EXHIBIT 99.3
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STOCK PURCHASE AGREEMENT
Dated as of October 27, 2003
among
AMERICAN CIGARETTE COMPANY OVERSEAS B.V.,
CIGARETTE MANUFACTURERS SUPPLIES INC.,
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ TOBACCO CORPORATION
and
▇.▇. ▇▇▇▇▇▇▇▇ Tobacco Holdings, Inc.
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TABLE OF CONTENTS
Page
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ARTICLE I
Purchase and Sale of Shares; Closing
SECTION 1.01. Purchase and Sale of the Shares ................................. 3
SECTION 1.02. Closing Date .................................................... 3
SECTION 1.03. Transactions To Be Effected at the Closing ...................... 3
SECTION 1.04. Working Capital Adjustment ...................................... 4
ARTICLE II
Representations and Warranties Relating to Seller and the Shares
SECTION 2.01. Organization, Standing and Power ................................ 7
SECTION 2.02. Authority; Execution and Delivery; Enforceability ............... 7
SECTION 2.03. No Conflicts; Consents .......................................... 8
SECTION 2.04. The Shares ...................................................... 9
SECTION 2.05. Private Offering ................................................ 9
ARTICLE III
Representations and Warranties Relating to the Company
SECTION 3.01. Organization, Standing and Power; Business of the Company ....... 10
SECTION 3.02. Capital Structure; Company Subsidiaries; Equity Interests ....... 11
SECTION 3.03. Authority; Execution and Delivery; Enforceability ............... 12
SECTION 3.04. No Conflicts; Consents .......................................... 13
SECTION 3.05. Company Financial Statements; Undisclosed Liabilities ........... 14
SECTION 3.06. Absence of Certain Changes or Events ............................ 15
SECTION 3.07. Taxes ........................................................... 16
SECTION 3.08. Absence of Changes in Benefit Plans ............................. 18
SECTION 3.09. ERISA Compliance; Excess Parachute Payments ..................... 19
SECTION 3.10. Litigation ...................................................... 23
SECTION 3.11. Compliance with Applicable Laws ................................. 23
SECTION 3.12. Title to Properties ............................................. 24
SECTION 3.13. Intellectual Property ........................................... 24
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SECTION 3.14. Labor and Employment Matters .................................... 26
SECTION 3.15. Contracts ....................................................... 26
SECTION 3.16. Insurance ....................................................... 28
SECTION 3.17. Brokers; Schedule of Fees and Expenses.......................... 28
ARTICLE IV
Representations and Warranties of Purchaser
SECTION 4.01. Organization, Standing and Power ................................ 28
SECTION 4.02. Authority; Execution and Delivery; and Enforceability ........... 29
SECTION 4.03. No Conflicts; Consents .......................................... 29
SECTION 4.04. Securities Act .................................................. 30
SECTION 4.05. Brokers; Schedule of Fees and Expenses.......................... 30
ARTICLE V
Covenants
SECTION 5.01. Covenants Relating to Conduct of Business ....................... 31
SECTION 5.02. No Solicitation ................................................. 35
SECTION 5.03. Access to Information ........................................... 37
SECTION 5.04. Confidentiality ................................................. 38
SECTION 5.05. Reasonable Best Efforts ......................................... 39
SECTION 5.06. Expenses; Transfer Taxes ........................................ 41
SECTION 5.07. Benefit Plans ................................................... 41
SECTION 5.08. Indemnification ................................................. 43
SECTION 5.09. Tax Matters ..................................................... 43
SECTION 5.10. Public Announcements ............................................ 44
SECTION 5.11. Further Assurances .............................................. 44
SECTION 5.12. Intercompany Accounts and Contracts ............................. 44
SECTION 5.13. Accounting Records .............................................. 45
SECTION 5.14. Manufacturing Agreement ......................................... 45
SECTION 5.15. Transition Support Services ..................................... 45
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's Obligation ........................... 46
SECTION 6.02. Conditions to Obligation of Purchaser ........................... 47
SECTION 6.03. Conditions to Obligation of Seller .............................. 47
SECTION 6.04. Frustration of Closing Conditions ............................... 47
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ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01. Termination ..................................................... 48
SECTION 7.02. Effect of Termination ........................................... 48
SECTION 7.03. Amendments and Waivers .......................................... 48
ARTICLE VIII
Indemnification
SECTION 8.01. Indemnification by Seller and B&W ............................... 48
SECTION 8.02. Procedures Relating to Indemnification .......................... 49
SECTION 8.03. Certain Limitations ............................................. 49
ARTICLE IX
General Provisions
SECTION 9.01. Nonsurvival of Representations and Warranties ................... 49
SECTION 9.02. Notices ......................................................... 50
SECTION 9.03. Definitions ..................................................... 51
SECTION 9.04. Interpretation; Disclosure Letters .............................. 55
SECTION 9.05. Severability .................................................... 55
SECTION 9.06. Counterparts .................................................... 56
SECTION 9.07. Entire Agreement; No Third-Party Beneficiaries .................. 56
SECTION 9.08. Governing Law ................................................... 56
SECTION 9.09. Assignment ...................................................... 56
SECTION 9.10. Enforcement; Service of Process ................................. 57
Exhibit A Form of Lane Joinder Agreement
Exhibit B Term Sheet for Manufacturing Contracts
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STOCK PURCHASE AGREEMENT (this
"Agreement") dated as of October 27, 2003,
between American Cigarette Company Overseas
B.V., a private company with limited
liability (besloten vennootschap met
beperkte aansprakelijkheid) incorporated
under the laws of the Netherlands
("Seller"), Cigarette Manufacturers Supplies
Inc., a Delaware corporation (the
"Company"), ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ Tobacco
Corporation, a Delaware corporation ("B&W")
(solely for the purpose of Article XIII),
and ▇.▇. ▇▇▇▇▇▇▇▇ Tobacco Holdings, Inc., a
Delaware corporation ("Purchaser").
WHEREAS Seller owns all the issued and outstanding shares of
common stock, par value U.S.$1.00 per share (the "Shares"), of the Company;
WHEREAS Purchaser desires to purchase from Seller, and Seller
desires to sell to Purchaser, the Shares (the "Company Stock Sale"), on the
terms and subject to the conditions set forth in this Agreement;
WHEREAS simultaneously with the execution of this Agreement,
B&W and Purchaser are entering into a Business Combination Agreement dated as of
the date of this Agreement (the "Business Combination Agreement");
WHEREAS prior to the Effective Time (as such term is defined
in the Business Combination Agreement), Purchaser and B&W will cause ▇▇▇▇▇▇▇▇
American Inc., a new North Carolina corporation formed by Purchaser and B&W
("▇▇▇▇▇▇▇▇ American"), to enter into the Joinder Agreement among Seller, the
Company, Purchaser and ▇▇▇▇▇▇▇▇ American in the form of Exhibit A hereto (the
"Lane Joinder Agreement"), pursuant to which ▇▇▇▇▇▇▇▇ American will assume
substantially all of the obligations of Purchaser under this Agreement;
WHEREAS Seller, Purchaser and the Company desire to make
certain representations, warranties, covenants and agreements in connection with
the transactions contemplated by this Agreement and also to prescribe various
conditions to the transactions contemplated by this Agreement.
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NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
Purchase and Sale of Shares; Closing
SECTION 1.01. Purchase and Sale of the Shares. On the terms
and subject to the conditions of this Agreement, at the Closing (as defined in
Section 1.02), Seller shall sell, transfer and deliver to Purchaser, and
Purchaser shall purchase from Seller, the fully paid and nonassessable Shares
for an aggregate cash purchase price of U.S.$400,000,000 (the "Purchase Price"),
payable as set forth in Section 1.03. The purchase and sale of the Shares is
referred to in this Agreement as the "Acquisition".
SECTION 1.02. Closing Date. The closing of the Acquisition
(the "Closing") shall take place at the offices of Cravath, Swaine & ▇▇▇▇▇ LLP,
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, immediately prior to the Effective
Time following the satisfaction (or, to the extent permitted by Law (as defined
in Section 2.03(a)), the waiver) of the conditions set forth in Section 6.01, or
if on such day any condition set forth in Section 6.02 or 6.03 has not been
satisfied (or, to the extent permitted, waived by the party entitled to the
benefit thereof), as soon as practicable after all the conditions set forth in
Article VI have been satisfied (or, to the extent permitted by Law, waived by
the party entitled to the benefit thereof), or at such other place, time and
date as shall be agreed between Seller and Purchaser. The date on which the
Closing occurs is referred to in this Agreement as the "Closing Date".
SECTION 1.03. Transactions To Be Effected at the Closing. At
the Closing:
(i) Seller shall deliver to Purchaser certificates
representing the Shares, duly endorsed in blank or accompanied by stock
powers duly endorsed in blank in proper form for transfer, free and
clear of all Liens (as defined in Section 2.03) other than those
arising from acts of Purchaser or its affiliates; and
(ii) Purchaser shall deliver to Seller payment, by wire
transfer to a bank account designated in writing by Seller (such
designation to be made at
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least two business days prior to the Closing Date), immediately
available funds in an amount equal to the Purchase Price.
SECTION 1.04. Working Capital Adjustment. (a) As soon as
reasonably practicable after the Closing (but in no event later than 60 calendar
days after the Closing), Purchaser will cause to be prepared and delivered to
Seller an unaudited balance sheet of Lane as of the date of Closing, after
giving effect to the Acquisition (such time being referred to as the
"Measurement Time"), together with a statement of each component of Working
Capital (as defined in Section 9.03) of Lane as of the Measurement Time (the
"Working Capital Statement"). The Working Capital Statement will be prepared in
accordance with the same accounting principles, policies, practices and
procedures used to prepare the Unaudited Historical Financial Statements (as
defined in Section 3.05(a)), except that Stocks are valued on a FIFO basis (the
"Lane Accounting Policies"). Seller will have the right to audit the worksheets,
examine underlying records and review any work papers relating to the Working
Capital Statement.
(b) If Seller disagrees with the Working Capital Statement,
Seller must, within 20 business days after delivery of the Working Capital
Statement to Seller, notify Purchaser in writing as to whether Seller accepts
the Working Capital Statement. If Seller notifies Purchaser that it does not
accept the Working Capital Statement (the "Notice of Dispute"), Seller will set
out each disputed item, the amount in dispute and its reasons for such dispute
in reasonable detail, including any adjustments which, in Seller's opinion,
should be made to the Working Capital Statement in order to comply with the
requirements of this Section 1.04. After delivery of the Notice of Dispute,
Seller may not introduce additional disagreements with respect to any item in
the Working Capital Statement. If a Notice of Dispute is received by Purchaser
in accordance with this Section 1.04(b), Seller and Purchaser will use all
reasonable efforts to meet and resolve the objections of Seller to the Working
Capital Statement within 60 calendar days of Purchaser's receipt of the Notice
of Dispute (the "Negotiation Period").
(c) If Seller and Purchaser do not reach agreement prior to
expiration of the Negotiation Period, then Seller and Purchaser will each
deliver to the Atlanta
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office of Ernst & Young LLP or such other accounting firm as the parties shall
jointly agree (the "Independent Firm") a written notice (a "Submission Notice")
specifying the nature and value of all items remaining in dispute within ten
calendar days following the expiration of the Negotiation Period. Seller and
Purchaser will be deemed to have agreed with all items and amounts contained in
the Working Capital Statement other than the disputed items in each Submission
Notice.
(d) The Independent Firm will (i) make an examination of the
Working Capital Statement, (ii) inspect and examine each party's working papers,
(iii) schedule meetings at which each party may present supporting data and
arguments to substantiate its position and (iv) after giving each party an
opportunity to rebut the other party's data and arguments, decide all disputed
items set forth in each Submission Notice. Purchaser and Seller will instruct,
and will use their reasonable best efforts to cause, the Independent Firm to
determine and report to Seller and Purchaser in writing upon all disputed items
included in the Submission Notices within 90 calendar days following the
delivery of such Submission Notices to the Independent Firm in accordance with
this Section 1.04, and such report will be final, binding and conclusive on
Seller and Purchaser. The Independent Firm's determination will be accompanied
by a certificate of the Independent Firm that it reached its decision in
accordance with the provisions of this Section 1.04. The Independent Firm will
not have the authority to review or make a determination with respect to any
matter except the disputed items included in each Submission Notice, it being
understood that the Independent Firm will not conduct its own independent audit
or review, but rather will only resolve specific differences between Seller and
Purchaser and make a determination within the range of such differences as set
forth in each Submission Notice. In resolving such differences, the Independent
Firm may not assign a value to an item greater than the greatest value claimed
by any party or less than the smallest value for such item claimed by any party
in the Submission Notice. The fees and disbursements of the Independent Firm
will be allocated equally between Seller and Purchaser. In acting under this
Agreement, the Independent Firm will be entitled to the privileges and
immunities of arbitrators. The Working Capital Statement will be deemed final,
binding and conclusive on the parties hereto for the purposes of this
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Section 1.04 upon the earliest of (A) the failure of Seller to deliver a Notice
of Dispute to Purchaser pursuant to Section 1.04(b) within 20 business days of
Purchaser's delivery of the Working Capital Statement to Seller, (B) the
resolution of all disputes by Seller and Purchaser in accordance with this
Section 1.04, (C) the failure by Seller to deliver a Submission Notice to the
Independent Firm in accordance with Section 1.04(c) (provided that Purchaser has
delivered a Submission Notice in accordance with Section 1.04(c)) or (D) the
resolution of all the disputed items set forth in the Submission Notice by the
Independent Firm. The Working Capital Statement, as modified by all adjustments
provided for in the Notice of Dispute, will be deemed final, binding and
conclusive on the parties hereto for the purpose of this Section 1.04 upon
failure of Purchaser to deliver a Submission Notice to the Independent Firm in
accordance with Section 1.04(c) (provided that Seller has delivered a Submission
Notice in accordance with Section 1.04(c)). Seller and Purchaser will each
permit the other party, its agents and the Independent Firm reasonable access
during normal business hours, and on reasonable notice, to all relevant books
and records, computer files, premises and personnel involved in the preparation
of the underlying records and operating systems which generated the information
used in the preparation of the Working Capital Statement, the Notice of Dispute
and the Submission Notice and will permit them to take copies of such accounts,
documents and records at their own expense.
(e) Within five business days of the Working Capital Statement
being deemed final, if the Working Capital of Lane as of the Measurement Time
(as finally determined) is less than $25,000,000 (the "Minimum Required Working
Capital Amount"), Seller shall pay to Purchaser an amount equal to (i) such
Minimum Required Working Capital Amount less such Working Capital plus (ii)
interest on such difference from the date of this Agreement to the date of such
payment at a rate per annum equal to (A) three-month LIBOR (as reported in The
Wall Street Journal (Northeast edition) or, if not reported therein, in another
authoritative source acceptable to Seller and Purchaser) on the date of this
Agreement (or if no quotation for three-month LIBOR is available for such date,
on the next preceding date for which such a quotation is available) plus (B)
1.5%.
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ARTICLE II
Representations and Warranties
Relating to Seller and the Shares
Seller represents and warrants to Purchaser that as of the
date of this Agreement:
SECTION 2.01. Organization, Standing and Power. Seller is duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized and has full corporate power and authority
and possesses all governmental franchises, licenses, permits and authorizations
(collectively, "Permits") and approvals necessary to enable it to own, lease or
otherwise hold its properties and assets and to carry on its business as
presently conducted, other than such Permits and approvals the lack of which,
individually or in the aggregate, has not had and is not reasonably likely to
have a Seller Material Adverse Effect (as defined in Section 9.03). Seller is
duly qualified to do business in each jurisdiction where the nature of its
business or the ownership or leasing of its properties and assets makes such
qualification necessary, other than jurisdictions in which the failure to so
qualify has not had and is not reasonably likely to have a Seller Material
Adverse Effect.
SECTION 2.02. Authority; Execution and Delivery;
Enforceability. Seller has all requisite corporate power and authority to
execute and deliver this Agreement and the Lane Joinder Agreement (this
Agreement and the Lane Joinder Agreement collectively referred to as the "Lane
Transaction Agreements"), to perform its obligations hereunder and thereunder
and to consummate the Acquisition and the other transactions contemplated hereby
and thereby. The execution and delivery by Seller of each Lane Transaction
Agreement to which it is or will be a party, the performance of its obligations
hereunder and thereunder and the consummation by Seller of the Acquisition and
the other transactions contemplated hereby and thereby have been duly authorized
by all necessary corporate action on the part of Seller. Seller has duly
executed and delivered (or will duly execute and deliver on or prior to the
Closing Date) each Lane Transaction Agreement to which it is or will be a party,
and each such Lane Transaction Agreement constitutes (or will constitute on or
prior to the Closing Date) its
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legal, valid and binding obligation, enforceable against it in accordance with
its terms.
SECTION 2.03. No Conflicts; Consents. (a) The execution and
delivery by Seller of each Lane Transaction Agreement to which it is or will be
a party and the performance by it of its obligations hereunder and thereunder do
not, and the consummation of the Acquisition and the other transactions
contemplated hereby and thereby and compliance with the terms hereof and thereof
will not, conflict with, or result in any violation of or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancelation or acceleration of any obligation or to loss of a
material benefit under, or to increased, additional, accelerated or guaranteed
rights or entitlements of any person under, or result in the creation of any
pledges, claims, liens, charges, mortgages, encumbrances and security interests
of any kind or nature whatsoever (collectively, "Liens") upon any of the
properties or assets of Seller under, any provision of (i) the certificate of
incorporation or by-laws or any comparable organizational documents of Seller,
(ii) any contract, commitment, obligation, lease, license, indenture, note,
debenture, bond, guarantee, agreement, permit, concession, franchise or other
instrument (a "Contract") to which Seller is a party or by which any of its
properties or assets are bound or (iii) subject to the filings and other matters
referred to in Section 2.03(b), any judgment, order or decree ("Judgment") or
statute, law, ordinance, rule or regulation ("Law") applicable to Seller or its
properties or assets, other than, in the case of clauses (ii) and (iii) above,
any such items that, individually or in the aggregate, have not had and are not
reasonably likely to have a Seller Material Adverse Effect.
(b) No consent, approval, license, Permit, order or
authorization ("Consent") of, or registration, declaration or filing with, or
Permit from, any domestic or foreign (whether national, Federal, state,
provincial, local or otherwise) government or any court of competent
jurisdiction, administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign (a "Governmental Entity") is
required to be obtained or made by or with respect to Seller in connection with
the execution, delivery and performance of any Lane Transaction Agreement to
which it is or will be a party or
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the consummation of the Acquisition or the other transactions contemplated
hereby and thereby, other than (i) compliance with and filings under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (ii) any required approval of the Acquisition by the European Commission
pursuant to Council Regulation No. 4064189 of the European Community, as amended
(the "EC Merger Regulation"), (iii) any required approvals or filings under the
antitrust laws of member states of the European Union, (iv) any filings required
under the rules and regulations of the New York Stock Exchange (the "NYSE"), (v)
such filings with and approvals of the Bureau of Alcohol, Tobacco, Firearms and
Explosives, state licensing authorities and state taxing authorities as are
required to consummate the Acquisition, (vi) compliance with any such filings as
may be required under applicable Environmental Law (as defined in Section 9.05),
and (vii) such other items that the failure of which to obtain or make,
individually or in the aggregate, are not reasonably likely to have a Seller
Material Adverse Effect.
SECTION 2.04. The Shares. Seller has good and valid title to
the Shares, free and clear of all Liens. Assuming Purchaser has the requisite
power and authority to be the lawful owner of the Shares, upon delivery to
Purchaser at the Closing of certificates representing the Shares, duly endorsed
by Seller for transfer to Purchaser, and upon Seller's receipt of the Purchase
Price to be paid in accordance with Section 1.03, good and valid title to the
Shares will pass to Purchaser, free and clear of any Liens, other than those
arising from acts of Purchaser or its affiliates (other than B&W). Other than
this Agreement, the Shares are not subject to any voting trust agreement or
other Contract, including any Contract restricting or otherwise relating to the
voting or dividend rights or disposition of the Shares.
SECTION 2.05. Private Offering. None of Seller, its affiliates
or any of their respective representatives has issued, sold or offered any
security of the Company to any person under circumstances that would cause the
sale of the Shares, as contemplated by this Agreement, to be subject to the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"). None of Seller, its affiliates or any of their respective
representatives will offer the Shares or any part thereof or any similar
securities for issuance or sale to, or
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solicit any offer to acquire any of the same from, anyone so as to make the sale
of the Shares subject to the registration requirements of Section 5 of the
Securities Act. Assuming the representations of Purchaser contained in Section
4.04 are true and correct, the sale and delivery of the Shares hereunder are
exempt from the registration and prospectus delivery requirements of the
Securities Act.
ARTICLE III
Representations and Warranties
Relating to the Company
Seller represents and warrants to Purchaser that, as of the
date of this Agreement except as set forth in the disclosure letter dated the
date of this Agreement (with specific reference to the particular Section or
subsection of this Agreement to which the information set forth in such
disclosure letter relates; provided, however, that any information set forth in
one Section of such disclosure letter shall be deemed to apply to each other
Section or subsection thereof or hereof to which its relevance is readily
apparent) delivered by the Company to Purchaser prior to the execution of this
Agreement (the "Company Disclosure Letter"):
SECTION 3.01. Organization, Standing and Power; Business of
the Company. (a) The Company and Lane Limited, a New York corporation and a
wholly owned subsidiary (as defined in Section 9.03) of the Company ("Lane") is
duly organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized and has full corporate power and authority
and possesses all Permits and approvals necessary to enable it to own, lease or
otherwise hold its properties and assets and to conduct its businesses as
presently conducted, other than such Permits the lack of which, individually or
in the aggregate, has not had and is not reasonably likely to have a Company
Material Adverse Effect (as defined in Section 9.04). The Company and Lane are
duly qualified to do business in each jurisdiction where the nature of its
business or the ownership or leasing of its properties makes such qualification
necessary, other than jurisdictions in which the failure to so qualify has not
had and is not reasonably likely to have a Company Material Adverse Effect. The
Company has made available to Purchaser true and complete copies of the
certificate of
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incorporation and by-laws of the Company and Lane, in each case as amended
through the date of this Agreement.
(b) The Company holds no other assets other than the shares of
capital stock of Lane, and conducts no business other than holding the shares of
capital stock of Lane and conducting other activities related thereof.
SECTION 3.02. Capital Structure; Company Subsidiaries; Equity
Interests. (a) The authorized capital stock of the Company consists of 100,000
Shares. All outstanding Shares are duly authorized, validly issued, fully paid
and nonassessable and not subject to or issued in violation of any purchase
option, call option, right of first refusal, preemptive right, subscription
right or any similar right under the Delaware General Corporation Law, the
certificate of incorporation of the Company, the bylaws of the Company or any
Contract to which the Company is a party or otherwise bound. There are not any
bonds, debentures, notes or other indebtedness of the Company having the right
to vote (or convertible into, or exchangeable for, securities having the right
to vote) on any matters on which holders of the Shares may vote. There are no
options, warrants, rights, convertible or exchangeable securities, other
securities, "phantom stock" rights, SARs, stock-based performance units,
commitments, Contracts, arrangements or undertakings of any kind to which the
Company or Lane is a party or by which any of them is bound (x) obligating the
Company or Lane to issue, grant, deliver or sell, or cause to be issued,
granted, delivered or sold, additional shares of capital stock of or other
equity, voting or ownership interests in, or any security convertible or
exercisable for or exchangeable into any capital stock of or other equity,
voting or ownership interest in, the Company or Lane, (y) obligating the Company
or Lane to issue, grant, sell, extend or enter into any such option, warrant,
call, right, security, unit, commitment, Contract, arrangement or undertaking or
(z) that give any person the right to receive any economic benefit or right
similar to or derived from the economic benefits and rights accruing to holders
of the capital stock of the Company or Lane. There are not any outstanding
contractual obligations of the Company or Lane to (i) repurchase, redeem or
otherwise acquire any shares of capital stock of, or other equity, voting or
ownership interests in, the Company or Lane or (ii) vote or dispose
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of any shares of capital stock of, or other equity, voting or ownership interest
in, any of its subsidiaries.
(b) Section 3.02 of the Company Disclosure Letter lists as of
the date of this Agreement the jurisdiction of organization of Lane. All the
outstanding shares of capital stock of, or other equity, voting or ownership
interests in, Lane have been validly issued and are fully paid and nonassessable
and are owned by the Company free and clear of all Liens. None of such
outstanding shares of capital stock of, or other equity, voting or ownership
interests in, Lane has been issued in violation of, and is not subject to, any
preemptive, subscription or similar rights under any provision of applicable
Law, its charter or constituent documents, any Contract to which Lane is
subject, bound or a party or otherwise. There are no outstanding warrants,
options, rights, "phantom stock" rights, Contracts, convertible or exchangeable
securities or other commitments (other than this Agreement) (i) pursuant to
which the Company or any affiliate of the Company is or may become obligated to
issue, sell, purchase, return or redeem any shares of capital stock or other
securities of Lane or (ii) that give any person the right to receive any
economic benefits or rights similar to or derived from the economic benefits or
rights accruing to holders of shares of capital stock of Lane. There are no
equity securities of Lane reserved for issuance for any purpose.
(c) Except for the capital stock of, or equity, voting or
other ownership interests in, Lane, the Company does not own, directly or
indirectly, any capital stock, membership interest, partnership interest, joint
venture interest or equity, voting or other ownership interest in any person.
SECTION 3.03. Authority; Execution and Delivery;
Enforceability. Each of the Company and Lane has all requisite corporate power
and authority to execute and deliver each Lane Transaction Agreement to which it
is or will be a party, to perform its obligations hereunder and thereunder and
to consummate the Acquisition and the other transactions contemplated hereby and
thereby. The execution and delivery by each of the Company and Lane of each Lane
Transaction Agreement to which it is or will be a party, the performance of its
obligations hereunder and thereunder and the consummation by the Company and
Lane of
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the Acquisition and the other transactions contemplated hereby and thereby have
been duly authorized by all necessary corporate action on the part of the
Company and Lane, as the case may be. Each of the Company and Lane has duly
executed and delivered (or will duly execute and deliver on or prior to the
Closing Date) each Lane Transaction Agreement to which it is or will be a party,
and each such Lane Transaction Agreement to which it is or will be a party
constitutes (or will constitute on or prior to the Closing Date) its legal,
valid and binding obligation, enforceable against it in accordance with its
terms.
SECTION 3.04. No Conflicts; Consents. (a) The execution and
delivery by each of the Company and Lane of each Lane Transaction Agreement to
which it is or will be a party and the performance of its obligations hereunder
and thereunder do not, and the consummation of the Acquisition and the other
transactions contemplated hereby and thereby and compliance with the terms
hereof and thereof will not, conflict with, or result in any violation of or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancelation or acceleration of any obligation or to
loss of a material benefit under, or to increased, additional, accelerated or
guaranteed rights or entitlements of any person under, or result in the creation
of any Lien upon any of the properties or assets of the Company or Lane under,
any provision of (i) the certificate of incorporation or by-laws of the Company
or the comparable charter or organizational documents of Lane, (ii) any Contract
to which the Company or Lane is a party or by which any of their respective
properties or assets is bound or (iii) subject to the filings and other matters
referred to in Section 3.04(b), any Judgment or Law applicable to the Company or
Lane or their respective properties or assets, other than, in the case of
clauses (ii) and (iii) above, any such items that, individually or in the
aggregate, have not had and are not reasonably likely to have a Company Material
Adverse Effect.
(b) No Consent of, or registration, declaration or filing
with, any Governmental Entity is required to be obtained or made by or with
respect to the Company or Lane in connection with the execution, delivery and
performance by the Company or Lane of any Lane Transaction Agreement to which it
is a party or the consummation of the Acquisition
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or the other transactions contemplated hereby and thereby, other than (i)
compliance with and filings under the HSR Act, (ii) any required approval of the
Acquisition by the European Commission pursuant to the EC Merger Regulation,
(iii) any required approvals or filings under the antitrust laws of member
states of the European Union, (iv) such filings with and approvals of the Bureau
of Alcohol, Tobacco, Firearms and Explosives, state licensing authorities and
state taxing authorities as are required to consummate the Acquisition (v)
compliance with any such filings as may be required under applicable
Environmental Law, and (vi) such other items that the failure of which to obtain
or make, individually or in the aggregate, are not reasonably likely to have a
Company Material Adverse Effect.
SECTION 3.05. Company Financial Statements; Undisclosed
Liabilities. (a) Section 3.05 of the Company Disclosure Letter sets forth (i)
the unaudited balance sheets of Lane for each of the three fiscal years ended as
of December 31, 2002, and the related unaudited statements of income and cash
flows (collectively, the "Unaudited Historical Financial Statements") and (ii)
the unaudited balance sheet as of September 30, 2003 (the "September 30, 2003
Unaudited Balance Sheet"), and the related unaudited statements of income and
cash flows (together with the September 30, 2003, Unaudited Balance Sheet, the
"2003 Interim Financial Statements"). The Unaudited Historical Financial
Statements and the 2003 Interim Financial Statements (i) have been prepared from
the books and records of Lane regularly maintained to prepare the financial
statements of Lane, (ii) were prepared in accordance with U.S. generally
accepted accounting principles ("GAAP"), other than the absence of notes
thereto, if applicable, and the accounting methods and policies of Lane applied
on a consistent basis during the periods involved and (iii) fairly present,
subject to normal year-end adjustments, in all material respects the financial
condition and results of operations of Lane as of the dates and for the periods
indicated.
(b) The Company and Lane have no liabilities or obligations of
any nature (whether accrued, absolute, contingent or otherwise and other than
liabilities or obligations of any nature arising out of any Action or relating
to the development, packaging, labeling, delivery, sale, resale, distribution,
marketing, promotion, use or
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consumption of, or exposure to, tobacco products, including smoking and
health-related and safety-related claims) that are required by GAAP to be set
forth on a balance sheet of Lane and that, individually or in the aggregate,
have had or are reasonably likely to have a Company Material Adverse Effect.
(c) Neither the Company nor Lane is, or has at any time since
January 1, 2002, been, subject to the reporting requirements of Sections 13(a)
or 15(d) of the Securities Exchange Act of 1934.
SECTION 3.06. Absence of Certain Changes or Events. From
December 31, 2002, until the date of this Agreement, (a) the Company has
conducted its business in the ordinary course consistent with past practice and
(b) there has not been:
(i) a Company Material Adverse Effect;
(ii) any incurrence, assumption or guarantee by the
Company or Lane of any indebtedness for borrowed money in an aggregate
principal amount in excess of U.S.$1,000,000;
(iii) (A) except in the ordinary course of business
consistent with past practice (1) any granting by the Company or Lane
to any current or former director, officer, employee or consultant of
the Company or Lane (collectively, "Company Personnel") of any bonus
opportunity or any increase in compensation or benefits or (2) any
payment by the Company or Lane to any Company Personnel of any bonus,
in each case except to the extent required under employment agreements
in effect as of December 31, 2002, and in accordance with its terms as
of such date, (B) any granting by the Company or Lane to any Company
Personnel of severance or termination pay or the right to receive any
severance or termination pay or increases therein, except to the extent
required under any agreement in effect as of December 31, 2002, (C) any
entry by the Company or Lane into, or any amendment of, (1) any
employment, deferred compensation, severance, termination, employee
benefit, loan, indemnification, stock repurchase, consulting or similar
agreement between the Company or Lane, on the one hand, and any Company
Personnel, on
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the other hand, or (2) any agreement between the Company or Lane, on
the one hand, and any Company Personnel, on the other hand, the
benefits of which are contingent, or the terms of which are materially
altered, upon the occurrence of a transaction involving the Company of
the nature contemplated by this Agreement (all such agreements under
this clause (C) including any such agreement which is entered into on
or after the date of this Agreement, collectively, "Lane Benefit
Agreements"), (D) any amendment of any incentive award (including
performance units, restricted stock, stock repurchase rights or other
equity-based or equity-related awards) or any removal or modification
of any restrictions in any such award or (E) any amendment to, or
material modification of, any plan, arrangement or understanding
providing Company Personnel with the awards described in clause (D);
(iv) any change in financial reporting or accounting
methods, principles or practices by the Company or Lane materially
affecting the consolidated assets, liabilities or results of operations
of the Company and Lane, except insofar as may have been required by a
change in GAAP;
(v) any material elections by the Company or Lane with
respect to Taxes (as defined below) of the Company or Lane or
settlement or compromise by the Company or Lane of any material Tax
liability or refund; or
(vi) any sale, lease (as lessor), license or other
disposition of, or the creation or existence of any Lien on, any
properties or assets, except sales of inventory and excess or obsolete
assets in the ordinary course of business consistent with past
practice.
SECTION 3.07. Taxes. (a) The Company and Lane and any
consolidated, combined, affiliated or unitary group of which the Company or Lane
is or has ever been a member (each, a "Company Affiliated Group") has timely
filed, or has caused to be timely filed on its behalf, all Tax Returns (as
defined below) required to be filed by it, and all such Tax Returns are true,
complete and accurate, except to the extent any failure to file or any
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inaccuracies in any filed Tax Returns, individually or in the aggregate, has not
had and is not reasonably likely to have a Company Material Adverse Effect. All
Taxes shown to be due on such Tax Returns, or otherwise owed by the Company,
Lane or any Company Affiliated Group, have been timely paid, except to the
extent that any failure to pay, individually or in the aggregate, has not had
and is not reasonably likely to have a Company Material Adverse Effect.
(b) The Unaudited Historical Financial Statements reflect an
adequate reserve for all Taxes payable by Lane (in addition to any reserve for
deferred Taxes to reflect timing differences between book and Tax items) for all
taxable periods and portions thereof through the date of such financial
statements. No deficiency, audit examination, refund litigation, proposed
adjustment or matter in controversy with respect to any Taxes has been proposed,
asserted or assessed against the Company, Lane or any Company Affiliated Group
since January 1, 2001. No requests for waivers of the time to assess any Taxes
of the Company, Lane or any Company Affiliated Group are pending and as of the
date of this Agreement, there is no effective agreement or other document
extending, or having the effect of extending, the period of assessment or
collection of any Taxes of the Company, Lane or any Company Affiliated Group,
except to the extent any such deficiency or request for waiver, individually or
in the aggregate, has not had and is not reasonably likely to have a Company
Material Adverse Effect.
(c) The Federal income Tax Returns of the Company and Lane
have been examined by and settled with the United States Internal Revenue
Service ("IRS"), or have closed by virtue of the expiration of the relevant
statute of limitations, for all years through 1999. All material assessments for
Taxes due and owing by the Company, Lane or any Company Affiliated Group with
respect to completed and settled examinations or any concluded litigation have
been fully paid.
(d) There are no material Liens for Taxes (other than for
current Taxes not yet due and payable) on the assets and properties of the
Company and Lane.
(e) For purposes of this Agreement:
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"Taxes" means all (i) domestic or foreign (whether national,
Federal, state, provincial, local or otherwise) taxes, assessments, duties or
similar charges of any kind whatsoever, including all corporate franchise,
income, sales, use, ad valorem, receipts, value added, profits, license,
withholding, payroll, employment, excise, property, net worth, capital gains,
transfer, stamp, documentary, payroll, alternative minimum, recapture and other
taxes, including any interest, penalties and additions imposed with respect to
such amounts; (ii) liability for the payment of any amounts of the type
described in clause (i) as a result of being a member of an affiliated,
consolidated, combined, unitary or aggregate group and (iii) liability for the
payment of any amounts as a result of an express or implied obligation to
indemnify any other person with respect to the payment of any amounts of the
type described in clause (i) or (ii).
"Tax Return" means all domestic or foreign (whether national,
Federal, state, provincial, local or otherwise) Tax returns, declarations,
statements, reports, schedules, forms and information returns and any amended
Tax return relating to Taxes.
SECTION 3.08. Absence of Changes in Benefit Plans. From
December 31, 2002, through the date of this Agreement, there has not been (a)
any termination, adoption or amendment in any material respect or any agreement
to terminate, adopt or amend in any material respect, by the Company or Lane of
any collective bargaining agreement or any bonus, pension, profit sharing,
deferred compensation, incentive compensation, stock ownership, stock purchase,
stock appreciation, restricted stock, stock repurchase rights, stock option,
"phantom stock", performance, retirement, vacation, severance, disability, death
benefit, hospitalization, medical or other plan, arrangement or understanding
(whether or not legally binding and whether or not subject to the laws of the
United States) maintained or contributed to, or required to be maintained or
contributed to, by the Company or Lane, in each case, providing benefits to any
Company Personnel (all such plans, arrangements or understandings, including any
such plan, arrangement or understanding which is entered into or adopted on or
after the date of this Agreement, collectively, "Lane Benefit Plans") or (b) any
material change in the manner in which contributions to any Lane Pension Plans
(as defined in Section 3.09(a)) are made or
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the basis on which such contributions are determined. Neither the Company nor
Lane is a party to any Lane Benefit Agreement.
SECTION 3.09. ERISA Compliance; Excess Parachute Payments. (a)
Section 3.09 of the Company Disclosure Letter contains a list of all "employee
pension benefit plans" (as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) ("Lane Pension Plans"),
"employee welfare benefit plans" (as defined in Section 3(1) of ERISA) ("Lane
Welfare Plans") and all other Lane Benefit Plans maintained or contributed to,
or required to be maintained or contributed to, by the Company or Lane. Each
Lane Benefit Plan has been administered in compliance with its terms and
applicable Law, except where the failure to be so administered, individually or
in the aggregate, has not had and is not reasonably likely to have a Company
Material Adverse Effect. The Company has made available to Purchaser true,
complete and correct copies of (i) each Lane Benefit Plan and Lane Benefit
Agreement (or, in the case of any unwritten Lane Benefit Plan or Lane Benefit
Agreement, a description thereof), (ii) the most recent annual report on Form
5500 filed with the IRS with respect to each Lane Benefit Plan for which such
annual report was required, (iii) the most recent summary plan description for
each Lane Benefit Plan for which such summary plan description is required, (iv)
the most recent actuarial valuation report for each Lane Benefit Plan for which
such actuarial valuation report was required or prepared and (v) each trust
agreement and group annuity contract relating to any Lane Benefit Plan.
(b) All Lane Pension Plans intended to be tax qualified are so
qualified and have been the subject of determination letters from the IRS or
other Governmental Entity with respect to all Tax Law changes through and
including the Economic Growth and Tax Relief Reconciliation Act of 2001 or have
a remaining period of time under applicable Law to amend such Lane Pension Plans
to comply with applicable Tax Law and to submit such amendment to the IRS for a
determination letter to the effect that such Lane Pension Plans are qualified
and exempt from United States Federal income Taxes under Sections 401(a) and
501(a), respectively, of the Internal Revenue Code of 1986, as amended (the
"Code"), and no determination letter has been revoked (nor, to the knowledge of
the Company, has
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revocation been threatened). No event has occurred since the date of the most
recent determination letter or application therefor relating to any such Lane
Pension Plan that would adversely affect the qualification of such Lane Pension
Plan or increase the costs relating thereto or require security under Section
307 of ERISA, except for events that, individually or in the aggregate, are not
reasonably likely to have a Company Material Adverse Effect. All Lane Pension
Plans required to have been approved by any non-U.S. Governmental Entity have
been so approved or timely submitted for approval and no such approval has been
revoked (nor, to the knowledge of the Company, has revocation been threatened).
No event has occurred since the date of the most recent approval or application
therefor relating to any such Lane Pension Plan that would affect any such
approval relating thereto or increase the costs relating thereto, except for
events that, individually or in the aggregate, are not reasonably likely to have
a Company Material Adverse Effect. The Company has made available to Purchaser a
true, complete and correct copy of the most recent determination or approval
letter received with respect to each Lane Pension Plan, as well as a true,
complete and correct copy of each pending application for a determination or
approval letter, if any.
(c) No Lane Pension Plan, other than any Lane Pension Plan
that is a "multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA
(a "Lane Multiemployer Pension Plan"), had, as of the respective last annual
valuation date for each such Lane Pension Plan, an "unfunded benefit liability"
(as such term is defined in Section 4001(a)(18) of ERISA), based on actuarial
assumptions that have been furnished to Purchaser. No Lane Pension Plan has an
"accumulated funding deficiency" (as such term is defined in Section 302 of
ERISA or Section 412 of the Code), whether or not waived, nor has any waiver of
the minimum funding standards of Section 302 of ERISA or Section 412 of the Code
been requested of or granted by the IRS with respect to any Lane Pension Plan.
With respect to each Lane Benefit Plan, (i) there has not occurred any
prohibited transaction in which the Company, Lane or any of its or their
respective employees or, to the knowledge of the Company, any trustee or other
fiduciary or administrator of any Lane Benefit Plan or trust created thereunder
has engaged that is reasonably likely to subject the Company, Lane or any of its
or their respective
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employees, or, to the knowledge of the Company, any trustee or other fiduciary
or administrator of any Lane Benefit Plan or any trust created thereunder, to
any Tax or penalty on prohibited transactions imposed by Section 4975 of the
Code or the sanctions imposed under Title I of ERISA or any other applicable Law
of a magnitude that would result in a Company Material Adverse Effect and (ii)
none of the Company, Lane or any of its or their respective employees, or, to
the knowledge of the Company, any trustee or other fiduciary of any Lane Benefit
Plan or any trust created thereunder, has engaged in any transaction or acted in
a manner that is reasonably likely to, or failed to act in a manner that is
reasonably likely to, subject the Company, Lane, or, to the knowledge of
Company, any trustee or other fiduciary of any Lane Benefit Plan or any trust
created thereunder, to any liability for breach of fiduciary duty under ERISA or
any other applicable Law of a magnitude that would result in a Company Material
Adverse Effect. No Lane Benefit Plan or trust has been terminated, nor has there
been any "reportable event" (as that term is defined in Section 4043 of ERISA)
with respect to any Lane Benefit Plan during the last five years. Neither the
Company nor Lane has incurred a "complete withdrawal" or a "partial withdrawal"
(as such terms are defined in Sections 4203 and 4205, respectively, of ERISA)
since the effective date of such Sections 4203 and 4205 with respect to any Lane
Multiemployer Pension Plan.
(d) (i) No Lane Welfare Plan is unfunded, funded through a
"welfare benefits fund" (as such term is defined in Section 419(e) of the Code)
or self-insured, except for the provision of severance and vacation benefits;
(ii) There are no understandings, agreements or undertakings, written or oral,
that are reasonably likely to prevent any Lane Welfare Plan (including any such
Plan covering retirees or other former employees) from being amended or
terminated in a manner that is reasonably likely to have a Company Material
Adverse Effect on or after the Closing (except for ordinary administrative
expenses); and (iii) No Lane Welfare Plan provides benefits after termination of
employment, except where the cost thereof is borne entirely by the former
employee (or his eligible dependents or beneficiaries) or as required by Section
4980B(f) of the Code.
(e) No amount that could be received (whether in cash or
property or the vesting of property) as a result of
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the Acquisition by any Company Personnel who is a "disqualified individual" (as
is defined in Treasury Regulation Section 1.280G-1) under any Lane Benefit Plan,
Lane Benefit Agreement or other compensation arrangement is reasonably likely to
be characterized as an "excess parachute payment" (as defined in Section
280G(b)(1) of the Code) and no such disqualified individual is entitled to
receive any additional payment (e.g., any Tax gross-up or other payment) from
the Company or any other person in the event that the excise Tax required by
Section 4999(a) of the Code is imposed on such disqualified individual.
(f) The execution and delivery by the Company and Lane of each
Lane Transaction Agreement to which it is or will be a party do not, and the
consummation of the Acquisition and the other transactions contemplated hereby
and thereby and compliance with the terms hereof and thereof will not (either
alone or in combination with any other event) (i) entitle any Company Personnel
to any additional compensation, severance or other benefits, (ii) accelerate the
time of payment or vesting or trigger any payment or funding (through a grantor
trust or otherwise) of compensation or benefits under, increase the amount
payable or trigger any other material obligation pursuant to, any Lane Benefit
Plan or Lane Benefit Agreement (iii) result in any breach or violation of, or a
default (with or without notice or lapse of time or both) under, any Lane
Benefit Plan or Lane Benefit Agreement.
(g) Since January 1, 2001, and through the date of this
Agreement, neither the Company nor Lane has received notice of, and, to the
knowledge of the Company, there are no (i) pending termination proceedings or
other suits, claims (except claims for benefits payable in the normal operation
of the Lane Benefit Plans), actions or proceedings against or involving any Lane
Benefit Plan or Lane Benefit Agreement that, individually or in the aggregate,
are reasonably likely to have a Company Material Adverse Effect or (ii) pending
investigations (other than routine inquiries) by any Governmental Entity with
respect to any Lane Benefit Plan or Lane Benefit Agreement. All contributions,
premiums and benefit payments under or in connection with the Lane Benefit Plans
or Lane Benefit Agreements that are required to have been made by the Company or
Lane have been timely made, accrued or reserved for in all material respects.
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(h) Neither the Company nor Lane has any material liability or
obligations, including under or on account of a Lane Benefit Plan or Lane
Benefit Agreement, arising out of the hiring of persons to provide services to
the Company or Lane and treating such persons as consultants or independent
contractors and not as employees of the Company or Lane, other than the
obligations of the Company or Lane under any Contract, arrangement or
understanding with any such person.
(i) There does not exist, nor do any circumstances exist that
could reasonably be expected to result in, any Employee Benefits Liability that
could result in a Company Material Adverse Effect. "Employee Benefits Liability"
means any liability of any Company Controlled Entity under (i) Sections 302,
405, and 409 or Title IV of ERISA, (ii) Sections 412, 4971 and 4975 of the Code,
(iii) Sections 601 et seq. and 701 et seq. of ERISA and Section 4980B and
Sections 9801 et seq. of the Code or (iv) any corresponding or similar provision
of any applicable Federal, state, local or non-U.S. laws, rules or regulations.
"Company Commonly Controlled Entity" means any person that, together with the
Company, is treated as a single employer under Section 414(b), (c), (m) or (o)
of the Code or any other applicable Law.
SECTION 3.10. Litigation. There is no Action pending or, to
the knowledge of the Company, any Action threatened or investigation pending or
threatened against the Company or Lane, except for Actions or investigations
that (a) arise out of or relate to the development, packaging, labeling,
production, delivery, sale, resale, distribution, marketing, promotion, use or
consumption of, or exposure to tobacco products, including smoking and
health-related and safety-related claims or (b), individually or in the
aggregate, have not had or are not reasonably likely to have a Company Material
Adverse Effect. There is no Judgment outstanding against the Company or Lane
that, individually or in the aggregate, has had or is reasonably likely to have
a Company Material Adverse Effect. Section 3.10 of the Company Disclosure Letter
sets forth a list of all material litigation in which the Company or Lane is
currently a party (other than litigation of the type described in clause (a)
above).
SECTION 3.11. Compliance with Applicable Laws. The Company and
Lane are in compliance with all applicable
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Laws and Permits, including Environmental Laws and those relating to
occupational health and safety, except for instances of noncompliance that,
individually and in the aggregate, have not had and are not reasonably likely to
have a Company Material Adverse Effect. Neither the Company nor Lane has
received any written communication during the past two years from a Governmental
Entity that alleges that the Company or Lane has liability under or is not in
compliance with any applicable Law or Permit, including Environmental Law,
except for such liabilities and instances of noncompliance that, individually or
in the aggregate, have not had and are not reasonably likely to have a Company
Material Adverse Effect. There exists no Environmental Condition (as defined in
Section 9.04) that, individually or in the aggregate, has had or is reasonably
likely to have a Company Material Adverse Effect. There are no capital
expenditures in excess of U.S.$500,000 required to be made for pollution control
equipment or other remedial measures pursuant to Environmental Laws that have
not been reserved for, or reflected on, the September 30, 2003 Unaudited Balance
Sheet. This Section 3.11 does not relate to matters with respect to Taxes, which
are the subject of Section 3.07, and employment and labor matters, which are the
subject of Sections 3.08, 3.09 and 3.14.
SECTION 3.12. Title to Properties. The Company and Lane have
good and marketable title to, or valid leasehold interests in, all its
properties and assets, except for such as are no longer used or useful in the
conduct of its businesses or have been disposed of in the ordinary course of
business consistent with past practice and except for defects in title,
easements, restrictive covenants and similar encumbrances or impediments that,
individually or in the aggregate, have not had and are not reasonably likely to
have a Company Material Adverse Effect. All such assets and properties, other
than assets and properties in which the Company or Lane has leasehold interests,
are free and clear of all Liens, except for Liens that, individually or in the
aggregate, have not had and are not reasonably likely to have a Company Material
Adverse Effect.
SECTION 3.13. Intellectual Property. (a) The Company and Lane
own, or are validly licensed or otherwise have the right to use, in each case
free and clear of any Liens, all Intellectual Property (as defined in Section
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9.03) used or necessary to carry on its business as now being conducted, except
for Intellectual Property the failure of which to own or have the right to use
is not reasonably likely to have a Company Material Adverse Effect. The
consummation of the Acquisition will not conflict with the rights of the Company
or Lane in its Intellectual Property, except for conflicts that, individually or
in the aggregate, are not reasonably likely to have a Company Material Adverse
Effect.
(b) Neither the Company nor Lane has infringed upon,
misappropriated or otherwise come into conflict with any Intellectual Property
or other proprietary information of any other person, except for any such
infringement, misappropriation or other conflict that, individually or in the
aggregate, is not reasonably likely to have a Company Material Adverse Effect.
During the two years preceding the date of this Agreement, (i) neither the
Company nor Lane has received any written material charge, complaint, claim,
demand or notice alleging any such infringement, misappropriation or other
conflict (including any claim that the Company or Lane must license or refrain
from using any Intellectual Property or other proprietary information of any
other person), and (ii) none of the Company or Lane is a party to or the subject
of any pending or, to the knowledge of the Company, threatened, suit, claim,
action or proceeding before or by any Governmental Entity with respect to any
such infringement, misappropriation or conflict, in each case except for such
suits, claims, actions, investigations or proceedings that have not had and are
not reasonably likely to have a Company Material Adverse Effect. To the
Company's knowledge, no other person has infringed upon, misappropriated or
otherwise come into conflict with any Intellectual Property owned by, licensed
to or otherwise used by the Company or Lane, except for any such infringement,
misappropriation or other conflict that, individually or in the aggregate, has
not had and is not reasonably likely to have a Company Material Adverse Effect.
(c) Each of the Company and Lane have taken all reasonable and
necessary steps to protect their material Intellectual Property and rights
thereunder, and, to the knowledge of the Company, no such rights to material
Intellectual Property have been lost or are in jeopardy of being lost as a
result of any act or omission by the Company or Lane.
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SECTION 3.14. Labor and Employment Matters. There are no
collective bargaining or other labor union agreements to which the Company or
Lane is a party or by which any of them is bound. To the knowledge of the
Company, since January 1, 2001, neither the Company nor Lane has encountered any
labor union organizing activity or had any actual or threatened employee
strikes, work stoppages, slowdowns or lockouts, except for any such labor union
organizing activity or actual or threatened employee strikes, work stoppages,
slowdowns or lockouts that, individually or in the aggregate, have not had and
are not reasonably likely to have a Company Material Adverse Effect. Except with
respect to instances that, individually or in the aggregate, are not reasonably
likely to have a Company Material Adverse Effect the Company (a) is, and since
January 1, 2001, has been, in compliance with all applicable Laws relating to
employment and employment practices, occupational safety and health standards,
terms and conditions of employment and wages and hours, and (b) is not, and
since January 1, 2001, has not, engaged in any unfair labor practice. During the
two years preceding the date of this Agreement, the Company has not received
written notice of any unfair labor practice charge against the Company or Lane
which is pending.
SECTION 3.15. Contracts. (a) Section 3.15 of the Company
Disclosure Letter sets forth a list of each of the following types of Contracts
to which the Company or Lane is a party:
(i) Any material Contract granting any person a right of
first refusal, first offer or other similar right;
(ii) Any material loan agreement, indenture, mortgage,
promissory note, pledge, hypothecation, deed of trust, conditional sale
or title retention agreement, security agreement, equipment financing
obligation, guaranty or other source of contingent liability (other
than any Contract that will be terminated on or prior to the Closing
pursuant to Section 5.12);
(iii) Any Contract for the purchase or other acquisition by
the Company or Lane of goods or services or other assets that provides
for annual
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payments by the Company or Lane of U.S.$1,000,000 or more;
(iv) Any Contract providing for the sale or other
disposition by the Company or Lane to another person of goods or
services for U.S.$1,000,000 or more, other than in the ordinary course
of business;
(v) Any partnership, joint venture or other similar
Contract or arrangement;
(vi) Any Contract relating to the acquisition or
disposition of any business (whether by merger, consolidation, sale of
stock, sale of assets or otherwise) or the making of any capital
expenditures in excess of U.S.$1,000,000;
(vii) Any material license, assignment, transfer or similar
Contract pursuant to which any third party has rights to use or own any
material Intellectual Property of the Company;
(viii) Any material Contract that would materially restrict
the ability of ▇▇▇▇▇▇▇▇ American or any of its subsidiaries to compete
in any line of business in any geographic area;
(ix) Any Contract (other than any Contract that will be
terminated on or prior to the Closing pursuant to Section 5.12) with
(A) Seller, British American Tobacco p.l.c. or any of their respective
affiliates (other than the Company or Lane) or (B) any Company
Personnel (other than Lane Benefit Agreements or Lane Benefit Plans);
or
(x) Any Contract providing for indemnification of any person
with respect to material liabilities relating to any former (not
current) business of the Company, Lane or any affiliate or predecessor
person thereof.
(b) None of the Company, Lane or, to the knowledge of the
Company, any other party thereto is in violation of or in default under (nor
does there exist any condition that, upon the passage of time or the giving of
notice or both, would cause such a violation of or default under) any Contract
to which it is a party or by which it or any of its properties is bound, except
for violations or
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defaults that, individually or in the aggregate, have not had and are not
reasonably likely to have a Company Material Adverse Effect. Each Contract
listed or described in Section 3.15 of the Company Disclosure Letter or required
to be so listed or described is a valid and binding obligation of the Company or
Lane party thereto.
SECTION 3.16. Insurance. Except to the extent that insurance
coverage with respect to tobacco product-related liabilities is unobtainable or
is obtainable only at a cost which the Company reasonably believes to be
prohibitive or unreasonable, the Company and Lane have insurance with coverage
of a type and in a manner that the Company believes is prudent and reasonable in
the circumstances. No written notice of cancelation or threat thereof with
respect to any such material policy has been received. All such material
policies are in full force and effect and neither the Company nor Lane is in
default, whether as to payment of premium or otherwise, in any material respect
under the terms of any such policy, nor, to the knowledge of the Company, has
the Company or Lane done or omitted to do any act or thing which could render
any such material insurance policy void or voidable.
SECTION 3.17. Brokers; Schedule of Fees and Expenses. No
broker, investment banker, financial advisor or other person is entitled to any
broker's, finder's, financial advisor's or other similar fee or commission in
connection with the Acquisition based upon arrangements made by or on behalf of
the Company; provided, however, that an affiliate of the Company has engaged,
and will pay the fees and expenses of, ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. in connection with
the transactions contemplated by the Business Combination Agreement.
ARTICLE IV
Representations and Warranties of Purchaser
Purchaser represents and warrants to Seller that, as of the
date of this Agreement:
SECTION 4.01. Organization, Standing and Power. Purchaser is
duly organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized and has full corporate power and authority
and possesses all Permits and approvals necessary to enable it
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to own, lease or otherwise hold its properties and assets and to carry on its
business as presently conducted, other than such Permits and approvals the lack
of which, individually or in the aggregate, has not had and is not reasonably
likely to have a Purchaser Material Adverse Effect (as defined in Section 9.03).
Purchaser is duly qualified to do business in each jurisdiction where the nature
of its business or the ownership or leasing of its properties and assets makes
such qualification necessary, other than jurisdictions in which the failure to
so qualify has not had and is not reasonably likely to have a Purchaser Material
Adverse Effect.
SECTION 4.02. Authority; Execution and Delivery; and
Enforceability. Purchaser has all requisite corporate power and authority to
execute and deliver each Lane Transaction Agreement to which it is or will be a
party, to perform its obligations hereunder and thereunder and to consummate the
Acquisition and the other transactions contemplated hereby and thereby. The
execution and delivery by Purchaser of each Lane Transaction Agreement to which
it is or will be a party, the performance of its obligations hereunder and
thereunder and the consummation by Purchaser of the Acquisition and the other
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of Purchaser. Purchaser has duly executed
and delivered (or will duly execute and deliver on or prior to the Closing Date)
each Lane Transaction Agreement to which it is or will be a party, and each such
Lane Transaction Agreement constitutes (or will constitute on or prior to the
Closing Date) its legal, valid and binding obligation, enforceable against it in
accordance with its terms.
SECTION 4.03. No Conflicts; Consents. (a) The execution and
delivery by Purchaser of each Lane Transaction Agreement to which it is or will
be a party and the performance of its obligations hereunder and thereunder do
not, and the consummation of the Acquisition and the other transactions
contemplated hereby and thereby and compliance with the terms hereof and thereof
will not, conflict with, or result in any violation of or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancelation or acceleration of any obligation or to loss of a
material benefit under, or to increased, additional, accelerated or guaranteed
rights or entitlements of any person under, or
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result in the creation of any Lien upon any of the properties or assets of
Purchaser under, any provision of (i) the certificate of incorporation or
by-laws of Purchaser, (ii) any Contract to which Purchaser is a party or by
which any of its properties or assets is bound or (iii) subject to the filings
and other matters referred to in Section 4.03(b), any Judgment or Law applicable
to Purchaser or its properties or assets, other than, in the case of clauses
(ii) and (iii) above, any such items that, individually or in the aggregate,
have not had and are not reasonably likely to have a Purchaser Material Adverse
Effect.
(b) No Consent, of, or registration, declaration or filing
with, any Governmental Entity is required to be obtained or made by or with
respect to Purchaser in connection with the execution, delivery and performance
by Purchaser of each Lane Transaction Agreement to which it is or will be a
party or the consummation of the Acquisition or the other transactions
contemplated hereby and thereby, other than (i) compliance with and filings
under the HSR Act, (ii) any required approval of the Acquisition by the European
Commission pursuant to the EC Merger Regulation, (iii) any required approvals or
filings under the antitrust laws of member states of the European Union, (iv)
such filings with and approvals of the Bureau of Alcohol, Tobacco, Firearms and
Explosives, State licensing authorities and state taxing authorities as are
required to consummate the Acquisition, (v) compliance with any such filings as
may be required under applicable Environmental Law and (vi) such other items
that the failure of which to obtain or make, individually or in the aggregate,
are not reasonably likely to have a Purchaser Material Adverse Effect.
SECTION 4.04. Securities Act. The Shares purchased by
Purchaser pursuant to this Agreement are being acquired for investment only and
not with a view to any public distribution thereof, and Purchaser shall not
offer to sell or otherwise dispose of the Shares so acquired by it in violation
of any of the registration requirements of the Securities Act.
SECTION 4.05. Brokers; Schedule of Fees and Expenses. No
broker, investment banker, financial advisor or other person, other than ▇▇▇▇▇▇
Brothers Inc. ("▇▇▇▇▇▇") and ▇.▇. ▇▇▇▇▇▇ ▇▇▇▇▇ ("JPM"), the fees and expenses of
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which will be paid by the Purchaser, is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
Acquisition based upon arrangements made by or on behalf of the Purchaser. The
Purchaser has furnished to Seller true and complete copies of all agreements
between the Purchaser and ▇▇▇▇▇▇ and between the Purchaser and JPM relating to
the Acquisition.
ARTICLE V
Covenants
SECTION 5.01. Covenants Relating to Conduct of Business. (a)
Except for matters set forth in the Company Disclosure Letter or otherwise
expressly permitted by this Agreement, from the date of this Agreement to the
Closing, Seller shall, and shall cause the Company and Lane to, use its
reasonable best efforts to conduct the business of the Company and Lane in the
usual, regular and ordinary course consistent with past practice and, to the
extent consistent therewith, use its reasonable best efforts to preserve intact
its current business organization, keep available the services of its current
officers and employees and keep its relationships with customers, suppliers,
licensors, licensees, distributors and others having business dealings with them
(provided that nothing in this Section 5.01 shall be construed to limit the
ability of Lane and the Company to pay cash dividends on or prior to the
Closing). In addition, and without limiting the generality of the foregoing,
except for matters set forth in the Company Disclosure Letter or otherwise
expressly permitted by this Agreement, from the date of this Agreement to the
Closing, the Company shall not, and shall not permit Lane to, do any of the
following:
(i) issue, deliver, sell or grant (or become obligated to
issue, deliver, sell or grant) (A) any shares of capital stock of the
Company or Lane, (B) any equity, voting or other ownership interests in
the Company or Lane, (C) any securities convertible into or
exchangeable for, or any options, warrants or rights to acquire, any
such shares, equity, voting or other ownership interests or convertible
or exchangeable securities, (D) any "phantom stock", "phantom stock"
rights, stock appreciation rights ("SARs") or stock-based performance
units relating to
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the Company or Lane or (E) any options, warrants, rights, securities,
units, commitments, Contracts, arrangements or undertakings of any kind
that give any person the right to receive any economic benefit or
rights similar to or derived from the economic benefits and rights
accruing to holders of capital stock of the Company or Lane;
(ii) amend the certificate of incorporation, by-laws or
other comparable charter or organizational documents of the Company or
Lane;
(iii) acquire or agree to acquire (A) by merging or
consolidating with, or by purchasing a substantial equity interest in
or portion of the assets of, or by any other manner, any business or
any corporation, partnership, joint venture, association or other
business organization or division thereof or (B) any assets that are
material, individually or in the aggregate, to the Company and Lane,
taken as a whole, except purchases of inventory in the ordinary course
of business consistent with past practice;
(iv) except as required to comply with applicable Law or
any Contract, Lane Benefit Plan or Lane Benefit Agreement in effect on
the date of this Agreement, (A) increase in any manner the compensation
or benefits of, or pay any bonus to, any Company Personnel, except for
increases or bonuses in the ordinary course of business consistent with
past practice, (B) pay to any Company Personnel any material benefit
not provided for under any Contract, Lane Benefit Plan or Lane Benefit
Agreement in effect on the date of this Agreement other than the
payment of base compensation (inclusive of overtime, commissions,
incentive pay and the like) in the ordinary course of business
consistent with past practice, (C) take any action to fund or in any
other way secure the payment of compensation or benefits under any
Contract, Lane Benefit Plan or Lane Benefit Agreement, except in the
ordinary course of business consistent with past practice, (D) take any
action to accelerate the vesting or payment of any compensation or
benefit under any Contract, Lane Benefit Plan or Lane Benefit
Agreement, (E) adopt, enter into, amend or terminate any Lane Benefit
Plan or Lane Benefit Agreement, except in the ordinary course of
business
-32-
consistent with past practice, or (F) make any material determination
under any Lane Benefit Plan or Lane Benefit Agreement that is
inconsistent with the ordinary course of business or past practice;
(v) make any change in accounting methods, principles or
practices materially affecting the reported consolidated assets,
liabilities or results of operations of the Company and Lane, except
insofar as may have been required by a change in GAAP;
(vi) sell, lease (as lessor), license or otherwise dispose
of any properties or assets, except sales of inventory and excess or
obsolete assets in the ordinary course of business consistent with past
practice;
(vii) (A) incur any indebtedness for borrowed money or
assume or guarantee any such indebtedness of another person, issue or
sell any debt securities or warrants or other rights to acquire any
debt securities of the Company or Lane, assume or guarantee any debt
securities of another person, enter into any "keep well" or other
agreement to maintain any financial statement condition of another
person or enter into any arrangement having the economic effect of any
of the foregoing, except for (1) short-term borrowings incurred in the
ordinary course of business consistent with past practice or (2)
indebtedness in an aggregate principal amount not to exceed
U.S.$2,000,000 or (B) make any loans, advances or capital contributions
to, or investments in, any other person, other than (1) to or in the
Company or Lane, (2) extensions of trade credit in the ordinary course
of business consistent with past practice and (3) in respect of travel
expenses in the ordinary course of business;
(viii) make or agree to make any new capital expenditure or
expenditures that, in the aggregate, are in excess of U.S.$2,000,000;
(ix) make any material Tax election or settle or
compromise any material Tax liability or refund;
(x) (A) pay, settle, discharge or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise),
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other than the payment, settlement, discharge or satisfaction, in the
ordinary course of business consistent with past practice or in
accordance with their terms as in effect on the date of this Agreement,
of liabilities incurred in the ordinary course of business or reflected
or reserved against in, or contemplated by, the Unaudited Historical
Financial Statements (or the notes thereto) or incurred since the date
of such statements in the ordinary course of business consistent with
past practice, (B) cancel any material indebtedness (individually or in
the aggregate) or waive any claims or rights of substantial value or
(C) waive, fail to enforce the benefits of, or agree to modify in any
manner, any confidentiality, standstill or similar agreement to which
the Company or Lane is a party;
(xi) other than in the ordinary course of business
consistent with past practice, enter into or modify or otherwise amend
in any material respect any Contract that contains any provision that
materially restricts the ability of the Company or Lane or which,
following the consummation of the Acquisition, could restrict the
ability of ▇▇▇▇▇▇▇▇ American or any of its subsidiaries or any of their
respective affiliates to compete in any business or with any person or
in any geographic area;
(xii) enter into any material joint venture, partnership or
other similar arrangement;
(xiii) make any material changes to its practices relating
to the collection of accounts receivable, acquisition or disposition of
inventory or payment of accounts payable, other than in the ordinary
course of business consistent with past practice; or
(xiv) authorize any of, or commit or agree to take any of,
the foregoing actions.
(b) Other Actions. The Company shall not, and shall not permit
Lane to, take any action that would, or that is reasonably likely to, result in
(i) any of the representations and warranties of the Company set forth in this
Agreement that is qualified as to materiality or Company Material Adverse Effect
becoming untrue, (ii) any of such representations and warranties that is not so
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qualified becoming untrue in any material respect or (iii) except as otherwise
permitted by Section 5.02, any condition to the Acquisition set forth in Article
VI not being satisfied.
(c) Excluded Intellectual Property. Notwithstanding anything
in this Agreement to the contrary, Purchaser and Seller hereby agree that all
Intellectual Property that is used in any jurisdiction other than the United
States on or prior to the date of this Agreement (the "Excluded Intellectual
Property") and all rights in respect of the Excluded Intellectual Property shall
not be transferred to Purchaser, and may be sold, transferred, or otherwise
disposed of on or prior to the Closing (provided that the exclusion of the
Excluded Intellectual Property shall not interfere with the Existing IP
Licenses), other than the name "Captain Black" and all derivatives thereof in
those countries where such name is actively used on the date of this Agreement
(it being understood and agreed that Seller and Purchaser shall agree in good
faith on the list of countries where such name is actively used prior to the
Closing).
(d) Advise of Changes. Each of Seller and Purchaser shall
promptly advise the other party orally and in writing to the extent it has
knowledge that (i) any representation or warranty made by it contained in any
Lane Transaction Agreement is untrue or inaccurate in any material respect
(without regard to any qualification as to Material Adverse Effect), (ii) it has
failed to comply with or satisfy in any material respect any material obligation
to be performed by it under any Lane Transaction Agreement or (iii) any change
or event that has had or is reasonably likely to have a Company Material Adverse
Effect; provided, however, that no notification pursuant to this Section 5.01(d)
shall affect the representations, warranties, covenants or agreements of the
parties (or remedies with respect thereto) or the conditions to the obligations
of the parties under any Lane Transaction Agreement.
SECTION 5.02. No Solicitation. (a) Seller shall not nor shall
it authorize or permit the Company or Lane to, nor shall it authorize or permit
any officer, director or employee of, or any investment banker, attorney,
accountant or other advisor or representative (collectively, "Representatives")
to, directly or indirectly (i) solicit, initiate or encourage the
-35-
submission of, or take any other action to facilitate, any Lane Takeover
Proposal (as defined below), (ii) enter into any agreement with respect to any
Lane Takeover Proposal or (iii) participate in any discussions or negotiations
regarding, or furnish to any person any information with respect to, or take any
other action to facilitate any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Lane Takeover
Proposal. Seller and the Company promptly shall advise Purchaser orally and in
writing of any Lane Takeover Proposal or any inquiry with respect to or which
could lead to any Lane Takeover Proposal and the identity of the person making
any such Lane Takeover Proposal. Without limiting the foregoing, it is agreed
that any violation of the restrictions set forth in the next preceding sentence
by any Representative or affiliate of Seller, the Company or Lane, whether or
not such person is purporting to act on behalf of Seller, the Company or Lane or
otherwise, shall be deemed to be a breach of this Section 5.02(a) by Seller or
the Company, as the case may be. Upon execution of this Agreement, Seller and
the Company shall, and shall cause their respective Representatives to, (i)
cease immediately all discussion and negotiations regarding any proposal that
constitutes, and may reasonably be expected to lead to, a Lane Takeover Proposal
and (ii) promptly request each person, if any, that has executed a
confidentiality agreement in the last 12 months to return or destroy all
information heretofore furnished to such person by or on behalf of the Company
or Lane.
(b) For purposes of this Agreement:
"Lane Takeover Proposal" means any inquiry, proposal or offer
from any person relating to, or that would reasonably be expected to lead to,
any direct or indirect acquisition or purchase, in one transaction or a series
of transactions, of assets or businesses that constitute 20% or more of the
revenues, net income, EBITDA (earnings before interest expense, taxes,
depreciation and amortization) or the assets of the Company and Lane, taken as a
whole, or 20% or more of any class of equity securities of the Company or Lane,
any tender offer or exchange offer that if consummated would result in any
person beneficially owning 20% or more of any class of equity securities of the
Company or Lane, or any merger, consolidation, tender offer, exchange offer,
stock acquisition, asset acquisition, business combination,
-36-
recapitalization, liquidation, dissolution, joint venture, binding share
exchange or similar transaction involving the Company or Lane pursuant to which
any person or the stockholders of any person would own 20% or more of any class
of equity securities of the Company or Lane or of any resulting parent company
of the Company or Lane, other than (A) the transactions contemplated by this
Agreement and the other Lane Transaction Agreements and (B) the acquisition of
inventory in the ordinary course of business consistent with past practice.
SECTION 5.03. Access to Information. (a) Seller shall, and
shall cause each of the Company and Lane to, afford to Purchaser, its affiliates
and their respective officers, employees, accountants, counsel, financial
advisors and other Representatives reasonable access during normal business
hours during the period prior to the Closing to all their respective properties,
books, Contracts, commitments, personnel and records, and, during such period,
Seller shall, and shall cause each of the Company and Lane to, furnish promptly
to Purchaser (x) a copy of each report, schedule, registration statement and
other document filed by it during such period pursuant to the requirements of
Federal or state securities laws and (y) all other information concerning its
business, properties and personnel as such other party may reasonably request;
provided, however, that such access (i) shall not unreasonably disrupt the
normal operations of any party, (ii) shall be subject to any legal restrictions
on a party's ability to provide any information and (iii) shall not result in a
waiver of the attorney-client privilege or the protection of attorney
work-product. All information exchanged pursuant to this Section 5.03 shall be
subject to Section 5.04 of this Agreement.
(b) Notwithstanding anything herein to the contrary, any party
to this Agreement (and any employee, representative or other agent of such
party) may disclose to any and all persons, without limitation of any kind, the
tax treatment and tax structure of the transactions contemplated by this
Agreement and all materials of any kind (including opinions or other tax
analyses) that are provided to it relating to such tax treatment and tax
structure, except that (i) this provision shall not permit disclosure until the
earliest of (a) the date of the public announcement of discussions relating to
the transaction, (b) the date of the public announcement of the transaction
-37-
or (c) the date of the execution of an agreement (with or without conditions) to
enter into the transaction, (ii) tax treatment and tax structure shall not
include the identity of any existing or future party (or any affiliate of such
party) to this Agreement and (iii) this provision shall not permit disclosure to
the extent that nondisclosure is necessary in order to comply with applicable
securities laws. Nothing in this Agreement shall in any way limit any party's
ability to consult any tax advisor (including a tax advisor independent from all
other entities involved in the Transaction) regarding the tax treatment or tax
structure of the transaction.
SECTION 5.04. Confidentiality. (a) Purchaser acknowledges that
the information (whether oral or written) being provided to it with respect to
the Company and Lane is confidential and competitive, except for information
that is available to the public on the date it is provided to Purchaser or
thereafter becomes available to the public other than as a result of a breach of
this Section 5.04(a). Consequently, from the date of this Agreement until the
Closing Date, Purchaser shall treat all such information confidentially and it
shall not disclose such information to any other person, except that Purchaser
may disclose such information to its parent, subsidiaries or its or their
respective directors, officers, employees, agents, advisors or representatives
on a need to know basis for the purpose of consummating the Acquisition or as
required by applicable Law.
(b) Seller shall keep confidential, and instruct its
directors, officers, employees, agents, advisors or representatives to keep
confidential, all information relating to the Company and Lane, except as
required by applicable Law or administrative process and except for information
that is available to the public on the Closing Date, or thereafter becomes
available to the public other than as a result of a breach of this Section
5.04(b). The covenant set forth in this Section 5.04(b) shall remain in effect
for a period of two years after the date of this Agreement.
(c) Notwithstanding anything herein to the contrary, any party
to this Agreement (and any employee, representative or other agent of such
party) may disclose to any and all Persons, without limitation of any kind, the
tax treatment and tax structure of the transactions
-38-
contemplated by this Agreement and all materials of any kind (including opinions
or other tax analyses) that are provided to it relating to such tax treatment
and tax structure, except that (i) this provision shall not permit disclosure
until the earliest of (A) the date of the public announcement of discussions
relating to the transaction, (B) the date of the public announcement of the
transaction or (C) the date of the execution of an agreement (with or without
conditions) to enter into the transaction, (ii) tax treatment and tax structure
shall not include the identity of any existing or future party (or any affiliate
of such party) to this Agreement and (iii) this provision shall not permit
disclosure to the extent that nondisclosure is necessary in order to comply with
applicable securities laws. Nothing in this Agreement shall in any way limit any
party's ability to consult any tax advisor (including a tax advisor independent
from all other entities involved in the transactions contemplated by this
Agreement) regarding the tax treatment or tax structure of the transactions
contemplated by this Agreement.
SECTION 5.05. Reasonable Best Efforts. (a) Upon the terms and
subject to the conditions set forth in this Agreement, each of the parties shall
use its reasonable best efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, and to assist and cooperate with the other parties
in doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the Acquisition,
including (i) the taking of all reasonable acts necessary to cause the
conditions to Closing to be satisfied as soon as reasonably practicable, (ii)
the obtaining of all necessary actions or nonactions, waivers, consents and
approvals from Governmental Entities and the making of all necessary
registrations and filings (including filings with Governmental Entities, if any)
and the taking of all reasonable steps as may be necessary to obtain an approval
or waiver from, or to avoid an action or proceeding by, any Governmental Entity,
(iii) the obtaining of all necessary Consents, approvals or waivers from third
parties, (iv) the defending of any lawsuits or other legal proceedings, whether
judicial or administrative, challenging this Agreement or the consummation of
the Acquisition, including seeking to have any stay or temporary restraining
order entered by any court or other Governmental Entity vacated or reversed, and
(v) the execution and delivery of any additional instruments
-39-
necessary to consummate the Acquisition and to fully carry out the purposes of
the Lane Transaction Agreements. In connection with, and without limiting the
foregoing, Purchaser and Seller shall duly (x) file with the U.S. Federal Trade
Commission and the Antitrust Division of the Department of Justice the
notification and report form (the "HSR Filing") required under the HSR Act with
respect to the transactions contemplated by this Agreement and (y) as promptly
as practicable after the date of this Agreement make all necessary
notifications, if any, under the EC Merger Regulation (the "EC Filings"). The
HSR Filing shall be in substantial compliance with the requirements of the HSR
Act and the EC Filings shall be in substantial compliance with the EC Merger
Regulation. Subject to Section 5.05(b), each party shall cooperate with the
other party to the extent necessary to assist the other party in the preparation
of its HSR Filing and the EC Filings, to request early termination of the
waiting period required by the HSR Act and, if requested, to promptly amend or
furnish additional information with respect to the HSR Filing and the EC
Filings.
(b) Nothing in Section 5.05(a) shall require Purchaser or
Seller to dispose of any of its assets or to limit its freedom of action with
respect to any of its businesses, or to consent to any disposition of the other
party's assets or limits on the other party's freedom of action with respect to
any of its businesses, or to commit or agree to any of the foregoing (each, a
"Regulatory Requirement"), and nothing in Section 5.05(a) shall authorize either
Purchaser or Seller to commit or agree to any Regulatory Requirement, to obtain
any Consents, approvals, permits or authorizations, in connection with, or to
remove any impediments to, the Acquisition relating to the HSR Act or to avoid
the entry of, or to effect the dissolution of, any injunction, temporary
restraining order or other order in any suit, action or proceeding relating to
the HSR Act.
(c) Without limiting the generality of Section 5.05(a), upon
the terms and subject to the conditions set forth in this Agreement, each of the
parties hereto will (i) cause ▇▇▇▇▇▇▇▇ American to (A) execute and deliver the
Lane Joinder Agreement and (B) in accordance therewith, assume the obligations
of Purchaser hereunder as if ▇▇▇▇▇▇▇▇ American were a party hereto (other than
the obligations of Purchaser in this Section 5.05(c)) and
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(ii) cause ▇▇▇▇▇▇▇▇ American to execute and deliver the Manufacturing Agreement
(as defined in Section 5.14).
SECTION 5.06. Expenses; Transfer Taxes. (a) All fees and
expenses incurred in connection with the transactions contemplated hereby shall
be paid by the party incurring such expense.
(b) All stock transfer, real estate transfer, documentary,
stamp, recording and other similar Taxes (including interest, penalties and
additions to any such Taxes) ("Transfer Taxes") applicable to the transfer of
the Shares shall be paid by Purchaser, and Purchaser shall cooperate with Seller
in preparing, executing and filing any Tax Returns with respect to such Transfer
Taxes.
SECTION 5.07. Benefit Plans. (a) ▇▇▇▇▇▇▇▇ American will cause
the Company and Lane to honor, in accordance with their respective terms, but
only to the extent of the Company's and Lane's liabilities under the Lane
Benefit Plans and Lane Benefit Agreements, including any rights or benefits
arising as a result of the Acquisition (either alone or in combination with any
other event).
(b) ▇▇▇▇▇▇▇▇ American agrees that (i) during the period
commencing upon the Closing Date and ending on the first anniversary thereof,
the employees of the Company and Lane (the "Affected Lane Employees") who remain
employed by ▇▇▇▇▇▇▇▇ American and its subsidiaries will continue to be provided
with benefits under employee benefit plans, programs, policies or arrangements
(other than (x) stock options or other plans involving the issuance of
securities of ▇▇▇▇▇▇▇▇ American and (y) severance or termination benefit plans,
programs, policies, agreements or arrangements of ▇▇▇▇▇▇▇▇ American) which in
the aggregate are no less favorable than those provided by the Company and Lane
to the Affected Lane Employees immediately prior to the Acquisition and (ii)
each Affected Lane Employee who is eligible as of the Closing Date (or who would
become eligible as of the Closing Date if his or her active service with
▇▇▇▇▇▇▇▇ American and its subsidiaries during the period he or she is covered
under clause (i) of this Section 5.07(b) is added to his or her eligible service
prior to the Closing Date) to receive a benefit under a retirement or retiree
welfare plan of the Company or Lane shall receive such benefits in amounts and
at times
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required by such plans as in effect immediately prior to the Closing Date.
(c) ▇▇▇▇▇▇▇▇ American agrees that (i) for all purposes
(including eligibility, vesting and benefit accrual) under the employee benefit
plans of ▇▇▇▇▇▇▇▇ American and its subsidiaries providing benefits to any
Affected Lane Employees after the Acquisition, each Affected Lane Employee shall
be credited with his or her years of service with the Company and Lane (and any
predecessor entities thereof) before the Acquisition, to the same extent as such
Affected Lane Employee was entitled, before the Acquisition, to credit for such
service under any similar Lane Benefit Plan and (ii) any early retirement
subsidies, eligibilities and features under any Lane Benefit Plan which cover
Affected Lane Employees as of the Closing Date shall remain available to each
such employee who is eligible for such right at the Closing Date (or who would
be eligible at the Closing Date if his or her age and/or eligible service as of
the Closing Date was combined with his or her additional age and active service
with ▇▇▇▇▇▇▇▇ American and its subsidiaries following the Closing Date), in each
case except for purposes of benefit accrual under defined benefit pension plans
to the extent such credit would result in a duplication of accrued benefits in
respect of the same period of service. Following the Acquisition, ▇▇▇▇▇▇▇▇
American shall, or shall cause its subsidiaries to, (i) waive any pre-existing
conditions, exclusions, actively-at-work requirements and waiting periods under
any welfare benefit plan maintained by ▇▇▇▇▇▇▇▇ American or any of its
subsidiaries in which Affected Lane Employees and their eligible dependents
participate (except to the extent that such pre-existing conditions, exclusions,
actively-at-work requirements and waiting periods would have been applicable
under the comparable Lane welfare benefit plans immediately prior to the
Acquisition), and (ii) provide each Affected Lane Employee with credit for any
co-payments and deductibles incurred prior to the Acquisition (or such later
transition date to new welfare benefits plans) for the calendar year in which
the Acquisition (or such later transition date) occurs, in satisfying any
applicable deductible or out-of-pocket requirements under any welfare plans that
the Affected Lane Employees participate in after the Acquisition.
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SECTION 5.08. Indemnification. Purchaser shall, or shall cause
▇▇▇▇▇▇▇▇ American, to the fullest extent permitted by Law, honor all of the
Company and Lane's obligations to indemnify (including any obligations to
advance funds for expenses) the current or former directors or officers of the
Company and Lane for acts or omissions by such directors and officers occurring
prior to the Closing to the extent that such obligations of the Company and Lane
exist on the date of this Agreement, whether pursuant to the certificate of
incorporation or by-laws of the Company or Lane or individual indemnity
agreements or otherwise, and such obligations shall survive the Acquisition and
shall continue in full force and effect in accordance with the terms of the
certificate of incorporation and by-laws of the Company or Lane and such
individual indemnity agreements from the Closing until the expiration of the
applicable statute of limitations with respect to any claims against such
directors or officers arising out of such acts or omissions.
SECTION 5.09. Tax Matters. (a) Any tax sharing agreement
between the Company or Lane on the one hand, and Seller or any of its affiliates
(other than the Company or Lane), on the other hand shall be terminated as of
the Closing. After the Closing, no party shall have any rights or obligations
under any such Tax sharing agreement.
(b) Seller and its affiliates shall, and shall cause their
respective officers, directors, affiliates, employees, agents, auditors and
representatives to provide to the Company any information reasonably requested
by the Company for the purposes of resolving any Tax claim made by any taxing
authority relating to a taxable period (or portion thereof) of the Company or
Lane that ends on or before the Closing Date. The Company shall promptly notify
Seller of any Tax claim made by any taxing authority relating to cross-border
transactions entered into by the Company or Lane with Seller or any of its
affiliates in a taxable period (or portion thereof) that ends on or before the
Closing Date and Seller or its affiliates and counsel of their own choosing
shall have the right to participate fully in all aspects of any such Tax claim,
provided, however, that the Company shall control all proceedings and may make
all decisions taken in connection with such Tax claim. The Company and its
affiliates shall, and shall cause their respective officers, directors,
affiliates, employees, agents, auditors and representatives to provide
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to Seller and its affiliates any information reasonably requested by Seller or
its affiliates in connection with any Tax claim made by any taxing authority
relating to cross-border transactions entered into by the Company or Lane with
Seller or any of its affiliates in a taxable period (or portion thereof) that
ends on or before the Closing Date.
(c) Seller shall deliver to Purchaser at the Closing a
certificate in form and substance satisfactory to Purchaser, duly executed and
acknowledged, certifying that such Seller is exempt from withholding under
Section 1445 of the Code.
SECTION 5.10. Public Announcements. Seller and Purchaser shall
consult with each other before issuing, and provide each other the opportunity
to review and comment upon, any press release or other public statements with
respect to this Agreement and the Acquisition and shall not issue any such press
release or make any such public statement prior to such consultation, except as
may be required by applicable Law, court process or by obligations pursuant to
any listing agreement with any national securities exchange.
SECTION 5.11. Further Assurances. From time to time, as and
when requested by any party, each party shall execute and deliver, or cause to
be executed and delivered, all such documents and instruments and shall take, or
cause to be taken, all such further or other actions (subject to Section 5.05),
as such other party may reasonably deem necessary or desirable to consummate the
transactions contemplated by the Lane Transaction Agreements, including, in the
case of Seller, executing and delivering to Purchaser such assignments, deeds,
bills of sale, consents and other instruments as Purchaser or its counsel may
reasonably request as necessary or desirable for such purpose.
SECTION 5.12. Intercompany Accounts and Contracts. Seller
shall cause (a) all receivables, payables, accounts and indebtedness (other than
trade receivables and trade payables) between (x) the Company or Lane and (y)
British American Tobacco p.l.c. or any of its affiliates to be satisfied or
eliminated prior to Closing and shall cause all arrangements or Contracts
relating to such receivables, payables, accounts and indebtedness
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(other than trade receivables and trade payables) to be terminated with respect
to the Company and Lane and (b) all arrangements or Contracts between (x) the
Company or Lane and (y) Seller or any affiliate of Seller (other than any
intercompany agreement relating to Intellectual Property licenses in effect on
the date of this Agreement (the "Existing IP Licenses") to be terminated with
respect to the Company and Lane.
SECTION 5.13. Accounting Records. Purchaser acknowledges that
Seller and its affiliates shall, from time to time after the Closing, require
access to certain accounting records and information held by the Company and
Lane to the extent such records and information pertain to events occurring on
or prior to the last day of any accounting period which includes the Closing,
therefore, from and after the Closing, Purchaser and the Company shall, and
shall cause each of their respective subsidiaries to, use its reasonable best
efforts properly retain and maintain such records for ten years. After the end
of such ten year period, before destroying, abandoning or disposing of such
records, Purchaser will cause the Company to give notice to Seller and give
Seller, at its sole cost and expense, an opportunity to remove and retain all or
any part of such records as Seller may elect. In the absence of bad faith or
willful misconduct, Purchaser will not have any liability arising out of or in
connection with its retention and handling of such records.
SECTION 5.14. Manufacturing Agreement. Purchaser and Seller
hereby agree to negotiate in good faith a customary manufacturing contract
between an affiliate of Purchaser and an affiliate of Lane containing the terms
and conditions set forth on Exhibit B to this Agreement (the "Manufacturing
Agreement") to replace the manufacturing contract currently in effect between
Lane and an affiliate of Seller. Set forth in the Company Disclosure Letter is a
list of all manufacturing contracts currently in effect between Lane, on the one
hand, and Seller or any of its affiliates, on the other hand. Copies of all such
manufacturing contracts have been provided to Purchaser.
SECTION 5.15. Transition Support Services. B&W and its
affiliates shall provide the Company with such services as Purchaser may
reasonably request (the "B&W Services") for such transitional period as
Purchaser may
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reasonably request(1); provided, however, that B&W and its affiliates shall not
be obligated to perform any such B&W Service if and to the extent that such B&W
Service (i) has not historically been provided by B&W or its affiliates in the
ordinary course for the Company or Lane, or in a volume substantially greater
than that which has been historically provided to for the Company or Lane by B&W
or such affiliate, (ii) would require B&W to hire any additional personnel or
make any capital expenditures, (iii) is for any operations of the Company or
Lane other than in respect of its business as of the date of this Agreement or
(iv) would breach any contract to which B&W is a party or violate any applicable
law to which B&W is subject. Purchaser will reimburse B&W for the B&W Services
at B&W's fully-allocated costs. During the period in which the B&W Services are
being provided, Purchaser shall furnish B&W with such information and other
reasonable assistance as is necessary to enable B&W to perform the B&W Services.
Any such information shall be provided by Purchaser at the same times and in the
same format as previously supplied to B&W. Purchaser shall be responsible for
assuring that such information is accurate and complete. B&W's performance of
any B&W Service may be suspended during any period that Purchaser fails to
provide such information and assistance to the extent such failure renders
performance of such B&W Service by B&W unduly burdensome. B&W shall not be
liable to Purchaser for any Indemnifiable Losses in respect of providing any B&W
Service absent gross negligence or wilful misconduct.
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's Obligation. The
respective obligation of each party to effect the Acquisition is subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Antitrust. Any waiting period (and any extension thereof)
applicable to the Acquisition under the HSR Act shall have been terminated or
shall have expired
----------------------
(1) Schedule to be prepared prior to Closing.
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and any required approval of the Acquisition by the European Commission shall
have been obtained pursuant to the EC Merger Regulation
(b) No Restraints. No temporary restraining order, preliminary
or permanent injunction or other Judgment or Law entered, enacted, promulgated,
enforced or issued by any court or other Governmental Entity of competent
jurisdiction (collectively, "Restraints") shall be in effect preventing the
consummation of the Acquisition.
(c) Other Conditions. All conditions to the Merger set forth
in Sections 7.01, 7.02 and 7.03 of the Business Combination Agreement shall have
been satisfied (or, to the extent permitted thereunder, waived by the party
entitled to the benefit thereof).
SECTION 6.02. Conditions to Obligation of Purchaser. The
obligations of Purchaser to effect the Acquisition are further subject to the
following condition:
(a) Performance of Obligations of Seller. Seller shall have
performed in all material respects all material obligations required to be
performed by it under this Agreement at or prior to the Closing Date, and
Purchaser shall have received a certificate signed on behalf of Seller by the
chief financial officer of Seller to such effect.
SECTION 6.03. Conditions to Obligation of Seller. The
obligations of Seller to effect the Acquisition are further subject to the
following condition:
(a) Performance of Obligations of Purchaser. Purchaser shall
have performed in all material respects all material obligations required to be
performed by it under this Agreement at or prior to the Closing Date, and Seller
shall have received a certificate signed on behalf of Purchaser by the chief
financial officer of Purchaser to such effect.
SECTION 6.04. Frustration of Closing Conditions. Neither
Purchaser nor Seller may rely on the failure of any condition set forth in this
Article VI to be satisfied if such failure was caused by such party's failure to
act in good faith or to use its reasonable best efforts to cause the Closing to
occur, as required by Section 5.05.
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ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01. Termination. In the event that the Business
Combination Agreement is terminated prior to the Effective Time, this Agreement
shall automatically and simultaneously and without any action by the parties
hereto be terminated, the Acquisition and the other transactions contemplated by
this Agreement abandoned, and none of Purchaser, Seller or the Company shall
have any liability or obligations hereunder. It is understood and agreed that
the consummation of the Merger shall not constitute a termination of this
Agreement.
SECTION 7.02. Effect of Termination. In the event of
termination of this Agreement as provided in Section 7.01, this Agreement shall
forthwith become void and have no effect, without any liability or obligation on
the part of Purchaser or Seller, other than the provisions of Sections 4.04,
5.04, 5.06, 5.10, 7.01, this Section 7.02, and Article IX, which provisions
shall survive such termination. Nothing in this Section 7.02 shall be deemed to
release any party from any liability for any willful and material breach by such
party of the terms and provisions of this Agreement or to impair the right of
any party to compel specific performance by any other party of its obligations
under this Agreement.
SECTION 7.03. Amendments and Waivers. This Agreement may not
be amended except by an instrument in writing signed on behalf of each of the
parties hereto. Purchaser, on the one hand, or Seller, on the other hand, may
waive compliance by the other with any term or provision of this Agreement that
such other party was or is obligated to comply with or perform.
ARTICLE VIII
Indemnification
SECTION 8.01. Indemnification by Seller and B&W. Subject to
the provisions of this Article VIII, from and after the Effective Time, Seller
and B&W (each, an "Indemnifying Party") shall jointly and severally indemnify,
defend and hold harmless the Purchaser Indemnitees from and against, and pay or
reimburse the
-▇▇-
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ for, all Indemnifiable Losses, as incurred, to the extent
of:
(a) Any U.S. withholding tax, including interest and
penalties, imposed in respect of the receipt of the Purchase Price by Seller;
and
(b) any MSA Liability Amount due and payable by the Company or
Lane with respect to any period prior to the Closing Date that has not been paid
as of the Closing Date.
SECTION 8.02. Procedures Relating to Indemnification. In order
for a Purchaser Indemnitee to be entitled to any indemnification provided for
under this Agreement, the Purchaser Indemnitee shall deliver notice of such
claim (in reasonably sufficient detail to enable the Indemnifying Party to
evaluate such claim) with reasonable promptness to the Indemnifying Party. The
failure by any Purchaser Indemnitee to give such notification shall not affect
the indemnification provided hereunder except to the extent that the
Indemnifying Party shall have been actually and materially prejudiced as a
result of such failure. If the Indemnifying Party has disputed its liability
with respect to such claim, the Indemnifying Party and the Indemnitee shall
proceed in good faith to negotiate a resolution of such dispute and, if not
resolved through negotiations, such dispute shall be resolved by litigation,
subject to the provisions of Section 9.10, in an appropriate court of competent
jurisdiction.
SECTION 8.03. Certain Limitations. The amount of any
Indemnifiable Losses or other liability for which indemnification is provided
under this Agreement shall be net of any amounts actually recovered by the
Purchaser Indemnitee from third parties (including amounts actually recovered
under insurance policies) with respect to such Indemnifiable Losses. The
Purchaser Indemnitee shall use its reasonable best efforts to seek to obtain
recovery in respect of any Indemnifiable Loss or such other liability under any
available insurance policy.
ARTICLE IX
General Provisions
SECTION 9.01. Nonsurvival of Representations and Warranties.
None of the representations and warranties in this Agreement or in any
certificate or instrument
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delivered pursuant to this Agreement, including any rights arising out of any
breach of such representations or warranties, shall survive the Closing. This
section 9.01 shall not limit this Article IX or any covenant or agreement of the
parties which by its terms contemplates performance after the Closing.
SECTION 9.02. Notices. All notices, requests, claims, demands
and other communications under this Agreement shall be in writing and shall be
deemed given upon receipt by the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
(i) if to Purchaser,
▇.▇. ▇▇▇▇▇▇▇▇ Holdings, Inc.
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇-▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attention: General Counsel;
with a copy to:
▇▇▇▇▇ Day
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.;
(ii) if to Seller or B&W,
British American Tobacco p.l.c.
▇▇▇▇▇ ▇▇▇▇▇
▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax: ▇▇-▇▇▇-▇▇▇-▇▇▇▇
Attention: General Counsel;
with a copy to:
Cravath, Swaine & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
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Fax: ▇▇▇-▇▇▇-▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
SECTION 9.03. Definitions. For purposes of this Agreement:
"Action" means any claim, suit, action arbitration, inquiry,
investigation or other proceeding of any nature (whether criminal, civil,
legislative, administrative, regulatory, prosecutorial or otherwise) by or
before any court, arbitrator or governmental entity or similar body.
An "affiliate" of any person means another person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first person.
A "Company Material Adverse Effect" means any change, effect,
occurrence, state of facts or development that, individually or in the
aggregate, (A) is materially adverse to the business, financial condition or
results of operations of the B&W Business, other than with respect to the
Excluded Assets and Excluded Liabilities (in each case as such term is defined
in the Business Combination Agreement) and the Company and Lane, taken as a
whole, or (B) is reasonably likely to prevent or materially impede, interfere
with, hinder or delay the consummation by B&W and its affiliates of the
Transactions (as such term is defined in the Business Combination Agreement),
other than, in each case, any change, effect, event, occurrence, state of facts
or development arising out of or related to (w) economic or political conditions
or the securities markets in general, (x) any failure, in and of itself, by B&W
to meet any internal or published projections, forecasts, or revenue or earnings
predictions, (y) the industry in which B&W and Purchaser participate or (z) the
announcement or existence of the Transactions.
"Environmental Condition" means and includes the generation,
discharge, emission, release or threatened release into the environment
(including ambient air, surface water, groundwater or land), spill, receiving,
handling, use, storage, containment, treatment,
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transportation, shipment or disposition of any Hazardous Materials by the
Company or Lane (or their predecessors), as the case may be, which has resulted
in or may reasonably result in response action under any Environmental Laws or
as to which any liability is currently or may in the future be imposed on such
persons based on conditions existing prior to the date of this Agreement or the
actions or omissions prior to the date of this Agreement of any person (or their
predecessors) with respect to any Hazardous Materials or reporting with respect
thereto.
"Environmental Law" means any applicable Law, Judgment or
Consent issued or promulgated by or entered into with any Governmental Entity
relating to pollution or the protection of the environment (including ambient
air, surface water, groundwater, land surface or subsurface strata), the
presence, management, release, disposal of, or exposure to, Hazardous Materials,
or the protection of human health and safety.
"Hazardous Materials" means any chemical, material, substance
or waste that is regulated pursuant to any Environmental Law including petroleum
and petroleum by-products, asbestos and asbestos-containing materials, urea
formaldehyde foam insulation, polychlorinated biphenyls, pesticides and
herbicides, radon gas, or chlorofluorocarbons and ozone-depleting substances.
"Indemnifiable Losses" means all losses, liabilities, damages
(including compensatory damages, punitive damages, exemplary damages, penalties,
sanctions and restitution), deficiencies, fines, expenses, Actions, demands,
judgments, orders, decrees or settlements, including interest and penalties
recovered by a third party with respect thereto and out-of-pocket expenses and
reasonable attorneys' and accountants' fees and expenses incurred in the
investigation or defense of any of the same or in asserting, preserving or
enforcing any of an Indemnitee's rights hereunder, suffered or incurred by an
Indemnitee.
"Indemnifying Party" has the meaning assigned to such term in
Section 5.03(a).
"Intellectual Property" means trademarks (registered or
unregistered), service marks, brand names, certification marks, trade dress,
designs, assumed names,
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trade names, domain names and other indications of origin, the goodwill
associated with the foregoing and registrations in any jurisdiction of, and
applications in any jurisdiction to register, the foregoing, including any
extension, modification or renewal of any such registration or application;
trade secrets and confidential information and rights in any jurisdiction to
limit the use or disclosure thereof by any person; registration or applications
for registration of copyrights in any jurisdiction, and any renewals or
extensions thereof; any intellectual property or proprietary rights similar to
any of the foregoing; licenses, immunities, covenants not to ▇▇▇ and the like
relating to any of the foregoing; patents (including all reissues, divisions,
continuations and extensions thereof), patent rights, know-how, processes,
technology and inventions and registrations in any jurisdiction of, and
applications in any jurisdiction to register, the foregoing, including any
extension, modification or renewal of any such registration or application; and
any claims or causes of action arising out of or related to any infringement,
misuse or misappropriation of any of the foregoing.
"MSA" means the Master Settlement Agreement, dated as of
November 23, 1998, among the 46 states and five U.S. territories listed on the
signature pages thereto, the District of Columbia, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Incorporated,
▇.▇. ▇▇▇▇▇▇▇▇ Tobacco Company, B&W and Lorillard Tobacco Company, as amended,
supplemented or replaced.
"MSA Liability Amount" means, with respect to any period, the
total of all amounts due by the Company or Lane for such period pursuant to (a)
the State Settlements, and (b) attorney fee payment agreements adopted pursuant
to any of the State Settlements.
A "person" means any individual, firm, corporation,
partnership, company, limited liability company, trust, joint venture,
association, Governmental Entity, unincorporated organization or other entity.
A "Purchaser Material Adverse Effect" means any change,
effect, occurrence, state of facts or development that, individually or in the
aggregate, is reasonably likely to prevent or materially impede, interfere with,
hinder or delay the consummation by Purchaser of the Acquisition.
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"Purchaser Indemnitee" means Purchaser, the Company, Lane and
their respective Representatives.
"Representative" of any Person means any officer, director,
manager, employee, consultant, attorney or other advisor or representative of
such Person.
A "Seller Material Adverse Effect" means any change, effect,
occurrence, state of facts or development that, individually or in the
aggregate, is reasonably likely to prevent or materially impede, interfere with,
hinder or delay the consummation by Seller of the Acquisition.
"State Settlements" means (a) the MSA, (b) the Settlement
Agreement, dated as of August 25, 1997, among the State of Florida, ▇▇▇▇▇▇
▇▇▇▇▇▇ Incorporated, ▇.▇. ▇▇▇▇▇▇▇▇ Tobacco Company, B&W, Lorillard Tobacco
Company and United States Tobacco Company, as amended by the Stipulation of
Amendment to Settlement Agreement and For Entry of Consent Decree, dated as of
September 11, 1998, (c) the Settlement Agreement and Stipulation for Entry of
Consent Decree, dated as of May 8, 1998, among the State of Minnesota, ▇▇▇▇▇▇
▇▇▇▇▇▇ Incorporated, ▇.▇. ▇▇▇▇▇▇▇▇ Tobacco Company, B&W and Lorillard Tobacco
Company, (d) the Comprehensive Settlement Agreement and Release, dated as of
October 17, 1997, among the State of Mississippi, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Incorporated,
▇.▇. ▇▇▇▇▇▇▇▇ Tobacco Company, B&W and Lorillard Tobacco Company, as amended by
the Stipulation of Amendment to Settlement Agreement and For Entry of Agreed
Order, dated as of July 2, 1998, (e) the Comprehensive Settlement Agreement and
Release, dated as of January 16, 1998, among the State of Texas, ▇▇▇▇▇▇ ▇▇▇▇▇▇
Incorporated, ▇.▇. ▇▇▇▇▇▇▇▇ Tobacco Company, B&W, Lorillard Tobacco Company and
United States Tobacco Company, as amended by the Stipulation of Amendment to
Settlement Agreement and For Entry of Consent Decree, dated as of July 24, 1998,
in each case, as amended, supplemented or replaced, and (f) the Trust Agreement,
dated July 19, 1999, among ▇▇▇▇▇▇ ▇▇▇▇▇▇ Incorporated, B&W, Lorillard Tobacco
Company and ▇.▇. ▇▇▇▇▇▇▇▇ Tobacco Company, as settlors, The Chase Manhattan
Bank, as trustee, and the Grower States listed therein, as amended, supplemented
or replaced.
A "subsidiary" of any person means another person, an amount
of the voting securities, other voting ownership or voting partnership
interests of which is
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sufficient to elect at least a majority of its Board of Directors or other
governing body (or, if there are no such voting interests, 50% or more of the
equity interests of which) is owned directly or indirectly by such first person
or by another subsidiary of such first person.
"Working Capital" means, as of any time, (a) the sum of (i)
Stocks - FIFO basis, (ii) Accounts Receivable, (iii) Due from/Due to Affiliates
- Trading and (iv) Other Debtors less (b) the sum of (i) Excise Tax Payable
(Federal and state), (ii) Accounts Payable and (iii) Other Creditors.
SECTION 9.04. Interpretation; Disclosure Letters. When a
reference is made in this Agreement to a Section, Subsection or Exhibit, such
reference shall be to a Section or Subsection of, or an Exhibit to, this
Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include", "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation". The words "hereof",
"herein" "hereto" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. The term "or" is not exclusive. The word "extent"
in the phrase "to the extent" shall mean the degree to which a subject or other
thing extends, and such phrase shall not mean simply "if". The Company will be
deemed to have "knowledge" of a particular fact or matter if an executive
officer of British American Tobacco p.l.c., B&W, the Company or Lane is actually
aware of such fact or matter or has been presented information or evidence which
would lead a reasonable and prudent individual to determine the existence of
such fact or matter. The definitions contained in this Agreement are applicable
to the singular as well as the plural forms of such terms. Any agreement or
instrument defined or referred to herein or in any agreement or instrument that
is referred to herein means such agreement or instrument as from time to time
amended, modified or supplemented. References to a person are also to its
permitted successors and assigns.
SECTION 9.05. Severability. If any term or other provision of
this Agreement is invalid, illegal or
-55-
incapable of being enforced by any rule or Law, or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the Acquisition
is not affected in any manner materially adverse to any party. Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner to the end that the Acquisition contemplated
hereby is fulfilled to the extent possible.
SECTION 9.06. Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties.
SECTION 9.07. Entire Agreement; No Third-Party Beneficiaries.
The Lane Transaction Agreements, taken together with the Company Disclosure
Letter, (a) constitute the entire agreement, and supersede all prior agreements
and understandings, both written and oral, among the parties with respect to the
Acquisition and (b) except for the provisions of Section 5.08, are not intended
to confer upon any person (including any stockholder of any party) other than
the parties any rights or remedies.
SECTION 9.08. Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of Delaware,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof.
SECTION 9.09. Assignment. Neither this Agreement nor any of
the rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise, by any of the parties
without the prior written consent of the other parties hereto. Notwithstanding
the foregoing, Purchaser shall assign its right to purchase the Shares to
▇▇▇▇▇▇▇▇ American pursuant to the Lane Joinder Agreement; provided, however,
that such assignment shall not limit or affect the assignor's obligations
hereunder. Any purported assignment (other than the assignment of Purchaser's
rights to ▇▇▇▇▇▇▇▇ American pursuant to the Lane Joinder Agreement)
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without such prior written consent shall be void. Subject to the preceding
sentences, this Agreement will be binding upon, inure to the benefit of, and be
enforceable by, the parties hereto and their respective successors and assigns.
SECTION 9.10. Enforcement; Service of Process. The parties
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions of this
Agreement in any Federal court located in the State of Delaware or in the Court
of Chancery of the State of Delaware, this being in addition to any other remedy
to which they are entitled at law or in equity. In addition, each of the parties
hereto irrevocably and unconditionally (a) consents to submit itself to the
personal jurisdiction of any Federal court located in the State of Delaware or
Court of Chancery of the State of Delaware in the event any dispute arises out
of this Agreement or the Acquisition, (b) agrees that it will not attempt to
deny or defeat such personal jurisdiction by motion or other request for leave
from any such court, (c) irrevocably and unconditionally waives (and agrees not
to plead or claim) any objection to the laying of venue of any action, suit or
proceeding arising out of this Agreement or the Acquisition, (d) agrees that it
will not bring any action relating to this Agreement or the Acquisition, in any
court other than any Federal court sitting in the State of Delaware or the Court
of Chancery of the State of Delaware and (e) waives any right to trial by jury
with respect to any action related to or arising out of this Agreement or the
Acquisition.
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IN WITNESS WHEREOF, Seller, the Company and Purchaser have
duly executed this Agreement as of the date first written above.
AMERICAN CIGARETTE COMPANY OVERSEAS B.V.,
by /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Attorney
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CIGARETTE MANUFACTURERS SUPPLIES INC.,
by /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
V.P. Finance
-----------------------------------------
Name:
Title:
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▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ TOBACCO CORPORATION,
by /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------------
Name:
Title:
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▇.▇. ▇▇▇▇▇▇▇▇ TOBACCO HOLDINGS, INC.,
by /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Chairman of the
Board, President and
Chief Executive Officer
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