Exhibit 10.2
GOVERNANCE AGREEMENT, dated as of July 30,
2004 (this "Agreement"), among BRITISH AMERICAN
TOBACCO p.l.c., a public limited company incorporated
under the laws of England and Wales ("BAT"), ▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇▇ TOBACCO CORPORATION, a Delaware
corporation ("B&W"), and ▇▇▇▇▇▇▇▇ AMERICAN INC., a
North Carolina corporation ("▇▇▇▇▇▇▇▇ American").
WHEREAS the respective Boards of Directors of BAT, B&W and ▇▇▇▇▇▇▇▇
American have approved the execution, delivery and performance of this
Agreement;
WHEREAS B&W and ▇.▇. ▇▇▇▇▇▇▇▇ Tobacco Holdings, Inc., a Delaware
corporation ("RJR"), entered into the Business Combination Agreement dated as of
October 27, 2003 (the "Combination Agreement"), and each of B&W, RJR, ▇▇▇▇▇▇▇▇
American and certain of their affiliates will engage in the Transactions (as
defined in the Combination Agreement);
WHEREAS B&W will own approximately 42% of the outstanding shares of
common stock, par value $0.01 per share, of ▇▇▇▇▇▇▇▇ American (the "Common
Stock") immediately following the completion of the Transactions; and
WHEREAS BAT, B&W and ▇▇▇▇▇▇▇▇ American desire to establish in this
Agreement certain terms and conditions concerning the corporate governance of
▇▇▇▇▇▇▇▇ American, the acquisition and disposition of securities of ▇▇▇▇▇▇▇▇
American by BAT, B&W and their respective affiliates and other matters.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I. Definitions
SECTION 1.01. Definitions. As used in this Agreement, the following
terms shall have the following meanings:
An "affiliate" of any Person means another Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first Person.
"Approval Termination Event" means (i) any wilful and deliberate
action, or failure to take action, by ▇▇▇▇▇▇▇▇ American or the Board of
Directors that results in B&W failing to receive a material right provided for
in Section 2.04(a), (b) or (d) or (ii) any wilful and deliberate action, or
failure to take action, by ▇▇▇▇▇▇▇▇ American or the Board of Directors relating
to Section 2.04(c) that materially increases the likelihood of an adverse tax
event or consequence to any Investor Party as a result of such action or failure
to take action.
"B&W" has the meaning set forth above.
"B&W Counteroffer" means an offer by any Investor Party to acquire
any and all of the outstanding Common Stock not beneficially owned by an
Investor Party at the time of the offer (or such lesser number or percentage of
shares of Common Stock (a) equal to (i) the percentage of Common Stock that is
subject to acquisition pursuant to a Third Party Offer giving rise to B&W's
ability to make such B&W Counteroffer (if the Board of Directors has approved,
consented to or recommended (other than a negative recommendation) such Third
Party Offer) less (ii) B&W's Percentage Interest at such time or (b) as may be
approved by a majority of the Other Directors). Unless otherwise approved by a
majority of the Other Directors prior to the acquisition of shares of Common
Stock pursuant to a B&W Counteroffer, any B&W Counteroffer structured as a
tender offer or other share purchase shall include a binding commitment (subject
to any mandatory legal restrictions and requirements) by the offering party to
acquire within one year of the closing of such tender offer or share purchase
any Common Stock that remains outstanding at the time of such closing for
consideration equal to or greater than the
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consideration paid in such tender offer or share purchase for the same class of
Common Stock less the percentage of Common Stock, if any, that B&W was not
required to acquire pursuant to clause (a) above.
"B&W Opco" means ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ U.S.A., Inc., a North Carolina
corporation.
"B&W's Percentage Interest" means, as of any date of determination,
the percentage of Voting Power (determined on the basis of the number of
outstanding shares of Voting Stock, as set forth in the most recent SEC filing
of ▇▇▇▇▇▇▇▇ American prior to such date that contained such information) that is
beneficially owned by the Investor Parties as of such date. For purposes of
determining whether and to what extent an Investor Party is entitled to any
right under this Agreement, Voting Stock acquired by any of them in breach of
this Agreement will be excluded from any calculation of B&W's Percentage
Interest.
"BAT" has the meaning set forth above.
"beneficial owner" and words of similar import have the meaning
assigned to such terms in Rule 13d-3 promulgated of the Exchange Act as in
effect on the date of this Agreement.
"Board" or "Board of Directors" means the Board of Directors of
▇▇▇▇▇▇▇▇ American, except where the context requires otherwise.
"Board Provisions" means Sections 2.01, 2.02, 2.03 and 2.06.
"Closing" has the meaning assigned to such term in the Combination
Agreement.
"Combination Agreement" has the meaning set forth above.
"Common Stock" has the meaning set forth above and, as the context
may require, any other common stock of ▇▇▇▇▇▇▇▇ American that may be issued from
time to time.
"Core Committee" has the meaning assigned to such term in Section
2.03(b).
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"Corporate Governance and Nominating Committee" shall mean the
Corporate Governance and Nominating Committee of the Board of Directors or any
successor committee thereto.
"Deferral Period" has the meaning assigned to such term in Section
3.06.
"Demand Registration" has the meaning assigned to such term in
Section 3.01(a).
"Director" means a member of the Board of Directors.
"Discriminatory Transaction" means any corporate action (other than
those taken pursuant to the express terms of this Agreement) that would (a)
impose material limitations on the legal rights of any Investor Party as a
holder of a class of Voting Stock, including any action that would impose
material restrictions without lawful exemption for the Investor Parties that are
based upon the size of security holding, nationality of a security holder, the
business in which a security holder is engaged or other considerations
applicable to any Investor Party and not to holders of the same class of Voting
Stock generally or (b) deny any material benefit to any Investor Party
proportionately as a holder of any class of Voting Stock that is made available
to other holders of that same class of Voting Stock generally.
"Equity Security" means (a) any Common Stock or other Voting Stock,
(b) any securities of ▇▇▇▇▇▇▇▇ American convertible into or exchangeable for
Common Stock or other Voting Stock or (c) any options, rights or warrants (or
any similar securities) issued by ▇▇▇▇▇▇▇▇ American to acquire Common Stock or
other Voting Stock.
"Exchange Act" means the Securities Exchange Act of 1934 and the
rules and regulations promulgated thereunder, as amended.
"GAAP" means U.S. generally accepted accounting principles, as in
effect at the time such term is relevant.
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"Independent Director" means a Director of ▇▇▇▇▇▇▇▇ American who
qualifies as an "independent director" of ▇▇▇▇▇▇▇▇ American under (a) (i) NYSE
Rule 303A(2), as such rule may be amended, supplemented or replaced from time to
time, or (ii) if ▇▇▇▇▇▇▇▇ American is not listed on the NYSE, any comparable
rule or regulation of the primary securities exchange or quotation system on
which the Common Stock is listed or quoted (whether by final rule or otherwise)
and (b) any other applicable law, rule or regulation mandating, or imposing as a
condition to any material benefit to ▇▇▇▇▇▇▇▇ American or any of its
Subsidiaries, the independence of one or more members of the Board of Directors,
excluding, in each case, requirements that relate to "independence" only for
members of a particular Board committee or directors fulfilling a particular
function. In addition, in order for a Director to be deemed to be an
"Independent Director", (A) such Director shall not be, or at any time during
the previous three years have been, a director, officer or employee of BAT or
any of its subsidiaries (other than ▇▇▇▇▇▇▇▇ American and its subsidiaries, if
applicable) and (B) assuming for this purpose that such Director were a director
of BAT (whether or not such Director actually is or has been a director of BAT),
such Director would be considered to be an "independent director" of BAT under
NYSE Rule 303A(2), as such rule may be amended, supplemented or replaced from
time to time (provided that, with respect to this clause (B), (x) BAT shall be
deemed to be a NYSE listed company, (y) any permitted delays for compliance or
exceptions for foreign issuers under the NYSE rules shall be inapplicable and
(z) the fact that such Director is serving as a Director of ▇▇▇▇▇▇▇▇ American
shall be disregarded). The fact that a Person has been designated by B&W for
nomination as an Investor Director pursuant to this Agreement will not, by
itself, disqualify that person as an Independent Director if that person
otherwise meets the criteria of an Independent Director.
"Inspectors" has the meaning assigned to such term in Section
3.04(f).
"Investor Director" means a Director who is designated for such
position by B&W in accordance with Section 2.01.
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"Investor Parties" means BAT and its Subsidiaries (other than, if
▇▇▇▇▇▇▇▇ American is a Subsidiary of BAT, ▇▇▇▇▇▇▇▇ American and its
Subsidiaries).
"Management Director" means a Director who is also an executive
officer of ▇▇▇▇▇▇▇▇ American.
"Nominee Calculation Date" has the meaning assigned to such term in
Section 2.01(d).
"NYSE" means the New York Stock Exchange, Inc.
"Other Director" means an Independent Director that is not an
Investor Director. In no event, however, will ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ be deemed to
be an Other Director.
"Person" means any individual, firm, corporation, partnership,
company, limited liability company, trust, joint venture, association,
governmental entity, unincorporated organization or other entity.
"Piggyback Registration" has the meaning assigned to such term in
Section 3.02.
"Prior Year Net Income" means, as of any date of determination,
▇▇▇▇▇▇▇▇ American's consolidated net income, prepared in accordance with GAAP,
for the fiscal year immediately preceding such date for which financial
statements have been made publicly available.
"Records" has the meaning assigned to such term in Section 3.04(f).
"Registrable Securities" means (a) all shares of Common Stock issued
to B&W pursuant to the Combination Agreement or purchased by any Investor Party
without breach of Article IV of this Agreement and held at any time by any
Investor Party and (b) any securities issued or issuable with respect to any
such shares of Common Stock by way of a stock dividend or other similar
distribution or stock split, or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or otherwise;
provided, however, that such securities shall cease to be Registrable Securities
when (i) a Registration Statement relating to such securities shall have been
declared effective by the SEC and such
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securities shall have been disposed of by an Investor Party pursuant to such
Registration Statement; (ii) such securities have been disposed of by an
Investor Party pursuant to Rule 144 promulgated under the Securities Act or
(iii) such securities may be disposed of within the next three months without
registration under the Securities Act by the applicable Investor Party pursuant
to Rule 144(k) promulgated under the Securities Act in an orderly manner without
materially adversely affecting the price at which such securities can be sold,
as reasonably determined by such Investor Party.
"Registration Statement" has the meaning assigned to such term in
Section 3.01(a).
"▇▇▇▇▇▇▇▇ American" has the meaning set forth above.
"RJR" has the meaning set forth above.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933 and the rules and
regulations promulgated thereunder, as amended.
"Significant Transaction" means any sale, merger, acquisition
(including by way of tender offer or exchange offer), consolidation,
dissolution, recapitalization or other business combination involving ▇▇▇▇▇▇▇▇
American or any of its Subsidiaries pursuant to which more than 30% of the
Voting Power or the consolidated total assets of ▇▇▇▇▇▇▇▇ American would be
acquired or received by any Person or 13D Group (other than ▇▇▇▇▇▇▇▇ American or
its Subsidiaries).
"Standstill Percentage" means B&W's Percentage Interest immediately
following the Closing (assuming the conversion of all shares of RJR common stock
outstanding immediately prior to the Closing into the number of shares of Common
Stock issuable upon surrender of the related certificates).
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"Standstill Period" means the period from the date of this Agreement
until the Standstill Termination Date.
"Standstill Termination Date" means the earliest to occur of: (i)
the date that is the tenth anniversary of the date of this Agreement or (ii) the
date on which a Significant Transaction is consummated or occurs.
A "Subsidiary" of any Person means another Person, an amount of the
voting securities, other voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its Board of Directors or
other governing body (or, if there are no such voting interests, 50% or more of
the equity interests of which) is owned directly or indirectly by such first
Person.
"Third Party Offer" means a bona fide written offer to enter into a
Significant Transaction by a Person other than an Investor Party or any other
Person acting on behalf of, or who is part of a 13D Group with, any Investor
Party, which offer is (a) reasonably capable of being completed, taking into
account all financial, legal, regulatory and other aspects of such offer and (b)
has not expired or been withdrawn.
"13D Group" means any group of Persons formed for the purpose of
acquiring, holding, voting or disposing of Voting Stock that would be required
under Section 13(d) of the Exchange Act, and the rules and regulations
thereunder (as in effect on, and based on legal interpretations thereof existing
on, the date hereof), to file a statement on Schedule 13D with the SEC as a
"person" within the meaning of Section 13(d)(3) of the Exchange Act if such
group beneficially owned Voting Stock representing more than 5% of any class of
Voting Stock then outstanding.
"Transaction Agreements" has the meaning assigned to such term in
the Combination Agreement.
"Unaffiliated Equity Holders" means holders of Equity Securities
other than any Investor Party.
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"Underwriter" means a securities dealer who purchases any
Registrable Securities as a principal in connection with a distribution of such
Registrable Securities and not as part of such dealer's market-making
activities.
"Voting Power" means the ability to vote or to control, directly or
indirectly, by proxy or otherwise, the vote of any Voting Stock at the time such
determination is made; provided, however, that a Person will not be deemed to
have Voting Power as a result of an agreement, arrangement or understanding to
vote such Voting Stock if such agreement, arrangement or understanding (a)
arises solely from a revocable proxy or consent given in response to a public
proxy or consent solicitation made pursuant to the applicable rules and
regulations under the Exchange Act and (b) is not also then reportable by such
Person on Schedule 13D under the Exchange Act (or any comparable or successor
report).
"Voting Stock" means securities having the right to vote generally
in any election of Directors of ▇▇▇▇▇▇▇▇ American.
ARTICLE II. Corporate Governance
SECTION 2.01. Composition of the Board of Directors. The composition
of the Board of Directors and manner of selecting members thereof shall be as
follows:
(a) The Board of Directors shall be composed of 13 Directors. The
number of such Directors may be increased only in accordance with Section
2.01(g).
(b) Immediately following the Closing, the Directors shall be those
individuals designated in accordance with Section 1.09 of the Combination
Agreement and Exhibit H thereto and shall be classified as set forth on such
Exhibit H.
(c) Except as otherwise provided herein, the Directors shall be
nominated as follows (it being understood that such nomination shall include any
nomination of any incumbent Director for reelection to the Board of Directors):
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(i) the Corporate Governance and Nominating Committee shall nominate
for election one Management Director, who shall be the Chief Executive
Officer or equivalent senior executive of ▇▇▇▇▇▇▇▇ American;
(ii) B&W shall have the right to designate for nomination by the
Corporate Governance and Nominating Committee five Investor Directors, at
least three of whom shall be Independent Directors and two of whom may be
executive employees of any Investor Party, and each of whom shall be
nominated for election by the Corporate Governance and Nominating
Committee; and
(iii) the Corporate Governance and Nominating Committee shall
nominate for election the remaining Directors, each of whom shall be an
Independent Director; provided, however, that the Corporate Governance and
Nominating Committee may re-nominate ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ for election to
the Board of Directors without regard to whether he is an Independent
Director.
(d) Notwithstanding anything in Section 2.01(c) to the
contrary,
(i) if B&W's Percentage Interest, calculated as of the close
of business on the last NYSE trading day of the month prior to the
meeting in which the Corporate Governance and Nominating Committee
selects Director nominees (the "Nominee Calculation Date"), falls
below 32% but remains at least 27%, the Directors shall be nominated
as set forth in Section 2.01(c) except B&W shall have the right to
designate for nomination four Investor Directors, at least two of
whom shall be Independent Directors and two of whom may be executive
officers of any Investor Party;
(ii) if B&W's Percentage Interest, calculated as of the
Nominee Calculation Date, falls below 27% but remains at least 22%,
the Directors shall be nominated as set forth in Section 2.01(c)
except B&W shall have the right to designate for nomination three
Investor Directors, at least two of whom shall be Independent
Directors and one of whom may be an executive officer of any
Investor Party;
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(iii) if B&W's Percentage Interest, calculated as of the
Nominee Calculation Date, falls below 22% but remains at least 15%,
the Directors shall be nominated as set forth in Section 2.01(c)
except B&W shall have the right to designate for nomination two
Investor Directors, at least one of whom shall be an Independent
Director and one of whom may be an executive officer of any Investor
Party; and
(iv) if B&W's Percentage Interest, calculated as of the
Nominee Calculation Date, falls below 15%, B&W shall no longer have
the right to designate for nomination any Investor Director.
(e) In connection with each meeting of the shareholders of ▇▇▇▇▇▇▇▇
American in which Directors shall be elected, B&W shall have the right to
designate for nomination a number of nominees for Director that together with
the persons designated for nomination by B&W who are Directors in the classes
not standing for election at such meeting equals the number of Investor
Directors that B&W is entitled to designate for nomination pursuant to this
Section 2.01 as of the date of such meeting. ▇▇▇▇▇▇▇▇ American shall cause each
person designated for election in accordance with this Section 2.01 to be
included in management's slate of nominees for such meeting.
(f) B&W and the Board of Directors, respectively, shall have the
right to designate any replacement for a Director designated for nomination or
nominated, as the case may be, in accordance with this Section 2.01 by B&W or
the Board of Directors, respectively, upon the death, resignation, retirement,
disqualification or removal from office for other cause of such Director. Such
replacement for any Independent Director shall also be an Independent Director.
The Board of Directors shall elect each person so designated.
(g) Without limiting the generality of Section 2.01(c), in the event
that the number of Investor Directors on the Board of Directors differs from the
number that B&W has the right (and wishes) to designate pursuant to this Section
2.01, (i) if the number of Investor Directors exceeds such number, B&W shall
promptly take all appropriate action to cause to resign that number of
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Investor Directors as is required to make the remaining number of such Investor
Directors conform to this Section 2.01 or (ii) if the number of Investor
Directors otherwise is less than such number, the Board of Directors shall take
all necessary action to create sufficient vacancies on the Board of Directors to
permit B&W to designate the full number of Investor Directors that it is
entitled (and wishes) to designate pursuant to this Section 2.01 (such action to
include expanding the size of the Board of Directors, seeking the resignation of
Directors or, at the request of B&W, calling a special meeting of the
shareholders of ▇▇▇▇▇▇▇▇ American for the purpose of removing Directors to
create such vacancies to the extent permitted by applicable law). Upon the
creation of any vacancy pursuant to the preceding sentence, B&W shall designate
the person to fill such vacancy in accordance with this Section 2.01, and the
Board of Directors shall elect each person so designated. In the event that the
number of Directors is increased pursuant to this Section 2.01(g), the Board of
Directors shall cause the number of Directors to be reduced at the first
available opportunity to comply with the number of Directors otherwise specified
by Section 2.01(a).
(h) Notwithstanding anything to the contrary in the foregoing, in no
event will (i) the number of Investor Directors divided by the total number of
Directors then comprising the Board exceed (ii) the number of Investor Directors
which B&W is then entitled to designate pursuant to Sections 2.01(c) and (d)
divided by 12, rounded up to the nearest whole number.
(i) In the event that the Corporate Governance and Nominating
Committee or the Board of Directors relies on Section 2.08 to exclude an
Investor Director nominee from management's slate of nominees (or otherwise take
adverse action with respect to any such Investor Director nominee, including
failing to recommend the election of such Investor Director nominee), the
Corporate Governance and Nominating Committee and the Board of Directors shall
afford B&W a reasonable opportunity to select a replacement Investor Director
nominee for inclusion, subject to Section 2.08, on management's slate of
nominees.
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SECTION 2.02. Solicitation and Voting of Shares. (a) ▇▇▇▇▇▇▇▇
American shall use its reasonable best efforts to solicit from its shareholders
eligible to vote for the election of Directors proxies in favor of the nominees
selected in accordance with Section 2.01.
(b) In any election of Directors or any meeting of the shareholders
of ▇▇▇▇▇▇▇▇ American called expressly for the removal of Directors, so long as
the Board of Directors will include after such meeting (assuming for this
calculation that management's entire slate of nominees is elected at such
meeting) the number of Investor Directors contemplated by Section 2.01, each
Investor Party shall attend in person or by proxy for purposes of establishing a
quorum and shall vote all their shares of Voting Stock (i) in favor of any
nominee or Director selected in accordance with Section 2.01 and(ii) otherwise
against the removal of any Director designated in accordance with Section 2.01;
provided, however, that the Investor Parties will have no obligation under this
sentence with respect to the election of Directors at a meeting of ▇▇▇▇▇▇▇▇
American shareholders where a Person (other than ▇▇▇▇▇▇▇▇ American, an Investor
Party, a Person that is part of a 13D Group with any Investor Party or any
Person on the behalf of any of them) has made a material effort to solicit
proxies in favor of a different slate of nominees for election to the Board at
such meeting. In any other matter submitted to a vote of the shareholders of
▇▇▇▇▇▇▇▇ American, the Investor Parties may vote any or all of their shares in
their sole discretion; provided, however, that in the event the approval of B&W
shall be required with respect to such matter pursuant to Section 2.04(b) or
2.04(c) and such approval shall have been given, the Investor Parties shall vote
to approve such matter at any meeting of shareholders held in connection
therewith.
(c) Each Investor Party hereby appoints ▇▇▇▇▇▇▇▇ American and any
designee of ▇▇▇▇▇▇▇▇ American, each of them individually, its proxy and
attorney-in-fact, with full power of substitution and resubstitution (i) to vote
or act by written consent with respect to all of B&W's Voting Stock which it has
the right to vote pursuant to the first sentence of Section 2.02(b) or the
proviso to the second sentence of Section 2.02(b) and (ii) to sign its name (as
shareholder) to any consent, certificate or other
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document relating to ▇▇▇▇▇▇▇▇ American that the law of the State of North
Carolina may permit or require in connection with any matter referred to in
clause (i). This proxy is given to secure the performance of the duties of each
Investor Party under this Agreement, and its existence will not be deemed to
relieve any Investor Party of its obligations under Section 2.02(b). Each
Investor Party affirms that this proxy is coupled with an interest and is
irrevocable until termination of this Agreement pursuant to Section 6.11,
whereupon such proxy and power of attorney shall automatically terminate. Each
Investor Party shall take such further action and execute such other instruments
as may be necessary to effectuate the intent of this proxy. For Voting Stock as
to which any Investor Party is the beneficial but not the record owner, each
Investor Party will cause any record owner of such Voting Stock to ▇▇▇▇▇
▇▇▇▇▇▇▇▇ American a proxy to the same effect as that contained herein. Each
Investor Party represents that any proxy heretofore given in respect of such
Voting Stock is not irrevocable, and hereby revokes any and all such proxies.
This Section 2.02(c) shall not limit any Investor Party's right to vote pursuant
to the second sentence of Section 2.02(b) (other than pursuant to the proviso
thereof) or pursuant to the proviso to the first sentence of Section 2.02(b) and
shall not operate to grant any proxy to any Person in connection therewith.
(d) B&W agrees that it will take all action as a shareholder of
▇▇▇▇▇▇▇▇ American, or as is otherwise reasonably within its control, as
necessary to effect the provisions of this Agreement.
SECTION 2.03. Committees. (a) Subject to the general oversight and
authority of the Board of Directors under applicable law, the Board of Directors
shall establish, empower and maintain the committees of the Board of Directors
contemplated by this Section 2.03.
(b) The following committees shall be established, empowered and
maintained by the Board of Directors at all times during the term of this
Agreement: (i) an Audit Committee, (ii) a Corporate Governance and Nominating
Committee and (iii) a Compensation Committee (collectively, the "Core
Committees"). Each of the Audit Committee, the Nomination and Governance
Committee and the
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Compensation Committee shall consist solely of Independent Directors. Investor
Directors shall serve on each committee of the Board of Directors, and the
number of Investor Directors on a committee of the Board of Directors shall be
not less than (x) the number of Investor Directors at such time divided by (y)
the total number of Directors at such time multiplied by (z) the number of
Directors serving on such committee, rounded to the nearest whole number, with
B&W selecting the Investor Directors that will serve on each committee of the
Board, subject to the requirements set forth herein; provided, however, that (i)
each of the committees named in this Section 2.03(b) shall have not less than
five Directors on such committee and (ii) so long as there are any Investor
Directors serving on the Board of Directors, at least one Investor Director
shall serve on each committee of the Board of Directors. Notwithstanding the
foregoing, an Investor Director shall not serve on any committee if such service
would violate mandatory legal or listing requirements (or law, rule or
regulation requiring committee member independence as a condition to a material
benefit to ▇▇▇▇▇▇▇▇ American or any of its Subsidiaries) concerning the
independence of directors; provided, however, that ▇▇▇▇▇▇▇▇ American shall take
all reasonable efforts to avoid any such disqualification.
(c) The Board of Directors may establish such other committees as it
deems necessary or desirable, provided that such committees are established in
compliance with the terms of this Agreement (including the proportionality
requirement set forth in Section 2.03(b)).
(d) The Board of Directors shall designate an Investor Director or
an Other Director to replace any disqualified Investor Director member or Other
Director member, respectively, of any committee. In the event that any Investor
Director or Other Director ceases to serve on any committee of the Board of
Directors and, after a reasonable time, no successor to such Director is
designated in accordance with the terms hereof to serve on such committee, the
number of members of such committee may be temporarily reduced if such reduction
does not (and no such reduction is intended to) result in a change of the
relative authorities and representation within such
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committee among the Investor Directors (taken as a group) and the Other
Directors (taken as a group).
(e) In the event that the Board of Directors or any committee
thereof relies on Section 2.08 to exclude an Investor Director from serving on a
committee on which such Investor Director is qualified to serve, the Board of
Directors and any such committee shall permit B&W to designate another Investor
Director, subject to Section 2.08, to serve as a member of such committee.
SECTION 2.04. Approval Required for Certain Actions. (a) The
approval of a majority of the Investor Directors shall be required for the Board
of Directors to approve or authorize, and for ▇▇▇▇▇▇▇▇ American or any of its
Subsidiaries to do, any of the following (in addition to any other Board or
shareholder approval required by any law, rule or regulation or the constituent
documents of ▇▇▇▇▇▇▇▇ American):
(i) if, at the time of such approval, authorization or action, B&W's
Percentage Interest has not fallen below 32%, issue any Equity Securities,
or any securities convertible into or exercisable for Equity Securities,
in any transaction or series of related transactions if such issuance
would require the approval of ▇▇▇▇▇▇▇▇ American's shareholders under NYSE
Rule 312.03(c) as in effect of the date of this Agreement (assuming the
"20 percent" threshold set forth therein were, instead, "5 percent" and
disregarding the exceptions set forth therein); or
(ii) if, at the time of such approval, authorization or action,
B&W's Percentage Interest has not fallen below 25%, repurchase Common
Stock pursuant to self-tender offers, stock repurchase programs, open
market transactions or otherwise; provided, however, that ▇▇▇▇▇▇▇▇
American and its Subsidiaries may (x) repurchase Common Stock from
employees or former employees pursuant to the terms and conditions of
▇▇▇▇▇▇▇▇ American's employee stock plans, (y) on or after the first
anniversary of the Closing, repurchase Common Stock if the dividends
declared (and, to the extent the payment date has occurred, paid) on
Common Stock during each of the preceding four fiscal
16
quarters has equaled or exceeded 18.75% of the Prior Year Net Income
applicable at the time that any such dividend was declared and (z)
repurchase Common Stock to comply with the requirements of Section
2.04(d).
(b) The approval of B&W, as shareholder, such approval, if given,
not to be unreasonably delayed, shall be required for ▇▇▇▇▇▇▇▇ American or any
of its Subsidiaries to do or effect any of the following (in addition to any
other Board or shareholder approval required by any law, rule, regulation or the
constituent documents of ▇▇▇▇▇▇▇▇ American):
(i) the entry by ▇▇▇▇▇▇▇▇ American or any of its Subsidiaries into
any Discriminatory Transaction;
(ii) any sale, asset exchange, lease, exchange, mortgage, pledge,
transfer or other disposition (by merger or otherwise) (collectively, a
"disposition") by ▇▇▇▇▇▇▇▇ American or any of its Subsidiaries (in one
transaction or a series of transactions) of any of ▇▇▇▇▇▇▇▇ American's
intellectual property relating to the brands set forth on Schedule 2.04,
other than any disposition to a wholly-owned Subsidiary of ▇▇▇▇▇▇▇▇
American or any disposition that (A) occurs in connection with creating or
granting any liens to a third party that is not an affiliate of ▇▇▇▇▇▇▇▇
American in connection with a bona fide financing, (B) arises as a matter
of law or occurs pursuant to a court order, (C) occurs as a result of the
acquisition of all outstanding Equity Securities by any Person (including
by way of merger, tender or exchange offer or any similar transaction) or
all or virtually all of the assets of ▇▇▇▇▇▇▇▇ American and its
Subsidiaries or (D) if B&W's Percentage Interest has fallen below 32%,
occurs as a result of the acquisition of a majority of the Voting Power of
all outstanding Voting Stock by any Person (including by way of merger,
tender or exchange offer or similar transaction);
(iii) any amendment to the Articles of Incorporation or By-Laws of
▇▇▇▇▇▇▇▇ American or to the charter of any committee of the Board of
Directors, in each case which amendment would conflict in any material
respect with the provisions of this Agreement, or any
17
amendment or repeal of Section 2.03 of the By-Laws of ▇▇▇▇▇▇▇▇ American or
Article Eighth, Section 8 of the Articles of Incorporation of ▇▇▇▇▇▇▇▇
American, in each case as in effect as of the Closing; or
(iv) the adoption or implementation of any takeover defense measures
(including a rights plan) that would apply to the acquisition of
beneficial ownership of any Equity Securities by any Investor Party;
provided, however, that ▇▇▇▇▇▇▇▇ American may enter into a Rights
Agreement in the form of Exhibit C to the Combination Agreement and may
enter into any replacement or extension thereof in the form of such
Exhibit C.
(c) The approval of B&W, as shareholder, such approval, if given,
not to be unreasonably delayed, shall be required for ▇▇▇▇▇▇▇▇ American or any
of its Subsidiaries to do or effect any of the following prior to the fifth
anniversary of the date of this Agreement(in addition to any other Board or
shareholder approval required by any law, rule, regulation or the constituent
documents of ▇▇▇▇▇▇▇▇ American):
(i) effect any transaction or take any action that is reasonably
likely to be inconsistent with the representations, facts or assumptions
set forth in the B&W Tax Ruling (as defined in the Combination Agreement)
or materially inconsistent with the representations, facts or assumptions
set forth in the materials submitted to the Internal Revenue Service in
seeking the B&W Tax Ruling; provided, however, that for purposes of this
Section 2.04(c)(i), if a representation, fact or assumption set forth in
the B&W Tax Ruling or the materials submitted to the Internal Revenue
Service in seeking the B&W Tax Ruling indicated that a party had no plan
or intention to effect a particular transaction or take a particular
action, effecting such transaction or taking such action after the Closing
(as defined in the Combination Agreement) will be deemed to be
inconsistent with such plan or intention representation, fact or
assumption; or
18
(ii) effect any other transaction or take any other action that, in
the opinion of Cravath, Swaine & ▇▇▇▇▇ LLP or other nationally recognized
B&W tax counsel, had such transaction or action been effected at Closing,
would more likely than not have prevented the Asset Contribution and
Assumption of Liabilities, on the one hand, or the B&W Opco Stock
Contribution and the Merger (as those terms are defined in the Combination
Agreement), on the other hand, from qualifying as exchanges within the
meaning of Section 351 of the Internal Revenue Code of 1986, as amended.
In addition, B&W and ▇▇▇▇▇▇▇▇ American shall cooperate in good faith, and shall
cause their respective officers, directors, affiliates, employees, agents,
auditors and representatives to cooperate in good faith, in all matters relating
to Taxes (as defined in the Combination Agreement), including by maintaining and
making available to each other all books and records necessary in connection
with Taxes.
(d) If, on or prior to June 30, 2005, ▇▇▇▇▇▇▇▇ American issues
Common Stock upon exercise of any option, warrant or other security relating to
Common Stock or otherwise issues Common Stock (restricted or otherwise) to any
of its directors, officers, employees or consultants, then prior to or within a
reasonable period after such issuance (but in any event not later than the end
of such fiscal quarter in which such issuance occurs), ▇▇▇▇▇▇▇▇ American will
repurchase a number of shares of outstanding Common Stock so that the number of
outstanding shares of Common Stock are not increased by such issuance; provided,
however, that (i) ▇▇▇▇▇▇▇▇ American will not be required to repurchase such
shares, if, at the time of such issuance, B&W's Percentage Interest has fallen
below 25% and (ii) ▇▇▇▇▇▇▇▇ American will not be required to repurchase the
first 241,414 shares that are so issued.
SECTION 2.05. Financial Statements. As soon as reasonably
practicable following the end of each fiscal quarter and fiscal year, ▇▇▇▇▇▇▇▇
American shall furnish to B&W and BAT the consolidated financial statements of
▇▇▇▇▇▇▇▇ American (including providing draft statements as such statements
become available and, with respect to fiscal years, audit reports as such
reports become
19
available). Each of ▇▇▇▇▇▇▇▇ American, B&W and BAT shall use its reasonable best
efforts to assist the other party with respect to the timeliness of filing,
releasing or posting the other party's respective financial disclosure
documents. ▇▇▇▇▇▇▇▇ American shall cooperate with and assist BAT and B&W in the
translation of ▇▇▇▇▇▇▇▇ American's financial statements in order to conform such
financial statements to applicable international accounting standards and shall
otherwise provide BAT and B&W with access to information necessary in connection
with such financial statements.
SECTION 2.06. Articles of Incorporation and By-Laws. The Board of
Directors of ▇▇▇▇▇▇▇▇ American shall take or cause to be taken all lawful action
necessary to ensure at all times that ▇▇▇▇▇▇▇▇ American's Articles of
Incorporation and By-Laws are not at any time inconsistent in any material
respect with the provisions of this Agreement.
SECTION 2.07. Interested Transactions. The approval by a majority of
the Other Directors shall be required (in addition to any other Board or
shareholder approval required by any law, rule or regulation) for ▇▇▇▇▇▇▇▇
American or any of its Subsidiaries to enter into or effect, or agree to enter
into or effect, any material contract or transaction between or involving
▇▇▇▇▇▇▇▇ American or any of its Subsidiaries, on the one hand, and any Investor
Party, on the other hand, the terms of which are not governed by a pre-existing
agreement to which ▇▇▇▇▇▇▇▇ American or any of its Subsidiaries is a party or a
provision of ▇▇▇▇▇▇▇▇ American's Articles of Incorporation or By-Laws.
SECTION 2.08. Fiduciary Duties. Nothing in Section 2.01, 2.02, 2.03
or 2.06 shall be deemed to require the Board of Directors or any committee or
member thereof to take any action or refrain from taking any action, or result
in a breach of Sections 2.01, 2.02, 2.03 or 2.06 by reason of the failure to
take such action or the failure to refrain from taking such action, as the case
may be, if the Board of Directors, such committee or Director determines in good
faith (after consideration of specific written advice of outside legal counsel,
which advice will be provided to B&W) that taking such action or refraining from
20
taking such action, as the case may be, would cause a violation of his or her
fiduciary duties to shareholders, including B&W and its affiliates, under
applicable law. This Section 2.08 shall not be interpreted to create any
fiduciary obligation that would not exist in the absence of this Section 2.08.
SECTION 2.09. Change in Law. In the event any law, rule or
regulation comes into force or effect (including by amendment) which conflicts
with the terms and conditions of this Agreement, the parties shall negotiate in
good faith to revise the Agreement to achieve the parties' intention set forth
herein.
SECTION 2.10. Changes in B&W's Percentage Interest Attributable to
Issuances of Common Stock. To the extent that any decrease in B&W's Percentage
Interest is attributable to issuances of Equity Securities by ▇▇▇▇▇▇▇▇ American
(as opposed to dispositions of Equity Securities by any Investor Party), such
decrease will not be taken into account in determining whether B&W's Percentage
Interest has fallen below any of the thresholds for B&W's Percentage Interest
set forth in this Article II.
ARTICLE III. Registration Rights
SECTION 3.01. Registration. (a) At any time and from time to time
following the first anniversary of the date of this Agreement, ▇▇▇▇▇▇▇▇ American
agrees that upon the written request of any Investor Party holding Registrable
Securities (a "Demand Registration"), it will as promptly as reasonably
practical prepare and file a registration statement (a "Registration Statement")
under the Securities Act as to the number of shares of Registrable Securities
specified in such request; provided, however, that (i) ▇▇▇▇▇▇▇▇ American shall
not be obligated to effect more than two Demand Registrations in any
eighteen-month period, (ii) the Registrable Securities for which a Demand
Registration has been requested by any Investor Party holding Registrable
Securities shall have a value (based on the average closing price per share of
Common Stock for the ten trading days preceding the delivery of B&W's request
for such Demand Registration) of not less than $100,000,000 and (iii) ▇▇▇▇▇▇▇▇
American shall not be required to file a shelf Registration
21
Statement pursuant to Rule 415 of the Securities Act under this Section 3.01.
Each such request for a Demand Registration shall specify the number of shares
of Registrable Securities proposed to be offered for sale and shall also specify
the intended method of distribution thereof; provided, however, that the
Investor Parties may change such number if such change shall not materially
adversely affect the timing or success of the offering, so long as such change
does not result in less than $100,000,000 of Registrable Securities being
included in the Registration Statement.
(b) ▇▇▇▇▇▇▇▇ American agrees to use its reasonable best efforts (i)
to cause any Registration Statement to be declared effective as promptly as
reasonably practicable after the filing thereof and (ii) to keep such
Registration Statement effective for a period of not less than 90 days, or, if
earlier, the period sufficient to complete the distribution of the Registrable
Securities. ▇▇▇▇▇▇▇▇ American further agrees to supplement or make amendments to
the Registration Statement as may be necessary to keep such Registration
Statement effective for the period set forth in clause (ii) above, including (A)
to respond to the comments of the SEC, if any, (B) as may be required by the
registration form utilized by ▇▇▇▇▇▇▇▇ American for such Registration Statement
or by the instructions applicable to such registration form, (C) as may be
required by the Securities Act or the rules and regulations thereunder or (D) as
may be reasonably requested in writing by B&W or any Underwriter for B&W.
▇▇▇▇▇▇▇▇ American agrees to furnish to B&W copies of any such supplement or
amendment prior to its being used or filed with the SEC. Upon the expiration of
the time period set forth in clause (ii) above, a Demand Registration Statement
shall count as a Demand Registration Statement for purposes of determining when
future Demand Registrations which can be requested pursuant to this Section
3.01, except to the extent set forth in paragraph (e) below.
(c) In the event an offering of shares of Registrable Securities
involves one or more Underwriters, B&W shall select the lead Underwriter and any
additional Underwriters in connection with the offering from a list of
22
nationally-recognized investment banks reasonably agreed to between ▇▇▇▇▇▇▇▇
American and B&W.
(d) Notwithstanding the foregoing provisions of this Section 3.01,
B&W may not request a Demand Registration within the 90-day period after a
Registration Statement for Common Stock has been filed by ▇▇▇▇▇▇▇▇ American (for
its own account or for any other security holders) with and declared effective
by the SEC, unless such Registration Statement has been withdrawn; provided,
however, the forgoing limitation will not apply if an Investor Party holding
Registrable Securities was not given the opportunity, in accordance with Section
3.02, to include its Registrable Securities in the Registration Statement
described in this Section 3.01(d).
(e) Any Investor Party holding Registrable Securities included in a
Registration Statement shall be permitted to remove all or any part of the
Registrable Securities held by it from any Registration Statement at any time
prior to the effective date of the Registration Statement covering such
Registrable Securities; provided, however, that such Demand Registration shall
nonetheless count as a Demand Registration for purposes of determining when
future Demand Registrations can be requested pursuant to this Section 3.01,
unless B&W reimburses ▇▇▇▇▇▇▇▇ American for all Registration Expenses incurred
by ▇▇▇▇▇▇▇▇ American in connection with such withdrawn Demand Registration.
SECTION 3.02. Piggyback Registration. If ▇▇▇▇▇▇▇▇ American proposes
to file a Registration Statement under the Securities Act with respect to an
offering of Common Stock for (a) ▇▇▇▇▇▇▇▇ American's own account (other than a
Registration Statement on Form S-4 or S-8 (or any substitute form that may be
adopted by the SEC)) or (b) the account of any of its holders of Common Stock
pursuant to a demand registration requested by such holders, then ▇▇▇▇▇▇▇▇
American shall give written notice of such proposed filing to B&W as soon as
practicable (but in no event less than twenty days before the anticipated filing
date), and such notice shall offer any Investor Party holding Registrable
Securities the opportunity to register such number of shares of Registrable
Securities as B&W and its affiliates may request on the same terms and
conditions
23
as ▇▇▇▇▇▇▇▇ American's or such holder's Common Stock (a "Piggyback
Registration"). ▇▇▇▇▇▇▇▇ American shall control the determination of the form of
any offering contemplated by this Section 3.02, including whether any such
offering shall be in the form of an underwritten offering and, if any such
offering is in the form of an underwritten offering, ▇▇▇▇▇▇▇▇ American shall
select the lead Underwriter and any additional Underwriters in connection with
such offering.
SECTION 3.03. Reduction of Offering. Notwithstanding anything
contained herein, if the lead Underwriter of an underwritten offering described
in Section 3.01 or Section 3.02 delivers a written opinion to ▇▇▇▇▇▇▇▇ American
that the number of shares of Common Stock (including all Registrable Securities)
that B&W, ▇▇▇▇▇▇▇▇ American and any other Persons intend to include in any
Registration Statement is such that the success of any such offering would be
materially and adversely affected, including the price at which the securities
can be sold, then the number of shares of Common Stock to be included in the
Registration Statement for the account of B&W, ▇▇▇▇▇▇▇▇ American and any other
Persons shall be reduced pro rata to the extent necessary to reduce the total
amount of securities to be included in any such Registration Statement to the
amount recommended by such lead Underwriter; provided, however, that (a)
priority in the case of a Demand Registration pursuant to Section 3.01 shall be
(i) first, the Registrable Securities requested to be included in the
Registration Statement for the account of the Investor Parties, allocated pro
rata among them in accordance with the number of Registrable Securities held by
each of them so that the total number of Registrable Securities to be included
in any such offering for the account of all such Persons will not exceed the
number recommended by such lead Underwriter, (ii) second, securities initially
proposed to be offered by ▇▇▇▇▇▇▇▇ American for its own account and (iii) third,
pro rata among any other securities of ▇▇▇▇▇▇▇▇ American requested to be
registered by the holders thereof pursuant to a contractual right of
registration so that the total number of registrable securities to be included
in any such offering for the account of all such Persons will not exceed the
number recommended by such lead Underwriter, (b) priority in the case of a
Piggyback Registration
24
initiated by ▇▇▇▇▇▇▇▇ American for its own account pursuant to Section 3.02
shall be (i) first, securities initially proposed to be offered by ▇▇▇▇▇▇▇▇
American for its own account, (ii) second, the Registrable Securities requested
to be included in the Registration Statement for the account of the Investor
Parties, allocated pro rata among them in accordance with the number of
registrable securities held by each of them so that the total number of
Registrable Securities to be included in any such offering for the account of
all such Persons will not exceed the number recommended by such lead
Underwriter, and (iii) third, pro rata among any other securities of ▇▇▇▇▇▇▇▇
American requested to be registered pursuant to a contractual right of
registration and (c) priority with respect to inclusion of securities in a
Registration Statement initiated by ▇▇▇▇▇▇▇▇ American for the account of holders
other than any Investor Party pursuant to demand registration rights afforded
such holders shall be (i) first, securities offered for the account of such
holders so that the total number of registrable securities to be included in any
such offering for the account of all such Persons will not exceed the number
recommended by such lead Underwriter, (ii) second, securities offered by
▇▇▇▇▇▇▇▇ American for its own account, (iii) third, the Registrable Securities
offered for the account of the Investor Parties and (iv) fourth, pro rata among
any other securities of ▇▇▇▇▇▇▇▇ American requested to be registered pursuant to
a contractual right of registration. Until such time as B&W owns less than 15%
of the outstanding Common Stock of ▇▇▇▇▇▇▇▇ American, ▇▇▇▇▇▇▇▇ American shall
not enter into any contractual arrangements that would conflict with the
priorities set forth in the proviso to the preceding sentence.
SECTION 3.04. Registration Procedures. Subject to the provisions of
Section 3.01 hereof, in connection with the registration of the sale of
Registrable Securities hereunder, ▇▇▇▇▇▇▇▇ American will as promptly as
reasonably practicable:
(a) furnish to B&W, if requested, prior to the filing of a
Registration Statement, copies of such Registration Statement as is
proposed to be filed, and thereafter such number of copies of such
Registration Statement, each amendment and supplement thereto (in
25
each case including all exhibits thereto and documents incorporated by
reference therein), the prospectus included in such Registration Statement
(including each preliminary prospectus), copies of any and all transmittal
letters or other correspondence with the SEC relating to the Registration
Statement and such other documents in such quantities as B&W may
reasonably request from time to time in order to facilitate the
disposition of the Registrable Securities;
(b) use its reasonable best efforts to register or qualify the
Registrable Securities under such other securities or blue sky laws of
such jurisdictions as B&W reasonably requests and do any and all other
acts and things as may be reasonably necessary or advisable to enable B&W
to consummate the disposition of the Registrable Securities in such
jurisdictions; provided, however, that ▇▇▇▇▇▇▇▇ American will not be
required to (i) qualify generally to do business in any jurisdiction where
it would not otherwise be required to qualify but for this Section
3.04(b), (ii) subject itself to taxation in any such jurisdiction or (iii)
consent to general service of process in any such jurisdiction;
(c) notify B&W, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the happening of any
event as a result of which the prospectus included in such Registration
Statement or amendment contains an untrue statement of a material fact or
omits to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and ▇▇▇▇▇▇▇▇
American will prepare a supplement or amendment to such prospectus so
that, as thereafter delivered to the purchasers of the Registrable
Securities, such prospectus will not contain an untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
26
(d) use its reasonable best efforts to cause the Registrable
Securities covered by any Registration Statement to be registered with or
approved by such other governmental agencies or authorities as may be
necessary by virtue of the business and operations of ▇▇▇▇▇▇▇▇ American to
enable B&W to consummate the disposition of the Registrable Securities;
provided, however, that ▇▇▇▇▇▇▇▇ American will not be required to (i)
qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3.04(d), (ii)
subject itself to taxation in any such jurisdiction or (iii) consent to
general service of process in any such jurisdiction;
(e) enter into customary agreements (including an underwriting
agreement in customary form that is reasonably satisfactory to ▇▇▇▇▇▇▇▇
American) and use commercially reasonable efforts to take such other
actions as are reasonably required in order to expedite or facilitate the
disposition of the Registrable Securities;
(f) make available for inspection by B&W, any Underwriter
participating in any disposition pursuant to such Registration Statement,
and any attorney for B&W and the Underwriter and any accountant or other
agent retained by B&W or any such Underwriter (collectively, the
"Inspectors"), all financial and other records, pertinent corporate
documents and properties of ▇▇▇▇▇▇▇▇ American (collectively, the
"Records") as shall be reasonably necessary to enable them to exercise
their due diligence responsibility, and cause the officers, directors and
employees of ▇▇▇▇▇▇▇▇ American and its Subsidiaries to supply all
information reasonably requested by any such Inspector in connection with
such Registration Statement; provided, however, that (i) Records and
information obtained hereunder shall be used by such Inspector only to
exercise their due diligence responsibility, (ii) Records or information
that ▇▇▇▇▇▇▇▇ American determines, in good faith, to be confidential shall
not be disclosed by the Inspectors unless (x) the disclosure of such
Records or information is necessary to avoid or correct a material
misstatement or
27
omission in the Registration Statement or (y) the release of such Records
or information is ordered pursuant to a subpoena or other order from a
court or governmental authority of competent jurisdiction and (iii)
▇▇▇▇▇▇▇▇ American may require, as a condition to the provision to any
Inspector of any Records, that such Inspector execute and deliver to
▇▇▇▇▇▇▇▇ American a written agreement, in form and substance reasonably
satisfactory to ▇▇▇▇▇▇▇▇ American, pursuant to which such Inspector agrees
to the confidential treatment of such Records;
(g) use its reasonable best efforts to obtain and deliver to the
Underwriters and the Investor Parties a comfort letter from the
independent public accountants for ▇▇▇▇▇▇▇▇ American in customary form and
covering such matters of the type customarily covered by comfort letters
as such Underwriters and the Investor Parties may reasonably request;
(h) use its reasonable best efforts to obtain and deliver to the
Underwriters and the Investor Parties a 10b-5 statement and legal opinions
from ▇▇▇▇▇▇▇▇ American's counsel in customary form and covering such
matters as customarily covered by 10b-5 statements and legal opinions as
such Underwriters and the Investor Parties may reasonably request;
(i) otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the SEC, and make generally available
to its security holders, within the required time period, an earnings
statement covering a period of twelve months, beginning with the first
fiscal quarter after the effective date of the Registration Statement (as
the term "effective date" is defined in Rule 158(c) under the Securities
Act), which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act and Rule 158 thereunder or any successor
provisions thereto; and
(j) use its reasonable best efforts to cause all Registrable
Securities to be listed or quoted on the NYSE and each other securities
exchange or automated
28
quotation system on which similar securities issued by ▇▇▇▇▇▇▇▇ American
are listed or quoted.
SECTION 3.05. Conditions to Offerings. The obligations of ▇▇▇▇▇▇▇▇
American to take the actions contemplated by Sections 3.01, 3.02 and 3.04 with
respect to an offering of Registrable Securities shall be subject to the
following conditions:
(a) the Investor Parties shall conform to all applicable
requirements of the Securities Act and the Exchange Act with respect to
the offering and sale of securities;
(b) B&W shall advise each Underwriter through which any of the
Registrable Securities are offered that the Registrable Securities are
part of a distribution that is subject to the prospectus delivery
requirements of the Securities Act;
(c) ▇▇▇▇▇▇▇▇ American may require B&W to furnish to ▇▇▇▇▇▇▇▇
American such information regarding B&W or the distribution of the
Registrable Securities as ▇▇▇▇▇▇▇▇ American may from time to time
reasonably request in writing, in each case only as required by the
Securities Act or the rules and regulations thereunder or under state
securities or blue sky laws; and
(d) in any underwritten offering pursuant to Section 3.01 or Section
3.02 hereof, any Investor Party including Registrable Securities in a
Registration Statement, together with ▇▇▇▇▇▇▇▇ American, shall enter into
an underwriting agreement in customary form with the Underwriter or
Underwriters selected for such underwriting, as well as such other
documents customary in similar offerings, including, custody agreements,
powers of attorney and indemnification provisions relating to information
provided in writing by an Investor Party.
Any Investor Party holding Registrable Securities agrees that, upon receipt of
any notice from ▇▇▇▇▇▇▇▇ American of the happening of any event of the kind
described in
29
Section 3.04(c) hereof or a condition described in Section 3.06 hereof, B&W will
forthwith discontinue disposition of Registrable Securities pursuant to the
Registration Statement covering the sale of such shares of Registrable
Securities until B&W's receipt of the copies of the supplemented or amended
prospectus contemplated by Section 3.04(c) hereof or notice from ▇▇▇▇▇▇▇▇
American of the termination of the Deferral Period and, if so directed by
▇▇▇▇▇▇▇▇ American, will promptly deliver to ▇▇▇▇▇▇▇▇ American all copies (other
than any permanent file copies then in B&W's possession) of the most recent
prospectus covering such Registrable Securities that was current at the time of
receipt of such notice.
SECTION 3.06. Black-out Period. ▇▇▇▇▇▇▇▇ American's obligations
pursuant to Sections 3.01 and 3.02 hereof shall be suspended if compliance with
such obligations would (a) violate applicable law or (b) require ▇▇▇▇▇▇▇▇
American to disclose a material financing, acquisition or other corporate
development, and the proper officers of ▇▇▇▇▇▇▇▇ American have determined, in
the good faith exercise of their reasonable business judgment, that such
disclosure is not in the best interests of ▇▇▇▇▇▇▇▇ American; provided, however,
that any such suspension shall not exceed 60 days and all such suspensions shall
not exceed 120 days in any twelve-month period (the "Deferral Period"). ▇▇▇▇▇▇▇▇
American shall promptly give B&W written notice of any such suspension
containing the approximate length of the anticipated delay, and ▇▇▇▇▇▇▇▇
American shall notify B&W upon the termination of the Deferral Period.
SECTION 3.07. Registration Expenses. All fees and expenses incident
to ▇▇▇▇▇▇▇▇ American's performance of or compliance with the registration
obligations of this Article III, including all fees and expenses of compliance
with securities or blue sky laws (including reasonable fees and disbursements of
counsel for any Underwriters in connection with blue sky qualifications of the
Registrable Securities), printing expenses, messenger and delivery expenses of
▇▇▇▇▇▇▇▇ American, any registration or filing fees payable under any Federal or
state securities or blue sky laws, the fees and expenses incurred in connection
with any listing or quoting of the securities to be registered on any national
securities exchange or automated quotation system, fees and disbursements of
counsel for ▇▇▇▇▇▇▇▇
30
American and its independent certified public accountants (including the
expenses of any comfort letters required by or incident to such performance) and
the fees and expenses of other Persons retained by ▇▇▇▇▇▇▇▇ American, will be
borne by ▇▇▇▇▇▇▇▇ American. Any Investor Party or any other Person registering
Registrable Securities will bear and pay any underwriting discounts and
commissions applicable to securities offered for its or its affiliates' account,
transfer taxes and fees and expenses of its counsel.
SECTION 3.08. Indemnification; Contribution. (a) In connection with
any registration of Registrable Securities pursuant to Section 3.01 or 3.02
hereof, ▇▇▇▇▇▇▇▇ American agrees to indemnify, to the fullest extent permitted
by law, B&W, its affiliates, their directors, officers and shareholders and each
Person who controls B&W (within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act) against any and all losses,
claims, damages, liabilities and expenses (including reasonable attorneys' fees)
caused by any untrue or alleged untrue statement of material fact contained in
any Registration Statement, prospectus or preliminary prospectus contained
therein, or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein (in
the case of a prospectus, in the light of the circumstances under which they
were made) not misleading; provided, however, that ▇▇▇▇▇▇▇▇ American shall not
be required to indemnify B&W, its affiliates, their officers, directors,
shareholders or controlling Persons for any losses, claims, damages, liabilities
or expenses resulting from any such untrue statement or omission if such untrue
statement or omission is made in reliance on and in conformity with any
information with respect to B&W or such other parties furnished to ▇▇▇▇▇▇▇▇
American in writing by B&W or such other parties expressly for use therein. In
connection with an underwritten offering, ▇▇▇▇▇▇▇▇ American will indemnify each
Underwriter, the officers and directors of such Underwriter, and each Person who
controls such Underwriter (within the meaning of either the Securities Act or
the Exchange Act) to the same extent as provided above with respect to the
indemnification of B & W; provided, however, that such Underwriter agrees to
indemnify ▇▇▇▇▇▇▇▇ American to the same extent as provided
31
below with respect to the indemnification of ▇▇▇▇▇▇▇▇ American by B&W.
Notwithstanding the forgoing, with respect to any untrue statement or omission
of material fact made in any prospectus or preliminary prospectus, the
provisions of this Section 3.08 shall not inure to the benefit of any Investor
Party, any other holder of Registrable Securities or any Underwriter from whom
the Person asserting any such loss, claim, damages, liabilities or expenses
purchased the Registrable Securities to the extent that it shall be established
that (i) any such loss, claim, damages, liabilities or expenses of such Person
arises primarily from the fact that any Investor Party or any Underwriter sold
Registrable Securities to such a Person, (ii) there was not sent or given a copy
of the final prospectus (as amended or supplemented) at or prior to the written
confirmation of such sale (provided ▇▇▇▇▇▇▇▇ American shall have previously
furnished a sufficient number of copies thereof on a timely basis to the
Investor Parties, any such holder and each Underwriter, as the case may be, in
accordance herewith) and (iii) the final prospectus (as amended or supplemented)
would have corrected any such untrue statement or omission of a material fact.
(b) In connection with any Registration Statement, the Investor
Parties holding Registrable Securities, as the case may be, will furnish to
▇▇▇▇▇▇▇▇ American in writing such information and affidavits with respect to the
Investor Parties holding Registrable Securities, as the case may be, as ▇▇▇▇▇▇▇▇
American reasonably requests, including, but not limited to, information
relating to the Investor Parties, as the case may be, for use in connection with
any such Registration Statement, prospectus or preliminary prospectus and agrees
to indemnify ▇▇▇▇▇▇▇▇ American, its directors, its officers who sign the
Registration Statement and each Person, if any, who controls ▇▇▇▇▇▇▇▇ American
(within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act) to the same extent as the foregoing indemnity from ▇▇▇▇▇▇▇▇
American to B&W, but only with respect to information relating to B&W or such
other holders of Registrable Securities, as the case may be, furnished to
▇▇▇▇▇▇▇▇ American in writing by B&W expressly for use in the Registration
Statement, the prospectus, any
32
amendment or supplement thereto, or any preliminary prospectus.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any Person in respect of which
indemnity may be sought pursuant to Section 3.08(a) or (b), such Person
(hereinafter called the indemnified party) shall promptly notify the Person
against whom such indemnity may be sought (hereinafter called the indemnifying
party) in writing and the indemnifying party, upon request of the indemnified
party, shall retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and shall pay the fees and disbursements of such
counsel related to such proceeding. In any such proceeding, any indemnified
party shall have the right to retain its own counsel, but the fees and expenses
of such counsel shall be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and the indemnified party shall have been advised by counsel
that representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them. It is understood
that the indemnifying party shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees
and expenses of more than one separate firm of attorneys (in addition to any
local counsel) at any time for all such indemnified parties, and that all such
reasonable fees and expenses shall be reimbursed as they are incurred. In the
case of the retention of any such separate firm for the indemnified parties,
such firm shall be designated in writing by the indemnified parties. The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment. Notwithstanding the foregoing sentence, if at
any time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for reasonable fees and expenses of
33
counsel as contemplated by the third sentence of this Section 3.08(c), the
indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such indemnifying party of the
aforesaid request and (ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request or reasonably objected in
writing, on the basis of the standards set forth herein, to the propriety of
such reimbursement prior to the date of such settlement. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
(d) If the indemnification provided for in this Section 3.08 from
the indemnifying party is unavailable to an indemnified party hereunder in
respect of any losses, claims, damages, liabilities or expenses referred to in
this Section 3.08, then the indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses in such proportion as is appropriate to reflect the relative fault of
the indemnifying party and indemnified party in connection with the actions that
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified party shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or relates to information supplied by,
such indemnifying party or indemnified party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action. The amount paid or payable by a party as a result of the losses, claims,
damages,
34
liabilities and expenses referred to above shall be deemed to include, subject
to the limitations set forth in Section 3.08(c), any legal or other fees or
expenses reasonably incurred by such party in connection with any investigation
or proceeding.
The parties agree that it would not be just and equitable if
contribution pursuant to this Section 3.08(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in this Section 3.08(d). No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
If indemnification is available under this Section 3.08, the
indemnifying party shall indemnify each indemnified party to the full extent
provided in Sections 3.08(a) and (b) without regard to the relative fault of
said indemnifying party or indemnified party or any other equitable
consideration provided for in this Section 3.08(d).
SECTION 3.09. Rule 144. For so long as ▇▇▇▇▇▇▇▇ American is subject
to the requirements of Section 13, 14 or 15(d) of the Securities Act, ▇▇▇▇▇▇▇▇
American agrees that it will file the reports required to be filed by it under
the Securities Act and the Exchange Act and the rules and regulations adopted by
the SEC thereunder and it will take such further action as B&W reasonably may
request, all to the extent required from time to time to enable the Investor
Parties to sell Registrable Securities within the limitation of the exemptions
provided by (a) Rule 144 under the Securities Act, as such Rule may be amended
from time to time, or (b) any similar rule or regulation hereafter adopted by
the SEC. Upon the request of B&W, ▇▇▇▇▇▇▇▇ American will deliver to B&W a
written statement as to whether it has complied with such requirements.
SECTION 3.10. Lockup. If and to the extent requested by the managing
Underwriters of an underwritten public offering of equity securities of ▇▇▇▇▇▇▇▇
American, ▇▇▇▇▇▇▇▇ American and B&W agree not to effect, and to cause
35
their respective affiliates not to effect, except as part of such registration,
any offer, sale, pledge, transfer or other distribution or disposition or any
agreement with respect to the foregoing, of the issue being registered or of a
similar security of ▇▇▇▇▇▇▇▇ American, or any securities convertible into or
exchangeable or exercisable for such securities, including a sale pursuant to
Rule 144, during the seven-day period prior to and during such period that the
lead Underwriter may reasonably request, no greater than 90 days, beginning on
the effective date of such registration.
SECTION 3.11. Termination of Registration Rights. The registration
rights contained in this Article III shall terminate on the date on which all
shares of Common Stock subject to this Agreement cease to be Registrable
Securities. Notwithstanding the forgoing, the registration rights contained in
this Article III shall terminate in any event with respect to any Investor Party
or any other holder of Registrable Securities when any such holder no longer
owns any Registrable Securities. In addition, even if the registration rights
contained in this Article III are no longer in effect, in the event that an
Investor Party intends to dispose of a significant number of Common Shares and
such disposition could reasonably be expected to have an adverse impact on the
trading price of shares of Common Stock or otherwise have an adverse impact on
the market for Common Stock, ▇▇▇▇▇▇▇▇ American and the Investor Parties shall
cooperate in connection with such disposition and shall take commercially
reasonable efforts to mitigate the adverse effects of any such disposition;
provided, however, that nothing in this sentence shall be deemed to restrict an
Investor Party in connection with the sale of any Common Stock (including the
size or timing of such disposition).
ARTICLE IV. Limitations on Purchases of Equity Securities and Other Actions
SECTION 4.01. Purchases of Equity Securities. Except for the
acquisition of shares of Common Stock pursuant to the Combination Agreement and
subject to the exceptions set forth in Section 4.03, during the Standstill
Period, the Investor Parties shall not, directly or indirectly, acquire, agree
to acquire or make a proposal to
36
acquire beneficial ownership of any shares of
Equity Securities. Equity Securities acquired pursuant to this Article IV shall
be subject to all of the terms, covenants and conditions of this Agreement.
SECTION 4.02. Additional Limitations. Subject to the exceptions set
forth in Section 4.03, during the Standstill Period, the Investor Parties shall
not:
(a) seek, make or take any action to solicit, initiate or encourage,
any offer or proposal for, or any indication of interest in, a merger,
consolidation, tender or exchange offer, sale or purchase of assets or
securities or other business combination or any dissolution, liquidation,
restructuring, recapitalization or similar transaction in each case
involving ▇▇▇▇▇▇▇▇ American or any of its Subsidiaries or the acquisition
of any equity interest in, or a substantial portion of the assets of,
▇▇▇▇▇▇▇▇ American or any of its Subsidiaries;
(b) "solicit", or become a "participant" in any "solicitation" of,
any "proxy" (as such terms are defined in Regulation 14A under the
Exchange Act) from any holder of Voting Stock in connection with any vote
on any matter (whether or not relating to the election or removal of
Directors), or agree or announce its intention to vote with any Person
undertaking a "solicitation", except to the extent required by applicable
law, rule, regulation or order (including any applicable rule, regulation
or order of a self-governing authority, such as the New York Stock
Exchange, the UK Listing Authority and the UK Panel on Takeovers and
Mergers);
(c) form, join or in any way participate in a 13D Group with respect
to any Voting Stock (other than a 13D Group composed of the Investor
Parties);
(d) grant any proxies with respect to any Voting Stock to any Person
(other than as recommended by the Board of Directors) or deposit any
Voting Stock in a voting trust or enter into any other arrangement or
agreement with respect to the voting thereof;
37
(e) seek, alone or in concert with other Persons, additional
representation on the Board of Directors or seek the removal of any member
of the Board that is not an Investor Director or a change in the
composition or size of the Board of Directors that is inconsistent with
this Agreement;
(f) enter into any arrangements, understandings or agreements
(whether written or oral) with, or advise, finance or assist any other
Persons in connection with any of the foregoing; or
(g) request, propose or otherwise seek any amendment or waiver of
the provisions of Article IV.
SECTION 4.03. Standstill Exceptions. Notwithstanding Sections 4.01
and 4.02:
(a) during the Standstill Period, the Investor Parties may acquire
beneficial ownership of additional Equity Securities if, after giving
effect to any such acquisition, B&W's Percentage Interest would not exceed
the Standstill Percentage less the percentage of Voting Power (calculated
as of the date of disposition) associated with any Equity Securities
disposed of by any Investor Party (other than to another Investor Party)
following the date of this Agreement;
(b) if, during the Standstill Period, ▇▇▇▇▇▇▇▇ American becomes the
subject of a Third Party Offer, ▇▇▇▇▇▇▇▇ American shall promptly, and in
any event within two business days, deliver written notice to B&W to such
effect, which notice shall to the extent known by ▇▇▇▇▇▇▇▇ American set
forth the percentage of Voting Power or assets that the third party is
seeking to acquire pursuant to the Third Party Offer, and the Investor
Parties shall have the right to make a B&W Counteroffer to the Board of
Directors in response to such Third Party Offer. If ▇▇▇▇▇▇▇▇ American
accepts any such B&W Counteroffer, the Investor Parties may acquire Equity
Securities in accordance with the terms of such B&W Counteroffer. If
▇▇▇▇▇▇▇▇ American rejects any such B&W Counteroffer and enters into an
agreement with a third party (other than the Investor Parties) with
respect to a Significant Transaction or a third
38
party (other than the Investor Parties) initiates a tender offer or
exchange offer that would constitute a Significant Transaction, the
Investor Parties may make and consummate a public proposal constituting a
B&W Counteroffer (including by way of a tender offer or exchange offer).
Notwithstanding the foregoing, an Investor Party's right to make any B&W
Counteroffer and to acquire additional Equity Securities pursuant to this
clause (b) is subject to the condition that the Investor Directors recuse
themselves from any and all consideration by the Board of Directors or any
committee thereof of a Third Party Offer or a B&W Counteroffer; and
(c) during the Standstill Period, the Investor Parties shall be
permitted to make requests to the Board of Directors to amend or waive any
of the limitations set forth in Section 4.01 or 4.02, which the Other
Directors, acting by majority, may accept or reject in their sole
discretion; provided, however, that (i) any such request shall not be
publicly disclosed by the Investor Parties and (ii) any such request shall
be made in a manner that is not reasonably likely to require the public
disclosure of such request by ▇▇▇▇▇▇▇▇ American.
ARTICLE V. Transfer of Common Stock
SECTION 5.01. Limitation on Transfer of Common Stock. (a) During the
term of this Agreement, any sale, transfer or other disposition of shares of
Common Stock by the Investor Parties shall be subject to the following
limitations:
(i) no shares of Common Stock may be sold, transferred or otherwise
disposed of, directly or indirectly, to any Person or 13D Group, if, after
giving effect to such sale, transfer or other disposition such Person or
13D Group would, to B&W's knowledge, beneficially own, or have the right
to acquire, 7.5% or more of the Voting Power of all Voting Stock, except
in connection with a tender offer or exchange offer for Common Stock
(provided that the Board of Directors has not recommended to its
39
shareholders that such tender offer or exchange offer be rejected); and
(ii) none of the Investor Parties will, in any six-month period,
sell, transfer or otherwise dispose of, directly or indirectly, Common
Stock representing in the aggregate more than 5% of the Voting Power of
all Voting Stock without first obtaining the consent of a majority of the
Other Directors, except in connection with a tender offer or exchange
offer for Common Stock (provided that the Board of Directors has not
recommended to its shareholders that such tender offer or exchange offer
be rejected).
(b) Notwithstanding any of the foregoing, B&W may at any time
transfer any or all of its shares of Common Stock to any Investor Party, and any
such transferee may make similar transfers; provided, however, that (x) any such
transferee shall agree to be bound by the terms of this Agreement and (y) for
purposes of calculating any ownership threshold applicable to B&W and/or its
affiliates under this Agreement, all shares of Common Stock held by B&W and any
permitted transferee under this Section 5.01(b) shall be taken into account.
(c) ▇▇▇▇▇▇▇▇ American may place appropriate legends on the
certificates representing Common Stock held by the Investor Parties setting
forth the restrictions referred to above and any restrictions appropriate for
compliance with U.S. federal securities laws. ▇▇▇▇▇▇▇▇ American will promptly
issue replacement certificates to the Investor Parties, upon request, in order
to permit the Investor Parties to engage in sales, transfers and other
dispositions that are not restricted hereunder or under U.S. federal securities
laws. Purported transfers of shares of Common Stock that are not in compliance
with this Article V shall be void.
ARTICLE VI. Miscellaneous
SECTION 6.01. Notices. All notices, requests, claims, demands and
other communications under this Agreement shall be in writing and shall be
deemed given upon receipt by the parties at the following addresses (or
40
at such other address for a party as shall be specified by like notice):
(a) if to BAT, to
▇▇▇▇▇ ▇▇▇▇▇
▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax: ▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
Attention: General Counsel
with a copy to:
Cravath, Swaine & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
(b) if to B&W, to
▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
with a copy to:
Cravath, Swaine & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
(c) if to ▇▇▇▇▇▇▇▇ American, to
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇-▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
41
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
with a copy to:
▇▇▇▇▇ Day
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
SECTION 6.02. Amendments; Waivers. (a) No provision of this
Agreement may be amended or waived unless such amendment or waiver is in writing
and signed, in the case of an amendment, by the parties hereto, or in the case
of a waiver, by the party against whom the waiver is to be effective; provided,
however, that no such amendment or waiver by ▇▇▇▇▇▇▇▇ American shall be
effective without the approval of a majority of the Other Directors (except for
amendments or waivers that are administrative in nature or that do not
materially adversely affect the rights of the Unaffiliated Equity Holders, which
amendments and waivers shall only require the approval of a majority of the
Directors).
(b) The failure of any party to this Agreement to assert any of its
rights under this Agreement or otherwise shall not constitute a waiver of such
rights nor shall any single or partial exercise by any party to this Agreement
of any of its rights under this Agreement preclude any other or further exercise
of such rights or any other rights under this Agreement. The rights and remedies
herein provided shall be cumulative and not exclusive of any rights or remedies
provided by law or otherwise.
SECTION 6.03. Interpretation. When a reference is made in this
Agreement to a Section, Subsection or Exhibit, such reference shall be to a
Section or Subsection of, or an Exhibit to, this Agreement unless otherwise
indicated. The headings contained in this Agreement are
42
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation". The words "hereof", "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement. The
words "date hereof" shall refer to the date of this Agreement. The term "or" is
not exclusive. The word "extent" in the phrase "to the extent" shall mean the
degree to which a subject or other thing extends, and such phrase shall not mean
simply "if". The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms. Any agreement or instrument
defined or referred to herein or in any agreement or instrument that is referred
to herein means such agreement or instrument as from time to time amended,
modified or supplemented. References to a Person are also to its permitted
successors and assigns.
SECTION 6.04. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule or Law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the Transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that the Transactions contemplated hereby are fulfilled to the extent possible.
SECTION 6.05. Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
SECTION 6.06. Entire Agreement; No Third-Party Beneficiaries. This
Agreement and the other Transaction
43
Agreements constitute the entire agreement, and supercede all prior agreements
and understandings, both written and oral, among the parties with respect to the
subject matter hereof and thereof and are not intended to confer upon any Person
other than the parties any rights or remedies.
SECTION 6.07. Governing Law. Except to the extent specifically
required by the North Carolina Business Corporation Act, this Agreement shall be
governed by, and construed in accordance with, the laws of the State of
Delaware, regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws thereof. The parties declare that it is their
intention that this Agreement shall be regarded as made under the laws of the
State of Delaware and that the laws of the State of Delaware shall be applied in
interpreting its provisions in all cases where legal interpretation shall be
required, except to the extent the North Carolina Business Corporation Act is
specifically required by such act to govern the interpretation of this
Agreement.
SECTION 6.08. Assignment. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise, by any of the parties
without the prior written consent of the other parties hereto, except that B&W
may assign, in its sole discretion, any of or all its rights, interests and
obligations under this Agreement to BAT or any of its Subsidiaries that agrees
in writing to be bound by the provisions hereof. Any purported assignment
without such prior written consent shall be void. Subject to the preceding
sentences, this Agreement will be binding upon, inure to the benefit of, and be
enforceable by, the parties and their respective successors and assigns.
SECTION 6.09. Enforcement. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any Federal court located in the
State of Delaware or in the Chancery Court
44
of the State of Delaware, this being in addition to any other remedy to which
they are entitled at law or in equity. In addition, each of the parties (a)
consents to submit itself to the personal jurisdiction of any Federal court
located in the State of Delaware or Chancery Court of the State of Delaware in
the event any dispute arises out of this Agreement or any Transaction, (b)
agrees that it will not attempt to deny or defeat such personal jurisdiction by
motion or other request for leave from any such court, (c) irrevocably and
unconditionally waives (and agrees not to plead or claim) any objection to the
laying of venue of any action, suit or proceeding arising out of this Agreement
or any Transaction, (d) agrees that it will not bring any action relating to
this Agreement or any Transaction in any court other than any Federal court
sitting in the State of Delaware or Chancery Court of the State of Delaware, (e)
waives any right to trial by jury with respect to any action related to or
arising out of this Agreement or any Transaction and (f) agrees that this
Agreement involves at least $100,000 and has been entered into by the parties in
express reliance upon 6 Del. C. Section 2708. Without limiting the agreement of
the parties set forth in this Section 6.11, in the event that any dispute
arising under this Agreement is subject to, or adjudicated by, the courts of the
State of North Carolina, the parties agree that any such dispute will be
adjudicated by the North Carolina Business Court (with any references in this
Section 6.09 to Delaware courts being deemed to be references to North Carolina
courts and any references in this Section 6.09 to the Chancery Court of the
State of Delaware being deemed to be references to the North ▇▇▇▇▇▇▇▇ Business
Court).
SECTION 6.10. Effectiveness. This Agreement shall become effective
upon the execution of this Agreement.
SECTION 6.11. Termination.
(a) Automatic Termination. This Agreement shall automatically
terminate at such time that (i) B&W's Percentage Interest equals 100% or is less
than 15% or (ii) any Person or 13D Group (other than the Investor Parties or any
Person participating in a 13D Group with the Investor Parties) beneficially owns
or controls Voting
45
Stock representing more than 50% of the Voting Power of all Voting Stock.
(b) Termination by BAT and B&W. BAT and B&W shall be entitled to
terminate this Agreement in the event that (i) (A) ▇▇▇▇▇▇▇▇ American, the Board
of Directors or any committee of the Board of Directors takes any action, or
fails to take appropriate action, which action, or failure to take action, would
have resulted in a material breach of any of the Board Provisions but for the
fiduciary duty exception set forth in Section 2.08 or (B) an Approval
Termination Event occurs or (ii) the number of Investor Directors serving on the
Board of Directors at any time is less than the number of Investor Directors to
which B&W is entitled at such time pursuant to Section 2.01 (provided B&W has
complied in all material respects and in good faith with the requirements set
forth in this Agreement regarding the nomination of, and voting for, directors),
in the case of clauses (i) and (ii) subject to notice from B&W and the
expiration of a 45-day period in which to cure such action or failure to act (if
such action or failure to act is capable of being cured).
(c) Termination of Obligations. BAT and B&W shall be entitled to
terminate Articles IV and V and Sections 2.01(g) and (h) and Sections 2.02(b)
and (c), but the remainder of this Agreement shall continue until otherwise
terminated pursuant to Section 6.11(a) or (b), in the event that the Board of
Directors or ▇▇▇▇▇▇▇▇ American willfully and deliberately fails to take
appropriate action, which action, or failure to take action, results in a
material breach of the Board Provisions, subject to notice from B&W and the
expiration of a 45-day period in which to cure such breach or failure (if such
breach or failure is capable of being cured). ▇▇▇▇▇▇▇▇ American shall be
entitled to terminate Article II (provided that Section 2.04(c) shall survive
until the fifth anniversary of the date of this Agreement and Sections
2.01(g)(i) and (h) and 2.02(b) and (c) shall survive until otherwise terminated
pursuant to Section 6.11(a)), but the remainder of this Agreement shall continue
until otherwise terminated pursuant to Section 6.11(a), in the event that BAT or
B&W willfully and deliberately takes any action, or fails to take appropriate
action, which action, or failure to take action, results in a material breach of
Section 4.01 hereof
46
(subject to the exceptions set forth in Section 4.03), subject to notice from
▇▇▇▇▇▇▇▇ American and the expiration of a 45-day period in which to cure such
breach or failure (if such breach or failure is capable of being cured).
(d) Survival. In the event that this Agreement shall terminate, all
provisions of this Agreement shall terminate and shall be void, except (i)
Article III shall survive any such termination until the Investor Parties no
longer hold Registrable Securities, (ii) Section 2.04(c) shall survive until the
fifth anniversary of the date of this Agreement and (iii) Articles I and VI
shall survive any such termination indefinitely. Nothing in this Section 6.11
will be deemed to release any party from any liability for any wilful and
material breach of this Agreement or to impair the right of any party to compel
specific performance by any other party of its obligations under this Agreement.
SECTION 6.12. Confidentiality. (a) Each of BAT and B&W agree to
maintain, and they shall cause each of their respective Subsidiaries, directors,
officers, employees and other representatives (including any Investor Director)
to maintain, the confidentiality of all material non-public information obtained
by the Investor Parties from ▇▇▇▇▇▇▇▇ American or any of its Subsidiaries or
their respective directors, officers, employees or agents, and not to use such
information for any purpose other (i) than the evaluation and protection of the
investment by the Investor Parties in ▇▇▇▇▇▇▇▇ American, (ii) the exercise by
the Investor Parties of any of their respective rights under this Agreement and
(iii) the exercise by the Investor Directors of their fiduciary duties as
Directors of ▇▇▇▇▇▇▇▇ American.
(b) Notwithstanding the foregoing, the confidentiality obligations
of Section 6.12(a) will not apply to information obtained other than in
violation of this Agreement:
(i) which any of Investor Parties or any of their officers,
employees, representatives, consultants or advisors is required to
disclose by judicial or administrative process, or by other requirements
of applicable law or regulation or any governmental
47
authority (including any applicable rule, regulation or order of a
self-governing authority, such as the New York Stock Exchange, the UK
Listing Authority and the UK Panel on Takeovers and Mergers); provided,
however, that, where and to the extent practicable, the disclosing party
(A) gives the other party reasonable notice of any such requirement and,
to the extent protective measures consistent with such requirement are
available, the opportunity to seek appropriate protective measures and (B)
cooperates with such party in attempting to obtain such protective
measures;
(ii) which becomes available to the public other than as a result of
a breach of Section 6.12(a); or
(iii) which has been provided to any of the Investor Parties or any
of their officers, employees, representatives, consultants or advisors by
a third party who obtained such information other than from any such
Person or other than as a result of a breach of Section 6.12(a).
(c) Notwithstanding anything herein to the contrary, any party to
this Agreement (and any employee, representative or other agent of such party)
may disclose to any and all Persons, without limitation of any kind, the tax
treatment and tax structure of the transactions contemplated by this Agreement
and all materials of any kind (including opinions or other tax analyses) that
are provided to it relating to such tax treatment and tax structure, except that
(i) this provision shall not permit disclosure until the earliest of (A) the
date of the public announcement of discussions relating to the transaction, (B)
the date of the public announcement of the transaction or (C) the date of the
execution of an agreement (with or without conditions) to enter into the
transaction, (ii) tax treatment and tax structure shall not include the identity
of any existing or future party (or any affiliate of such party) to this
Agreement and (iii) this provision shall not permit disclosure to the extent
that nondisclosure is necessary in order to comply with applicable securities
laws. Nothing in this Agreement shall in any way limit any party's ability to
consult any tax advisor (including a tax advisor independent from all other
entities involved in the
48
transactions contemplated by this Agreement) regarding the tax treatment or tax
structure of the transactions contemplated by this Agreement.
SECTION 6.13. Acknowledgment of Securities Laws. Each of BAT and B&W
hereby acknowledges that it is aware, and that it will advise its
representatives who are informed as to the material non-public information that
is the subject of Section 6.12, that the United States securities laws prohibit
any Person who has received from an issuer material, non-public information from
purchasing or selling securities of such issuer or from communication of such
information to any other Person under circumstances in which it is reasonably
foreseeable that such Person is likely to purchase or sell such securities.
49
IN WITNESS WHEREOF, the parties hereto have executed this Governance
Agreement as of the day and year first above written.
BRITISH AMERICAN TOBACCO P.L.C.
By ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Attorney-in-Fact
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ TOBACCO CORPORATION
By ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President and Secretary
▇▇▇▇▇▇▇▇ AMERICAN INC.
By ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President and
General Counsel
50