1
EXHIBIT 10.61
THIS CLASS A OPTION AGREEMENT (the "AGREEMENT"), dated as of
January 12, 1999, is entered into among Brooke Group Ltd., a Delaware
corporation ("BROOK"), Xxxxxxx & Xxxxx Inc., a Delaware corporation ("LMI"),
Xxxxxxx Group Inc., a Delaware corporation ("XXXXXXX"), and Eve Holdings Inc., a
Delaware corporation (the "GRANTOR", and together with Brooke, LMI and Xxxxxxx,
the "XXXXXXX PARTIES"), on the one hand, and Xxxxxx Xxxxxx Incorporated, a
Virginia corporation ("PM"), on the other hand.
WHEREAS, concurrently with the execution of this Agreement,
the Xxxxxxx Parties and PM will execute the Formation and Limited Liability
Company Agreement of Brands LLC, a Delaware limited liability company (the
"COMPANY"), pursuant to which, among other things, the Grantor will contribute
the Marks to the Company in exchange for 100% of the Class A Shares and 100% of
the Class B Shares of the Company; and
WHEREAS, the Grantor desires to grant to PM an option to
acquire all of the Class A Shares, on the terms and subject to the conditions
contained in this Agreement.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
As used in this Agreement the following terms shall have the
following respective meanings:
"AFFILIATE" shall mean, with respect to any Person, any direct
or indirect subsidiary of such Person, any other Person that directly or through
one or more intermediaries, is controlled by, or is under common control with,
the specified Person, and, if such a Person is an individual, any member of the
immediate family (including parents, spouse and children) of such individual and
any trust whose principal beneficiary is such individual or one or more members
of such immediate family and any person who is controlled by any such member or
trust. As used in this definition, the term "CONTROL" (including with
correlative meanings, "controlled by" and "under common control with") shall
mean possession, directly or indirectly, of power to direct or cause the
direction of management or policies, whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise.
Notwithstanding the foregoing, for purposes of this Agreement (i) the Xxxxxxx
Parties and their Subsidiaries shall not be deemed to be Affiliates of PM, and
(ii) PM and its Subsidiaries (including the Company) shall not be deemed to be
Affiliates of the Xxxxxxx Parties.
"AGREEMENT" shall have the meaning set forth in the recitals
hereof.
2
"ASSIGN" shall mean to, directly or indirectly, sell, assign,
transfer, pledge, hypothecate, mortgage or dispose of, by gift or otherwise, or
in any way encumber, any Class A Shares.
"BRANDS" shall mean "Lark," "Chesterfield" and "L&M."
"BROOKE" shall have the meaning set forth in the preamble
hereof.
"CERTIFICATE" shall mean the Certificate of Formation of the
Company filed on behalf of the Company with the office of the Secretary of
State of the State of Delaware pursuant to the Delaware Act.
"CLASS A EXERCISE PRICE" shall have the meaning set forth in
Section 2.3.
"CLASS A OPTION" shall have the meaning set forth in
Section 2.1.
"CLASS B OPTION Agreement" shall mean that certain option
agreement, dated as of the date hereof, pursuant to which PM (or any Permitted
Assignee thereunder) may purchase from the Grantor the Class B Shares owned by
it. Such right to purchase the Class B Shares is the "CLASS B OPTION".
"CLASS A OPTION CONSIDERATION" shall have the meaning set
forth in Section 2.1.
"CLASS A OPTION TERMINATION Date" shall have the meaning set
forth in Section 2.2(d).
"CLOSING" shall have the meaning set forth in Section 2.5.
"CLOSING DATE" shall mean the date on which the Closing
occurs.
"COMPANY" shall have the meaning set forth in the preamble
hereto.
"DELAWARE ACT" means the Delaware Limited Liability Company
Act (6 Del. Co. section 18-101, ET SEQ.), as amended from time to time.
"DOJ" shall have the meaning set forth in Section 5.1 (b).
"DUE DILIGENCE PERIOD" shall have the meaning set forth in
Section 2.2(a).
"EXTENDED DUE DILIGENCE PERIOD" shall have the meaning set
forth in Section 2.2(a).
"FTC" shall have the meaning set forth in Section 5.1 (b).
"GOVERNMENTAL ENTITY" means any government or subdivision
thereof, domestic, foreign or supranational or any administrative, governmental
or regulatory authority, agency, commission, tribunal or body, domestic, foreign
or supranational.
-2-
3
"GOVERNMENTAL FILINGS" shall have the meaning set forth in
Section 5.1 (a).
"GRANTOR" shall have the meaning set forth in the preamble
hereof
"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended.
"HSR CLEARANCE" means expiration or termination of the waiting
period under the HSR Act with respect to the filings made in connection with the
exercise of the Class A Option and the entering into of the License Agreement.
"INITIAL DUE DILIGENCE PERIOD" shall have the meaning set
forth in Section 2.2(a).
"LICENSE AGREEMENT" shall mean that certain license agreement,
attached as Exhibit A to the LLC Agreement, between the Company and PM and dated
as of the Closing Date, pursuant to which PM and its Affiliates will obtain the
exclusive (including with respect to the Company) license to use the Marks
within the United States (as defined in the License Agreement).
"LIEN" shall have the meaning set forth in Section 3.2.
"XXXXXXX" and "XXXXXXX PARTIES" shall have the respective
meanings set forth in the preamble hereof.
"LLC AGREEMENT" shall mean that certain Formation and Limited
Liability Company Agreement to be entered into by the Xxxxxxx Parties and PM
concurrently with the execution of this Agreement.
"LMI" shall have the meaning set forth in the preamble hereof.
"MARKS" shall mean all of the interest of the Xxxxxxx Parties
and any Affiliate of any Xxxxxxx Party in all trademarks, trade names, trade
dress, service marks, registrations and applications for registrations therefor,
in each case relating to each of the Brands, including any variation or product
line extension thereof and any derivative pertaining thereto.
"MATERIAL BREACH BY THE XXXXXXX PARTIES" shall have the
meaning set forth in Section 2.4(a).
"MATERIAL BREACH BY PM" shall have the meaning set forth in
Section 6.1(c).
"NOTICE OF EXERCISE" shall have the meaning set forth in
Section 2.5.
"PERSON" includes any individual, corporation, association,
partnership (general or limited), joint venture, trust, estate, limited
liability company or other legal entity or organization.
"PERMITTED ASSIGNEE" shall have the meaning set forth in
Section 2.2(d).
-3-
4
"PM" shall have the meaning set forth in the preamble hereof.
"SUBSIDIARIES" shall mean, with respect to any Person, any
other Person in which such Person owns, directly or indirectly, 50% or more of
the voting interests.
"TRANSACTION AGREEMENTS" mean this Agreement, the Class B
Option Agreement and the LLC Agreement.
ARTICLE II
GRANT AND EXERCISE OF OPTION, FURTHER INVESTIGATION; CLOSING
SECTION 2.1. GRANT OF CLASS A OPTION. The Grantor hereby
grants to PM (or a Permitted Assignee) an irrevocable option (THE "CLASS A
OPTION") to purchase 100% of the Class A Shares, on the terms and subject to
the conditions set forth in this Agreement. In consideration of the grant of the
Class A Option, PM has delivered to the Grantor $5.0 million (the "CLASS A
OPTION CONSIDERATION"), receipt of which is hereby acknowledged.
SECTION 2.2. FURTHER INVESTIGATION; EXERCISE OF OPTION.
(a) PM may conduct further due diligence with respect to the
Marks from the date hereof until 5:00 P.M. (New York City time) on the 10th day
following HSR Clearance (the "INITIAL DUE DILIGENCE PERIOD"); PROVIDED, that in
the event any information requested by PM in the course of its due diligence is
withheld due to competitive considerations or otherwise, such information will
be provided to PM by the Xxxxxxx Parties no later than 5:00 P.M. (New York City
time) on the 10th day following HSR Clearance, and PM may continue its due
diligence until 5:00 P.M. (New York City time) on the 30th day following HSR
Clearance (such period, the "EXTENDED DUE DILIGENCE PERIOD" and together with
the Initial Due Diligence Period, the "DUE DILIGENCE PERIOD").
(b) Subject to terms and conditions herein, unless at any time
during the Due Diligence Period, as a result of matters learned through such due
diligence, PM reasonably determines that (i) there exists substantial doubt as
to the validity or enforceability of one or more of the Marks, or (ii) there
exists substantial and previously unknown to PM (x) litigation liability
affecting or relating to one or more of the Marks, which liability is material
in relation to the transactions contemplated by the Transaction Agreements, or
(y) regulatory risk affecting or relating to one or more of the Marks, PM must
exercise the Class A Option prior to or at the expiration of the Due Diligence
Period in accordance with the procedures set forth in Section 2.5 of this
Agreement. In the event PM makes the due diligence determination described in
the preceding sentence, PM shall promptly deliver a notice upon making any such
determination (and in any event prior to or at the expiration of the Due
Diligence Period) stating that the completion of its due diligence was not
satisfactory as provided herein.
(c) In the event that PM delivers a notice that the completion
of its due diligence was not satisfactory, the Xxxxxxx Parties shall have a
period of 120 days from the date of
4-
5
such notice in which to cure the condition or conditions that were the basis of
such notice. If such condition or conditions are cured, the obligation of PM to
exercise the Class A Option shall be reinstated.
(d) If PM Assigns the Class A Option to a third party in
accordance with Section 10.6 (such assignee, a "PERMITTED ASSIGNEE"), the Class
A Option shall be exercisable by such Permitted Assignee (or any subsequent
Permitted Assignee) (together with PM, a "CLASS A OPTIONHOLDER") at any time
prior to March 1, 2009 (the "CLASS A OPTION TERMINATION DATE"); PROVIDED,
however, that such Permitted Assignee shall assume PM's obligations with
respect to obtaining HSR Clearance and exercising the Class A Option in
accordance with this Section 2.2.
SECTION 2.3. CLASS A EXERCISE PRICE.
(a) Subject to Sections 2.3(b) and 23(c), the Class A Exercise
Price shall be $10.1 million.
(b) If a Material Breach by PM occurs, and upon payment of the
amount required by the last sentence of Section 6.1 (c) hereof, the Class A
Exercise Price shall become $1.00.
(c) If the Xxxxxxx Parties refund the Class A Option
Consideration in accordance with Section 2.4 hereof and PM does not terminate
this Agreement in accordance with Section 9.1 (a)(ii) hereof, the Class A
Exercise Price shall become $15.1 million.
SECTION 2.4. REFUND OF CLASS A OPTION CONSIDERATION.
(a) The Class A Option Consideration shall be repayable to PM
by the Xxxxxxx Parties in full promptly following demand by PM, whether before
or after the Closing, upon any of the following events that is not cured to PM's
reasonable satisfaction within 120 days of written notice thereof from PM to the
Xxxxxxx Parties (a "MATERIAL BREACH BY THE XXXXXXX PARTIES"):
(i) the material failure of the Xxxxxxx Parties or
any of their Affiliates to comply prior to the Closing with
their obligations set forth in Section 5.1 (a) (subject to
Section 5.1 (b)); or
(ii) the material failure of the Xxxxxxx Parties to
deliver to the Company the Marks free and clear of all
encumbrances, restrictions or conditions arising as a result
of settlement agreements (it being expressly understood that
any obligation of any Xxxxxxx Party under any settlement
agreement that is imposed on the Company or PM or their
Affiliates as a result of the transactions contemplated by the
Transaction Agreements or the License Agreement would be such
an encumbrance, restriction or condition) and to keep the
Marks free of such encumbrances, restrictions or conditions
through the Closing Date; or
(iii) the material failure of the Xxxxxxx Parties or
any of their Affiliates to comply, prior to the approval by
all relevant courts of the settlement
-5-
6
agreement referred to in paragraph 9 of that certain letter
agreement dated November 20, 1998 between PM and the Xxxxxxx
Parties, with the obligations imposed by such paragraph 9.
(b) In the event that a demand for repayment of the Class A
Option Consideration is made by PM pursuant to Section 2.4(a) after the Closing,
PM shall reconvey the Class A Shares to Eve in exchange for the repayment by Eve
of the Class A Exercise Price, with such exchange to take place concurrently
with the repayment of the Class A Option Consideration.
SECTION 2.5. NOTICE OF EXERCISE; CLOSING. In order to
exercise the Class A Option, a Class A Optionholder must give written notice (A
"NOTICE OF EXERCISE") to the Xxxxxxx Parties reciting its intention to exercise
the Class A Option and setting forth the time and place of the closing (the
"CLOSING"); PROVIDED that the date of the Closing set forth in such Notice of
Exercise may not be more than 90 days from the date thereof. At the Closing, the
events set forth in Section 2.7 of the LLC Agreement shall also occur or have
occurred. Notwithstanding the foregoing and for the avoidance of doubt the
failure of any such event to occur is not a condition to the Closing unless set
forth in Article VII or Article VIII hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE XXXXXXX PARTIES
Each of the Xxxxxxx Parties hereby jointly and severally
represents and warrants to PM as follows:
SECTION 3.1. INCORPORATION OF CERTAIN REPRESENTATIONS AND
WARRANTIES. The representations and warranties of the Xxxxxxx Parties contained
in Article III of the LLC Agreement are hereby incorporated by reference in this
Agreement and shall have the same effect as if made in this Agreement.
SECTION 3.2. OWNERSHIP OF CLASS A SHARES. Immediately prior to
the Closing, the Grantor will have good and valid title to the Class A Shares
free and clear of any liens, claims, charges, security interests, options or
other legal or equitable encumbrances or restrictions (any of the foregoing, a
"LIEN"), and assuming the person exercising the Class A Option has the requisite
power and authority to enter into this Agreement and to be the lawful owner of
the Class A Shares, upon delivery of the Class A Shares, good and valid title to
such Class A Shares will pass to the person exercising the Class A Option free
and clear of any Lien. Other than the Transaction Agreements, the Class A Shares
are not subject to any voting trust agreement or other contract, agreement,
arrangement, commitment or understanding, including any such agreement,
arrangement, commitment or understanding restricting or otherwise relating to
voting, distribution rights or disposition of such Class A Shares.
-6-
7
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
PM hereby represents and warrants to the Xxxxxxx Parties as
follows:
SECTION 4.1. INCORPORATION OF CERTAIN REPRESENTATIONS AND
WARRANTIES. The representations and warranties of PM contained in Article IV of
the LLC Agreement are hereby incorporated by reference in this Agreement and
shall have the same effect as if made in this Agreement.
ARTICLE V
COVENANTS OF THE XXXXXXX PARTIES
SECTION 5.1. HSR ACT.
(a) The Xxxxxxx Parties shall promptly prepare and file all
filings required to be made by it in connection with the Transaction Agreements
and the License Agreement under the HSR Act, as well as any other filings
required to be made with any other Governmental Entity in connection with the
Transaction Agreements and the License Agreement (collectively, "GOVERNMENTAL
FILINGS"). The Xxxxxxx Parties shall provide any information required by the HSR
Act and any other Governmental Filing, and shall cooperate with PM in connection
with obtaining any approval required from any Governmental Entity in order to
consummate the transactions contemplated hereby and thereby. The Xxxxxxx Parties
shall use their respective reasonable best efforts to obtain promptly any
consent, order or approval of, or any exemption by, any Governmental Entity in
connection with the consummation of the transactions contemplated by the
Transaction Agreements and the License Agreement (including without limitation
to cause the prompt expiration of the waiting period under the HSR Act
applicable to the exercise of the Class A Option and the entering into of the
License Agreement).
(b) In the event a Xxxxxxx Party fails to comply (prior to
exercise of the Class A Option) with Section 5.1 (a) and shall not have cured
such failure to comply to PM's reasonable satisfaction within 120 days of
written notice thereof from PM to the Xxxxxxx Parties, a Material Breach by the
Xxxxxxx Parties shall be deemed to occur, PROVIDED, however, that a Material
Breach by the Xxxxxxx Parties shall not be deemed to have occurred pursuant to
this Section 5.1 unless, as a direct or indirect result of such failure, within
nine months following the initial filings for HSR Clearance (i) HSR Clearance
has not been obtained, or the Federal Trade Commission (the "FTC") or the
Department of Justice ("DOJ") has commenced litigation to enjoin the
transactions contemplated by the Transaction Agreements, or (ii) PM has had to
make a material concession to the FTC or DOJ to obtain HSR Clearance or to avoid
the litigation described in clause (i).
SECTION 5.2. REPRESENTATIONS AND WARRANTIES. Each of the
Xxxxxxx Parties shall give written notice to PM promptly upon the occurrence of
any event that would cause or
-7-
8
constitute a material breach or would have caused a material breach, had such
event occurred or been known to the Xxxxxxx Parties prior to the date hereof, of
any representations or warranties of the Xxxxxxx Parties contained in any of the
Transaction Agreements.
SECTION 5.3. ACCESS TO INFORMATION. Prior to the Closing, the
Xxxxxxx Parties shall, and shall cause each of their respective Subsidiaries to,
give PM and its representatives, employees, counsel and accountants full access,
during normal business hours, and upon reasonable notice to the employees,
agents, independent contractors, properties, books and records relating to the
Marks, only to the extent, in the reasonable judgment of counsel, permitted by
law, including antitrust law, and provided that the Xxxxxxx Parties and their
Subsidiaries shall not be obligated to make any disclosure which would cause
forfeiture of attorney-client privilege. The Xxxxxxx Parties shall notify PM in
writing if any disclosure is withheld in order to avoid such forfeiture. No
investigation pursuant to this Section shall affect or be deemed to affect any
representation or warranty made by the Xxxxxxx Parties. PM agrees that all
information received pursuant to this Section 5.3 shall be kept confidential and
PM shall not disclose such information to any third party unless, and only to
the extent, required to do so by applicable law.
ARTICLE VI
COVENANTS OF PM
PM covenants and agrees as follows:
SECTION 6.1. HSR ACT.
(a) PM shall promptly prepare and file all filings required to
be made by it in connection with the Transaction Agreements and the License
Agreement under the HSR Act, as well as any other Governmental Filings. PM shall
provide any information required by the HSR Act and any other Governmental
Filing, and shall cooperate with the Xxxxxxx Parties in connection with
obtaining any approval required from any Governmental Entity in order to
consummate the transactions contemplated hereby and thereby. PM shall use its
reasonable best efforts to obtain promptly any consent, order or approval of, or
any exemption by, any Governmental Entity in connection with the consummation of
the transactions contemplated by the Transaction Agreements and the License
Agreement (including without limitation to cause the prompt expiration of the
waiting period under the HSR Act applicable to the exercise of the Class A
Option and the entering into of the License Agreement); PROVIDED, HOWEVER, that
notwithstanding anything to the contrary in this Agreement, PM shall not be
required to agree to divest or hold separate any brand, product, business or
assets or to take or agree to take any action that limits its freedom of action
with respect to, or its ability to retain, any of the Marks or the Brands or any
brand, product, business or other asset of PM or its Affiliates.
(b) Unless and until HSR Clearance is obtained, PM shall, upon
the request of the Xxxxxxx Parties, attempt periodically to obtain HSR
Clearance; PROVIDED, HOWEVER, that PM shall not be required to attempt to obtain
HSR Clearance more than once in any two-year period or more than four times
during the period ending on the Class A Option Termination Date. The
-8-
9
Xxxxxxx Parties shall cooperate with PM (pursuant to the terms of Section 5.1
hereof) in obtaining HSR Clearance each time that PM seeks HSR Clearance.
Notwithstanding the foregoing, PM shall not be required to attempt to obtain any
such approval (other than the initial filings for HSR Clearance) at any time at
which it reasonably believes that attempting to obtain such approval is likely
to interfere with any pending transaction so long as PM does not defer any
request for more than six months or more than once in any two-year period.
(c) In the event PM fails to comply (prior to exercise of the
Class A Option) with Section 6.1 (a) hereof and shall not have cured such
failure to comply to Brooke's reasonable satisfaction within 120 days of written
notice thereof from Brooke to PM, a "MATERIAL BREACH BY PM" shall be deemed to
occur; PROVIDED, HOWEVER, that a Material Breach by PM shall not be deemed to
have occurred unless as a direct or indirect result of such failure, (i) HSR
Clearance shall not have been obtained within nine months of the initial filings
for HSR Clearance or (ii) the FTC or DOJ has commenced litigation to enjoin the
transactions contemplated by the Transaction Agreements. In the event a Material
Breach by PM has occurred, PM shall promptly prepay to the Xxxxxxx Parties the
fall amount of the Class A Exercise Price of the Class A Option minus $1.00,
and the Class A Exercise Price shall be reduced to $1.00.
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF THE XXXXXXX PARTIES
The obligations of the Xxxxxxx Parties under this Agreement
are subject to the fulfillment of the following conditions prior to or at the
Closing Date (any of which may be waived by them):
SECTION 7.1. REPRESENTATIONS, WARRANTIES, COVENANTS. The
representations and warranties of PM made or incorporated in this Agreement
shall be true and correct in all material respects as of the date hereof and,
except as specifically contemplated by this Agreement, on and as of the Closing
Date, as though made on and as of the Closing Date, and PM shall have performed
or complied in all material respects with the obligations and covenants required
by this Agreement or the LLC Agreement to be performed or complied with by it by
the time of the Closing; PM shall have delivered to the Xxxxxxx Parties a
certificate dated the Closing Date and signed by an authorized officer
confirming the foregoing.
SECTION 7.2. NO INJUNCTION OR GOVERNMENTAL LITIGATION. There
shall be no effective temporary restraining order, preliminary or permanent
injunction or order issued by any Governmental Entity which would prevent the
consummation of the transactions contemplated by the Transaction Agreements or
the License Agreement, and no Governmental Entity shall have commenced
litigation to enjoin the transactions contemplated by the Transaction Agreements
or the License Agreement.
SECTION 7.3. REGULATORY APPROVALS. The HSR Clearance shall
have been received and all other authorizations, approvals, consents and waivers
of any Governmental Entities required to consummate the transactions
contemplated by this Agreement, the other Transaction Agreements or the License
Agreement shall have been obtained and shall not have been terminated, suspended
or withdrawn as of the Closing Date.
-9-
10
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF PM
Once PM has delivered a Notice of Exercise, its obligation to
purchase the Class A Shares is subject to the fulfillment of the following
conditions prior to or at the Closing Date (any of which may be waived by it):
SECTION 8.1. REPRESENTATIONS, WARRANTIES, COVENANTS. The
representations and warranties of the Xxxxxxx Parties made or incorporated in
this Agreement shall be true and correct in all material respects as of the date
hereof on and as of the Closing Date, as though made on and as of the Closing
Date, and the Xxxxxxx Parties shall have performed or complied in all material
respects with the obligations and covenants required by this Agreement or the
LLC Agreement to be performed or complied with by the Xxxxxxx Parties by the
time of the Closing; the Xxxxxxx Parties shall have delivered to PM a
certificate dated the Closing Date and signed by an authorized officer
confirming the foregoing.
SECTION 8.2. NO INJUNCTION OR GOVERNMENTAL LITIGATION. There
shall be no effective temporary restraining order, preliminary or permanent
injunction or order issued by any Governmental Entity which would prevent the
consummation of the transactions contemplated by the Transaction Agreements or
the License Agreement, and no Governmental Entity shall have commenced
litigation to enjoin the transactions contemplated by the Transaction Agreements
or the License Agreements.
SECTION 8.3. REGULATORY APPROVALS. The HSR Clearance shall
have been received and all other authorizations, approvals, consents and waivers
of any Governmental Entities required to consummate the transactions
contemplated by this Agreement shall have been obtained and shall not have been
terminated, suspended or withdrawn as of the Closing Date.
ARTICLE IX
TERMINATION
SECTION 9.1. TERMINATION.
(a) This Agreement may be terminated at any time prior to the
Closing by:
(i) the mutual consent of the Xxxxxxx Parties and PM;
or
(ii) by PM upon a Material Breach by the Xxxxxxx
Parties; PROVIDED that a termination under this
Section 9.1(a)(ii) must occur no later than 10 days after
the date of repayment of the Class A Option Consideration.
-10-
11
(b) This Agreement will terminate automatically on March 1,
2009 if the Class A Option is not exercised prior to such date.
SECTION 9.2. PROCEDURE AND EFFECT OF TERMINATION. In the event
of termination of this Agreement by either or both of PM and the Xxxxxxx Parties
pursuant to Section 9.1, written notice thereof shall forthwith be given by the
terminating party to the other party hereto, and this Agreement shall thereupon
terminate and become void and have no effect, and the transactions contemplated
hereby shall be abandoned without further action by the parties hereto;
PROVIDED, HOWEVER, that such termination shall not relieve any party hereto of
any liability for any breach of any representation or warranty made herein as of
the date hereof or of any covenant contained herein. If this Agreement is
terminated as provided herein, all filings, applications and other submissions
made hereunder shall, to the extent practicable, be withdrawn from the persons
to which they were made.
ARTICLE X
MISCELLANEOUS
SECTION 10.1. REASONABLE BEST EFFORTS. Each of the parties to
this Agreement agrees to use its reasonable best efforts to cause the conditions
to the Closing to be satisfied; PROVIDED, HOWEVER, that, subject to the terms
and conditions of the License Agreement, PM shall not be required to agree to
divest or hold separate any brand, product, business or assets or to take or
agree to take any action that limits its freedom of action with respect to, or
its ability to retain, any of the Marks or any brand, product, business or other
asset of PM or its Affiliates.
SECTION 10.2. 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 party. Copies of
executed counterparts transmitted by telecopy, telefax or other electronic
transmission service shall be considered original executed counterparts for
purposes of this Section, provided receipt of copies of such counterparts is
confirmed.
SECTION 10.3. GOVERNING LAW. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York without
reference to the choice of law principles thereof.
SECTION 10.4. ENTIRE AGREEMENT. There are no oral agreements,
understandings, representations or warranties between the parties with respect
to the subject matter hereof.
SECTION 10.5. EXPENSES. Whether or not the transactions
contemplated hereby are consummated, all legal and other costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such costs and expenses.
-11-
12
SECTION 10.6. NOTICES. All notices provided for in this
Agreement shall be in writing, duly signed by the party giving such notice, and
shall be hand delivered, faxed or mailed by registered or certified mail or
overnight courier service, as follows:
(a) if given to PM or its designee:
Xxxxxx Xxxxxx Incorporated
000 Xxxx Xxxxxx
Xxx Xxxx,XX 00000
Facsimile: (000) 000-0000
Attention: General Counsel, PM USA
with a copy to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx
(b) if given to the Xxxxxxx Parties:
c/o Brooke Group Ltd.
000 X.X. Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx
with a copy to:
Milbank Tweed Hadley & XxXxxx
0 Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx
All such notices shall be deemed to have been given when received. The address
for receipt of notice may be changed by providing written notice to the Company.
SECTION 10.7. SUCCESSORS AND ASSIGNS. PM may Assign this
Agreement at any time; PROVIDED, that the assignee assumes all obligations of PM
under this Agreement, and PM is not relieved of any payment obligations
hereunder. The Xxxxxxx Parties may not Assign this Agreement without the written
consent of PM.
SECTION 10.8. HEADINGS; DEFINITIONS. The Section, Article and
other headings contained in this Agreement are inserted for convenience of
reference only and will not
-12-
13
affect the meaning or interpretation of this Agreement. All references to
Sections or Articles contained herein mean Sections or Articles of this
Agreement unless otherwise stated. All capitalized terms defined herein are
equally applicable to both the singular and plural forms of such terms.
SECTION 10.9. AMENDMENTS AND WAIVERS. This Agreement may not
be modified or amended except by an instrument or instruments in writing signed
by the party against whom enforcement of any such modification or amendment is
sought. PM, on the one hand, or the Xxxxxxx Parties, on the other hand, may,
only by an instrument in writing, waive compliance by the other with any term or
provision hereof on the part of such other party hereto to be performed or
complied with. The waiver by any party hereto of a breach of any term or
provision hereof shall not be construed as a waiver of any subsequent breach.
SECTION 10.10. INTERPRETATION; ABSENCE OF PRESUMPTION. (a) For
the purposes hereof, (i) words in the singular shall be held to include the
plural and vice versa and words of one gender shall be held to include the other
genders as the context requires, (ii) the terms "hereof," "herein," and
"herewith" and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement as a whole (including all of the Schedules
and Exhibits hereto) and not to any particular provision of this Agreement, and
Article, Section, paragraph and Exhibit references are to the Articles,
Sections, paragraphs and Exhibits to this Agreement unless otherwise specified,
(iii) the word "including" and words of similar import when used in this
Agreement shall mean "including, without limitation," unless the context
otherwise requires or unless otherwise specified, (iv) the word "or" shall not
be exclusive, and (v) provisions shall apply, when appropriate, to successive
events and transactions.
(b) This Agreement shall be construed without regard to any
presumption or rule requiring construction or interpretation against the party
drafting or causing any instrument to be drafted.
SECTION 10.11. SEVERABILILY. Any provision hereof which is
invalid or unenforceable shall be ineffective to the extent of such invalidity
or unenforceability, without affecting in any way the remaining provisions
hereof.
SECTION 10.12. FURTHER ASSURANCES; SPECIFIC PERFORMANCE. The
Xxxxxxx Parties, and PM agree that, from time to time, whether before, at or
after the Closing Date, each of them will, and will cause their respective
Affiliates to, execute and deliver such further instruments of conveyance and
transfer and take such other action as may be necessary to carry out the
purposes and intents hereof. PM and the Xxxxxxx Parties each acknowledge that,
in view of the uniqueness of the Marks, PM would not have an adequate remedy at
law for money damages in the event that this Agreement were not performed in
accordance with its terms, and therefore agree that PM shall be entitled to
specific enforcement of the terms hereof in addition to any other remedy to
which PM may be entitled at law or in equity.
-13-
14
SECTION 10.13. NO LIMITATION OF REMEDIES. The remedies
provided herein with respect to a Material Breach by the Xxxxxxx Parties or a
Material Breach by PM are not liquidated damages, and the parties shall be
entitled to pursue all remedies available at law or equity in addition to such
remedies.
IN WITNESS WHEREOF, this Agreement has been signed by or on
behalf of each of the parties as of the day first above written.
BROOKE GROUP LTD.
By: /s/ Xxxxxxx X. XxXxx
------------------------------------------
Name: Xxxxxxx X. XxXxx
Title: Chairman of the Board and President
XXXXXXX & XXXXX INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
EVE HOLDINGS INC.
By: /s/ Xxxxxxx X. XxXxx
------------------------------------------
Name: Xxxxxxx X. XxXxx
Title: Chairman of the Board and President
XXXXXXX GROUP INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Senior Vice President
XXXXXX XXXXXX INCORPORATED
By: /s/ M.E. Xxxxxxxxxx
------------------------------------------
Name: M.E. Xxxxxxxxxx
Title: Chief Executive Officer
-14-
