Escrow Obligations. (a) On or prior to the Termination Date, the Sellers shall use reasonable best efforts to satisfy the condition set forth in Section 6.2(h). For the purposes of this Section 5.7(a), "reasonable best efforts" shall include payment of any and all amounts into the Sellers' escrow accounts maintained in accordance with the Qualifying Statutes, and any other payments required under the Qualifying Statutes, as shall be necessary, as determined by the applicable states or other applicable Governmental Authority, to cause the Sellers to be in compliance with the Qualifying Statutes, including, without limitation, using or directing the use of proceeds from the transactions contemplated hereby for such purpose. Notwithstanding anything to the contrary in this Agreement, the Sellers shall not have any obligation under this Agreement to agree with any MSA States to take any action, or make any commitment, other than with respect to the payment of cash into the Sellers' escrow accounts maintained in accordance with the Qualifying Statutes. (b) The Sellers shall provide to Purchaser, at least two Business Days prior to the Closing Date: (i) their good faith estimate, which shall be based on the Sellers' shipping records of direct sales into the MSA States and shall be in form and substance reasonably satisfactory to Purchaser, of their Escrow Obligations with respect to the number of units of Brand cigarettes tax stamped in each MSA State during the Closing Year prior to and including the Closing Date and (ii) written instructions to Purchaser to direct a portion of the Purchase Price equal to the aggregate amount of such Escrow Obligations into an escrow account established pursuant to an escrow agreement, in the form of Annex P, among the Escrow Agent, the Sellers and Purchaser (the "Post-Closing Escrow Agreement"), which the Sellers and Purchaser each agree to execute and deliver to the other parties hereto on or prior to the Closing Date. The Sellers and Purchaser shall, upon determination of the Sellers' Closing Year Escrow Obligation for each MSA State in accordance with this Section 5.7, cooperate to cause the Escrow Agent to promptly deliver to each MSA State, to the extent of the funds remaining in the escrow account maintained in accordance with the Post-Closing Escrow Agreement, the funds necessary to satisfy the Sellers' Closing Year Escrow Obligation for such MSA State. Purchaser shall cooperate with the Sellers to cause the Escrow Agent promptly to release to the Sellers any amounts remaining in such escrow account after the Sellers have satisfied (including by payments from such escrow account) the Sellers' Closing Year Escrow Obligation for each MSA State. (c) At least ten days prior to the anticipated Closing Date, the Sellers shall send to each distributor to whom the Sellers have sold cigarette products since January 1, 2003 a written notice in such form approved by Purchaser, such approval not unreasonably to be withheld or delayed. Such written notice shall (i) inform such distributor of the sale of the Assets contemplated by this Agreement and the anticipated Closing Date and (ii) request that, after the Closing Date, each such distributor identify Purchaser, rather than the Sellers, as the manufacturer of cigarettes sold under the Brands after the Closing Date. Promptly following the Closing Date (but not later than five Business Days thereafter), the Sellers shall send to each such distributor a further written notice, which shall (i) inform such distributor of the Closing Date and (ii) reiterate the request referred to in clause (ii) of the immediately preceding sentence. (d) Promptly following the Closing Date, the Sellers shall notify the tobacco enforcement section (or comparable department) of the office of the Attorney General (or other applicable regulatory office) for each State and the District of Columbia party to the Master Settlement Agreement (each such State and the District of Columbia, an "MSA State") of the Closing and the transfer of the Transferred Business to Purchaser effective the Closing Date. Such notice shall state that the Sellers ceased manufacturing cigarettes as of the Closing Date and shall request that the MSA State confirm to the Sellers the number of units of Brand cigarettes that were tax stamped in such MSA State from the period beginning on January 1 of the year in which the Closing occurs (the "Closing Year") and ending on the last calendar day of the month in which the Closing occurs (such period the "MSA Cut-off Period" and such number of units tax stamped by such MSA State during the MSA Cut-off Period, the "Cut-off Period Data"). (e) The Sellers and Purchaser each covenant and agree to satisfy all Escrow Obligations for sales of Brand cigarettes during the Closing Year as provided in the Qualifying Statutes. Notwithstanding the foregoing or any assertion by an MSA State to the contrary, subject to Section 5.7(i), the parties agree that, as between the Sellers and Purchaser, the Sellers' Escrow Obligations for the sale of Brand cigarettes in any MSA State during the Closing Year (for each such MSA State, "Sellers' Closing Year Escrow Obligation") shall be: (i) with respect to any MSA State providing Cut-off Period Data, the escrow deposits required for the sale of (i) the number of units of Brand cigarettes tax stamped in such MSA State during the Closing Year prior to the month in which the Closing occurs plus (ii) the Sellers' Closing Month Units. (ii) with respect to any other MSA State, the escrow deposits required for the sale of (i) the number of units of Brand cigarettes sold by the Sellers directly into such MSA State during the MSA Cut-off Period plus (ii) Sellers' Allocable Portion of such MSA State's Total Asserted Indirect Sales. (f) The Sellers' obligation to make the Sellers' Closing Year Escrow Obligations shall be deemed to be an Excluded Liability. The Sellers will use reasonable best efforts to satisfy the Sellers' Closing Year Escrow Obligations on or prior to April 1, 2004 and will reasonably promptly notify Purchaser of the amounts deposited with respect to each MSA State. As between the Sellers and Purchaser, other than the Sellers' Closing Year Escrow Obligations, Purchaser shall be responsible for all Escrow Obligations related to the sale of cigarettes under the Brands during and after the Closing Year, and such Escrow Obligations shall be deemed to be Assumed Liabilities. (g) Promptly upon receipt of Cut-off Period Data from any MSA State, the Sellers shall notify the tobacco enforcement section (or comparable department) of the office of Attorney General for such MSA State of Sellers' intention to make escrow deposits for sale of the Brand cigarettes by the Sellers in such MSA State during the Closing Year equal to the Sellers' Closing Year Escrow Obligation for such MSA State and shall request that such MSA State confirm the sufficiency of such escrow deposits. On or prior to April 1, 2004, the Sellers shall notify the office of the Attorney General of each MSA State not providing Cut-off Period Data of the Sellers' calculation of the Sellers' Closing Year Escrow Obligation with respect to such MSA State and of Sellers' intention to make escrow deposits of such amount for sale of the Brand cigarettes by the Sellers in such MSA States during the Closing Year and shall request that such MSA State confirm the sufficiency of such escrow deposit. (h) Subject to Section 5.7(i), in the event that any MSA State shall assert that the Sellers' Escrow Obligations for Brand cigarettes sold in such MSA State during the Closing Year (such asserted amount, an "Asserted Escrow Obligation") is different than the Sellers' Closing Year Escrow Obligation, the parties agree to cooperate in good faith to seek to convince such MSA State to accept as sufficient the Sellers' Closing Year Escrow Obligation with respect to such MSA State. If such efforts are unsuccessful and the amount of the escrow deposit that the Sellers are required to make for such MSA State exceeds the Sellers' Closing Year Escrow Obligation for such MSA State, then such excess amount will represent an Assumed Liability and Purchaser shall promptly pay such excess amount into the escrow account maintained by the Sellers with respect to such MSA State. If such efforts are unsuccessful and the amount of the escrow deposit that the Sellers are required to make for such MSA State is less than the Sellers' Closing Year Escrow Obligation for such MSA State, then the amount of such deficit will represent an Excluded Liability and the Sellers shall promptly pay such excess amount into the escrow account maintained by Purchaser with respect to such MSA State. (i) Notwithstanding anything to the contrary in this Agreement, if the Sellers enter into a binding agreement with any MSA State pursuant to which the Sellers' Escrow Obligations for the sale of Brand cigarettes in such MSA State during the Closing Year are released or otherwise determined to be an amount less than the amount determined pursuant to Section 5.7(e), and such release or determination is effective and not subject to any pre-Closing or post-Closing conditions, then for all purposes of this Agreement the Sellers' Closing Year Escrow Obligation for each such MSA State shall be deemed to be the amount owed by the Sellers to such MSA State under such agreement between the Sellers and such MSA State.
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Sources: Asset Purchase Agreement (Star Scientific Inc), Asset Purchase Agreement (North Atlantic Trading Co Inc)
Escrow Obligations. (a) On Within 90 days after the Closing Date (or prior such later date acceptable to the Termination DateAgent), the Sellers Agent and the Borrower shall use reasonable best efforts to satisfy negotiate an escrow agreement (the condition set forth in Section 6.2(h). For the purposes of this Section 5.7(a“Escrow Agreement”), "reasonable best efforts" shall include payment of any and all amounts into the Sellers' escrow accounts maintained in accordance with the Qualifying Statutes, and any other payments required under the Qualifying Statutes, as shall be necessary, as determined by the applicable states or other applicable Governmental Authority, to cause the Sellers to be in compliance with the Qualifying Statutes, including, without limitation, using or directing the use of proceeds from the transactions contemplated hereby for such purpose. Notwithstanding anything to the contrary in this Agreement, the Sellers shall not have any obligation under this Agreement to agree with any MSA States to take any action, or make any commitment, other than with respect to the payment of cash into the Sellers' escrow accounts maintained in accordance with the Qualifying Statutes.
(b) The Sellers shall provide to Purchaser, at least two Business Days prior to the Closing Date: (i) their good faith estimate, which shall be based on the Sellers' shipping records of direct sales into the MSA States and shall be in form and substance reasonably satisfactory to Purchaserthe Agent and the Borrower, of their Escrow Obligations with respect Iron Mountain Intellectual Property Management, Inc. (or another escrow agent reasonably acceptable to the number of units of Brand cigarettes tax stamped in each MSA State Agent and the Borrower) (the “Escrow Agent”). Upon the occurrence and during the Closing Year prior to continuation of an Event of Default, at the request of Agent, Borrower, Agent and including the Closing Date and Escrow Agent shall within five (ii5) written instructions to Purchaser to direct a portion of the Purchase Price equal to the aggregate amount Business Days of such request enter into the Escrow Obligations into an escrow account established Agreement (and maintain in good standing at Borrower’s expense), pursuant to which Borrower shall deposit (or cause to be deposited) as soon as practicable but in no event later than five (5) Business Days following the effective date thereof, the Deposit Materials, which shall thereafter be kept in escrow for the benefit of Lenders in accordance with the provisions of this Section 4.16 and the Escrow Agreement. The Deposit Material shall only be released by the Escrow Agent upon an escrow agreement, acceleration of any or all the Obligations pursuant to Section 7.2 hereof and receipt of Agent’s written notice in the form of Annex P, among attached to the Escrow AgentAgreement directing the release of the Deposit Material to Agent (subject to the provisions of the Escrow Agreement). Upon the release of the Lien on the Deposit Material pursuant to Section 8.10(b)(iii) hereof, the Sellers Agent and Purchaser (Borrower shall jointly instruct the "Post-Closing Escrow Agreement")Agent to terminate the Escrow Agreement and return the Deposit Materials to Borrower. In the event that the Escrow Agreement is terminated, which the Sellers and Purchaser each agree to execute and deliver to the other parties hereto on cancelled, or expires prior to the Closing Date. The Sellers and Purchaser shall, upon determination release of the Sellers' Closing Year Escrow Obligation for each MSA State Deposit Material in accordance with this Section 5.74.16(a), cooperate to Borrower (with the reasonable assistance of Agent) shall cause the Deposit Material to be placed in escrow with a successor escrow agent selected by Agent and reasonably acceptable to Borrower under terms and conditions that are substantially similar to those in the Escrow Agent to promptly deliver to each MSA State, to Agreement.
(b) Following the extent initial deposit of the funds remaining in Deposit Material with Escrow Agent, until such time as the escrow account maintained Deposit Materials are released in accordance with the Post-Closing Escrow Agreement, the funds necessary to satisfy the Sellers' Closing Year Escrow Obligation for such MSA State. Purchaser shall cooperate with the Sellers to cause the Escrow Agent promptly to release to the Sellers any amounts remaining in such escrow account after the Sellers have satisfied (including by payments from such escrow account) the Sellers' Closing Year Escrow Obligation for each MSA State.terms of Section 4.16(a):
(c) At least ten days prior to the anticipated Closing Date, the Sellers shall send to each distributor to whom the Sellers have sold cigarette products since January 1, 2003 a written notice in such form approved by Purchaser, such approval not unreasonably to be withheld or delayed. Such written notice shall (i) inform such distributor within five (5) Business Days of the sale end of each fiscal quarter, Borrower shall deposit (or cause to be deposited) with Escrow Agent updated copies of the Assets contemplated Deposit Material (or if specified by this Agreement Agent, updated copies of only the Technical Material or the Customer and the anticipated Closing Date and Content Material);
(ii) request thatupon Agent’s request, after the Closing Date, each such distributor identify Purchaser, rather than the Sellers, as the manufacturer of cigarettes sold under the Brands after the Closing Date. Promptly following the Closing Date Borrower shall deposit (but not later than five Business Days thereafter), the Sellers shall send or cause to each such distributor a further written notice, which shall (ibe deposited) inform such distributor with Escrow Agent updated copies of the Closing Date Deposit Material (or if specified by Agent, updated copies of only the Technical Material or the Customer and (ii) reiterate Content Material); provided, however, that the Agent may make a request referred pursuant to in this clause (ii) not more than one time per fiscal quarter; and
(iii) as soon as practicable (but in any event within five (5) Business Days) after any material changes, enhancements, supplements, corrections, additions or other modifications to any of the immediately preceding sentence.
Technical Material that have been expressly approved by the Board of Managers of Holdings (d“Modifications”) Promptly following the Closing Dateare put into production, the Sellers Borrower shall notify the tobacco enforcement section deposit (or comparable department) of the office of the Attorney General (or other applicable regulatory office) for each State and the District of Columbia party cause to the Master Settlement Agreement (each such State and the District of Columbia, an "MSA State") of the Closing and the transfer of the Transferred Business to Purchaser effective the Closing Date. Such notice shall state that the Sellers ceased manufacturing cigarettes as of the Closing Date and shall request that the MSA State confirm to the Sellers the number of units of Brand cigarettes that were tax stamped in such MSA State from the period beginning on January 1 of the year in which the Closing occurs (the "Closing Year") and ending on the last calendar day of the month in which the Closing occurs (such period the "MSA Cut-off Period" and such number of units tax stamped by such MSA State during the MSA Cut-off Period, the "Cut-off Period Data").
(e) The Sellers and Purchaser each covenant and agree to satisfy all Escrow Obligations for sales of Brand cigarettes during the Closing Year as provided in the Qualifying Statutes. Notwithstanding the foregoing or any assertion by an MSA State to the contrary, subject to Section 5.7(i), the parties agree that, as between the Sellers and Purchaser, the Sellers' Escrow Obligations for the sale of Brand cigarettes in any MSA State during the Closing Year (for each such MSA State, "Sellers' Closing Year Escrow Obligation") shall be:
(ibe deposited) with respect to any MSA State providing Cut-off Period Data, the escrow deposits required for the sale Escrow Agent updated copies of (i) the number of units of Brand cigarettes tax stamped in such MSA State during the Closing Year prior to the month in which the Closing occurs plus (ii) the Sellers' Closing Month Unitsall Technical Material.
(ii) with respect to any other MSA State, the escrow deposits required for the sale of (i) the number of units of Brand cigarettes sold by the Sellers directly into such MSA State during the MSA Cut-off Period plus (ii) Sellers' Allocable Portion of such MSA State's Total Asserted Indirect Sales.
(f) The Sellers' obligation to make the Sellers' Closing Year Escrow Obligations shall be deemed to be an Excluded Liability. The Sellers will use reasonable best efforts to satisfy the Sellers' Closing Year Escrow Obligations on or prior to April 1, 2004 and will reasonably promptly notify Purchaser of the amounts deposited with respect to each MSA State. As between the Sellers and Purchaser, other than the Sellers' Closing Year Escrow Obligations, Purchaser shall be responsible for all Escrow Obligations related to the sale of cigarettes under the Brands during and after the Closing Year, and such Escrow Obligations shall be deemed to be Assumed Liabilities.
(g) Promptly upon receipt of Cut-off Period Data from any MSA State, the Sellers shall notify the tobacco enforcement section (or comparable department) of the office of Attorney General for such MSA State of Sellers' intention to make escrow deposits for sale of the Brand cigarettes by the Sellers in such MSA State during the Closing Year equal to the Sellers' Closing Year Escrow Obligation for such MSA State and shall request that such MSA State confirm the sufficiency of such escrow deposits. On or prior to April 1, 2004, the Sellers shall notify the office of the Attorney General of each MSA State not providing Cut-off Period Data of the Sellers' calculation of the Sellers' Closing Year Escrow Obligation with respect to such MSA State and of Sellers' intention to make escrow deposits of such amount for sale of the Brand cigarettes by the Sellers in such MSA States during the Closing Year and shall request that such MSA State confirm the sufficiency of such escrow deposit.
(h) Subject to Section 5.7(i), in the event that any MSA State shall assert that the Sellers' Escrow Obligations for Brand cigarettes sold in such MSA State during the Closing Year (such asserted amount, an "Asserted Escrow Obligation") is different than the Sellers' Closing Year Escrow Obligation, the parties agree to cooperate in good faith to seek to convince such MSA State to accept as sufficient the Sellers' Closing Year Escrow Obligation with respect to such MSA State. If such efforts are unsuccessful and the amount of the escrow deposit that the Sellers are required to make for such MSA State exceeds the Sellers' Closing Year Escrow Obligation for such MSA State, then such excess amount will represent an Assumed Liability and Purchaser shall promptly pay such excess amount into the escrow account maintained by the Sellers with respect to such MSA State. If such efforts are unsuccessful and the amount of the escrow deposit that the Sellers are required to make for such MSA State is less than the Sellers' Closing Year Escrow Obligation for such MSA State, then the amount of such deficit will represent an Excluded Liability and the Sellers shall promptly pay such excess amount into the escrow account maintained by Purchaser with respect to such MSA State.
(i) Notwithstanding anything to the contrary in this Agreement, if the Sellers enter into a binding agreement with any MSA State pursuant to which the Sellers' Escrow Obligations for the sale of Brand cigarettes in such MSA State during the Closing Year are released or otherwise determined to be an amount less than the amount determined pursuant to Section 5.7(e), and such release or determination is effective and not subject to any pre-Closing or post-Closing conditions, then for all purposes of this Agreement the Sellers' Closing Year Escrow Obligation for each such MSA State shall be deemed to be the amount owed by the Sellers to such MSA State under such agreement between the Sellers and such MSA State.
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