UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
UNITED STATES OF AMERICA,
L'OREAL USA, INC.,
Civil Action No. __________
HOLD SEPARATE STIPULATION AND
IT IS HEREBY STIPULATED AND AGREED by and between the undersigned parties,
subject to approval and entry by this Court, that:
As used in this Hold Separate Stipulation and Order:
- "Acquirer" means the entity to whom Defendants or the trustee divest the Hair
Care Assets or to whom the trustee divests the Divestiture Assets.
- "L'Oreal" means Defendant L'Oreal S.A., a French corporation headquartered in
Paris, France, and Defendant L'Oreal USA, Inc., a Delaware corporation headquartered in New
York, New York, and includes all successors and assigns, and all parents, subsidiaries, divisions
(including Soft Sheen Products, Inc.), groups, affiliates, partnerships and joint ventures, and
directors, officers, managers, agents, and employees.
- "Carson" means Defendant Carson, Inc., a Delaware corporation with its
headquarters in Savannah, Georgia, and includes its successors and assigns, and its parents,
subsidiaries, divisions, groups, affiliates, partnerships and joint ventures, and their directors,
officers, managers, agents, and employees.
- "Hair Care Assets" mean:
- all tangible assets used primarily in the research, development,
marketing, servicing or sale of any product that Carson sold, sells
or has plans to sell under the Relevant Brand Names, including, but
not limited to: materials, supplies, and other tangible property and
all assets used primarily with such products; and
- all tangible assets relating to any product that Carson sold, sells or
has plans to sell under the Relevant Brand Names, including, but
not limited to, all licenses, permits and authorizations issued by any
governmental organization; all contracts, teaming arrangements,
agreements, commitments, certifications, and understandings,
including supply agreements; all customer lists, contracts, accounts,
and credit records; all agreements with retailers, wholesalers, or any
other person regarding the sale, promotion, marketing, advertising
or placement of such products; product inventory, packaging and
artwork relating to such packaging; molds and silk screens; and all
performance records and all other records.
- all intangible assets used in the research, development, production,
marketing, servicing or sale of any product that Carson sold, sells, or has
plans to sell under the Relevant Brand Names, including, but not limited to:
all legal rights, including intellectual property rights, associated with the
products, including trademarks, trade names, service names, service marks,
designs, trade dress, patents, copyrights and all licenses and sublicenses to
such intellectual property; all legal rights to use the names "Johnson
Products Co., Inc." and "JP," and any derivation thereof; all trade secrets;
all technical information, computer software and related documentation,
and know-how, including, but not limited to, recipes and formulas, and
information relating to plans for, improvements to, or line extensions of,
the products; all research, packaging, sales, marketing, advertising and
distribution know-how and documentation, including plan-o-grams,
marketing and sales data, packaging designs, quality assurance and control
procedures; all manuals and technical information Carson provided to their
own employees, customers, suppliers, agents or licensees; all specifications
for materials, and safety procedures for the handling of materials and
substances; all research information and data concerning historic and
current research and development efforts, including, but not limited to,
designs of experiments and the results of successful and unsuccessful
designs and experiments.
- with respect to any identifiable and specific trade secrets, recipes,
or know-how that, prior to the merger, were being used in the production
or development of products sold under the Relevant Brand Names and any
product not being divested, the Acquirer shall provide to Defendants a
non-exclusive, transferable, royalty-free right to use any such trade secrets,
recipes, formulas or know-how in the production or development of any
- "Plant Assets" mean all of the following assets: Carson's facility and property
located at 8522 South Lafayette Avenue, Chicago, Illinois, and with respect to such facility, all
manufacturing, research and development equipment, tooling and fixed assets, personal
real property, titles, interests, leases, input inventory, office furniture, materials, supplies,
drawings, blueprints, designs, design protocols, specifications for parts and devices, and safety
procedures for the handling of plant equipment and substances, and all other tangible property.
- "Divestiture Assets" mean the Hair Care Assets and the Plant Assets.
- "Relevant Brand Names" mean:
- Gentle Treatment;
- Ultra Sheen; and
- any other name that uses, incorporates, or references either the Ultra
or Gentle Treatment name, including, but not limited to, Ultra Sheen
Supreme, Ultra Sheen Supreme Valu-Pak, Ultra Sheen Gro Natural, Ultra
Sheen Extra Dry, Ultra Sheen Soft Touch, Ultra Sheen Hair Food, Ultra
Sheen Anti-Itch, and Ultra Sheen Creme Satin Press, but not including the
names Precise and Perfect Performance. With respect to the Precise name,
Perfect Performance name or any other brand name or product, Defendants
shall not use, incorporate or reference the names JP or Johnson Products,
Co., Inc. (or any derivation thereof), or the names Gentle Treatment or
The Final Judgment filed in this civil action is meant to ensure prompt divestitures for the
purpose of establishing a viable competitor in the ethnic hair care industry in order to remedy the
effects that the United States alleges would otherwise result from L'Oreal's acquisition of
The Hold Separate Stipulation and Order ensure, prior to such divestitures, that the Hair Care
Assets remain economically viable as part of an ongoing business that will remain independently
managed by the Designated Personnel (as defined in Section V(I) below) and not influenced by
L'Oreal, and that competition is maintained during the pendency of the ordered divestitures.
JURISDICTION AND VENUE
This Court has jurisdiction over the subject matter of this action and over each of the
parties hereto, and venue of this action is proper in the United States District Court for the
District of Columbia.
COMPLIANCE WITH AND ENTRY OF FINAL
- The parties stipulate that a Final Judgment in the form attached hereto as Exhibit A
may be filed with and entered by this Court, upon the motion of any party or upon this Court's
own motion, at any time after compliance with the requirements of the Antitrust Procedures and
Penalties Act (15 U.S.C. § 16), and without further notice to any party or other
provided that the United States has not withdrawn its consent, which it may do at any time
the entry of the proposed Final Judgment by serving notice thereof on Defendants and by filing
that notice with this Court.
- Defendants shall abide by and comply with the provisions of the proposed Final
Judgment, pending the Judgment's entry by this Court, or until expiration of time for all appeals
of any court ruling declining entry of the proposed Final Judgment. Defendants, from the date
the signing of this Stipulation by the parties, shall comply with all the terms and provisions of
proposed Final Judgment as though the same were in full force and effect as an order of this
- Defendants shall not consummate the transaction sought to be enjoined by the
Complaint filed in this action until after this Court has signed and entered this Hold Separate
Stipulation and Order.
- This Stipulation shall apply with equal force and effect to any amended proposed
Final Judgment agreed upon in writing by the parties and submitted to this Court.
- In the event that (1) the proposed Final Judgment is not entered pursuant to this
Stipulation, the time has expired for all appeals of any court ruling declining entry of the
Final Judgment, and this Court has not otherwise ordered continued compliance with the terms
and provisions of the proposed Final Judgment, or (2) the United States has withdrawn its
consent, as provided in Section IV(A) above, then the parties are released from all further
obligations under this Stipulation, and the making of this Stipulation shall be without evidentiary
prejudice to any party in this or any other proceeding.
- Defendants represent that the divestitures ordered in the proposed Final Judgment
can and will be made, and that Defendants will later raise no claim of mistake, hardship or
difficulty of compliance as grounds for asking this Court to modify any of the provisions
HOLD SEPARATE PROVISIONS
Until the divestitures required by the Final Judgment have been accomplished:
- Defendants shall preserve, maintain, and continue to operate the products sold
under the Relevant Brand Names as an economically viable part of an ongoing competitive
business, with management, research, development, promotions, marketing, and terms of sale of
such products held entirely separate, distinct and apart from those of L'Oreal's other operations.
L'Oreal shall not coordinate its management, research, development, promotions, marketing, or
terms of sale with any products sold under any of the Relevant Brand Names. Within twenty
calendar days after either the filing of the Complaint or the entry of the Hold Separate
and Order, whichever is earlier, each Defendant shall deliver to the United States an affidavit
describes in reasonable detail all actions Defendant has taken and all steps Defendant has
implemented on an ongoing basis to comply with this Hold Separate Stipulation and Order.
- Defendants shall take all steps necessary to ensure that: (1) the products sold
under the Relevant Brand Names will be maintained and operated as independent, ongoing,
economically viable and active competitive products in the ethnic hair care industry, including
adult women's hair relaxer kit market; (2) management of the Hair Care Assets will be
by the Designated Personnel and not be influenced by L'Oreal (or Carson); and (3) the books,
records, competitively sensitive sales, marketing, promotion and pricing information, and
decision-making concerning research, development, production, distribution, marketing,
promotion or sales of products under any of the Relevant Brand Names will be kept separate and
apart from Defendants' other operations.
- Defendants shall use all reasonable efforts to maintain the research, development,
sales, revenues, marketing, promotion, shelf-space, advertising, and distribution of the products
sold under the Relevant Brand Names, and shall maintain at fiscal year 2000 or previously
approved levels for fiscal year 2001, whichever are higher, all research, development, product
improvement, promotional, advertising, sales, distribution, technical assistance, marketing and
merchandising support for those products. Defendants shall also ensure that all plans and efforts
to improve current products sold, or to introduce new products under, the Relevant Brand Names
- Defendants shall provide sufficient working capital and lines and sources of credit
to continue to maintain the products sold under the Relevant Brand Names as economically
and competitive, ongoing products, consistent with the requirements of Sections V (A) and (B)
- Defendants shall take all steps necessary to ensure that the Divestiture Assets are
fully maintained in operable condition at no less than current capacity and sales, and shall
and adhere to normal repair, product improvement and upgrade, and maintenance schedules for
the Divestiture Assets.
- Defendants shall not, except as part of a divestiture approved by the United States
in accordance with the terms of the proposed Final Judgment, remove, sell, lease, assign,
pledge or otherwise dispose of any of the Divestiture Assets.
- Defendants shall maintain, in accordance with sound accounting principles,
separate, accurate and complete financial ledgers, books and records that report on a periodic
basis, such as the last business day of every month, consistent with past practices, the assets,
liabilities, expenses, revenues and income of the Divestiture Assets.
- Carson's employees with primary responsibility for the research, development,
marketing, promotion, production, operation, distribution, or sale of the products sold under the
Relevant Brand Names, shall not be terminated, transferred or reassigned to other areas within
Carson or L'Oreal except for transfer bids initiated by employees pursuant to Defendants'
established job posting policy. Defendants shall provide the United States with ten (10) calendar
days notice of such transfer. The Designated Personnel shall not be terminated, transferred or
reassigned prior to a divestiture pursuant to the terms of the Final Judgment.
- Until such time as the Hair Care Assets are divested pursuant to the terms of the
Final Judgment, the Hair Care Assets shall be managed by Donald N. Riley and Curdedra N.
Andrews (collectively "Designated Personnel"). The Designated Personnel shall have complete
managerial responsibility for the Hair Care Assets, subject to the provisions of this Order and the
proposed Final Judgment, and will be responsible for Defendants' compliance with this Section.
In the event that the Designated Personnel are unable to perform their duties, Defendants shall
appoint, subject to the approval of the United States, a replacement within ten (10) working
Should Defendants fail to appoint a replacement acceptable to the United States within ten (10)
working days, the United States shall appoint a replacement. Defendants shall take no action
would interfere with the ability of the Designated Personnel or any later appointed persons to
oversee the Hair Care Assets.
- Defendants shall take no action that would interfere with the ability of any trustee
appointed pursuant to the Final Judgment to complete the divestitures pursuant to the Final
Judgment to an Acquirer acceptable to the United States.
- This Hold Separate Stipulation and Order shall remain in effect until
consummation of the divestitures required by the proposed Final Judgment or until further order
of this Court.
Dated: 31 July 2000
FOR DEFENDANT L'OREAL USA, INC.:
John Sullivan, Esq
Senior Vice-President & General Counsel
L'Oreal USA, Inc.
575 Fifth Avenue
New York, N.Y. 10017
Phone: (212) 818-1500
Peter D. Standish, Esq.
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, N.Y. 10153
FOR DEFENDANT L'OREAL S.A.:
John Sullivan, Esq.
Senior Vice-President & General Counsel
L'Oreal USA, Inc.
575 Fifth Avenue
New York, N.Y. 10017
Phone: (212) 818-1500
FOR DEFENDANT CARSON, INC.:
Charles Westland, Esq.
Milbank, Tweed, Hadley & McCloy LLP
1 Chase Manhattan Plaza
New York, N.Y. 10005
FOR PLAINTIFF UNITED STATES OF AMERICA:
Assistant Chief, Litigation II Section
U.S. Department of Justice
1401 H Street, N.W.
Washington, D.C. 20530
O R D
IT IS SO ORDERED by this Court, this ____ day of _____________,
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United States District Judge