STOCK PURCHASE AGREEMENT
dated as of April 17, 1997
by and between
NATC HOLDING COMPANY, LTD.
and
NTC HOLDING, L.L.C.
with respect to all
outstanding capital stock of
NATC HOLDINGS USA, INC.
TABLE OF CONTENTS
This Table of Contents is not part of the Agreement to which
it is attached but is inserted for convenience only.
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No.
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ARTICLE I.
SALE OF SHARES AND CLOSING
1.01 Purchase and Sale................................. 1
1.02 Purchase Price; Option Cancellation Payment....... 1
1.03 Closing........................................... 3
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF SELLER
2.01 Corporate Existence of Seller..................... 3
2.02 Authority......................................... 3
2.03 Corporate Existence of the Company................ 4
2.04 Capital Stock..................................... 4
2.05 Subsidiaries...................................... 4
2.06 No Conflicts...................................... 5
2.07 Governmental Approvals and Filings................ 5
2.08 Books and Records................................. 5
2.09 Financial Statements and Condition................ 6
2.10 Taxes............................................. 8
2.11 Legal Proceedings................................. 8
2.12 Compliance With Laws and Orders................... 8
2.13 Company Plans; ERISA.............................. 9
2.14 Real Property..................................... 9
2.15 Tangible Personal Property........................ 10
2.16 Intellectual Property Rights...................... 10
2.17 Contracts......................................... 10
2.18 Licenses.......................................... 12
2.19 Insurance......................................... 12
2.20 Affiliate Transactions............................ 12
2.21 Labor Relations................................... 12
2.22 Brokers........................................... 12
2.23 Bank Accounts..................................... 13
2.24 Customers......................................... 13
2.25 Disclosure........................................ 13
2.26 No Other Representations.......................... 13
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No.
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ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
3.01 Corporate Existence............................... 13
3.02 Authority......................................... 13
3.03 No Conflicts...................................... 13
3.04 Governmental Approvals and Filings................ 14
3.05 Legal Proceedings................................. 14
3.06 Purchase for Investment........................... 14
3.07 Financing......................................... 14
3.08 Brokers........................................... 14
3.09 Disclosure........................................ 15
ARTICLE IV.
COVENANTS OF SELLER
4.01 Regulatory and Other Approvals.................... 15
4.02 HSR Filings....................................... 15
4.03 Investigation by Purchaser........................ 16
4.04 No Solicitations.................................. 16
4.05 Conduct of Business............................... 16
4.06 Noncompetition.................................... 16
4.07 Fulfillment of Conditions......................... 17
ARTICLE V.
COVENANTS OF PURCHASER
5.01 Regulatory and Other Approvals.................... 17
5.02 HSR Filings....................................... 18
5.03 Fulfillment of Conditions......................... 18
ARTICLE VI.
CONDITIONS TO OBLIGATIONS OF PURCHASER
6.01 Representations and Warranties.................... 18
6.02 Performance....................................... 18
6.03 Officers' Certificates............................ 19
6.04 Orders and Laws................................... 19
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No.
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6.05 Regulatory Consents and Approvals................. 19
6.06 Third Party Consents.............................. 19
6.07 Opinion of Counsel................................ 19
6.08 Repayment of Certain Indebtedness................. 19
6.09 Corporate Authorization........................... 19
6.10 Good Standing..................................... 19
6.11 Financing......................................... 19
6.12 Contingent Obligations............................ 20
6.13 Non-Compete Agreements............................ 20
6.14 Member Consents................................... 20
6.15 Certain Agreements................................ 20
ARTICLE VII.
CONDITIONS TO OBLIGATIONS OF SELLER
7.01 Representations and Warranties.................... 20
7.02 Performance....................................... 20
7.03 Officers' Certificates............................ 21
7.04 Orders and Laws................................... 21
7.05 Regulatory Consents and Approvals................. 21
7.06 Third Party Consents.............................. 21
7.07 Opinion of Counsel................................ 21
7.08 Corporate Authorization........................... 21
7.09 Contingent Agreement.............................. 21
ARTICLE VIII.
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
8.01 Survival of Representations and Warranties........ 21
8.02 Net Worth of Seller............................... 22
ARTICLE IX.
INDEMNIFICATION
9.01 Indemnification................................... 22
9.02 Method of Asserting Claims........................ 23
9.03 Exclusivity....................................... 25
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No.
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ARTICLE X.
TERMINATION
10.01 Termination...................................... 25
10.02 Effect of Termination............................ 25
ARTICLE XI.
DEFINITIONS
11.01 Definitions...................................... 25
ARTICLE XII.
MISCELLANEOUS
12.01 Notices.......................................... 31
12.02 Entire Agreement................................. 33
12.03 Expenses......................................... 33
12.04. Transfer Taxes................................... 33
12.05 Public Announcements............................. 34
12.06 Confidentiality.................................. 34
12.07 Further Assurances; Post-Closing Cooperation..... 35
12.08 Waiver........................................... 35
12.09 Amendment........................................ 35
12.10 No Third Party Beneficiary....................... 36
12.11 No Assignment; Binding Effect.................... 36
12.12 Headings......................................... 36
12.13 Invalid Provisions............................... 36
12.14 Governing Law.................................... 36
12.15 Counterparts..................................... 36
Exhibit A - Option Cancellation Agreement
Exhibit B - 1997 Promotion
Exhibit C - DGG Non-Compete Agreement
Exhibit ▇ - ▇▇▇▇▇▇ Non-Compete Agreement
Exhibit E - Royalty Agreement
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Exhibit F - Commitment Letter
Exhibit G - Bollore Consent
Exhibit H - USTC Amendment
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This STOCK PURCHASE AGREEMENT dated as of April 17, 1997 is
made and entered into by and between NTC Holding, L.L.C., a Delaware limited
liability company ("Purchaser"), and NATC Holding Company, Ltd., a Bermuda
corporation ("Seller"). Capitalized terms not otherwise defined herein have the
meanings set forth in Section 11.01.
WHEREAS, Seller owns 13,333 1/3 shares of Class A Common
Stock, par value $0.01 per share, of NATC Holdings USA, Inc., a Delaware
corporation (the "Company"), constituting all issued and outstanding shares of
capital stock of the Company (such shares being referred to herein as the
"Shares");
WHEREAS, contemporaneously with the execution of this
Agreement ▇▇▇▇ ▇▇▇▇▇▇, the Chief Executive Officer of the Company ("Africk"), is
executing a Cancellation Agreement in the form attached as Exhibit A hereto (the
"Cancellation Agreement") with respect to the cancellation, effective as of the
time of the Closing, of options (the "Africk Options") to purchase 3331/3 shares
of Class A Common Stock previously awarded to ▇▇. ▇▇▇▇▇▇ pursuant to an Option
Award Agreement dated as of March 5, 1996; and
WHEREAS, Seller desires to sell, and Purchaser desires to
purchase, the Shares on the terms and subject to the conditions set forth in
this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I.
SALE OF SHARES AND CLOSING
1.01 Purchase and Sale. Seller agrees to sell to Purchaser,
and Purchaser agrees to purchase from Seller, all of the right, title and
interest of Seller in and to the Shares at the Closing on the terms and subject
to the conditions set forth in this Agreement.
1.02 Purchase Price; Option Cancellation Payment. (a) Subject
to adjustment as provided in Section 1.02(c), the aggregate purchase price for
the Shares (the "Purchase Price") is an amount equal to (i) One Hundred
Fifty-Three Million Six Hundred Thousand Dollars ($153,600,000) minus (ii) the
Debt Payments minus (iii) the Option Cancellation Payment pursuant to Section
1.02(b).
(b) In addition to the Purchase Price, Purchaser shall
contribute to the Company cash in an amount equal to, and immediately thereafter
Purchaser shall cause the Company to pay to Africk in cash in the manner
provided in Section 1.03 for the cancellation of the Africk Options pursuant to
the Cancellation Agreement an amount (the "Option Cancellation Payment") equal
to (i) (A) (x) One Hundred Fifty-Three Million Six Hundred Thousand Dollars
($153,600,000) minus (y) the Debt Payments multiplied by (B) two and one-half
percent (2.5%) minus (ii) One Hundred Twenty-Five Thousand Dollars ($125,000).
(c) (i) Not later than three (3) Business Days before the
Closing Date, Seller shall prepare and deliver to Purchaser an estimated
calculation and statement of the Net Assets (the "Estimated Statement") based
upon the books and records of the Company as of the time such books and records
are closed on the day preceding the day of delivery of the Estimated Statement.
The Estimated Statement shall be prepared in good faith. In the event that the
amount of the estimated Net Assets set forth on the Estimated Statement (the
"Estimated Net Assets") exceeds $6,754,247 (such amount representing the Net
Assets as of May 31, 1996), then the Purchase Price shall be increased by the
amount of such excess. In the event that the amount of the Estimated Net Assets
is less than $6,754,247, then the Purchase Price shall be reduced by the amount
of such deficiency.
(ii) As promptly as practicable, but in any event not later
than forty-five (45) days after the Closing Date, Seller shall cause to be
prepared and delivered to Purchaser a consolidated balance sheet for the Company
and the Subsidiary as of the Closing Date (but immediately prior to the payment
of all Contingent Obligations on the Closing Date) (the "Balance Sheet"), which
shall be audited by Coopers & ▇▇▇▇▇▇▇ ("Seller's Accountant"), certified public
accountants, and certified by such firm to have been prepared in accordance with
GAAP consistently applied and in the manner used to prepare the financial
statements described in Section 2.09. The Balance Sheet shall be accompanied by
a statement (the "Statement of Net Assets") prepared by such accountants and
setting forth the Net Assets as of the Closing Date, which shall be calculated
by reference to the Balance Sheet.
(iii) Subject to subsection (iv) below, within fifteen (15)
days after delivery of the Balance Sheet and the Statement of Net Assets
pursuant to subsection (ii) above, (1) Seller shall pay to Purchaser the amount,
if any, by which the amount of the Estimated Net Assets exceeds the Net Assets
as of the Closing Date, or (2) Purchaser shall pay to Seller the amount, if any,
by which the amount of the Net Assets as of the Closing Date exceeds the
Estimated Net Assets. Payments, if any, by Seller or Purchaser pursuant to this
subsection (iii) shall be made by wire transfer of immediately available funds.
The parties shall treat any payment made pursuant to this Section as an
adjustment to the Purchase Price for all purposes.
(iv) If Purchaser in good faith disagrees with the Balance
Sheet or the Statement of Net Assets, then Purchaser shall notify Seller in
writing (the "Notice of Disagreement") of such disagreement within fifteen (15)
days after delivery of the Balance Sheet and the Statement of Net Assets. The
Notice of Disagreement shall set forth in reasonable detail the basis for the
disagreement. Thereafter, Seller and Purchaser shall attempt in good faith to
resolve and finally determine the Balance Sheet and the Statement of Net Assets.
If Seller and Purchaser are unable to resolve the disagreement within thirty
(30) days after delivery of the Notice of Disagreement, then Seller and
Purchaser shall select a mutually acceptable, nationally recognized independent
accounting firm which does not then have a relationship with either of the
parties hereto or any of their Affiliates (such accounting firm being
hereinafter referred to as the "Independent Accountant") to resolve the disputed
items and make a determination with respect thereto. Such determination will be
made, and written notice thereof given to Seller and Purchaser within thirty
(30) days after such selection. The determination by the Independent Accountant
shall be final, binding and conclusive upon the parties hereto. The scope of
such firm's engagement (which shall not be an audit) shall be limited to the
resolution of the items contained in the Notice of
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Disagreement, and the recalculation, if any, of the Balance Sheet and the
Statement of Net Assets in light of such resolution and such firm shall be
deemed to be acting as experts and not as arbitrators. The fees, costs and
expenses of Seller's Accountant in connection with the preparation of the
Balance Sheet and the Statement of Net Assets shall be borne by Seller. The
fees, costs and expenses of the Independent Accountant, if any, will be borne
equally by both parties. Within ten (10) days of delivery of a notice of
determination by the Independent Accountant as described above, any adjustment
shall be paid as provided in subsection (iii). Any portion of the Purchase Price
adjustment not in dispute shall be paid when due.
1.03 Closing. The Closing will take place at the offices of
▇▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at such other
place as Purchaser and Seller mutually agree, at 10:00 A.M. local time, on the
Closing Date. At the Closing, Purchaser will pay the Purchase Price by wire
transfer of immediately available funds to such account as Seller may reasonably
direct by written notice delivered to Purchaser by Seller at least two (2)
Business Days before the Closing Date. Simultaneously, Seller will assign and
transfer to Purchaser good and valid title in and to the Shares, by delivering
to Purchaser a certificate or certificates representing the Shares, duly
endorsed in blank or accompanied by duly executed stock powers endorsed in
blank. In addition at the Closing, Purchaser will contribute to the Company
immediately available funds in an amount equal to, and shall thereafter cause
the Company to pay to Africk, the Option Cancellation Payment by wire transfer
of immediately available funds to such account as Africk may reasonably direct
by written notice delivered to Purchaser at least two (2) Business Days before
the Closing Date. Simultaneously, Purchaser shall pay, on behalf of the
Subsidiary, the Debt Payments in full and that portion of the Bollore Payment
which is to be paid at the Closing pursuant to the Bollore Consent by wire
transfer of immediately available funds to the respective accounts of the
Persons entitled to receive such funds. At the Closing, there shall also be
delivered to Seller and Purchaser the opinions, certificates and other documents
and instruments to be delivered under Articles VI and VII.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser as follows,
except as set forth in the Disclosure Schedule:
2.01 Corporate Existence of Seller. Seller is a corporation
duly organized, validly existing and in good standing under the Laws of Bermuda.
Except for authorizations by the board of directors of Seller as described in
Section 2.02, Seller has full corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder and to
consummate the transactions contemplated hereby, including without limitation to
own, hold, sell and transfer (pursuant to this Agreement) the Shares.
2.02 Authority. The execution and delivery by Seller of
this Agreement, and the performance by Seller of its obligations hereunder, are
required to be duly and validly authorized by the board of directors of Seller,
no other corporate action on the part of Seller being
3
necessary; and such authorizations will be obtained on or before the date five
(5) Business Days after the date of this Agreement. Except for such board of
directors authorization, this Agreement has been duly and validly executed and
delivered by Seller and constitutes a legal, valid and binding obligation of
Seller enforceable against Seller in accordance with its terms.
2.03 Corporate Existence of the Company. The Company is a
corporation duly organized, validly existing and in good standing under the Laws
of the State of Delaware, and has full corporate power and authority to conduct
its business as and to the extent now conducted and to own, use and lease its
assets and properties. The Company is duly qualified, licensed or admitted to do
business and is in good standing in those jurisdictions specified in Section
2.03 of the Disclosure Schedule, which are the only jurisdictions in which the
ownership, use or leasing of its assets and properties, or the conduct or nature
of its business, makes such qualification, licensing or admission necessary,
except for those jurisdictions in which the adverse effects of all such failures
by the Company to be qualified, licensed or admitted and in good standing could
not in the aggregate reasonably be expected to have a material adverse effect on
the Business or Condition of the Company. Seller has prior to the execution of
this Agreement delivered or made available for inspection to Purchaser true and
complete copies of the certificate of incorporation and by-laws of the Company
as currently in effect.
2.04 Capital Stock. The authorized capital stock of the
Company consists solely of fifty thousand (50,000) shares of Class A Common
Stock and fifty thousand (50,000) shares of Class B Common Stock, of which only
the Shares are issued and outstanding. The Shares are duly authorized, validly
issued, fully paid and nonassessable. Seller owns the Shares, beneficially and
of record, free and clear of all Liens. Except for this Agreement, there are no
outstanding Options with respect to the Company. The delivery of a certificate
or certificates at the Closing representing the Shares in the manner provided in
Section 1.03 will transfer to Purchaser good and valid title to the Shares, free
and clear of all Liens other than Liens created or suffered to exist by
Purchaser.
2.05 Subsidiaries. The Subsidiary is the only Person in which
the Company directly or indirectly beneficially owns more than 50% of either the
equity interests in, or the voting control of, such Person. The Subsidiary is a
corporation duly organized, validly existing and in good standing under the Laws
the State of Delaware, and has full corporate power and authority to conduct its
business as and to the extent now conducted and to own, use and lease its assets
and properties. The Subsidiary is duly qualified, licensed or admitted to do
business and is in good standing in those jurisdictions specified in Section
2.05 of the Disclosure Schedule, which are the only jurisdictions in which the
ownership, use or leasing of the Subsidiary's assets and properties, or the
conduct or nature of its business, makes such qualification, licensing or
admission necessary, except for those jurisdictions in which the adverse effects
of all such failures by the Subsidiary to be qualified, licensed or admitted and
in good standing could not in the aggregate reasonably be expected to have a
material adverse effect on the Business or Condition of the Company. Section
2.05 of the Disclosure Schedule lists for the Subsidiary the amount of its
authorized capital stock, the amount of its outstanding capital stock and the
record owners of such outstanding capital stock. All of the outstanding shares
of capital stock of the Subsidiary have been duly authorized and validly issued,
are fully paid and nonassessable, and are owned, beneficially and of record, by
the Company free and clear of all
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Liens. There are no outstanding Options with respect to the Subsidiary. Seller
has prior to the execution of this Agreement delivered or made available for
inspection to Purchaser true and complete copies of the certificate of
incorporation and by-laws of the Subsidiary as currently in effect.
2.06 No Conflicts. The execution and delivery by Seller of
this Agreement do not, and the performance by Seller of its obligations under
this Agreement and the consummation of the transactions contemplated hereby will
not (with or without notice or lapse of time or both):
(a) conflict with or result in a violation or breach of any of
the articles of association, certificate of incorporation or by-laws (or other
comparable corporate charter documents) of Seller, the Company or the
Subsidiary;
(b) conflict with or result in a violation or breach of any
Law or Order applicable to Seller, the Company or the Subsidiary or any of their
respective assets and properties (other than such conflicts, violations or
breaches (i) which could not in the aggregate reasonably be expected to
materially adversely affect the validity or enforceability of this Agreement or
to have a material adverse effect on the Business or Condition of the Company or
(ii) as would occur solely as a result of the identity or the legal or
regulatory status of Purchaser or any of its Affiliates); or
(c) (i) conflict with or result in a violation or breach of,
(ii) constitute (with or without notice or lapse of time or both) a default
under, (iii) require Seller, the Company or the Subsidiary to obtain any
consent, approval or action of, make any filing with or give any notice to any
Person as a result or under the terms of, or (iv) result in the creation or
imposition of any Lien upon Seller, the Company or the Subsidiary or any of
their respective assets and properties under, any Contract or License to which
Seller, the Company or the Subsidiary is a party or by which any of their
respective assets and properties is bound and which, individually or in the
aggregate with other such Contracts and Licenses, is material to the validity or
enforceability of this Agreement or to the Business or Condition of the Company.
2.07 Governmental Approvals and Filings. Except as required
pursuant to the HSR Act, no consent, approval or action of, filing with or
notice to any Governmental or Regulatory Authority on the part of Seller, the
Company or the Subsidiary is required in connection with the execution, delivery
and performance of this Agreement or the consummation of the transactions
contemplated hereby, except (i) where the failure to obtain any such consent,
approval or action, to make any such filing or to give any such notice could not
reasonably be expected to materially adversely affect the validity or
enforceability of this Agreement or to have a material adverse effect on the
Business or Condition of the Company and (ii) those as would be required solely
as a result of the identity or the legal or regulatory status of Purchaser or
any of its Affiliates.
2.08 Books and Records. The minute books of the Company and
the Subsidiary as made available to Purchaser prior to the execution of this
Agreement contain a true and complete record, in all material respects, of all
action taken at all meetings and by all written
5
consents in lieu of meetings of the stockholders, the boards of directors and
committees of the boards of directors of the Company and the Subsidiary.
2.09 Financial Statements and Condition. (a) Prior to the
execution of this Agreement, Seller has delivered to Purchaser true and complete
copies of the audited consolidated balance sheets of the Company and the
Subsidiary as of December 31, 1994, 1995 and 1996, and the related audited
consolidated statements of operations, stockholders' equity and cash flows for
each of the fiscal periods then ended, certified by Seller's Accountant. All
such financial statements were prepared in accordance with GAAP and fairly
present in all material respects the consolidated financial condition and
results of operations of the Company and the Subsidiary as of the respective
dates thereof and for the respective periods covered thereby except, in the case
of the unaudited financial statements, for the absence of footnotes and normal
year end adjustments which an audit would reveal.
(b) Except for the execution and delivery of this Agreement
and the transactions to take place pursuant hereto on or prior to the Closing
Date, since the Audited Financial Statement Date there has not been any material
adverse change in the Business or Condition of the Company, other than those
occurring as a result of general economic or financial conditions or other
developments which are not unique to the Company and the Subsidiary but also
affect other Persons who participate or are engaged in the lines of business in
which the Company and the Subsidiary participate or are engaged.
(c) Since the Audited Financial Statement Date, neither the
Company nor the Subsidiary has incurred any liabilities of a kind required by
GAAP to be set forth on a balance sheet and which in the aggregate are material
to the Business or Condition of the Company, other than liabilities incurred in
the ordinary course of business.
(d) Except as expressly authorized or required by this
Agreement, since December 31, 1996 neither the Company nor the Subsidiary has,
and Seller covenants and agrees that from the date of this Agreement until the
Closing Date neither the Company nor the Subsidiary will have,:
(i) amended its certificate of incorporation or by-laws
or comparable instruments or merged with or into or
consolidated with any other Person, or changed or
agreed to rearrange in any material respect the
character of its business (except that the Company
may amend its certificate of incorporation to change
its name as contemplated by Section 12.16);
(ii) issued, sold or purchased options or rights to
subscribe to, or entered into any contracts or
commitments to issue, sell or purchase, any shares of
its capital stock;
(iii) entered into, amended or terminated any (x)
employment agreement, (y) adopted, entered into or
amended any arrangement which is, or would be, a
Company Plan or (z) made any change in any actuarial
methods or
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assumptions used in funding any Company Plan or in
the assumptions or factors used in determining
benefit equivalences thereunder;
(iv) issued any note, bond or other debt security,
created, incurred or assumed any indebtedness for
borrowed money, or guaranteed any indebtedness for
borrowed money or any capitalized lease obligation,
in each case in excess of $25,000 individually or in
the aggregate;
(v) declared, set aside or paid any dividends or declared
or made any other distributions of any kind to its
stockholders, or made any direct or indirect
redemption, retirement, purchase or other acquisition
of any shares of its capital stock other than cash
distributions to its stockholders;
(vi) knowingly waived any right of material value to its
business;
(vii) made any change in its accounting methods or
practices or made any changes in depreciation or
amortization policies or rates adopted by it or made
any material write-down of inventory or material
write-off as uncollectible of accounts receivable;
(viii) made any wage or salary increase or other
compensation payable or to become payable or bonus,
or increase in any other direct or indirect
compensation, for or to any of its officers,
directors, employees, consultants, agents or other
representatives, or any accrual for or commitment or
agreement to make or pay the same, other than
increases made in the ordinary course consistent with
past practice;
(ix) entered into any transactions with any of its
Affiliates, stockholders, officers, directors,
employees, consultants, agents or other
representatives (other than employment arrangements
made in the ordinary course of business consistent
with past practice), or any Affiliate of any
stockholder, officer, director, consultant, employee,
agent or other representative;
(x) made any payment or commitment to pay any severance
or termination pay to any Person or any of its
officers, directors, employees, consultants, agents
or other representatives, other than payments or
commitments to pay such Persons or its officers,
directors, employees in the ordinary course of
business;
(xi) (A) entered into any lease (as lessor or lessee), (B)
sold, abandoned or made any other disposition of any
of its assets or properties other than in the
ordinary course of business consistent with past
practice; or (C) granted or suffered any Lien on any
of its assets or properties other than Permitted
Liens and sales of inventory in the ordinary course
of business;
7
(xii) except for inventory or equipment acquired in the
ordinary course of business, made any acquisition of
all or any part of the assets, properties, capital
stock or business of any other Person;
(xiii) paid, directly or indirectly, any of its liabilities
before the same became due in accordance with its
terms or otherwise than in the ordinary course of
business, except to obtain the benefit of discounts
available for early payment; or
(xiv) made any capital expenditures or commitments for
capital expenditures in an aggregate amount exceeding
$25,000.
2.10 Taxes. (i) All Tax Returns required to be filed with
respect to the Company and the Subsidiary have been timely filed; (ii) such Tax
Returns were true, correct and complete in all material respects; (iii) all
Taxes owed by the Company and the Subsidiary have been timely paid (other than
such Taxes not exceeding $100,000 in the aggregate); (iv) neither the Company
nor the Subsidiary has entered into any agreement extending the statute of
limitations with respect to the collection or assessment of any Taxes; (v) no
consent under Section 341(f) of the Code has been filed with respect to the
Company or the Subsidiary; and (vi) neither the Company or the Subsidiary are or
have been United States real property holding corporations, as defined in Code
Section 897(c)(2), during the applicable period specified in Code Section
897(c)(1). Neither the Company nor the Subsidiary has executed or filed with the
IRS or any other taxing authority any agreement extending the period for
assessment or collection of any Taxes. No examination by any taxing authority of
the Company's or the Subsidiary's Tax Returns is pending which could reasonably
be expected to have a material adverse effect on the Business or Condition of
the Company.
2.11 Legal Proceedings. (a) (i) There are no Actions or
Proceedings pending against Seller, the Company or the Subsidiary or any of
their respective assets and properties; and (ii) to the Knowledge of Seller,
there are no Actions or Proceedings threatened against Seller, the Company or
the Subsidiary or any of their respective assets and properties except, in the
case of this clause (ii), where such Actions or Proceedings could not reasonably
be expected, individually or in the aggregate with other such Actions or
Proceedings, to have a material adverse effect on the Business or Condition of
the Company or to result in the issuance of an Order restraining, enjoining or
otherwise prohibiting or making illegal the consummation of any of the
transactions contemplated by this Agreement; and
(b) there are no Orders outstanding against the Company or the
Subsidiary which, individually or in the aggregate with other such Orders,
materially adversely affect the Business or Condition of the Company.
2.12 Compliance With Laws and Orders. Neither the Company nor
the Subsidiary is or has been in violation of or in default under any Law or
Order (including, without limitation, any Law or Order relating to or otherwise
involving the protection of the environment) applicable to the Company or the
Subsidiary or any of their respective assets and properties the effect of
8
which, individually or in the aggregate with other such violations and defaults,
could reasonably be expected to be materially adverse to the Business or
Condition of the Company.
2.13 Company Plans; ERISA. There are no Company Plans other
than those listed on Section 2.13 of the Disclosure Schedule. With respect to
each Company Plan, to the extent applicable:
(a) Such Company Plan has been maintained and operated in
material compliance with its terms and with the applicable provisions of ERISA,
the Code and all other applicable governmental laws and regulations;
(b) There is no material suit, action, dispute, claim,
arbitration or legal, administrative or other proceeding or governmental
investigation pending, or to the Knowledge of Seller threatened, alleging any
breach of the terms of any such Company Plan or of any fiduciary duties
thereunder or violation of any applicable Law with respect to any such Company
Plan;
(c) (i) No ERISA Event has occurred as to which the Company or
any ERISA Affiliate was required to file a report with the PBGC and (ii) the
Company and its ERISA Affiliates are not required to make, or accrue an
obligation to make, contributions to any Multiemployer Plan and, during the past
five years, neither the Company nor any ERISA Affiliate has been required to
make, or accrued an obligation to make, any contribution to any Multiemployer
Plan; and
(d) True, correct, and complete copies of the applicable
following documents have been delivered to Purchaser: (i) all current Company
Plan documents; (ii) the most recently filed Forms 5500 with applicable
attachments; and (iii) all current summary plan descriptions.
2.14 Real Property. (a) Section 2.14(a) of the Disclosure
Schedule contains a true and correct list of each parcel of real property leased
by the Company or the Subsidiary (as lessee). Neither the Company nor the
Subsidiary owns any real property or leases any real property to others.
(b) Each of the Company and the Subsidiary has a valid and
subsisting leasehold estate in and the right to quiet enjoyment of the real
properties leased by it as lessee under leases referred to in paragraph (a)
above for the full term of the lease thereof. Each such lease is a legal, valid
and binding agreement, enforceable in accordance with its terms, of the Company
or the Subsidiary and, to the Knowledge of Seller, of each other Person that is
a party thereto, and neither the Company nor the Subsidiary is in default (or
with the giving of notice or lapse of time or both, would be in default) in any
material respect thereunder.
(c) Seller has delivered or made available for inspection to
Purchaser prior to the execution of this Agreement true and complete copies of
all leases referred to in paragraph (a) above.
9
(d) To the Knowledge of Seller the improvements on the real
property to be identified in Section 2.14(a) of the Disclosure Schedule are in
all material respects in good operating condition and in a state of good
maintenance and repair, ordinary wear and tear excepted, are adequate and
suitable for the purposes for which they are presently being used and, to the
Knowledge of Seller, there are no condemnation or appropriation proceedings
pending or threatened against any of such real property or the improvements
thereon.
2.15 Tangible Personal Property. The Company or the Subsidiary
is in possession of and has good title to, or has valid leasehold interests in
or valid rights under Contract to use, all tangible personal property which is
used in, and individually or in the aggregate with other such property is
material to, the Business or Condition of the Company. All such tangible
personal property is free and clear of all Liens, other than Permitted Liens and
is in all material respects in good working order and condition, ordinary wear
and tear excepted.
2.16 Intellectual Property Rights. Section 2.16 of the
Disclosure Schedule discloses all Intellectual Property which is used in and
individually or in the aggregate with other such Intellectual Property is
material to the Business or Condition of the Company, each of which the Company
or the Subsidiary either has all right, title and interest in or a valid and
binding license to use (and Section 2.16 of the Disclosure Schedule sets forth
which of such Intellectual Property is held by license). (i) All registrations
with and applications to Governmental or Regulatory Authorities in respect of
Intellectual Property owned by the Company or the Subsidiary and disclosed in
Section 2.16 of the Disclosure Schedule are valid and in full force and effect,
(ii) there are no material restrictions on the direct or indirect transfer of
any license, or any interest therein, held by the Company or the Subsidiary in
respect of Intellectual Property disclosed in Section 2.16 of the Disclosure
Schedule, (iii) neither the Company nor the Subsidiary is in default (or with
the giving of notice or lapse of time or both, would be in default) in any
material respect under any license to use the Intellectual Property disclosed in
Section 2.16 of the Disclosure Schedule and (iv) to the Knowledge of Seller the
Intellectual Property to be disclosed in Section 2.16 of the Disclosure Schedule
is not being infringed by any other Person. Neither Seller, the Company nor the
Subsidiary has received notice that the Company or the Subsidiary is infringing
any Intellectual Property of any other Person, to the Knowledge of Seller no
claim is pending or has been made to such effect that has not been resolved and,
to the Knowledge of Seller, neither the Company nor the Subsidiary is infringing
any Intellectual Property Rights of any other Person the effect of which,
individually or in the aggregate, could reasonably be expected to be materially
adverse to the Business or Condition of the Company.
2.17 Contracts. (a) Section 2.17(a) of the Disclosure Schedule
(with paragraph references corresponding to those set forth below) contains a
true and complete list of each of the following Contracts (true and complete
copies or, if none, reasonably complete and accurate written descriptions of
which, together with all amendments and supplements thereto, have been delivered
or made available for inspection to Purchaser prior to the execution of this
Agreement), to which the Company or the Subsidiary is a party or by which any of
their respective assets and properties is bound:
(i) all Contracts (excluding Company Plans) providing
for a commitment of employment or consultation services for a specified
or unspecified term,
10
the name, position and rate of compensation of each Person party to
such a Contract and the expiration date of each such Contract;
(ii) all Contracts with any Person containing any
provision or covenant prohibiting or materially limiting the ability of
the Company or the Subsidiary to engage in any business activity or
compete with any Person or prohibiting or materially limiting the
ability of any Person to compete with the Company or the Subsidiary;
(iii) all material partnership, joint venture or
stockholders' Contracts with any Person;
(iv) all Contracts relating to Indebtedness of the
Company or the Subsidiary in excess of $25,000 individually (other
than Indebtedness owing to the Company or the Subsidiary);
(v) all Contracts with distributors, dealers,
manufacturer's representatives, sales agencies or franchisees which in
any case (A) involve the payment or potential payment, pursuant to the
terms of any such Contract, by or to the Company or the Subsidiary of
more than $25,000 in any calendar year or (B) involve an exclusive
grant of right to distribute the product and, in the case of clause (A)
or (B) above cannot be terminated on thirty (30) days or less notice
without penalty to the Company or the Subsidiary;
(vi) all Contracts relating to (A) the future
disposition or acquisition of any assets and properties individually or
in the aggregate material to the Business or Condition of the Company,
other than dispositions or acquisitions in the ordinary course of
business, and (B) any Business Combination;
(vii) all Contracts between or among the Company or the
Subsidiary, on the one hand, and Seller, any officer, director or
Affiliate of Seller (other than the Company or the Subsidiary) on the
other hand;
(viii) all collective bargaining Contracts; and
(ix) all other Contracts which (A) involve the payment
or potential payment, pursuant to the terms of any such Contract, by or
to the Company or the Subsidiary of more than $25,000 in any calendar
year and (B) cannot be terminated on thirty (30) days or less notice
without penalty to the Company or the Subsidiary.
(b) Each Contract disclosed in Section 2.17(a) of the
Disclosure Schedule is in full force and effect and constitutes a legal, valid
and binding agreement, enforceable in accordance with its terms, of the Company
or the Subsidiary and, to the Knowledge of Seller, of each other party thereto,
and neither the Company, the Subsidiary nor, to the Knowledge of Seller, any
other party to such Contract is in violation or breach of or default under any
such Contract (or with notice or lapse of time or both, would be in violation or
breach of or default
11
under any such Contract), the effect of which, individually or in the aggregate,
could reasonably be expected to be materially adverse to the Business or
Condition of the Company.
2.18 Licenses. Section 2.18 of the Disclosure Schedule
contains a true and complete list of all Licenses which are used in and
individually or in the aggregate with other such Licenses material to the
Business or Condition of the Company. Prior to the execution of this Agreement,
Seller has delivered or made available for inspection to Purchaser true and
complete copies of all such Licenses. Each such License is in full force and
effect.
2.19 Insurance. Section 2.19 of the Disclosure Schedule
contains a true and complete list of all material insurance policies currently
in effect that insure the business, operations or employees of the Company or
the Subsidiary or affect or relate to the ownership, use or operation of any of
the assets and properties of the Company or the Subsidiary and that (i) have
been issued to the Company or the Subsidiary or (ii) have been issued to any
Person (other than the Company or the Subsidiary) for the benefit of the Company
or the Subsidiary. The insurance coverage provided by the policies described in
clause (i) above will not terminate or lapse by reason of the transactions
contemplated by this Agreement. Each policy referred to in clause (i) above is,
to the Knowledge of Seller, valid and binding and in full force and effect, and
no premiums due thereunder have not been paid and neither the Company nor the
Subsidiary has received any notice of cancellation or termination in respect of
any such policy or is in default thereunder in any material respect.
2.20 Affiliate Transactions. As of the date of this Agreement,
(i) there is no Indebtedness between the Company or the Subsidiary, on the one
hand, and Seller or any officer, director, employee, stockholder or Affiliate of
Seller (other than the Company or the Subsidiary), on the other, (ii) neither
Seller nor any such officer, director, employee, stockholder or Affiliate
provides or causes to be provided any assets, services, facilities or goods to
the Company or the Subsidiary which are individually or in the aggregate
material to the Business or Condition of the Company and (iii) neither the
Company nor the Subsidiary is a party to any contract for any assets, services,
facilities or goods with Seller or any such officer, director, employee,
stockholder or Affiliate of Seller.
2.21 Labor Relations. As of the date of this Agreement, the
Company and the Subsidiary have 18 employees (it being understood that such
number excludes Africk and ▇▇▇ ▇▇▇▇▇▇ because they are consultants). No employee
of the Company or the Subsidiary is presently a member of a collective
bargaining unit and, to the Knowledge of Seller, there are no threatened or
contemplated attempts to organize for collective bargaining purposes any of the
employees of the Company or the Subsidiary. Since January 1, 1994, there has
been no work stoppage, strike or other concerted action by employees of the
Company or the Subsidiary which materially adversely affected the Business or
Condition of the Company.
2.22 Brokers. Except for ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. ("▇▇▇▇▇ ▇▇▇▇▇▇"),
whose fees, commissions and expenses are the sole responsibility of Seller, all
negotiations relative to this Agreement and the transactions contemplated hereby
have been carried out by Seller directly with Purchaser without the intervention
of any Person on behalf of Seller in such manner as to give
12
rise to any valid claim by any Person against Purchaser, the Company or the
Subsidiary for a finder's fee, brokerage commission or similar payment.
2.23 Bank Accounts. Section 2.23 of the Disclosure Schedule
lists (i) all bank, trust, checking, savings, custody and other accounts
(including without limitation any trading or other accounts maintained with any
brokerage, investment banking or commodity trading firms) and lock boxes or safe
deposit boxes of the Company or the Subsidiary in which there are or may be
deposited monies or other assets of the Company or the Subsidiary, (ii) an
indication of the purposes of each of such accounts and lock boxes or safe
deposit boxes, (iii) any and all persons authorized to make withdrawals or other
transfers from such accounts or lock boxes or safe deposit boxes, (iv) each bank
at which the Company has borrowing authority and (v) a true, correct and
complete list of any and all persons authorized to exercise such borrowing
authority.
2.24 Customers. No customer of the Company or the
Subsidiary is an Affiliate of the Company, the Subsidiary or Seller.
2.25 Disclosure. No representation or warranty of Seller
contained herein contains any untrue statement of material fact or omits to
state a material fact necessary in order to make the statements contained herein
not misleading.
2.26 No Other Representations. Notwithstanding anything to the
contrary contained in this Agreement, it is the explicit intent of each party
hereto that Seller is making no representation or warranty whatsoever, express
or implied, except those representations and warranties contained in this
Article II and in any certificate delivered pursuant to Section 6.03.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as follows:
3.01 Corporate Existence. Purchaser is a limited liability
company duly formed, validly existing and in good standing under the Laws of the
State of Delaware. Purchaser has full limited liability company power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby.
3.02 Authority. The execution and delivery by Purchaser of
this Agreement, and the performance by Purchaser of its obligations hereunder,
have been duly and validly authorized by the managers and members of Purchaser,
no other limited liability company action on the part of Purchaser being
necessary. This Agreement has been duly and validly executed and delivered by
Purchaser and constitutes a legal, valid and binding obligation of Purchaser
enforceable against Purchaser in accordance with its terms.
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3.03 No Conflicts. The execution and delivery by Purchaser
of this Agreement do not, the performance by Purchaser of its obligations under
this Agreement and the consummation of the transactions contemplated hereby will
not:
(a) conflict with or result in a violation or breach of any
of the certificate of formation, by-laws, operating agreement, or other
comparable charter document of Purchaser;
(b) conflict with or result in a violation or breach of any
Law or Order applicable to Purchaser or any of its assets and properties (other
than such conflicts, violations or breaches which could not in the aggregate
reasonably be expected to materially adversely affect the validity or
enforceability of this Agreement); or
(c) except as disclosed in Schedule 3.03 hereto, (i) conflict
with or result in a violation or breach of, (ii) constitute (with or without
notice or lapse of time or both) a default under, (iii) require Purchaser to
obtain any consent, approval or action of, make any filing with or give any
notice to any Person as a result or under the terms of, or (iv) result in the
creation or imposition of any Lien upon Purchaser or any of its assets or
properties under, any Contract or License to which Purchaser is a party or by
which any of its assets and properties is bound and which, individually or in
the aggregate with other such Contracts and Licenses, is material to the
validity or enforceability of this Agreement.
3.04 Governmental Approvals and Filings. Except as required
pursuant to the HSR Act and except for a post-Closing notice to be given to the
Bureau of Alcohol, Tobacco and Firearms by Purchaser, no consent, approval or
action of, filing with or notice to any Governmental or Regulatory Authority on
the part of Purchaser is required in connection with the execution, delivery and
performance of this Agreement or the consummation of the transactions
contemplated hereby, except where the failure to obtain any such consent,
approval or action, to make any such filing or to give any such notice could not
reasonably be expected to materially adversely affect the validity or
enforceability of this Agreement.
3.05 Legal Proceedings. There are no Actions or Proceedings
pending or, to the knowledge of Purchaser, threatened against Purchaser or any
of its assets and properties which could reasonably be expected to result in the
issuance of an Order restraining, enjoining or otherwise prohibiting or making
illegal the consummation of any of the transactions contemplated by this
Agreement.
3.06 Purchase for Investment. The Shares will be acquired by
Purchaser for its own account for the purpose of investment. Purchaser will
refrain from transferring or otherwise disposing of any of the Shares, or any
interest therein, in such manner as to cause Seller to be in violation of the
registration requirements of the Securities Act of 1933, as amended, or
applicable state securities or blue sky laws.
3.07 Financing. Attached hereto as Exhibit F is a true,
correct and complete copy of the Commitment Letter. The Commitment Letter has
been accepted by Purchaser and all commitment fees payable on or prior to the
date hereof in respect thereof have been paid.
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3.08 Brokers. Except for UBS Securities LLC ("UBS"), whose
fees, commissions and expenses are the sole responsibility of Purchaser, all
negotiations relative to this Agreement and the transactions contemplated hereby
have been carried out by Purchaser directly with Seller without the intervention
of any Person on behalf of Purchaser in such manner as to give rise to any valid
claim by any Person against Seller, the Company or the Subsidiary for a finder's
fee, brokerage commission or similar payment.
3.09 Disclosure. No representation or warranty of Purchaser
contained herein contains any untrue statement of material fact or omits to
state a material fact necessary in order to make the statements contained herein
not misleading.
ARTICLE IV.
COVENANTS OF SELLER
Seller covenants and agrees with Purchaser that, at all times
from and after the date hereof until the Closing Seller will comply with all
covenants and provisions of this Article IV, except to the extent Purchaser may
otherwise consent in writing.
4.01 Regulatory and Other Approvals. Seller will, and will
cause the Company and the Subsidiary to, (a) take all commercially reasonable
steps necessary or desirable, and proceed diligently and in good faith and use
all commercially reasonable efforts, as promptly as practicable to obtain all
consents, approvals or actions of, to make all filings with and to give all
notices to Governmental or Regulatory Authorities or any other Person required
of Seller, the Company or the Subsidiary to consummate the transactions
contemplated hereby, including without limitation those described in Sections
2.06 and 2.07 of the Disclosure Schedule, (b) provide such other information and
communications to such Governmental or Regulatory Authorities or other Persons
as such Governmental or Regulatory Authorities or other Persons may reasonably
request and (c) provide reasonable cooperation to Purchaser in obtaining all
consents, approvals or actions of, making all filings with and giving all
notices to Governmental or Regulatory Authorities or other Persons required of
Purchaser to consummate the transactions contemplated hereby. Seller will
provide prompt notification to Purchaser when any such consent, approval,
action, filing or notice referred to in clause (a) above is obtained, taken,
made or given, as applicable, and will advise Purchaser of any communications
(and, unless precluded by Law, provide copies of any such communications that
are in writing) with any Governmental or Regulatory Authority or other Person
regarding any of the transactions contemplated by this Agreement.
4.02 HSR Filings. Seller will (a) take promptly all actions
necessary to make the filings required of Seller or its Affiliates under the HSR
Act, (b) comply at the earliest practicable date with any request for additional
information received by Seller or its Affiliates from the Federal Trade
Commission or the Antitrust Division of the Department of Justice pursuant to
the HSR Act and (c) cooperate with Purchaser in connection with Purchaser's
filing under the HSR Act and in connection with resolving any investigation or
other inquiry concerning the transactions contemplated by this Agreement
commenced by either the Federal
15
Trade Commission or the Antitrust Division of the Department of Justice or state
attorneys general.
4.03 Investigation by Purchaser. Until the Closing, Seller
will, and will cause the Company and the Subsidiary to, (a) provide Purchaser
and its officers, employees, counsel, accountants, financial advisors,
consultants and other representatives (together, "Representatives") with access,
upon reasonable prior notice and during normal business hours, to all officers,
employees, agents and accountants of the Company and the Subsidiary and their
assets and properties and books and records, but only to the extent that such
access does not unreasonably interfere with the business and operations of the
Company and the Subsidiary, and (b) furnish Purchaser and such other Persons
with all such information and data (including without limitation copies of
Contracts, Company Plans, monthly financial statements and other books and
records) concerning the business and operations of the Company and the
Subsidiary as Purchaser or any of such other Persons reasonably may request in
connection with such investigation. All information and data provided to
Purchaser and its Representatives pursuant to this Section 4.03 will be subject
to the provisions of Section 12.06.
4.04 No Solicitations. Prior to the termination of this
Agreement, subject to the duties imposed by applicable Law, Seller will not
take, and it will cause the Company, the Subsidiary, the shareholders of Seller
and any parent company of Seller and their respective representatives, not to
take, directly or indirectly, any action to initiate, assist, solicit, negotiate
or accept any offer from any Person to engage in any Business Combination. For
purposes hereof, "Business Combination" means any merger, consolidation or
combination to which the Company or the Subsidiary is a party, any sale,
dividend, split or other disposition of capital stock or other equity interest
of the Company or the Subsidiary or any sale, dividend or other disposition of
all or substantially all of the assets and properties of the Company or the
Subsidiary.
4.05 Conduct of Business. Seller will cause the Company and
the Subsidiary to conduct business only in the ordinary course. Without limiting
the generality of the foregoing, Seller will cause the Company and the
Subsidiary to use commercially reasonable efforts, to the extent the officers of
the Company believe such action to be in the best interests of the Company and
the Subsidiary, to (a) preserve intact the present business organization and
reputation of the Company and the Subsidiary, (b) keep available (subject to
dismissals and retirements in the ordinary course of business) the services of
the key officers and employees of the Company and the Subsidiary in all material
respects, (c) maintain the assets and properties of the Company and the
Subsidiary in good working order and condition, ordinary wear and tear excepted,
and (d) maintain the good will of key customers and suppliers of the Company or
the Subsidiary. In addition, Seller will cause the Company and the Subsidiary
(i) to conduct product promotions during the remainder of 1997 (the "1997
Promotions") only in accordance with the description thereof in Exhibit B
hereto, (ii) to pay their trade payables and maintain their inventory in the
ordinary course of business consistent with past practice (other than
inconsistencies with past practice which result from the fact that the 1997
Promotions are not the same as previous promotions) and (iii) not to enter into
any agreement with Republic Tobacco, L.P. with respect to any of the matters
referred to in Section 2.16 of the Disclosure Schedule without the consent of
Purchaser.
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4.06 Noncompetition. (a) Seller will, for a period of five
(5) years from the Closing Date, refrain from, directly or indirectly through
its Affiliates:
(i) disclosing (unless required by Law or Order
or other judicial or administrative process) or using any confidential
or secret information relating to the Company or the Subsidiary; or
(ii) engaging in (other than through the ownership of
five percent (5%) or less of any class of securities registered under
the Securities Exchange Act of 1934, as amended), the Restricted
Business in the Restricted Region.
(b) The parties hereto recognize that the Laws and public
policies of the various jurisdictions within the Restricted Region may differ as
to the validity and enforceability of covenants similar to those set forth in
this Section. It is the intention of the parties that the provisions of this
Section be enforced to the fullest extent permissible under the Laws and
policies of each jurisdiction in which enforcement may be sought, and that the
unenforceability (or the modification to conform to such Laws or policies) of
any provisions of this Section shall not render unenforceable, or impair, the
remainder of the provisions of this Section. Accordingly, if any provision of
this Section shall be determined to be invalid or unenforceable, such invalidity
or unenforceability shall be deemed to apply only with respect to the operation
of such provision in the particular jurisdiction in which such determination is
made and not with respect to any other provision or jurisdiction.
(c) The parties hereto acknowledge and agree that any remedy
at Law for any breach of the provisions of this Section would be inadequate, and
Seller hereby consents to the granting by any court of an injunction or other
equitable relief, without the necessity of actual monetary loss being proved, in
order that the breach or threatened breach of such provisions may be effectively
restrained.
4.07 Fulfillment of Conditions. Seller will take all
commercially reasonable steps necessary or desirable and proceed diligently and
in good faith to satisfy each condition to the obligations of Purchaser
contained in this Agreement (other than Section 6.12). Notwithstanding anything
to the contrary contained in this Agreement, in no event will Seller, the
Company or the Subsidiary be required to request, and Purchaser will not
request, that Bollore consent to any changes to the Bollore Contracts other than
as provided in the Bollore Consent.
ARTICLE V.
COVENANTS OF PURCHASER
Purchaser covenants and agrees with Seller that, at all times
from and after the date hereof until the Closing, Purchaser will comply with all
covenants and provisions of this Article V, except to the extent Seller may
otherwise consent in writing.
17
5.01 Regulatory and Other Approvals. Purchaser will (a) take
all commercially reasonable steps necessary or desirable, and proceed diligently
and in good faith and use all commercially reasonable efforts, as promptly as
practicable to obtain all consents, approvals or actions of, to make all filings
with and to give all notices to Governmental or Regulatory Authorities or any
other Person required of Purchaser to consummate the transactions contemplated
hereby, including without limitation those described in Schedule 3.03 hereto,
(b) provide such other information and communications to such Governmental or
Regulatory Authorities or other Persons as such Governmental or Regulatory
Authorities or other Persons may reasonably request and (c) provide reasonable
cooperation to Seller, the Company and the Subsidiary in obtaining all consents,
approvals or actions of, making all filings with and giving all notices to
Governmental or Regulatory Authorities or other Persons required of Seller, the
Company or the Subsidiary to consummate the transactions contemplated hereby.
Purchaser will provide prompt notification to Seller when any such consent,
approval, action, filing or notice referred to in clause (a) above is obtained,
taken, made or given, as applicable, and will advise Seller of any
communications (and, unless precluded by Law, provide copies of any such
communications that are in writing) with any Governmental or Regulatory
Authority or other Person regarding any of the transactions contemplated by this
Agreement.
5.02 HSR Filings. Purchaser will (a) take promptly all actions
necessary to make the filings required of Purchaser or its Affiliates under the
HSR Act, (b) comply at the earliest practicable date with any requests for
additional information received by Purchaser or its Affiliates from the Federal
Trade Commission or the Antitrust Division of the Department of Justice pursuant
to the HSR Act and (c) cooperate with Seller in connection with Seller's filing
under the HSR Act and in connection with resolving any investigation or other
inquiry concerning the transactions contemplated by the Agreement commenced by
either the Federal Trade Commission or the Antitrust Division of the Department
of Justice or state attorneys general.
5.03 Fulfillment of Conditions. Purchaser will take all
commercially reasonable steps necessary or desirable and proceed diligently and
in good faith to satisfy each condition to the obligations of Seller contained
in this Agreement.
5.04 Maximizing Economic Benefits. Purchaser agrees to (i)
cooperate with Seller with a view toward restructuring the transactions
contemplated by the Royalty Agreement in the form of Exhibit E hereto (including
contributing the "Marks", as defined therein, to a jointly owned entity such as
a partnership) so as to allow the parties thereto to more fully realize the
economic benefits of such transactions and (ii) negotiate in good faith with
Seller any revision of such Royalty Agreement that Purchaser and Seller believe
will maximize such benefits; provided, however, that Purchaser shall not have
any obligation to take any action pursuant to this Section 5.04 that would
result in Purchaser incurring any economic detriment as a result thereof and,
provided further, that neither the restructuring of the transactions
contemplated by such Royalty Agreement nor the revision of such Royalty
Agreement shall constitute a condition precedent to the Closing.
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ARTICLE VI.
CONDITIONS TO OBLIGATIONS OF PURCHASER
The obligations of Purchaser hereunder are subject to the
fulfillment, at or before the Closing, of each of the following conditions (all
or any of which may be waived in whole or in part by Purchaser in its sole
discretion):
6.01 Representations and Warranties. The representations and
warranties made by Seller in this Agreement, shall be true and correct in all
material respects on and as of the Closing Date as though made on and as of the
Closing Date or, in the case of representations and warranties made as of a
specified date earlier than the Closing Date, on and as of such earlier date.
6.02 Performance. Seller shall have performed and complied
with, in all material respects, the agreements, covenants and obligations
required by this Agreement to be so performed or complied with by Seller at or
before the Closing.
6.03 Officers' Certificates. Seller shall have delivered to
Purchaser a certificate, dated the Closing Date and executed by the Chairman of
the Board, the President or any Vice President of Seller to the effect of the
matters set forth in section 6.01 and 6.02.
6.04 Orders and Laws. There shall not be in effect on the
Closing Date any Order or Law restraining, enjoining or otherwise prohibiting or
making illegal the consummation of any of the transactions contemplated by this
Agreement.
6.05 Regulatory Consents and Approvals. All consents,
approvals and actions of, filings with and notices to any Governmental or
Regulatory Authority necessary to permit Purchaser and Seller to perform their
obligations under this Agreement and to consummate the transactions contemplated
hereby shall have been duly obtained, made or given and shall be in full force
and effect, and all terminations or expirations of waiting periods imposed by
any Governmental or Regulatory Authority necessary for the consummation of the
transactions contemplated by this Agreement, including the HSR Act, shall have
occurred.
6.06 Third Party Consents. The consents (or in lieu thereof
waivers) listed in Schedule 3.03 hereto or in Sections 2.06 and 2.07 of the
Disclosure Schedule shall have been obtained and shall be in full force and
effect.
6.07 Opinion of Counsel. Purchaser shall have received the
opinion of counsel to Seller, dated the Closing Date, in form and substance
customary for transactions of the type contemplated by this Agreement and
reasonably satisfactory to Purchaser.
6.08 Repayment of Certain Indebtedness. Prior to or at the
Closing, the holders of the Subsidiary's Senior Subordinated Notes due April 20,
2001 shall have waived the requirement that they receive notice of prepayment of
such Notes.
19
6.09 Corporate Authorization. Purchaser shall have received
from Seller a copy of the resolutions of the board of directors and
shareholders, of Seller certified as of the Closing Date by the secretary or
assistant secretary thereof, duly authorizing the execution, delivery and
performance by Seller of this Agreement and the transactions contemplated
hereby, together with an incumbency certificate as to the persons authorized to
execute and deliver this Agreement and other closing documents on its behalf.
6.10 Good Standing. Seller shall have delivered to Purchaser
certificates issued by appropriate governmental authorities evidencing the good
standing of the Company, the Subsidiary and Seller as of a date or dates not
more than ten (10) days prior to the Closing Date as corporations of the
respective jurisdictions in which they were organized and are qualified to do
business.
6.11 Financing. Purchaser shall have obtained financing for
the purchase of the Shares as herein provided on the terms and conditions
specified in the Commitment Letter and from a private placement of debt
securities having substantially the terms set forth in Schedule 6.12 hereto.
6.12 Contingent Obligations. The Company and/or the
Subsidiary, as applicable, shall have entered into agreements, each in a form
reasonably satisfactory to Purchaser, with each holder of a Contingent
Obligation pursuant to which such holder shall have agreed to cancel its
Contingent Obligation at the Closing in consideration of a fixed sum cash
payment by the Subsidiary at the Closing in an amount determined and negotiated
with such holder by Seller in its sole discretion (such payments being referred
to herein collectively as the "Contingent Obligation Payments").
6.13 Non-Compete Agreements. Each of Drake, ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇, Inc. and Africk shall have executed and delivered to Purchaser
Non-Compete Agreements in the forms of Exhibits C and D attached hereto,
respectively.
6.14 Member Consents. Each of the members of Purchaser shall
have consented to (i) the conversion of Purchaser into a Delaware corporation by
merger or otherwise and (ii) the inclusion in the Certificate of Incorporation
of such Delaware corporation of provisions with respect to voting and conversion
as those currently contained in the Certificate of Incorporation provisions
attached as Exhibit C to Amendment No. 1 dated as of April 9, 1997 to the
Bollore Consent.
6.15 Certain Agreements. (i) Each of the three Employment
Agreements dated as of January 17, 1997 between the Subsidiary and each of ▇▇▇▇
▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇ shall have been terminated,
(ii) the Company shall have assigned all of its rights and obligations under
that certain Agreement of Sublease (the "New York Sublease") dated February 14,
1997 between ▇▇▇▇▇▇, Wood & ▇▇▇▇▇▇▇▇ Incorporated and the Company to an
Affiliate of the Company other than the Subsidiary, as contemplated by Section 7
thereof, (iii) the Subsidiary and Drake, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Inc. shall have
terminated all arrangements pursuant to which the Subsidiary is obligated to
purchase Learjet airtime from Drake, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Inc. and (iv) that
certain Financial Advisory Agreement dated as of
20
March 31, 1993 among the Company, the Subsidiary and Drake, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇,
Inc. shall have been terminated.
6.16 USTC Amendment and Bollore Consent. Each of the USTC
Amendment and Bollore Consent shall be in full force and effect and the
Subsidiary and Bollore shall have entered into the Buyer Trademark Agreement (as
such term is defined in the Bollore consent).
ARTICLE VII.
CONDITIONS TO OBLIGATIONS OF SELLER
The obligations of Seller hereunder are subject to the
fulfillment, at or before the Closing, of each of the following conditions (all
or any of which may be waived in whole or in part by Seller in its sole
discretion):
7.01 Representations and Warranties. The representations and
warranties made by Purchaser in this Agreement shall be true and correct in all
material respects on and as of the Closing Date as though made on and as of the
Closing Date.
7.02 Performance. Purchaser shall have performed and complied
with, in all material respects, the agreements, covenants and obligations
required by this Agreement to be so performed or complied with by Purchaser at
or before the Closing.
7.03 Officers' Certificates. Purchaser shall have delivered to
Seller a certificate, dated the Closing Date and executed by the Chairman of the
Board, the President or any Vice President of Purchaser to the effect of the
matters set forth in Section 7.01 and 7.02.
7.04 Orders and Laws. There shall not be in effect on the
Closing Date any Order or Law restraining, enjoining or otherwise prohibiting or
making illegal the consummation of any of the transactions contemplated by this
Agreement.
7.05 Regulatory Consents and Approvals. All consents,
approvals and actions of, filings with and notices to any Governmental or
Regulatory Authority necessary to permit Seller and Purchaser to perform their
obligations under this Agreement and to consummate the transactions contemplated
hereby shall have been duly obtained, made or given and shall be in full force
and effect, and all terminations or expirations of waiting periods imposed by
any Governmental or Regulatory Authority necessary for the consummation of the
transactions contemplated by this Agreement, including the HSR Act, shall have
occurred.
7.06 Third Party Consents. The consents (or in lieu thereof
waivers) listed in Schedule 3.03 and Sections 2.06 and 2.07 of the Disclosure
Schedule shall have been obtained and shall be in full force and effect.
7.07 Opinion of Counsel. Seller shall have received the
opinion of counsel to Purchaser, dated the Closing Date and customary for
transactions of the type contemplated by this Agreement and reasonably
satisfactory to Seller.
21
7.08 Corporate Authorization. Seller shall have received from
Purchaser a copy of the resolutions of the managers and members of Purchaser,
certified as of the Closing Date by the secretary or assistant secretary
thereof, duly authorizing the execution, delivery and performance by Purchaser
of this Agreement and the transactions contemplated hereby, together with an
incumbency certificate as to the persons authorized to execute and deliver this
Agreement and other closing documents on its behalf.
7.09 Contingent Agreement. The Purchaser and the
Subsidiary shall have executed and delivered to Seller a Royalty Agreement in
the form of Exhibit E attached hereto.
7.10 USTC Amendment and Bollore Consent. Each of the USTC
Amendment and Bollore Consent shall be in full force and effect and the
Subsidiary and Bollore shall have entered into the Buyer Trademark Agreement (as
such term is defined in the Bollore Consent).
ARTICLE VIII.
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
8.01 Survival of Representations and Warranties. The
representations and warranties of Seller and Purchaser, and the covenants and
agreements of Seller and Purchaser to be performed at or before the Closing,
contained in this Agreement and in the certificates delivered by Seller pursuant
to Section 6.03 and by Purchaser pursuant to Section 7.03 will survive the
Closing (a) until the date thirty (30) months after the Closing Date with
respect to the representations and warranties contained in Section 2.10 and (b)
until the date twelve (12) months after the Closing Date in the case of each
other representation and warranty and each of such covenants and agreements;
except that any representation, warranty, covenant or agreement that would
otherwise terminate in accordance with clause (a) or clause (b) above will
continue to survive if a Claim Notice shall have been timely given in good faith
based on facts reasonably expected to establish a valid claim under Article IX
on or prior to such termination date, until the related claim for
indemnification has been satisfied or otherwise resolved as provided in Article
IX.
8.02 Net Worth of Seller. Seller covenants with Purchaser
that from and after the Closing and until the date thirty (30) months after the
Closing Date, Seller will maintain on hand cash, cash equivalents and/or
marketable securities having a market value at all times in an amount which
exceeds Seller's liabilities (such liabilities being calculated in accordance
with GAAP) by not less than the Applicable Cap Amount. For purposes of this
Agreement, the term "Applicable Cap Amount" shall mean: (i) with respect to the
period from the Closing Date to the date which is 360 days after the Closing
Date, an amount equal to Twelve Million Five Hundred Thousand Dollars
($12,500,000), (ii) with respect to the period from the date which is 360 days
after the Closing Date until the date which is thirty (30) months after the
Closing Date, an amount equal to Five Million Dollars ($5,000,000); provided,
however, that if a Claim Notice shall have been given in good faith based on
facts reasonably expected to establish a valid claim under Article IX on or
prior to the date on which the Applicable Cap Amount pursuant to clause (i) or
clause (ii) above would expire and such claim has not been satisfied or
otherwise resolved
22
as provided in Article IX on or before such expiration date but which claim
would otherwise be covered by such Applicable Cap Amount, then such Applicable
Cap Amount shall not so expire with respect to such covered claim until such
claim has been satisfied or otherwise resolved as provided in Article IX.
ARTICLE IX.
INDEMNIFICATION
9.01 Indemnification.
(a) Subject to the other Sections of this Article IX, (i)
Seller shall indemnify Purchaser, its Affiliates and their respective officers,
directors, employees and agents in respect of, and hold each of them harmless
from and against, any and all Losses suffered, incurred or sustained by any of
them or to which any of them becomes subject, resulting from, arising out of or
relating to any misrepresentation, breach of warranty or breach of any covenant
or agreement on the part of Seller contained in this Agreement or in the
certificate delivered by Seller pursuant to Section 6.03 and (ii) Seller shall
(x) reimburse the Company for sixty percent (60%) of the aggregate additional
federal, state or local income taxes which the Company or the Subsidiary is
required to pay after the Closing Date with respect to the proposed adjustments
(the "Audit Adjustments") to the Company's Federal income Tax Returns for
calendar years 1993, 1994 and 1995 described in Section 2.10 of Disclosure
Schedule and (y) indemnify the Company for one hundred percent (100%) of any
Losses (including but not limited to interest and penalties which are payable to
a federal, state or local taxing authority in respect of the additional income
taxes referred to subclause (x) above) which arise after the Closing out of the
Audit Adjustments, excluding, however, the additional income taxes referred to
in subclause (x) above.
(b) Subject to the other Sections of this Article IX,
Purchaser agrees to indemnify Seller, its Affiliates and their respective
officers, directors, employees and agents in respect of, and hold each of them
harmless from and against, any and all Losses suffered, incurred or sustained by
any of them or to which any of them becomes subject, resulting from, arising out
of or relating to any misrepresentation, breach of warranty or breach of any
covenant or agreement on the part of Purchaser contained in this Agreement or in
the certificate delivered by Purchaser pursuant to Section 7.03.
(c) Notwithstanding anything to the contrary contained in this
Agreement, no amounts of indemnity shall be payable as a result of any claim
arising under Section 9.01(a):
(i) in the case of a claim pursuant to clause (i) of
Section 9.01(a), unless, until and then only to the extent that the
Indemnified Parties thereunder have suffered, incurred, sustained or
become subject to Losses referred to in such clause (i) in excess of
One Million Five Hundred Thousand Dollars ($1,500,000) in the
aggregate, (the "Basket Amount"), and at such time as such Losses
exceed the Basket Amount the
23
Indemnified Parties shall be entitled to the full amount of any and
all such Losses (including the Basket Amount).
(ii) with respect to any Loss as to which the
Indemnified Parties are entitled to receive insurance proceeds in
respect thereof; or
(iii) with respect to any amount to the extent that an
accrual is made in respect thereof for purposes of calculating Net
Assets as of the Closing Date pursuant to Section 1.02(c).
In addition, notwithstanding anything to the contrary
contained in this Agreement, in no event shall the aggregate liability of Seller
pursuant to clause (i) of Section 9.01(a) exceed the Applicable Cap Amount. For
the avoidance of doubt in this regard, it is understood and agreed that the
Applicable Cap Amount is intended to be a declining cap on Seller's aggregate
liability pursuant to clause (i) of Section 9.01(a) so that, (i) in no event
shall Seller's aggregate liability pursuant to clause (i) of Section 9.01(a)
exceed Twelve Million Five Hundred Thousand Dollars ($12,500,000) with respect
to all claims for indemnification thereunder (including those claims described
in clause (ii) below), (ii) Seller's aggregate liability with respect to claims
for indemnification pursuant to clause (i) of Section 9.01(a) which are made
after the date which is 360 days after the Closing Date but prior to the date
thirty (30) months after the Closing Date shall be Five Million Dollars
($5,000,000) and, at that time, those claims may only be made with respect to a
breach by Seller of its representations and warranties contained in Section
2.10, as more fully provided in Section 8.01 and (iii) Seller shall not have any
liability with respect to claims for indemnification pursuant to clause (i) of
Section 9.01(a) which are made after the date thirty (30) months after the
Closing Date.
9.02 Method of Asserting Claims. The party making a claim
under this Article IX is referred to as the "Indemnified Party" and the party
against whom such claims are asserted under this Article IX is referred to as
the "Indemnifying Party". All claims by any Indemnified Party under this Article
IX shall be asserted and resolved as follows:
(a) In the event that any claim or demand for which an
Indemnifying Party would be liable to an Indemnified Party hereunder is asserted
against or sought to be collected from such Indemnified Party by a third party,
said Indemnified Party shall with reasonable promptness notify in writing the
Indemnifying Party of such claim or demand, specifying the basis for such claim
or demand, and the amount or the estimated amount thereof to the extent then
determinable (which estimate shall not be conclusive of the final amount of such
claim and demand; the "Claim Notice"); provided, however, that any failure to
give such Claim Notice will not be deemed a waiver of any rights of the
Indemnified Party except to the extent the rights of the Indemnifying Party are
actually prejudiced by such failure. The Indemnifying Party shall have the right
to control the defense of such claim or demand and shall retain counsel (who
shall be reasonably acceptable to the Indemnified Party) to represent the
Indemnified Party and shall pay the reasonable fees and disbursements of such
counsel with regard thereto; provided, however, that any Indemnified Party is
hereby authorized prior to the date on which it receives written notice from the
Indemnifying Party designating such counsel, to retain counsel, whose fees and
expenses shall be at the expense of the Indemnifying Party, to file any motion,
answer
24
or other pleading and take such other action which it reasonably shall deem
necessary to protect its interests or those of the Indemnifying Party until the
date on which the Indemnified Party receives such notice from the Indemnifying
Party. After the Indemnifying Party shall retain such counsel, the 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. The
Indemnifying Party shall not, in connection with any proceedings or related
proceedings in the same jurisdiction, be liable for the fees and expenses of
more than one such firm for the Indemnified Party (except to the extent the
Indemnified Party retained counsel to protect its (or the Indemnifying Party's)
rights prior to the selection of counsel by the Indemnifying Party). If
requested by the Indemnifying Party, the Indemnified Party agrees to cooperate
with the Indemnifying Party and its counsel in contesting any claim or demand
which the Indemnifying Party defends. A claim or demand may not be settled by
the Indemnifying Party without the prior written consent of the Indemnified
Party (which consent will not be unreasonably withheld) unless, as part of such
settlement, the Indemnified Party shall receive a full and unconditional release
reasonably satisfactory to the Indemnified Party. If the Indemnifying Party
elects to defend a claim or demand, the Indemnified Party shall not pay or
settle such claim or demand without the consent of the Indemnifying Party.
(b) In the event any Indemnified Party shall have a claim
against any Indemnifying Party hereunder which does not involve a claim or
demand being asserted against or sought to be collected from it by a third
party, the Indemnified Party shall send a Claim Notice with respect to such
claim to the Indemnifying Party.
(c) After delivery of a Claim Notice, so long as any right to
indemnification exists pursuant to this Article IX, the affected parties each
agree to retain all books and records related to such Claim Notice. In each
instance, the Indemnified Party shall have the right to be kept fully informed
by the Indemnifying Party and its legal counsel with respect to any legal
proceedings. Any information or documents made available to any party hereunder
and designated as confidential by the party providing such information or
documents and which is not otherwise generally available to the public and not
already within the knowledge of the party to whom the information is provided
(unless otherwise covered by the confidentiality provisions of any other
agreement among the parties hereto, or any of them), and except as may be
required by applicable law, shall not be disclosed to any third Person (except
for the representatives of the party being provided with the information, in
which event the party being provided with the information shall request its
representatives not to disclose any such information which it otherwise required
hereunder to be kept confidential).
(d) Anything contained herein to the contrary notwithstanding,
Seller shall have the sole right to control the defense and settlement of the
Audit Adjustments and any appeal thereof; it being understood and agreed,
however, that (i) the Company shall be responsible for the payment of forty per
cent (40%) of the additional federal, state or local income taxes referred to in
subclause (x) of clause (ii) of Section 9.01(a) and (ii) unless the prior
written consent of Purchaser shall be obtained (which consent shall not be
unreasonably withheld), such settlement must include a full and unconditional
release of the Company and the Subsidiary reasonably satisfactory to Purchaser.
Seller shall retain an accounting firm and/or counsel (who shall be reasonably
acceptable to Purchaser; it being agreed that Coopers & ▇▇▇▇▇▇▇ L.L.P. and
▇▇▇▇▇▇
25
& ▇▇▇▇▇ shall be acceptable to Purchaser) to represent the Company and
the Subsidiary in connection with the Audit Adjustments and shall pay the
reasonable fees and disbursements of such accountants and counsel. Purchaser
shall have the right to retain its own accountants and counsel with respect to
the Audit Adjustments but the fees and disbursements of such accountants and
counsel shall be at the expense of Purchaser. Purchaser shall, and shall cause
the Company and the Subsidiary and its and their accountants and counsel to
cooperate with Seller and its accountants and counsel in the defense of the
Audit Adjustments. Purchaser shall not, and shall cause the Company and the
Subsidiary not to, pay or settle the Audit Adjustments without the prior written
consent of Seller. Nothing contained in this Section 9.02(d) is intended to
modify Section 9.02(c), which shall also apply to the matters set forth in this
Section 9.02(d).
9.03 Exclusivity. After the Closing, to the extent permitted
by Law and except as provided in paragraph (c) of Section 4.06, the indemnities
set forth in this Article IX shall be the exclusive remedies of Purchaser and
Seller, their Affiliates and their respective officers, directors, employees and
agents for any misrepresentation, breach of warranty or breach of any covenant
or agreement contained in this Agreement, and the parties shall not be entitled
to a rescission of this Agreement or to any further indemnification rights or
claims of any nature whatsoever in respect thereof, all of which the parties
hereto hereby waive.
ARTICLE X.
TERMINATION
10.01 Termination. This Agreement may be terminated, and
the transactions contemplated hereby may be abandoned:
(a) at any time before the Closing, by mutual written
agreement of Seller and Purchaser; or
(b) at any time after the Cut-Off Date, by Seller or Purchaser
upon notification of the non-terminating party by the terminating party if the
Closing shall not have occurred on or before such date and such failure to
consummate is not caused by a breach of this Agreement by the terminating party;
or
(c) at any time before the Closing, by Seller or Purchaser
upon notification of the non-terminating party if either of the Bollore Consent
or the USTC Amendment shall have terminated.
10.02 Effect of Termination. If this Agreement is validly
terminated pursuant to Section 10.01, this Agreement will forthwith become null
and void, and there will be no liability or obligation on the part of Seller or
Purchaser (or any of their Affiliates or their respective officers, directors,
employees or agents), except as provided in the next succeeding sentence and
except that the provisions with respect to expenses in Sections 12.03 and
confidentiality in Sections 12.05 and 12.06 will continue to apply following any
such termination. Notwithstanding any other provision in this Agreement to the
contrary, upon termination of this Agreement
26
pursuant to Section 10.01(b), each party will remain liable to the other party
for any willful breach of this Agreement existing at the time of such
termination.
ARTICLE XI.
DEFINITIONS
11.01 Definitions. (a) As used in this Agreement, the
following defined terms shall have the meanings indicated below:
"Actions or Proceedings" means any action, suit, proceeding,
arbitration or Governmental or Regulatory Authority investigation.
"Affiliate" means any Person that directly, or indirectly
through one of more intermediaries, controls or is controlled by or is under
common control with the Person specified. For purposes of this definition,
control of a Person means the power, direct or indirect, to direct or cause the
direction of the management and policies of such Person whether by Contract or
otherwise and, in any event and without limitation of the previous sentence, any
Person owning more than fifty (50%) of the voting securities of a second Person
shall be deemed to control that second Person.
"Agreement" means this Stock Purchase Agreement and the
Exhibits, the Disclosure Schedule and the Schedules hereto, as the same shall be
amended from time to time.
"Applicable Cap Amount" has the meaning specified in
Section 8.02.
"Audited Financial Statement Date" means December 31, 1996.
"Audit Adjustments" has the meaning specified in
Section 9.01(a).
"Balance Sheet" has the meaning specified in Section 1.02(c).
"Bollore" means Bollore Technologies S. A.
"Bollore Consent" means that certain Consent Agreement dated
as of April 4, 1997 between Bollore and the Subsidiary, as amended by an
Amendment No. 1 thereto dated as of April 9, 1997, a copy of which is attached
hereto as Exhibit G.
"Bollore Contracts" means the three Amended and Restated
Distribution and License Agreements dated as of November 30, 1992 between the
Subsidiary and Bollore relating to the distribution of Zig Zag cigarette paper
booklets in the United States, in Canada and in Hong Kong and certain other
territories, as amended by agreements dated January 28, 1993, March 31, 1993,
June 10, 1996 and September 25, 1996 and by the Bollore Consent.
27
"Bollore Payment" means any of the amounts payable to Bollore
by the Subsidiary pursuant to Section 2 of the Bollore Consent.
"Business Combination" has the meaning specified in Section
4.04.
"Business Day" means a day other than Saturday, Sunday or any
day on which banks located in the States of New York and North Carolina are
authorized or obligated to close.
"Business or Condition of the Company" means the business,
assets, liabilities, condition (financial or otherwise) or results of operations
of the Company and the Subsidiary, taken as a whole.
"Claim Notice" has the meaning specified in Section 9.02(a).
"Class A Common Stock" means the Class A voting common stock,
par value $0.01 per share, of the Company.
"Class B Common Stock" means the Class B non-voting common
stock, par value $0.01 per share, of the Company.
"Closing" means the closing of the transactions contemplated
by Section 1.03.
"Closing Date" means (a) the fifth Business Day after the day
on which the last of the consents, approvals, actions, filings, notices or
waiting periods described in or related to the filings described in Sections
6.04 through 6.06 and Sections 7.04 through 7.06 has been obtained, made or
given or has expired, as applicable, or (b) such other date as Purchaser and
Seller mutually agree upon in writing.
"Code" means the Internal Revenue Code of 1986, as amended,
and the rules and regulations promulgated thereunder.
"Commitment Letter" means that certain commitment letter dated
February 14, 1997 from Societe Generale, a copy which is attached hereto as
Exhibit F.
"Company" has the meaning ascribed to it in the forepart of
this Agreement.
"Company Plan" means a plan maintained by the Company or the
Subsidiary that is (a) an employee pension benefit plan (as defined in ERISA ss.
3(2)) or (b) an employee welfare benefit plan (as defined in ERISA ss. 3(1))
subject to ERISA.
"Contingent Obligations" shall mean (i) the obligations of the
Company and the Subsidiary to make certain payments under the letter agreement
dated March 31, 1993 from the Company and the Subsidiary to Banque Nationale de
Paris, New York Branch and (ii) the obligations of the Subsidiary to make
certain payments under the three letter agreements dated May 5, 1995 between the
Subsidiary and each of Crescent/MACH I Partners, L.P., Crescent Shared
Opportunity Fund II, L.P. and Continental Casualty Company.
28
"Contingent Obligation Payment" has the meaning specified in
Section 6.12.
"Contract" means any agreement, lease, evidence of
Indebtedness, mortgage, indenture, security agreement or other contract.
"Cut-Off Date" means June 30, 1997.
"Debt Payments" means an amount equal to the sum of (i) the
total principal, interest and all other amounts required to repay in full, at
the Closing, all Indebtedness under the Subsidiary's Senior Subordinated Notes
due April 20, 2001, (ii) the total principal, interest and all other amounts
required to repay in full, at the Closing, all Indebtedness under the Credit
Agreement, dated as of April 28, 1995 among the Subsidiary, as borrower, the
banks named therein and NationsBank N.A. Carolina, as agent, (iii) the
Prepayment Amount (as such term is defined in the USTC Amendment), (iv) the
aggregate amount which Seller, in its sole discretion, shall have agreed with
the holders of all Contingent Obligations shall be paid to such holders by the
Subsidiary at the Closing in consideration of the cancellation of the Contingent
Obligations and (v) any and all other long term Indebtedness incurred by Seller
after the date hereof and which remains outstanding at the Closing; provided,
however, that the term "Debt Payments" shall not include (x) any portion of any
of the foregoing to the extent that it is included as a current liability for
purposes of calculating Net Assets as of the Closing Date or (y) the Bollore
Payment.
"Disclosure Schedule" means the record delivered to Purchaser
by Seller on the date hereof, containing all lists, descriptions, exceptions and
other information and materials as are included therein by Seller.
"Estimated Statement" has the meaning specified in Section
1.02(c).
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the rules and regulations promulgated thereunder.
"ERISA Affiliate" shall mean any trade or business (whether or
not incorporated) that is a member of a group of which the Company or the
Subsidiary is a member and which is treated as a single employer under Section
414 of the Code.
"ERISA Event" with respect to any Person means (i) the
occurrence of a reportable event, within the meaning of Section 4043 of ERISA,
with respect to any Company Plan of such Person or any of its ERISA Affiliates
unless the 30-day notice requirement with respect to such event has been waived
by the PBGC; (ii) the provision by the administrator of any Company Plan of such
Person or any of its ERISA Affiliates of a notice of intent to terminate such
Company Plan, pursuant to Section 4041(a)(2) of ERISA (including any such notice
with respect to a plan amendment referred to in Section 4041(e) of ERISA); (iii)
the cessation of operations at a facility of such Person or any of its ERISA
Affiliates in the circumstances described in Section 4068(f) of ERISA; (iv) the
failure by such Person or any of its ERISA Affiliates to make a payment to a
Company Plan required under Section 302(f)(1) of ERISA; (v) the adoption of an
amendment to a Company Plan of such Person or any of its ERISA Affiliates
requiring the provision of
29
security to such Company Plan, pursuant to Section 307 of ERISA; or (vi) the
institution by the PBGC of proceedings to terminate a Company Plan of such
Person or any of its ERISA Affiliates, pursuant to Section 4042 of ERISA, or the
occurrence of any event or condition described in Section 4042 of ERISA that
could constitute grounds for the termination of, or the appointment of a trustee
to administer, such Company Plan.
"GAAP" means generally accepted accounting principles,
consistently applied throughout the specified period.
"Governmental or Regulatory Authority" means any court,
tribunal, arbitrator, authority, agency, commission, official or other
instrumentality of the United States, any foreign country or any domestic or
foreign state, county, city or other political subdivision.
"HSR Act" means Section 7A of the ▇▇▇▇▇▇▇ Act (Title II of the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended) and the rules
and regulations promulgated thereunder.
"Indebtedness" of any Person means all obligations of such
Person (i) for borrowed money, (ii) evidenced by notes, bonds, debentures or
similar instruments, (iii) for the deferred purchase price of goods or services
(other than trade payables or accruals incurred in the ordinary course of
business), (iv) under capital leases and (v) in the nature of guarantees of the
obligations described in clauses (i) through (iv) above of any other Person.
"Indemnified Party" has the meaning specified in Section 9.02.
"Indemnifying Party" has the meaning specified in
Section 9.02.
"Independent Accountant" has the meaning specified in Section
1.02(c).
"Intellectual Property" means all patents and patent rights,
trademarks and trademark rights, trade names and trade name rights, service
marks and service ▇▇▇▇ rights, service names and service name rights, brand
names, inventions, copyrights and copyright rights, and all pending applications
for and registrations of patents, trademarks, service marks and copyrights, both
foreign and domestic.
"IRS" means the United States Internal Revenue Service.
"Knowledge of Seller" means the actual knowledge of any of
the following Persons: Africk, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇.
"Laws" means all laws, statutes, rules, regulations,
ordinances and other pronouncements having the effect of law of the United
States, any foreign country or any domestic or foreign state, county, city or
other political subdivision or of any Governmental or Regulatory Authority.
30
"Licenses" means all licenses, permits, certificates of
authority, authorizations, approvals, registrations, franchises and similar
consents granted or issued by any Governmental or Regulatory Authority.
"Liens" means any mortgage, pledge, security interest, lien
or other encumbrance.
"Loss" means any and all damages, fines, penalties,
deficiencies, losses and expenses (including without limitation reasonable fees
of attorneys).
"Multiemployer Plan" means a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"Net Assets" means, as of any date, the amount by which (i)
the consolidated current assets of the Company and the Subsidiary (excluding for
this purpose the amount contributed to the Company by Purchaser pursuant to
Section 1.02(b)) as of such date exceed (ii) the consolidated current
liabilities of the Company and the Subsidiary (excluding for this purpose the
Option Cancellation Payment to be paid pursuant to Section 1.02(b), the Bollore
Payment, any Debt Payments and any other amounts which will be extinguished by
payment of the Bollore Payment or Debt Payments pursuant to Section 1.03,
including without limitation, current maturities of long term debt) as of such
date. Net Assets shall be calculated in accordance with GAAP applied on a basis
consistent with the preparation of the financial statements described in Section
2.09.
"New York Sublease" has the meaning specified in Section 6.15.
"Notice of Disagreement" has the meaning specified in Section
1.02(c).
"Option" with respect to any Person means any security, right,
subscription, warrant, option, or other Contract that gives the right to
purchase or otherwise receive or be issued any shares of capital stock of such
Person or any security of any kind convertible into or exchangeable or
exercisable for any shares of capital stock of such Person.
"Order" means any writ, judgment, decree, injunction or
similar order of any Governmental or Regulatory Authority (in each such case
whether preliminary or final).
"PBGC" means the Pension Benefit Guaranty Corporation
established under ERISA.
"Permitted Lien" means (i) any Lien for Taxes not yet due or
delinquent or being contested in good faith by appropriate proceedings for which
adequate reserves have been established in accordance with GAAP, (ii) any
statutory Lien arising in the ordinary course of business by operation of Law
with respect to a Liability that is not yet due or delinquent and (iii) any
minor imperfection of title or similar Lien which individually or in the
aggregate with other such Liens could not reasonably be expected to materially
adversely affect the Business or Condition of the Company.
31
"Person" means any natural person, corporation, general
partnership, limited partnership, limited liability company, proprietorship,
other business organization, trust, union, association or Governmental or
Regulatory Authority.
"Purchase Price" has the meaning ascribed to it in Section
1.02.
"Purchaser" has the meaning ascribed to it in the forepart of
this Agreement.
"Representatives" has the meaning ascribed to it in Section
4.03.
"Restricted Business" means the marketing and distribution of
cigarette papers.
"Restricted Region" means the United States of America and
Canada.
"Seller" has the meaning ascribed to it in the forepart of
this Agreement.
"Seller's Accountant" has the meaning specified in Section
1.02(c).
"Shares" has the meaning ascribed to it in the forepart of
this Agreement.
"Statement of Net Assets" has the meaning specified in Section
1.02(c).
"Subsidiary" means North Atlantic Trading Company, Inc., a
Delaware corporation.
"Tax Returns" means any return, report, information return or
other document filed or required to be filed with any federal, state, local or
foreign Governmental or Regulatory Authority in connection with the
determination, assessment or collection of any Taxes.
"Taxes" means any and all federal, state, local or foreign
taxes of any kind (together with any interest, penalties, or additional amounts
imposed on or with respect thereto) imposed by any government or taxing
authority including without limitation, all federal, state, foreign and local
income, profits, franchise, sales, use, occupation, property, excise, ad
valorem, employment or other taxes.
"Transfer Taxes" means any sales, use, transfer, real property
transfer, recording, stock transfer and other similar taxes and fees.
"USTC" means United States Tobacco Company.
"USTC Amendment" means that certain Amendment No. 3 to Asset
Purchase Agreement dated as of April 9, 1997 among the Subsidiary, USTC and
certain subsidiaries of USTC, a copy of which is attached hereto as Exhibit H.
"UST Obligation" means the obligations of the Subsidiary to
make the Trademark Contingent Royalty Payments to USTC pursuant to Section 1.06
of that certain Asset Purchase
32
Agreement dated as of November 25, 1992 among the Subsidiary, USTC and certain
subsidiaries of USTC, as amended.
(b) Unless the context of this Agreement otherwise requires,
(i) words of any gender include each other gender; (ii) words using the singular
or plural number also include the plural or singular number, respectively; (iii)
the terms "hereof," "herein," "hereby" and derivative or similar words refer to
this entire Agreement; (iv) the terms "Article" or "Section" refer to the
specified Article or Section of this Agreement; and (v) the phrase "ordinary
course of business" refers to the business of the Company or a Subsidiary. All
accounting terms used herein and not expressly defined herein shall have the
meanings given to them under GAAP. Any representation or warranty contained
herein as to the enforceability of a Contract shall be subject to the effect of
any bankruptcy, insolvency, reorganization, moratorium or other similar law
affecting the enforcement of creditors' rights generally and to general
equitable principles (regardless of whether such enforceability is considered in
a proceeding in equity or at Law).
ARTICLE XII.
MISCELLANEOUS
12.01 Notices. All notices, requests and other communications
hereunder must be in writing and will be deemed to have been duly given only if
delivered personally or by facsimile transmission or mailed (first class postage
prepaid) to the parties at the following addresses or facsimile numbers:
If to Seller, to:
NATC Holding Company, Ltd.
c/o NATC Holdings USA, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Attn: Mr. ▇▇▇▇ ▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
33
If to Purchaser, to:
NTC Holding L.L.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
with copies to:
Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
- and -
Fennebresque, Clark, ▇▇▇▇▇▇▇▇ & Hay
NationsBank Corporate Center
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇, Esq.
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section, be deemed given upon receipt, and (iii) if delivered
by mail in the manner described above to the address as provided in this
Section, be deemed given upon receipt (in each case regardless of whether such
notice is received by any other Person to whom a copy of such notice, request or
other communication is to be delivered pursuant to this Section). Any party from
time to time may change its address, facsimile number or other information for
the purpose of notices to that party by giving notice specifying such change to
the other party hereto.
12.02 Entire Agreement. This Agreement supersedes all prior
discussions and agreements between the parties with respect to the subject
matter hereof, and contains the sole and entire agreement between the parties
hereto with respect to the subject matter hereof.
12.03 Expenses. Except as otherwise expressly provided in this
Agreement, Seller agrees to pay, without right of reimbursement from Purchaser,
the Company or the Subsidiary, the costs incurred by Seller, the Company and the
Subsidiary, and Purchaser agrees to pay, without right of reimbursement from
Seller, the costs incurred by it, incident to the preparation and execution of
this Agreement and performance of their respective obligations hereunder,
whether or not the transaction contemplated by this Agreement shall be
consummated, including, without limitation, the fees and disbursements or legal
counsel, accountants and consultants
34
employed by the respective parties in connection with the transactions
contemplated by this Agreement.
12.04. Transfer Taxes. Purchaser agrees to pay any Transfer
Taxes arising out of or in connection with the transactions effected pursuant to
the Agreement, and shall indemnify, defend, and hold harmless Seller with
respect to such Transfer Taxes.
12.05 Public Announcements. At all times at or before the
Closing, Seller and Purchaser will not issue or make any release to the press or
other public disclosure with respect to this Agreement or the transaction
contemplated hereby without the consent of the other party and Purchaser will
not make any statement to any employee, customer, supplier of the Company or the
Subsidiary or other Person with respect to this Agreement or the transactions
contemplated hereby without the consent of Seller, which consents shall not be
unreasonably withheld. Seller and Purchaser will also obtain the other party's
prior approval of any press release to be issued immediately following the
Closing announcing the consummation of the transactions contemplated by this
Agreement. Notwithstanding the foregoing provisions of this Section 12.05,
Seller consents to Purchaser discussing the transactions contemplated hereby
with the following: (i) Purchaser's current or proposed debt and equity
providers and Purchaser's management committee members and professional
advisors; (ii) any of Seller's top ten customers; provided, however, that such
communications are made in the presence of Africk; provided further, however,
that in the event that Purchaser reasonably requires further access to Seller's
customers, Purchaser's financial advisor, UBS, shall be permitted to contact any
of Seller's next top twenty customers so long as such communications are made in
the presence of Africk or ▇▇▇▇▇ ▇▇▇▇▇▇, Inc. and the reason for or context of
such communications disclosed by UBS or any other party in connection with such
communications are limited to a potential refinancing of the Company and (iii)
Messrs. Africk, Beasly, Dixson, and each of the Seller's five regional sales
directors.
12.06 Confidentiality Each party hereto will hold, and will
cause its Affiliates, and their respective Representatives to hold, in strict
confidence from any Person (other than any such Affiliate, or Representative),
unless (a) compelled to disclose by judicial or administrative process
(including without limitation in connection with obtaining the necessary
approvals of this Agreement and the transactions contemplated hereby of
Governmental or Regulatory Authorities) or by other requirements of Law or (b)
disclosed in an Action or Proceeding brought by a party hereto in pursuit of its
rights or in the exercise of its remedies hereunder, all documents and
information concerning the other party or any of its Affiliates furnished to it
by the other party or such other party's Representatives in connection with this
Agreement or the transactions contemplated hereby, except to the extent that
such documents or information can be shown to have been (i) previously known by
the party receiving such documents or information, (ii) in the public domain
(either prior to or after the furnishing of such documents or information
hereunder) through no fault of such receiving party or (iii) later acquired by
the receiving party from another source if the receiving party is not aware that
such source is under an obligation to another party hereto to keep such
documents and information confidential; provided that following the Closing the
foregoing restrictions will not apply to Purchaser's use of documents and
information concerning the Company and the Subsidiaries furnished by Seller
hereunder. In the event the transactions contemplated hereby are not
consummated, upon the request of the other party, each party hereto will, and
will cause its Affiliates and their respective Representatives to, promptly
35
redeliver or cause to be redelivered all copies of confidential documents and
information furnished by the other party in connection with this Agreement or
the transactions contemplated hereby and destroy or cause to be destroyed all
notes, memoranda, summaries, analyses, compilations and other writings related
thereto or based thereon prepared by the party furnished such documents and
information or its Representatives.
12.07 Further Assurances; Post-Closing Cooperation. (a)
Subject to the terms and conditions of this Agreement, at any time or from time
to time after the Closing, each of the parties hereto shall execute and deliver
such other documents and instruments, provide such materials and information and
take such other actions as may reasonably be necessary, proper or advisable, to
the extent permitted by Law, to fulfill its obligations under this Agreement.
(b) Following the Closing, each party will afford the other
party, its counsel and its accountants, during normal business hours, reasonable
access to the books, records and other data relating to the Business or
Condition of the Company in its possession with respect to periods prior to the
Closing and the right to make copies and extracts therefrom, to the extent that
such access may be reasonably required by the requesting party in connection
with (i) the preparation of Tax Returns, (ii) the determination or enforcement
of rights and obligations under this Agreement, (iii) compliance with the
requirements of any Governmental or Regulatory Authority or (iv) the
determination or enforcement of the rights and obligations of any Indemnified
Party. Further, each party agrees for a period extending six (6) years after the
Closing Date not to destroy or otherwise dispose of any such books, records and
other data unless such party shall first offer in writing to surrender such
books, records and other data to the other party and such other party shall not
agree in writing to take possession thereof during the ten (10) day period after
such offer is made.
(c) If, in order properly to prepare its Tax Returns, other
documents or reports required to be filed with Governmental or Regulatory
Authorities or its financial statements or to fulfill its obligations hereunder,
it is necessary that a party be furnished with additional information, documents
or records relating to the Business or Condition of the Company not referred to
in paragraph (b) above, and such information, documents or records are in the
possession or control of the other party, such other party agrees to use its
best efforts to furnish or make available such information, documents or records
(or copies thereof) at the recipient's request, cost and expense. Any
information obtained by Seller in accordance with this paragraph shall be held
confidential by Seller in accordance with Section 12.06.
(d) Notwithstanding anything to the contrary contained
in this Section, if the parties are in an adversarial relationship in litigation
or arbitration, the furnishing of information, documents or records in
accordance with any provision of this Section shall be subject to applicable
rules relating to discovery.
12.08 Waiver. Any term or condition of this Agreement may be
waived at any time by the party that is entitled to the benefit thereof, but no
such waiver shall be effective unless set forth in a written instrument duly
executed by or on behalf of the party waiving such term or condition. No waiver
by any party of any term or condition of this Agreement, in any one or more
instances, shall be deemed to be or construed as a waiver of the same or any
other
36
term or condition of this Agreement on any future occasion. All remedies, either
under this Agreement or by Law or otherwise afforded, will be cumulative and not
alternative.
12.09 Amendment. This Agreement may be amended, supplemented
or modified only by a written instrument duly executed by or on behalf of each
party hereto.
12.10 No Third Party Beneficiary. The terms and provisions of
this Agreement are intended solely for the benefit of each party hereto and
their respective successors or permitted assigns, and it is not the intention of
the parties to confer third-party beneficiary rights upon any other Person other
than any Person entitled to indemnity under Article IX.
12.11 No Assignment; Binding Effect. Neither this Agreement
nor any right, interest or obligation hereunder may be assigned by any party
hereto without the prior written consent of the other party hereto and any
attempt to do so will be void. Notwithstanding the preceding sentence, Purchaser
may assign any or all of its rights, interests and obligations hereunder to (x)
any successor in interest, prior to the Closing, to all or substantially all of
the assets and properties of Purchaser or (y) any wholly-owned subsidiary of
Purchaser or any such successor, in each case without the consent of (but with
notice to) Seller; provided, however, that Purchaser shall remain primarily
liable hereunder following each such assignment referred to in clause (x) or
clause (y). This Agreement is binding upon, inures to the benefit of and is
enforceable by the parties hereto and their respective successors and permitted
assigns.
12.12 Headings. The headings used in this Agreement have been
inserted for convenience of reference only and do not define or limit the
provisions hereof.
12.13 Invalid Provisions. If any provision of this Agreement
is held to be illegal, invalid or unenforceable under any present or future Law,
and if the rights or obligations of any party hereto under this Agreement will
not be materially and adversely affected thereby, (a) such provision will be
fully severable, (b) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof,
(c) the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom and (d) in lieu of such illegal, invalid
or unenforceable provision, there will be added automatically as a part of this
Agreement a legal, valid and enforceable provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible.
12.14 Governing Law. This Agreement shall be governed by and
construed in accordance with the Laws of the State of New York applicable to a
Contract executed and performed in such State without giving effect to the
conflicts of laws principles thereof.
12.15 Counterparts. This Agreement may be executed in any
number of counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
12.16 Name Change. At or prior to the Closing, the Company
shall change its name to exclude, and shall thereafter cease to use, the name
"NATC"; it being understood and
37
agreed that Seller shall retain all rights to the use of the name "NATC" and
that, after the Closing, none of Purchaser, the Company, the Subsidiary or any
of their Affiliates shall be entitled to use the name "NATC" but they shall be
entitled to use the name "North Atlantic Trading Company, Inc." and the Seller
and its Affiliates shall not be entitled to use such name.
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officer of each party hereto as of the date
first above written.
NATC HOLDING COMPANY, LTD.
By:
-----------------------
Name:
Title:
NTC HOLDING, L.L.C.
By:
-----------------------
Name:
Title:
38