Securities of any series are issued, the Company will cause definitive Securities of that series to be prepared without unreasonable delay. After the
preparation of definitive Securities of such series, the temporary Securities of such series shall be exchangeable for definitive Securities of such series upon surrender of the
temporary Securities of such series at the office or agency of the Company in a Place of Payment for that series, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Securities of any series the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor one or
more definitive Securities of the same series, of any authorized denominations and of a like aggregate principal amount and tenor. Until so exchanged the temporary
Securities of any series shall in all respects be entitled to the same benefits under this Indenture as definitive Securities of such series and tenor.
SECTION 305.
Registration, Registration of Transfer and Exchange .
The Company shall cause to be kept at the Corporate Trust Office of the Trustee a register (the register maintained in such office and in any other office or agency
of the Company in a Place of Payment being herein sometimes collectively referred to as the Security Register) in which, subject to such reasonable regulations as it may
prescribe, the Company shall provide for the registration of Securities and of transfers of Securities. The Trustee is hereby appointed Security Registrar for the purpose of
registering Securities and transfers of Securities as herein provided.
Upon surrender for registration of transfer of any Security of any series at the office or agency in a Place of Payment for that series, the Company shall execute, and
the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Securities of the same series, of any authorized
denominations and of a like aggregate principal amount and tenor.
At the option of the Holder, Securities of any series may be exchanged for other securities of the same series, of any authorized denominations and of a like
aggregate principal amount and tenor, upon surrender of the Securities to be exchanged at such office or agency. Whenever any Securities are so surrendered for exchange,
the Company shall execute, and the Trustee shall authenticate and deliver, the Securities which the Holder making the exchange is entitled to receive.
All Securities issued upon any registration of transfer or exchange of Securities shall be the valid obligations of the Company, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Securities surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer or for exchange shall (if so required by the Company or the Trustee) be duly endorsed, or be
accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed, by the Holder thereof or his attorney duly
authorized in writing.
22
No service charge shall be made for any registration of transfer or exchange of Securities, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Securities, other than exchanges pursuant to Section
304, 906 or 1107 not involving any transfer.
The Company shall not be required (i) to issue, register the transfer of or exchange Securities of any series during a period beginning at the opening of business 15
days before the day of the mailing of a notice of redemption of Securities of that series selected for redemption under Section 1103 and ending at the close of business on
the day of such mailing, or (ii) to register the transfer of or exchange of any Security so selected for redemption in whole or in part, except the unredeemed portion of any
Security being redeemed in part.
Notwithstanding the foregoing, no Book-Entry Security shall be registered for transfer or exchange, or authenticated and delivered, whether pursuant to this Section,
Sections 304, 306, 906 or 1107 or otherwise, in the name of a Person other than the Depository for such Book-Entry Security or its nominee until (i) the Depository with
respect to a Book-Entry Security notifies the Company that it is unwilling or unable to continue as Depository for such Book-Entry Security or the Depository ceases to be
a clearing agency registered under the Exchange Act, (ii) the Company executes and delivers to the Trustee a Company Order that such Book-Entry Security shall be so
transferable and exchangeable or (iii) there shall have occurred and be continuing an Event of Default with respect to the Securities of such series. Upon the occurrence in
respect of any Book-Entry Security of any series of any one or more of the conditions specified in clauses (i), (ii) or (iii) of the preceding sentence or such other conditions
as may be specified as contemplated by Section 301 for such series, such Book-Entry Security may be registered for transfer or exchange for Securities registered in the
name of, or authenticated and delivered to, such Persons as the Depository with respect to such series shall direct.
Except as provided in the preceding paragraph, any Security authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, any BookEntry Security, whether pursuant to this Section, Section 304, 306, 906 or 1107 or otherwise, shall also be a Book-Entry Security and bear the legend specified in Section
204.
SECTION 306.
Mutilated, Destroyed, Lost and Stolen Securities .
If any mutilated Security is surrendered to the Trustee, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Security
of the same series and of like tenor and principal amount and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i) evidence to their satisfaction of the destruction, loss or theft of any Security and (ii) such security or
indemnity as may be required by them to save each of them and any agent of either of them harmless, then, in the absence of notice to the Company or the Trustee that such
Security has been acquired by a bona fide purchaser, the Company shall execute and the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen
Security, a new Security of the same series and of like tenor and principal amount and bearing a number not contemporaneously outstanding.
23
In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of
issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security of any series issued pursuant to this Section in lieu of any destroyed, loss or stolen Security shall constitute an original additional contractual
obligation of the Company, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this
Indenture equally and proportionately with any and all other Securities of that series duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities.
SECTION 307.
Payment of Interest; Interest Rights Preserved .
Except as otherwise provided as contemplated by Section 301 with respect to any series of Securities, interest on any Security which is payable, and is punctually
paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record date for such interest.
Any interest on any Security of any Series which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date (herein called Defaulted
Interest) shall forthwith cease to be payable to the Holder on the relevant regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be
paid by the Company, at its election in each case, as provided in Clause (1) or (2) below:
(1)
The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities of such Series (or their
respective Predecessor Securities) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be made
in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security of such series
and the date of the proposed payment, and at the same time the Company shall deposit with the trustee an amount of money equal to the aggregate amount proposed
to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment,
such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this Clause provide. Thereupon the Trustee shall
fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed
payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such
Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special
Record Date therefore to be mailed, First-class postage prepaid, to each holder of Securities of such series at his address as it appears in the Security Register, not
less than 10 days prior such Special Record Date.
24
Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefore having been so mailed such Defaulted Interest shall be paid to the
Persons in whose names the Securities of such series (or their respective Predecessor Securities) are registered at the close of business on such Special Record Date
and shall no longer be payable pursuant to the following Clause (2).
(2)
The Company may make payment of any Defaulted Interest on the Securities of any series in any other lawful manner not inconsistent with the
requirements of any securities exchange on which such Securities may be listed, and upon such notice as may be required by such exchange, if after notice given by
the Company to the Trustee of the proposed payment pursuant to this Clause, such manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any
other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security.
SECTION 308.
Persons Deemed Owners.
Prior to due presentment of a Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in
whose name such Security is registered as the owner of such Security for the purpose of receiving payment of principal of and any premium and (subject to Section 307)
any interest on such Security and for all other purposes whatsoever, whether or not such Security be overdue, and neither the Company, the Trustee nor any agent of the
Company or the Trustee shall be affected by notice to the contrary.
SECTION 309.
Cancellation.
All Securities surrendered for payment, redemption, registration of transfer or exchange or for credit against any sinking fund payment shall, if surrendered to any
Person other than the Trustee, be delivered to the Trustee and shall be promptly cancelled by it. The Company may at any time deliver to the Trustee for cancellation any
Securities previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and may deliver to the Trustee (or to any
other Person for delivery to the Trustee) for cancellation any Securities previously authenticated hereunder which the Company has not issued and sold, and all Securities
so delivered shall be promptly cancelled by the Trustee. No Securities shall be authenticated in lieu of or in exchange for any Securities cancelled as provided in this
Section, except as expressly permitted by this Indenture. All cancelled Securities held by the Trustee shall be disposed of as directed by a Company Order.
25
SECTION 310.
Computation of Interest.
Except as otherwise specified as contemplated by Section 301 for Securities of any series, interest on the Securities of each series shall be computed on the basis of
a 360-day year of twelve 30-day months.
SECTION 311.
CUSIP and ISIN Numbers.
The Company in issuing any series of the Securities may use CUSIP and ISIN numbers, in each case if then generally in use, and thereafter with respect to such
series, the Trustee for the Securities of such series may use such numbers in any notice of redemption or exchange with respect to such series, provided that any such notice
may state that no representation is made as to the correctness of such numbers either as printed on the Securities of that series or as contained in any notice of a redemption
or exchange and that reliance may be placed only on the other identification numbers printed on the Securities of that series, and any such redemption or exchange shall not
be affected by any defect in or omission of such numbers. The Company will promptly notify the Trustee in writing of any change in the CUSIP numbers.
ARTICLE FOUR
SECTION 401.
Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Request cease to be of further effect with respect to any series of Securities (except as to any surviving rights of registration of
transfer or exchange of Securities of such series herein expressly provided for), and the Trustee, at the expense of the Company, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture with respect to such series of Securities, when
(1)
either
(A)
all Securities of such series theretofore authenticated and delivered (other than (i) Securities of such series which have been destroyed,
lost or stolen and which have been replaced or paid as provided in Section 306 and (ii) Securities of such series for whose payment money has theretofore
been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in
Section 1003) have been delivered to the Trustee for cancellation; or
(B)
all Securities of such series not theretofore delivered to the Trustee for cancellation
(i)
have become due and payable or
26
(ii)
will become due and payable at their Stated Maturity within one year, or
(iii)
are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense of the Company,
and the Company, in the case of (i), (ii) or (iii) above, has deposited or cause to be deposited with the Trustee as trust funds in trust for the purpose an amount sufficient to
pay and discharge the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for principal and any premium and Interest to the date
of such deposit (in the case of Securities which have become due and payable) or to the Stated Maturity or Redemption Date, as the case may be;
(2)
the Company has paid or caused to be paid all other sums payable hereunder by the Company; and
(3)
the Company has delivered to the Trustee an Officers Certificate and an Opinion of Counsel, each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture as to such series of Securities have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture with respect to any series of Securities, the obligations of the Company to the Trustee under Section
607, the obligations of the Trustee to any Authenticating Agent under Section 614 and, if money or U.S. Government Obligations shall have been deposited with the
Trustee in accordance with Section 403 or 1006, the obligations of the Company to the Trustee under Section 402(b), and, if money shall have been deposited with the
Trustee pursuant to subclause (B) of Clause (1) of this Section, the obligations of the Trustee under Section 402 and the last paragraph of Section 1003 shall survive.
SECTION 402.
Application of Trust Money.
(a)
Subject to the provisions of the last paragraph of Section 1003, all money deposited with the Trustee pursuant to Section 401, all money and U.S.
Government Obligations deposited with the Trustee pursuant to Section 403 or 1006 and all money received by the Trustee in respect of U.S. Government Obligations
deposited with the Trustee pursuant to Section 403 or 1006, shall be held in trust and applied by it, in accordance with the provisions of the Securities and this Indenture, to
the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled
thereto, of the principal (and premium, if any) and Interest for whose payment such money has been deposited with or received by the Trustee or to make mandatory
sinking fund payments or analogous payments as contemplated by Section 403 or 1006.
(b)
The Company shall pay and shall indemnify the Trustee against any tax, fee or other charge imposed on or assessed against U.S. Government
Obligations deposited pursuant to Section 403 or 1006 or the interest and principal received in respect of such obligations other than any payable by or on behalf of
Holders.
27
(c)
The Trustee shall deliver or pay to the Company from time to time upon Company Request any money or U.S. Government Obligations held by it as
provided in Section 403 or 1006 which, in the opinion of a nationally recognized firm of independent certified public accountants expressed in a written certification thereof
delivered to the Trustee, as then in excess of the amount thereof which then would have been required to be deposited for the purpose for which such money or U.S.
Government Obligations were deposited or received.
SECTION 403.
Defeasance and Discharge of Securities of any Series.
If this Section 403 is specified, as contemplated by Section 301, to be applicable to Securities of any series, then notwithstanding Section 401, the Company shall be
deemed to have paid and discharged the entire indebtedness on all the Outstanding Securities of that series, the provisions of this Indenture as it relates to such Outstanding
Securities (except as to the rights of Holders of Securities to receive, from the trust funds described in subparagraph (1) below, payment of the principal of (and premium, if
any) and any installment of principal of (and premium, if any) or interest on such Securities on the Stated Maturity of such principal or installment of principal or interest or
any mandatory sinking fund payments or analogous payments applicable to the Securities of that series on the day on which such payments are due and payable in
accordance with the terms of the Indenture and of such Securities, the Companys obligations with respect to such Securities under Section 305, 306, 1002 and 1003 and the
rights, powers, trusts, duties and immunities of the Trustee hereunder) shall no longer be in effect, and the Trustee, at the expense of the Company, shall, upon Company
Request, execute proper instruments acknowledging the same, provided that the following conditions have been satisfied:
(1)
the Company has deposited or caused to be deposited with the Trustee (or another trustee satisfying the requirements of Section 609), irrevocably
(irrespective of whether the conditions in subparagraphs (2), (3), (4), (5) and (6) below have been satisfied, but subject to the provisions of Section 402(c) and the
last paragraph of Section 1003), as trust funds in trust, specifically pledged as security for, and dedicated solely to, the benefit of the Holders of the Securities of that
series, with reference to this Section 403, (A) money in an amount, or (B) U.S. Government Obligations which through the payment of interest and principal in
respect thereof in accordance with their terms will provide not later than the opening of business on the due date of any payment referred to in clause (i) or (ii) of
this subparagraph (1) money in an amount, or (C) a combination thereof, sufficient, in the opinion of a nationally recognized firm of independent certified public
accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge (i) the principal of (and premium, if any) and each installment
of principal (and premium, if any) and interest on such Outstanding Securities on the Stated Maturity of such principal or installment of principal or interest and (ii)
any mandatory sinking fund payments or analogous payments applicable to Securities of such series on the day on which such payments are due and payable in
accordance with the terms of this Indenture and of such Securities;
(2)
such deposit will not result in a breach or violation of, or constitute a default under, this Indenture or any other material agreement or instrument
to which the Company is a party or by which it is bound;
28
(3)
no Event of Default or event which with the giving of notice or lapse of time, or both, would become an Event of Default with respect to the
Securities of that series shall have occurred and be continuing on the date of such deposit and no Event of Default under Section 501(5) or Section 501(6) or event
which with the giving of notice or lapse of time or both, would become an Event of Default under Section 501(5) or Section 501(6) shall have occurred and be
continuing on the 91st day after such date;
(4)
the Company has delivered to the Trustee an Opinion of Counsel to the effect that the Company has received from, or there has been published
by, the U.S. Internal Revenue Service a ruling to the effect that Holders and beneficial owners of the Securities of that series will not recognize income, gain or loss
for U.S. federal income tax purposes as a result of such deposit, defeasance and discharge and will be subject to U.S. federal income tax on the same amount and in
the same manner and at the same times, as would have been the case if such deposit, defeasance and discharge had not occurred; and
(5)
the Company has delivered to the Trustee an Officers Certificate and an Opinion of Counsel, each stating that all conditions precedent provided
for relating to the defeasance and discharge of the entire indebtedness on all Outstanding Securities of any such series as contemplated by this Section have been
complied with.
ARTICLE FIVE
REMEDIES
SECTION 501.
Events of Default .
Event of Default, wherever used herein with respect to Securities of any series, means any one of the following events (whatever the reason for such Event of
Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(1)
default in the payment of any interest upon any Security of that series when it becomes due and payable, and continuance of such default for a
period of 30 days; or
(2)
(3)
default in the payment of the principal of (or premium, if any, on) any Security of that series at its Maturity; or
default in the deposit of any sinking fund payment, when and as due by the terms of a Security of that series; or
(4)
default in the performance, or breach, of any covenant or warranty of the Company in this Indenture which affects or is applicable to the
Securities of that series (other than a covenant or warranty a default in whose performance or whose breach is elsewhere in this Section specifically dealt with or
which has expressly been included in this Indenture solely for the benefit of series of
29
Securities other than that series), and continuance of such default or breach for a period of 90 days after there has been given, by registered or certified mail, to the
Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the Outstanding Securities of that series a written
notice specifying such default or breach and requiring it to be remedied and stating that such notice is a Notice of Default hereunder; or
(5)
the entry by a court having jurisdiction in the premises of (A) a decree or order for relief in respect of the Company in an involuntary case or
proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or (B) a decree or order adjudging the Company a
bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company
under any applicable Federal or State law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or
of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order for relief or any such
other decree or order unstayed and in effect for a period of 60 consecutive days; or
(6)
the commencement by the Company of a voluntary case or proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or of any other case or preceding to be adjudicated a bankrupt or insolvent, or the consent by it to the entry of a decree or order
for relief in respect of the Company in an involuntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other
similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or the filing by it of a petition or answer or consent seeking
reorganization or relief under any applicable Federal or State law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of its property, or the making by it of
an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due, or the taking of corporate
action by the Company in furtherance of any such action; or
(7)
SECTION 502.
any other Event of Default provided with respect to Securities of that series.
Acceleration of Maturity; Rescission and Annulment.
If an Event of Default with respect to Securities of any series at the time Outstanding occurs and is continuing, then in every such case the Trustee or the Holders of
not less than 25% in principal amount of the Outstanding Securities of that series may declare the principal amount (or, if any of the Securities of that series are Original
Issue Discount Securities, such portion of the principal amount of such Securities as may be specified in the terms thereof) of all of the Securities of that series to be due
and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders), and upon any such declaration such principal amount (or specified
amount) shall become immediately due and payable.
At any time after such a declaration of acceleration with respect to Securities of any series has been made and before a judgment or decree for payment of the
money due has been obtained by the Trustee as
30
hereinafter in this Article provided, the Holders of a majority in principal amount of the Outstanding Securities of that series, by written notice to the Company and the
Trustee, may rescind and annul such declaration and its consequences if
(1)
(A)
the Company has paid or deposited with the Trustee a sum sufficient to pay
all overdue interest on all Securities of that series,
(B)
the principal of (and premium, if any, on) any Securities of that series which have become due otherwise than by such declaration of
acceleration and any interest thereon at the rate or rates prescribed therefor in such Securities,
(C)
Securities, and
to the extent that payment of such interest is lawful, interest upon overdue interest at the rate or rates prescribed therefor in such
(D)
all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel; and
(2)
all Events of Default with respect to Securities of that series, other than the non-payment of the principal of Securities of that series which have
become due solely by such declaration of acceleration, have been cured or waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any right consequent thereon.
SECTION 503.
Collection of Indebtedness and Suits for Enforcement by Trustee .
The Company covenants that if
(1)
default is made in the payment of any interest on any Security when such interest becomes due and payable and such default continues for a
period of 30 days, or
(2)
default is made in the payment of the principal of (or premium, if any, on) any Security at the Maturity thereof,
(3)
the Company will, upon demand of the Trustee, pay to it, for the benefit of the Holders of such Securities, the whole amount then due and payable on such Securities for
principal and any premium and interest and, to the extent that payment of such interest shall be legally enforceable, interest on any overdue principal and premium and on
any overdue interest, at the rate or rates prescribed therefor in such Securities, and, in addition thereto, such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial
proceeding for the collection of the sums so due
31
and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Company or any other obligor upon such Securities and
collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon such Securities,
wherever situated.
If an Event of Default with respect to Securities of any series occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and
the rights of the Holders of Securities of such series by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such
rights, whether for the specific enforcement of any covenant or agreement in the Indenture or in aid of the exercise of any power granted herein, or to enforce any other
proper remedy.
SECTION 504.
Trustee May File Proofs of Claim .
In case of any judicial proceeding relative to the Company (or any other obligor upon the Securities), its property or its creditors, the Trustee shall be entitled and
empowered, by intervention in such proceeding or otherwise, to take any and all actions authorized under the Trust Indenture Act in order to have claims of the Holders and
the Trustee allowed in any such proceeding. In particular, the Trustee shall be authorized to collect and receive any moneys 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 Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any
other amounts due the Trustee under Section 607.
No provision of this Indenture shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim
of any Holder in any such proceeding.
SECTION 505.
Trustee May Enforce Claims Without Possession of Securities .
All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities
or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express
trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, be for the ratable benefit of the Holders of the Securities in respect of which such judgment has been recovered.
SECTION 506.
Application of Money Collected .
Any money collected by the Trustee pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the
distribution of such money on account of principal or any premium or interest, upon presentation of the Securities and the notation thereon of the payment if only partially
paid and upon surrender thereof if fully paid:
32
FIRST: To the payment of all amounts due the Trustee under Section 607;
SECOND: To the payment of the amounts then due and unpaid for principal of and any premium and interest on the Securities in respect of which or for the benefit
of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Securities for principal and
any premium and interest, respectively; and
THIRD: To the Company.
SECTION 507.
Limitation on Suits.
No Holder of any Security of any series shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment
of a receiver or trustee, or for any other remedy hereunder, unless
(1)
such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Securities of that series;
(2)
the Holders of not less than 25% in principal amount of the Outstanding Securities of that series shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name as Trustee hereunder;
(3)
such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance
with such request;
(4)
the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and
(5)
no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in
principal amount of the Outstanding Securities of that series;
it being understood and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this
Indenture or the Securities to affect, disturb or prejudice the rights of any other of such Holders, or to obtain or to seek to obtain priority or preference over any other of
such Holders or to enforce any right under the Indenture, except in the manner provided in this Indenture or the Securities and for the equal and ratable benefit of all of such
Holders.
SECTION 508.
Unconditional Right of Holders to Receive Principal, Premium and Interest.
Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to receive payment of
the principal of and any premium and (subject to Section 307) any interest on such Security on the Stated Maturity or Maturities expressed in such Security (or, in the case
of redemption, on the Redemption Date) and to institute suit for the enforcement of any such payment, and such rights shall not be impaired without the consent of such
Holder.
33
SECTION 509.
Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture or the Securities and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in
such proceeding, the Company, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and
remedies of the Trustee and the Holders shall continue as though no such proceeding has been instituted.
SECTION 510.
Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities in the last paragraph of Section 306, no
right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy
shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate
right or remedy.
SECTION 511.
Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Securities to exercise any right or remedy accruing upon any Event of Default shall impair any such
right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by the Article or by law to the Trustee or to
the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be.
SECTION 512.
Control by Holders.
The Holders of a majority in principal amount of the Outstanding Securities of any series shall have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, with respect to the Securities of such series, provided that
(1)
(2)
such direction shall not be in conflict with any rule of law or with this Indenture or the Securities, and
the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction.
34
SECTION 513.
Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of the Outstanding Securities of any series may on behalf of the Holders of all the Securities of such
series waive any past default hereunder with respect to such series and its consequences, except a default
(1)
in the payment of the principal of or any premium or interest on any Security of such series, or
(2)
in respect of a covenant or provision hereof which under Article Nine cannot be modified or amended without the consent of the Holder of each
Outstanding Security of such series affected.
Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this
Indenture, but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon.
SECTION 514.
Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as
Trustee, a court may require any party litigant in such suit to file an undertaking to pay the costs of such suit, and may assess costs against any such party litigant, in the
manner and to the extent provided in the Trust Indenture Act.
SECTION 515.
Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this
Indenture or the Securities; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that
it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such
law had been enacted.
ARTICLE SIX
THE TRUSTEE
SECTION 601.
Certain Duties and Responsibilities.
The duties and responsibilities of the Trustee shall be as provided by the Trust Indenture Act and this Indenture. Notwithstanding the foregoing, no provision of this
Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties
35
hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured to it. Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the
liability of or affording protection to the Trustee shall be subject to the provisions of this Section.
SECTION 602.
Notice of Defaults.
If a default occurs hereunder with respect to Securities of any series, the Trustee shall give the Holders of Securities of such series notice of such default as and to
the extent provided by the Trust Indenture Act; provided, however, that in the case of any default of the character specified in Section 501(4) with respect to Securities of
such series, no such notice to Holders shall be given until at least 30 days after the occurrence thereof. For the purpose of this Section, the term default means any event
which is, or after notice or lapse of time or both would become, an Event of Default with respect to Securities of such series.
SECTION 603.
Certain Rights of Trustee.
Subject to the provisions of Section 601:
(a)
the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been
signed or presented by the proper party or parties;
(b)
any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order and any resolution
of the Board of Directors may be sufficiently evidenced by a Board Resolution;
(c)
whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or
omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers
Certificate;
(d)
the Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon;
(e)
the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the
Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which
might be incurred by it in compliance with such request or direction;
(f)
the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its
36
discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney; and
(g)
the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and
the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder.
SECTION 604.
Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the Trustees certificates of authentication, shall be taken as the statements of the Company, and the
Trustee or any Authenticating Agent assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture
or of the Securities. The Trustee or any Authenticating Agent shall not be accountable for the use or application by the Company of Securities or the proceeds thereof.
SECTION 605.
May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any Security Registrar or any other agent of the Company, in its individual or any other capacity, may
become the owner or pledgee of Securities and, subject to Sections 608 and 613, may otherwise deal with the Company with the same rights it would have if it were not
Trustee, Authenticating Agent, Paying Agent, Security Registrar or such other agent.
SECTION 606. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability
for interest on any money received by it hereunder except as otherwise agreed with the Company.
SECTION 607.
Compensation and Reimbursement.
The Company agrees
(1)
to pay to the Trustee from time to time reasonable compensation for all services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee of an express trust);
(2)
except as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of
its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or bad faith; and
(3)
to indemnify the Trustee for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of the trust or trusts hereunder, including the costs and expenses
37
of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder.
SECTION 608.
Disqualification; Conflicting Interests.
If the Trustee has or shall acquire a conflicting interest within the meaning of the Trust Indenture Act, the Trustee shall either eliminate such interest or resign, to the
extent and in the manner provided by, and subject to the provisions of, the Trust Indenture Act and this Indenture.
SECTION 609.
Corporate Trust Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be a Person that is eligible pursuant to the Trust Indenture Act to act as such and has a combined capital
and surplus of at least $50,000,000 and its Corporate Trust Office in the Borough of Manhattan, The City of New York. If such Person publishes reports of condition at
least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of
such Person shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article.
SECTION 610.
Resignation and Removal; Appointment of Successor.
(a)
No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee in accordance with the applicable requirements of Section 611.
(b)
The Trustee may resign at any time with respect to the Securities of one or more series by giving written notice thereof to the Company. If the instrument
of acceptance by a successor Trustee required by Section 611 shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series.
(c)
The Trustee may be removed at any time with respect to the Securities of any series by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series, delivered to the Trustee and to the Company.
(d)
If at any time:
(1)
the Trustee shall fail to comply with Section 608 after written request therefor by the Company or by any Holder who has been a bona fide Holder
of a Security for at least six months, or
(2)
Holder, or
the Trustee shall cease to be eligible under Section 609 and shall fail to resign after written request therefor by the Company or by any such
38
(3)
the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be
appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation,
then, in any such case (i) the Company by a Board Resolution may remove the Trustee with respect to all Securities, or (ii) subject to Section 514, any Holder who has been
a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee with respect to all Securities and the appointment of a successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, with respect to the
Securities of one or more series, the Company, by a Board Resolution, shall promptly appoint a successor Trustee or Trustees with respect to the Securities of that or those
series (it being understood that any such successor Trustee may be appointed with respect to the Securities of one or more or all of such series and that at any time there
shall be only one Trustee with respect to the Securities of any particular series) and shall comply with the applicable requirements of Section 611. If, within one year after
such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee with respect to the Securities of any series shall be appointed by act of the
Holders of a majority in principal amount of the Outstanding Securities of such series delivered to the Company and the retiring Trustee, the successor Trustee so appointed
shall, forthwith upon its acceptance of such appointment in accordance with the applicable requirements of Section 611, become the successor Trustee with respect to the
Securities of such series and to that extent supersede the successor Trustee appointed by the Company. If no successor Trustee with respect to the Securities of any series
shall have been so appointed by the Company or the Holders and accepted appointment in the manner required by Section 611, any Holder who has been a bona fide Holder
of a Security of such series for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Securities of such series.
(f) The Company shall give notice of each resignation and each removal of the Trustee with respect to the Securities of any series and each appointment of a
successor Trustee with respect to the Securities of any series to all Holders of Securities of such series in the manner provided in Section 106. Each notice shall include the
name of the successor Trustee with respect to the Securities of such series and the address of its Corporate Trust Office.
SECTION 611.
Acceptance of Appointment by Successor.
(a)
In case of the appointment hereunder of a successor Trustee with respect to all Securities, every such successor Trustee so appointed shall execute,
acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of
the retiring Trustee; but, on the request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument
transferring to such successor Trustee all the rights, powers and
39
trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder.
(b)
In case of the appointment hereunder of a successor Trustee with respect to the Securities of one or more (but not all) series, the Company, the retiring
Trustee and each such successor Trustee with respect to the Securities of one or more series shall execute and deliver an indenture supplemental hereto wherein each
successor Trustee shall accept such appointment and which (1) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in,
each successor Trustee all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such
successor Trustee relates, (2) if the retiring Trustee is not retiring with respect to all Securities, shall contain such provisions as shall be deemed necessary or desirable to
confirm that all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series as to which the retiring Trustee is not retiring
shall continue to be vested in the retiring Trustee, and (3) shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Trustees cotrustees of the same trust and that each such Trustee shall be trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any
other such Trustee; and upon the execution and delivery of such supplemental indenture the resignation or removal of the retiring Trustee shall become effective to the
extent provided therein and each such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of
the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates; but, on request of the Company or any
successor Trustee, such retiring Trustee shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder
with respect to the Securities of that or those series to which the appointment of such successor Trustee relates.
(c)
Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to
such successor Trustee all such rights, powers and trusts referred to in paragraphs (a) and (b) of this Section, as the case may be.
(d)
Article.
SECTION 612.
No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this
Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of the Trustee, shall be
the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or
any further act on the part of any of the parties hereto. In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by
merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated with the same effect as if such
successor Trustee had itself authenticated such Securities.
40
SECTION 613.
Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the Company (or any other obligor upon the Securities), the Trustee shall be subject to the provisions of the
Trust Indenture Act regarding the collection of claims against the Company (or any such other obligor).
SECTION 614.
Appointment of Authenticating Agent.
The Trustee may appoint an Authenticating Agent or Agents with respect to one or more series of Securities which shall be authorized to act on behalf of the
Trustee to authenticate Securities of such series issued upon original issue and upon exchange, registration of transfer or partial redemption thereof or pursuant to Section
306, and Securities so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee
hereunder. Wherever reference is made in this Indenture to the authentication and delivery of Securities by the Trustee or the Trustees certificate of authentication, such
reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent and a certificate of authentication executed on behalf
of the Trustee by an Authenticating Agent. Each Authenticating Agent shall be acceptable to the Company and shall at all times be a corporation organized and doing
business under the laws of the United States of America, any State thereof or the District of Columbia, authorized under such laws to act as Authenticating Agent, having a
combined capital and surplus of not less than $50,000,000 except such combined capital surplus amount shall not be applicable to Deutsche Bank Trust Company
Americas, and subject to supervision or examination by Federal or State authority. If such Authenticating Agent publishes reports of condition at least annually, pursuant to
law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Authenticating Agent
shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time an Authenticating Agent shall cease to
be eligible in accordance with the provisions of this Section, such Authenticating Agent shall resign immediately in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any corporation succeeding to the corporate agency or corporate trust business
of an Authenticating Agent, shall continue to be an Authenticating Agent, provided such corporation shall be otherwise eligible under this Section, without the execution or
filing of any paper or any further act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign any time by giving written notice thereof to the Trustee and to the Company. The Trustee may at any time terminate the
agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the Company. Upon receiving such a notice of resignation or upon
such a termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, the Trustee may appoint a
successor Authenticating Agent which shall be acceptable to the Company and shall mail written notice of such appointment by first-class mail, postage prepaid, to all
Holders of Securities of the series with respect to which such Authenticating Agent will serve, as their names and addresses appear in the Security Register. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights,
41
powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent. No successor Authenticating Agent shall be appointed
unless eligible under the provisions of this Section.
The Trustee agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section, and the Trustee shall be
entitled to be reimbursed for such payments, subject to the provisions of Section 607.
If an appointment with respect to one or more series is made pursuant to this Section, the Securities of such series may have endorsed thereon, in addition to the
Trustees certificate of authentication, an alternative certificate of authentication in the following form:
DEUTSCHE BANK TRUST COMPANY AMERICAS,

As Trustee
By...............................................................
Authorized Signatory
ARTICLE SEVEN
SECTION 701.
Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee
(a)
semi-annually, not later than 15 days after each Regular Record Date for each series of Securities at the time Outstanding, a list, in such form as the
Trustee may reasonably require, of the names and addresses of the Holders as of such Regular Record Date (or a date to be determined pursuant to Section 301 for Original
Issue Discount Securities); and
(b)
at such other times as the Trustee may request in writing, within 30 days after the receipt by the Company of any such request, a list of similar form and
content as of a date not more than 15 days prior to the time such list is furnished;
excluding from any such list names and addresses received by the Trustee in its capacity as Security Registrar.
42
SECTION 702.
Preservation of Information; Communications to Holders.
(a)
The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the most recent list
furnished to the Trustee as provided in Section 701 and the names and addresses of Holders received by the Trustee in its capacity as Security Registrar. The Trustee may
destroy any list furnished to it as provided in Section 701 upon receipt of a new list so furnished.
(b)
The rights of the Holders to communicate with other Holders with respect to their rights under this Indenture or under the Securities, and the
corresponding rights and privileges of the Trustee, shall be as provided by the Trust Indenture Act.
(c)
Every Holder of Securities, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor
any agent of either of them shall be held accountable by reason of any disclosure of information as to names and addresses of Holders made pursuant to the Trust Indenture
Act.
SECTION 703.
Reports by Trustee.
(a)
The Trustee shall transmit to Holders such reports concerning the Trustee and its actions under this Indenture as may be required pursuant to the Trust
Indenture Act at the times and in the manner provided pursuant thereto.
(b)
A copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with each stock exchange upon which any Securities
are listed, with the Commission and with the Company. If any Securities are listed on any stock exchange after the initial issuance of such Securities, the Company will so
notify the Trustee at the time of such listing.
SECTION 704.
Reports by Company.
The Company shall file with the Trustee and the Commission, and transmit to Holders, such information, documents and other reports, and such summaries thereof,
as may be required pursuant to the Trust Indenture Act at the times and in the manner provided pursuant to such Act; provided that any such information, documents or
reports required to be filed with the Commission pursuant to Section 13 or 15(d) of the Exchange Act shall be filed with the Trustee within 15 days after the same is so
required to be filed with the Commission. All required information, documents and other reports referred to in this Section 704 shall be deemed filed with the Trustee and
transmitted to the Holders at the time such information, documents or other reports are publicly filed with the Commission via the Commission's EDGAR filing system (or
any successor system).
43
ARTICLE EIGHT
SECTION 801.
Company May Consolidate, Etc. Only on Certain Terms.
The Company shall not consolidate with or merge into any other Person or convey, transfer or lease its properties and assets substantially as an entirety to any
Person, unless:
(1)
either (x) the Company shall be the surviving Person or (y) the entity formed by such consolidation or into which the Company is merged or the
Person which acquires by conveyance or transfer, or which leases, the properties and assets of the Company substantially as an entirety shall be a corporation,
partnership, limited liability company or trust, shall be organized and validly existing under the laws of the United States of America, any State thereof or the
District of Columbia and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, the
due and punctual payment of the principal of and any premium and interest on all the Securities and the performance or observance of every covenant of this
Indenture on the part of the Company to be performed or observed;
(2)
immediately after giving effect to such transaction and treating any indebtedness which becomes an obligation of the Company or a Subsidiary as
a result of such transaction as having been incurred by the Company or such Subsidiary at the time of such transaction, no Event of Default, and no event which,
after notice or lapse of time or both, would become an Event of Default, shall have happened and be continuing; and
(3)
the Company has delivered to the Trustee an Officers Certificate and an Opinion of Counsel, each stating that such consolidation, merger,
conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture comply with this Article
and that all conditions precedent herein provided for relating to such transaction have been complied with.
SECTION 802.
Successor Substituted.
Upon any consolidation of the Company with, or merger of the Company into, any other Person or any conveyance, transfer or lease of the properties and assets of
the Company substantially as an entirety in accordance with Section 801, the successor Person formed by such consolidation or into which the Company is merged or to
which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture
with the same effect as if such successor Person had been named as the Company herein, and thereafter, except in the case of a lease, the predecessor Person shall be
relieved of all obligations and covenants under this Indenture and the Securities.
44
ARTICLE NINE
SECTION 901.
Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into one
or more indentures supplemental hereto, in form satisfactory to the Trustee, for any of the following purposes:
(1)
to evidence the succession of another Person to the Company and the assumption by any such successor of the covenants of the Company herein
and in the Securities; or
(2)
to add to the covenants of the Company for the benefit of the Holders of all or any series of Securities (and if such covenants are to be for the
benefit of less than all series of Securities, stating that such covenants are expressly being included solely for the benefit of such series) or to surrender any right or
power herein conferred upon the Company; or
(3)
to add any additional Events of Default; or
(4)
to add or change any of the provisions of this Indenture to such extent as shall be necessary to permit or facilitate the issuance of Securities in
bearer form, registrable or not registrable as to principal, and with or without interest coupons, or to permit or facilitate the issuance of Securities in uncertificated
form; or
(5)
to add to, change or eliminate any of the provisions of this Indenture in respect of one or more series of Securities, provided that any such
addition, change or elimination (i) shall neither (A) apply to any Security of any series created prior to the execution of such supplemental indenture and entitled to
the benefit of such provision nor (B) modify the rights of the Holder of any such Security with respect to such provision or (ii) shall become effective only when
there is no such Security Outstanding; or
(6)
(7)
to secure the Securities pursuant to the requirement of Section 1004 or otherwise; or
to establish the form or terms of Securities of any series as permitted by Section 201 and 301; or
(8)
to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Securities of one or more series
and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more
than one Trustee, pursuant to the requirements of Section 611(b); or
(9)
to cure any ambiguity, to correct or supplement any provision herein which may be inconsistent with any other provision herein, or to make any
other provisions with respect to matters
45
or questions arising under this Indenture, provided that such action pursuant to this clause (9) shall not adversely affect the interests of the Holders of Securities of
any series in any material respect.
SECTION 902.
Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than the majority in principal amount of the Outstanding Securities of each series affected by such supplemental
indenture, by Act of said Holders delivered to the Company and the Trustee, the Company, when authorized by a Board Resolution, and the Trustee may enter into an
indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or
of modifying in any manner the rights of the Holders of Securities of such series under this Indenture, provided, however, that no such supplemental indenture shall,
without the consent of the Holder of each Outstanding Security affected thereby,
(1)
change the Stated Maturity of the principal of, or any installment of principal of or interest on, any Security, or reduce the principal amount
thereof or the rate of interest thereon or any premium payable upon the redemption thereof, or reduce the amount of the principal of an Original Issue Discount
Security that would be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 502, or change any Place or Payment where,
or the coin or currency in which, any Security or any premium or interest thereon is payable, or impair the right to institute suit for the enforcement of any such
payment on or after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date), or
(2)
reduce the percentage in principal amount of the Outstanding Securities of any series, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for any waiver (of compliance with certain provisions of this Indenture or certain defaults
hereunder and their consequences) provided for in this Indenture, or
(3)
modify any of the provisions of this Section, Section 513 or Section 1008, except to increase any such percentage or to provide that certain other
provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Outstanding Security affected thereby, provided, however, that
this clause shall not be deemed to require the consent of any Holder with respect to changes in the references to the Trustee and concomitant changes in this
Section and Section 1008, or the deletion of this proviso, in accordance with the requirements of Sections 611(b) and 901(8).
A supplemental Indenture which changes or eliminates any covenant or other provision of this Indenture which has expressly been included solely for the benefit of one or
more particular series of Securities, or which modifies the rights of the Holders of Securities of such series with respect to such covenant or other provision, shall be
deemed not to affect the rights under this Indenture of the Holders of Securities of any other series.
46
It shall not be necessary for any Act of Holders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if
such Act shall approve the substance thereof.
SECTION 903.
Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by
this Indenture, the Trustee shall be entitled to receive, and (subject to Section 601) shall be fully protected in relying upon, an Opinion of Counsel stating that the execution
of such supplemental indenture is authorized or permitted by this Indenture. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture
which adversely affects the Trustees own rights, duties or immunities under this Indenture or otherwise.
SECTION 904.
Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture
shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby.
SECTION 905.
Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act.
SECTION 906.
References in Securities to Supplemental Indentures.
Securities of any series authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the
Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities of
any series so modified as to conform, in the opinion of the Trustee and the Company, to any such supplemental indenture may be prepared and executed by the Company
and authenticated and delivered by the Trustee in exchange for Outstanding Securities of such series.
ARTICLE TEN
COVENANTS
SECTION 1001.
Payment of Principal, Premium and Interest.
The Company covenants and agrees for the benefit of each series of Securities that it will duly and punctually pay the principal of and any premium and interest on
the Securities of that series in accordance with the terms of the Securities and this Indenture.
47
SECTION 1002.
Maintenance of Office or Agency.
The Company will maintain in each Place of Payment for any series of Securities an office or agency where Securities of that series may be presented or
surrendered for payment, where Securities of that series may be surrendered for registration of transfer or exchange and where notices and demands to or upon the
Company in respect of the Securities of that series and this Indenture may be served. The Company will give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with
the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Company hereby
appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other offices or agencies where the Securities of one or more series may be presented or
surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any
manner relieve the Company of its obligation to maintain an office or agency in each Place of Payment for Securities of any series for such purposes. The Company will
give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency.
SECTION 1003.
Money for Securities Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent with respect to any series of Securities, it will, on or before each due date of the principal of or any
premium or interest on any of the Securities of that series, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal and
any premium and interest so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided and will promptly notify the Trustee
of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents for any series of Securities, it will, prior to each due date of the principal of or any premium or
interest on any Securities of that series, deposit with a Paying Agent a sum sufficient to pay such amount, such sum to be held as provided by the Trust Indenture Act, and
(unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its action or failure to act.
The Company will cause each Paying Agent for any series of Securities other than the Trustee to execute and deliver to the Trustee an instrument in which such
Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will (i) comply with the provisions of the Trust Indenture Act
applicable to it as a Paying Agent and (ii) during the continuance of any default by the Company (or any other obligor upon the Securities of that series) in the making of
any payment in respect of the Securities of that series, and upon the written request of the Trustee, forthwith pay to the Trustee all sums held in trust by such Paying Agent
for payment in respect of the Securities of that series.
The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order
direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the
48
same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying
Agent shall be released from all further liability with respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of or any premium or interest on
any Security of any series and remaining unclaimed for two years after such principal, premium or interest has become due and payable shall be paid to the Company on
Company Request, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Security shall thereafter, as an unsecured general creditor,
look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as
trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of
the Company cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in the
Borough of Manhattan, The City of New York, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from
the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Company.
SECTION 1004.
Limitation on Liens.
The Company will not itself, and will not permit any Domestic Subsidiary to, incur, issue, assume or guarantee any notes, bonds, debentures or other similar
evidences of indebtedness for money borrowed (notes, bonds, debentures or other similar evidences of indebtedness for money borrowed being hereinafter in this Article
called Debt), secured by pledge of, or mortgage or other lien on, any Principal Domestic Manufacturing Property of the Company or any Domestic Subsidiary, or any
shares of stock of any Domestic Subsidiary that owns a Principal Domestic Manufacturing Property (pledges, mortgages and other liens being hereinafter in this Article
called Mortgage or Mortgages), without effectively providing that the Securities of each series then Outstanding (together with, if the Company shall so determine, any
other Debt of the Company or such Domestic Subsidiary then existing or thereafter created which is not subordinate to the Securities of each series then Outstanding) shall
be secured equally and ratably with (or prior to) such secured Debt, so long as such secured Debt shall be so secured, unless, after giving effect thereto, the aggregate
amount of all such secured Debt plus all Attributable Debt of the Company and its Domestic Subsidiaries in respect of sale and leaseback transactions (as defined in Section
1005) would not exceed 15% of Consolidated Net Tangible Assets; provided, however , that this Section shall not apply to, and there shall be excluded from secured Debt
in any computation under this Section, Debt secured by:
(1)
with respect to any series of Securities, Mortgages existing on the date of the original issuance of the Securities of such series;
(3)
Mortgages in favor of the Company or any Domestic Subsidiary;
(2)
Mortgages on property of, or on any shares of stock of, any corporation existing at the time such corporation becomes a Domestic Subsidiary or at
the time it is merged into or consolidated with the Company or a Domestic Subsidiary;
49
(4)
Mortgages in favor of the United States of America, any State thereof, any foreign country or any agency, department or other instrumentality
thereof, to secure progress, advance or other payments pursuant to any contract or provision of any statute;
(5)
Mortgages on property or shares of stock existing at the time of acquisition thereof (including acquisition through merger or consolidation) or to
secure the payment of all or any part of the purchase price or construction or improvement cost thereof or to secure any Debt incurred prior to, at the time of, or
within 12 months after the later of the acquisition of such property or shares or the completion of any such construction or improvement for the purpose of financing
all or any part of the purchase price or construction or improvement cost thereof; and
(6)
any extension, renewal or replacement (or successive extensions, renewals or replacements), as a whole or in part, of any Mortgage referred to in
the foregoing clauses (1) to (5), inclusive; provided , that (i) such extension, renewal or replacement Mortgage shall be limited to all or a part of the same property
or shares of stock that secured the Mortgage extended, renewed or replaced (plus improvements and construction on such property) and (ii) the principal amount of
the Debt secured by such Mortgage at such time is not increased.
SECTION 1005.
Limitation on Sales and Leasebacks .
The Company will not itself, and it will not permit any Domestic Subsidiary to, enter into any arrangement with any bank, insurance company or other lender or
investor (not including the Company or any Domestic Subsidiary) or to which any such lender or investor is a party, providing for the leasing by the Company or a
Domestic Subsidiary for a period, including renewals, in excess of three years of any Principal Domestic Manufacturing Property which has been or is to be sold or
transferred, more than 180 days after the completion of construction and commencement of full operation thereof, by the Company or any Domestic Subsidiary to such
lender or investor or to any person to whom funds have been or are to be advanced by such lender or investor on the security of such Principal Domestic Manufacturing
Property (herein referred to as a sale and leaseback transaction) unless either:
(1)
The Company or such Domestic Subsidiary could create Debt secured by a Mortgage pursuant to Section 1004 on the Principal Domestic
Manufacturing Property to be leased back in an amount equal to the Attributable Debt with respect to such sale and leaseback transaction without equally and
ratably securing the Securities of each series, or
(2)
The Company within 180 days after the sale or transfer shall have been made by the Company or by a Domestic Subsidiary, applies an amount
equal to the greater of (i) the net proceeds of the sale of the Principal Domestic Manufacturing Property sold and leased back pursuant to such arrangement or
(ii) the fair market value of the Principal Domestic Manufacturing Property so sold and leased back at the time of entering into such arrangement (as set forth in an
Officers Certificate) to either (or a combination of) the investment in one or more other Principal Domestic Manufacturing Properties or the retirement of Funded
Debt of the Company; provided , that the amount to be applied to either (or a combination of) the investment in one or more other Principal Domestic
Manufacturing Properties or the retirement of Funded Debt of the Company shall be reduced by (a) the principal amount of any Securities delivered within 180 days
after such sale to the Trustee for retirement and
50
cancellation, and (b) the principal amount of Funded Debt other than Securities, voluntarily retired by the Company within 180 days after such sale.
Notwithstanding the foregoing, no retirement referred to in this clause (2) may be effected by payment at maturity or pursuant to any mandatory sinking fund
payment or any mandatory prepayment provision.
SECTION 1006.
Defeasance of Certain Obligations.
If this Section 1006 is specified, as contemplated by Section 301, to be applicable to Securities of any series, the Company may omit to comply with any term,
provision or condition set forth in Sections 1004 and 1005, and Section 501(4) with respect to Sections 1004 and 1005 shall be deemed not to be an Event of Default, in
each case with respect to the Securities of that series, provided that the following conditions have been satisfied:
(1)
With reference to this Section 1006, the Company has deposited or caused to be deposited with the Trustee (or another trustee satisfying the
requirements of Section 609) irrevocably (irrespective of whether the conditions in subparagraphs (2), (3), (4), (5), (6) and (7) below have been satisfied, but subject
to the provisions of Section 402(c) and the last paragraph of Section 1003), as trust funds in trust, specifically pledged as security for, and dedicated solely to, the
benefit of the Holders of the Securities of that series, (A) money in an amount, or (B) U.S. Government Obligations which through the payment of interest and
principal in respect thereof in accordance with their terms will provide not later than the opening of business on the due date of any payment referred to in clause (i)
or (ii) of this subparagraph (1) money in an amount, or (C) a combination thereof, sufficient, in the opinion of a nationally recognized firm of independent certified
public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge (i) the principal and any premium and each installment
of principal and any premium and interest on the Outstanding Securities of that series on the Stated Maturity of such principal or installment of principal or interest
and (ii) any mandatory sinking fund payments or analogous payments applicable to Securities of such series on the day on which such payments are due and payable
in accordance with the terms of this Indenture and of such Securities;
(2)
Such deposit shall not cause the Trustee with respect to the Securities of that series to have a conflicting interest for purposes of the Trust
Indenture Act with respect to the Securities of any series;
(3)
Such deposit will not result in a breach or violation of, or constitute a default under, this Indenture or any other material agreement or instrument
(4)
No Event of Default or event which with the giving of notice or lapse of time, or both, would become an Event of Default with respect to the
which with the giving of notice or lapse of time, or both, would become an Event of Default under Section 501(5) or Section 501(6) shall have occurred and be
51
(5)
The Company has delivered to the Trustee an Opinion of Counsel to the effect that Holders and beneficial owners of the Securities of such series
will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such deposit and defeasance of certain obligations and will be subject to
U.S. federal income tax on the same amount and in the same manner and at the same times, as would have been the case if such deposit and defeasance had not
occurred; and
(6)
The Company has delivered to the Trustee an Officers Certificate and an Opinion of Counsel, each stating that all conditions precedent therein
provided for relating to the defeasance contemplated by this Section have been complied with.
SECTION 1007.
Statement by Officers as to Default.
The Company will deliver to the Trustee, within 120 days after the end of each fiscal year of the Company ending after the date hereof, an Officers Certificate,
stating whether or not to the best knowledge of the signers thereof the Company is in default in the performance and observance of any of the terms, provisions and
conditions of this Indenture (without regard to any period of grace or requirement of notice provided hereunder) and, if the Company shall be in default, specifying all such
defaults and the nature and status thereof of which they may have knowledge.
SECTION 1008.
Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any term, provision or condition set forth in Sections 1004 to 1005, inclusive, with respect to the
Securities of any series if before the time for such compliance the Holders of at least the majority in principal amount of the Outstanding Securities of such series shall, by
Act of such Holders, either waive such compliance in such instance or generally waive compliance with such term, provision or condition, but no such waiver shall extend
to or affect such term, provision or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company and
the duties of the Trustee in respect of any such term, provision or condition shall remain in full force and effect.
ARTICLE ELEVEN
SECTION 1101.
Applicability of Article.
Securities of any series which are redeemable before their Stated Maturity shall be redeemable in accordance with their terms and (except as otherwise specified as
contemplated by Section 301 for Securities of any series) in accordance with this Article.
52
SECTION 1102.
Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities shall be evidenced by a Board Resolution or by action taken pursuant to a Board Resolution. In case of any
redemption at the election of the Company of less than all the Securities of any series, the Company shall, at least 60 days prior to the Redemption Date fixed by the
Company (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee of such Redemption Date, of the principal amount of Securities of such series to be
redeemed and, if applicable, of the tenor of the Securities to be redeemed. In the case of any redemption of Securities prior to the expiration of any restriction on such
redemption provided in the terms of such Securities or elsewhere in this Indenture, the Company shall furnish the Trustee with an Officers Certificate evidencing
compliance with such restriction.
SECTION 1103.
Selection by Trustee of Securities to Be Redeemed .
If less than all the Securities of any series are to be redeemed (unless all of the Securities of such series and of a specified tenor are to be redeemed), the particular
Securities to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee, from the Outstanding Securities of such series not
previously called for redemption, by such method as the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of portions (equal
to the minimum authorized denomination for Securities of that series or any integral multiple in excess thereof) of the principal amount of Securities of such series of a
denomination larger than the minimum authorized denomination for Securities of that series. If less than all of the Securities of such series and of a specified tenor are to be
redeemed, the particular Securities to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee, from the Outstanding Securities of
such series and specified tenor not previously called for redemption in accordance with the preceding sentence.
The Trustee shall promptly notify the Company in writing of the Securities selected for redemption and, in the case of any Securities selected for partial redemption,
the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any
Securities redeemed or to be redeemed only in part, to the portion of the principal amount of such Securities which has been or is to be redeemed.
SECTION 1104.
Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption Date, to each Holder
of Securities to be redeemed, at his address appearing in the Security Register.
All notices of redemption shall state:
(1)
(2)
the Redemption Date,
the Redemption Price,
53
(3)
if less than all the Outstanding Securities of any series are to be redeemed, the identification (and, in the case of partial redemption of any
Securities, the principal amounts) of the particular Securities to be redeemed,
(4)
that on the Redemption Date the Redemption Price will become due and payable upon each such Security to be redeemed and, if applicable, that
interest thereon will cease to accrue on and after said date,
(5)
(6)
the place or places where such Securities are to be surrendered for payment of the Redemption Price, and
that the redemption is for a sinking fund, if such is the case.
Notice of redemption of Securities to be redeemed at the election of the Company shall be given by the Company or, at the Companys request, by the Trustee in the
name and at the expense of the Company.
SECTION 1105.
Deposit of Redemption Price .
Prior to any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate
and hold in trust as provided in Section 1003) an amount of money sufficient to pay the Redemption Price of, and (except if the Redemption Date shall be an Interest
Payment Date) accrued interest on, all the Securities which are to be redeemed on that date.
SECTION 1106.
Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption
Price therein specified, and from and after such date (unless the Company shall default in the payment of the Redemption Price and accrued interest) such Securities shall
cease to bear interest. Upon surrender of any such Security for redemption in accordance with said notice, such Security shall be paid by the Company at the Redemption
Price, together with accrued interest to the Redemption Date; provided, however, that, unless otherwise specified as contemplated by Section 301, installments of interest
whose Stated Maturity is on or prior to the Redemption Date shall be payable to the Holders of such Securities, or one or more Predecessor Securities, registered as such at
the close of business on the relevant Record Dates according to their terms and the provisions of Section 307.
If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal and any premium shall, until paid, bear interest from
the Redemption Date at the rate prescribed therefor in the Security.
SECTION 1107.
Securities Redeemed in Part.
Any Security which is to be redeemed only in party shall be surrendered at a Place of Payment therefor (with, if the Company or the Trustee so requires, due
endorsement by, or a written instrument of
54
transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or his attorney duly authorized in writing), and the Company shall
execute, and the Trustee shall authenticate and deliver to the Holder of such Security without service charge, a new Security or Securities of the same series and of like
tenor, of any authorized denomination as requested by such Holder, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of
the Security so surrendered.
ARTICLE TWELVE
SINKING FUNDS
SECTION 1201.
The provisions of this Article shall be applicable to any sinking fund for the retirement of Securities of a series except as otherwise specified as contemplated by
Section 301 for Securities of such series.
The minimum amount of any sinking fund payment provided for by the terms of Securities of any series is herein referred to as a mandatory sinking fund
payment, and any payment in excess of such minimum amount provided for by the terms of Securities of any series is herein referred to as an optional sinking fund
payment. If provided for by the terms of Securities of any series, the cash amount of any sinking fund payment may be subject to reduction as provided in Section 1202.
Each sinking fund payment shall be applied to the redemption of Securities of any series as provided for by the terms of Securities of such series.
SECTION 1202.
Satisfaction of Sinking Fund Payments with Securities .
The Company (1) may deliver Outstanding Securities of a series (other than any previously called for redemption) and (2) may apply as a credit Securities of a
series which have been redeemed either at the election of the Company pursuant to the terms of such Securities or through the application of permitted optional sinking
fund payments pursuant to the terms of such Securities, in each case in satisfaction of all or any part of any sinking fund payment with respect to the Securities of such
series required to be made pursuant to the terms of such Securities as provided for by the terms of such series; provided that such Securities have not been previously so
credited. Such Securities shall be received and credited for such purpose by the Trustee at the Redemption Price specified in such Securities for redemption through
operation of the sinking fund and the amount of such sinking fund payment shall be reduced accordingly.
SECTION 1203.
Redemption of Securities for Sinking Fund.
Not less than 60 days prior to each sinking fund payment date for any series of Securities, the Company will deliver to the Trustee an Officers Certificate
specifying the amount of the next ensuing sinking fund payment for that series pursuant to the terms of that series, the portion thereof, if any, which is to be satisfied by
payment of cash and the portion thereof, if any, which is to be satisfied by delivering and crediting Securities of that series pursuant to Section 1202 and will also deliver to
the Trustee any Securities to be so delivered. Not less than 30 and not more than 60 days before each such sinking fund payment date the Trustee shall select the Securities
to be redeemed upon such sinking fund payment date in the manner specified in Section 1103 and cause notice of the redemption thereof to be given in the name
55
of and at the expense of the Company in the manner provided in Section 1104. Such notice having been duly given, the redemption of such Securities shall be made upon
the terms and in the manner stated in Sections 1106 and 1107.
This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same instrument.
56
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the day and year first above written.
By /s/ Jon R. Moeller
Name: Jon R. Moeller
Title: Chief Financial Officer
DEUTSCHE BANK TRUST COMPANY, as Trustee
By /s/ Richard L. Buckwalter
Name: Richard L. Buckwalter
Title: Director
By /s/ Annie V. Jaghatspanyan
Name: Annie V. Jaghatspanyan
Title: Vice President
EXHIBIT (4-2)
INDENTURE AMONG PROCTER & GAMBLE INTERNATIONAL FUNDING SCA, THE PROCTER & GAMBLE COMPANY AND DEUTSCHE BANK
TRUST COMPANY AMERICAS
PROCTER & GAMBLE INTERNATIONAL FUNDING SCA,

as Issuer
and
THE PROCTER & GAMBLE COMPANY,

as Guarantor
TO
Deutsche Bank Trust Company Americas,
as Trustee
____________
Indenture
Dated as of September 3, 2009

____________

Certain Sections of this Indenture relating to
Sections 310 through 318, inclusive, of the
Trust Indenture Act of 1939
Trust Indenture
Act Sections
Indenture Sections
310(a)(1)..............................................................................................................................609
(a)(2)..............................................................................................................................609
(a)(3)............................................................................................................................. Not Applicable
(a)(4)............................................................................................................................. Not Applicable
(a)(5).............................................................................................................................609
(b)................................................................................................................................. 608
610
311(a).................................................................................................................................. 613
(b).................................................................................................................................. 613
312(a).................................................................................................................................. 701
702(a)
(b).................................................................................................................................. 702(b)
(c)................................................................................................................................. 702(c)
313(a).................................................................................................................................. 703(a)
(b).................................................................................................................................. 703(a)
(c).................................................................................................................................. 703(a)
(d).................................................................................................................................. 703(b)
314(a).................................................................................................................................. 704
(a)(4)............................................................................................................................. 101
1007
(b).................................................................................................................................. Not Applicable
(c)(1).............................................................................................................................. 102
(c)(2).............................................................................................................................. 102
(c)(3).............................................................................................................................. Not Applicable
(d).................................................................................................................................. Not Applicable
(e) .................................................................................................................................. 102
315(a).................................................................................................................................. 601
(b).................................................................................................................................. 602
(c) .................................................................................................................................. 601
(d).................................................................................................................................. 601
(e) .................................................................................................................................. 514
316(a).................................................................................................................................. 101
(a)(1)(A)........................................................................................................................ 502
512
(a)(1)(B)........................................................................................................................ 513
(a)(2).............................................................................................................................. Not Applicable
(b)...................................................................................................................................508
(c) ...................................................................................................................................104(c)
317(a)(1)............................................................................................................................. 503
(a)(2)...............................................................................................................................504
(b)...................................................................................................................................1003
318(a)...................................................................................................................................107
_______________
Note: This reconciliation and tie shall not, for any purpose, be deemed to be a part of the Indenture.
TABLE OF CONTENTS
Page
PARTIES............................................................................................................................................ 1 RECITALS...........................................................................................................................
ARTICLE ONE
SECTION 101.
SECTION 102.
SECTION 103.
SECTION 104.
SECTION 105.
SECTION 106.
SECTION 107.
SECTION 108.
SECTION 109.
SECTION 110.
SECTION 111.
SECTION 112.
SECTION 113.
SECTION 114.
Definitions...................................................................................................... 1
Compliance Certificates and Opinions.......................................................... 8
Form of Documents Delivered to Trustee...................................................... 8
Acts of Holders; Record Dates...................................................................... 9
Notices, Etc., to Trustee and Company.......................................................... 10
Notice of Holders; Waiver.............................................................................. 10
Conflict with Trust Indenture Act.................................................................. 11
Effect of Headings and Table of Contents..................................................... 11
Successors and Assigns.................................................................................. 11
Separability Clause........................................................................................ 11
Benefits of Indenture...................................................................................... 11
Governing Law............................................................................................... 11
Legal Holidays............................................................................................... 11
USA Patriot Act..............................................................................................12
ARTICLE TWO
SECURITY FORMS
SECTION 201.
SECTION 202.
SECTION 203.
SECTION 204.
SECTION 205.
SECTION 206.
Forms Generally.............................................................................................
Form of Face of Security................................................................................
Form of Reverse of Security..........................................................................
Form of Legend for Book-Entry Securities...................................................
Form of Trustees Certificate of Authentication............................................
Form of Guarantee.........................................................................................
12
12
15
18
18
19
ARTICLE THREE
THE SECURITIES
SECTION 301.
SECTION 302.
SECTION 303.
SECTION 304.
SECTION 305.
SECTION 306.
SECTION 307.
SECTION 308.
SECTION 309.
SECTION 310.
SECTION 311.
Amount Unlimited; Issuable in Series........................................................... 20

Denominations............................................................................................... 22
Execution, Authentication, Delivery and Dating........................................... 22
Temporary Securities..................................................................................... 23
Registration, Registration of Transfer and Exchange.................................... 24
Mutilated, Destroyed, Lost and Stolen Securities.......................................... 25
Payment of Interest; Interest Rights Preserved.............................................. 26
Persons Deemed Owners................................................................................27
Cancellation....................................................................................................27
Computation of Interest................................................................................. 28
CUSIP and ISIN Numbers............................................................................. 28
ARTICLE FOUR
SECTION 401.
SECTION 402.
SECTION 403.
Satisfaction and Discharge of Indenture........................................................ 28

Application of Trust Money........................................................................... 29
Defeasance and Discharge of Securities of any Series.................................. 30
ARTICLE FIVE
REMEDIES
SECTION 501.
SECTION 502.
SECTION 503.
SECTION 504.
SECTION 505.
SECTION 506.
SECTION 507.
SECTION 508.
SECTION 509.
SECTION 510.
SECTION 511.
SECTION 512.
SECTION 513.
SECTION 514.
SECTION 515.
Events of Default........................................................................................... 31
Acceleration of Maturity; Rescission and Annulment................................... 33
Collection of Indebtedness and Suits for Enforcement by Trustee................ 34
Trustee May File Proofs of Claim.................................................................. 34
Trustee May Enforce Claims Without Possession of Securities.................... 35
Application of Money Collected.................................................................... 35
Limitation on Suits......................................................................................... 35
Unconditional Right of Holders to Receive Principal, Premium and
Interest............................................................................................................ 36
Restoration of Rights and Remedies.............................................................. 36
Rights and Remedies Cumulative.................................................................. 36
Delay or Omission Not Waiver...................................................................... 37
Control by Holders......................................................................................... 37
Waiver of Past Defaults..................................................................................37
Undertaking for Costs.................................................................................... 37
Waiver of Stay or Extension Laws................................................................ 38
ARTICLE SIX
THE TRUSTEE
SECTION 601.
SECTION 602.
SECTION 603.
SECTION 604.
SECTION 605.
SECTION 606.
SECTION 607.
SECTION 608.
SECTION 609.
SECTION 610.
SECTION 611.
SECTION 612.
SECTION 613.
SECTION 614.
Certain Duties and Responsibilities............................................................... 38

Notice of Defaults.......................................................................................... 38
Certain Rights of Trustee............................................................................... 38
Not Responsible for Recitals or Issuance of Securities................................. 39
May Hold Securities...................................................................................... 39
Money Held in Trust...................................................................................... 40
Compensation and Reimbursement............................................................... 40
Disqualification; Conflicting Interests........................................................... 40
Corporate Trust Required; Eligibility............................................................. 40
Resignation and Removal; Appointment of Successor.................................. 41
Acceptance of Appointment by Successor..................................................... 42
Merger, Conversion, Consolidation or Succession to Business..................... 43
Preferential Collection of Claims Against Company. ................................... 43
Appointment of Authenticating Agent........................................................... 43
ARTICLE SEVEN
SECTION 701.
SECTION 702.
SECTION 703.
SECTION 704.
Company to Furnish Trustee Names and Addresses of Holders.................... 45

Preservation of Information; Communications to Holders............................ 45
Reports by Trustee......................................................................................... 46
Reports by Company...................................................................................... 46
ARTICLE EIGHT
SECTION 801.
SECTION 802.
Company May Consolidate, Etc. Only on Certain Terms.............................. 46

Successor Substituted..................................................................................... 47
ARTICLE NINE
SECTION 901.
SECTION 902.
SECTION 903.
SECTION 904.
SECTION 905.
SECTION 906.
Supplemental Indentures Without Consent of Holders..................................

Supplemental Indentures with Consent of Holders.......................................
Execution of Supplemental Indentures..........................................................
Effect of Supplemental Indentures.................................................................
Conformity with Trust Indenture Act.............................................................
References in Securities to Supplemental Indentures....................................
47
48
49
49
50
50
ARTICLE TEN
COVENANTS
SECTION 1001.
SECTION 1002.
SECTION 1003.
SECTION 1004.
SECTION 1005.
SECTION 1006.
SECTION 1007.
SECTION 1008.
SECTION 1009.
Payment of Principal, Premium and Interest.................................................

Maintenance of Office or Agency..................................................................
Money for Securities Payments to Be Held in Trust......................................
Limitation on Liens........................................................................................
Limitation on Sales and Leasebacks..............................................................
Defeasance of Certain Obligations................................................................
Statement by Officers as to Default...............................................................
Waiver of Certain Covenants.........................................................................
Business Activities.........................................................................................
50
50
51
52
53
53
55
55
55
ARTICLE ELEVEN
GUARANTEE
SECTION 1101.
SECTION 1102.
SECTION 1103.
SECTION 1104.
SECTION 1105.
SECTION 1106.
SECTION 1107.
Guarantee.......................................................................................................
Consolidation, Merger, Conveyance, Transfer or Lease................................
Successor Substituted.....................................................................................
No Waiver......................................................................................................
Modification...................................................................................................
Non-Impairment.............................................................................................
Limitation on Guarantor Liability..................................................................
55
57
58
58
58
54
59
ARTICLE TWELVE
SECTION 1201.
SECTION 1202.
SECTION 1203.
SECTION 1204.
SECTION 1205.
SECTION 1206.
SECTION 1207.
Election to Redeem; Notice to Trustee...........................................................59
Selection by Trustee of Securities to Be Redeemed...................................... 59
Notice of Redemption.................................................................................... 60
Deposit of Redemption Price......................................................................... 60
Securities Payable on Redemption Date........................................................ 61
Securities Redeemed in Part.......................................................................... 61
ARTICLE THIRTEEN
SINKING FUNDS
SECTION 1301.
SECTION 1302.
SECTION 1303.
Satisfaction of Sinking Fund Payments with Securities................................ 62
Redemption of Securities for Sinking Fund................................................... 62
ARTICLE FOURTEEN
SINKING FUNDS
SECTION 1401.
Submission to Jurisdiction; Appointment of Agent.......................................
62
INDENTURE, dated as of September 3, 2009, among PROCTER & GAMBLE INTERNATIONAL FUNDING SCA, a socit en commandite par actions duly
organized and existing under the laws of the Grand Duchy of Luxembourg (herein called the Company), having its registered office at 26, boulevard Royal, L-2449
Luxembourg, registered with the Luxembourg trade and companies register under number B114825, THE PROCTER & GAMBLE COMPANY, a corporation duly
organized and existing under the laws of the State of Ohio (herein called the Guarantor), having its principal office at One Procter & Gamble Plaza, Cincinnati, Ohio
45202, and DEUTSCHE BANK TRUST COMPANY AMERICAS, a New York banking corporation, having its principal corporate office at 60 Wall Street, MSNYC602710, New York, New York 10005, as Trustee (herein called the Trustee).
RECITALS
The Company has duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of its unsecured debentures, notes or
other evidences of indebtedness (herein called the Securities), to be issued in one or more series as in this Indenture provided.
The Guarantor has duly authorized the execution and delivery of this Indenture to provide for the Guarantee (as defined herein) of the Securities to be issued by the
Company in one or more series as in this Indenture provided.
All things necessary to make this Indenture a valid agreement of the Company and the Guarantor, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Securities or of series thereof, as follows:
ARTICLE ONE
SECTION 101.
Definitions.
For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires:
(1)
(2)
them therein;
(3)
indicated;
the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular;
all other terms used herein which are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to
the phrase in writing as used herein shall be deemed to include .pdf attachments and other electronic means of transmission, unless otherwise
1
(4) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles,
and, except as otherwise herein expressly provided, the term generally accepted accounting principles with respect to any computation required or permitted
hereunder shall mean such accounting principles as are generally accepted at the date of such computation; and
(5) the words herein, hereof and hereunder and other words of similar import refer to this Indenture as a whole and not to any particular Article,
Section or other subdivision.
Certain terms used principally in Article Six, are defined in that Article.
Act, when used with respect to any Holder, has the meaning specified is Section 104.
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 the purposes of this definition, control when used with respect to any specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms controlling and controlled have
meanings correlative to the foregoing.
Attributable Debt means, as to any particular lease under which any Person is at the time liable, at any date as of which the amount thereof is to be determined, the
lesser of (i) the fair market value of the Principal Domestic Manufacturing Property sold and leased back at the time of entering into a sale and leaseback transaction as
defined in Section 1005 (as set forth in an Officers Certificate), and (ii) the total net amount of rent required to be paid by such Person under such lease during the
remaining term thereof, discounted from the respective due dates thereof to such date at the rate of 10% per annum compounded annually. The net amount of rent required
to be paid under any such lease for any such period shall be the amount of the rent payable by the lessee with respect to such period, after excluding amounts required to be
paid on account of maintenance and repairs, insurance, taxes, assessments, water rates and similar charges. In the case of any lease which is terminable by the lessee upon
the payment of a penalty, such net amount shall also include the amount of such penalty, but no rent shall be considered as required to be paid under such lease subsequent
to the first date upon which it may be so terminated.
series.
Authenticating Agent means any Person authorized by the Trustee pursuant to Section 614 to act on behalf of the Trustee to authenticate Securities of one or more
Board of Directors means either the board of managers of the sole general partner of the Company or the board of directors of the Guarantor, as the case may be,
or any duly authorized committee of such board.
Board Resolution means a copy of a resolution certified by a Manager of the general partner of the Company or by the Secretary or an Assistant Secretary of the
Guarantor, as the case may be, to have been duly adopted by the Board of Directors of the Company or the Guarantor, as the case may be, and to be in full force and effect
on the date of such certification, and delivered to the Trustee. References to any
2
matter in this Indenture being established in, by or pursuant to a Board Resolution shall include actions taken pursuant to authority granted by one or more Board
Resolutions.
Book-Entry Security means a Security bearing the legend specified in Section 204 evidencing all or part of a series of Securities, authenticated and delivered to
the Depository for such series or its nominee, and registered in the name of such Depository or nominee.
Business Day, when used with respect to any Place of Payment, means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in that Place of Payment are authorized or obligated by law or executive order to close, or as such term is otherwise specified with respect to a series of
Securities.
Commission means the United States Securities and Exchange Commission, as from time to time constituted, created under the United States Securities Exchange
Act of 1934, as amended (the Exchange Act), or, if at any time after the execution of this instrument such Commission is not existing and performing the duties now
assigned to it under the Trust Indenture Act, then the body performing such duties at such time.
Company means the Person named as the Company in the first paragraph of this instrument until a successor Person shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter Company shall mean such successor Person.
Company Request or Company Order means a written request or order signed in the name of the Company by any Manager of the general partner of the
Company, and delivered to the Trustee.
Consolidated Net Tangible Assets means total assets of the Guarantor, less net goodwill and other intangible assets, less total current liabilities (as set forth on the
most recent balance sheet of the Guarantor and calculated based on positions as reported in the consolidated financial statements of the Guarantor in accordance with
generally accepted accounting principles).
Corporate Trust Office means the office of the Trustee in the city of New York, New York, at which at any particular time its corporate trust business shall be
administered, which as of the date of this Indenture is - the address of the Trustee set forth in Section 105.
corporation means a corporation, association, company, joint-stock company or business trust.
Debt has the meaning specified in Section 1004.
Defaulted Interest has the meaning specified in Section 307.
Depository means, with respect to the Securities of any series issuable or issued in whole or in part in the form of one or more Book-Entry Securities, the Person
designated as Depository by the Company pursuant to Section 301 which must be a clearing agency registered under the Exchange Act, and if at any time there is more than
one such Person, Depository shall mean the Depository with respect to the Securities of that series.
3
Domestic Subsidiary means a Subsidiary of the Guarantor except (i) the Company and (ii) a Subsidiary (a) which neither transacts any substantial portion of its
business nor regularly maintains any substantial portion of its fixed assets within the States of the United States, or (b) which is engaged primarily in financing the
operations of the Guarantor or its Subsidiaries, or both, outside the States of the United States.
Event of Default has the meaning specified in Section 501.
Funded Debt means all indebtedness for money borrowed having a maturity of more than 12 months from its date of creation.
Guarantee means the guarantee of the Companys obligations under the Securities of any applicable series by the Guarantor under this Indenture.
Guaranteed Obligations has the meaning specified in Section 1101(a).
Guarantor means the Person named as the Guarantor in the first paragraph of this instrument until a successor Person shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter Guarantor shall mean such successor Person.
Holder means a Person in whose name a Security is registered in the Security Register.
Indenture means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof, including, for all purposes of this instrument, and any such supplemental indenture, the provisions of the
Trust Indenture Act that are deemed to be a part of and govern this instrument and any such supplemental indenture, respectively. The term Indenture shall also include
the terms of particular series of Securities established as contemplated by Section 301.
interest, when used with respect to an Original Issue Discount Security which by its terms bears interest only after Maturity, means interest payable after Maturity.
Interest Payment Date, when used with respect to any Security, means the Stated Maturity of an installment of interest on such Security.
Judgment Currency has the meaning specified in Section 1401(e).
Law has the meaning specified in Section 112.
Manager means a manager of the general partner of the Company.
Maturity, when used with respect to any Security, means the date on which the principal of such Security or an installment of principal becomes due and payable
as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise.
4
Mortgage or Mortgages has the meaning specified in Section 1004.

Officers Certificate means a certificate signed by (i) any Manager of the general partner of the Company or (ii) the Chairman of the Board, Chief Executive
Officer, Chief Financial Officer, Chief Operating Officer, a Vice Chairman, a President or a Vice President, or an officer certified by an Assistant Secretary as having a
similar level of authority, and by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary, of the Guarantor, as the case may be, and delivered to the
Trustee. One of the officers signing an Officers Certificate given pursuant to Section 1007 shall be the principal executive, financial or accounting officer of the Guarantor.
Opinion of Counsel means a written opinion of counsel, who may be counsel for the Company or the Guarantor, and who shall be reasonably acceptable to the
Trustee.
Original Issue Discount Security means any Security which provides for an amount less than the principal amount thereof to be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section 502.
Outstanding, when used with respect to Securities, means, as of the date of determination, all Securities theretofore authenticated and delivered under this
Indenture, except :
(i)
Securities theretofore cancelled by the Trustee or delivered to the Trustee for cancellation;
(ii)
Securities for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent
(other than the Company or the Guarantor) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the
Holders of such Securities in accordance with Section 401; provided , that if such Securities are to be redeemed, notice of such redemption has been duly given
pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made;
(iii)
Securities for whose payment or redemption money or U.S. Government Obligations in the necessary amount has been theretofore deposited
with the Trustee (or another trustee satisfying the requirements of Section 609) in trust for the Holders of such Securities in accordance with Section 403; and
(iv)
Securities which have been paid pursuant to Section 306 or in exchange for or in lieu of which other Securities have been authenticated and
delivered pursuant to this Indenture, other than any such Securities in respect of which there shall have been presented to the Trustee proof satisfactory to it that
such Securities are held by a bona fide purchaser in whose hands such Securities are valid obligations of the Company;
provided , however , that in determining whether the Holders of the requisite principal amount of the Outstanding Securities have given any request, demand, authorization,
direction, notice, consent or waiver hereunder, (i) the principal amount of an Original Issue Discount Security that shall be deemed to be Outstanding shall be the amount of
the principal thereof that would be due and payable as of the date of
5
such determination upon acceleration of the Maturity thereof pursuant to Section 502, (ii) the principal amount of a Security denominated in one or more foreign currencies
or currency units shall be the U.S. dollar equivalent, determined in the manner provided as contemplated by Section 301 on the date of original issuance of such Security, of
the principal amount (or, in the case of an Original Issue Discount Security, the U.S. dollar equivalent on the date of original issuance of such Security of the amount
determined as provided in (i) above) of such Security, and (iii) Securities owned by the Company, the Guarantor or any other obligor upon the Securities or any Affiliate of
the Company, the Guarantor or of such other obligor shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be
protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities which the Trustee knows to be so owned shall be so
disregarded. Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the
pledgees right so to act with respect to such Securities and that the pledgee is not the Company, the Guarantor or any other obligor upon the Securities or any Affiliate of
the Company, the Guarantor or of such other obligor.
Paying Agent means any Person authorized by the Company to pay the principal of or any premium or interest on any Securities on behalf of the Company.
Person means any individual, corporation, partnership, joint venture, trust, unincorporated organization or government or any agency or political subdivision
thereof.
Place of Payment, when used with respect to the Securities of any series, means the place or places where the principal of and any premium and interest on the
Securities of that series are payable as specified as contemplated by Section 301.
Predecessor Security of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular
Security; and, for the purposes of this definition, any Security authenticated and delivered under Section 306 in exchange for or in lieu of a mutilated, destroyed, lost or
stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security.
Principal Domestic Manufacturing Property means any building, structure or other facility, together with the land upon which it is erected and fixtures comprising
a part thereof, used primarily for manufacturing or processing and located in the United States, owned or leased by the Guarantor or any Subsidiary of the Guarantor, the
gross book value (without deduction of any depreciation reserves) of which on the date as of which the determination is being made exceeds 1.0% of Consolidated Net
Tangible Assets, other than any such building, structure or other facility or portion thereof (i) which is financed by obligations the interest on which is exempt from U.S.
federal income tax pursuant to Section 103 of the Internal Revenue Code of 1986, as amended (or any predecessor or successor provision thereof), or (ii) which, in the
opinion of the Board of Directors of the Guarantor, is not of material importance to the total business conducted by the Guarantor and its Subsidiaries as an entirety.
rate of exchange has the meaning specified in Section 1401(e).
Redemption Date, when used with respect to any Security to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture.
6
Redemption Price, when used with respect to any Security to be redeemed, means the price at which it is to be redeemed pursuant to this Indenture.
Regular Record Date for the interest payable on any Interest Payment Date on the Securities of any series means the date specified for that purpose as
contemplated by Section 301.
Securities has the meaning stated in the first recital of this Indenture and more particularly means any Securities authenticated and delivered under this Indenture.
Security Register and Security Registrar have the respective meanings specified in Section 305.
Special Record Date for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 307.
Stated Maturity, when used with respect to any Security or any installment of principal thereof or interest thereon, means the date specified in such Security as the
fixed date on which the principal of such Security or such installment of principal or interest is due and payable.
Subsidiary means a corporation more than 50% of the outstanding voting stock of which is owned, directly or indirectly, by the Guarantor or by one or more other
Subsidiaries, or by the Guarantor and one or more other Subsidiaries. For the purposes of this definition, voting stock means stock which ordinarily has voting power for
the election of directors, whether at all times or only so long as no senior class of stock has such voting power by reason of any contingency.
Trustee means the Person named as the Trustee in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter Trustee shall mean or include each Person who is then a Trustee hereunder, and if at any time there is more than
one such Person, Trustee as used with respect to the Securities of any series shall mean the Trustee with respect to Securities of that series.
Trust Indenture Act means the Trust Indenture Act of 1939 as in force at the date as of which this instrument was executed; provided , however , that in the event
the Trust Indenture Act of 1939 is amended after such date, Trust Indenture Act means, to the extent required by any such amendment, the Trust Indenture Act of 1939 as
so amended.
U.S. Government Obligations means securities which are (i) direct obligations of the United States of America for the payment of which its full faith and credit is
pledged or (ii) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case, are not . callable or redeemable at the option of the
issuer thereof, and shall also include a depository receipt issued by a bank or trust company as custodian with respect to any such U.S. Government Obligation or a specific
payment of interest on or principal of any such U.S. Government Obligation held by such custodian for the account of the holder of a depository receipt; provided that
(except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount
received by the custodian in respect of
7
the U.S. Government Obligation or the specific payment of interest on or principal of the U.S. Government Obligation evidenced by such depository receipt.
Vice President, when used with respect to the Guarantor or the Trustee, means any vice president, whether or not designated by a number or a word or words
added before or after the title vice president.
SECTION 102.
Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall furnish to the Trustee
such certificates and opinions as may be required under the Trust Indenture Act. Each such certificate or opinion shall be given in the form of an Officers Certificate, if to
be given by an officer of the Company, or an Opinion of Counsel, if to be given by counsel, and shall comply with the requirements of the Trust Indenture Act and any
other requirements set forth in this Indenture.
Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include
(1)
a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto;
(2)
a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3)
a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been complied with; and
(4)
SECTION 103.
a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with.
Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an
opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one
or several documents.
Any certificate or opinion of a Manager of the general partner of the Company or of an officer of the Guarantor, as the case may be, may be based, insofar as it
relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such Manager or officer knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to the matters upon which his or her certificate or opinion is based are erroneous. Any such certificate or
opinion of counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or
8
representations by, a Manager or Managers of the general partner of the Company or of an officer or officers of the Guarantor, as the case may be, stating that the
information with respect to such factual matters is in the possession of the Company or the Guarantor, as the case may be, unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this
Indenture, they may, but need not, be consolidated and form one instrument.
SECTION 104.
Acts of Holders; Record Dates.
(a)
Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be
embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by agent duly appointed in writing; and, except as
herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly
required, to the Company or the Guarantor. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the
Act of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Indenture and (subject to Section 601) conclusive in favor of the Trustee, the Company and the Guarantor, if made in the manner provided in this Section.
(b)
The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing
acknowledged to him the execution thereof. Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall
also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may
also be proved in any other manner which the Trustee deems sufficient.
(c)
The Company may, in the circumstances permitted by the Trust Indenture Act, fix any day as the record date for the purpose of determining the Holders
of Securities of any series entitled to give or take any request, demand, authorization, direction, notice, consent, waiver or other action, or to vote on any action, authorized
or permitted to be given or taken by Holders of Securities of such series. If not set by the Company prior to the first solicitation of a Holder of Securities of such series
made by any Person in respect of any such action, or, in the case of any such vote, prior to such vote, the record date for any such action or vote shall be the 30th day (or, if
later, the date of the most recent list of Holders required to be provided pursuant to Section 701) prior to such first solicitation or vote, as the case may be. With regard to
any record date for action to be taken by the Holders of one or more series of Securities, only the Holders of Securities of such series on such date (or their duly designated
proxies) shall be entitled to give or take, or vote on, the relevant action.
9
(d)
The ownership of Securities shall be proved by the Security Register.
(e)
Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Security shall bind every future Holder of the
same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted
or suffered to be done by the Trustee, the Company or the Guarantor in reliance thereon, whether or not notation of such action is made upon such Security.
SECTION 105.
Notices, Etc., to Trustee and Company.
Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Indenture to be made
upon, given or furnished to, or filed with,
(1)
the Trustee by any Holder or by the Company or the Guarantor shall be sufficient for every purpose hereunder if made, given, furnished or filed
in writing to or with the Trustee at its Corporate Trust Office, Deutsche Bank Trust Company Americas, 60 Wall Street, MSNYC60-2710, New York, New York
10005, Attention: Trust & Securities Services, or
(2)
the Company or the Guarantor, as the case may be, by the Trustee or by any Holder shall be sufficient for every purpose hereunder (unless
otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to the Company or the Guarantor, as the case may be, addressed to it at the
address of its office specified in the first paragraph of this instrument or at any other address previously furnished in writing to the Trustee by the Company or the
Guarantor, as the case may be.
SECTION 106.
Notice of Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class postage prepaid, to each Holder affected by such event, at his address as it appears in the Security Register, not later than the latest date (if any), and
not earlier than the earliest date (if any), prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such
notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Indenture
provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall
be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice by mail, then such
notification as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder.
10
SECTION 107.
Conflict with Trust Indenture Act.
SECTION 108.
Effect of Headings and Table of Contents.
If any provision hereof limits, qualifies or conflicts with a provision of the Trust Indenture Act that is required under such Act to be a part of and govern this
Indenture, the Trust Indenture Act provision shall control. If any provision of this Indenture modifies or excludes any provision of the Trust Indenture Act that may be so
modified or excluded, the latter provision shall be deemed to apply to this Indenture as so modified or to be excluded, as the case may be.
The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof.
SECTION 109.
Successors and Assigns.
All covenants and agreements in this Indenture by the Company and the Guarantor shall bind their respective successors and assigns, whether so expressed or not.
SECTION 110.
Separability Clause.
In case any provision in this Indenture or in the Securities or in any Guarantee shall be invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 111.
Benefits of Indenture.
Nothing in this Indenture or in the Securities or any Guarantee, express or implied, shall give to any Person, other than the parties hereto and their successors
hereunder and the Holders, any benefit or any legal or equitable right, remedy or claim under this Indenture.
SECTION 112.
Governing Law.
This Indenture, the Securities and any Guarantee shall be governed by and construed in accordance with the laws of the State of New York. The Company expressly
decides to derogate from the provisions of articles 86 to 94-8 of the law of August 10, 1915 on commercial companies as amended (the Law) in accordance with the
provision of article 95 of the Law.
SECTION 113.
Legal Holidays.
In any case where any Interest Payment Date, Redemption Date or Stated Maturity of any Security shall not be a Business Day at any Place of Payment, then
(notwithstanding any other provision of this Indenture or of the Securities (other than a provision of the Securities of any series which specifically states otherwise))
payment of interest or principal (and premium, if any) need not be made at such Place of Payment on such date, but may be made on the next succeeding Business Day at
such Place of Payment with the same force and effect as if made on the Interest Payment Date or Redemption Date, or at the Stated
11
Maturity, provided that no interest shall accrue for the period from and after such Interest Payment Date, Redemption Date or Stated Maturity, as the case may be.
SECTION 114.
USA Patriot Act.
The parties hereto acknowledge that in accordance with Section 326 of the USA Patriot Act, the Trustee, like all financial institutions, is required to obtain, verify,
and record information that identifies each person or legal entity that establishes a relationship or opens an account. Each of the Company and the Guarantor agrees that it
will provide the Trustee with such information that is in its possession, or is obtainable by the Company or the Guarantor, as the case may be, without unreasonable burden
or expense, as the Trustee may reasonably request, no more frequently than on an annual basis, in order for the Trustee to satisfy the requirements of the USA Patriot Act.
ARTICLE TWO
SECURITY FORMS
SECTION 201.
Forms Generally.
The Securities of each series shall be substantially the form set forth in this Article, or in such other form as shall be established by or pursuant to a Board
Resolution or in one or more indentures supplemental hereto, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to
comply with the rules of any securities exchange or as may, consistently herewith, be determined by the officers executing such Securities, as evidenced by their execution
of the Securities. If the form of Securities of any series is established by action taken pursuant to a Board Resolution, a copy of an appropriate record of such action shall be
certified by a Manager of the general partner of the Company and delivered to the Trustee at or prior to the delivery of the Company Order contemplated by Section 303 for
the authentication and delivery of such Securities.
The definitive Securities shall be printed, lithographed or engraved on steel engraved borders or may be produced in any other manner, all as determined by the
Manager executing such Securities, as evidenced by his or her execution of such Securities.
SECTION 202.
Form of Face of Security.
[if the Security is an Original Issue Discount Security, insert- THIS NOTE WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR PURPOSES OF
SECTIONS 1272, 1273 AND 1275 OF THE UNITED STATES INTERNAL REVENUE CODE OF 1986, AS AMENDED. [THE ISSUE PRICE OF THIS NOTE WAS
_____% OF ITS PRINCIPAL AMOUNT; THE TOTAL AMOUNT OF ORIGINAL ISSUE DISCOUNT IS $____ PER NOTE WITH A PRINCIPAL AMOUNT OF
$___; THE ISSUE DATE IS _____20__; AND THE YIELD TO MATURITY IS ___%.] [THE ISSUE PRICE, ISSUE DATE, TOTAL AMOUNT OF ORIGINAL ISSUE
DISCOUNT AND YIELD TO MATURITY OF THIS NOTE MAY BE OBTAINED BY CONTACTING THE COMPANY AT [26, boulevard Royal, L-2449
Luxembourg].]
12
[if the Security is an Original Issue Discount Security that is subject to the rules of Treasury regulations section 1.1275-4(b) ] [THE ISSUE PRICE OF THIS NOTE
WAS _____% OF ITS PRINCIPAL AMOUNT AT ISSUANCE; THE TOTAL AMOUNT OF ORIGINAL ISSUE DISCOUNT IS $____ PER NOTE WITH A
PRINCIPAL AMOUNT OF $___ AT ISSUANCE, DETERMINED WITHOUT TAKING INTO ACCOUNT ANY ADJUSTMENTS PURSUANT TO TREASURY
REGULATION SECTION 1.1275-4(b); THE ISSUE DATE IS _____20__; THE COMPARABLE YIELD IS ___%; AND THE PROJECTED PAYMENT SCHEDULE
IS ATTACHED HERETO AS EXHIBIT ___.] [THE ISSUE PRICE, ISSUE DATE, TOTAL AMOUNT OF ORIGINAL ISSUE DISCOUNT, COMPARABLE YIELD
AND PROJECTED PAYMENT SCHEDULE WITH RESPECT TO THIS NOTE MAY BE OBTAINED BY CONTACTING THE COMPANY AT [26, boulevard Royal,
L-2449 Luxembourg].]
PROCTER & GAMBLE INTERNATIONAL FUNDING SCA
fully and unconditionally guaranteed by
..
No. ..
CUSIP: [ ]
$ ..
Procter & Gamble International Funding SCA, a socit en commandite par actions duly organized and existing under the laws of the Grand Duchy of Luxembourg
(herein called the Company, which term includes any successor Person under the Indenture hereinafter referred to), having its registered office at 26, boulevard Royal,
L-2449 Luxembourg, registered with the Luxembourg trade and companies register under number B114825, for value received, hereby promises to pay to
or registered assigns, the principal sum of [Dollars] on [ if the Security is to bear Interest
prior to Maturity, Interest- , and to pay interest thereon from or from the most recent Interest Payment Date to which interest has been paid or duly provided
for, semi-annually on .. and in each year, commencing .., at the rate of . . . % per annum, until the principal hereof is paid or
made available for payment [ if applicable, insert- , and (to the extent that the payment of such interest shall be legally enforceable) at the rate of % per annum on any
overdue principal and premium and on any overdue installment of interest]. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date
will, as provided in such Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the
Regular Record Date for such interest, which shall be the or .. (in each case, whether or not a Business Day), immediately preceding
the related Interest Payment Date; provided, however , that interest payable on any Maturity date shall be payable to the Person to whom the principal of the Securities shall
be payable. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be
paid to the Person on whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record
13
Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities of this series not less than 10 days prior to
such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of
this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture].
[ If the Security is not to bear interest prior to the Maturity, insert- The principal of this Security shall not bear interest except in the case of a default in payment of
principal upon acceleration, upon redemption or at Stated Maturity and in such case the overdue principal of this Security shall bear interest at the rate of ..% per annum
(to the extent that the payment of such interest shall be legally enforceable), which shall accrue from the date of such default in payment to the date payment of such
principal has been made or duly provided for. Interest on any overdue principal shall be payable on demand. Any such interest on any overdue principal that is not so paid
on demand shall bear interest at the rate of ..% per annum (to the extent that the payment of such interest shall be legally enforceable), which shall accrue from the date
of such demand for payment to the date payment of such interest has been made or duly provided for, and such interest shall also be payable on demand.]
Payment of the principal of (and premium, if any) and [ if applicable, insert- any such] interest on this Security will be made at the office or agency of the Company
maintained for that purpose in .., in [such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and
private debts] [ if applicable, insert- ; provided , however , that at the option of the Company payment of interest may be made by: check mailed to the address of the
Person entitled thereto in whose name this Security (or one or more Predecessor Securities) are registered at the close of business on the Regular Record Date at such
address as shall appear in the Security Register or by wire transfer of immediately available funds to an account specified in writing by such Holder to the Company and the
Trustee prior to the relevant record date].
This Security is fully and unconditionally guaranteed by The Procter & Gamble Company, a corporation duly organized and existing under the laws of the State of
Ohio (the Guarantor).
Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same
effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be
entitled to any benefit under the Indenture or be valid or obligatory for any purpose.
14
Dated:
IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.
By: its general partner Procter & Gamble International
Finance Funding General Management Srl
By:.....
SECTION 203.
Form of Reverse of Security.
This Security is one of a duly authorized issue of securities of the Company (herein called the Securities), issued and to be issued in one or more series under an
Indenture, dated as of September 3, 2009 (herein called the Indenture), among the Company, the Guarantor and Deutsche Bank Trust Company Americas, as Trustee
(herein called the Trustee, which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby
made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Guarantor, the Trustee and the Holders of the
Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. This Security is one of the series designated on the face hereof[,
limited in aggregate principal amount to [$]..].
[ If applicable, insert- The Securities of this series are subject to redemption upon not less than 30 days notice by mail, [ if applicable, insert- (1) on
. in any year commencing with the year .. and ending with the year . through operation of the sinking fund for this series at a Redemption Price equal
to 100% of the principal amount, and (2)] at any time [on or after ., 20], as a whole or in part, at the election of the Company, at the following Redemption
Prices (expressed as percentages of the principal amount): If redeemed [on or before , %, and if redeemed] during the 12-month period beginning
. of the years indicated,
Year
Redemption Price
Year
Redemption Price
and thereafter at a Redemption Price equal to .% of the principal amount, together in the case of any such redemption [ if applicable, insert- (whether through operation
of the sinking fund or otherwise)] with accrued interest to the Redemption Date, but interest installments whose Stated Maturity is on or prior to such Redemption Date will
be payable to the Holders of such Securities, or one or more Predecessor Securities, of record at the close of business on the relevant Record Dates referred to on the face
hereof, all as provided in the Indenture.]
15
[ If applicable, insert- The Securities of this series are subject to redemption upon not less than 30 days notice by mail, (1) on .. in any year
commencing with the year . and ending with the year . through operation of the sinking fund for this series at the Redemption Prices for redemption through operation
of the sinking fund (expressed as percentages of the principal amount) set forth in the table below, and (2) at any time [on or after .], as a whole or in part, at
the election of the Company, at the Redemption Prices for redemption otherwise than through operation of the sinking fund (expressed as percentages of the principal
amount) set forth in the table below: If redeemed during the 12-month period beginning of the years indicated.
Year
Redemption Price For Redemption Through

Operation of the Sinking Fund
Redemption Price For Redemption Otherwise Than

Through Operation of the Sinking Fund
and thereafter at a Redemption Price equal to .% of the principal amount, together in the case of any such redemption (whether through operation of the sinking fund or
otherwise) with accrued interest to the Redemption Date, but interest installments whose Stated Maturity is on or prior to such Redemption Date will be payable to the
Holders of such Securities, or one or more Predecessor Securities, of record at the close of business on the relevant Record Dates referred to on the face hereof, all as
provided in the Indenture.]
[Notwithstanding the foregoing, the Company may not, prior to , redeem any Securities of this series as contemplated by [Clause (2) of] the
preceding paragraph as a part of, or in anticipation of, any refunding operation by the application, directly or indirectly, of moneys borrowed having an interest cost to the
Company (calculated in accordance with generally accepted financial practice) of less than .% per annum.]
[The sinking fund for this series provides for the redemption on . in each year beginning with the year .. and ending with the year .. of [not less
than $ (mandatory sinking fund) and not more than] $.. aggregate principal amount of Securities of this series. Securities of this series acquired or redeemed by
the Company otherwise than through [mandatory] sinking fund payments may be credited against subsequent [mandatory] sinking fund payments otherwise required to be
made [in the inverse order in which they become due].]
[ If the Security is subject to redemption, insert- In the event of redemption of this Security in part only, a new Security or Securities of this series and of like tenor
for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof.]
[ If the Security is not an Original Issue Discount Security, insert- If an Event of Default with respect to Securities of this series shall occur and be continuing, the
principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture.]
[ If the Security is an Original Issue Discount Security, insert- If an Event of Default with respect to Securities of this series shall occur and be continuing, an
amount of principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture. Such amount shall be equal
to- insert formula for determining the amount . Upon payment (i) of the amount of principal
16
so declared due and payable and (ii) of interest on any overdue principal and overdue interest (in each case to the extent that the payment of such interest shall be legally
enforceable), all of the Companys obligations in respect of the payment of the principal of and interest, if any, on the Securities of this series shall terminate.]
The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and
the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of at
least a majority in principal amount of the Securities at the time Outstanding of each series to be affected. The Indenture also contains provisions permitting the Holders of
at least a majority in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance
by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of
this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and
unconditional, to pay the principal of and any premium and interest on this Security at the times, place and rate, and in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registerable in the Security Register, upon surrender of
this Security for registration of transfer at the office or agency of the Company in any place where the principal of and any premium and interest on this Security are
payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder
hereof or his attorney duly authorized in writing, and thereupon one or more new Securities of this series and of like tenor, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or transferees.
The Securities of this series are issuable only in registered form without coupons in denominations of [$]. and any integral multiple of [$]. in excess
thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of
Securities of this series and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or
other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in
whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such
agent shall be affected by notice to the contrary.
17
All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture.
SECTION 204.
Form of Legend for Book-Entry Securities .
Any Book-Entry Security authenticated and delivered hereunder shall bear a legend in substantially the following form:
This Security is a Book-Entry Security within the meaning of the Indenture hereinafter referred to and is registered in the name of a Depository or a
nominee of a Depository or a successor depository. This Security is not exchangeable for Securities registered in the name of a Person other than the Depository or
its nominee except in the limited circumstances described in the Indenture, and no transfer of this Security (other than a transfer of this Security as a whole by the
Depository to a nominee of the Depository or by a nominee of the Depository to the Depository or another nominee of the Depository) may be registered except in
the limited circumstances described in the Indenture.
SECTION 205.
Form of Trustees Certificate of Authentication .
The Trustees certificates of authentication shall be in substantially the following form:
DEUTSCHE BANK TRUST COMPANY AMERICAS

As Trustee
By ...
Authorized Officer
18
SECTION 206.
Form of Guarantee
The Guarantee of any applicable series of Securities shall be in substantially the following form:
For value received, the undersigned (the Guarantor), to the extent set forth in and subject to the terms of the Indenture, dated as of September 3, 2009 (the
Indenture), among Procter & Gamble International Funding SCA, a socit en commondite par actions duly organized under the laws of the Grand Duchy of
Luxembourg (the Company), the Guarantor and Deutsche Bank Trust Company Americas, as trustee (the Trustee), irrevocably and unconditionally guarantees to each
Holder and to the Trustee and its successors and assigns (1) the full and punctual payment when due, whether at Stated Maturity, by acceleration, by redemption or
otherwise, of all obligations of the Company under this Indenture (including obligations to the Trustee) and the Securities, whether for payment of principal of or interest on
or premium, if any, on the Securities and all other monetary obligations of the Company under this Indenture and the Securities and (2) the full and punctual performance
within applicable grace periods of all other obligations of the Company whether for fees, expenses, indemnification or otherwise under this Indenture and the Securities (all
the foregoing being hereinafter collectively called the Guaranteed Obligations).
The obligations of the Guarantor to the Holders and to the Trustee pursuant to this Guarantee and the Indenture are expressly set forth in Article Eleven of the
Indenture, and reference is hereby made to the Indenture for the precise terms and limitations of this Guarantee. Each Holder of the Securities to which this Guarantee is
endorsed, by accepting such Securities, agrees to and shall be bound by such provisions.
All terms used in this Guarantee which are defined in the Indenture shall have the meanings assigned to them in the Indenture.
IN WITNESS WHEREOF, the Guarantor has caused this Guarantee to be signed by a duly authorized officer.
By ...
19
ARTICLE THREE
THE SECURITIES
SECTION 301.
Amount Unlimited; Issuable in Series .
The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be established in or pursuant to a Board Resolution and, subject to Section 303, set forth, or
determined in the manner provided, in an Officers Certificate, or established in one or more indentures supplemental hereto, prior to the issuance of Securities of any
series,
(1)
the title of the Securities of the series (which shall distinguish the Securities of the series from Securities of any other series);
(2)
any limit upon the aggregate principal amount of the Securities of the series which may be authenticated and delivered under this Indenture
(except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of the series pursuant to Section
304, 305, 306, 906 or 1207 and except for any Securities which, pursuant to Section 303, are deemed never to have been authenticated and delivered hereunder);
(3)
the Person to whom any interest on a Security of the series shall be payable, if other than the Person in whose name that Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest;
(4)
the date or dates on which the principal of the Securities of the series is payable;
(6)
the place or places where the principal of and any premium and interest on Securities of the series shall be payable;
(5)
the rate or rates at which the Securities of the series shall bear interest, or the method or methods by which such rate or rates shall be determined,
if any, the date or dates from which such interest shall accrue, the Interest Payment Dates on which any such interest shall be payable and the Regular Record Date
for any interest payable on any Interest Payment Date;
(7)
the period or periods within which, the price or prices at which and the terms and conditions upon which Securities of the series may be
redeemed, in whole or in part, at the option of the Company;
(8)
the obligation, if any, of the Company to redeem or purchase Securities of the series pursuant to any sinking fund or analogous provisions or at
the option of a Holder thereof and the period or periods within which, the price or prices at which and the terms and conditions upon which Securities of the series
shall be redeemed or purchased, in whole or in part, pursuant to such obligation;
20
(9)
if other than minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof, the denominations in which Securities of the
series shall be issuable;
(10)
(11)
(12)
the currency, currencies or currency units in which payment of the principal of and any premium and interest on any Securities of the series shall
be payable if other than the currency of the United States of America and the manner of determining the equivalent thereof in the currency of the United States of
America for purposes of the definition of Outstanding in Section 101;
(13)
if the amount of payments of principal of or any premium or interest on any Securities of the series may be determined with reference to an
index, the manner in which such amounts shall be determined;
(14)
whether the Securities of the series shall be issued in whole or in part in the form of one or more Book-Entry Securities and, in such case, the
Depository with respect to such Book-Entry Security or Securities and the circumstances under which any such Book-Entry Security may be registered for transfer
or exchange, or authenticated and delivered, in the name of a Person other than such Depository or its nominee, if other than as set forth in Section 305;
(15)
if other than the principal of or any premium or interest on any Securities of the series is to be payable, at the election of the Company or a
Holder thereof, in one or more currencies or currency units other than that or those in which the Securities are stated to be payable, the currency, currencies or
currency units in which payment of the principal of and any premium and interest on Securities of such series as to which such election is made shall be payable,
and the periods within which and the terms and conditions upon which such election is to be made;
(16)
if other than the entire principal amount thereof, the portion of the principal amount of Securities of the series which shall be payable upon
declaration of acceleration of the Maturity thereof pursuant to Section 502;
(17)
any deletions, modifications of or additions to the Events of Default or the covenants of the Company or the Guarantor set forth herein, and any
definitions related thereto, with respect to Securities of the series;
(18)
if the Securities of the series are to be listed on any securities exchange, the securities exchange upon which such Securities shall be listed;
(19)
whether the Securities of the series will be guaranteed by any Person and, if so, the identity of such Person, the terms and conditions upon which
such Securities shall be guaranteed;
(20)
the obligation, if any, of the Company or the Guarantor to pay additional amounts in respect of any tax, assessment or governmental charge and,
if so, whether the Company will have
21
the option to redeem such Securities rather than paying such additional interest (and the terms of any such option); and
(21)
any other terms of the series (which terms shall not be inconsistent with the provisions of this Indenture, except as permitted by Section 901(5)).
All Securities of any one series shall be substantially identical except as to denomination and except as may otherwise be provided in or pursuant to the Board
Resolution referred to above and (subject to Section 303) set forth, or determined in the manner provided, in the Officers Certificate referred to above or in any such
indenture supplemental hereto.
SECTION 302.
Denominations .
The Securities of each series shall be issuable in registered form without coupons in such denominations as shall be specified as contemplated by Section 301. In the
absence of any such provisions with respect to the Securities of any series, the Securities of such series shall be issuable in minimum denominations of $2,000 and any
integral multiple of $1,000 in excess thereof.
SECTION 303.
Execution, Authentication, Delivery and Dating .
The Securities shall be executed on behalf of the Company by one of the Managers of the general partner of the Company. The signature of such Manager on the
Securities may be manual, facsimile, in the form of a .pdf attachment or by other means of electronic transmission.
Securities bearing the signature of an individual who was, at the time of executing such Securities, the proper Manager of the general partner of the Company, shall
bind the Company, notwithstanding that such individual has ceased to be a Manager of the general partner of the Company prior to the authentication and delivery of such
Securities.
At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities of any series executed by the Company to
the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities, and the Trustee in accordance with the Company
Order shall authenticate and deliver such Securities. If the form or terms of the Securities of the series have been established in or pursuant to one or more Board
Resolutions as permitted by Sections 201 and 301, in authenticating such Securities, and accepting the additional responsibilities under this Indenture in relation to such
Securities, the Trustee shall be entitled to receive, and (subject to Section 601) shall be fully protected in relying upon, an Opinion of Counsel stating,
(a)
if the form of such Securities has been established by or pursuant to Board Resolutions as permitted by Section 201, that such form has been established
in conformity with the provisions of this Indenture;
(b)
if the terms of such Securities have been established by or pursuant to Board Resolutions as permitted by Section 301, that such terms have been
22
(c)
that such Securities, when authenticated and delivered by the Trustee and issued by the Company in the manner and subject to any conditions specified in
such Opinion of Counsel, will constitute valid and binding obligations of the Company enforceable in accordance with their terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors rights and to general equity principles; and
with.
(d)
all conditions precedent provided for in this Indenture relating to the authentication and delivery of the Securities by the Trustee have been complied
If such form or terms have been so established, the Trustee shall not be required to authenticate such Securities if the issue of such Securities pursuant to this
Indenture will adversely affect the Trustees own rights, duties or immunities under the Securities and this Indenture or otherwise in a manner which is not reasonably
acceptable to the Trustee.
Notwithstanding the provisions of Section 301 and of the preceding paragraph, if all Securities of a series are not to be originally issued at one time, it shall not be
necessary to deliver the Officers Certificate otherwise required pursuant to Section 301 or the Company Order and Opinion of Counsel otherwise required pursuant to such
preceding paragraph at or prior to the time of authentication of each Security of such series if such documents are delivered at or prior to the authentication upon original
issuance of the first Security of such series to be issued.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Security a certificate of
authentication substantially in the form provided for herein executed by the Trustee by manual signature, and such certificate upon any Security shall be conclusive
evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder. Notwithstanding the foregoing, if any Security shall have been
authenticated and delivered hereunder but never issued and sold by the Company, and the Company shall deliver such Security to the Trustee for cancellation as provided
in Section 309, for all purposes of this Indenture such Security shall be deemed never to have been authenticated and delivered hereunder and shall never be entitled to the
benefits of this Indenture.
SECTION 304.
Temporary Securities .
Pending the preparation of definitive Securities of any series, the Company may execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Securities which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the
definitive Securities in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such
Securities may determine, as evidenced by their execution of such Securities.
If temporary Securities of any series are issued, the Company will cause definitive Securities of that series to be prepared without unreasonable delay. After the
preparation of definitive Securities of such series, the temporary Securities of such series shall be exchangeable for definitive Securities of such series upon surrender of the
temporary Securities of such series at the office or agency of the Company in a Place
23
of Payment for that series, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities of any series the Company shall execute
and the Trustee shall authenticate and deliver in exchange therefor one or more definitive Securities of the same series, of any authorized denominations and of a like
aggregate principal amount and tenor. Until so exchanged the temporary Securities of any series shall in all respects be entitled to the same benefits under this Indenture as
definitive Securities of such series and tenor.
SECTION 305.
Registration, Registration of Transfer and Exchange .
The Company shall cause to be kept at its registered office in the Grand Duchy of Luxembourg, with a copy kept at the Corporate Trust Office of the Trustee, a
register (the register maintained in such office and in any other office or agency of the Company in a Place of Payment being herein sometimes collectively referred to as
the Security Register) in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Securities and of transfers of
Securities. The Trustee is hereby appointed Security Registrar for the purpose of registering Securities and transfers of Securities as herein provided.
Upon surrender for registration of transfer of any Security of any series at the office or agency in a Place of Payment for that series, the Company shall execute, and
the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Securities of the same series, of any authorized
denominations and of a like aggregate principal amount and tenor.
At the option of the Holder, Securities of any series may be exchanged for other securities of the same series, of any authorized denominations and of a like
aggregate principal amount and tenor, upon surrender of the Securities to be exchanged at such office or agency. Whenever any Securities are so surrendered for exchange,
the Company shall execute, and the Trustee shall authenticate and deliver, the Securities which the Holder making the exchange is entitled to receive.
All Securities issued upon any registration of transfer or exchange of Securities shall be the valid obligations of the Company, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Securities surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer or for exchange shall (if so required by the Company or the Trustee) be duly endorsed, or be
accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed, by the Holder thereof or his attorney duly
authorized in writing.
No service charge shall be made for any registration of transfer or exchange of Securities, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Securities, other than exchanges pursuant to Section
304, 906 or 1207 not involving any transfer.
The Company shall not be required (i) to issue, register the transfer of or exchange Securities of any series during a period beginning at the opening of business 15
days before the day of the mailing of a notice of redemption of Securities of that series selected for redemption under Section 1203 and ending at the close of business on
the day of such mailing, or (ii) to register the transfer of or exchange of any Security
24
so selected for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part.
Notwithstanding the foregoing, no Book-Entry Security shall be registered for transfer or exchange, or authenticated and delivered, whether pursuant to this Section,
Sections 304, 306, 906 or 1207 or otherwise, in the name of a Person other than the Depository for such Book-Entry Security or its nominee until (i) the Depository with
respect to a Book-Entry Security notifies the Company that it is unwilling or unable to continue as Depository for such Book-Entry Security or the Depository ceases to be
a clearing agency registered under the Exchange Act, (ii) the Company executes and delivers to the Trustee a Company Order that such Book-Entry Security shall be so
transferable and exchangeable or (iii) there shall have occurred and be continuing an Event of Default with respect to the Securities of such series. Upon the occurrence in
respect of any Book-Entry Security of any series of any one or more of the conditions specified in clauses (i), (ii) or (iii) of the preceding sentence or such other conditions
as may be specified as contemplated by Section 301 for such series, such Book-Entry Security may be registered for transfer or exchange for Securities registered in the
name of, or authenticated and delivered to, such Persons as the Depository with respect to such series shall direct.
Except as provided in the preceding paragraph, any Security authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, any BookEntry Security, whether pursuant to this Section, Section 304, 306, 906 or 1207 or otherwise, shall also be a Book-Entry Security and bear the legend specified in Section
204.
SECTION 306.
Mutilated, Destroyed, Lost and Stolen Securities .
If any mutilated Security is surrendered to the Trustee, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Security
of the same series and of like tenor and principal amount and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i) evidence to their satisfaction of the destruction, loss or theft of any Security and (ii) such security or
indemnity as may be required by them to save each of them and any agent of either of them harmless, then, in the absence of notice to the Company, the Guarantor or the
Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute and the Trustee shall authenticate and deliver, in lieu of any such
destroyed, lost or stolen Security, a new Security of the same series and of like tenor and principal amount and bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of
issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security of any series issued pursuant to this Section in lieu of any destroyed, loss or stolen Security shall constitute an original additional contractual
obligation of the Company, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled
25
to all the benefits of this Indenture equally and proportionately with any and all other Securities of that series duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities.
SECTION 307.
Payment of Interest; Interest Rights Preserved .
Except as otherwise provided as contemplated by Section 301 with respect to any series of Securities, interest on any Security which is payable, and is punctually
paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record date for such interest.
Any interest on any Security of any Series which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date (herein called Defaulted
Interest) shall forthwith cease to be payable to the Holder on the relevant regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be
paid by the Company, at its election in each case, as provided in Clause (1) or (2) below:
(1)
The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities of such Series (or their
respective Predecessor Securities) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be made
in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security of such series
and the date of the proposed payment, and at the same time the Company shall deposit with the trustee an amount of money equal to the aggregate amount proposed
to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment,
such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this Clause provide. Thereupon the Trustee shall
fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed
payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such
Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special
Record Date therefore to be mailed, First-class postage prepaid, to each holder of Securities of such series at his address as it appears in the Security Register, not
less than 10 days prior such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefore having been so
mailed such Defaulted Interest shall be paid to the Persons in whose names the Securities of such series (or their respective Predecessor Securities) are registered at
the close of business on such Special Record Date and shall no longer be payable pursuant to the following Clause (2).
26
(2)
The Company may make payment of any Defaulted Interest on the Securities of any series in any other lawful manner not inconsistent with the
requirements of any securities exchange on which such Securities may be listed, and upon such notice as may be required by such exchange, if after notice given by
the Company to the Trustee of the proposed payment pursuant to this Clause, such manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any
other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security.
SECTION 308.
Persons Deemed Owners.
Prior to due presentment of a Security for registration of transfer, the Company, the Guarantor, the Trustee and any agent of the Company, the Guarantor or the
Trustee may treat the Person in whose name such Security is registered as the owner of such Security for the purpose of receiving payment of principal of and any premium
and (subject to Section 307) any interest on such Security and for all other purposes whatsoever, whether or not such Security be overdue, and neither the Company, the
Guarantor, the Trustee nor any agent of the Company, the Guarantor or the Trustee shall be affected by notice to the contrary.
SECTION 309.
Cancellation.
All Securities surrendered for payment, redemption, registration of transfer or exchange or for credit against any sinking fund payment shall, if surrendered to any
Person other than the Trustee, be delivered to the Trustee and shall be promptly cancelled by it. The Company and the Guarantor may at any time deliver to the Trustee for
cancellation any Securities previously authenticated and delivered hereunder which the Company or the Guarantor may have acquired in any manner whatsoever, and may
deliver to the Trustee (or to any other Person for delivery to the Trustee) for cancellation any Securities previously authenticated hereunder which the Company has not
issued and sold, and all Securities so delivered shall be promptly cancelled by the Trustee. No Securities shall be authenticated in lieu of or in exchange for any Securities
cancelled as provided in this Section, except as expressly permitted by this Indenture. All cancelled Securities held by the Trustee shall be disposed of as directed by a
Company Order.
27
SECTION 310.
Computation of Interest.
Except as otherwise specified as contemplated by Section 301 for Securities of any series, interest on the Securities of each series shall be computed on the basis of
a 360-day year of twelve 30-day months.
SECTION 311.
CUSIP and ISIN Numbers.
The Company in issuing any series of the Securities may use CUSIP and ISIN numbers, in each case if then generally in use, and thereafter with respect to such
series, the Trustee for the Securities of such series may use such numbers in any notice of redemption or exchange with respect to such series, provided that any such notice
may state that no representation is made as to the correctness of such numbers either as printed on the Securities of that series or as contained in any notice of a redemption
or exchange and that reliance may be placed only on the other identification numbers printed on the Securities of that series, and any such redemption or exchange shall not
be affected by any defect in or omission of such numbers. The Company will promptly notify the Trustee in writing of any change in the CUSIP numbers.
ARTICLE FOUR
SECTION 401.
Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Request cease to be of further effect with respect to any series of Securities and any related Guarantee (except as to any
surviving rights of registration of transfer or exchange of Securities of such series herein expressly provided for), and the Trustee, at the expense of the Company, shall
execute proper instruments acknowledging satisfaction and discharge of this Indenture with respect to such series of Securities, when
(1)
either
(A)
all Securities of such series (and any related Guarantee) theretofore authenticated and delivered (other than (i) Securities of such series
which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 306 and (ii) Securities of such series for whose
payment money has theretofore been deposited in trust or segregated and held in trust by the Company or the Guarantor and thereafter repaid to the
Company or the Guarantor or discharged from such trust, as provided in Section 1003) have been delivered to the Trustee for cancellation; or
(B)
(i)
all Securities of such series not theretofore delivered to the Trustee for cancellation
have become due and payable or
28
(ii)
will become due and payable at their Stated Maturity within one year, or
(iii)
are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense of the Company,
and the Company or the Guarantor, in the case of (i), (ii) or (iii) above, has deposited or cause to be deposited with the Trustee as trust funds in trust for the purpose an
amount sufficient to pay and discharge the entire indebtedness on such Securities (and any related Guarantee) not theretofore delivered to the Trustee for cancellation, for
principal and any premium and Interest to the date of such deposit (in the case of Securities which have become due and payable) or to the Stated Maturity or Redemption
Date, as the case may be;
(2)
the Company or the Guarantor has paid or caused to be paid all other sums payable hereunder by the Company or the Guarantor; and
(3)
the Company has delivered to the Trustee an Officers Certificate and an Opinion of Counsel, each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture as to such series of Securities (and any related Guarantee) have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture with respect to any series of Securities, the obligations of the Company to the Trustee under Section
607, the obligations of the Trustee to any Authenticating Agent under Section 614 and, if money or U.S. Government Obligations shall have been deposited with the
Trustee in accordance with Section 403 or 1006, the obligations of the Company to the Trustee under Section 402(b), and, if money shall have been deposited with the
Trustee pursuant to subclause (B) of Clause (1) of this Section, the obligations of the Trustee under Section 402 and the last paragraph of Section 1003 shall survive.
SECTION 402.
Application of Trust Money.
(a)
Subject to the provisions of the last paragraph of Section 1003, all money deposited with the Trustee pursuant to Section 401, all money and U.S.
Government Obligations deposited with the Trustee pursuant to Section 403 or 1006 and all money received by the Trustee in respect of U.S. Government Obligations
deposited with the Trustee pursuant to Section 403 or 1006, shall be held in trust and applied by it, in accordance with the provisions of the Securities and this Indenture, to
the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled
thereto, of the principal (and premium, if any) and Interest for whose payment such money has been deposited with or received by the Trustee or to make mandatory
sinking fund payments or analogous payments as contemplated by Section 403 or 1006.
(b)
The Company shall pay and shall indemnify the Trustee against any tax, fee or other charge imposed on or assessed against U.S. Government
Obligations deposited pursuant to Section 403 or 1006 or the interest and principal received in respect of such obligations other than any payable by or on behalf of
Holders.
29
(c)
The Trustee shall deliver or pay to the Company from time to time upon Company Request any money or U.S. Government Obligations held by it as
provided in Section 403 or 1006 which, in the opinion of a nationally recognized firm of independent certified public accountants expressed in a written certification thereof
delivered to the Trustee, as then in excess of the amount thereof which then would have been required to be deposited for the purpose for which such money or U.S.
Government Obligations were deposited or received.
SECTION 403.
Defeasance and Discharge of Securities of any Series.
If this Section 403 is specified, as contemplated by Section 301, to be applicable to Securities of any series, then notwithstanding Section 401, the Company, the
Guarantor and any other obligor shall be deemed to have paid and discharged the entire indebtedness on all the Outstanding Securities of that series (and any related
Guarantee), the provisions of this Indenture as it relates to such Outstanding Securities (and any related Guarantee) (except as to the rights of Holders of Securities to
receive, from the trust funds described in subparagraph (1) below, payment of the principal of (and premium, if any) and any installment of principal of (and premium, if
any) or interest on such Securities on the Stated Maturity of such principal or installment of principal or interest or any mandatory sinking fund payments or analogous
payments applicable to the Securities of that series on the day on which such payments are due and payable in accordance with the terms of the Indenture and of such
Securities, the Companys obligations with respect to such Securities under Section 305, 306, 1002 and 1003 and the rights, powers, trusts, duties and immunities of the
Trustee hereunder) shall no longer be in effect, and the Trustee, at the expense of the Company, shall, upon Company Request, execute proper instruments acknowledging
the same, provided that the following conditions have been satisfied:
(1)
the Company or the Guarantor has deposited or caused to be deposited with the Trustee (or another trustee satisfying the requirements of Section
609), irrevocably (irrespective of whether the conditions in subparagraphs (2), (3), (4), (5) and (6) below have been satisfied, but subject to the provisions of Section
402(c) and the last paragraph of Section 1003), as trust funds in trust, specifically pledged as security for, and dedicated solely to, the benefit of the Holders of the
Securities of that series, with reference to this Section 403, (A) money in an amount, or (B) U.S. Government Obligations which through the payment of interest and
principal in respect thereof in accordance with their terms will provide not later than the opening of business on the due date of any payment referred to in clause (i)
or (ii) of this subparagraph (1) money in an amount, or (C) a combination thereof, sufficient, in the opinion of a nationally recognized firm of independent certified
public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge (i) the principal of (and premium, if any) and each
installment of principal (and premium, if any) and interest on such Outstanding Securities on the Stated Maturity of such principal or installment of principal or
interest and (ii) any mandatory sinking fund payments or analogous payments applicable to Securities of such series on the day on which such payments are due and
payable in accordance with the terms of this Indenture and of such Securities;
(2)
such deposit will not result in a breach or violation of, or constitute a default under, this Indenture or any other material agreement or instrument
30
(3)
no Event of Default or event which with the giving of notice or lapse of time, or both, would become an Event of Default with respect to the
which with the giving of notice or lapse of time or both, would become an Event of Default under Section 501(5) or Section 501(6) shall have occurred and be
(4)
the Company has delivered to the Trustee an Opinion of Counsel to the effect that the Company has received from, or there has been published
by, the Internal Revenue Service a ruling to the effect that Holders and beneficial owners of the Securities of that series will not recognize income, gain or loss for
U.S. federal income tax purposes as a result of such deposit, defeasance and discharge and will be subject to U.S. federal income tax on the same amount and in the
same manner and at the same times, as would have been the case if such deposit, defeasance and discharge had not occurred; and
(5)
the Company has delivered to the Trustee an Officers Certificate and an Opinion of Counsel, each stating that all conditions precedent provided
for relating to the defeasance and discharge of the entire indebtedness on all Outstanding Securities of any such series as contemplated by this Section have been
complied with.
ARTICLE FIVE
REMEDIES
SECTION 501.
Events of Default .
Event of Default, wherever used herein with respect to Securities of any series, means any one of the following events (whatever the reason for such Event of
Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(1)
default in the payment of any interest upon any Security of that series when it becomes due and payable, and continuance of such default for a
period of 30 days; or
(2)
(3)
default in the payment of the principal of (or premium, if any, on) any Security of that series at its Maturity; or
default in the deposit of any sinking fund payment, when and as due by the terms of a Security of that series; or
(4)
default in the performance, or breach, of any covenant or warranty of the Company or the Guarantor in this Indenture which affects or is
applicable to the Securities of that series (other than a covenant or warranty a default in whose performance or whose breach is elsewhere in this Section specifically
dealt with or which has expressly been included in this Indenture solely for the benefit of series of Securities other than that series), and continuance of such default
or breach for
31
a period of 90 days after there has been given, by registered or certified mail, to the Company or the Guarantor, as the case may be, by the Trustee or to the
Company or the Guarantor, as the case may be, and the Trustee by the Holders of at least 25% in principal amount of the Outstanding Securities of that series a
written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a Notice of Default hereunder; or
(5)
the entry by a court having jurisdiction in the premises of (A) a decree or order for relief in respect of the Company or the Guarantor in an
involuntary case or proceeding under any applicable Federal or State or foreign bankruptcy, insolvency, reorganization or other similar law or (B) a decree or order
adjudging the Company or the Guarantor a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or
composition of or in respect of the Company or the Guarantor under any applicable Federal or State or foreign law, or appointing a custodian, receiver, liquidator,
assignee, trustee, sequestrator or other similar official of the Company or the Guarantor or of any substantial part of either of its property, or ordering the winding up
or liquidation of either of its affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period
of 60 consecutive days; or
(6)
the commencement by the Company or the Guarantor of a voluntary case or proceeding under any applicable Federal or State or foreign
bankruptcy, insolvency, reorganization or other similar law or of any other case or preceding to be adjudicated a bankrupt or insolvent, or the consent by either the
Company or the Guarantor to the entry of a decree or order for relief in respect of the Company or the Guarantor in an involuntary case or proceeding under any
applicable Federal or State or foreign bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or
proceeding against either the Company or the Guarantor, or the filing by either the Company or the Guarantor of a petition or answer or consent seeking
reorganization or relief under any applicable Federal or State or foreign law, or the consent by either the Company or the Guarantor to the filing of such petition or
to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or the
Guarantor or of any substantial part of either of its property, or the making by either the Company or the Guarantor of an assignment for the benefit of creditors, or
the admission by either the Company or the Guarantor in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by
the Company or the Guarantor in furtherance of any such action; or
(7)
any Guarantee of Securities of that series is determined to be unenforceable or invalid or shall for any reason cease to be in full force and effect
except as permitted by this Indenture, or the Guarantor repudiates its obligations under such Guarantee; or
(8)
any other Event of Default provided with respect to Securities of that series.
32
SECTION 502.
Acceleration of Maturity; Rescission and Annulment.
If an Event of Default with respect to Securities of any series at the time Outstanding occurs and is continuing, then in every such case the Trustee or the Holders of
not less than 25% in principal amount of the Outstanding Securities of that series may declare the principal amount (or, if any of the Securities of that series are Original
Issue Discount Securities, such portion of the principal amount of such Securities as may be specified in the terms thereof) of all of the Securities of that series to be due
and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders), and upon any such declaration such principal amount (or specified
amount) shall become immediately due and payable.
At any time after such a declaration of acceleration with respect to Securities of any series has been made and before a judgment or decree for payment of the
money due has been obtained by the Trustee as hereinafter in this Article provided, the Holders of a majority in principal amount of the Outstanding Securities of that
series, by written notice to the Company, the Guarantor and the Trustee, may rescind and annul such declaration and its consequences if
(1)
(A)
the Company or the Guarantor has paid or deposited with the Trustee a sum sufficient to pay
all overdue interest on all Securities of that series,
(B)
the principal of (and premium, if any, on) any Securities of that series which have become due otherwise than by such declaration of
acceleration and any interest thereon at the rate or rates prescribed therefor in such Securities,
(C)
Securities, and
to the extent that payment of such interest is lawful, interest upon overdue interest at the rate or rates prescribed therefor in such
(D)
all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel; and
(2)
all Events of Default with respect to Securities of that series, other than the non-payment of the principal of Securities of that series which have
become due solely by such declaration of acceleration, have been cured or waived as provided in Section 513.
(3)
No such rescission shall affect any subsequent default or impair any right consequent thereon.
33
SECTION 503.
Collection of Indebtedness and Suits for Enforcement by Trustee .
The Company and the Guarantor covenant that if
(1)
default is made in the payment of any interest on any Security when such interest becomes due and payable and such default continues for a
period of 30 days, or
(2)
default is made in the payment of the principal of (or premium, if any, on) any Security at the Maturity thereof,
the Company or the Guarantor will, upon demand of the Trustee, pay to it, for the benefit of the Holders of such Securities, the whole amount then due and payable on such
Securities for principal and any premium and interest and, to the extent that payment of such interest shall be legally enforceable, interest on any overdue principal and
premium and on any overdue interest, at the rate or rates prescribed therefor in such Securities, and, in addition thereto, such further amount as shall be sufficient to cover
the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel.
If the Company or the Guarantor fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may
institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same
against the Company, the Guarantor or any other obligor upon such Securities and collect the moneys adjudged or decreed to be payable in the manner provided by law out
of the property of the Company, the Guarantor or any other obligor upon such Securities, wherever situated.
If an Event of Default with respect to Securities of any series occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and
the rights of the Holders of Securities of such series by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such
rights, whether for the specific enforcement of any covenant or agreement in the Indenture or in aid of the exercise of any power granted herein, or to enforce any other
proper remedy.
SECTION 504.
Trustee May File Proofs of Claim .
In case of any judicial proceeding relative to the Company or the Guarantor (or any other obligor upon the Securities), their property or their creditors, the Trustee
shall be entitled and empowered, by intervention in such proceeding or otherwise, to take any and all actions authorized under the Trust Indenture Act in order to have
claims of the Holders and the Trustee allowed in any such proceeding. In particular, the Trustee shall be authorized to collect and receive any moneys 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 Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 607.
34
No provision of this Indenture shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim
of any Holder in any such proceeding.
SECTION 505.
Trustee May Enforce Claims Without Possession of Securities .
All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities
or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express
trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, be for the ratable benefit of the Holders of the Securities in respect of which such judgment has been recovered.
SECTION 506.
Application of Money Collected .
Any money collected by the Trustee pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the
distribution of such money on account of principal or any premium or interest, upon presentation of the Securities and the notation thereon of the payment if only partially
paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section 607;
SECOND: To the payment of the amounts then due and unpaid for principal of and any premium and interest on the Securities in respect of which or for the benefit
of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Securities for principal and
any premium and interest, respectively; and
THIRD: To the Company.
SECTION 507.
Limitation on Suits.
No Holder of any Security of any series shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment
of a receiver or trustee, or for any other remedy hereunder, unless
(1)
such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Securities of that series;
(2)
the Holders of not less than 25% in principal amount of the Outstanding Securities of that series shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name as Trustee hereunder;
(3)
such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance
with such request;
35
(4)
the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and
(5)
no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in
principal amount of the Outstanding Securities of that series;
it being understood and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this
Indenture, the Securities or any Guarantee to affect, disturb or prejudice the rights of any other of such Holders, or to obtain or to seek to obtain priority or preference over
any other of such Holders or to enforce any right under the Indenture, except in the manner provided in this Indenture, the Securities or any Guarantee and for the equal and
ratable benefit of all of such Holders.
SECTION 508.
Unconditional Right of Holders to Receive Principal, Premium and Interest.
Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to receive payment of
the principal of and any premium and (subject to Section 307) any interest on such Security on the Stated Maturity or Maturities expressed in such Security (or, in the case
of redemption, on the Redemption Date) and to institute suit for the enforcement of any such payment, and such rights shall not be impaired without the consent of such
Holder.
SECTION 509.
Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture, the Securities or any Guarantee and such proceeding
has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Guarantor, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder
and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding has been instituted.
SECTION 510.
Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities in the last paragraph of Section 306, no
right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy
shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate
right or remedy.
36
SECTION 511.
Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Securities to exercise any right or remedy accruing upon any Event of Default shall impair any such
right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by the Article or by law to the Trustee or to
the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be.
SECTION 512.
Control by Holders.
The Holders of a majority in principal amount of the Outstanding Securities of any series shall have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, with respect to the Securities of such series, provided that
(1)
(2)
SECTION 513.
such direction shall not be in conflict with any rule of law or with this Indenture, the Securities or any Guarantee, and
the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction.
Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of the Outstanding Securities of any series may on behalf of the Holders of all the Securities of such
series waive any past default hereunder with respect to such series and its consequences, except a default
(1)
in the payment of the principal of or any premium or interest on any Security of such series, or
(2)
in respect of a covenant or provision hereof which under Article Nine cannot be modified or amended without the consent of the Holder of each
Outstanding Security of such series affected.
Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this
Indenture, but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon.
SECTION 514.
Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as
Trustee, a court may require any party litigant in such suit to file an undertaking to pay the costs of such suit, and may assess costs against any such party litigant, in the
manner and to the extent provided in the Trust Indenture Act.
37
SECTION 515.
Waiver of Stay or Extension Laws.
The Company and the Guarantor each covenant (to the extent that they may lawfully do so) that they will not at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or
the performance of this Indenture, the Securities or any Guarantee; and the Company and the Guarantor (to the extent that they may lawfully do so) hereby expressly waive
all benefit or advantage of any such law and covenant that they will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer
and permit the execution of every such power as though no such law had been enacted.
ARTICLE SIX
THE TRUSTEE
SECTION 601.
Certain Duties and Responsibilities.
The duties and responsibilities of the Trustee shall be as provided by the Trust Indenture Act and this Indenture. Notwithstanding the foregoing, no provision of this
Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it. Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section.
SECTION 602.
Notice of Defaults.
If a default occurs hereunder with respect to Securities of any series, the Trustee shall give the Holders of Securities of such series notice of such default as and to
the extent provided by the Trust Indenture Act; provided, however, that in the case of any default of the character specified in Section 501(4) with respect to Securities of
such series, no such notice to Holders shall be given until at least 30 days after the occurrence thereof. For the purpose of this Section, the term default means any event
which is, or after notice or lapse of time or both would become, an Event of Default with respect to Securities of such series.
SECTION 603.
Certain Rights of Trustee.
Subject to the provisions of Section 601:
(a)
the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been
signed or presented by the proper party or parties;
38
(b)
any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order and any resolution
of the Board of Directors may be sufficiently evidenced by a Board Resolution;
(c)
whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or
omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers
Certificate;
(d)
the Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon;
(e)
the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the
Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which
might be incurred by it in compliance with such request or direction;
(f)
the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may
make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it
shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney; and
(g)
the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and
the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder.
SECTION 604.
Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the Trustees certificates of authentication, shall be taken as the statements of the Company, and the
Trustee or any Authenticating Agent assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture
or of the Securities. The Trustee or any Authenticating Agent shall not be accountable for the use or application by the Company of Securities or the proceeds thereof.
SECTION 605.
May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any Security Registrar or any other agent of the Company or the Guarantor, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to Sections 608 and 613, may otherwise deal with the Company and the Guarantor with the same
rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, any Security Registrar or such other agent.
39
SECTION 606.
Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability
for interest on any money received by it hereunder except as otherwise agreed with the Company or the Guarantor, as the case may be.
SECTION 607.
Compensation and Reimbursement.
The Company and the Guarantor agree
(1)
to pay to the Trustee from time to time reasonable compensation for all services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee of an express trust);
(2)
except as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of
its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or bad faith; and
(3)
to indemnify the Trustee for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of the trust or trusts hereunder, including the costs and expenses of defending itself against any
claim or liability in connection with the exercise or performance of any of its powers or duties hereunder.
SECTION 608.
Disqualification; Conflicting Interests.
If the Trustee has or shall acquire a conflicting interest within the meaning of the Trust Indenture Act, the Trustee shall either eliminate such interest or resign, to the
extent and in the manner provided by, and subject to the provisions of, the Trust Indenture Act and this Indenture.
SECTION 609.
Corporate Trust Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be a Person that is eligible pursuant to the Trust Indenture Act to act as such and has a combined capital
and surplus of at least $50,000,000 and its Corporate Trust Office in the Borough of Manhattan, The City of New York. If such Person publishes reports of condition at
least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of
such Person shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article.
40
SECTION 610.
Resignation and Removal; Appointment of Successor.
(a)
No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee in accordance with the applicable requirements of Section 611.
(b)
The Trustee may resign at any time with respect to the Securities of one or more series by giving written notice thereof to the Company and the
Guarantor. If the instrument of acceptance by a successor Trustee required by Section 611 shall not have been delivered to the Trustee within 30 days after the giving of
such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of
such series.
(c)
The Trustee may be removed at any time with respect to the Securities of any series by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series, delivered to the Trustee, the Company and the Guarantor.
(d)
If at any time:
(1)
the Trustee shall fail to comply with Section 608 after written request therefor by the Company or by any Holder who has been a bona fide Holder
of a Security for at least six months, or
(2)
the Trustee shall cease to be eligible under Section 609 and shall fail to resign after written request therefor by the Company, the Guarantor or by
any such Holder, or
(3)
the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be
appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation,
then, in any such case (i) the Company or the Guarantor by a Board Resolution may remove the Trustee with respect to all Securities, or (ii) subject to Section 514, any
Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee with respect to all Securities and the appointment of a successor Trustee or Trustees.
(e)
If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, with respect to the
Securities of one or more series, the Company, by a Board Resolution, shall promptly appoint a successor Trustee or Trustees with respect to the Securities of that or those
series (it being understood that any such successor Trustee may be appointed with respect to the Securities of one or more or all of such series and that at any time there
shall be only one Trustee with respect to the Securities of any particular series) and shall comply with the applicable requirements of Section 611. If, within one year after
such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee with respect to the Securities of any series shall be appointed by act of the
Holders of a majority in principal amount of the Outstanding Securities of such series delivered to the
41
Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment in accordance with the applicable
requirements of Section 611, become the successor Trustee with respect to the Securities of such series and to that extent supersede the successor Trustee appointed by the
Company. If no successor Trustee with respect to the Securities of any series shall have been so appointed by the Company or the Holders and accepted appointment in the
manner required by Section 611, any Holder who has been a bona fide Holder of a Security of such series for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series.
(f)
The Company shall give notice of each resignation and each removal of the Trustee with respect to the Securities of any series and each appointment of a
successor Trustee with respect to the Securities of any series to all Holders of Securities of such series in the manner provided in Section 106. Each notice shall include the
name of the successor Trustee with respect to the Securities of such series and the address of its Corporate Trust Office.
SECTION 611.
Acceptance of Appointment by Successor.
(a)
In case of the appointment hereunder of a successor Trustee with respect to all Securities, every such successor Trustee so appointed shall execute,
acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of
the retiring Trustee; but, on the request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument
transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all
property and money held by such retiring Trustee hereunder.
(b)
In case of the appointment hereunder of a successor Trustee with respect to the Securities of one or more (but not all) series, the Company, the Guarantor,
the retiring Trustee and each such successor Trustee with respect to the Securities of one or more series shall execute and deliver an indenture supplemental hereto wherein
each successor Trustee shall accept such appointment and which (1) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest
in, each successor Trustee all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of
such successor Trustee relates, (2) if the retiring Trustee is not retiring with respect to all Securities, shall contain such provisions as shall be deemed necessary or desirable
to confirm that all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series as to which the retiring Trustee is not
retiring shall continue to be vested in the retiring Trustee, and (3) shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or
facilitate the administration of the trusts hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such
Trustees co-trustees of the same trust and that each such Trustee shall be trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder
administered by any other such Trustee; and upon the execution and delivery of such supplemental indenture the resignation or removal of the retiring Trustee shall become
effective to the extent provided therein and each such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts
and duties of the retiring Trustee with
42
respect to the Securities of that or those series to which the appointment of such successor Trustee relates; but, on request of the Company, the Guarantor or any successor
Trustee, such retiring Trustee shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder with respect
to the Securities of that or those series to which the appointment of such successor Trustee relates.
(c)
Upon request of any such successor Trustee, the Company and the Guarantor shall execute any and all instruments for more fully and certainly vesting in
and confirming to such successor Trustee all such rights, powers and trusts referred to in paragraphs (a) and (b) of this Section, as the case may be.
(d)
Article.
SECTION 612.
No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this
Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of the Trustee, shall be
the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or
any further act on the part of any of the parties hereto. In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by
merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated with the same effect as if such
successor Trustee had itself authenticated such Securities.
SECTION 613.
Preferential Collection of Claims Against Company and Guarantor.
If and when the Trustee shall be or become a creditor of the Company or the Guarantor (or any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against the Company or the Guarantor (or any such other obligor).
SECTION 614.
Appointment of Authenticating Agent.
The Trustee may appoint an Authenticating Agent or Agents with respect to one or more series of Securities which shall be authorized to act on behalf of the
Trustee to authenticate Securities of such series issued upon original issue and upon exchange, registration of transfer or partial redemption thereof or pursuant to Section
306, and Securities so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee
hereunder. Wherever reference is made in this Indenture to the authentication and delivery of Securities by the Trustee or the Trustees certificate of authentication, such
reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent and a certificate of authentication executed on behalf
of the Trustee by an Authenticating Agent. Each Authenticating Agent shall be acceptable to the Company and shall at all times be a corporation organized and doing
business under the laws of the United States of America, any State thereof or the District of Columbia, authorized under such laws to act as Authenticating Agent, having a
combined capital and surplus of not less than $50,000,000 except such combined capital
43
surplus amount shall not be applicable to Deutsche Bank Trust Company Americas, and subject to supervision or examination by Federal or State authority. If such
Authenticating Agent publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the
purposes of this Section, the combined capital and surplus of such Authenticating Agent shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, such
Authenticating Agent shall resign immediately in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any corporation succeeding to the corporate agency or corporate trust business
of an Authenticating Agent, shall continue to be an Authenticating Agent, provided such corporation shall be otherwise eligible under this Section, without the execution or
filing of any paper or any further act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign any time by giving written notice thereof to the Trustee and to the Company. The Trustee may at any time terminate the
agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the Company. Upon receiving such a notice of resignation or upon
such a termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, the Trustee may appoint a
successor Authenticating Agent which shall be acceptable to the Company and shall mail written notice of such appointment by first-class mail, postage prepaid, to all
Holders of Securities of the series with respect to which such Authenticating Agent will serve, as their names and addresses appear in the Security Register. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect
as if originally named as an Authenticating Agent. No successor Authenticating Agent shall be appointed unless eligible under the provisions of this Section.
The Trustee agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section, and the Trustee shall be
entitled to be reimbursed for such payments, subject to the provisions of Section 607.
If an appointment with respect to one or more series is made pursuant to this Section, the Securities of such series may have endorsed thereon, in addition to the
Trustees certificate of authentication, an alternative certificate of authentication in the following form:
DEUTSHCE BANK TRUST COMPANY AMERICAS

As Trustee
By........................................................................
Authorized Signatory
44
ARTICLE SEVEN
SECTION 701.
Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee
(a)
semi-annually, not later than 15 days after each Regular Record Date for each series of Securities at the time Outstanding, a list, in such form as the
Trustee may reasonably require, of the names and addresses of the Holders as of such Regular Record Date (or a date to be determined pursuant to Section 301 for Original
Issue Discount Securities); and
(b)
at such other times as the Trustee may request in writing, within 30 days after the receipt by the Company of any such request, a list of similar form and
content as of a date not more than 15 days prior to the time such list is furnished;
excluding from any such list names and addresses received by the Trustee in its capacity as Security Registrar.
SECTION 702.
Preservation of Information; Communications to Holders.
(a)
The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the most recent list
furnished to the Trustee as provided in Section 701 and the names and addresses of Holders received by the Trustee in its capacity as Security Registrar. The Trustee may
destroy any list furnished to it as provided in Section 701 upon receipt of a new list so furnished.
(b)
The rights of the Holders to communicate with other Holders with respect to their rights under this Indenture or under the Securities, and the
corresponding rights and privileges of the Trustee, shall be as provided by the Trust Indenture Act.
(c)
Every Holder of Securities, by receiving and holding the same, agrees with the Company, the Guarantor and the Trustee that neither the Company, the
Guarantor nor the Trustee nor any agent of either of them shall be held accountable by reason of any disclosure of information as to names and addresses of Holders made
pursuant to the Trust Indenture Act.
(d)
Every Holder of Securities shall be entitled to receive information required to be communicated to them under applicable law (including the Law).
45
SECTION 703.
Reports by Trustee.
(a)
The Trustee shall transmit to Holders such reports concerning the Trustee and its actions under this Indenture as may be required pursuant to the Trust
Indenture Act at the times and in the manner provided pursuant thereto.
(b)
A copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with each stock exchange upon which any Securities
are listed, with the Commission and with the Company. If any Securities are listed on any stock exchange after the initial issuance of such Securities, the Company will so
notify the Trustee at the time of such listing.
SECTION 704.
Reports by Company and the Guarantor.
The Company and the Guarantor shall file with the Trustee and the Commission, and transmit to Holders, such information, documents and other reports, and such
summaries thereof, as may be required pursuant to the Trust Indenture Act at the times and in the manner provided pursuant to such Act; provided that any such
information, documents or reports required to be filed with the Commission pursuant to Section 13 or 15(d) of the Exchange Act shall be filed with the Trustee within 15
days after the same is so required to be filed with the Commission. All required information, documents and other reports referred to in this Section 704 shall be deemed
filed with the Trustee and transmitted to the Holders at the time such information, documents or other reports are publicly filed with the Commission via the Commissions
EDGAR filing system (or any successor system).
ARTICLE EIGHT
SECTION 801.
Company May Consolidate, Etc. Only on Certain Terms.
The Company shall not consolidate with or merge into any other Person or convey, transfer or lease its properties and assets substantially as an entirety to any
Person, unless:
(1)
either (x) the Company shall be the surviving Person or (y) the entity formed by such consolidation or into which the Company is merged or the
Person which acquires by conveyance or transfer, or which leases, the properties and assets of the Company substantially as an entirety shall be either the Guarantor
or a corporation, partnership, limited liability company or trust, wholly owned by the Guarantor and shall be organized and validly existing under the laws of the
United States of America, any State thereof, the District of Columbia or any member country of the European Union and shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, the due and punctual payment of the principal of and any premium
and interest on all the Securities and the performance or observance of every covenant of this Indenture on the part of the Company to be performed or observed;
(2)
immediately after giving effect to such transaction and treating any indebtedness which becomes an obligation of the Company or a Subsidiary as
a result of such transaction as
46
having been incurred by the Company or such Subsidiary at the time of such transaction, no Event of Default, and no event which, after notice or lapse of time or
both, would become an Event of Default, shall have happened and be continuing; and
(3)
the Company has delivered to the Trustee an Officers Certificate and an Opinion of Counsel, each stating that such consolidation, merger,
SECTION 802.
Successor Substituted.
Upon any consolidation of the Company with, or merger of the Company into, any other Person or any conveyance, transfer or lease of the properties and assets of
the Company substantially as an entirety in accordance with Section 801, the successor Person formed by such consolidation or into which the Company is merged or to
which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture
with the same effect as if such successor Person had been named as the Company herein, and thereafter, except in the case of a lease, the predecessor Person shall be
relieved of all obligations and covenants under this Indenture and the Securities.
ARTICLE NINE
SECTION 901.
Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company and the Guarantor, in each case when authorized by a Board Resolution, and the Trustee, at any time and from
time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to the Trustee, for any of the following purposes:
(1)
to evidence the succession of another Person to the Company or the Guarantor, as the case may be, and the assumption by any such successor of
the covenants of the Company or the Guarantor herein and in the Securities, as the case may be; or
(2)
to add to the covenants of the Company or the Guarantor for the benefit of the Holders of all or any series of Securities (and if such covenants are
to be for the benefit of less than all series of Securities, stating that such covenants are expressly being included solely for the benefit of such series) or to surrender
any right or power herein conferred upon the Company or the Guarantor; or
(3)
to add any additional Events of Default; or
(4)
to add or change any of the provisions of this Indenture to such extent as shall be necessary to permit or facilitate the issuance of Securities in
bearer form, registrable or not registrable
47
as to principal, and with or without interest coupons, or to permit or facilitate the issuance of Securities in uncertificated form; or
(5)
to add to, change or eliminate any of the provisions of this Indenture in respect of one or more series of Securities, provided that any such
addition, change or elimination (i) shall neither (A) apply to any Security of any series created prior to the execution of such supplemental indenture and entitled to
the benefit of such provision nor (B) modify the rights of the Holder of any such Security with respect to such provision or (ii) shall become effective only when
there is no such Security Outstanding; or
(6)
(7)
to secure the Securities or any Guarantee pursuant to the requirement of Section 1004 or otherwise; or
to establish the form or terms of Securities of any series as permitted by Section 201 and 301; or
(8)
to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Securities of one or more series
and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more
than one Trustee, pursuant to the requirements of Section 611(b); or
(9)
to cure any ambiguity, to correct or supplement any provision herein which may be inconsistent with any other provision herein, or to make any
other provisions with respect to matters or questions arising under this Indenture, provided that such action pursuant to this clause (9) shall not adversely affect the
interests of the Holders of Securities of any series in any material respect.
SECTION 902.
Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than the majority in principal amount of the Outstanding Securities of each series affected by such supplemental
indenture, by Act of said Holders delivered to the Company, the Guarantor and the Trustee, the Company and the Guarantor, in each case when authorized by a Board
Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders of Securities of such series under this Indenture, provided,
however, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Security affected thereby,
(1)
change the Stated Maturity of the principal of, or any installment of principal of or interest on, any Security, or reduce the principal amount
thereof or the rate of interest thereon or any premium payable upon the redemption thereof, or reduce the amount of the principal of an Original Issue Discount
Security that would be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 502, or change any Place or Payment where,
or the coin or currency in which, any Security or any premium or interest thereon is payable, or impair the right to institute suit for the enforcement of any such
payment on or after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date), or
48
(2)
reduce the percentage in principal amount of the Outstanding Securities of any series, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for any waiver (of compliance with certain provisions of this Indenture or certain defaults
hereunder and their consequences) provided for in this Indenture, or
(3)
modify any of the provisions of this Section, Section 513 or Section 1008, except to increase any such percentage or to provide that certain other
provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Outstanding Security affected thereby, provided, however, that
this clause shall not be deemed to require the consent of any Holder with respect to changes in the references to the Trustee and concomitant changes in this
Section and Section 1008, or the deletion of this proviso, in accordance with the requirements of Sections 611(b) and 901(8), or
(4)
release the Guarantor from its obligations in respect of the Guarantee of any series of Securities.
A supplemental Indenture which changes or eliminates any covenant or other provision of this Indenture which has expressly been included solely for the benefit of one or
more particular series of Securities, or which modifies the rights of the Holders of Securities of such series with respect to such covenant or other provision, shall be
deemed not to affect the rights under this Indenture of the Holders of Securities of any other series.
It shall not be necessary for any Act of Holders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if
such Act shall approve the substance thereof.
SECTION 903.
Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by
this Indenture, the Trustee shall be entitled to receive, and (subject to Section 601) shall be fully protected in relying upon, an Opinion of Counsel stating that the execution
of such supplemental indenture is authorized or permitted by this Indenture. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture
which adversely affects the Trustees own rights, duties or immunities under this Indenture or otherwise.
SECTION 904.
Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture
shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby.
49
SECTION 905.
Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act.
SECTION 906.
References in Securities to Supplemental Indentures.
Securities of any series authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the
Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company or the Guarantor shall so determine,
new Securities of any series so modified as to conform, in the opinion of the Trustee and the Company and the Guarantor, to any such supplemental indenture may be
prepared and executed by the Company and the Guarantor and authenticated and delivered by the Trustee in exchange for Outstanding Securities of such series.
ARTICLE TEN
COVENANTS
SECTION 1001.
Payment of Principal, Premium and Interest.
The Company covenants and agrees for the benefit of each series of Securities that it will duly and punctually pay the principal of and any premium and interest on
the Securities of that series in accordance with the terms of the Securities and this Indenture. The performance by the Guarantor of the obligations of the Company under
this Section 1001 shall also be deemed to constitute performance thereof by the Company.
SECTION 1002.
Maintenance of Office or Agency.
The Company will maintain in each Place of Payment for any series of Securities an office or agency where Securities of that series may be presented or
surrendered for payment, where Securities of that series may be surrendered for registration of transfer or exchange and where notices and demands to or upon the
Company in respect of the Securities of that series and this Indenture may be served. The Company will give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with
the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Company hereby
appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other offices or agencies where the Securities of one or more series may be presented or
surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any
manner relieve the Company of its obligation to maintain an office or agency in each Place of Payment for Securities of any series for such purposes. The Company will
give prompt written notice to
50
the Trustee of any such designation or rescission and of any change in the location of any such other office or agency.
SECTION 1003.
Money for Securities Payments to Be Held in Trust.
If the Company or the Guarantor shall at any time act as its own Paying Agent with respect to any series of Securities, it will, on or before each due date of the
principal of or any premium or interest on any of the Securities of that series, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to
pay the principal and any premium and interest so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided and will
promptly notify the Trustee of its action or failure so to act.
Whenever the Company or the Guarantor shall have one or more Paying Agents for any series of Securities, it will, prior to each due date of the principal of or any
premium or interest on any Securities of that series, deposit with a Paying Agent a sum sufficient to pay such amount, such sum to be held as provided by the Trust
Indenture Act, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its action or failure to act.
The Company will cause each Paying Agent for any series of Securities other than the Trustee to execute and deliver to the Trustee an instrument in which such
Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will (i) comply with the provisions of the Trust Indenture Act
applicable to it as a Paying Agent and (ii) during the continuance of any default by the Company or the Guarantor (or any other obligor upon the Securities of that series) in
the making of any payment in respect of the Securities of that series, and upon the written request of the Trustee, forthwith pay to the Trustee all sums held in trust by such
Paying Agent for payment in respect of the Securities of that series.
The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order
direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as
those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be
released from all further liability with respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then held by the Company or the Guarantor, in trust for the payment of the principal of or any
premium or interest on any Security of any series and remaining unclaimed for two years after such principal, premium or interest has become due and payable shall be
paid to the Company on Company Request, or (if then held by the Company or the Guarantor) shall be discharged from such trust; and the Holder of such Security shall
thereafter, as an unsecured general creditor, look only to the Company or the Guarantor for payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company or the Guarantor as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying
Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in a newspaper published in the English
language, customarily published on each Business Day and of general circulation in the Borough of Manhattan, The City of New York, notice that such money remains
unclaimed and that, after a date specified therein, which shall not be less than 30 days
51
from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Company.
SECTION 1004.
Limitation on Liens.
The Guarantor will not itself, and will not permit any Domestic Subsidiary to, incur, issue, assume or guarantee any notes, bonds, debentures or other similar
evidences of indebtedness for money borrowed (notes, bonds, debentures or other similar evidences of indebtedness for money borrowed being hereinafter in this Article
called Debt), secured by pledge of, or mortgage or other lien on, any Principal Domestic Manufacturing Property of the Guarantor or any Domestic Subsidiary, or any
shares of stock of any Domestic Subsidiary that owns a Principal Domestic Manufacturing Property (pledges, mortgages and other liens being hereinafter in this Article
called Mortgage or Mortgages), without effectively providing that the Securities of each series then Outstanding and/or any Guarantee of each series of Securities then
outstanding, as the case may be, (together with, if the Guarantor shall so determine, any other Debt of the Guarantor or such Domestic Subsidiary then existing or thereafter
created which is not subordinate to the Securities of each series then Outstanding and any Guarantee thereof) shall be secured equally and ratably with (or prior to) such
secured Debt, so long as such secured Debt shall be so secured, unless, after giving effect thereto, the aggregate amount of all such secured Debt plus all Attributable Debt
of the Guarantor and its Domestic Subsidiaries in respect of sale and leaseback transactions (as defined in Section 1005) would not exceed 15% of Consolidated Net
Tangible Assets; provided, however , that this Section shall not apply to, and there shall be excluded from secured Debt in any computation under this Section, Debt
secured by:
(1)
with respect to any series of Securities, Mortgages existing on the date of the original issuance of the Securities of such series;
(3)
Mortgages in favor of the Guarantor or any Domestic Subsidiary;
(2)
Mortgages on property of, or on any shares of stock of, any corporation existing at the time such corporation becomes a Domestic Subsidiary or at
the time it is merged into or consolidated with the Guarantor or a Domestic Subsidiary;
(4)
Mortgages in favor of the United States of America, any State thereof, any foreign country or any agency, department or other instrumentality
thereof, to secure progress, advance or other payments pursuant to any contract or provision of any statute;
(5)
Mortgages on property or shares of stock existing at the time of acquisition thereof (including acquisition through merger or consolidation) or to
secure the payment of all or any part of the purchase price or construction or improvement cost thereof or to secure any Debt incurred prior to, at the time of, or
within 12 months after the later of the acquisition of such property or shares or the completion of any such construction or improvement for the purpose of financing
all or any part of the purchase price or construction or improvement cost thereof; and
(6)
any extension, renewal or replacement (or successive extensions, renewals or replacements), as a whole or in part, of any Mortgage referred to in
the foregoing clauses (1) to (5), inclusive; provided , that (i) such extension, renewal or replacement Mortgage shall be limited to
52
all or a part of the same property or shares of stock that secured the Mortgage extended, renewed or replaced (plus improvements and construction on such property)
and (ii) the principal amount of the Debt secured by such Mortgage at such time is not increased.
SECTION 1005.
Limitation on Sales and Leasebacks .
The Guarantor will not itself, and it will not permit any Domestic Subsidiary to, enter into any arrangement with any bank, insurance company or other lender or
investor (not including the Guarantor or any Domestic Subsidiary) or to which any such lender or investor is a party, providing for the leasing by the Guarantor or a
Domestic Subsidiary for a period, including renewals, in excess of three years of any Principal Domestic Manufacturing Property which has been or is to be sold or
transferred, more than 180 days after the completion of construction and commencement of full operation thereof, by the Guarantor or any Domestic Subsidiary to such
lender or investor or to any person to whom funds have been or are to be advanced by such lender or investor on the security of such Principal Domestic Manufacturing
Property (herein referred to as a sale and leaseback transaction) unless either:
(1)
The Guarantor or such Domestic Subsidiary could create Debt secured by a Mortgage pursuant to Section 1004 on the Principal Domestic
Manufacturing Property to be leased back in an amount equal to the Attributable Debt with respect to such sale and leaseback transaction without equally and
ratably securing the Securities of each series or any Guarantee thereof, or
(2)
The Guarantor within 180 days after the sale or transfer shall have been made by the Guarantor or by a Domestic Subsidiary, applies an amount
equal to the greater of (i) the net proceeds of the sale of the Principal Domestic Manufacturing Property sold and leased back pursuant to such arrangement or
(ii) the fair market value of the Principal Domestic Manufacturing Property so sold and leased back at the time of entering into such arrangement (as set forth in an
Officers Certificate) to either (or a combination of) the investment in one or more other Principal Domestic Manufacturing Properties or the retirement of Funded
Debt of the Guarantor; provided , that the amount to be applied to either (or a combination of) the investment in one or more other Principal Domestic
Manufacturing Properties or the retirement of Funded Debt of the Guarantor shall be reduced by (a) the principal amount of any Securities delivered within 180
days after such sale to the Trustee for retirement and cancellation, and (b) the principal amount of Funded Debt other than Securities, voluntarily retired by the
Guarantor within 180 days after such sale. Notwithstanding the foregoing, no retirement referred to in this clause (2) may be effected by payment at maturity or
pursuant to any mandatory sinking fund payment or any mandatory prepayment provision.
SECTION 1006.
Defeasance of Certain Obligations.
If this Section 1006 is specified, as contemplated by Section 301, to be applicable to Securities of any series, the Company and the Guarantor may omit to comply
with any term, provision or condition set forth in Sections 1004 and 1005, and Section 501(4) with respect to Sections 1004 and 1005 shall be deemed not to be an Event of
Default, in each case with respect to the Securities of that series, provided that the following conditions have been satisfied:
53
(1)
With reference to this Section 1006, the Company or the Guarantor has deposited or caused to be deposited with the Trustee (or another trustee
satisfying the requirements of Section 609) irrevocably (irrespective of whether the conditions in subparagraphs (2), (3), (4), (5), (6) and (7) below have been
satisfied, but subject to the provisions of Section 402(c) and the last paragraph of Section 1003), as trust funds in trust, specifically pledged as security for, and
dedicated solely to, the benefit of the Holders of the Securities of that series, (A) money in an amount, or (B) U.S. Government Obligations which through the
payment of interest and principal in respect thereof in accordance with their terms will provide not later than the opening of business on the due date of any payment
referred to in clause (i) or (ii) of this subparagraph (1) money in an amount, or (C) a combination thereof, sufficient, in the opinion of a nationally recognized firm of
independent certified public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge (i) the principal and any premium
and each installment of principal and any premium and interest on the Outstanding Securities of that series on the Stated Maturity of such principal or installment of
principal or interest and (ii) any mandatory sinking fund payments or analogous payments applicable to Securities of such series on the day on which such payments
are due and payable in accordance with the terms of this Indenture and of such Securities;
(2)
Such deposit shall not cause the Trustee with respect to the Securities of that series to have a conflicting interest for purposes of the Trust
Indenture Act with respect to the Securities of any series;
(3)
Such deposit will not result in a breach or violation of, or constitute a default under, this Indenture or any other material agreement or instrument
to which the Company or the Guarantor is a party or by which they are bound;
(4)
No Event of Default or event which with the giving of notice or lapse of time, or both, would become an Event of Default with respect to the
which with the giving of notice or lapse of time, or both, would become an Event of Default under Section 501(5) or Section 501(6) shall have occurred and be
(5)
The Company has delivered to the Trustee an Opinion of Counsel to the effect that Holders and beneficial owners of the Securities of such series
will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such deposit and defeasance of certain obligations and will be subject to
U.S. federal income tax on the same amount and in the same manner and at the same times, as would have been the case if such deposit and defeasance had not
occurred; and
(6)
The Company has delivered to the Trustee an Officers Certificate and an Opinion of Counsel, each stating that all conditions precedent therein
provided for relating to the defeasance contemplated by this Section have been complied with.
54
SECTION 1007.
Statement by Officers as to Default.
The Company and the Guarantor will deliver to the Trustee, within 120 days after the end of each fiscal year of the Guarantor ending after the date hereof, an
Officers Certificate, stating whether or not to the best knowledge of the signers thereof the Company and the Guarantor are in default in the performance and observance of
any of the terms, provisions and conditions of this Indenture (without regard to any period of grace or requirement of notice provided hereunder) and, if the Company
and/or the Guarantor shall be in default, specifying all such defaults and the nature and status thereof of which they may have knowledge.
SECTION 1008.
Waiver of Certain Covenants.
The Company and the Guarantor may omit in any particular instance to comply with any term, provision or condition set forth in Sections 1004 to 1005, inclusive,
with respect to the Securities of any series if before the time for such compliance the Holders of at least the majority in principal amount of the Outstanding Securities of
such series shall, by Act of such Holders, either waive such compliance in such instance or generally waive compliance with such term, provision or condition, but no such
waiver shall extend to or affect such term, provision or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of
the Company and the Guarantor and the duties of the Trustee in respect of any such term, provision or condition shall remain in full force and effect.
SECTION 1009.
Business Activities.
The Company may not engage in any business activities other than those related to (a) financing the business and operations of the Guarantor or any of its
Subsidiaries, (b) the establishment and maintenance of the Companys existence, and (c) any activities related or ancillary thereto or necessary in connection therewith.
ARTICLE ELEVEN
GUARANTEE
SECTION 1101.
Guarantee.
(a)
The Guarantor hereby irrevocably and unconditionally guarantees to each Holder and to the Trustee and its successors and assigns (1) the full and
punctual payment when due, whether at Maturity, by acceleration, by redemption or otherwise, of all obligations of the Company under this Indenture (including
obligations to the Trustee) and the Securities, whether for payment of principal of, or interest, premium, if any, on, the Securities and all other monetary obligations of the
Company under this Indenture and the Securities and (2) the full and punctual performance within applicable grace periods of all other obligations of the Company whether
for fees, expenses, indemnification or otherwise under this Indenture and the Securities (all the foregoing being hereinafter collectively called the Guaranteed
Obligations). The Guarantor further agrees that the Guaranteed Obligations may be extended or renewed, in whole or in part, without notice or further assent from the
Guarantor, and that the Guarantor shall remain bound under
55
this Article notwithstanding any extension or renewal of any Guaranteed Obligation. The Guarantee shall be substantially as set forth in Section 206 hereof.
(b)
The Guarantor waives presentation to, demand of payment from and protest to the Company of any of the Guaranteed Obligations and also waives notice
of protest for nonpayment. The Guarantor waives notice of any default under the Securities or the Guaranteed Obligations. The obligations of the Guarantor hereunder shall
not be affected by (1) the failure of any Holder or the Trustee to assert any claim or demand or to enforce any right or remedy against the Company or any other Person
under this Indenture, the Securities or any other agreement or otherwise; (2) any extension or renewal of any thereof; (3) any rescission, waiver, amendment or modification
of any of the terms or provisions of this Indenture, the Securities or any other agreement; (4) the release of any security held by any Holder or the Trustee for the
Guaranteed Obligations or any of them; or (5) the failure of any Holder or Trustee to exercise any right or remedy against any other guarantor of the Guaranteed
Obligations.
(c)
The Guarantor hereby waives any right to which it may be entitled to have the assets of the Company first be used and depleted as payment of the
Companys or such Guarantors obligations hereunder prior to any amounts being claimed from or paid by the Guarantor hereunder. The Guarantor hereby waives any right
to which it may be entitled to require that the Company be sued prior to an action being initiated against the Guarantor.
(d)
The Guarantor further agrees that its Guarantee herein constitutes a guarantee of payment, performance and compliance when due (and not a guarantee of
collection) and waives any right to require that any resort be had by any Holder or the Trustee to any security held for payment of the Guaranteed Obligations.
(e)
Except as expressly set forth in this Indenture, the obligations of the Guarantor hereunder shall not be subject to any reduction, limitation, impairment or
termination for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any defense of setoff, counterclaim,
recoupment or termination whatsoever or by reason of the invalidity, illegality or unenforceability of the Guaranteed Obligations or otherwise. Without limiting the
generality of the foregoing, the obligations of the Guarantor herein shall not be discharged or impaired or otherwise affected by the failure of any Holder or the Trustee to
assert any claim or demand or to enforce any remedy under this Indenture, the Securities or any other agreement, by any waiver or modification of any thereof, by any
default, failure or delay, willful or otherwise, in the performance of the obligations, or by any other act or thing or omission or delay to do any other act or thing which may
or might in any manner or to any extent vary the risk of the Guarantor or would otherwise operate as a discharge of the Guarantor as a matter of law or equity.
(f)
Except as expressly set forth in this Indenture, the Guarantor agrees that its Guarantee shall remain in full force and effect until payment in full of all the
Guaranteed Obligations. The Guarantor further agrees that its Guarantee herein shall continue to be effective or be reinstated, as the case may be, if at any time payment, or
any part thereof, of principal of or interest on any Guaranteed Obligation is rescinded or must otherwise be restored by any Holder or the Trustee upon the bankruptcy or
reorganization of the Company or otherwise.
56
(g)
In furtherance of the foregoing and not in limitation of any other right which any Holder or the Trustee has at law or in equity against the Guarantor by
virtue hereof, upon the failure of the Company to pay the principal of or interest on any Guaranteed Obligation when and as the same shall become due, whether at
maturity, by acceleration, by redemption or otherwise, or to perform or comply with any other Guaranteed Obligation, the Guarantor, hereby promises to and shall, upon
receipt of written demand by the Trustee, forthwith pay, or cause to be paid, in cash, to the Holders or the Trustee an amount equal to the sum of (1) the unpaid principal
amount of such Guaranteed Obligations, (2) accrued and unpaid interest on such Guaranteed Obligations (but only to the extent not prohibited by law) and (3) all other
monetary obligations of the Company to the Holders and the Trustee.
(h)
The Guarantor agrees that it shall not be entitled to any right of subrogation in relation to the Holders in respect of any Guaranteed Obligations
guaranteed hereby until payment in full of all Guaranteed Obligations. The Guarantor further agrees that, as between it, on the one hand, and the Holders and the Trustee,
on the other hand, (1) the maturity of the Guaranteed Obligations guaranteed hereby may be accelerated as provided in this Indenture for the purposes of the Guarantee
herein, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Guaranteed Obligations guaranteed hereby, and (2) in the
event of any declaration of acceleration of such Guaranteed Obligations as provided in this Indenture, the Guaranteed Obligations (whether or not due and payable) shall
forthwith become due and payable by the Guarantor for the purposes of this Section 1101.
(i)
The Guarantor also agrees to pay any and all costs and expenses (including reasonable attorneys fees and expenses) incurred by the Trustee or any
Holder in enforcing any rights under this Section 1101.
(j)
Upon request of the Trustee, the Guarantor shall execute and deliver such further instruments and do such further acts as may be reasonably necessary or
proper to carry out more effectively the purpose of this Indenture.
SECTION 1102.
Consolidation, Merger, Conveyance, Transfer or Lease
The Guarantor shall not consolidate with or merge into any other Person or convey, transfer or lease its properties and assets substantially as an entirety to any
Person, unless:
(1)
either (x) the Guarantor shall be the surviving Person or (y) the entity formed by such consolidation or into which the Guarantor is merged or the
Person which acquires by conveyance or transfer, or which leases, the properties and assets of the Guarantor substantially as an entirety shall be a corporation,
partnership, limited liability company or trust, shall be organized and validly existing under the laws of the United States of America, any State thereof or the
District of Columbia and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, the
Guaranteed Obligations and the performance or observance of every covenant of this Indenture on the part of the Guarantor to be performed or observed;
(2)
immediately after giving effect to such transaction and treating any indebtedness which becomes an obligation of the Guarantor or a Subsidiary as
a result of such transaction as
57
having been incurred by the Guarantor or such Subsidiary at the time of such transaction, no Event of Default, and no event which, after notice or lapse of time or
both, would become an Event of Default, shall have happened and be continuing; and
(3)
the Guarantor has delivered to the Trustee an Officers Certificate and an Opinion of Counsel, each stating that such consolidation, merger,
SECTION 1103.
Successor Substituted
Upon any consolidation of the Guarantor with, or merger of the Guarantor into, any other Person or any conveyance, transfer or lease of the properties and assets of
the Guarantor substantially as an entirety in accordance with Section 1102, the successor Person formed by such consolidation or into which the Guarantor is merged or to
which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Guarantor under this Indenture
with the same effect as if such successor Person had been named as the Guarantor herein, and thereafter, except in the case of a lease, the predecessor Person shall be
relieved of all obligations and covenants under this Indenture, the Securities and the Guarantee.
SECTION 1104.
No Waiver.
Neither a failure nor a delay on the part of either the Trustee or the Holders in exercising any right, power or privilege under this Article shall operate as a waiver
thereof, nor shall a single or partial exercise thereof preclude any other or further exercise of any right, power or privilege. The rights, remedies and benefits of the Trustee
and the Holders herein expressly specified are cumulative and not exclusive of any other rights, remedies or benefits which either may have under this Article at law, in
equity, by statute or otherwise.
SECTION 1105.
Modification.
No modification, amendment or waiver of any provision of this Article, nor the consent to any departure by the Guarantor therefrom, shall in any event be effective
unless the same shall be in writing and signed by the Trustee, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which
given. No notice to or demand on the Guarantor in any case shall entitle the Guarantor to any other or further notice or demand in the same, similar or other circumstances.
SECTION 1106.
Non-Impairment.
The failure to endorse a Guarantee on any Security shall not affect or impair the validity thereof.
58
SECTION 1107.
Limitation on Guarantor Liability.
The Guarantor, and by its acceptance of any series of Securities, each Holder, hereby confirms that it is the intention of all such parties that the Guarantee of such
Guarantor not constitute a fraudulent transfer or conveyance for purposes of any applicable Federal or State bankruptcy, insolvency or reorganization or other similar law,
the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal or state law to the extent applicable to any Guarantee. To effectuate
the foregoing intention, the Trustee, the Holders and the Guarantor hereby irrevocably agree that the obligations of the Guarantor will be limited to the maximum amount
which, after giving effect to all other contingent and fixed liabilities of the Guarantor, will result in the obligations of the Guarantor under its Guarantee not constituting a
fraudulent conveyance or fraudulent transfer under federal or state law. Until such time as the Securities of any series are paid in full, the Guarantor, with respect to such
series of Securities, hereby waives all rights of subrogation, whether arising by contract or operation of law (including, without limitation, any such right arising under
federal bankruptcy law) or otherwise by reason of any payment by it pursuant to the provisions of this Article.
ARTICLE TWELVE
SECTION 1201.
Securities of any series which are redeemable before their Stated Maturity shall be redeemable in accordance with their terms and (except as otherwise specified as
contemplated by Section 301 for Securities of any series) in accordance with this Article.
SECTION 1202.
Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities shall be evidenced by a Board Resolution or by action taken pursuant to a Board Resolution. In case of any
redemption at the election of the Company of less than all the Securities of any series, the Company shall, at least 60 days prior to the Redemption Date fixed by the
Company (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee of such Redemption Date, of the principal amount of Securities of such series to be
redeemed and, if applicable, of the tenor of the Securities to be redeemed. In the case of any redemption of Securities prior to the expiration of any restriction on such
redemption provided in the terms of such Securities or elsewhere in this Indenture, the Company shall furnish the Trustee with an Officers Certificate evidencing
compliance with such restriction.
SECTION 1203.
Selection by Trustee of Securities to Be Redeemed .
If less than all the Securities of any series are to be redeemed (unless all of the Securities of such series and of a specified tenor are to be redeemed), the particular
Securities to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee, from the Outstanding Securities of such series not
previously called for redemption, by such method as the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of portions (equal
to the minimum
59
authorized denomination for Securities of that series or any integral multiple in excess thereof) of the principal amount of Securities of such series of a denomination larger
than the minimum authorized denomination for Securities of that series. If less than all of the Securities of such series and of a specified tenor are to be redeemed, the
particular Securities to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee, from the Outstanding Securities of such series and
specified tenor not previously called for redemption in accordance with the preceding sentence.
The Trustee shall promptly notify the Company in writing of the Securities selected for redemption and, in the case of any Securities selected for partial redemption,
the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any
Securities redeemed or to be redeemed only in part, to the portion of the principal amount of such Securities which has been or is to be redeemed.
SECTION 1204.
Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption Date, to each Holder
of Securities to be redeemed, at his address appearing in the Security Register.
All notices of redemption shall state:
(1)
(2)
the Redemption Date,
the Redemption Price,
(3)
if less than all the Outstanding Securities of any series are to be redeemed, the identification (and, in the case of partial redemption of any
Securities, the principal amounts) of the particular Securities to be redeemed,
(4)
that on the Redemption Date the Redemption Price will become due and payable upon each such Security to be redeemed and, if applicable, that
interest thereon will cease to accrue on and after said date,
(5)
(6)
the place or places where such Securities are to be surrendered for payment of the Redemption Price, and
that the redemption is for a sinking fund, if such is the case.
Notice of redemption of Securities to be redeemed at the election of the Company shall be given by the Company or, at the Companys request, by the Trustee in the
name and at the expense of the Company.
SECTION 1205.
Deposit of Redemption Price .
Prior to any Redemption Date, the Company or the Guarantor shall deposit with the Trustee or with a Paying Agent (or, if the Company or the Guarantor is acting as
its own Paying Agent, segregate and hold
60
in trust as provided in Section 1003) an amount of money sufficient to pay the Redemption Price of, and (except if the Redemption Date shall be an Interest Payment Date)
accrued interest on, all the Securities which are to be redeemed on that date.
SECTION 1206.
Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption
Price therein specified, and from and after such date (unless the Company and the Guarantor shall default in the payment of the Redemption Price and accrued interest)
such Securities shall cease to bear interest. Upon surrender of any such Security for redemption in accordance with said notice, such Security shall be paid by the Company
at the Redemption Price, together with accrued interest to the Redemption Date; provided, however, that, unless otherwise specified as contemplated by Section 301,
installments of interest whose Stated Maturity is on or prior to the Redemption Date shall be payable to the Holders of such Securities, or one or more Predecessor
Securities, registered as such at the close of business on the relevant Record Dates according to their terms and the provisions of Section 307.
If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal and any premium shall, until paid, bear interest from
the Redemption Date at the rate prescribed therefor in the Security.
SECTION 1207.
Securities Redeemed in Part.
Any Security which is to be redeemed only in party shall be surrendered at a Place of Payment therefor (with, if the Company or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or his attorney duly authorized
in writing), and the Company shall execute, and the Trustee shall authenticate and deliver to the Holder of such Security without service charge, a new Security or
Securities of the same series and of like tenor, of any authorized denomination as requested by such Holder, in aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Security so surrendered.
ARTICLE THRITEEN
SINKING FUNDS
SECTION 1301.
The provisions of this Article shall be applicable to any sinking fund for the retirement of Securities of a series except as otherwise specified as contemplated by
Section 301 for Securities of such series.
The minimum amount of any sinking fund payment provided for by the terms of Securities of any series is herein referred to as a mandatory sinking fund
payment, and any payment in excess of such minimum amount provided for by the terms of Securities of any series is herein referred to as an optional sinking fund
payment. If provided for by the terms of Securities of any series, the cash amount of any sinking fund payment may be subject to reduction as provided in Section 1302.
Each sinking fund payment
61
shall be applied to the redemption of Securities of any series as provided for by the terms of Securities of such series.
SECTION 1302.
Satisfaction of Sinking Fund Payments with Securities .
The Company (1) may deliver Outstanding Securities of a series (other than any previously called for redemption) and (2) may apply as a credit Securities of a
series which have been redeemed either at the election of the Company pursuant to the terms of such Securities or through the application of permitted optional sinking
fund payments pursuant to the terms of such Securities, in each case in satisfaction of all or any part of any sinking fund payment with respect to the Securities of such
series required to be made pursuant to the terms of such Securities as provided for by the terms of such series; provided that such Securities have not been previously so
credited. Such Securities shall be received and credited for such purpose by the Trustee at the Redemption Price specified in such Securities for redemption through
operation of the sinking fund and the amount of such sinking fund payment shall be reduced accordingly.
SECTION 1303.
Redemption of Securities for Sinking Fund.
Not less than 60 days prior to each sinking fund payment date for any series of Securities, the Company will deliver to the Trustee an Officers Certificate
specifying the amount of the next ensuing sinking fund payment for that series pursuant to the terms of that series, the portion thereof, if any, which is to be satisfied by
payment of cash and the portion thereof, if any, which is to be satisfied by delivering and crediting Securities of that series pursuant to Section 1302 and will also deliver to
the Trustee any Securities to be so delivered. Not less than 30 and not more than 60 days before each such sinking fund payment date the Trustee shall select the Securities
to be redeemed upon such sinking fund payment date in the manner specified in Section 1203 and cause notice of the redemption thereof to be given in the name of and at
the expense of the Company in the manner provided in Section 1204. Such notice having been duly given, the redemption of such Securities shall be made upon the terms
and in the manner stated in Sections 1206 and 1207.
ARTICLE FOURTEEN
MISCELLANEOUS
SECTION 1401.
Submission to Jurisdiction; Appointment of Agent.
(a) Each of the Company, the Guarantor and the Trustee agrees that any suit, action or proceeding brought by the Company, the Guarantor or the Trustee in
connection with or arising out of this Indenture or the Securities of any series (or any Guarantee thereof) or the offer and sale of the Securities (or any Guarantee thereof)
shall be brought solely in the United States federal courts located in the Borough of Manhattan or the courts of the State of New York located in the Borough of Manhattan.
EACH OF THE COMPANY, THE GUARANTOR AND THE TRUSTEE WAIVES ITS RIGHT TO TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING
WITH RESPECT TO THIS INDENTURE OR THE TRANSACTIONS CONTEMPLATED HEREBY.
62
(b) The Company hereby irrevocably accepts and submits to the non-exclusive jurisdiction of each of the aforesaid courts in personam, generally and
unconditionally, for itself and in respect of its properties, assets and revenues, with respect to any suit, action or proceeding in connection with or arising out of this
Indenture.
(c) The Company hereby irrevocably designates, appoints and empowers CT Corporation System, with offices at 111 Eighth Avenue, New York, New York 10011,
as its designee, appointee and agent to receive, accept and acknowledge for and on its behalf, and its properties, assets and revenues, service for any and all legal process,
summons, notices and documents which may be served in any such action, suit or proceeding brought in the courts listed in Section 1401(a) which may be made on such
designee, appointee and agent in accordance with legal procedures prescribed for such courts, with respect to any suit, action or proceeding in connection with or arising
out of this Indenture or the Securities or the offer and sale of the Securities. If for any reason such designee, appointee and agent hereunder shall cease to be available to act
as such, the Company agrees to designate a new designee, appointee and agent in The City of New York on the terms and for the purposes of this Section 1401 satisfactory
to the Trustee. The Company further hereby irrevocably consents and agrees to the service of any and all legal process, summons, notices and documents out of any of the
aforesaid courts in any such action, suit or proceeding by serving a copy thereof upon the agent for service of process referred to in this Section 1401 (whether or not the
appointment of such agent shall for any reason prove to be ineffective or such agent shall accept or acknowledge such service) or by mailing copies thereof by registered or
certified airmail, postage prepaid, to it at its address specified in or designated pursuant to this Indenture. The Company agrees that the failure of any such designee,
appointee and agent to give any notice of such service to it shall not impair or affect in any way the validity of such service or any judgment rendered in any action or
proceeding based thereon. Nothing herein shall in any way be deemed to limit the ability of the Holders of any Securities or the Trustee to serve any such legal process,
summons, notices and documents in any other manner permitted by applicable law or to obtain jurisdiction over the undersigned or bring actions, suits or proceedings
against the undersigned in such other jurisdictions, and in such other manner, as may be permitted by applicable law. The Company hereby irrevocably and unconditionally
waives any objection which it may now or hereafter have to the laying of venue of any of the aforesaid actions, suits or proceedings arising out of or in connection with this
Indenture brought in the courts listed in Section 1401(a) and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that
any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.
(d) To the extent that the Company or any of its properties, assets or revenues may have or may hereafter become entitled to, or have attributed to them, any right
of immunity, on the grounds of sovereignty or otherwise, from any legal action, suit or proceeding in connection with or arising out of this Indenture or the Securities or the
offer and sale of the Securities, from the giving of any relief in any thereof, from setoff or counterclaim, from the jurisdiction of any court, from service of process, from
attachment upon or prior to judgment, from attachment in aid of execution of judgment, or from execution of judgment, or other legal process or proceeding for the giving
of any relief or for the enforcement of any judgment, in any jurisdiction in which proceeding may at any time be commenced, with respect to its obligations, liabilities or
any other matter under or arising out of or in connection with this Indenture or the Securities, the Company hereby irrevocably and unconditionally waives, and agrees for
the benefit of the Trustee and any Holder from time to time of the Securities not to plead or claim, any such immunity, and consent to such relief and enforcement.
63
(e) Each of the Company and the Guarantor agrees to indemnify and hold harmless the Trustee and each Holder from time to time of Securities against any loss
incurred by the Trustee or such Holder as a result of any judgment or order being given or made for any amount due hereunder and such judgment or order being expressed
and paid in a currency (the Judgment Currency) other than United States dollars and as a result of any variation as between (i) the rate of exchange at which the United
States dollar amount is converted into the Judgment Currency for the purpose of such judgment or order, and (ii) the rate of exchange at which the Trustee or such Holder is
able to purchase United States dollars with the amount of Judgment Currency actually received by the Trustee or such Holder. The foregoing indemnity shall constitute
separate and independent obligations of the Company and the Guarantor and shall continue in full force and effect notwithstanding any such judgment or order as aforesaid.
The term rate of exchange shall include any premiums and costs of exchange payable in connection with the purchase of, or conversion into, the relevant currency.
This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same instrument.
64
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the day and year first above written.
By: its general partner Procter & Gamble International Finance Funding General Management Srl
/s/ Herwig Meskens
Name: Herwig Meskens
Title: Manager

By /s/ Jon R. Moeller
Name: Jon R. Moeller
Title: Chief Financial Officer
DEUTSCHE BANK TRUST COMPANY, as Trustee

By /s/ Richard L. Buckwalter
Name: Richard L. Buckwalter
Title: Director
By /s/ Annie V. Jaghatspanyan
Name: Annie V. Jaghatspanyan
Title: Vice President
EXHIBIT (10-7)
THE PROCTER & GAMBLE FUTURE SHARES PLAN
1
Contents
Article 1. Establishment, Objectives, and Duration 3

Article 2. Definitions 3
Article 3. Administration 5
Article 4. Shares Subject to the Plan 5
Article 5. Eligibility and Participation 5
Article 6. Awards 5
Article 7. General Provisions 9

Article 1. Establishment, Objectives, and Duration
1.1
Establishment of the Plan. The Procter & Gamble Company, an Ohio corporation (hereinafter referred to as the Company), hereby establishes a
worldwide stock option plan to be known as The Procter & Gamble Future Shares Plan (hereinafter referred to as the Plan), as set forth herein.
1.2
Purpose. The purpose of the Plan is to advance the interests of the Company by giving substantially all employees a stake in the Companys future growth
and success, to increase employee focus on the Companys stock price, to strengthen the alignment of interests between employees and the Companys shareholders
through the increased ownership of shares of the Companys common stock, and to encourage employees to remain in the employ of the Company and its Affiliates.
1.3
Duration of the Plan. The Plan shall become effective as of October 14, 1997 (the Effective Date). The Plan shall terminate on October 13, 2007. No
Award 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.
Article 2. Definitions
Whenever used in the Plan, the fol-lowing terms shall have the meanings set forth below, and when the meaning is intended, the initial letter of the word shall be
capitalized:
2.1
Affiliate means any entity in which the Company has an ownership interest of fifty percent (50%) or more.
2.2
Award means a grant of an Option, a Modified Option, an SAR, or a Modified SAR under the Plan.
2.3
Board or Board of Directors means the Board of Directors of the Company.
2.4
Code means the Internal Revenue Code of 1986 and the regulations thereunder, as amended from time to time.
2.5
Committee means the Compensation Committee of the Board or such other committee appointed by the Board to administer the Plan.
2.6
Common Stock means the common stock, without par value, of the Company.
2.7
Company means The Procter & Gamble Company, an Ohio corporation, and any successor thereto.
2.8
Disability or Disabled shall mean qualifying for benefits under a long-term disability pay plan maintained by the Company or any Affiliate, or as
required by or available under applicable local law, or in the absence of any such plan or local law, as determined by the Committee.
2.9
Employee means a full- or part-time employee on the regular payroll of the Company or any Affiliate as of the Grant Date of an Award. For purposes of
this definition, on the regular
3
2.10
payroll shall mean paid through the payroll department of the Company or an Affiliate (or, if there is no such payroll department, classified as a regular
employee on the Companys or Affiliates employment records), and shall exclude individuals classified by the Company or Affiliate as intermittent or
temporary, or as independent contractors, regardless of how such person may be classified by any federal, state, or local, domestic or foreign, government
agency or instrumentality thereof, or court. An individual whose only relationship to the Company or an Affiliate is that of a temporary employee (except
regular employees on temporary assignment from another unit) or leased employee (as defined in Section 414(n)(2) of the Code) shall not be an Employee
unless determined otherwise by the Committee at its sole discretion. The determination of whether an individual is an employee on the regular payroll
shall be made solely according to the method of paying the individual for services, and such determination shall be within the discretion of the Committee.
Fair Market Value means, unless determined otherwise by the Committee, the average of the high and low prices of a share of Common Stock on the
New York Stock Exchange on the date of measurement as determined by the Committee, and if there were no trades on such date, on the day on which a
trade occurred next preceding such date, or as otherwise determined by the Committee.
2.11
Grant Date means such date, as determined by the Committee, upon which Awards are granted to Participants pursuant to the terms of this Plan.
2.12
Modified Option means an Option that must be exercised on the fifth anniversary of the Grant Date or forfeited.
2.13
Modified SAR means an SAR that must be exercised on the fifth anniversary of the Grant Date or forfeited.
2.14
Option means a right to purchase a specified number of shares of Common Stock at the Option Price, which is not intended to qualify under Code Section
422 as an Incentive Stock Option, except as otherwise provided in Section 6.1(k).
2.15
Option Price means the price at which a share of Common Stock may be purchased by a Participant pursuant to an Option or a Modified Option.
2.16
Participant means an Employee who has been selected by the Committee in its sole discretion to receive an Award or who has outstanding an Award
granted under the Plan.
2.17
Retirement means, strictly for purposes of this Plan, the termination of employment on or after the date the Participant has attained age fifty-five (55),
except as otherwise determined by the Committee.
2.18
SAR means an Award pursuant to which the Participant receives a right to a cash settlement payment upon exercise equal to the excess of the Fair Market
Value of one share of Common Stock on the date of exercise over the Fair Market Value of one share of Common Stock on the Grant Date of the SAR,
multiplied by the number of SARs granted.
4
2.19
Special Separation means any termination of employment, except a termination for cause or a voluntary resignation that is not initiated or encouraged by
the Company, that occurs prior to the time a recipient is eligible to retire.
2.20
Spread Value means the excess of the Fair Market Value of one share of Common Stock on the date of exercise over the Fair Market Value of one share
of Common Stock on the Grant Date, multiplied by the number of shares of Common Stock underlying the Award.
Article 3. Administration
The Plan and all Awards granted pursuant thereto shall be administered by the Compensation Committee of the Board. The Committee may, from time to time,
adopt rules and regulations for carrying out the provisions and purposes of the Plan. The Committee, in its absolute discretion, shall have the power to interpret and
construe the Plan; provided, however, that the Committee may designate persons other than members of the Committee to carry out such responsibilities of the Committee
under the Plan as it may deem appropriate. Any interpretation of construction of any provision of this Plan by the Committee shall be final and conclusive upon all parties.
No member of the Committee or the Board shall be liable for any action or determination made hereunder in good faith.
Article 4. Shares Subject to the Plan
4.1
Number of Shares Available for Options. The number of shares of Common Stock available with respect to all Awards granted under the Plan shall not
exceed thirty-four million (34,000,000) in the aggregate, subject to adjustment under Section 4.2 herein. The shares of Common Stock subject to the Plan shall consist of
either authorized but unissued shares or treasury shares, as determined by the Committee. Notwithstanding any terms or conditions contained herein, the shares to be
delivered by the Company upon exercise of an Award by a Participant located in Italy shall be authorized but unissued shares.
4.2
Changes in Capitalization. In the event of any future reorganization, recapitalization, stock split, stock dividend, combination of shares, merger,
consolidation, rights offering, share exchange, reclassification, distribution, spin-off or other change affecting the corporate structure, capitalization or Common Stock of
the Company occurring after the date of approval of the Plan by the Company shareholders, appropriate adjustments and changes shall be made by the Committee to the
extent necessary to prevent dilution or enlargement of rights under the Plan in (a) the aggregate number of shares of Common Stock subject to the Plan; (b) the number of
shares of Common Stock for which Awards may be granted or awarded to any Participant; (c) the number of shares and the Option Price per share of all shares of Common
Stock subject to outstanding Options or Modified Options, as applicable; (d) the number of SARs or Modified SARs subject to an Award and the Fair Market Value of a
share of Common Stock for purposes of determining the cash settlement payment on exercise of an SAR or Modified SAR, as applicable; and (e) such other provisions of
the Plan as may be necessary and equitable to carry out the foregoing purposes.
Article 5. Eligibility and Participation
An Award may be granted by the Committee, in its discretion, to an Employee who is actively employed by the Company or any Affiliate on the Grant Date. The
granting of Awards under the terms of this Plan is made at the sole discretion of the Committee and does not entitle a Participant to receive future Awards. The adoption of
this Plan shall not be deemed to give any Participant any right to be granted an Award, except to the extent as may be determined by the Committee.
Article 6. Awards
6.1
Awards. The Award to each Participant under the Plan shall consist of either Options, Modified Options, SARs, or Modified SARs. The Committee shall
determine (i) the number of shares of Common
5
Stock to be covered by each Award; (ii) the terms and conditions of the Awards (including, but not limited to, restrictions upon the Awards, when Awards are first
exercisable and the period of exercise, conditions of their exercise, requirements regarding payment of the exercise price, withholding requirements and restrictions on the
shares of Common Stock issuable upon the exercise thereof); and (iii) the form of the instruments necessary or advisable in the administration of the Awards.
(a)
Term of Award. The term of each Award shall be no more than ten (10) years from the Grant Date, except as provided in Section 6.1(k).
(b)
Option Price. With respect to an Option or Modified Option, the Option Price shall be not less than the Fair Market Value of the Common Stock on the Grant
Date.
(c)
Exercise and Limitations on Exercise. Except as otherwise provided for herein, if a Participant has been in the continuous employ of the Company through
the fifth anniversary of the Grant Date, at any time on or after the fifth anniversary of the Grant Date, but in no event later than the tenth anniversary of the Grant Date
(except as provided in Section 6.1(k)), the Participant may exercise the Award, and purchase the number of shares of Common Stock covered by the Option (or
Modified Option if the Award is exercised on the fifth anniversary of the Grant Date), or receive the cash settlement payment with respect to the SAR (or Modified
SAR if the Award is exercised on the fifth anniversary of the Grant Date), as applicable. An Award must be exercised for the full number of shares of Common Stock
covered by the Option or Modified Option, or for the entire cash settlement payment with respect to the SAR or Modified SAR, as applicable. Notwithstanding the
foregoing, stock options and stock appreciation rights granted hereunder shall vest immediately upon a Change in Control. A Change in Control shall mean the
occurrence of any of the following:
(i)
An acquisition (other than directly from the Company) of any voting securities of the Company (the "Voting Securities") by any "Person" (as the
term person is used for purposes of Section 13(d) or 14(d) of the Exchange Act), immediately after which such Person has "Beneficial Ownership" (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of twenty percent (20%) or more of the then outstanding Shares or the combined voting power of the
Company's then outstanding Voting Securities; provided, however, in determining whether a Change in Control has occurred pursuant to this Section 6.1(c), Shares or
Voting Securities which are acquired in a "Non-Control Acquisition" (as hereinafter defined) shall not constitute an acquisition which would cause a Change in
Control. A "Non-Control Acquisition" shall mean an acquisition by (i) an employee benefit plan (or a trust forming a part thereof) maintained by (A) the Company or
(B) any corporation or other Person of which a majority of its voting power or its voting equity securities or equity interest is owned, directly or indirectly, by the
Company (for purposes of this definition, a "Related Entity"), (ii) the Company or any Related Entity, or (iii) any Person in connection with a "Non-Control
Transaction" (as hereinafter defined);
(ii)
The individuals who, as of July 11, 2000 are members of the Board (the "Incumbent Board"), cease for any reason to constitute at least half of
the members of the Board; or, following a Merger (as hereinafter defined) which results in a Parent Corporation (as hereinafter defined), the board of directors of the
ultimate Parent Corporation; provided, however , that if the election, or nomination for election by the Company's common stockholders, of any new director was
approved by a vote of at least two-thirds of the Incumbent Board, such new director shall, for purposes of this Plan, be considered as a member of the Incumbent
Board; provided further, however , that no individual shall be considered a member of the Incumbent Board if such individual initially assumed office as a result of
either an actual or threatened "Election Contest" (as described in Rule 14a-11
6
promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board (a "Proxy
Contest") including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest; or
(iii)
The consummation of:
(A)
A merger, consolidation or reorganization with or into the Company or in which securities of the Company are issued (a Merger),
unless such Merger is a "Non-Control Transaction." A "Non-Control Transaction" shall mean a Merger where:
(1)
the stockholders of the Company, immediately before such Merger own directly or indirectly immediately following such Merger
at least fifty percent (50%) of the combined voting power of the outstanding voting securities of (x) the corporation resulting from such Merger (the "Surviving
Corporation") if fifty percent (50%) or more of the combined voting power of the then outstanding voting securities of the Surviving Corporation is not Beneficially
Owned, directly or indirectly by another Person (a "Parent Corporation"), or (y) if there is one or more Parent Corporations, the ultimate Parent Corporation;
(2)
the individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for
such Merger constitute at least half of the members of the board of directors of (x) the Surviving Corporation, if there is no Parent Corporation, or (y) if there is one or
more Parent Corporations, the ultimate Parent Corporation; and
(3)
no Person other than (1) the Company, (2) any Related Entity, (3) any employee benefit plan (or any trust forming a part thereof)
that, immediately prior to such Merger was maintained by the Company or any Related Entity, or (4) any Person who, immediately prior to such Merger had
Beneficial Ownership of twenty percent (20%) or more of the then outstanding Voting Securities or Shares, has Beneficial Ownership of twenty percent (20%) or
more of the combined voting power of the outstanding voting securities or common stock of (x) the Surviving Corporation if there is no Parent Corporation, or (y) if
there is one or more Parent Corporations, the ultimate Parent Corporation;
(b)
A complete liquidation or dissolution of the Company; or
(c)
The sale or other disposition of all or substantially all of the assets of the Company to any Person (other than a transfer to a Related
Entity or under conditions that would constitute a Non-Control Transaction with the disposition of assets being regarded as a Merger for this purpose or the
distribution to the Companys stockholders of the stock of a Related Entity or any other assets).
Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because any Person (the "Subject Person") acquired Beneficial Ownership of
more than the permitted amount of the then outstanding Shares or Voting Securities as a result of the acquisition of Shares or Voting Securities by the Company
which, by reducing the number of Shares or Voting Securities then outstanding, increases the proportional number of shares Beneficially Owned by the Subject
Persons, provided that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of Shares or Voting Securities by the
Company, and after such share acquisition by the Company, the Subject Person becomes the Beneficial Owner of any additional Shares or Voting Securities which
increases the percentage of the then outstanding Shares or Voting Securities Beneficially Owned by the Subject Person, then a Change in Control shall occur.
7
(d)
Termination of Employment Generally.
(i)
If a Participants employment is terminated on or after the fifth anniversary of the Grant Date, for any reason other than death, Disability, Retirement,
or Special Separation the Award shall be exercisable only for thirty (30) calendar days following such termination, and only to the extent such Award was
exercisable on the date of such termination, except as may be otherwise determined by the Committee. In no event, however, may an Award be exercised more than
ten (10) years after the Grant Date, except as provided in Section 6.1(k). If a Participants employment is terminated prior to the fifth anniversary of the Grant Date,
for any reason other than death, Disability, Retirement, or Special Separation, each Award granted to such Participant shall be immediately canceled and the
Participant shall forfeit the Award upon such termination of employment.
(ii)
Neither the Company nor the Committee shall have any obligation to notify a Participant of the expiration of an Award.
(iii)
Unless the Committee shall determine otherwise, a Participant employed by an Affiliate or business unit of the Company that is sold or otherwise
divested from the Company shall be considered to have his or her employment terminated as of the effective date of the divestiture.
(e)
Termination of Employment Due to Disability or Retirement.
(i)
If prior to the fifth anniversary of the Grant Date a Participants employment is terminated due to Disability or Retirement, the Award may be
exercised on or after the fifth anniversary of the Grant Date, but in no event may such an Award be exercised more than ten (10) years after the Grant Date, except
as provided in Section 6.1(k). If a Participants employment is terminated due to Disability or Retirement on or after the fifth anniversary of the Grant Date, the
Award may be exercised, to the extent such Award was exercisable on the date of such termination, within the remaining period of the Award.
(ii)
Notwithstanding the above and except for Participants located in Italy, the Committee reserves the discretionary ability to substitute an immediate
cash payment equal to the Spread Value of the Award in full satisfaction of the Award, in the event of a termination of employment due to Disability or Retirement
to the extent such payment is permitted by law.
(f)
Termination of Employment due to Special Separation.
(i)
If a Participants employment is terminated due to Special Separation (except for Participants located in Italy), the Participant will receive an
immediate cash payment equal to the Spread Value of the Award in full satisfaction of the Award, to the extent permitted by law.
(ii)
Notwithstanding the above, the Committee reserves the discretionary ability to waive the above cash payment provision and: (1) for terminations of
employment due to Special Separation prior to the fifth anniversary of the Grant Date, specify that the Award may be exercised on or after the fifth anniversary of
the Grant Date, but in no event may such an Award be exercised more than ten (10) years after the Grant Date, except as provided in Section 6.1(k); and (2) for
terminations of employment due to Special Separation on or after the fifth anniversary of the Grant Date, specify that the Award may be exercised, to the extent
such Award was exercisable on the date of such termination, within the remaining period of the Award.
8
(g)
Death of a Participant. Upon the death of a Participant, while an Award is still outstanding, regardless of whether the Award is or is not exercisable, a cash
payment equal to the Spread Value of the Award, as of the date of the Participants death, shall be paid as soon as administratively practicable to the Participants
estate, in full satisfaction of the Award. Notwithstanding the above, upon the death of a Participant located in Italy, the outstanding Award granted to such
Participant shall be (i) immediately canceled if the death occurs prior to the fifth anniversary of the Grant Date, or (ii) exercisable by the executors, administrators or
heirs of the deceased Participant only for six (6) months following such death if the death occurs on or after the fifth anniversary of the Grant Date.
(h)
Nontransferability. Awards are not transferable and may only be exercised by the Participant.
(i)
Exercise; Notice Thereof. Awards shall be exercised by delivering written notice of intention to exercise the Award, pursuant to such terms and conditions as
may be determined by the Committee. The Committee shall have the authority to establish procedures under any or all methods of exercise, including the
designation of the brokerage firm or firms through which exercises may be effected, which need not be the same for each grant or for each Participant. The
Committee shall have the authority to change without notice any method of exercise for any reason whatsoever, notwithstanding the fact that the method of exercise
had been available to Participants in the past.
(j)
Rights as Shareholder. A Participant shall have none of the rights of a shareholder with respect to shares of Common Stock covered by any Award until the
Participant becomes the record holder of such shares as determined by the records of the Companys transfer agent.
(k)
Additional Terms. With respect to any Award, the Committee may, in its discretion: (i) determine which Affiliates will be covered by the Plan; (ii)
determine which Employees are eligible to participate in the Plan; (iii) modify or restrict any of the terms and conditions of any Awards including but not limited to
extending the term of an Award beyond ten (10) years; (iv) modify or restrict exercise procedures and any other Plan procedures; (v) establish local country plans as
subplans to this Plan, each of which may be attached as an Appendix hereto; and (vi) take any action, before or after an Award is made, which it deems advisable to
obtain or comply with any necessary local government regulatory exemptions or approvals; provided that the Committee may not take any action hereunder which
would (1) increase the number of shares of Common Stock covered by the Plan; or (2) violate any securities law, the Code, or any governing statute.
(l)
Stock Appreciation Rights. The Committee may grant SARs or Modified SARs, as applicable, in lieu of Options or Modified Options under the Plan.
6.2
Refusal of Award. Any Participant may refuse the grant of an Award by notifying the Committee of his or her refusal in writing in a form and pursuant to
procedures to be determined by the Committee.
Article 7. General Provisions
7.1
No Additional Rights. Nothing in the Plan shall interfere with or limit in any way the right of the Company to terminate any Participants employment at
any time, or confer upon any Participant any right to continue in the employ of the Company. No Employee shall have the right to be selected to receive an Award under
this Plan or having been so selected, to be selected to receive a future Award. Neither the Award nor any benefits arising under this Plan shall constitute part of a
Participants employment contract with the Company or any Affiliate, and accordingly, this Plan and the benefits hereunder may be terminated
9
at any time in the sole and exclusive discretion of the Committee without giving rise to liability on the part of the Company or any Affiliate for severance payments.
7.2
No Effect on Other Benefits. The receipt of Awards under the Plan shall have no effect on any benefits and obligations to which a Participant may be
entitled from the Company or any Affiliate, under another plan or otherwise, or preclude a Participant from receiving any such benefits.
7.3
Binding Effect. Any decision made or action taken by the Company, 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, including the Company, its shareholders, Employees, Participants,
and their estates and beneficiaries.
7.4
Inalienability of Benefits and Interest. 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 benefits or interest shall be in any manner liable for or
subject to debts, liabilities, engagements, or torts of any Participant or beneficiary.
7.5
Requirements of Law. The granting of Awards and the issuance of shares of Common Stock under the Plan shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.
7.6
Governing Law. To the extent not preempted by federal law, the Plan and all agreements hereunder shall be construed in accordance with and governed by
the laws of the state of Ohio.
7.7
Withholding. The Company shall have the power and the right to deduct or withhold, to require an Affiliate to deduct or withhold, or to require a Participant
to remit to the Company or an Affiliate, an amount sufficient to satisfy federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld with
respect to any taxable event arising as a result of this Plan.
7.8
or in part.
Amendments. Subject to the terms of the Plan, the Committee may at any time and from time to time alter, amend, suspend, or terminate the Plan in whole
Adopted October 14, 1997

Article 2, Paragraph 2.19 added, Article 4, Paragraph 4.1 amended, Article 6, Paragraphs 6.1(d)(i), (e) (i) and (ii) and (f) amended - May 12, 1998
Article 4, Paragraph 4.1 amended - April 11, 2000
Article 2, Paragraph 2.19 amended - June 13, 2000
Article 6, Paragraph 6.1(c) amended and Paragraph 6.1(c)(i), (ii) and (iii) adopted - July 11, 2000
Article 4.2 amended - December 11, 2001
Article 6, Paragraph 6.1(e) changed; Article 6, Paragraph 6.1(f) adopted - March 11, 2003
Article 6, paragraphs 6.1(f)(i) and (ii) amended June 10, 2003
Adjusted for stock split effective May 21, 2004
10
EXHIBIT (12)
THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES

Computation of Ratio of Earnings to Fixed Charges
2015
Amounts in millions
EARNINGS, AS DEFINED
Earnings from operations before income taxes after eliminating undistributed earnings of
equity method investees
Fixed charges (excluding capitalized interest)
TOTAL EARNINGS, AS DEFINED
FIXED CHARGES, AS DEFINED

Interest expense (including capitalized interest)
1/3 of rental expense
TOTAL FIXED CHARGES, AS DEFINED
RATIO OF EARNINGS TO FIXED CHARGES
11,843
842
12,685
693
166
859
14.8x
Years ended June 30
2014
2013
14,320
928
15,248
789
174
963
15.8x
2012
14,270
899
15,169
754
171
925
16.4x
2011
12,111
1,000
13,111
844
176
1,020
12.9x
14,305
1,052
15,357
888
170
1,058
14.5x
EXHIBIT (21)

Subsidiaries of the Registrant
The registrant's subsidiaries are listed below, omitting certain entities that have de minimis activity or are in the process of being liquidated that, if considered in the aggregate as a single subsidiary, would
not constitute a significant subsidiary as of June 30, 2015 .
Agile Pursuits Franchising, Inc. [Ohio]
Agile Pursuits, Inc. [Ohio]
Arbora & Ausonia, S.L.U. [Spain]
Arbora, S.A. [Spain]
Arborinvest, S.A.U. [Spain]
Braun (Shanghai) Co., Ltd. [China]
Braun GmbH [Germany]
Braun-Gillette Immobilien GmbH & Co. KG [Germany]
Capella LLC [Russia]
Celtic Insurance Company, Inc. [Vermont]
Compania Giva, S.A. [Delaware]
Compania Procter & Gamble Mexico, S. de R.L. de C.V. [Mexico]
Compaia Quimica S.A. [Argentina]
Consumer Studies, Inc. [Massachusetts]
Corporativo Procter & Gamble, S. de R.L. de C.V. [Mexico]
Cosmetic Products Pty. Ltd. [Australia]
Cosmetic Suppliers Pty. Ltd. [Australia]
DDI Batteries Mexico S. de R.L. de C.V. [Mexico]
Detergent Products B.V. [Netherlands ]
Detergent Products SARL [Switzerland]
Detergenti S.A. [Romania]
Duracell (China) Ltd. [China]
Duracell Batteries B.V.B.A. [Belgium]
Duracell do Brasil Industria e Comercio Ltda. [Brazil]
Duracell Powermat, LLC [Delaware]
Escada Cosmetics Ltd. [Korea]
Eurocos Cosmetic GmbH [Germany]
Fameccanica Data S.p.A. [Italy]
Fameccanica Indstria e Comrcio Do Brasil LTDA. [Brazil]
Fameccanica Machinery (Shanghai) Co., Ltd. [China]
Fater S.p.A. [Italy]
Foreign Company "Procter & Gamble" [Belarus]
Fountain Square Music Publishing Co., Inc. [Ohio]
FPG Oleochemicals Sdn. Bhd. [Malaysia]
Galleria Co. [Delaware]
Gillette (China) Ltd. [China]
Gillette (Shanghai) Ltd. [China]

Gillette Australia Pty. Ltd. [Australia]
Gillette Canada Holdings, Inc. [Delaware]
Gillette China Investment, LLC [Delaware]
Gillette Commercial Operations North America [Massachusetts]
Gillette de Mexico, Inc. [Delaware]
Gillette del Uruguay, S.A. [Uruguay]
Gillette Distribution Ltd. [Egypt]
Gillette Diversified Operations Pvt. Ltd. [India]
Gillette Dominicana, S.A. [Dominican Republic]
Gillette Egypt S.A.E. [Egypt]
Gillette Group UK Ltd [U.K.]
Gillette Gruppe Deutschland GmbH & Co. oHG [Germany]
Gillette Holding Company, Inc. [Delaware]
Gillette Holding GmbH [Germany]
Gillette India Limited [India]
Gillette Industries Ltd. [U.K.]
Gillette International B.V. [Netherlands ]
Gillette Latin America Holding B.V. [Netherlands ]
Gillette Management LLC [Delaware]
Gillette Nova Scotia Company [Canada]
Gillette Pakistan Limited [Pakistan]
Gillette Poland International Sp. z.o.o. [Poland]
Gillette Poland S.A. [Poland]
Gillette Products Private Limited [India]
Gillette U.K. Limited [U.K.]
Giorgio Beverly Hills, Inc. [Delaware]
Go Unlimited LLC [Delaware]
Graham Webb International, Inc. [Delaware]
Gresham Cosmetics Pty. Ltd. [Australia]
Hyginett KFT [Hungary]
iMFLUX Inc. [Delaware]
Industries Marocaines Modernes SA [Morocco]
Labocos S.r.l. [Italy]
Laboratorios Vicks, S.L.U. [Spain]
Liberty Street Music Publishing Company, Inc. [Ohio]
Limited Liability Company 'Procter & Gamble Trading Ukraine' [Ukraine]
LLC "Gillette Group" [Russia]
LLC "Procter & Gamble Novomoskovsk" [Russia]
LLL "Procter & Gamble Distributorskaya Compania" [Russia]
"Procter & Gamble Services Company" LLC [Russia]
"Procter & Gamble" LLC [Russia]
Marcvenca Inversiones, C.A. [Venezuela]
Metropolitan Cosmetics GmbH [Germany]
Mining Consultants (India) Private Ltd. [India]
Modern Industries Company - Dammam [Saudi Arabia]
Modern Products Company - Jeddah [Saudi Arabia]

New Chapter Canada Inc. [Canada]
New Chapter, Inc. [Delaware]
Nexus Mercantile Private Ltd. [India]
Nioxin Management, Inc. [Georgia]
Nioxin Research Laboratories, Inc. [Georgia]
Noxell Corporation [Maryland]
Olay LLC [Puerto Rico]
Ondal France SARL [France]
Oral-B Laboratories Dublin LLC [Delaware]
Oral-B Laboratories Newbridge LLC [Delaware]
Oral-B Laboratories, G.P. [Delaware]
P&G Asia Investments, LLC [Ohio]
P&G Distribution Morocco SAS [Morocco]
P&G Industrial Peru S.R.L. [Peru]
P&G Innovation Godo Kaisha [Japan]
P&G Israel M.D.O. Ltd. [Israel]
P&G Japan Holdings Godo Kaisha [Japan]
P&G K.K. [Japan]
P&G Max Factor Godo Kaisha [Japan]
P&G Northeast Asia Pte. Ltd. [Singapore]
P&G Prestige Products GmbH [Germany]
P&G Prestige Products Ltd. [U.K.]
P&G Prestige Products N.V. [Belgium]
P&G Prestige Products, Inc. [Connecticut]
P&G Prestige Service GmbH [Germany]
P&G South African Trading (Pty.) Ltd. [South Africa]
P&G-Clairol, Inc. [Delaware]
Parfums Rochas S.A.S. [France]
PGIO S.A. Agencia en Chile [Chile]
PGT Health Care (Zhejiang) Limited [China]
PGT Healthcare LLP [Delaware]
Phase II Holdings Corporation [Philippines]
PPI ZAO [Russia]
PPS Hairwear Australia Pty. Ltd. [Australia]
Procter & Gamble (Chengdu) Ltd. [China]
Procter & Gamble (China) Ltd. [China]
Procter & Gamble (China) Sales Co., Ltd. [China]
Procter & Gamble (East Africa) Limited [Kenya]
Procter & Gamble (Egypt) Manufacturing Company [Egypt]
Procter & Gamble (Enterprise Fund) Limited [U.K.]
Procter & Gamble (Guangzhou) Consumer Products Co., Ltd. [China]
Procter & Gamble (Guangzhou) Enterprise Management Service Company Limited [China]
Procter & Gamble (Guangzhou) Ltd. [China]
Procter & Gamble (Health & Beauty Care) Limited [U.K.]
Procter & Gamble (Jiangsu) Ltd. [China]
Procter & Gamble (L&CP) Limited [U.K.]

Procter & Gamble (Malaysia) Sdn Bhd [Malaysia]
Procter & Gamble (Manufacturing) Ireland Limited [Ireland]
Procter & Gamble (Shanghai) International Trade Company Ltd. [China]
Procter & Gamble (Singapore) Pte. Ltd. [Singapore]
Procter & Gamble Acquisition GmbH [Germany]
Procter & Gamble Algeria EURL [Algeria]
Procter & Gamble Amazon Holding B.V. [Netherlands ]
Procter & Gamble Amiens S.A.S. [France]
Procter & Gamble Argentina SRL [Argentina]
Procter & Gamble Asia Holding B.V. [Netherlands ]
Procter & Gamble Asia Pte. Ltd. [Singapore]
Procter & Gamble Asia Pte. Ltd. [Philippines]
Procter & Gamble Asnieres S.A.S. [France]
Procter & Gamble Australia Proprietary Limited [Australia]
Procter & Gamble Azerbaijan Services LLC [Azerbaijan]
Procter & Gamble Bangladesh Private Ltd. [Bangladesh]
Procter & Gamble Blois S.A.S. [France]
Procter & Gamble Braun de Mexico Holding, LLC [Ohio]
Procter & Gamble Brazil Holdings B.V. [Netherlands ]
Procter & Gamble Bulgaria EOOD [Bulgaria]
Procter & Gamble Business Services Canada Company [Canada]
Procter & Gamble Canada Holding B.V. [Netherlands ]
Procter & Gamble Chile Holding Ltda. [Chile]
Procter & Gamble Chile Limitada [Chile]
Procter & Gamble Chile, Inc. [Ohio]
Procter & Gamble Colombia Ltda. [Colombia]
Procter & Gamble Commercial de Cuba, S.A. [Cuba]
Procter & Gamble Commercial LLC [Puerto Rico]
Procter & Gamble Czech Holding B.V. [Netherlands ]
Procter & Gamble Czech Republic s.r.o. [Czech Republic]
Procter & Gamble d.o.o. za trgovinu [Croatia]
Procter & Gamble Danmark ApS [Denmark]
Procter & Gamble de Venezuela, S.C.A. [Venezuela]
Procter & Gamble de Venezuela, S.R.L. [Venezuela]
Procter & Gamble Detergent (Beijing) Ltd. [China]
Procter & Gamble Distributing (Philippines) Inc. [Philippines]
Procter & Gamble Distributing New Zealand Limited [New Zealand]
Procter & Gamble Distribution Company (Europe) BVBA [Belgium]
Procter & Gamble Distribution S.R.L. [Romania]
Procter & Gamble do Brasil S/A [Brazil]
Procter & Gamble do Brazil, LLC [Delaware]
Procter & Gamble do Nordeste S/A [Brazil]
Procter & Gamble DS Polska Sp. z o.o. [Poland]
Procter & Gamble Eastern Europe, LLC [Ohio]
Procter & Gamble Ecuador Cia. Ltda. [Ecuador]
Procter & Gamble Egypt [Egypt]

Procter & Gamble Egypt Distribution [Egypt]
Procter & Gamble Egypt Holding [Egypt]
Procter & Gamble Egypt Supplies [Egypt]
Procter & Gamble Energy Company LLC [Ohio]
Procter & Gamble Espaa, S.A. [Spain]
Procter & Gamble Europe SA [Switzerland]
Procter & Gamble Export Operations SARL [Switzerland]
Procter & Gamble Exports, LLC [Delaware]
Procter & Gamble Far East, Inc. [Ohio]
Procter & Gamble Finance (U.K.) Ltd. [U.K.]
Procter & Gamble Finance Management S.a.r.l. [Luxembourg]
Procter & Gamble Financial Services S.a.r.l. [Luxembourg]
Procter & Gamble Finland OY [Finland]
Procter & Gamble France S.A.S. [France]
Procter & Gamble Germany GmbH [Germany]
Procter & Gamble Germany GmbH & Co. Operations oHG [Germany]
Procter & Gamble GmbH [Germany]
Procter & Gamble Grundstucks-und Vermogensverwaltungs GmbH & Co. KG [Germany]
Procter & Gamble Gulf FZE [United Arab Emirates]
Procter & Gamble Hair Care, LLC [Delaware]
Procter & Gamble Hellas Ltd. [Greece]
Procter & Gamble Holding (Thailand) Limited [Thailand]
Procter & Gamble Holding France S.A.S. [France]
Procter & Gamble Holding GmbH [Germany]
Procter & Gamble Holding S.r.l. [Italy]
Procter & Gamble Holdings (UK) Ltd. [U.K.]
Procter & Gamble Home Products Private Limited [India]
Procter & Gamble Hong Kong Investment, Limited [Hong Kong]
Procter & Gamble Hong Kong Limited [Hong Kong]
Procter & Gamble Hungary Wholesale Trading Partnership (KKT) [Hungary]
Procter & Gamble Hygiene & Health Care Limited [India]
Procter & Gamble Inc. [Canada]
Procter & Gamble India Holdings B.V. [Netherlands ]
Procter & Gamble India Holdings, Inc. [Ohio]
Procter & Gamble Indochina Limited Company [Vietnam]
Procter & Gamble Industrial Colombia Ltda. [Colombia]
Procter & Gamble Industrial e Comercial Ltda. [Brazil]
Procter & Gamble Industrial - 2012 C.A. [Venezuela]
Procter & Gamble Industrial S.C.A. [Venezuela]
Procter & Gamble Interamericas de Costa Rica, Limitada [Costa Rica]
Procter & Gamble Interamericas de El Salvador, Limitada de Capital Variable [El Salvador]
Procter & Gamble Interamericas de Guatemala, Limitada [Guatemala]
Procter & Gamble Interamericas de Panama, S. de R.L. [Panama]
Procter & Gamble International Funding SCA [Luxembourg]
Procter & Gamble International Operations Pte. Ltd. [Singapore]
Procter & Gamble International Operations S.A. [Switzerland]

Procter & Gamble International Operations SA-ROHQ [Philippines]
Procter & Gamble International S.a.r.l. [Luxembourg]
Procter & Gamble Investment Company (UK) Ltd. [U.K.]
Procter & Gamble Investment GmbH [Germany]
Procter & Gamble Italia, S.p.A. [Italy]
Procter & Gamble Japan K.K. [Japan]
Procter & Gamble Kazakhstan LLP [Kazakhstan]
Procter & Gamble Korea IE, Co. [Korea]
Procter & Gamble Korea Inc. [Korea]
Procter & Gamble Korea S&D Co. [Korea]
Procter & Gamble Lanka Private Ltd. [Sri Lanka]
Procter & Gamble Leasing LLC [Ohio]
Procter & Gamble Levant S.A.L. [Lebanon]
Procter & Gamble Limited [U.K.]
Procter & Gamble Manufactura, S. de R.L. de C.V. [Mexico]
Procter & Gamble Manufacturing Cologne GmbH [Germany]
Procter & Gamble Manufacturing (Thailand) Limited [Thailand]
Procter & Gamble Manufacturing (Tianjin) Co. Ltd. [China]
Procter & Gamble Manufacturing Belgium N.V. [Belgium]
Procter & Gamble Manufacturing Berlin GmbH [Germany]
Procter & Gamble Manufacturing GmbH [Germany]
Procter & Gamble Manufacturing SA (Pty) Ltd [South Africa]
Procter & Gamble Marketing and Services doo [Serbia and Montenegro]
Procter & Gamble Marketing Romania SRL [Romania]
Procter & Gamble Maroc SA [Morocco]
Procter & Gamble Mataro, S.L.U. [Spain]
Procter & Gamble Mexico Holding B.V. [Netherlands ]
Procter & Gamble Middle East FZE [United Arab Emirates]
Procter & Gamble Nederland B.V. [Netherlands ]
Procter & Gamble Netherlands Investments B.V. [Netherlands ]
Procter & Gamble Netherlands Services B.V. [Netherlands ]
Procter & Gamble Nigeria Limited [Nigeria]
Procter & Gamble Nordic, LLC [Ohio]
Procter & Gamble Norge AS [Norway]
Procter & Gamble Operations Polska Sp. z o.o. [Poland]
Procter & Gamble Overseas India B.V. [Netherlands ]
Procter & Gamble Overseas Ltd. [U.K.]
Procter & Gamble Pakistan (Private) Limited [Pakistan]
Procter & Gamble Partnership LLP [U.K.]
Procter & Gamble Peru S.R.L. [Peru]
Procter & Gamble Pharmaceuticals France SAS [France]
Procter & Gamble Philippines, Inc. [Philippines]
Procter & Gamble Polska Sp. z o.o [Poland]
Procter & Gamble Portugal - Produtos De Consumo, Higiene e Sade S.A. [Portugal]
Procter & Gamble Prestige Products S.A. [Portugal]
Procter & Gamble Prestige Products S.A.U. [Spain]

Procter & Gamble Product Supply (U.K.) Limited [U.K.]
Procter & Gamble Productions, Inc. [Ohio]
Procter & Gamble Productos de Consumo, S.L.U. [Spain]
Procter & Gamble Retail Services BVBA [Belguim]
Procter & Gamble RHD, Inc. [Ohio]
Procter & Gamble RSC Regional Service Company Ltd. [Hungary]
Procter & Gamble S.r.l. [Italy]
Procter & Gamble Satis ve Dagitim Ltd. Sti. [Turkey]
Procter & Gamble Service GmbH [Germany]
Procter & Gamble Services (Switzerland) SA [Switzerland]
Procter & Gamble Services Company N.V. [Belgium]
Procter & Gamble Services Ltd. [Kenya]
Procter & Gamble SA (Pty) Ltd [South Africa]
Procter & Gamble South America Holding B.V. [Netherlands ]
Procter & Gamble Sverige AB [Sweden]
Procter & Gamble Switzerland SARL [Switzerland]
Procter & Gamble Taiwan Limited [Taiwan]
Procter & Gamble Taiwan Sales Company Limited [Taiwan]
Procter & Gamble Technical Centres Limited [U.K.]
Procter & Gamble Technology (Beijing) Co., Ltd. [China]
Procter & Gamble Trading (Thailand) Limited [Thailand]
Procter & Gamble Tuketim Mallari Sanayii A.S. [Turkey]
Procter & Gamble UK [U.K.]
Procter & Gamble UK Parent Company Ltd. [U.K.]
Limited Liability Company with foreign investments Procter & and Gamble Ukraine [Ukraine]
Procter & Gamble Universal Holding B.V. [Netherlands ]
Procter & Gamble Verwaltungs GmbH [Germany]
Procter & Gamble Vietnam, Ltd. [Vietnam]
Procter & Gamble, Spol. s.r.o. (Ltd.) [Slovak Republic]
Procter & Gamble-Rakona s.r.o. [Czech Republic]
Productos Cosmticos, S.L.U. [Spain]
Professional Care Logistics, S.L.U. [Spain]
Progam Realty & Development Corporation [Philippines]
Promotora de Bienes y Valores, S. de R.L. de C.V. [Mexico]
PT Cosmopolitan Cosmetics [Indonesia]
PT Kosmindo [Indonesia]
PT Procter & Gamble Home Products Indonesia [Indonesia]
PT Procter & Gamble Operations Indonesia [Indonesia]
Redmond Products, Inc. [Minnesota]
Richardson-Vicks do Brasil Quimica e Farmacutica Ltda [Brazil]
Richardson-Vicks Real Estate Inc. [Ohio]
Riverfront Music Publishing Co., Inc. [Ohio]
Rosemount LLC [Delaware]
Russwell Ltd [Russia]
S.P.F. Beaute SAS [France]
Scannon GmbH [Germany]

Scannon S.A.S. [France]
Sebastian Europe GmbH [Germany]
Series Acquisition B.V. [Netherlands ]
Shulton, Inc. [New Jersey]
SPD Development Company Limited [U.K.]
SPD Swiss Precision Diagnostics GmbH [Switzerland]
Surfac S.R.L. [Peru]
Sycamore Productions, Inc. [Ohio]
Tambrands Inc. [Delaware]
Tambrands Limited [U.K.]
TAOS - FL, LLC [Florida]
TAOS Retail, LLC [Delaware]
Temple Trees Impex & Investment Private Limited [India]
The Art of Shaving - FL, LLC [Florida]
The Dover Wipes Company [Ohio]
The Gillette Company [Delaware]
The Procter & Gamble Distributing LLC [Delaware]
The Procter & Gamble GBS Company [Ohio]
The Procter & Gamble Global Finance Company, LLC [Ohio]
The Procter & Gamble Manufacturing Company [Ohio]
The Procter & Gamble Paper Products Company [Ohio]
The Procter & Gamble U.S. Business Services Company [Ohio]
The Wella Corporation [Delaware]
US CD LLC [Delaware]
Vidal Sassoon (Shanghai) Academy [China]
Vidal Sassoon Co. [Ohio]
WEBA Betriebsrenten-Verwaltungsgesellschaft mbH [Germany]
Wella (U.K.) Ltd. [U.K.]
Wella (UK) Holdings Ltd. [U.K.]
Wella France S.A.S. [France]
Wella GmbH [Germany]
Wella Grundstucks-und Vermogensverwaltungs AG & Co. KG [Germany]
Wella Hellas Ltd. [Greece]
Wella India Hair Cosmetics Private Limited [India]
Wella Intercosmetic GmbH [Germany]
Wella Management GmbH [Germany]
Wella Manufacturing GmbH [Germany]
Wella Philippines Inc. [Philippines]
Wella Verwaltung GmbH [Germany]
EXHIBIT (23)
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in the following documents of our reports dated August 7, 2015 , relating to the consolidated financial statements of The Procter & Gamble
Company and subsidiaries and the effectiveness of The Procter & Gamble Company and subsidiaries internal control over financial reporting, appearing in this Annual Report on Form
10-K of The Procter & Gamble Company for the year ended June 30, 2015 :
1.
Post-Effective Amendment No. 1 to Registration Statement No. 33-49289 on Form S-8 for The Procter & Gamble 1992 Stock Plan;
3.
Registration Statement No. 33-50273 on Form S-8 for The Procter & Gamble Commercial Company Employees Savings Plan;
2.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
Registration Statement No. 33-47656 on Form S-8 for The Procter & Gamble International Stock Ownership Plan;
Registration Statement No. 33-51469 on Form S-8 for The Procter & Gamble 1993 Non-Employee Directors Stock Plan;
Registration Statement No. 333-05715 on Form S-8 for The Procter & Gamble Profit Sharing Trust and Employee Stock Ownership Plan;
Post-Effective Amendment No. 2 to Registration Statement No. 33-59257 on Form S-3 for The Procter & Gamble Shareholder Investment Program;
Registration Statement No. 333-14381 on Form S-8 for Profit Sharing Retirement Plan of The Procter & Gamble Commercial Company;
Registration Statement No. 333-14397 on Form S-8 for Procter & Gamble Subsidiaries Savings Plan;
Registration Statement No. 333-21783 on Form S-8 for The Procter & Gamble 1992 Stock Plan (Belgian Version);
Registration Statement No. 333-37905 on Form S-8 for The Procter & Gamble Future Shares Plan;
Registration Statement No. 333-51213 on Form S-8 for Group Profit Sharing, Incentive, and Employer Contribution Plan (France);
Registration Statement No. 333-51219 on Form S-8 for Procter & Gamble Ireland Employees Share Ownership Plan;
Registration Statement No. 333-51221 on Form S-8 for Employee Stock Purchase Plan (Japan);
Registration Statement No. 333-51223 on Form S-8 for Savings and Thrift Plan (Saudi Arabia);
Registration Statement No. 333-34606 on Form S-8 for The Procter & Gamble Future Shares Plan;
Registration Statement No. 333-40264 on Form S-8 for Savings and Thrift Plan Saudi Arabia;
Registration Statement No. 333-49764 on Form S-3 for The Procter & Gamble U.K. Share Investment Scheme;
Registration Statement No. 333-75030 on Form S-8 for The Procter & Gamble 2001 Stock and Incentive Compensation Plan;
Registration Statement No. 333-100561 on Form S-8 for The Procter & Gamble (U.K.) 1-4-1 Plan;
22.
Registration Statement No. 333-108753 on Form S-8 for The Procter & Gamble Profit Sharing Trust and Employee Stock Ownership Plan;
24.
Registration Statement No. 333-108992 on Form S-8 for Savings and Thrift Plan (Saudi Arabia);
23.
25.
26.
27.
28.
29.
30.
31.
32.
33.
34.
35.
36.
37.
38.
39.
40.
41.
42.
43.
44.
Registration Statement No. 333-108994 on Form S-8 for Procter & Gamble Ireland Employees Share Plan;
Registration Statement No. 333-108995 on Form S-8 for Group Profit Sharing, Incentive, and Employer Contribution Plan (France);
Registration Statement No. 333-108999 on Form S-8 for The Procter & Gamble 1992 Stock Plan;
Amendment No. 1 to Registration Statement No. 333-113515 on Form S-3 for The Procter & Gamble Company Debt Securities and Warrants;
Amendment No. 3 to Registration Statement No. 333-123309 on Form S-4 for The Procter & Gamble Company;
Registration Statement No. 333-128859 on Form S-8 for certain employee benefit plans of The Gillette Company (2004 Long-Term Incentive Plan of The Gillette Company; 1971
Stock Option Plan of The Gillette Company; James M. Kilts Non-Statutory Stock Option Plan; The Gillette Company Employees Savings Plan; The Gillette Company
Supplemental Savings Plan; The Gillette Company Global Employee Stock Ownership Plan (GESOP));
Registration Statement No. 333-143801 on Form S-8 for The Procter & Gamble Savings Plan;
Registration Statement No. 333-145938 on Form S-3 for The Procter & Gamble Company and Procter & Gamble International Funding SCA;
Registration Statement No. 333-156033 on Form S-3 for The Procter & Gamble Shareholder Investment Program;
Registration Statement No. 333-161725 on Form S-8 for The Procter & Gamble Savings Plan;
Registration Statement No. 333-177760 on Form S-3 for The Procter & Gamble Shareholder Investment Program;
45.
47.
46.
48.
49.
50.
51.
52.
Registration Statement No. 333-199595 on Form S-3 for The Procter & Gamble Shareholder Investment Program; and
Registration Statement No. 333-199613 on Form S-3 for The Procter & Gamble U.K. Share Investment Scheme.

Cincinnati, Ohio
August 7, 2015
EXHIBIT (31)
Rule 13a-14(a)/15d-14(a) Certifications

I, A.G. Lafley, certify that:
(1)
I have reviewed this Form 10-K of The Procter & Gamble Company;
(2)
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period covered by this report;
(3)
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods presented in this report;
(4)
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information
relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being
prepared;
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles;
c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this report based on such evaluation;
d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's
fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial
reporting; and
(5)
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit
committee of the registrant's board of directors (or persons performing the equivalent functions):
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the
registrant's ability to record, process, summarize and report financial information; and
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
/s/ A.G. LAFLEY

(A.G. Lafley)
August 7, 2015
Date

I, Jon R. Moeller, certify that:
(1)
I have reviewed this Form 10-K of The Procter & Gamble Company;
(2)
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period covered by this report;
(3)
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods presented in this report;
(4)
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information
relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being
prepared;
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles;
c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this report based on such evaluation;
d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's
fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial
reporting; and
(1)
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit
committee of the registrant's board of directors (or persons performing the equivalent functions):
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the
registrant's ability to record, process, summarize and report financial information; and
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
/s/ JON R. MOELLER

(Jon R. Moeller)
August 7, 2015
Date
EXHIBIT (32)
Section 1350 Certifications
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of The Procter & Gamble Company
(the Company) certifies to his knowledge that:
(1)
(2)
Form 10-K of the Company for the year ended June 30, 2015 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act
of 1934; and
The information contained in that Form 10-K fairly presents, in all material respects, the financial conditions and results of operations of the Company.
/s/ A.G. LAFLEY

(A.G. Lafley)
August 7, 2015
Date
A signed original of this written statement required by Section 906 has been provided to The Procter & Gamble Company and will be retained by The Procter & Gamble
Company and furnished to the Securities and Exchange Commission or its staff upon request.
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of The Procter & Gamble Company
(the Company) certifies to his knowledge that:
(1)
(2)
Form 10-K of the Company for the year ended June 30, 2015 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act
of 1934; and
The information contained in that Form 10-K fairly presents, in all material respects, the financial conditions and results of operations of the Company.
/s/ JON R. MOELLER

(Jon R. Moeller)
August 7, 2015
Date
A signed original of this written statement required by Section 906 has been provided to The Procter & Gamble Company and will be retained by The Procter & Gamble
Company and furnished to the Securities and Exchange Commission or its staff upon request.
EXHIBIT (99-1)
Summary of Directors and Officers Insurance Program
The Procter & Gamble Company purchases Directors and Officers Liability insurance from various insurance carriers. The policy limits for the period from June 30, 2014
to June 30, 2015 were $250 million.

PROCTER & GAMBLE Co (Form 10-K Received 08 07 2015 16 06 25) PDF

Загружено:

Сведения о документе

Исходное описание:

Оригинальное название

Авторское право

Доступные форматы

Поделиться этим документом

Поделиться или встроить документ

Параметры публикации

Этот документ был вам полезен?

Это неприемлемый материал?

Авторское право:

Доступные форматы

PROCTER & GAMBLE Co (Form 10-K Received 08 07 2015 16 06 25) PDF

Загружено:

Авторское право:

Доступные форматы

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

THE PROCTER & GAMBLE COMPANY

Title of each class

Common Stock, without Par Value

Name of each exchange on which registered

New York Stock Exchange, NYSE Euronext-Paris

The Procter & Gamble Company 12

Additional information required by this item is incorporated herein by reference to Management's

13 The Procter & Gamble Company

Employees . Total number of employees is an estimate of total Company employees excluding

Total Number of Employees

North America (1)

Total Assets (years ended June 30)

Item 1A. Risk Factors.

The Procter & Gamble Company 14

15 The Procter & Gamble Company

reputation due to a significant product recall, product-related litigation, allegations of product

ordering and managing materials from suppliers;

The Procter & Gamble Company 16

providing data security; and

17 The Procter & Gamble Company

On February 10, 2015, the Sacramento County Environmental Management Department

The Procter & Gamble Company 18

EXECUTIVE OFFICERS OF THE REGISTRANT

Chief Financial Officer

Group President - Global Baby, Feminine and Family Care

Chairman of the Board, President and

Group President - Global Fabric and Home Care

Group President - North America Selling and Market Operations

Group President - Global Beauty, Grooming and Health Care; Director

President - Europe Selling and Market Operations

President - Latin America Selling and Market Operations

President - Asia Pacific Selling and Market Operations

President - Global Business Services

President - Greater China Selling and Market Operations

Senior Vice President, Comptroller and Treasurer

19 The Procter & Gamble Company

ISSUER PURCHASES OF EQUITY SECURITIES

Approximate Dollar Value of Shares that May Yet Be

(in dollars; split-adjusted)

Dividends per share

The Procter & Gamble Company 20

Common Stock Price Range

Cumulative Value of $100 Investment, through June 30

21 The Procter & Gamble Company

Item 6. Selected Financial Data.

Amounts in millions, except per share amounts

Net earnings margin from continuing operations

Diluted net earnings per common share: (1)

Basic net earnings per common share

Diluted net earnings per common share

Research and development expense

Dividends per common share

The Procter & Gamble Company 22

Throughout the MD&A, we refer to measures used by management to evaluate performance,

23 The Procter & Gamble Company

Fabric Care and Home Care

Baby, Feminine and Family Care

Beauty, Hair and Personal Care

Billion Dollar Brands

The Procter & Gamble Company 24