EXHIBIT 99.2
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DISTRIBUTION AGREEMENT
dated as of May 8, 1997
among
AMERICAN BRANDS, INC.,
ATIC GROUP, INC.,
▇▇▇▇▇▇▇▇ GROUP LIMITED
and
▇▇▇▇▇▇▇▇ LIMITED
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TABLE OF CONTENTS
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Page
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ARTICLE I DEFINITIONS............................................................. 1
Section 1.01 General............................................................. 1
Section 1.02 Exhibits, etc....................................................... 10
ARTICLE II THE DISTRIBUTION....................................................... 10
Section 2.01 The Distribution.................................................... 10
Section 2.02 Cooperation Prior to the Distribution............................... 11
Section 2.03 Parent Board Action; Conditions Precedent to the Distribution....... 12
Section 2.04 Waiver of Conditions................................................ 14
Section 2.05 Disclosure.......................................................... 14
ARTICLE III TRANSACTIONS RELATING TO THE DISTRIBUTION............................. 15
Section 3.01 Intercorporate Reorganization....................................... 15
Section 3.02 Elimination of Intercompany Accounts as of the Distribution Date.... 17
Section 3.03 The New ▇▇▇▇▇▇▇▇ Board.............................................. 17
Section 3.04 New ▇▇▇▇▇▇▇▇ Articles of Association and Memorandum of Association.. 18
Section 3.05 Resignations; Transfer of Stock Held as Nominee..................... 18
Section 3.06 Insurance........................................................... 19
Section 3.07 Use of Names........................................................ 24
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Section 3.08 Transfers Not Effected Prior to the Distribution; Transfers
Deemed Effective as of the Distribution Date...................... 25
Section 3.09 Guarantees; etc..................................................... 26
ARTICLE IV INDEMNIFICATION........................................................ 27
Section 4.01 Indemnification by Parent........................................... 27
Section 4.02 Indemnification by New ▇▇▇▇▇▇▇▇..................................... 28
Section 4.03 Insurance, Foreign Exchange and Taxes; Limitations on
Indemnification Obligations....................................... 30
Section 4.04 Procedures for Indemnification...................................... 31
Section 4.05 Remedies Cumulative................................................. 36
Section 4.06 Survival of Indemnities............................................. 36
Section 4.07 Limitations on Liability............................................ 36
ARTICLE V EMPLOYEE BENEFITS....................................................... 37
Section 5.01 Retirement Plan for Goldsboro Employees............................. 37
ARTICLE VI ACCESS TO INFORMATION.................................................. 37
Section 6.01 Provision of Corporate Records...................................... 37
Section 6.02 Access to Information............................................... 39
Section 6.03 Production of Witnesses............................................. 40
Section 6.04 Confidentiality..................................................... 40
ARTICLE VII MISCELLANEOUS......................................................... 41
Section 7.01 Complete Agreement; Construction.................................... 41
Section 7.02 Survival of Agreements.............................................. 42
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Section 7.03 Expenses............................................................ 42
Section 7.04 Governing Law....................................................... 42
Section 7.05 Notices............................................................. 42
Section 7.06 Consent to Jurisdiction............................................. 43
Section 7.07 Modifications or Amendments......................................... 44
Section 7.08 Successors and Assigns.............................................. 44
Section 7.09 Termination......................................................... 44
Section 7.10 No Third Party Beneficiaries........................................ 44
Section 7.11 Titles and Headings................................................. 45
Section 7.12 Severability........................................................ 45
Section 7.13 No Waivers.......................................................... 45
Section 7.14 Counterparts........................................................ 45
Section 7.15 Performance......................................................... 45
Section 7.16 Rights.............................................................. 46
Section 7.17 Further Assurances.................................................. 46
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SCHEDULE 1.1 Common Policies
SCHEDULE 1.2 Former ▇▇▇▇▇▇▇▇ Businesses
SCHEDULE 3.01 ATIC Disclosures
SCHEDULE 3.02 Intercompany Accounts
SCHEDULE 3.03 New ▇▇▇▇▇▇▇▇ Board of Directors
SCHEDULE 3.05 Resignations
SCHEDULE 3.09(a) Parent Guarantees; etc.
SCHEDULE 3.09(b) ▇▇▇▇▇▇▇▇ Guarantees; etc.
SCHEDULE 7.03 Allocation of Costs and Expenses
ANNEX A Interim Services Agreement
ANNEX B Tax Allocation Agreement
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DISTRIBUTION AGREEMENT
DISTRIBUTION AGREEMENT (this "Agreement"), dated as of May 8, 1997,
by and among AMERICAN BRANDS, INC., a Delaware corporation ("Parent"), ATIC
GROUP, INC., a Delaware corporation and, as of the date hereof, a direct wholly-
owned subsidiary of Parent ("ATIC"), ▇▇▇▇▇▇▇▇ GROUP LIMITED, an English private
limited company and, as of the date hereof, a direct wholly-owned subsidiary of
Parent ("New ▇▇▇▇▇▇▇▇"), and ▇▇▇▇▇▇▇▇ LIMITED, an English private limited
company and, as of the date hereof, an indirect wholly-owned subsidiary of
Parent ("▇▇▇▇▇▇▇▇").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Parent Board (as defined herein) has determined that it
is appropriate and desirable to distribute all outstanding New ▇▇▇▇▇▇▇▇ Ordinary
Shares (as defined herein) on a pro rata basis to the holders of Parent Common
Stock (as defined herein); and
WHEREAS, Parent, ATIC, New ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ have determined that
it is appropriate and desirable to set forth the principal corporate
transactions required to effect such distribution and certain other agreements
that will govern certain matters relating to such distribution;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, provisions and covenants contained in this Agreement, the parties
hereto hereby agree as follows:
ARTICLE I
Definitions
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Section 1.01 General. As used in this Agreement, the following terms
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shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
"ADRs" shall mean American Depositary Receipts evidencing ADSs.
"ADSs" shall mean American Depositary Shares representing New ▇▇▇▇▇▇▇▇
Ordinary Shares, where each ADS represents four New ▇▇▇▇▇▇▇▇ Ordinary Shares as
of the Distribution Date.
"Affiliate" shall mean, when used with respect to any specified
Person, any other Person that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with,
such Person; provided, however, that for the purposes of this Agreement, no
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member of either the Parent Group or the New ▇▇▇▇▇▇▇▇ Group shall be deemed to
be an Affiliate of any member of the other group.
"Ancillary Agreements" shall mean the Interim Services Agreement and
the Tax Allocation Agreement.
"Articles of Association" shall mean New ▇▇▇▇▇▇▇▇'▇ articles of
association substantially in the form previously delivered to Parent.
"ATIC Acquisition Agreement" shall mean the agreement among the
Depositary, Parent and New ▇▇▇▇▇▇▇▇ relating to the sale and purchase of the
ATIC Common Stock in a form agreeable to the parties.
"ATIC Common Stock" shall mean all of the issued and outstanding
Common Stock, par value $100.00 per share, of ATIC.
"Business Day" shall mean a day other than a Saturday or Sunday, on
which banks are open for ordinary banking business in London and New York.
"Claims Administration" shall mean the processing of claims made under
the Policies, including the reporting of claims to the insurance carrier,
management and defense of claims, and providing for appropriate releases upon
settlement of claims.
"Code" shall mean the Internal Revenue Code of 1986, as amended, or
any successor legislation.
"Commission" shall mean the Securities and Exchange Commission.
"Common Policies" shall mean all occurrence-based Policies, current or
past, which are or were owned
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or maintained by or on behalf of Parent or any of its predecessors or
Subsidiaries, or ▇▇▇▇▇▇▇▇ or any of its predecessors or Subsidiaries, and which
relate to the businesses of both the Parent Group and the New ▇▇▇▇▇▇▇▇ Group, or
current or past directors, officers, employees or agents of any of the foregoing
businesses, including, without limitation, the Policies identified on Schedule
1.1, provided, however, that such Policies shall not include Policies issued by
1700 Insurance Company Ltd.
"Depositary" shall mean The Bank of New York, a New York banking
corporation.
"Distribution" shall mean the distribution on a pro rata basis to
holders of Parent Common Stock of the Distribution Shares on the Distribution
Date pursuant to Article II.
"Distribution Date" shall mean such date as may hereafter be
determined by the Parent Board as the date as of which the Distribution shall be
effected.
"Distribution Shares" shall mean, collectively, (i) the New ▇▇▇▇▇▇▇▇
Ordinary Shares to be delivered to the holders of record of Parent Common Stock
on the Record Date with addresses outside of the U.S. and Canada and (ii) the
ADSs evidenced by the ADRs to be delivered to the holders of record of Parent
Common Stock on the Record Date with addresses within the U.S. and Canada
pursuant to Article II.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, together with the rules and regulations promulgated thereunder.
"Foreign Exchange Rate" shall mean, with respect to any currency other
than United States dollars as of any date of determination, the average of the
bid and asked rates at 10:00 a.m. (New York time) on such date at which such
currency may be exchanged for United States dollars as quoted by Reuters.
"Form 20-F" shall mean the registration statement on Form 20-F filed
by New ▇▇▇▇▇▇▇▇ with the Commission to effect the registration of the
Distribution Shares pursuant to the Exchange Act, including any amendments or
supplements thereto.
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"Former ▇▇▇▇▇▇▇▇ Businesses" shall mean (i) the businesses set forth
in Schedule 1.2 and (ii) all other businesses, assets or operations managed or
operated by, or operationally related to, ATIC or ▇▇▇▇▇▇▇▇ or any current or
former Subsidiary of ▇▇▇▇▇▇▇▇, which heretofore have been sold or otherwise
disposed of or discontinued; provided that such term shall be deemed to include
Bonny Products, Inc., a New York corporation, ▇▇▇▇▇▇ Instruments, Inc., a
Pennsylvania corporation, and Sefton Corporation, a Pennsylvania corporation,
and shall be deemed not to include The ▇▇▇▇▇ & ▇▇▇▇▇▇ Group PLC and its
Subsidiaries and Ofrex Group Holdings plc and its Subsidiaries.
"Former ▇▇▇▇▇▇▇▇ Business Liabilities" shall mean, collectively, all
of the Liabilities related to the Former ▇▇▇▇▇▇▇▇ Businesses.
"Former Parent Businesses" shall mean the businesses, assets or
operations managed or operated by, or operationally related to, Parent or any
current or former Subsidiary of Parent, which heretofore have been sold or
otherwise disposed of or discontinued, which are not Former ▇▇▇▇▇▇▇▇ Businesses.
"Former Parent Business Liabilities" shall mean, collectively, all of
the Liabilities related to the Former Parent Businesses.
"▇▇▇▇▇▇▇▇ Acquisition Agreement" shall mean the agreement between ATIC
and New ▇▇▇▇▇▇▇▇ relating to the sale and purchase of the ▇▇▇▇▇▇▇▇ Ordinary
Shares in a form agreeable to the parties.
"▇▇▇▇▇▇▇▇ Guarantee Obligations" shall have the meaning as defined in
Section 3.09(b).
"▇▇▇▇▇▇▇▇ Ordinary Shares" shall mean the entire issued share capital
of ▇▇▇▇▇▇▇▇ comprising 85,056,000 ordinary shares of 50 ▇▇▇▇▇ each.
"Indemnifiable Losses" shall have the meaning as defined in Section
4.01.
"Indemnification Agreement" shall mean an indemnification agreement
among Parent, ATIC, New ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ relating to the tobacco business
of ▇▇▇▇▇▇▇▇ in a form agreeable to the parties.
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"Indemnifying Party" shall have the meaning as defined in Section
4.03(a).
"Indemnitee" shall have the meaning as defined in Section 4.03(a).
"Indemnity Payment" shall have the meaning as defined in Section
4.03(a).
"Insurance Administration" shall mean, with respect to each Parent
Policy, New ▇▇▇▇▇▇▇▇ Policy and Common Policy, (i) the accounting for premiums,
retrospectively-rated premiums, defense costs, indemnity payments, deductibles
and retentions as appropriate under the terms and conditions of each of the
Policies, (ii) the reporting to all primary and excess insurance carriers of any
losses or claims as may be required in accordance with the terms of each Policy
and (iii) the distribution of Insurance Proceeds as contemplated by this
Agreement.
"Insurable Claim" shall have the meaning as defined in Section
3.06(a).
"Insurance Proceeds" shall mean those monies (i) received or
receivable by an insured from an insurance carrier or (ii) paid or payable by an
insurance carrier on behalf of an insured, in either case net of any applicable
premium adjustment, retrospectively-rated premium, deductible, retention, or
reserve paid or held by or for the benefit of such insured.
"Insured Claims" shall mean those claims, debts, liabilities or
obligations of whatever nature that, individually or in the aggregate, are
covered within the terms and conditions of the Policies, whether or not subject
to deductibles, co-insurance, uncollectability or retrospectively-rated premium
adjustments, but only to the extent that such claims, debts, liabilities or
obligations are within applicable Policy limits, including aggregates.
"Interim Services Agreement" shall mean an interim services agreement
between Parent and New ▇▇▇▇▇▇▇▇, substantially in the form attached hereto as
Annex A.
"IRS" shall mean the Internal Revenue Service.
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"J.R.F." shall mean J.R.F. Realty, Inc., a Delaware corporation and,
as of the date hereof, a direct, wholly-owned subsidiary of Parent.
"Liabilities" shall mean, with respect to any Person, any and all
claims, debts, liabilities and obligations of whatever nature, absolute or
contingent, matured or unmatured, liquidated or unliquidated, accrued or
unaccrued, known or unknown, whenever arising, including, without limitation,
all costs and expenses relating thereto; provided, however, that for the
purposes of this Agreement "Liabilities" shall be deemed not to include those
claims, debts, liabilities and obligations arising from smoking and health or
fire safe cigarette matters.
"Listing Particulars" shall mean the listing particulars relating to
New ▇▇▇▇▇▇▇▇ prepared in accordance with the listing rules of the London Stock
Exchange pursuant to Section 142 of the Financial Services Act of 1986,
including any supplement thereto.
"London Stock Exchange" shall mean the London Stock Exchange Limited.
"Memorandum of Association" shall mean New ▇▇▇▇▇▇▇▇'▇ memorandum of
association substantially in the form as previously delivered to Parent.
"New ▇▇▇▇▇▇▇▇ Board" shall mean the Board of Directors of New
▇▇▇▇▇▇▇▇.
"New ▇▇▇▇▇▇▇▇ Group" shall mean New ▇▇▇▇▇▇▇▇ and the New ▇▇▇▇▇▇▇▇
Subsidiaries whether now or hereafter existing.
"New ▇▇▇▇▇▇▇▇ Indemnitees" shall have the meaning as defined in
Section 4.01.
"New ▇▇▇▇▇▇▇▇ Liabilities" shall mean, collectively, all of (i) the
Liabilities of the New ▇▇▇▇▇▇▇▇ Group under this Agreement or any other
agreement or arrangement entered into in connection with the transactions
contemplated hereby, (ii) other Liabilities of the New ▇▇▇▇▇▇▇▇ Group, whether
arising before, on or after the Distribution Date, arising out of or relating to
the conduct of the businesses of the New ▇▇▇▇▇▇▇▇ Group or the ownership or use
of assets in
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connection therewith, and (iii) the Former ▇▇▇▇▇▇▇▇ Business Liabilities.
"New ▇▇▇▇▇▇▇▇ Ordinary Shares" shall mean, the ordinary shares of 10
▇▇▇▇▇ each of New ▇▇▇▇▇▇▇▇.
"New ▇▇▇▇▇▇▇▇ Policies" shall mean all Policies, current or past,
which are or were owned or maintained by or on behalf of ▇▇▇▇▇▇▇▇ or any of its
predecessors or Subsidiaries (i) which relate exclusively to the businesses of
the New ▇▇▇▇▇▇▇▇ Group and in either case do not also relate to the businesses
of the Parent Group or (ii) which are Common Policies identified on Part A of
Schedule 1.1.
"New ▇▇▇▇▇▇▇▇ Subsidiary" shall mean any Subsidiary of New ▇▇▇▇▇▇▇▇
that, as of the Distribution Date, will be a Subsidiary of New ▇▇▇▇▇▇▇▇, and any
other Subsidiary of New ▇▇▇▇▇▇▇▇ which thereafter may be organized or acquired.
"No-action Letter" shall mean a letter from the staff of the
Commission indicating, among other things, that the Division of Corporation
Finance will not recommend enforcement action to the Commission if the
Distribution Shares are distributed pursuant to the Distribution without
registration of the New ▇▇▇▇▇▇▇▇ Ordinary Shares under the Securities Act of
1933, as amended.
"NYSE" shall mean the New York Stock Exchange, Inc.
"Parent Board" shall mean the Board of Directors of Parent or the
Executive Committee thereof.
"Parent Common Stock" shall mean the Common Stock, par value $3.125
per share, of Parent.
"Parent Guarantee Obligations" shall have the meaning as defined in
Section 3.09(a).
"Parent Group" shall mean Parent and the Parent Subsidiaries, whether
now or hereafter existing, other than members of the New ▇▇▇▇▇▇▇▇ Group.
"Parent Indemnitees" shall have the meaning as defined in Section
4.02.
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"Parent Liabilities" shall mean, collectively, all of (i) the
Liabilities of the Parent Group under this Agreement or any other agreement or
arrangement entered into in connection with the transactions contemplated
hereby, (ii) other Liabilities of the Parent Group, whether arising before, on
or after the Distribution Date, arising out of or relating to the conduct of the
businesses of the Parent Group or the ownership or use of assets in connection
therewith and (iii) the Former Parent Business Liabilities, excluding New
▇▇▇▇▇▇▇▇ Liabilities.
"Parent Policies" shall mean all Policies, current or past, which are
or were owned or maintained by or on behalf of Parent or any of its predecessors
or Subsidiaries (i) which relate exclusively to the businesses of the Parent
Group and in either case do not also relate to the businesses of the New
▇▇▇▇▇▇▇▇ Group or (ii) which are Common Policies identified on Part B of
Schedule 1.1.
"Parent Subsidiary" shall mean any Subsidiary of Parent that, as of
the Distribution Date, will be a Subsidiary of Parent, and any other Subsidiary
of Parent which thereafter may be organized or acquired, other than New ▇▇▇▇▇▇▇▇
or any New ▇▇▇▇▇▇▇▇ Subsidiary.
"Parent Retirement Plan" shall mean the Retirement Plan for Employees
and Former Employees of American Brands, Inc.
"Person" shall mean any individual, organization, firm, partnership,
joint venture, corporation, company, body corporate, limited liability company,
trust, unincorporated organization or any other business entity or any
government or any department or agency thereof.
"Policies" shall mean insurance policies and insurance contracts of
any kind (other than life and benefits policies or contracts), including,
without limitation, primary, excess and umbrella policies, commercial general
liability policies, fiduciary liability, product liability, automobile,
aircraft, property and casualty, directors and officers liability, workers'
compensation and employee dishonesty insurance policies, bonds and captive
insurance company
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arrangements, together with the rights, benefits and privileges thereunder.
"Proxy Statement" shall mean the proxy statement of Parent
substantially complying with the requirements of Regulation 14A under the
Exchange Act, sent to the holders of Parent capital stock and filed with the
Commission in connection with the Distribution, including any amendment or
supplement thereto.
"Record Date" shall mean the time and date to be determined by the
Parent Board as the record date for the Distribution.
"Records" shall have the meaning as defined in Section 6.01(a).
"Registration Statements" shall mean the Form 20-F and the
registration statement on Form F-6 filed by New ▇▇▇▇▇▇▇▇, whether in preliminary
or final form, and including any amendment or supplement thereto.
"Representative" shall mean, with respect to any Person, any of such
Person's directors, officers, employees, agents, consultants, advisors,
accountants, attorneys and representatives.
"Subsidiary" shall mean, with respect to any Person, any corporation
or other legal entity of which such Person or any Subsidiaries controls or owns,
directly or indirectly, more than 50% of the stock or other equity interest, or
more than 50% of the voting power entitled to vote on the election of members to
the board of directors or similar governing body; provided, however, that for
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purposes of this Agreement, (i) ATIC, Gallaher, the Subsidiaries of ▇▇▇▇▇▇▇▇ and
J.R.F. shall be deemed to be New ▇▇▇▇▇▇▇▇ Subsidiaries and (ii) none of ATIC,
Gallaher, New ▇▇▇▇▇▇▇▇, any New ▇▇▇▇▇▇▇▇ Subsidiary or J.R.F. shall be deemed to
be Parent Subsidiaries.
"Tax" shall have the meaning as defined in the Tax Allocation
Agreement.
"Tax Allocation Agreement" shall mean the Tax Allocation Agreement
among Parent, New ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇, substantially in the form attached
hereto as Annex B.
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"Tax Ruling" shall mean a private letter ruling issued by the IRS
indicating that the Distribution will qualify as a tax-free spin-off to the
stockholders for federal income tax purposes under Section 355 of the Code.
"Third Party Claim" shall have the meaning as defined in Section
4.04(a)(i).
"Trademarks" shall mean the "B Trade Marks" as defined in the
Trademark Agreement, dated as of February 26, 1997 among ▇▇▇▇▇▇▇▇, ATIC and
British-American Tobacco Company Limited.
"U.K. Filings" shall mean the Listing Particulars and any other
document filed or required to be filed with the London Stock Exchange under or
pursuant to the provisions of, or in connection with, the transactions
contemplated by this Agreement.
"U.S. Filings" shall mean the Registration Statements, the Proxy
Statement and any other document filed or required to be filed with the
Commission or the NYSE under or pursuant to the provisions of, or in connection
with, the transactions contemplated by this Agreement.
Section 1.02 Exhibits, etc.. References to an "Exhibit" or
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"Schedule" are, unless otherwise specified, to one of the Exhibits or Schedules
attached to this Agreement, and references to "Section" or "Article" are, unless
otherwise specified, to one of the Sections or Articles of this Agreement and
references to "sub-section" are, unless the context otherwise requires,
references to the section in which the reference appears and references to this
Agreement include each of the Schedules.
ARTICLE II
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The Distribution
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Section 2.01 The Distribution. Subject to Section 2.03 hereof and on
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or prior to the Distribution Date, Parent will deliver to the Depositary for the
benefit of holders of record of Parent Common Stock on the Record Date, (i) an
ADR, endorsed by Parent in blank,
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evidencing the ADSs and (ii) a stock transfer, duly executed by Parent in favor
of one or more non-U.S. or Canadian holders of record of Parent Common Stock on
the Record Date, and the related share certificates representing New ▇▇▇▇▇▇▇▇
Ordinary Shares directly owned by Parent, which together represent all of the
then outstanding New ▇▇▇▇▇▇▇▇ Ordinary Shares owned directly or indirectly by or
on behalf of Parent, and shall instruct the Depositary to distribute on, or as
soon as practicable following, the Distribution Date the appropriate number of
Distribution Shares to each such holder or designated transferee or transferees
of such holder. The Distribution shall be effective as of the date and time upon
which the admission of the New ▇▇▇▇▇▇▇▇ Ordinary Shares for trading on the
Official List of the London Stock Exchange becomes fully effective on the
Distribution Date. New ▇▇▇▇▇▇▇▇ will cause to be provided to the Depositary all
share certificates and any information, and Parent and New ▇▇▇▇▇▇▇▇ will
instruct the Depositary to take or cause to be taken all action, required in
order to complete the Distribution on the basis of (a) one ADS for each share of
Parent Common Stock outstanding on the Record Date held of record by U.S. and
Canadian holders and (b) four New ▇▇▇▇▇▇▇▇ Ordinary Shares for each share of
Parent Common Stock outstanding on the Record Date held of record by all other
holders.
Section 2.02 Cooperation Prior to the Distribution. (a) Parent and
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New ▇▇▇▇▇▇▇▇ shall prepare, and Parent shall file with, and use its reasonable
best efforts to have cleared by, the Commission, the Proxy Statement.
(b) Parent and New ▇▇▇▇▇▇▇▇ shall prepare, and New ▇▇▇▇▇▇▇▇ shall
file with the Commission, the Form 20-F. Parent and New ▇▇▇▇▇▇▇▇ shall use
reasonable best efforts to cause the Form 20-F to become effective under the
Exchange Act as promptly as reasonably practicable, but in any event prior to
the Distribution Date.
(c) Parent and New ▇▇▇▇▇▇▇▇ shall cooperate in arranging for the
amendment, restatement and novation of an American depositary facility
established by ATIC and the Depositary so that such facility shall apply with
respect to the New ▇▇▇▇▇▇▇▇ Ordinary Shares and for New ▇▇▇▇▇▇▇▇ to enter into
an appropriate amended and restated deposit agreement with the Depositary, and
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Parent and New ▇▇▇▇▇▇▇▇ shall further cooperate in preparing, filing with the
Commission and causing to become effective under the Securities Act of 1933, as
amended, a registration statement on Form F-6, and any amendments thereto, with
respect to the ADSs evidenced by the ADRs.
(d) Parent and New ▇▇▇▇▇▇▇▇ shall take all such action as may be
necessary or appropriate under the securities or "blue sky" laws of the states
or other political subdivisions of the United States and the securities laws of
any applicable foreign countries or other political subdivisions thereof, in
connection with the transactions contemplated by this Agreement.
(e) Parent and New ▇▇▇▇▇▇▇▇ shall prepare, and New ▇▇▇▇▇▇▇▇ shall
file and pursue, (i) an application to permit listing of the ADSs and the New
▇▇▇▇▇▇▇▇ Ordinary Shares on the NYSE and (ii) an application to permit the
admission of the New ▇▇▇▇▇▇▇▇ Ordinary Shares to the Official List of the London
Stock Exchange.
(f) Parent and New ▇▇▇▇▇▇▇▇ shall each take all such action as may be
necessary or appropriate (including, without limitation, provide or procure the
provision of all information and execute or procure the execution of all
documents and otherwise do all such acts and things as may be required) to cause
the conditions set forth in Section 2.03 to be satisfied as soon as possible and
in any event before the Distribution Date and to effect the Distribution on the
Distribution Date.
Section 2.03 Parent Board Action; Conditions Precedent to the
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Distribution. The Parent Board shall in its discretion establish the Record
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Date and the Distribution Date and all appropriate procedures in connection with
the Distribution, but in no event shall the Distribution occur prior to such
time as each of the following have occurred or have been waived in accordance
with Section 2.04:
(a) the Distribution shall have been approved or ratified by the
affirmative vote of shares representing a majority in voting power of the
outstanding capital stock of Parent, voting together as one class, present in
person or represented by proxy at a duly called annual or special meeting and
entitled to vote thereat;
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(b) Parent shall have received the Tax Ruling and such Tax Ruling
shall be in full force and effect and shall not have been modified or amended in
any respect materially adversely affecting the tax consequences set forth
therein;
(c) the Parent Board shall have given final approval of the
Distribution conditioned upon the admission of the New ▇▇▇▇▇▇▇▇ Ordinary Shares
to the Official List of the London Stock Exchange becoming fully effective;
(d) all necessary third party consents to the transactions
contemplated by this Agreement shall have been obtained, except for those the
failure of which to obtain would not have a material adverse effect on Parent or
New ▇▇▇▇▇▇▇▇;
(e) the Registration Statements shall have been declared effective by
the Commission;
(f) the New ▇▇▇▇▇▇▇▇ Board, composed as contemplated by Section 3.03,
shall have been duly elected;
(g) the Articles of Association and the Memorandum of Association
shall each have been adopted and be in effect;
(h) the agreement by the London Stock Exchange to the admission of the
New ▇▇▇▇▇▇▇▇ Ordinary Shares to the Official List of the London Stock Exchange,
subject (if applicable) only to allocation and listing, shall have been received
and such admission shall have become fully effective under applicable rules and
regulations of the London Stock Exchange, and the ADSs shall have been approved
for listing upon notice of issuance on the NYSE pursuant to Section 2.02(e);
(i) the transactions contemplated by Section 3.01 and Section 3.02
shall have been consummated in all material respects;
(j) Parent, New ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ shall have entered into each of
the Ancillary Agreements and each such agreement shall be in full force and
effect;
13
(k) Parent, ATIC, New ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ shall have entered into
the Indemnification Agreement and such agreement shall be in full force and
effect;
(l) the No-action Letter shall have been issued and shall be in full
force and effect;
(m) no suit, action or proceeding by or before any court of competent
jurisdiction or other governmental authority shall have been commenced or
threatened to restrain or challenge the transactions contemplated by this
Agreement, and no inquiry shall have been received that in the reasonable
judgment of the Parent Board may lead to such a suit, action or proceeding; and
(n) no order, injunction or decree issued by any court of competent
jurisdiction or other legal restraint or prohibition preventing consummation of
the Distribution shall be in effect.
Section 2.04 Waiver of Conditions. Any or all of the conditions set
--------------------
forth in Section 2.03 may be waived, in whole or in part, in the sole discretion
of the Parent Board; provided, however, that the condition set forth in
-------- -------
paragraph (b) of Section 2.03 shall not be waived unless the Parent Board
determines in its sole discretion, based on an opinion of counsel, that the
Distribution should qualify as a tax-free spin-off to the Parent's U.S.
stockholders for federal income tax purposes under Section 355 of the Code. The
satisfaction of the conditions set forth in Section 2.03 shall not create any
obligation on the part of Parent or any other party hereto to effect the
Distribution or in any way limit Parent's powers of termination set forth in
Section 7.09 or alter the consequences of any such termination from those
specified in such Section.
Section 2.05. Disclosure. If at any time after the date hereof any
----------
of the parties shall become aware of any circumstances that will or may prevent
any or all of the conditions contained in Section 2.03 from being satisfied it
shall promptly give to each of the other parties written notice of those
circumstances.
14
ARTICLE III
TRANSACTIONS RELATING TO THE DISTRIBUTION
-----------------------------------------
Section 3.01 Intercorporate Reorganization.
-----------------------------
(a) Subject to Section 3.08, prior to the Distribution, Parent, ATIC
and New ▇▇▇▇▇▇▇▇ each agree to take, or cause to be taken, the following actions
in connection with the Distribution:
(i) ATIC shall transfer to ▇▇▇▇▇▇▇▇ the Trademarks, ▇▇▇▇▇▇▇▇
shall assume the liabilities of ATIC in respect of such Trademarks and
thereafter ATIC will distribute any remaining assets (other than the
▇▇▇▇▇▇▇▇ Ordinary Shares) to Parent as a dividend on the ATIC Common Stock;
(ii) Pursuant to the ATIC Acquisition Agreement, Parent will
arrange through the Depositary for the transfer at book value of the ATIC
Common Stock (previously deposited by Parent into an American depositary
facility established by ATIC and the Depositary) to New ▇▇▇▇▇▇▇▇ in
exchange for the issuance to the Depositary or its nominee, on behalf of
Parent, of New ▇▇▇▇▇▇▇▇ Ordinary Shares. ATIC and New ▇▇▇▇▇▇▇▇ shall cause
the deposit agreement in respect of the American depositary facility
established between ATIC and the Depositary to be amended, restated and
novated to substitute New ▇▇▇▇▇▇▇▇ for ATIC as the sponsor and to reference
the New ▇▇▇▇▇▇▇▇ Ordinary Shares. After such exchange and amendment,
restatement and novation, New ▇▇▇▇▇▇▇▇ Ordinary Shares will be represented
by ADSs and evidenced by a replacement ADR held by Parent;
(iii) Immediately following the transfer described in paragraph
(ii) immediately above, pursuant to the ▇▇▇▇▇▇▇▇ Acquisition Agreement ATIC
will sell the ▇▇▇▇▇▇▇▇ Ordinary Shares to New ▇▇▇▇▇▇▇▇ for the book value
thereof, such consideration to be comprised of an intercompany receivable
plus the express assumption by New ▇▇▇▇▇▇▇▇ of all the remaining debts,
liabilities and obligations of ATIC, and thereafter ATIC will liquidate and
dissolve, causing the intercompany receivable to be extinguished;
15
(iv) New ▇▇▇▇▇▇▇▇ will procure any necessary financing
commitments to borrow pounds sterling 945 million and transfer this amount
to Parent by (a) increasing its share capital by means of a 3 for 2 stock-
split of its shares and (b) immediately thereafter purchasing from the
Depositary a number of shares equal to the increase in the number of shares
resulting from such stock-split pursuant to an agreement between Parent,
the Depositary and New ▇▇▇▇▇▇▇▇ in a form agreeable to the parties; and
(v) Prior to the Distribution Date, Parent and New ▇▇▇▇▇▇▇▇ shall
take all steps necessary to adjust the outstanding New ▇▇▇▇▇▇▇▇ Ordinary
Shares so that immediately prior to the Distribution, Parent will
beneficially own through its ownership of ADSs and New ▇▇▇▇▇▇▇▇ Ordinary
Shares, a number of New ▇▇▇▇▇▇▇▇ Ordinary Shares equal to four times the
total number of shares of Parent Common Stock outstanding on the Record
Date.
(b) Immediately following the Distribution, Parent will sell and
▇▇▇▇▇▇▇▇ shall purchase the outstanding shares of capital stock of J.R.F. for
fair value of approximately $10 million payable in cash pursuant to an agreement
between Parent and ▇▇▇▇▇▇▇▇ in a form agreeable to the parties.
(c) In connection with the transfers of assets other than capital
stock and the assumptions of debts, liabilities and obligations contemplated by
subsection (a) and subsection (b) of this Section, Parent and New ▇▇▇▇▇▇▇▇ shall
execute or cause to be executed by the appropriate entities the transfer and
assumption instruments in such forms as Parent and New ▇▇▇▇▇▇▇▇ shall reasonably
agree. The transfer of capital stock shall be effected by means of delivery of
stock certificates duly endorsed or accompanied by duly executed stock powers
and notation on the stock record books of the corporation or other legal
entities involved and, to the extent required by applicable law, by notation on
appropriate registries.
(d) Except as set forth in subsection (e) of this Section 3.01 or in
any of the Ancillary Agreements or in any other agreement or document entered
into in connection with the transactions contemplated by this
16
Agreement, each of the parties hereto understands and agrees that no party
hereto is, in this Agreement or in any other agreement or document entered into
in connection with the transactions contemplated by this Agreement or otherwise,
representing or warranting in any way as to the value or freedom from
encumbrance of, or any other matter concerning, any assets of such party, it
being agreed and understood that all assets are being transferred "as is, where
is."
(e) Parent hereby represents and warrants to New ▇▇▇▇▇▇▇▇ that, other
than as set forth in Schedule 3.01 hereto, ATIC does not engage and has not
engaged in any business or activity of any nature other than in connection with
(i) the acquisition, ownership and holding of the ▇▇▇▇▇▇▇▇ Ordinary Shares, (ii)
the acquisition, ownership and holding of the Trademarks and (iii) the
transactions contemplated by this Agreement.
Section 3.02 Elimination of Intercompany Accounts as of the
----------------------------------------------
Distribution Date. All intercompany receivables, payables and loans between the
-----------------
New ▇▇▇▇▇▇▇▇ Group, on the one hand, and the Parent Group, on the other hand,
shall be accorded the treatment set forth on Schedule 3.02.
Section 3.03 The New ▇▇▇▇▇▇▇▇ Board. At the Distribution Date, the
----------------------
New ▇▇▇▇▇▇▇▇ Board shall consist of, and New ▇▇▇▇▇▇▇▇ and Parent shall take all
actions which may be required to elect or otherwise appoint as directors of New
▇▇▇▇▇▇▇▇ on or prior to the Distribution Date, the persons named on Schedule
3.03.
Section 3.04 New ▇▇▇▇▇▇▇▇ Articles of Association and Memorandum of
------------------------------------------------------
Association. Prior to the Distribution Date, New ▇▇▇▇▇▇▇▇ shall adopt the
-----------
Memorandum of Association and Articles of Association to replace the existing
memorandum and articles of association of New ▇▇▇▇▇▇▇▇ and the New ▇▇▇▇▇▇▇▇
Board shall cause copies of the Memorandum of Association and Articles of
Association to be filed with the Registrar of Companies in England and Wales.
Section 3.05 Resignations; Transfer of Stock Held as Nominee. (a)
-----------------------------------------------
Parent shall cause all of its employees, officers and directors and all of the
employees and directors of any member of the Parent Group to resign, not later
than and with effect from the Distribution Date, from all boards of directors or
similar governing bodies of New ▇▇▇▇▇▇▇▇ or any member of the New ▇▇▇▇▇▇▇▇ Group
on which they serve, and from all positions as officers or employees of New
▇▇▇▇▇▇▇▇ or any member of the New ▇▇▇▇▇▇▇▇ Group in which they serve, except as
otherwise specified in Part A of Schedule 3.05, each delivering to New ▇▇▇▇▇▇▇▇
an irrevocable and unconditional waiver and release (without any payment by New
▇▇▇▇▇▇▇▇) of any and all claims and any liability of any kind whatsoever for
salary, fees, compensation or otherwise for loss of office or services performed
prior to such resignation (but not including any indemnification rights) that
such employee or director may have against New ▇▇▇▇▇▇▇▇ or the relevant member
of the New ▇▇▇▇▇▇▇▇ Group or any of their respective directors, officers,
employees, servants or agents. New ▇▇▇▇▇▇▇▇ shall cause all of its employees,
officers and directors and all of the employees and directors of any member of
the New ▇▇▇▇▇▇▇▇ Group to resign, not later than and with effect from the
17
Distribution Date, from all boards of directors or similar governing bodies of
Parent or any member of the Parent Group on which they serve, and from all
positions as officers or employees of Parent or any member of the Parent Group
in which they serve, except as otherwise specified in Part B of Schedule 3.05,
each delivering to Parent an irrevocable and unconditional waiver and release
(without any payment by Parent) of any and all claims and any liability of any
kind whatsoever for salary, compensation or otherwise for loss of office or
services performed prior to such resignation (but not including any
indemnification rights) that such employee or director may have against Parent
or the relevant member of the Parent Group or any of their respective directors,
officers, employees, servants or agents.
(b) Parent shall cause each of its employees and directors and each
of the employees and directors of any members of the Parent Group who holds
stock, or similar evidence of ownership, of any New ▇▇▇▇▇▇▇▇ Group entity as
nominee for such entity pursuant to the laws of the country in which such entity
is located to transfer such stock, or similar evidence of
18
ownership, to the Person so designated by New ▇▇▇▇▇▇▇▇ to be such nominee as of
and after the Distribution Date. New ▇▇▇▇▇▇▇▇ shall cause each of its employees
and directors and each of the employees and directors of any members of the New
▇▇▇▇▇▇▇▇ Group who holds stock, or similar evidence of ownership, of any Parent
Group entity as nominee for such entity pursuant to the laws of the country in
which such entity is located to transfer such stock, or similar evidence of
ownership, to the Person so designated by Parent to be such nominee as of and
after the Distribution Date.
(c) Parent shall cause each of its employees and directors and each
of the employees and directors of any members of the Parent Group to irrevocably
and unconditionally revoke or withdraw their express written authority, if any,
to act on behalf of any member of the New ▇▇▇▇▇▇▇▇ Group as an agent or
representative therefor as of and after the Distribution Date. New ▇▇▇▇▇▇▇▇
shall cause each of its employees and directors and each of the employees and
directors of any members of the New ▇▇▇▇▇▇▇▇ Group to irrevocably and
unconditionally revoke or withdraw their express written authority, if any, to
act on behalf of any member of the Parent Group as an agent or representative
therefor as of and after the Distribution Date.
Section 3.06 Insurance.
---------
(a) Policies and Rights Included Within Assets.
------------------------------------------
(i) The assets of the Parent Group shall include (A) the Parent
Policies, and (B) any and all rights of the Parent or a Parent Subsidiary
as an insured party under each of the Common Policies which is also a New
▇▇▇▇▇▇▇▇ Policy, subject to the terms of such Common Policies and any
limitations or obligations of Parent contemplated by this Section 3.06,
specifically including rights of indemnity and the right to be defended by
or at the expense of the insurer, with respect to all claims, suits,
actions, proceedings, injuries, losses, liabilities, damages and expenses
("Insurable Claims") incurred or claimed to have been incurred on or prior
to the Distribution Date by any party in or in connection with the conduct
of the businesses of the Parent Group or, to the extent any claim is made
against Parent or any of the Parent Subsidiaries, the conduct of the
businesses of the New ▇▇▇▇▇▇▇▇ Group, and which Insurable Claims may arise
out of an insured occurrence under one or more of such Common Policies;
provided, however, that nothing in this
19
clause shall be deemed to constitute (or to reflect) an assignment of such
Common Policies, or any of them, to Parent or any Parent Subsidiary.
(ii) The assets of the New ▇▇▇▇▇▇▇▇ Group shall include (A) the New
▇▇▇▇▇▇▇▇ Policies, and (B) any and all rights of New ▇▇▇▇▇▇▇▇ or a New
▇▇▇▇▇▇▇▇ Subsidiary as an insured party under each of the Common Policies
which is also a Parent Policy, subject to the terms of such Common Policies
and any limitations or obligations of New ▇▇▇▇▇▇▇▇ contemplated by this
Section 3.06, specifically including rights of indemnity and the right to
be defended by or at the expense of the insurer, with respect to all
Insurable Claims incurred or claimed to have been incurred on or prior to
the Distribution Date by any party in or in connection with the conduct of
the businesses of the New ▇▇▇▇▇▇▇▇ Group or, to the extent any claim is
made against New ▇▇▇▇▇▇▇▇ or any of the New ▇▇▇▇▇▇▇▇ Subsidiaries, the
conduct of the businesses of the Parent Group, and which Insurable Claims
may arise out of an insured occurrence under one or more of such Common
Policies; provided, however, that nothing in this clause shall be deemed to
constitute (or to reflect) an assignment of such Common Policies, or any of
them, to New ▇▇▇▇▇▇▇▇ or any New ▇▇▇▇▇▇▇▇ Subsidiary.
(b) Post-Distribution Date Claims.
-----------------------------
(i) If, on or subsequent to the Distribution Date, any person shall
assert a claim against Parent or any of the Parent Subsidiaries (including,
without limitation, where Parent or any of the Parent Subsidiaries are
joint defendants with other persons) with respect to any Insurable Claim
incurred or claimed to have been incurred on or prior to the Distribution
Date and which Insurable Claim may arise out of an insured occurrence under
one or more of the Common Policies which is also a New ▇▇▇▇▇▇▇▇ Policy, New
▇▇▇▇▇▇▇▇ shall, at the time such claim is asserted, to the extent any such
Policy requires that any applicable Insurance Proceeds thereunder be
collected directly by the party against whom the Insured Claim is asserted,
be deemed to designate, without need of further documentation, Parent as
the agent and attorney-in-
20
fact to assert and to collect any applicable Insurance Proceeds under such
Common Policy, and shall further be deemed to assign, without need of
further documentation, to Parent any and all rights of an insured party
under such Common Policy with respect to such asserted claim, specifically
including rights of indemnity and the right to be defended by or at the
expense of the insurer and the right to any applicable Insurance Proceeds
thereunder; provided, however, that nothing in this subsection 3.06(b)(i)
-------- -------
shall be deemed to constitute (or to reflect) an assignment of such Common
Policies, or any of them, to Parent or any Parent Subsidiary.
(ii) If, on or subsequent to the Distribution Date, any person shall
assert a claim against New ▇▇▇▇▇▇▇▇ or any of the New ▇▇▇▇▇▇▇▇ Subsidiaries
(including, without limitation, where New ▇▇▇▇▇▇▇▇ or any of the New
▇▇▇▇▇▇▇▇ Subsidiaries are joint defendants with other persons) with respect
to any Insurable Claim incurred or claimed to have been incurred on or
prior to the Distribution Date and which Insurable Claim may arise out of
an insured occurrence under one or more of the Common Policies which is
also a Parent Policy, Parent shall, at the time such claim is asserted, to
the extent any such Policy requires that any applicable Insurance Proceeds
thereunder be collected directly by the party against whom the Insured
Claim is asserted, be deemed to designate, without need of further
documentation, New ▇▇▇▇▇▇▇▇ as the agent and attorney-in-fact to assert and
to collect any applicable Insurance Proceeds under such Common Policy, and
shall further be deemed to assign, without need of further documentation,
to New ▇▇▇▇▇▇▇▇ any and all rights of an insured party under such Common
Policy with respect to such asserted claim, specifically including rights
of indemnity and the right to be defended by or at the expense of the
insurer and the right to any applicable Insurance Proceeds thereunder;
provided, however, that nothing in this subsection 3.06(b)(ii) shall be
-------- -------
deemed to constitute (or to reflect) an assignment of such Common Policies,
or any of them, to New ▇▇▇▇▇▇▇▇ or any New ▇▇▇▇▇▇▇▇ Subsidiary.
21
(c) Administration. From and after the Distribution Date:
--------------
(i) Parent shall be responsible for the (A) Insurance Administration
of the Parent Policies and (B) Claims Administration with respect to the
claims, debts, liabilities and obligations of the Parent Group, the Former
Parent Businesses, Bonny Products, Inc., ▇▇▇▇▇▇ Instruments, Inc. and
Sefton Corporation; provided, that the retention of the Parent Policies by
Parent or a Parent Subsidiary, as appropriate, is in no way intended to
limit, inhibit or preclude any right to insurance coverage for any Insured
Claim of an insured party under the Parent Policies, including but not
limited to New ▇▇▇▇▇▇▇▇ and any of its operations, Subsidiaries and
Affiliates; and
(ii) New ▇▇▇▇▇▇▇▇ shall be responsible for the (A) Insurance
Administration of the New ▇▇▇▇▇▇▇▇ Policies and (B) Claims Administration
with respect to the claims, debts, liabilities and obligations of the New
▇▇▇▇▇▇▇▇ Group and the Former ▇▇▇▇▇▇▇▇ Businesses but excluding Bonny
Products, Inc., ▇▇▇▇▇▇ Instruments, Inc. and Sefton Corporation; provided,
that the retention of the New ▇▇▇▇▇▇▇▇ Policies by New ▇▇▇▇▇▇▇▇ or a New
▇▇▇▇▇▇▇▇ Subsidiary, as appropriate, is in no way intended to limit,
inhibit or preclude any right to insurance coverage for any Insured Claim
of an insured party under the New ▇▇▇▇▇▇▇▇ Policies, including but not
limited to Parent and any of its operations, Subsidiaries and Affiliates.
(d) Insurance Premiums. The party charged with Insurance
------------------
Administration of a Common Policy under Section 3.06(c) shall pay any premiums
thereunder (retrospectively-rated or otherwise) which are required to be paid
subsequent to the Distribution Date in order to preserve coverage under such
Policy with respect to claims which might be made with respect to an act,
omission or other event taking place on or prior to the Distribution Date and
shall provide the other party with such evidence as it may from time to time
reasonably require as to the payment of such premiums and the fact that the
relevant Common Policy is in full force and effect. The party responsible for
such Insurance Administration shall have the right to be reimbursed on
22
demand by the other party for the portion of all of such premiums that pertain
to the claims, debts, liabilities and obligations of the Parent Group or the
Former Parent Businesses (with respect to Common Policies the Insurance
Administration of which is charged to New ▇▇▇▇▇▇▇▇), or for the claims, debts,
liabilities and obligations of the New ▇▇▇▇▇▇▇▇ Group or the Former ▇▇▇▇▇▇▇▇
Businesses (with respect to Common Policies the Insurance Administration of
which is charged to Parent), as the case may be. If the party charged with such
Insurance Administration does not pay any such premium, the other party shall
have the right to do so and to be reimbursed for the portion of such premium
which it would not have had to pay had the premium been paid in accordance with
the preceding sentence. Notwithstanding the foregoing, neither Parent nor any
Parent Subsidiary shall be responsible for insurance adjustments under policies
provided by The Galleon Insurance Company Limited or The Schooner Insurance
Company Limited.
(e) Allocation of Insurance Proceeds. Insurance Proceeds received
--------------------------------
with respect to claims, costs and expenses under the Common Policies shall be
paid to Parent with respect to the claims, debts, liabilities and obligations of
the Parent Group, the Former Parent Businesses, Bonny Products, Inc., ▇▇▇▇▇▇
Instruments, Inc. and Sefton Corporation and to New ▇▇▇▇▇▇▇▇ with respect to the
claims, debts, liabilities and obligations of the New ▇▇▇▇▇▇▇▇ Group and the
Former ▇▇▇▇▇▇▇▇ Businesses but excluding Bonny Products, Inc., ▇▇▇▇▇▇
Instruments, Inc. and Sefton Corporation. The parties agree that there shall be
no obligation to allocate Insurance Proceeds in respect of any Common Policy in
the event that the aggregate limits on such Common Policy are exhausted. The
parties agree to cooperate in good faith with respect to insurance matters.
(f) Agreement for Waiver of Conflict and Shared Defense. If Insured
---------------------------------------------------
Claims of both Parent or any member of the Parent Group and New ▇▇▇▇▇▇▇▇ or any
member of the New ▇▇▇▇▇▇▇▇ Group exist relating to the same occurrence, Parent
and New ▇▇▇▇▇▇▇▇ agree to, or procure that the relevant Parent Subsidiary and
New ▇▇▇▇▇▇▇▇ Subsidiary (as appropriate) shall, jointly defend and waive any
conflict of interest necessary to the conduct of that joint defense. This
subsection (f) shall be without prejudice to, and shall in no way be construed
to limit or otherwise alter, modify or amend in any way, the
23
indemnity obligations of the parties to this Agreement, including those created
by this Agreement or the Indemnification Agreement, by operation of law or
otherwise.
(g) Directors' and Officers' Liability Insurance. Each of Parent and
--------------------------------------------
New ▇▇▇▇▇▇▇▇ agree to cooperate in good faith to obtain prior to the
Distribution Date, and to maintain for a period of time after the Distribution
Date, directors' and officers' liability insurance policies covering events
occurring prior to the Distribution Date for all persons who are or were
directors and officers of Parent and the Parent Subsidiaries or New ▇▇▇▇▇▇▇▇ and
the New ▇▇▇▇▇▇▇▇ Subsidiaries, respectively, on or prior to the Distribution
Date, such directors' and officers' liability insurance policies to provide
generally comparable coverage as provided under Parent's current directors' and
officers' liability insurance policies.
Section 3.07 Use of Names.
------------
(a) Use of New ▇▇▇▇▇▇▇▇ Name. Any existing printed material showing
------------------------
any affiliation or connection of Parent or any member of the Parent Group with
New ▇▇▇▇▇▇▇▇ or any member of the New ▇▇▇▇▇▇▇▇ Group shall not be used by Parent
or any member of the Parent Group after the Distribution Date, except that the
restrictions contained in this Section 3.07(a) shall not apply to filings,
reports and other documents required by applicable law or regulations of
securities exchanges to be filed and/or made publicly available. On and after
the Distribution Date, neither Parent nor any Parent Subsidiary shall represent
to third parties that any of them is affiliated or connected with New ▇▇▇▇▇▇▇▇
or any member of the New ▇▇▇▇▇▇▇▇ Group.
(b) Use of Parent Name. Any existing printed material showing any
------------------
affiliation or connection of New ▇▇▇▇▇▇▇▇ or any member of the New ▇▇▇▇▇▇▇▇
Group with Parent or any member of the Parent Group shall not be used by New
▇▇▇▇▇▇▇▇ or any member of the New ▇▇▇▇▇▇▇▇ Group after the Distribution Date,
except that the restrictions contained in this Section 3.07(b) shall not apply
to filings, reports and other documents required by applicable law or
regulations of securities exchanges to be filed and/or made publicly available.
On and after the Distribution Date, neither New ▇▇▇▇▇▇▇▇ nor any New
24
▇▇▇▇▇▇▇▇ Subsidiary shall represent to third parties that any of them is
affiliated or connected with Parent or any member of the Parent Group.
Section 3.08 Transfers Not Effected Prior to the Distribution;
-------------------------------------------------
Transfers Deemed Effective as of the Distribution Date. To the extent that any
------------------------------------------------------
transfers and assumptions contemplated by this Article III shall not have been
consummated on or prior to the Distribution Date, the parties shall cooperate in
good faith to effect such transfers as promptly following the Distribution Date
as shall be practicable, it nonetheless being agreed and understood by all the
parties that no party shall be liable in any manner to any other party for any
failure of any of the transfers contemplated by this Article III to be
consummated prior to the Distribution Date. Subject to the provisions of
Section 2.03, nothing herein shall be deemed to require the transfer of any
assets or the assumption of any debts, liabilities or obligations which by their
terms or operation of law cannot be transferred or assumed; provided, however,
-------- -------
that Parent and New ▇▇▇▇▇▇▇▇ shall, and shall cause their respective
Subsidiaries to, cooperate in good faith to seek to obtain any necessary
consents or approvals for the transfer and assumption of all assets and debts,
liabilities or obligations contemplated to be transferred or assumed pursuant to
this Article III. In the event that any such transfer of assets (other than
capital stock of corporations to be transferred hereunder) or assumption of
debts, liabilities or obligations has not been consummated, effective as of and
after the Distribution Date, the party retaining such asset or debt, liability
or obligation shall thereafter hold such asset in trust for the benefit of the
party entitled thereto (at the expense of the party entitled thereto) and retain
such debt, liability or obligation for the account of the party by whom such
debt, liability or obligation is to be assumed, and take such other action as
may be reasonably requested by and at the cost and expense of the party to whom
such asset is to be transferred, or by whom such debt, liability or obligation
is to be assumed, as the case may be, in order to place such party, insofar as
reasonably possible, in the same position as would have existed had such asset
or debt, liability or obligation been transferred or assumed as of the
Distribution Date. As and when any such asset or debt, liability or obligation
becomes transferable, such transfer shall be effected forthwith. The parties
25
agree that, as of the Distribution Date, each party hereto shall be deemed to
have acquired complete and sole beneficial ownership over all of the assets,
together with all rights, powers and privileges incident thereto, and shall be
deemed to have assumed in accordance with the terms of this Agreement and the
Ancillary Agreements all of the debts, liabilities and obligations, and all
duties, obligations and responsibilities incident thereto, which such party is
entitled to acquire or required to assume pursuant to the terms hereof and
thereof.
Section 3.09 Guarantees; etc.
---------------
(a) Parent Guarantees. Parent has entered into guarantees, letter of
-----------------
credit obligations, performance or surety bonds, comfort letters and other
similar obligations of Parent relating to the businesses of the New ▇▇▇▇▇▇▇▇
Group, which obligations are set forth on Schedule 3.09(a) and will remain
outstanding as of and after the Distribution Date (the "Parent Guarantee
Obligations"). Pursuant to Section 4.02, New ▇▇▇▇▇▇▇▇ shall indemnify and hold
harmless Parent in all respects from the Parent Guarantee Obligations.
(b) ▇▇▇▇▇▇▇▇ Guarantees. ▇▇▇▇▇▇▇▇ has entered into guarantees, letter
-------------------
of credit obligations, performance or surety bonds, comfort letters and other
similar obligations of ▇▇▇▇▇▇▇▇ relating to the businesses of the Parent Group,
which obligations are set forth on Schedule 3.09(b) and will remain outstanding
as of and after the Distribution Date (the "▇▇▇▇▇▇▇▇ Guarantee Obligations").
Pursuant to Section 4.01, Parent shall indemnify and hold harmless ▇▇▇▇▇▇▇▇ in
all respects from the ▇▇▇▇▇▇▇▇ Guarantee Obligations.
ARTICLE IV
INDEMNIFICATION
---------------
Section 4.01 Indemnification by Parent. Except with respect to
-------------------------
claims for proceeds of Policies or other amounts received, which shall be
governed by Section 3.06 and Section 4.03, and subject to the provisions of this
Article IV, Parent shall with effect from the Distribution Date indemnify,
defend and hold harmless New ▇▇▇▇▇▇▇▇, each Affiliate of New ▇▇▇▇▇▇▇▇ and each
of their respective directors, officers, employees
26
and agents and each of the heirs, executors, successors and assigns of any of
the foregoing (the "New ▇▇▇▇▇▇▇▇ Indemnitees") from and against any and all
damage, loss, liability, obligation, debt, claim, demand, cost and expense of
whatever nature (including, without limitation, reasonable attorneys' fees and
expenses in connection with any and all pending or threatened actions, suits,
arbitrations, inquiries, proceedings or investigations by or before any court,
any governmental or other regulatory or administrative agency, body or
commission or any other tribunal) (collectively, "Indemnifiable Losses")
relating to, arising out of, by reason of or otherwise in connection with:
(a) the Parent Liabilities (including the failure by Parent or any of
its Affiliates to pay, perform or otherwise discharge in due course such Parent
Liabilities in accordance with their terms), whether any such Indemnifiable
Losses relate to or arise from events, occurrences, actions, omissions, facts or
circumstances occurring, existing or asserted before, on or after the
Distribution Date;
(b) any untrue statement or alleged untrue statement of a material
fact contained in any of the U.S. Filings, or any omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading; but only in each case with respect to information provided
by Parent relating to the Parent Group or Parent contained in or omitted from
the U.S. Filings;
(c) any untrue, inaccurate or misleading statement or alleged untrue,
inaccurate or misleading statement contained in any of the U.K. Filings, or any
omission or alleged omission to state therein any matter required to be stated
therein in accordance with the provisions of Sections 146 and 147 of the
Financial Services Act of 1986 or necessary to make the statements therein, in
light of the circumstances under which they were made, not untrue, inaccurate or
misleading; but only in each case with respect to information provided by Parent
relating to the Parent Group or Parent contained in or omitted from the U.K.
Filings;
(d) the ▇▇▇▇▇▇▇▇ Guarantee Obligations whether any such Indemnifiable
Losses relate to or arise from
27
events, occurrences, actions, omissions, facts or circumstances occurring,
existing or asserted before, on or after the Distribution Date; and
(e) the enforcement by the New ▇▇▇▇▇▇▇▇ Indemnitees of their rights to
be indemnified, defended and held harmless under this Agreement.
Notwithstanding anything in this Section 4.01 to the contrary,
Indemnifiable Losses shall not cover liabilities for Taxes, which shall be
governed exclusively by the Tax Allocation Agreement, or claims, debts,
liabilities and obligations arising from smoking and health or fire safe
cigarette matters, which shall be governed exclusively by the Indemnification
Agreement.
Section 4.02 Indemnification by New ▇▇▇▇▇▇▇▇. Except with respect to
-------------------------------
claims for proceeds of Policies or other amounts received, which shall be
governed by Section 3.06 and Section 4.03, and subject to the provisions of this
Article IV, New ▇▇▇▇▇▇▇▇ shall with effect from the Distribution Date indemnify,
defend and hold harmless Parent, each Affiliate of Parent and each of their
respective directors, officers, employees and agents and each of the heirs,
executors, successors and assigns of any of the foregoing (the "Parent
Indemnitees") from and against any and all Indemnifiable Losses relating to,
arising out of, by reason of or otherwise in connection with:
(a) the New ▇▇▇▇▇▇▇▇ Liabilities (including the failure by New
▇▇▇▇▇▇▇▇ or any of its Affiliates to pay, perform or otherwise discharge in due
course such New ▇▇▇▇▇▇▇▇ Liabilities in accordance with their terms), whether
any such Indemnifiable Losses relate to or arise from events, occurrences,
actions, omissions, facts or circumstances occurring, existing or asserted
before, on or after the Distribution Date;
(b) any untrue statement or alleged untrue statement of a material
fact contained in any of the U.S. Filings, or any omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading; but only in each case with respect to information provided
by New ▇▇▇▇▇▇▇▇ relating to the New ▇▇▇▇▇▇▇▇
28
Group or New ▇▇▇▇▇▇▇▇ contained in or omitted from the U.S. Filings;
(c) any untrue, inaccurate or misleading statement or alleged untrue,
inaccurate or misleading statement contained in any of the U.K. Filings, or any
omission or alleged omission to state therein any matter required to be stated
therein in accordance with the provisions of Sections 146 and 147 of the
Financial Services Act of 1986 or necessary to make the statements therein, in
light of the circumstances under which they were made, not untrue, inaccurate or
misleading; but only in each case with respect to information provided by New
▇▇▇▇▇▇▇▇ relating to the New ▇▇▇▇▇▇▇▇ Group or New ▇▇▇▇▇▇▇▇ contained in or
omitted from the U.K. Filings;
(d) the Parent Guarantee Obligations whether any such Indemnifiable
Losses relate to or arise from events, occurrences, actions, omissions, facts or
circumstances occurring, existing or asserted before, on or after the
Distribution Date; and
(e) the enforcement by the Parent Indemnitees of their rights to be
indemnified, defended and held harmless under this Agreement.
Notwithstanding anything in this Section 4.02 to the contrary,
Indemnifiable Losses shall not cover liabilities for Taxes, which shall be
governed exclusively by the Tax Allocation Agreement, or claims, debts,
liabilities and obligations arising from smoking and health or fire safe
cigarette matters, which shall be governed exclusively by the Indemnification
Agreement.
Section 4.03 Insurance, Foreign Exchange and Taxes; Limitations on
-----------------------------------------------------
Indemnification Obligations.
---------------------------
(a) If any party (an "Indemnitee") shall have received full payment
(an "Indemnity Payment") pursuant to Section 4.01 or Section 4.02 of this
agreement from any other party (an "Indemnifying Party") in respect of any
Indemnifiable Losses and shall subsequently actually receive proceeds of
Policies or other amounts in respect of such Indemnifiable Losses, then such
Indemnitee shall pay to such Indemnifying Party a sum equal to the amount
actually received (net of increased insurance premiums and charges related
directly and solely to the related Indemnifiable Losses and any expenses
(including
29
reasonable legal fees and expenses) incurred by such Indemnitee in connection
with seeking to collect such insurance proceeds or other amounts, and up to but
not in excess of the amount of any Indemnity Payment made hereunder). The
parties acknowledge that an Indemnitee shall not be required to seek recovery of
proceeds of Policies. An insurer who would otherwise be obligated to pay any
claim shall not be relieved of such responsibility, or have any subrogation
rights with respect thereto, solely by virtue of the indemnification provisions
hereof, it being expressly understood and agreed that no insurer or any other
third party shall be entitled to any benefit they would not be entitled to
receive in the absence of the indemnification provisions hereof.
(b) In the event that an Indemnity Payment shall be denominated in a
currency other than United States dollars, the amount of such payment shall be
translated into United States dollars using the Foreign Exchange Rate for such
currency determined in accordance with the following rules:
(i) with respect to Indemnifiable Losses arising from payment by a
financial institution under a guarantee, comfort letter, letter of credit,
foreign exchange contract or similar instrument, the Foreign Exchange Rate
for such currency shall be determined as of the date on which such
financial institution shall have been reimbursed by the Indemnitee;
(ii) with respect to Indemnifiable Losses covered by insurance, the
Foreign Exchange Rate for such currency shall be the Foreign Exchange Rate
employed by the insurance company providing such insurance in settling such
Indemnifiable Losses with the Indemnifying Party as of the date on which
payment shall be made by such insurance company; and
(iii) with respect to Indemnifiable Losses not covered by clause (i)
or (ii) above, the Foreign Exchange Rate for such currency shall be
determined as of the date that notice of the claim with respect to such
Indemnifiable Losses shall be given to the Indemnitee.
30
(c) In determining the amount of any Indemnifiable Losses, such amount
shall be (i) reduced to take into account any net Tax benefit realized by the
Indemnitee arising from the incurrence or payment by the Indemnitee of such
Indemnifiable Losses and (ii) increased to take into account any net Tax cost
incurred by the Indemnitee as a result of the receipt or accrual of payments
hereunder (grossed-up for such increase), in each case determined by treating
the Indemnitee as recognizing all other items of income, gain, loss, deduction
or credit before recognizing any item arising from such Indemnifiable Losses.
Section 4.04 Procedures for Indemnification.
------------------------------
(a) Procedures for Indemnification of Third Party Claims shall be as
follows:
(i) If a claim or demand is made against an Indemnitee by any person
who is not a party to this Agreement as to which an Indemnifying Party may
be obligated to provide indemnification pursuant to this Agreement (a
"Third Party Claim"), such Indemnitee shall notify the Indemnifying Party
in writing of the Third Party Claim (giving reasonable details of the
specific matter or claim in respect of which such Third Party Claim is made
to the extent that such information is then known to the Indemnitee)
promptly (and in any event within 15 business days) after receipt by such
Indemnitee of written notice of the Third Party Claim; provided, however,
-------- -------
that failure to give such notification shall not affect the indemnification
provided hereunder except to the extent the Indemnifying Party shall have
been actually prejudiced as a result of such failure (except that the
Indemnifying Party shall not be liable for any expenses incurred during the
period in which the Indemnitee failed to give such notice). Thereafter,
the Indemnitee shall deliver to the Indemnifying Party, promptly (and in
any event within 15 business days) after the Indemnitee's receipt thereof,
copies of all notices and documents (including court papers) received or
transmitted by the Indemnitee relating to the Third Party Claim and shall
consult fully with the Indemnifying Party in respect of the Third Party
Claim and permit, and procure that any relevant person in the control of
the Indemnitee shall
31
permit, the Indemnifying Party and its advisers reasonable access to
relevant employees, premises, documents and records (including, without
limitation, the right to take copies at the Indemnifying Party's expense of
such documents and records) for the purposes of determining whether the
Indemnifying Party is obligated to provide indemnification hereunder.
(ii) If a Third Party Claim is made against an Indemnitee, the
Indemnifying Party shall be entitled to participate in the defense thereof
and, if it so chooses and unconditionally and irrevocably acknowledges in
writing its obligation to indemnify the Indemnitee therefor, to assume the
defense thereof with counsel selected by the Indemnifying Party; provided
that such counsel is not reasonably objected to by the Indemnitee. Should
the Indemnifying Party so elect to assume the defense of a Third Party
Claim, the Indemnifying Party shall not be liable to the Indemnitee for
legal or other expenses subsequently incurred by the Indemnitee in
connection with the defense thereof after the date of such assumption. If
the Indemnifying Party assumes such defense, the Indemnitee shall have the
right to participate in the defense thereof and to employ counsel, at its
own expense, separate from the counsel employed by the Indemnifying Party,
it being understood that the Indemnifying Party shall control such defense.
The Indemnifying Party shall be liable for the fees and expenses of counsel
employed by the Indemnitee for any period during which the Indemnifying
Party has failed to assume the defense thereof (other than during the
period prior to the time the Indemnitee shall have given notice of the
Third Party Claim as provided above). If the Indemnifying Party elects to
assume the defense of any Third Party Claim, the Indemnifying Party shall
promptly supply to the Indemnitee copies of all correspondence and
documents relating to or in connection with such Third Party Claim and keep
the Indemnitee fully informed of all developments relating to or in
connection with such Third Party Claim (including, without limitation,
provide to the Indemnitee promptly on reasonable request updates and
summaries as to the status thereof).
32
(iii) If the Indemnifying Party elects to assume the defense of any
Third Party Claim, all of the Indemnitees shall cooperate with the
Indemnifying Party in the defense thereof, such cooperation to be at the
expense (including reasonable legal fees and expenses) of the Indemnifying
Party. Without limiting the generality of the foregoing, the Indemnitee
shall, at the expense (including reasonable legal fees and expenses) of the
Indemnifying Party, (A) provide or cause to be provided to the Indemnifying
Party such information and assistance as the Indemnifying Party may
reasonably request to defend such Third Party Claim, including, without
limitation, the assistance of officers, employees, directors, agents and
others acting on behalf of the Indemnitee when reasonably considered
necessary by the Indemnifying Party to defend such Third Party Claim, and
(B) take or cause to be taken such action as the Indemnifying Party may
reasonably require to defend the Third Party Claim.
(iv) If the Indemnifying Party acknowledges in writing as aforesaid
its obligation to indemnify the Indemnitee for a Third Party Claim, then in
no event will the Indemnitee admit any liability with respect to, or
settle, compromise or discharge, any Third Party Claim without the
Indemnifying Party's prior written consent (such consent not to be
unreasonably withheld or delayed); provided, however, that the Indemnitee
-------- -------
shall have the right to admit any liability with respect to, or settle,
compromise or discharge, such Third Party Claim without the consent of the
Indemnifying Party if the Indemnitee irrevocably and unconditionally
releases absolutely the Indemnifying Party from its indemnification
obligation hereunder with respect to such Third Party Claim and such
admission, settlement, compromise or discharge would not in the reasonable
opinion of the Indemnifying Party otherwise materially adversely affect the
Indemnifying Party. If the Indemnifying Party acknowledges in writing as
aforesaid its obligation to indemnify the Indemnitee for a Third Party
Claim, the Indemnitee will agree to any settlement, compromise or discharge
of a Third Party Claim that the Indemnifying Party may recommend and that
by its terms obligates the Indemnifying Party to pay the full amount of the
33
liability in connection with such Third Party Claim and unconditionally and
irrevocably releases the Indemnitee completely in connection with such
Third Party Claim and that would not in the reasonable opinion of the
Indemnitee otherwise materially adversely affect the Indemnitee; provided,
--------
however, that the Indemnitee may refuse to agree to any such settlement,
-------
compromise or discharge if the Indemnitee unconditionally and irrevocably
acknowledges in writing that the Indemnifying Party's indemnification
obligation to the Indemnitee with respect to such Third Party Claim shall
not exceed the amount that would be required to be paid by or on behalf of
the Indemnifying Party in connection with such settlement, compromise or
discharge. Except as required by law or legal process, Parent and New
▇▇▇▇▇▇▇▇ shall not, and shall not permit any of their respective
Affiliates, officers, directors, employees, agents, or others acting on
their respective behalf to, make any adverse public statement regarding any
Third Party Claim.
(v) Notwithstanding the foregoing, (A) the Indemnifying Party shall
not be entitled to assume the defense of any Third Party Claim if the
Indemnitee unconditionally and irrevocably waives and releases in writing
its right to be indemnified by the Indemnifying Party therefor and (B) the
Indemnifying Party shall not be entitled to assume the defense of any Third
Party Claim (and shall be liable for the fees and expenses of counsel
incurred by the Indemnitee in defending such Third Party Claim) if the
Third Party Claim seeks an order, injunction or other equitable relief or
relief for other than money damages against the Indemnitee which the
Indemnitee reasonably determines, after conferring with its counsel, cannot
be separated from any related claim for money damages. If such equitable
relief or other relief portion of the Third Party Claim can be so separated
from that for money damages, the Indemnifying Party shall be entitled to
assume the defense of the portion relating to money damages (subject to
clause (v)(A) above in respect of such portion).
(vi) If the Indemnifying Party unconditionally and irrevocably
acknowledges in writing as aforesaid
34
its obligations to indemnify the Indemnitee for a Third Party Claim, the
Indemnitee shall take and shall procure to be taken such action as may be
reasonably requested in writing by the Indemnifying Party to avoid or
lessen any loss or liability which is the subject of such claim, and the
Indemnifying Party hereby agrees to indemnify and hold harmless such
Indemnitee from and against any and all costs and expenses (including
reasonable legal fees and expenses), claims and liabilities which the
Indemnitee may suffer or incur relating to, arising out of, by reason of or
otherwise in connection with the action requested.
(vii) For the avoidance of doubt, the provisions of this Section
4.04(a) shall not apply in any respect to the Indemnification Agreement.
(b) Any claim on account of Indemnifiable Losses which does not result
from a Third Party Claim shall be asserted by written notice (giving reasonable
details of the specific matter or claim in respect of which such claim is made
to the extent that such information is then known to the Indemnitee) given by
the Indemnitee to the Indemnifying Party from whom such indemnification is
sought. If such Indemnifying Party does not respond to the Indemnitee within 30
days after the receipt of such notice, such Indemnifying Party shall be deemed
to have refused to accept responsibility to make payment in respect of such
claim. If such Indemnifying Party does not respond within such 30-day period or
rejects such claim in whole or in part, such Indemnitee shall be free to pursue
such remedies as may be available to such party under this Agreement or under
applicable law.
(c) In addition to any adjustments required pursuant to Section 4.03,
if the amount of any Indemnifiable Losses shall, at any time subsequent to the
payment required by this Agreement, be reduced by recovery, settlement or
otherwise, the amount of such reduction, less any reasonable expenses incurred
in connection therewith, shall promptly be repaid by the Indemnitee to the
Indemnifying Party.
(d) In the event of payment by an Indemnifying Party to any Indemnitee
in connection with any Third Party Claim, such Indemnifying Party shall be
subrogated
35
to and shall stand in the place of such Indemnitee as to any events or
circumstances in respect of which such Indemnitee may have any right or claim
relating to such Third Party Claim against any claimant or plaintiff asserting
such Third Party Claim or against any other Person. Such Indemnitee shall
cooperate with such Indemnifying Party in a reasonable manner, and at the cost
and expense of such Indemnifying Party, in prosecuting any subrogated right or
claim.
Section 4.05 Remedies Cumulative. The remedies provided in this
-------------------
Article IV shall be cumulative and shall not preclude assertion by any
Indemnitee of any other rights or the seeking of any and all other remedies
against any Indemnifying Party.
Section 4.06 Survival of Indemnities. The obligations of each of
-----------------------
Parent and New ▇▇▇▇▇▇▇▇ under this Article IV shall survive the sale or other
transfer by it of any assets or businesses or the assignment by it of any
Liabilities, with respect to any Indemnifiable Losses of the other related to
such assets, businesses or Liabilities.
Section 4.07 Limitations on Liability. (a) An Indemnifying Party
------------------------
shall not be liable in respect of any claim in connection with any Indemnifiable
Losses (a "Relevant Claim") to the extent that the Relevant Claim is
attributable (in whole or in part) to anything expressly provided to be done or
omitted to be done pursuant to this Agreement, the Tax Allocation Agreement or
any other Ancillary Agreement.
(b) An Indemnifying Party shall not be liable in respect of any
Relevant Claim to the extent that the subject of the claim has been or is made
good or is otherwise compensated for without cost to the Indemnitee. An
Indemnitee shall not be entitled to recover damages or otherwise obtain
reimbursement or restitution for more than the amount of any Indemnifiable
Losses.
(c) In the event that an Indemnitee is entitled to claim under this
Agreement, or under any Ancillary Agreement, in respect of the same subject
matter, the Indemnitee may claim under any one or all of such agreements but
payments made under any Ancillary Agreement shall pro tanto satisfy and
discharge any claim
36
which is capable of being made under this Agreement in respect of the same
subject matter and vice versa.
(d) An Indemnifying Party shall not be liable in respect of a Relevant
Claim to the extent that the Relevant Claim is attributable (in whole or in
part) to any voluntary act or transaction carried out by or at the written
request of an Indemnitee or any of their successors in title or assigns on or
after the Distribution Date other than any such act or transaction carried out
in the ordinary and proper course of business.
(e) The provisions of this Section 4.07 shall apply notwithstanding
anything else in this Agreement or any Ancillary Agreement to the contrary.
ARTICLE V
EMPLOYEE BENEFITS
-----------------
Section 5.01 Retirement Plan for Goldsboro Employees. Effective as
---------------------------------------
of the Distribution Date, ▇▇▇▇▇▇▇▇ employees based in Goldsboro, North Carolina
and covered under the Parent Retirement Plan shall cease to accrue further
benefits thereunder. ▇▇▇▇▇▇▇▇ shall establish a separate retirement plan and
trust for such employees which shall be designed to be tax qualified under the
Code. As soon as practicable after the Distribution Date, Parent shall cause to
be transferred to such separate ▇▇▇▇▇▇▇▇ retirement plan and trust the assets
and liabilities of such ▇▇▇▇▇▇▇▇ employees under the Parent Retirement Plan.
The amount of assets and liabilities to be transferred shall be determined by
the actuary for the Parent Retirement Plan as the amount necessary to comply
with section 414(l) of the Code.
ARTICLE VI
ACCESS TO INFORMATION
---------------------
Section 6.01 Provision of Corporate Records.
------------------------------
(a) Parent shall arrange as soon as practicable following the
Distribution Date, to the extent not previously delivered in connection with the
transactions contemplated by Section 3.01, for the delivery (at New ▇▇▇▇▇▇▇▇'▇
cost) to New ▇▇▇▇▇▇▇▇ of all
37
original agreements, contracts, instruments, documents, books, records and
files, including records and files stored on computer disks or tapes or any
other storage medium (collectively, "Records"), if any, in the possession or
control of Parent relating specifically to the business and operations of the
New ▇▇▇▇▇▇▇▇ Group, subject to the exceptions set forth in Section 6.01(c).
(b) New ▇▇▇▇▇▇▇▇ shall arrange as soon as practicable following the
Distribution Date, to the extent not previously delivered in connection with the
transactions contemplated by Section 3.01, for the delivery (at Parent's cost)
to Parent of all Records, if any, in the possession or control of New ▇▇▇▇▇▇▇▇
relating specifically to the business and operations of the Parent Group,
subject to the exceptions set forth in Section 6.01(c).
(c) Sections 6.01(a) and (b) shall be subject to the following
exceptions:
(i) Parent and New ▇▇▇▇▇▇▇▇ each acknowledge that certain Records
may contain incidental information relating to the business and operations
of the other party but may also relate primarily to the business and
operations of the party in possession or control of such Records, and that
the party in possession or control of such Records may retain them and
shall provide the other party with copies of the relevant portions thereof
relating to the business and operations of the other party, if material, on
the Distribution Date or as soon as practicable thereafter;
(ii) Each of Parent and New ▇▇▇▇▇▇▇▇ may retain all Records
consisting of routine correspondence (including correspondence, memoranda,
reports and other information provided by employees of one party to the
other) that would be burdensome to deliver to the other party, provided
that such party shall, from and after the Distribution Date, provide copies
thereof to the other party if reasonably and specifically requested by such
other party within a reasonable period following the Distribution Date not
to exceed 90 days;
38
(iii) Each of Parent and New ▇▇▇▇▇▇▇▇ may retain all Records
prepared in connection with the Distribution;
(iv) Parent may retain any Records consisting of or directly
relating to Common Policies that are also Parent Policies, provided that
Parent shall provide copies of Records in respect of claims made by or on
behalf of any member of the New ▇▇▇▇▇▇▇▇ Group under such Common Policies
to the extent reasonably and specifically requested by New ▇▇▇▇▇▇▇▇, and
New ▇▇▇▇▇▇▇▇ may retain any Records consisting of or directly relating to
Common Policies that are also New ▇▇▇▇▇▇▇▇ Policies, provided that New
▇▇▇▇▇▇▇▇ shall provide copies of Records in respect of claims made by or on
behalf of any member of the Parent Group under such Common Policies to the
extent reasonably and specifically requested by Parent; and
(v) Each of Parent and New ▇▇▇▇▇▇▇▇ may retain any Records
consisting of publications available to the public generally.
(d) Notwithstanding anything in this Section 6.01 to the contrary, the
delivery and retention of any Records relating to the liability of either the
Parent Group or the New ▇▇▇▇▇▇▇▇ Group for Taxes or otherwise in connection with
any audit or other investigation by any taxing authority shall be governed
solely by the terms of the Tax Allocation Agreement.
Section 6.02 Access to Information. After the Distribution Date,
---------------------
upon reasonable written notice, Parent and New ▇▇▇▇▇▇▇▇ shall, to the extent
that such information has not previously been delivered pursuant to Section
6.01(a) or Section 6.01(b), furnish or cause to be furnished to each other and
their respective Representatives reasonable access and duplicating rights,
during normal business hours and at the cost of the party so requesting, to such
information and assistance as is reasonably necessary in connection with
asserting, processing or prosecuting insurance administration and claims
handling, environmental matters, financial reporting and accounting matters or
any other required reports or submissions to governmental bodies with respect to
the New ▇▇▇▇▇▇▇▇ Group and the Parent Group, respectively, for periods prior to
the Distribution Date
39
or in connection with litigation and other claims, proceedings and
investigations. Except as required by law or otherwise agreed to in writing by
the parties, such information shall, to the extent that such information has not
previously been delivered pursuant to Section 6.01(a) or Section 6.01(b), be
retained for a period of 5 years after the Distribution Date, except that Common
Policies shall be retained indefinitely. In addition, after the expiration of
such five-year period, such information shall not be destroyed or otherwise
disposed of at any time, unless, prior to such destruction or disposal, (a) the
party proposing to destroy or otherwise dispose of such information shall
provide no less than 30 days' prior written notice to the other, specifying in
reasonable detail the information proposed to be destroyed or disposed of and
(b) if a recipient of such notice shall request in writing prior to the
scheduled date for such destruction or disposal that any of the information
proposed to be destroyed or disposed of be delivered to such requesting party,
the party proposing the destruction or disposal shall promptly arrange for the
delivery of such of the information as was requested at the expense of the party
requesting such information.
Section 6.03 Production of Witnesses. After the Distribution Date,
-----------------------
each of Parent and New ▇▇▇▇▇▇▇▇ shall, and shall cause their respective
Subsidiaries to, use reasonable efforts to make available to the other party and
its Subsidiaries, upon written request and at the cost and expense of the party
so requesting, its directors, officers, employees and agents as witnesses to the
extent that any such Person may reasonably be required (giving consideration to
business demands of such Representatives) in connection with any legal,
administrative or other proceedings in which the requesting party may from time
to time be involved.
Section 6.04 Confidentiality. Each of Parent and New ▇▇▇▇▇▇▇▇ shall,
---------------
and shall cause each of their respective Subsidiaries and Representatives to,
hold, in strict confidence, all information concerning the other in its
possession or control or furnished by the other or the other's Representatives
pursuant to or in connection with either this Agreement or any Ancillary
Agreement or the transactions contemplated hereby or thereby (except to the
extent that such information has (a) come into the public domain through no
fault of such party or (b)
40
lawfully acquired from other sources by such party), and each party shall not
release or disclose such information to any other Person without the prior
written consent of the party from whom the information was obtained (such
consent not to be unreasonably withheld or delayed), unless compelled to
disclose by judicial or administrative process or, as advised by its counsel, by
other requirements of law or such disclosure is required by any securities
exchange or regulatory or governmental body having jurisdiction over such party,
wherever situated and whether or not the requirement has the force of law,
except that each party may disclose such information to its Representatives for
the purposes contemplated by this Agreement or any Ancillary Agreement provided
that such Representatives shall agree to maintain the confidentiality of such
information in accordance with this clause. Each party acknowledges that it
shall be liable for any breach of this Section 6.04 by its Representatives to
whom such information is disclosed by such party. Notwithstanding the foregoing,
each party may disclose the terms of this Agreement, the Ancillary Agreements
and the Indemnification Agreement and the transactions contemplated hereby and
thereby to the extent such information is disclosed in the U.K. or U.S. Filings.
ARTICLE VII
MISCELLANEOUS
-------------
Section 7.01 Complete Agreement; Construction. This Agreement, the
--------------------------------
Ancillary Agreements and the Indemnification Agreement, including any schedules
and exhibits hereto or thereto, and other agreements and documents referred to
herein, shall constitute the entire agreement between the parties with respect
to the subject matter hereof and shall supersede all previous negotiations,
commitments, drafts, agreements, undertakings, arrangements of any nature,
whether oral or written with respect to such subject matter. Except as provided
in Section 4.07 and notwithstanding any other provisions in this Agreement to
the contrary, in the event and to the extent that there shall be a conflict
between the provisions of this Agreement and the provisions of the Tax
Allocation Agreement, the provisions of the Tax Allocation Agreement shall
control.
41
Section 7.02 Survival of Agreements. Except as otherwise
----------------------
contemplated by this Agreement, the Ancillary Agreements and the Indemnification
Agreement all covenants, conditions and agreements of the parties contained in
this Agreement, the Ancillary Agreements and the Indemnification Agreement shall
remain in full force and effect and shall survive the Distribution Date.
Section 7.03 Expenses. All costs and expenses related to the
--------
negotiation, preparation, execution and delivery of this Agreement, the
Ancillary Agreements and the Indemnification Agreement, the carrying into effect
of the Distribution and the consummation of the transactions contemplated hereby
and thereby shall be allocated between Parent and New ▇▇▇▇▇▇▇▇ as set forth on
Schedule 7.03.
Section 7.04 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the internal laws of the State of New York
applicable to contracts made and to be performed entirely within such State,
without regard to the principles of conflicts of laws thereof.
Section 7.05 Notices. All notices, requests, claims, demands and
-------
other communications hereunder required or permitted to be given shall be in
writing and shall be delivered by hand or sent by prepaid cable or telecopy or
sent, postage prepaid, by registered, certified or express mail or reputable
overnight courier service and shall be deemed given when so delivered by hand,
cable or telecopied, or if mailed, ten days after mailing (two business days in
the case of express mail or overnight courier service) as follows:
If to Parent:
American Brands, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
42
With a copy to
American Brands, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Secretary
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to New ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ or ATIC:
▇▇▇▇▇▇▇▇ Group Plc
Members Hill
Brooklands Road
Weybridge
Surrey, KT 13 0QU
England
Attention: Group Legal Adviser
Telephone: ▇▇▇-▇▇-▇▇▇▇-▇▇▇▇▇▇
Fax: ▇▇▇-▇▇-▇▇▇▇-▇▇▇▇▇▇
With a copy to
▇▇▇▇▇▇▇▇ Group Plc
Members Hill
Brooklands Road
Weybridge
Surrey, KT 13 0QU
England
Attention: Company Secretary
Telephone: ▇▇▇-▇▇-▇▇▇▇-▇▇▇▇▇▇
Fax: ▇▇▇-▇▇-▇▇▇▇-▇▇▇▇▇▇
or to such other person or address as the addressee may from time to time have
specified for that purpose in a notice duly given to the sender as provided
herein.
Section 7.06 Consent to Jurisdiction. Each of the parties
-----------------------
irrevocably submits to the exclusive jurisdiction of (a) the Supreme Court of
the State of New York, New York County, and (b) the United States District Court
for the Southern District of New York, for the purposes of any suit, action or
other proceeding arising out of this Agreement or any transaction contemplated
hereby. Each of the parties agrees to commence any action, suit or proceeding
relating hereto either in the United States District Court for the Southern
District of
43
New York or if such suit, action or other proceeding may not be brought in such
court for jurisdictional reasons, in the Supreme Court of the State of New York,
New York County. Each of the parties further agrees that service of any process,
summons, notice or document by hand delivery or U.S. registered mail to such
party's respective address set forth in Section 7.05 hereof shall be effective
service of process for any action, suit or proceeding brought against such party
in any such court. Each of the parties irrevocably and unconditionally waives
any objection to the laying of venue of any action, suit or proceeding arising
out of this Agreement or the transactions contemplated hereby in (i) the Supreme
Court of the State of New York, New York County, or (ii) the United States
District Court for the Southern District of New York, and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any such action, suit or proceeding brought in any such court
has been brought in an inconvenient forum.
Section 7.07 Modifications or Amendments. This Agreement may not be
---------------------------
modified or amended except by an agreement in writing signed by the parties.
Section 7.08 Successors and Assigns. The rights and benefits under
----------------------
this Agreement may not be assigned and duties and obligations may not be
delegated by any party in whole or in part without the prior written consent of
the other parties, which consent shall not be unreasonably withheld or delayed.
This Agreement and all of the provisions hereof shall be binding upon and inure
to the benefit of the parties and their respective successors and permitted
assigns.
Section 7.09 Termination. This Agreement may be terminated and the
-----------
Distribution abandoned at any time prior to the Distribution Date by and in the
sole discretion of the Parent Board without the approval of New ▇▇▇▇▇▇▇▇ or of
Parent's stockholders. In the event of such termination, no party shall have
any liability of any kind to any other party on account of such termination.
Section 7.10 No Third Party Beneficiaries. Except for the provisions
----------------------------
of Article IV relating to Indemnitees, this Agreement is solely for the benefit
of the parties hereto and their respective Affiliates and
44
should not be deemed to confer upon third parties (including any employee of
Parent or New ▇▇▇▇▇▇▇▇ or of any Parent or New ▇▇▇▇▇▇▇▇ Subsidiary) any remedy,
claim, reimbursement, claim of action or other right in excess of those existing
without reference to this Agreement.
Section 7.11 Titles and Headings. Titles and headings to sections
-------------------
herein are inserted for convenience of reference only and are not intended to be
part of or to affect the meaning or interpretation of this Agreement.
Section 7.12 Severability. Any provision of this Agreement which is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof. Any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. Without prejudice to
any rights or remedies otherwise available to any party hereto, each party
hereto acknowledges that damages would be an inadequate remedy for any breach of
the provisions of this Agreement and agrees that the obligations of the parties
hereunder shall be specifically enforceable.
Section 7.13 No Waivers. No failure or delay by any party hereto to
----------
take any action or assert any right hereunder shall be deemed to be a waiver of
such right in the event of the continuation or repetition of the circumstances
giving rise to such right, unless expressly waived in writing by the party
against whom the existence of such waiver is asserted.
Section 7.14 Counterparts. This Agreement may be executed in two or
------------
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 7.15 Performance. Each party hereto shall cause to be
-----------
performed, and hereby guarantees the performance of, all actions, agreements and
obligations set forth herein to be performed by any Subsidiary or Affiliate of
such party.
45
Section 7.16 Rights. The rights, powers, privileges and remedies
------
provided in this Agreement are cumulative and are not exclusive of any rights,
powers, privileges or remedies provided by law or otherwise. No single or
partial exercise of any right, power, privilege or remedy under this Agreement
shall prevent any further or other exercise thereof or the exercise of any other
right, power, privilege or remedy.
Section 7.17 Further Assurances. The parties shall cooperate in good
------------------
faith to ensure that they and each of their respective Subsidiaries do all such
acts and things as may reasonably be necessary to complete the Distribution and
the transactions contemplated by this Agreement, the Indemnification Agreement
and each of the Ancillary Agreements. Without limiting the generality of the
foregoing, at any time after the date hereof each of Parent and New ▇▇▇▇▇▇▇▇
shall, at the request and cost of another party hereto, execute or procure the
execution of such documents and do or procure the doing of such acts and things
as the party so requesting may reasonably require for the purpose of giving the
party so requesting the full benefit of the provisions of this Agreement, the
Indemnification Agreement and each of the Ancillary Agreements. For the
avoidance of doubt, this section shall not and shall not be deemed to impose
upon any of the parties more onerous duties and obligations than those contained
in or contemplated by this Agreement, the Indemnification Agreement and the
Ancillary Agreements.
46
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
AMERICAN BRANDS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇
------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇
Title: Senior Vice President
and General Counsel
▇▇▇▇▇▇▇▇ GROUP LIMITED
By: /s/ C.T. ▇▇▇▇▇▇▇
------------------------------
Name: C.T. ▇▇▇▇▇▇▇
Title: Director
▇▇▇▇▇▇▇▇ LIMITED
By: /s/ ▇.▇. ▇▇▇▇▇▇▇
------------------------------
Name: ▇.▇. ▇▇▇▇▇▇▇
Title: Director and Secretary
ATIC GROUP, INC.
By: /s/ ▇.▇. ▇▇▇▇▇▇▇
------------------------------
Name: ▇.▇. ▇▇▇▇▇▇▇
Title: Vice President
47