EXHIBIT 10m1
[EXECUTION COPY]
INDEMNIFICATION AGREEMENT
AGREEMENT dated as of December 22, 1994 (this "Agreement"),
among AMERICAN BRANDS, INC., a Delaware corporation ("Seller"),
THE AMERICAN TOBACCO COMPANY, a Delaware corporation (the
"Company"), and XXXXX & XXXXXXXXXX TOBACCO CORPORATION, a Delaware
corporation (the "Subsidiary") (the Company and the Subsidiary are
herein sometimes referred to individually as an "Indemnitor" and
collectively as the "Indemnitors").
WHEREAS, Seller and B.A.T Industries P.L.C., a public limited company
organized under the laws of England ("Buyer"), have entered into a Stock
Purchase Agreement dated as of April 26, 1994 (the "Stock Purchase Agreement"),
pursuant to which, inter alia, Seller has agreed to sell to Buyer and Buyer has
agreed to purchase from Seller all of the outstanding capital stock of the
Company;
WHEREAS, pursuant to the terms of the Stock Purchase Agreement, each
Indemnitor is to enter into this Agreement at the time of the closing of the
sale under the Stock Purchase Agreement;
WHEREAS, each Indemnitor will benefit from, and therefore desires to
facilitate the consummation of, the transactions contemplated by the Stock
Purchase Agreement;
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Indemnification. The Indemnitors agree, jointly and severally, to
indemnify Seller and each of its officers, directors, employees, stockholders,
agents, representatives, successors and assigns, against and hold them harmless
from any loss, liability, claim, damage or expense (including reasonable legal
fees and expenses) suffered or incurred by any such indemnified party arising
from (i) any claim, investigation or proceeding alleging personal injury, (ii)
any claim, investigation or proceeding alleging fraud or (iii) any other claim,
investigation or proceeding, in the case of each of clauses (i), (ii) and (iii),
arising from smoking and health or fire-safe cigarette matters relating to the
tobacco business of the Company or any of its predecessors, including, without
limitation, any such matter arising from or related to the development,
manufacture, packaging, labeling, production, delivery, sale, resale,
distribution, advertising, marketing, promotion, use or consumption of, or
exposure to (whether occurring before, on or after the date hereof), any tobacco
products of the Company or any of its predecessors or research in respect of
smoking and health or fire-safe cigarette matters.
2. Procedures Relating to Indemnification Claims. (a) If any person
(the "indemnified party") entitled to indemnification under this Agreement
should have a claim against any Indemnitor under this Agreement, the indemnified
party shall deliver notice of such claim with reasonable promptness to
Subsidiary, as the representative of the Indemnitors. The failure by any
indemnified party so to notify Subsidiary shall not relieve the Indemnitors from
any liability which they may have to such indemnified party under this
Agreement, except to the extent that the Indemnitors shall have been actually
prejudiced as a result of such failure.
(b) If a claim for indemnification hereunder relates to an action,
suit, investigation or proceeding against or involving the indemnified party,
Subsidiary shall assume the defense thereof with counsel selected by Subsidiary.
From and after the time that Subsidiary assumes the defense of such matter, the
Indemnitors shall not be liable to the indemnified party for legal expenses
incurred by the indemnified party in connection with such defense. The
indemnified party shall have the right to employ counsel, at its own expense,
separate from the counsel employed by the indemnifying party, but such counsel
shall not have any right to participate in any such matter and Subsidiary shall
control such defense in all respects but Seller and such counsel shall have the
right to be kept fully informed of the progress of such defense. The Indemnitors
shall be liable for the fees and expenses of counsel employed by the indemnified
party for any period during which Subsidiary has failed to assume the defense of
such matter (other than during any period in which the indemnified party shall
have failed to give notice of the matter as provided herein). The indemnified
party shall not unreasonably withhold its consent to any settlement, compromise
or discharge of such matter which Subsidiary may recommend. The indemnified
party shall not settle any claim covered by this Agreement.
(c) The indemnified party shall cooperate with the Indemnitors in their
defense of any matter covered by this Agreement, at the expense (including
reasonable legal fees and expenses) of the Indemnitors. The indemnified party
shall further provide the Indemnitors at the expense (including reasonable legal
fees and expenses) of the Indemnitors, with such information and assistance as
any Indemnitor may reasonably request to defend any matter covered hereby,
including, in the case of Seller, the assistance of officers and employees of
Seller when reasonably considered necessary by any Indemnitor to defend any such
matter. Except as required by law or legal process, Seller shall not take any
action or make any admission which adversely affects or could reasonably be
foreseen to adversely affect the defense of any matter covered hereby or that
could reasonably be foreseen to be covered hereby and shall not, and shall not
permit any of its affiliates, officers, directors, employees, agents or others
acting on its behalf to, make any adverse public statement regarding any such
matters.
(d) It is understood and agreed that effective as of the date of this
Agreement and without any further notification by Seller hereunder, the
Indemnitors shall jointly and severally indemnify Seller in respect of the
proceedings pending against Seller on the date hereof and set forth in Schedule
A attached hereto and Subsidiary shall assume the defense of each such
proceeding as contemplated hereby.
3. Representations and Warranties of Subsidiary. Subsidiary represents
and warrants to Seller as follows:
(a) Subsidiary is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation. Subsidiary
has all requisite corporate power and authority to enter into this Agreement and
to perform its obligations hereunder. All corporate acts and other proceedings
required to be taken by Subsidiary to authorize the execution, delivery and
performance of this Agreement have been duly and properly taken. This Agreement
has been duly executed and delivered by Subsidiary and constitutes a legal,
valid and binding obligation of Subsidiary enforceable against Subsidiary in
accordance with its terms, subject to the qualification, however, that
enforcement of the rights and remedies created hereby is subject to bankruptcy
and other similar laws of general application relating to or affecting the
rights and remedies of creditors and that the remedy of specific enforcement or
of injunctive relief is subject to the discretion of the court before which any
proceeding therefor may be brought.
(b) The execution and delivery of this Agreement by Subsidiary does
not, and compliance with the terms hereof 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, cancellation or acceleration of
any obligation to any person under, or to increased, additional, accelerated or
guaranteed rights or entitlements of any person under, or result in the creation
or any lien, claim, encumbrance, security interest, option, charge or
restriction of any kind upon any of the properties or assets of Subsidiary
under, any provision of (i) the certificate of incorporation or by-laws of
Subsidiary, (ii) any material note, bond, mortgage, indenture, deed of trust,
license, lease, contract, commitment, agreement or arrangement to which
Subsidiary is a party or by which any of its properties or assets are bound or
(iii) any judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Subsidiary or its properties or assets, other than, in the case of
clause (ii) above, any such items that, individually or in the aggregate, would
not have a material adverse effect on the ability of Subsidiary to perform its
obligations hereunder. No consent, approval, license, permit, order or
authorization of, or registration, declaration or filing with, any Federal,
state, local or foreign government or any court of competent jurisdiction,
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign, is required to be obtained or made by or
with respect to Subsidiary or any of its affiliates in connection with the
execution, delivery and performance of this Agreement by Subsidiary.
(c) Subsidiary does not have any affiliate (other than the Company and
any of its subsidiaries) which manufacturers cigarettes in the United States.
4. Covenants of the Indemnitors. The Indemnitors jointly and severally
agree as follows:
(a) Subject to Section 4(b), each Indemnitor will do or cause to be
done all things necessary to preserve and keep in full force and effect its
corporate existence in accordance with its respective organizational documents
and all applicable laws.
(b) The Indemnitors shall not consolidate with or merge into any other
person or convey or transfer, or cause to be conveyed or transferred, in one or
a series of related or substantially contemporaneous transactions, all or
substantially all of their business (consisting of 50% or more of their combined
United States domestic unit sales in the immediately preceding calendar year),
to any person or persons (other than an Indemnitor), unless (i) the person
formed by such consolidation or into which the Indemnitor is merged or the
person or persons acquiring by conveyance or transfer the business of the
Indemnitors shall be duly organized and existing under the laws of the
jurisdiction of its organization and shall expressly assume, by an instrument
supplemental hereto, executed and delivered to Seller prior to or
contemporaneously with the consummation of such transaction, the performance of
the obligations of the Indemnitor under this Agreement, and (ii) prior to and
immediately after giving effect to such transaction, the Indemnitor shall not be
in default in any material respect of its obligations under this Agreement.
5. Notices. All notices or other communications required or permitted
to be given hereunder shall be in writing and shall be delivered by hand or sent
by prepaid cable or telecopy or sent, postage prepaid, by registered, certified
or express mail or reputable overnight courier service and shall be deemed given
when so delivered by hand, cabled or telecopied, or if mailed, ten days after
mailing (two business days in the case of express mail or overnight courier
service), as follows:
(i) if to Seller,
American Brands, Inc.
0000 Xxxx Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxx, XX
with copies to:
American Brands, Inc.
0000 Xxxx Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxxx 00000-0000
Attention: Xxxxxx Xxxxxx
and to:
Xxxxxxxxxx & Xxxxx
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxx; and
(ii) if to any Indemnitor,
Xxxxx & Xxxxxxxxxx Tobacco Corporation
1500 Xxxxx & Xxxxxxxxxx Tower
P.O. Box 35090
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: F. Xxxxxxx Xxxxx
with a copy to:
King & Spalding
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxxx or
Xxxxxx Xxxxx
or to such other person or address as the addressee may have specified in a
notice duly given to the sender as provided herein.
6. 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 such counterparts have been signed by
each of the parties and delivered to each of the other parties.
7. Entire Agreement. This Agreement contains the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and understandings relating to such
subject matter. None of the parties hereto shall be liable or bound to any other
party hereto in any manner by any representations, warranties or convenants
relating to such subject matter except as specifically set forth herein.
8. Jurisdiction. Seller and the Indemnitors each irrevocably submits to
the nonexclusive jurisdiction of (a) the Supreme Court of the State of New York,
New York County, and (b) the United States District Court for the Southern
District of New York, for the purposes of any suit, action or other proceeding
arising out of this Agreement. Each Indemnitor agrees that service of process,
summons, notice or document by hand delivery or U.S. registered mail in care of
King & Spalding, 000 Xxxxxxxxx Xxxxxx, X.X., Xxxxxxx, Xxxxxxx 00000, Attention
Managing Partner, shall be effective service of process for any action, suit or
proceeding brought against such Indemnitor in any such court. Seller agrees that
service of process, summons, notice or document by hand delivery or U.S.
registered mail in care of Xxxxxxxxxx & Xxxxx, 00 Xxxxxxxxxxx Xxxxx, Xxx Xxxx,
Xxx Xxxx 00000, Attention of Managing Clerk, shall be effective service of
process for any action, suit or proceeding brought against Seller in any such
court. Seller and the Indemnitors each irrevocably and unconditionally waives
any objection to the laying of venue of any action, suit or proceeding arising
out of this Agreement in (i) the Supreme Court of the State of New York, New
York County, or (ii) the United States District Court for the Southern District
of New York, and hereby further irrevocably and unconditionally waives and
agrees not to plead or claim in any such court that any such action, suit or
proceeding brought in any such court has been brought in an inconvenient forum.
9. Applicable Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York applicable to
agreements made and to be performed entirely within such State, without regard
to the conflicts of law principles of such State.
10. Amendment; Waiver. No amendment, modification or waiver in respect
of this Agreement shall be effective unless in writing and signed by all parties
hereto. No delay or failure on the part of any party in exercising any rights
hereunder, and no particular or single exercise thereof, will constitute a
waiver of such rights or of any other rights hereunder.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
AMERICAN BRANDS, INC.
by Xxxxxxx X. Xxxxxxx, XX
-------------------------
Name: Xxxxxxx X. Xxxxxxx, XX
Title: Senior Vice President
and General Counsel
THE AMERICAN TOBACCO COMPANY
by X.X. Xxxx
------------------------
Name: X.X. Xxxx
Title: Senior Vice President
and Chief Accounting
Officer
XXXXX & XXXXXXXXXX TOBACCO
CORPORATION
by F. Xxxxxxx Xxxxx
-------------------------
Name: F. Xxxxxxx Xxxxx
Title: Vice President Law
and General Counsel
Schedule A
I. Smoking and health cases in which American Brands, Inc., a Delaware
corporation, is not a defendant:
Xxxxxx v. Xxxxxx Xxxxxx, Inc., et al.
(Cir. Ct., Xxxxx County, Mississippi)
Xxxxxxx, et al. v. The American Tobacco Co., et al.
(U.S.D.C., E.D. La.)
Xxxx, et al. v. The American Tobacco Company, et al.
(Super. Ct., Delaware County, Indiana)
Xxxxxxxx v. The American Tobacco Company, et al.
(Dist. Ct., Oklahoma County, Oklahoma)
Xxxxx v. The American Tobacco Co., et al.
(Chancery Court, Xxxxxxx Co., Mississippi)
McGraw v. The American Tobacco Co., et al.
(Cir. Ct., Kanawha Co., West Virginia)
II. Pre-1986 smoking and health cases naming American Brands, Inc. a
New Jersey corporation, as a defendant:
Effective December 31, 1985, American Brands, Inc., a New Jersey
corporation, merged with The American Tobacco Company, a Delaware corporation.
The resulting Delaware corporation retained the name "The American Tobacco
Company." As a result, the company now known as The American Tobacco Company is
the defendant in any cases filed on or before December 31, 1985 that named
"American Brands" as a defendant. There are six pending cases in that category:
Bridges, et al. v. The American Tobacco Co.
(Sup. Ct., Albany Co., New York)
Xxxxxxxx, et al. v. The American Tobacco Co., et al.
(Dist. Ct., Jefferson Co., Texas)
Xxxxxx, et al. v. The American Tobacco Co., et al.
(Cir. Ct., Kanawha Co., West Virginia)
(procedurally dismissed subject to reopening)
I.D. Xxxxxx, et al. v. X.X. Xxxxxxxx Tobacco Co., et al.
(Dist. Ct., Jefferson Co., Texas)
Xxxxx Xxxxx v. American Tobacco Co.
(Ct. Com. Pleas, Philadelphia Co., Pennsylvania)
Xxxxx Xxxxx, et al. v. X.X. Xxxxxxxx Tobacco Co.
(U.S.D.C., D.N.J.)
III. Other smoking and health cases:
American Brands, Inc. a Delaware corporation, is the recipient of a
third-party subpoena from American Broadcasting Companies in Xxxxxx Xxxxxx
Companies, Inc., et al. v. American Broadcasting Companies, et al. (Cir. Ct.,
City of Richmond, Va.). That subpoena is currently the subject of litigation.
IV. Pending smoking and health cases in which American Brands, Inc., a
Delaware corporation, was named as a defendant but has been dismissed:
Xxxxxx, et al. v. Xxxxxx Xxxxxx, Inc., et al.
(U.S.D.C., S.D. Cal.)
Xxxxxx, et al. v. X.X. Xxxxxxxx Tobacco Co., et al.
(U.S.D.C., N.D. Tex.)
Broin, et al. v. Xxxxxx Xxxxxx Companies, Inc., et al.
(Cir. Ct., Dade Co., Florida)
Xxxxxxx, et al. v. American Tobacco Co., et al.
(U.S.D.C., N.D. Ohio)
