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EXHIBIT 10.1
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PURCHASE AND SALE AGREEMENT
BETWEEN
XXXXXXXX OVERSEAS (HOLDINGS) LIMITED
AND
BROOKE (OVERSEAS) LTD.
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Dated as of June 14, 2000
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TABLE OF CONTENTS
ARTICLE I PURCHASE PRICE AND CLOSING....................................................................1
1.01. Purchase Price of the Membership Interests...............................................1
1.02. The Closing..............................................................................2
1.03. Seller Indebtedness Payment..............................................................2
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLER.....................................................3
2.01. Organization and Authority...............................................................3
2.02. Due Authorization; Binding Obligation....................................................4
2.03. Non-Contravention........................................................................4
2.04. Regulatory Approvals.....................................................................5
2.05. Title to Membership Interests............................................................5
2.06. Capitalization of the Company............................................................5
2.07. Subsidiaries.............................................................................6
2.08. Organization.............................................................................7
2.09. Qualifications...........................................................................7
2.10. Financial Statements.....................................................................7
2.11. Absence of Certain Changes or Events.....................................................8
2.12. Assets Other than Real Property Interests................................................9
2.13. Real Property Owned and Leased..........................................................10
2.14. Patents, Trademarks, etc................................................................10
2.15. Insurance...............................................................................11
2.16. Commitments.............................................................................12
2.17. Legal Proceedings.......................................................................15
2.18. Taxes...................................................................................16
2.19. Compliance with Laws; Permits and Licenses..............................................16
2.20. Environmental Matters...................................................................17
2.21. Employee Benefit Plans; Termination and Severance Agreements............................18
2.22. Employee and Labor Matters..............................................................21
2.23. Capital Expenditures....................................................................22
2.24. Powers of Attorney......................................................................22
2.25. Customer Accounts Receivable; Inventories...............................................22
2.26. Customers and Suppliers.................................................................23
2.27. No U.S. Assets..........................................................................23
2.28. No Material Misstatement or Omission....................................................23
ARTICLE III REPRESENTATIONS AND WARRANTIES OF BUYER....................................................23
3.01. Organization and Authority..............................................................24
3.02. Due Authorization; Binding Obligation...................................................24
3.03. Non-Contravention.......................................................................24
3.04. Regulatory Approvals....................................................................25
3.05. Investment Intent.......................................................................25
3.06. Absence of Financial Contingency........................................................25
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3.07. Disclosure..............................................................................25
ARTICLE IV FURTHER AGREEMENTS AND ASSURANCES...........................................................25
4.01. Government Filings and Approvals........................................................25
4.02. Corporate Investigation by Buyer........................................................26
4.03. Confidentiality.........................................................................26
4.04. Sales and Transfer Taxes................................................................27
4.05. Maintenance of Insurance................................................................27
4.06. Reasonable Best Efforts.................................................................28
4.07. Additional Disclosure...................................................................28
4.08. Certain Licenses and Permits............................................................28
4.09. Resignations............................................................................28
4.10. Non-Competition; Non-Interference; Other Transactions...................................29
4.11. Settlement of Loans, Intercompany Accounts, etc.........................................30
4.12. Release of Encumbrances Securing Obligations............................................31
4.13. Execution of Additional Documents.......................................................32
4.14. Record Access and Retention.............................................................32
4.15. Replacement Guarantees..................................................................32
4.16. Option to Acquire Adjacent Land.........................................................33
4.17. Cooperation; Further Assurances.........................................................33
ARTICLE V CONDUCT OF BUSINESS..........................................................................34
5.01. Conduct of Business.....................................................................34
ARTICLE VI CONDITIONS TO BUYER'S OBLIGATIONS...........................................................37
6.01. Accuracy of Representations and Warranties..............................................37
6.02. Performance of Covenants................................................................38
6.03. Government Approvals....................................................................38
6.04. Russian Government Approvals............................................................38
6.05. No Legal Proceedings....................................................................38
6.06. Membership Interest Certificates........................................................38
6.07. Opinion of U.S. Counsel.................................................................39
6.08. Opinion of Special Russian Counsel......................................................39
6.09. Intercompany Accounts...................................................................39
6.10. Required Action in Respect of Seller Obligations........................................39
ARTICLE VII CONDITIONS TO SELLER'S OBLIGATIONS.........................................................39
7.01. Accuracy of Representations and Warranties..............................................39
7.02. Performance of Covenants................................................................40
7.03. Government Approvals....................................................................40
7.04. No Legal Proceedings....................................................................40
7.05. Payment of Purchase Price...............................................................40
7.06. Opinion of U.S. Counsel.................................................................40
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7.07. Opinion of U.K. Counsel.................................................................40
ARTICLE VIII SURVIVAL..................................................................................41
8.01. Survival................................................................................41
ARTICLE IX INDEMNIFICATION.............................................................................41
9.01. Indemnification by Seller...............................................................41
9.02. Indemnification by Buyer................................................................42
9.03. Third-Party Claims......................................................................42
9.04. Procedures for Environmental Claims.....................................................44
9.05. Indemnification as Sole Remedy After Closing............................................44
ARTICLE X TERMINATION..................................................................................44
10.01. Mutual Agreement.......................................................................44
10.02. Noncompliance or Nonperformance........................................................44
ARTICLE XI MISCELLANEOUS...............................................................................45
11.01. Integration; Amendment.................................................................45
11.02. Assignment.............................................................................45
11.03. Counterparts...........................................................................45
11.04. Headings...............................................................................45
11.05. Waiver; Requirement of Writing.........................................................46
11.06. Finder's Fees; Brokers.................................................................46
11.07. Expenses...............................................................................46
11.08. Notices................................................................................46
11.09. Applicable Law.........................................................................48
11.10. Consent to Jurisdiction................................................................48
11.11. Public Announcements...................................................................49
11.12. No Third-Party Beneficiaries...........................................................49
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PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT dated as of June 14, 2000
between XXXXXXXX OVERSEAS (HOLDINGS) LIMITED, a private limited company
incorporated under the laws of England ("Buyer"), and BROOKE (OVERSEAS) LTD., a
Delaware corporation ("Seller"),
W I T N E S S E T H :
WHEREAS, Seller owns all of the issued and outstanding
membership interests (the "Membership Interests") of Western Tobacco Investments
LLC, a Delaware limited liability company (the "Company");
WHEREAS, Buyer desires to purchase from Seller, and Seller
desires to sell to Buyer, the Membership Interests upon the terms and conditions
hereinafter set forth;
WHEREAS, simultaneously with the execution and delivery of
this Agreement, Vector Group Ltd., the ultimate parent of Seller, is executing
and delivering to Buyer a payment and performance guaranty with respect to
Seller's obligations under this Agreement; and
WHEREAS, simultaneously with the execution and delivery of
this Agreement, Xxxxxxxx Group Plc, the ultimate parent of Buyer, is executing
and delivering to Seller a payment and performance guaranty with respect to
Buyer's obligations under this Agreement.
NOW, THEREFORE, in consideration of the premises and of the
mutual agreements hereinafter contained, the parties hereto do hereby agree as
follows:
ARTICLE I
PURCHASE PRICE AND CLOSING
1.01. PURCHASE PRICE OF THE MEMBERSHIP INTERESTS.
Subject to all of the terms and conditions of this Agreement,
Seller shall sell the Membership Interests to Buyer at the Closing (as defined
in Section 1.02 below) and Buyer, in reliance on the covenants, representations
and warranties of Seller contained herein, shall purchase the Membership
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Interests from Seller at the Closing for a purchase price (the "Purchase Price")
equal to $335,600,000, subject to reduction pursuant to Section 4.16. A portion
of the Purchase Price equal to the Seller Indebtedness Payment (as defined in
Section 1.03) shall be paid at Closing to the Trustee (as defined in Section
1.03) and to the Collateral Agent (as defined in Section 4.12). The portion of
the Purchase Price payable at the Closing to Seller, and the remainder thereof
payable to the Trustee and the Collateral Agent, shall be paid by Buyer by wire
transfer in immediately available funds to accounts designated by Seller, the
Trustee and the Collateral Agent to Buyer in writing at least three business
days prior to the Closing. Seller shall deliver to Buyer at the Closing
certificates for all the Membership Interests duly endorsed or with duly
executed stock powers attached, or if the Collateral Agent has not released the
certificates for the Pledged Membership Interests (as defined in Section 4.12),
then, subject to Section 4.12, Seller shall deliver to Buyer at the Closing (a)
certificates for the Membership Interests (other than the Pledged Membership
Interests) duly endorsed or with duly executed stock powers attached and (b)
duly executed stock powers for the Pledged Membership Interests.
1.02. THE CLOSING.
The closing of the sale and purchase of the Membership
Interests (the "Closing") shall take place at the offices of Xxxxxxxxxx & Xxxxx
LLP, 00 Xxxxxxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx at 10:00 a.m. local time and shall
be effective as of the close of business local time on the later to occur of (a)
July 31, 2000 and (b) subject to Section 10.02, the fifth business day following
the date approval to carry out the transactions contemplated hereby has been
obtained from the Ministry for Antimonopoly Policy and Support for
Entrepreneurship of the Russian Federation (the "Antimonopoly Ministry"), or,
subject to Section 10.02, if the other conditions to the Closing set forth in
Articles VI and VII shall not have been satisfied by such date (other than for
conditions to be satisfied by deliveries at the Closing), as soon as practical
after such conditions have been satisfied, or at such other location, time or
date as may be agreed to in writing by Buyer and Seller (such time and date of
the Closing being herein called the "Closing Date").
1.03. SELLER INDEBTEDNESS PAYMENT.
(a) For purposes of this Agreement, "Seller Indebtedness
Payment" means all amounts necessary to redeem all issued and outstanding
Securities (as defined in the Indenture dated as of January 1, 1996 (the
"Indenture") between BGLS Inc. ("BGLS") and State Street Bank and Trust Company,
as successor to Fleet National Bank of Massachusetts (the "Trustee")) on the
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30th day following the Closing Date or if such day is not a business day, then
on the next following business day (the "Redemption Date"). At the Closing,
subject to Section 4.12, such amount of the Seller Indebtedness Payment as is
necessary to redeem the Securities secured by the Pledged Membership Interests
on the Redemption Date shall be paid to the Collateral Agent and the balance of
the Seller Indebtedness Payment shall be paid to the Trustee.
(b) Not later than three business days prior to the Closing,
Seller shall deliver to Buyer a statement setting forth the amount of the Seller
Indebtedness Payment. On or prior to the Closing Date, Seller shall cause BGLS
to give such notice to the Trustee and the Holders (as defined in the Indenture)
as may be required by the Indenture for the redemption of the Securities to take
place on the Redemption Date. For purposes of this Agreement, a "business day"
shall mean any day other than a Saturday, Sunday or other day on which
commercial banks located in New York City and London are authorized or required
to be closed.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer, as of the date
hereof and (except to the extent such representations and warranties expressly
relate to a prior date) as of the Closing Date, as follows (as used in this
Article II, the words "the knowledge of Seller" mean that Seller represents and
warrants as to Seller's actual knowledge after due inquiry as to the subject
matter covered by such representation or warranty of, and receipt of
confirmation of the accuracy of such representation or warranty from, the
officers of the Company and the Subsidiaries set forth in Schedule 2 attached
hereto):
2.01. ORGANIZATION AND AUTHORITY.
Seller is a corporation duly organized, validly existing and
in good standing under the laws of Delaware, with full corporate power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby.
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2.02. DUE AUTHORIZATION; BINDING OBLIGATION.
The execution, delivery and performance by Seller of this
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of Seller. This
Agreement has been duly and validly executed and delivered by Seller. This
Agreement constitutes the valid and binding obligations of Seller, enforceable
in accordance with its terms, subject to the qualification, however, that the
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 availability of 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.
2.03. NON-CONTRAVENTION.
The execution, delivery and performance of this Agreement by
Seller and the consummation of the transactions contemplated hereby do not and
will not, with or without the giving of notice or the lapse of time, or both,
violate, conflict with, result in the breach of or constitute a default under,
or give rise to any right of termination, cancellation or acceleration of any
obligation of any person or to the loss of any material right of any person
under or to increased, additional, accelerated or guaranteed rights or
entitlements of any person under, or result in the creation of any pledge, lien,
charge or other encumbrance upon any of the properties or assets of the Company
or any of the Subsidiaries under, any of the terms, conditions or provisions of
(a) the charter documents or by-laws or other governing documents of Seller, the
Company or any of the Subsidiaries or (b) any covenant, agreement or
understanding to which Seller, or any Contract (as defined in Section 2.16) to
which the Company or any of the Subsidiaries is a party or by which their
respective properties or assets are bound, or (c) any order, ruling, decree,
judgment, arbitration award, law, rule, permit, regulation or stipulation to
which Seller, the Company or any of the Subsidiaries is subject, other than, in
the case of clauses (b) and (c) above, any such items that, individually or in
the aggregate, would not have a material adverse effect on the business, assets,
financial condition, results of operations or prospects of the Company and the
Subsidiaries, taken as a whole, or each of Joint Stock Company Xxxxxxx-Xxxxx
("LDJSC") and Joint Stock Company Xxxxxxx-Xxxxx-Tobacco ("LDTJSC"), taken
separately ("Material Adverse Effect"), or the ability of Seller to consummate
the transactions contemplated hereby.
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2.04. REGULATORY APPROVALS.
None of Seller, the Company or any of the Subsidiaries are
required to file, seek or obtain any governmental notice, filing, authorization,
approval, order or consent, or any bond in satisfaction of any governmental
regulation, in connection with the execution, delivery and performance of this
Agreement by Seller, or the consummation of the transactions contemplated
hereby.
2.05. TITLE TO MEMBERSHIP INTERESTS.
Except as set forth in Schedule 2.05 attached hereto, Seller
is the beneficial and record owner of the Membership Interests and such
ownership is free and clear of any liens, pledges, encumbrances, charges,
agreements or claims. Except as set forth in Schedule 2.05, at the Closing,
Seller will convey to Buyer good and marketable title to the Membership
Interests, free and clear of any liens, pledges, encumbrances, charges,
agreements or claims.
2.06. CAPITALIZATION OF THE COMPANY.
The Company's authorized capital consists solely of 55,000
membership interests, all of which are issued and outstanding. Such issued and
outstanding Membership Interests are validly issued, fully paid and
nonassessable. Except for any rights arising in connection with the
Participating Loan (as defined in Section 4.11) which will all be terminated
prior to the Closing, the Membership Interests constitute all of the ownership,
membership and equity interests of the Company, including all (a) rights to
participate in the management of the Company, to vote on any matter, and to
grant or withhold consent or approval of actions of the Company and (b) rights
to receive all allocations of profits and losses, distributions and returns of
capital of the Company. Except for (a) any rights arising in connection with the
Participating Loan which will all be terminated prior to the Closing, and (b)
any rights granted to Buyer under this Agreement, there are no outstanding
options, warrants or other rights to purchase, obtain or acquire, or any
outstanding securities or obligations convertible into or exchangeable for, or
any voting agreements with respect to, any ownership, membership or equity
interests in the Company or any other securities of the Company and the Company
is not obligated, now or in the future, contingent or otherwise, to issue,
purchase or redeem ownership, membership or equity interests or any other
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securities to or from anyone. Copies of (x) the limited liability company
agreement, certificate of formation and minute books of the Company and (y) the
charter documents and by-laws (or similar governing documents) and corporate
minute books of each of the Subsidiaries (as defined in Section 2.07) have
heretofore been delivered to Buyer and are true, correct and complete.
2.07. SUBSIDIARIES.
The Company owns, directly or indirectly, the capital stock or
other ownership, membership or equity interests of the corporations or other
entities listed in Schedule 2.07 attached hereto, with the percentage of voting
stock or other ownership, membership or equity interests so owned indicated
therein, and how the stock or other ownership, membership or equity interests of
a corporation or other entity is owned also indicated therein (all such
corporations and entities being hereinafter referred to individually as a
"Subsidiary" and collectively as the "Subsidiaries"). Other than the
Subsidiaries identified on Schedule 2.07 as organized and existing under the
laws of the Russian Federation and any representative offices and branches and
any such Subsidiaries in the process of being so organized (the "Russian
Subsidiaries"), the Company does not own, directly or indirectly, the capital
stock or other ownership, membership or equity interests of any corporation or
other entity organized and existing under the laws of the Russian Federation.
Neither the Company nor any of the Subsidiaries owns any capital stock or has
any other interest in or obligation to form or participate in any other company,
partnership, joint venture or other organization, enterprise or entity. Except
as set forth in Schedule 2.07, the Company and the Subsidiaries have full title
to the shares or other ownership, membership or equity interests of the
Subsidiaries owned by them, in each case free and clear of any liens, pledges,
encumbrances, charges, agreements or claims. The issued and outstanding shares
of capital stock or other ownership, membership or equity interests of each of
the Subsidiaries are validly issued, fully paid and, subject to applicable law,
nonassessable. There are no treasury shares, and there are no outstanding
options, warrants or other rights to purchase, obtain or acquire, or outstanding
securities or obligations convertible into or exchangeable for, or voting
agreements with respect to, any shares of capital stock of or other ownership,
membership or equity interest in or any other securities of any of the
Subsidiaries. Except as set forth in Schedule 2.07, none of the Subsidiaries is
obligated, now or in the future, contingent or otherwise, to issue, purchase or
redeem capital stock or any other ownership, membership or equity interests or
any other securities to or from any person. For the purposes of this Section
2.07, no representations and warranties are made by Seller in respect of LDJSC's
ownership interests in BrookeMil Ltd. and Commercial Bank Khleb Rossii (Bread of
Russia).
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2.08. ORGANIZATION.
(a) The Company is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of Delaware,
with full power and authority to carry on its business as presently conducted by
it and to own, lease and operate its properties in the places where it maintains
offices and where its properties are owned, leased or operated.
(b) Each of the Subsidiaries is a corporation or other entity
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization (except that no representation
or warranty is made regarding good standing for any Subsidiary organized under
the laws of a jurisdiction in which the concept of good standing is
inapplicable), with full power and authority to carry on its business as
presently conducted by it and to own, lease and operate its properties in the
places where it maintains offices and where its properties are owned, leased or
operated.
2.09. QUALIFICATIONS.
Schedule 2.09 attached hereto sets forth each jurisdiction in
which the Company or any of the Subsidiaries is duly qualified to do business
and in good standing (except that no representation is made regarding good
standing or qualification to do business for any jurisdiction in which the
concept of good standing or qualification to do business is inapplicable) and
neither the character of the properties owned or held under lease or license by
the Company or any of the Subsidiaries nor the nature of the business conducted
by the Company or any of the Subsidiaries requires any qualification in any
other jurisdiction, except any such jurisdiction wherein the failure to be so
qualified would not have a Material Adverse Effect.
2.10. FINANCIAL STATEMENTS.
Seller has heretofore furnished to Buyer (a) audited
consolidated financial statements of the Company and its Subsidiaries consisting
of (i) consolidated balance sheets at December 31, 1999 and 1998, (ii)
consolidated statements of operations for the year ended December 31, 1999 and
for the period April 28, 1998 through December 31, 1998, (iii) consolidated
statements of member's equity for the year ended December 31, 1999 and for the
period April 28, 1998 through December 31, 1998 and (iv) consolidated statements
of cash flows for the year ended December 31, 1999 and for the period April 28,
1998 through December 31, 1998, together with the report of
PricewaterhouseCoopers ("PwC") thereon and the notes thereto, and (b) unaudited
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consolidated financial statements of the Company and the Subsidiaries consisting
of (i) a pro forma consolidated balance sheet at March 31, 2000 reflecting the
adjustments set forth on Schedule 2.10 attached hereto (the "Pro Forma Balance
Sheet"), (ii) a consolidated balance sheet at Xxxxx 00, 0000, (xxx) consolidated
statements of operations for the quarters ended March 31, 2000 and 1999, and
(iv) a consolidated statement of cash flows for the quarter ended March 31, 2000
(the foregoing audited and unaudited financial statements, report and notes
thereto are hereinafter collectively referred to as the "Financial Statements").
The Financial Statements other than the Pro Forma Balance Sheet (A) have been
prepared in accordance with accounting principles generally accepted in the
United States of America ("U.S. GAAP") applied on a consistent basis, and (B)
present fairly the consolidated financial position of the Company and the
Subsidiaries at the dates thereof and the consolidated results of operations and
cash flows of the Company and the Subsidiaries for the periods then ended,
except that the unaudited Financial Statements were prepared on an interim
basis, without footnotes, and are subject to normal and recurring year-end audit
adjustments. Except as and to the extent reflected or reserved against in the
unaudited consolidated balance sheet of the Company and the Subsidiaries at
March 31, 2000 (the "Balance Sheet"), or disclosed in Schedule 2.10 attached
hereto or any other Schedule hereto, at March 31, 2000 neither the Company nor
any of the Subsidiaries had any material liability or obligation (whether
absolute or contingent, or accrued or unaccrued) required to be disclosed in
financial statements, or in the notes thereto, prepared in accordance with U.S.
GAAP. The books of account and financial records of the Company and the
Subsidiaries have been prepared and are maintained in accordance with good
accounting practice and, to the extent required, applicable laws.
2.11. ABSENCE OF CERTAIN CHANGES OR EVENTS.
Except as set forth in Schedule 2.11 attached hereto, since
March 31, 2000 there has not been, with respect to the Company or any of the
Subsidiaries or their respective businesses or properties:
(a) any material adverse change in the financial
condition, business, prospects, assets or results of operations of the
Company and the Subsidiaries, taken as a whole, or each of LDJSC and
LDTJSC taken separately (without taking into account any effects on
the Company or any of the Subsidiaries that may result from
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macroeconomic or political policies or general economic conditions as
may be initiated or exist in the Russian Federation from or after
March 31, 2000);
(b) any destruction, damage by fire, accident or
other casualty or act of God of or to any of properties or assets of
the Company or any of the Subsidiaries, whether or not covered by
insurance, except any destruction, damage, accident, casualty or act
as would not have a Material Adverse Effect;
(c) any action that, if taken after the date of this
Agreement, would constitute a breach of any of the covenants set forth
in clauses (iii), (iv), (v), (ix) and (xiii) of Section 5.01; or
(d) any action that, if taken after the date of this
Agreement, would constitute a breach of any of the covenants set forth
in Section 5.01 (other than those referred to in subsection (c)
immediately above).
2.12. ASSETS OTHER THAN REAL PROPERTY INTERESTS.
(a) The Company and the Subsidiaries have good and marketable
title to all assets reflected on the Balance Sheet or thereafter acquired with a
value in excess of $50,000, except those sold or otherwise disposed of for fair
value since the date of the Balance Sheet in the ordinary course of business
consistent with past practice and not in violation of this Agreement, in each
case free and clear of all mortgages, liens, security interests, pledges,
encumbrances, charges, agreements, claims, restrictions and defects of title of
any kind except (i) as are set forth in Schedule 2.12, (ii) liens for Taxes (as
defined in Section 2.18) which are not yet due and payable or being contested in
good faith by appropriate proceedings, (iii) mechanic's, materialman's or other
similar liens arising by operation of law or (iv) other minor imperfections of
title, if any, which items in clauses (ii) through (iv) above do not,
individually or in the aggregate, materially impair the value or materially
interfere with the continued use of the assets to which they relate in the
conduct of the business of the Company and the Subsidiaries (such items in
clauses (ii) through (iv) are hereinafter referred to as "Permitted Liens").
(b) The tangible personal (moveable) property of the Company
and the Subsidiaries has been maintained in all material respects in accordance
with the past practice of the Company and the Subsidiaries and generally
accepted industry practice. The tangible personal property of the Company is in
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all material respects in good operating condition and repair, ordinary wear and
tear excepted. All leased personal property of the Company and each of the
Subsidiaries is in all material respects in the condition required of such
property by the terms of the lease currently applicable thereto.
This Section 2.12 does not relate to real property or interests in real
property, such items being the subject of Section 2.13.
2.13. REAL PROPERTY OWNED AND LEASED.
Schedule 2.13 attached hereto contains a complete list of all
real property (immovable property) (including, without limitation, plants,
warehouses, interests in real property, distribution centers, structures and
other buildings) owned or leased by the Company or any of the Subsidiaries (the
"Real Property"). The applicable Subsidiary owns all the buildings located at
the site of the new cigarette factory (described in Schedule 2.13 hereto) and
has the right, subject to applicable law, to transfer ownership of (a) the main
factory building located at such site and (b) after completion of the
registration process for which applications for registration have previously
been filed, all the other buildings at such site. The applicable Subsidiary has
leasehold ownership interests in the land underlying such buildings and is
entitled to dispose of its ownership rights, subject to the terms and conditions
of the lease agreement. The interests in Real Property (other than residential
leases for employees of the Company or any of the Subsidiaries) are free and
clear of all mortgages, liens, security interests, pledges, leases, subleases,
encumbrances, charges, assignments, easements, claims or other restrictions and
defects in title except (i) as are set forth in Schedule 2.13 hereto and (ii)
Permitted Liens. All interests in Real Property (other than residential leases
for employees of the Company or any of the Subsidiaries) are currently used in
the operation of the business of the Company or any of the Subsidiaries and are
adequately maintained and are in good operating condition and repair for the
requirements of the business as presently conducted by the Company and the
Subsidiaries.
2.14. PATENTS, TRADEMARKS, ETC.
(a) Schedule 2.14 attached hereto sets forth a complete and
accurate listing of all Russian Federation or other patents, trademarks, trade
names, service marks and copyrights used in the conduct of the businesses of the
Company or any of the Subsidiaries, whether registered or unregistered, and any
applications or registrations therefor. Except as set forth in Schedule 2.14,
the Company or the applicable Subsidiary solely owns and has the exclusive right
to use, or, for the items so identified in Schedule 2.14, the non-exclusive
right to use, free and clear of any payment (other than payments not yet due to
maintain the registration thereof) or encumbrance, all such patents, trademarks,
trade names, service marks and copyrights (all such patents, trademarks, trade
names, service marks and copyrights being hereinafter collectively referred to
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as the "Intellectual Property"). Except as set forth in Schedule 2.14, there is
no claim or demand of any person pertaining to, or any proceedings which are
pending or, to the knowledge of Seller, threatened, which challenge the
exclusive rights of the Company or any of the Subsidiaries in respect of any
Intellectual Property. No Intellectual Property is subject to any outstanding
order, ruling, decree, judgment or stipulation by or with any court, arbitrator,
administrative agency or governmental official and, except as set forth in
Schedule 2.14, to the knowledge of Seller, none of the Intellectual Property
infringes the intellectual property rights of others or is being infringed by
others or is used by others (whether or not such use constitutes infringement).
(b) All knowledge and know-how required to operate the Company
and the Subsidiaries as heretofore conducted is held and may be used by the
Company and the Subsidiaries without any obligation to Seller or its affiliates
(other than the Company or any Subsidiary). None of the Company or any of the
Subsidiaries has granted any licenses with respect to, nor otherwise disclosed
or has agreed to disclose, any such knowledge or know-how.
2.15. INSURANCE.
Schedule 2.15 attached hereto sets forth a complete and
accurate list of all casualty, directors and officers liability, general
liability (including product liability) and all other types of insurance
maintained by the Company or any of the Subsidiaries, together with the carriers
and liability limits for each such policy. Each policy is in force, and no
notice has been received by the Company or any of the Subsidiaries from any
insurance carrier purporting to cancel or reduce coverage under any such policy.
The Company and each of the Subsidiaries are current in all premiums or other
payments due thereunder. Schedule 2.15 identifies which insurance policies are
"occurrence" or "claims made". All insurance coverage held for the benefit of
the Company or any of the Subsidiaries is reasonably adequate to cover risks
customarily insured against by similar companies in their industry.
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2.16. COMMITMENTS.
(a) Except as set forth in Schedule 2.16, neither the Company
nor any Subsidiary is a party to or bound by any:
(i) employment agreement or employment contract that
provides for annual remuneration and benefits having a value in excess
of $50,000;
(ii) employee collective bargaining agreement or other
contract with any labor union;
(iii) covenant not to compete or other covenant restricting
the development, manufacture, marketing or distribution of the products
and services of the Company or any Subsidiary;
(iv) agreement, contract or other arrangement with (A) Seller
or any affiliate of Seller (other than the Company or any Subsidiary)
or (B) any current or former officer, director, employee or independent
contractor of the Company, any Subsidiary, Seller or any affiliate of
Seller (other than employment agreements covered by clause (i) above);
(v) lease, sublease or similar agreement with any person
under which the Company or any Subsidiary is a lessor or sublessor of,
or makes available for use to any person (other than the Company or any
Subsidiary), (A) any Real Property or (B) any portion of any premises
otherwise occupied by the Company or any Subsidiary, except, in the
case of clauses (A) or (B), for residential leases for employees of the
Company or any of the Subsidiaries;
(vi) lease or similar agreement with any person (other than
the Company or any Subsidiary) under which (A) the Company or any
Subsidiary is lessee of, or holds or uses, any machinery, equipment,
vehicle or other tangible personal property owned by any person or (B)
the Company or any Subsidiary is a lessor or sublessor of, or makes
available for use by any person, any tangible personal property owned
or leased by the Company or any Subsidiary, in any such case which has
an aggregate future liability or receivable, as the case may be, in
excess of $50,000 and, in the case of any such lease or similar
agreement entered into between the date hereof and the Closing, is not
terminable by the Company or the applicable Subsidiary by notice of 60
days or less without cost or penalty;
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(vii) (A) continuing agreement or contract for the future
purchase of materials, supplies or equipment (other than purchase
contracts and orders for inventory in the ordinary course of business
consistent with past practice, PROVIDED that any such contract or
order, when taken together with all other purchase contracts and orders
for inventory relating to the ordered item, would not require the
Company or any Subsidiary to acquire a quantity of such item that could
not reasonably be expected to be used in the ordinary course of
business of the Company or the applicable Subsidiary within six months
after the date of execution or entry of purchase contract or order for
inventory) or (B) service, consulting, management or other similar type
of agreement or contract (other than with the Company or any
Subsidiary), in either such case which has an aggregate future
liability in excess of $250,000 and, in the case of any such agreement
or contract entered into between the date hereof and the Closing, is
not terminable by the Company or the applicable Subsidiary by notice of
60 days or less without cost or penalty;
(viii) continuing agreement or contract for the sale or
distribution of any products manufactured by the Company or any
Subsidiary, including by franchise arrangement, involving in excess of
1% of the consolidated monthly sales of the Company and the
Subsidiaries by value, except, in the case of any such agreement or
contract entered into between the date hereof and the Closing, if such
agreement or contract is terminable by the Company or the applicable
Subsidiary by notice of 60 days or less without cost or penalty;
(ix) continuing agreement or contract for the purchase of any
finished goods manufactured by parties other than the Company or any
Subsidiary, except, in the case of any agreement or contract entered
into between the date hereof and the Closing, if such agreement or
contract is terminable by the Company or the applicable Subsidiary by
notice of 60 days or less without cost or penalty;
(x) continuing agreement or contract for products
manufactured by the Company or any Subsidiary on behalf of parties
other than the Company or any Subsidiary, except, in the case of any
agreement or contract entered into between the date hereof and the
Closing, if such agreement or contract is terminable by the Company or
the applicable Subsidiary by notice of 60 days or less without cost or
penalty;
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(xi) agreement, contract or arrangement for the placement of
advertising or other promotional activities which has an aggregate
future liability in excess of $100,000 and, in the case of any such
agreement, contract or arrangement entered into between the date hereof
and Closing, is not terminable by the Company or the applicable
Subsidiary by notice of 60 days or less without cost or penalty;
(xii) except as set forth in Schedule 2.14, any material
license, option or other agreement relating in whole or in part to the
Intellectual Property set forth in Schedule 2.14 (including any license
or other agreement under which the Company or any Subsidiary is
licensee or licensor of any such Intellectual Property) or to trade
secrets or proprietary rights and processes of the Company, any
Subsidiary or any other person;
(xiii) agreement, contract or other instrument under which the
Company or any Subsidiary has borrowed any money from, or issued any
note, bond, debenture or other evidence of indebtedness to, any person
or any other note, bond, debenture or other evidence of indebtedness
issued to any person;
(xiv) agreement, contract or other instrument (including
so-called take-or-pay or keepwell agreements) under which (A) to the
knowledge of Seller, except as set forth on Schedule 4.15, any person
has directly or indirectly guaranteed indebtedness, liabilities or
obligations of the Company or any Subsidiary or (B) the Company or any
Subsidiary has directly or indirectly guaranteed indebtedness,
liabilities or obligations of any person (in each case other than
endorsements for the purpose of collection in the ordinary course of
business);
(xv) agreement, contract or other instrument under which the
Company or any Subsidiary has, directly or indirectly, made any
advance, loan, extension of credit or capital contribution to, or other
investment in, any person (other than trade credits in the ordinary
course of business);
(xvi) mortgage, pledge, security agreement, deed of trust or
other instrument granting a lien or other encumbrance upon any property
of the Company or any Subsidiary, which lien or other encumbrance is
not set forth in Schedule 2.12 or 2.13 or is not a Permitted Lien; or
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(xvii) agreement, contract or instrument providing for
indemnification of any person with respect to liabilities relating to
any current or former business of the Company or any Subsidiary, or any
predecessor person (other than provisions of any contract or agreement
providing for indemnification solely in respect of breaches of such
contract or agreement).
(b) Except as set forth in Schedule 2.16, all agreements,
contracts, leases, licenses, commitments or instruments of the Company or any
Subsidiary listed in the Schedules hereto (collectively, the "Contracts") are
valid, binding and in full force and effect. Except as set forth in Schedule
2.16, (i) the Company and each of the Subsidiaries have performed all material
obligations required to be performed by them to date under the Contracts and
they are not and, as a result of the transactions contemplated hereby, will not
be (with or without the lapse of time or the giving of notice, or both) in
breach or default in any respect thereunder and, (ii) to the knowledge of
Seller, no other party to any of the Contracts is (with or without the lapse of
time or the giving of notice, or both) in breach or default in any respect
thereunder, except, in the case of clauses (i) and (ii), any such breaches or
defaults which individually or in the aggregate would not have a Material
Adverse Effect. Seller has provided to Buyer a true and correct copy of each of
the Contracts.
2.17. LEGAL PROCEEDINGS.
Except as set forth in Schedule 2.17, none of Seller, the
Company nor any of the Subsidiaries is engaged in or a party to, or, to the
knowledge of Seller, threatened with, any suit, investigation, legal action or
other proceeding before any court, administrative agency, arbitration panel or
other similar authority which involves (individually, or in the aggregate for
cases arising out of the same or substantially similar facts or circumstances)
the possibility of liability of the Company or any of the Subsidiaries in excess
of $50,000 (whether or not covered by insurance), and Seller knows of no
reasonable basis for any such suit, investigation, action or proceeding. There
are no outstanding orders, rulings, decrees, judgments or stipulations by or
with any court, administrative agency, arbitration panel or other similar
authority which challenge or otherwise relate to the transactions contemplated
by this Agreement.
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2.18. TAXES.
All federal, state and local and all foreign tax returns,
reports, declarations, statements and other documents required to be filed by or
with respect to the Company and each of the Subsidiaries and any predecessor
corporations of each of them in respect of all taxes, including income,
franchise, value-added, social fund, sales, property, payroll and other taxes,
levies, imposts and duties of any nature whatsoever and any interest, additions
or penalties in respect thereof ("Taxes") have been filed with the appropriate
tax and social fund authorities, such documents are true, accurate and complete
in all material respects and all amounts shown by such documents to be due and
payable have been paid. Copies of the U.S. income tax returns of the Company and
each of the Subsidiaries for the taxable period ended 1998 and a draft for the
taxable period ended 1999 have been provided or made available to Buyer. Neither
the Company nor any of the Subsidiaries is in default in the payment of any
Taxes due or payable or on any assessments received in respect thereof. Except
as and to the extent reflected or reserved against in the Balance Sheet or as
described in Schedule 2.10, at March 31, 2000, neither the Company nor any of
the Subsidiaries had any liability for Taxes or any interest or penalties in
respect thereof, that are or may become material to the Company or any of the
Subsidiaries. All Taxes that are or may become material to the Company or any of
the Subsidiaries for periods ending on or prior to March 31, 2000 that should be
reserved on the books of the Company or any of the Subsidiaries in accordance
with generally accepted accounting principles and the Company's and each
Subsidiary's past practice have been so reserved, and all estimated tax payments
required to be made have been made. No waivers of statutes of limitation are in
effect in respect of taxes for the Company or any of the Subsidiaries. There are
no pending, or to the knowledge of Seller threatened, material claims or
assessments against the Company or any of the Subsidiaries in respect of Taxes,
or interest or penalties, other than claims or assessments for which adequate
reserves have been provided.
2.19. COMPLIANCE WITH LAWS; PERMITS AND LICENSES.
Except as is disclosed on Schedules 2.17 and 2.19 attached
hereto and except for environmental matters which are covered in Section 2.20
below, (a) the Company and each of the Subsidiaries are now in compliance with
all laws, decrees, decisions, rulings, judgments, orders, ordinances,
regulations and other pronouncements adopted, rendered or otherwise issued by
any federal, state, regional, municipal or local governmental authority, agency,
board, body, court or instrumentality of the United States of America, the
Russian Federation, the Federal Republic of Germany and any other foreign
jurisdiction applicable to the Company or any of the Subsidiaries, except such
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instances of non-compliance as will not, individually or in the aggregate, have
a Material Adverse Effect, (b) no claims or complaints from any governmental
authorities or other parties have been asserted or received by the Company or
any of the Subsidiaries which are still pending or outstanding alleging that the
Company or any of the Subsidiaries is in violation of any applicable building,
zoning, or similar law, ordinance or regulation in relation to its plants,
warehouses, distribution centers, structures or other buildings or equipment, or
the operation thereof that should the claimant or complainant prevail would have
a Material Adverse Effect, (c) to the knowledge of Seller, there are no claims
or complaints from any governmental authorities or other persons that are
threatened of the type referred to in clause (b) above that should the claimant
or complainant prevail would have a Material Adverse Effect and (d) neither the
Company nor any of the Subsidiaries has received notice from any governmental
authorities of any pending proceedings to take all or any part of the properties
of the Company or any of the Subsidiaries (whether leased or owned) by
condemnation or right of eminent domain and, to the knowledge of Seller, no such
proceedings are threatened. Schedule 2.19 sets forth all material governmental
permits, licenses and authorizations necessary for the operation of the
businesses of the Company or any of the Subsidiaries as presently conducted and
for the operation or occupancy of the properties owned or used by the Company or
any of the Subsidiaries in the business and all licenses, permits and
authorizations of the Central Bank of the Russian Federation necessary for any
transactions entered into by the Russian Subsidiaries. All such licenses,
permits and authorizations are validly held by the Company or the applicable
Subsidiary, the Company or the applicable Subsidiary has complied with all terms
and conditions thereof, except such instances of non-compliance as would not,
individually or in the aggregate, have a Material Adverse Effect, and the same
will not be subject to suspension, modification, revocation or nonrenewal as a
result of the execution and delivery of this Agreement or the consummation of
the transactions contemplated hereby.
2.20. ENVIRONMENTAL MATTERS.
Except as set forth on Schedule 2.20 attached hereto, the
Company and the Subsidiaries (a) are in compliance in all material respects with
applicable Environmental Requirements (as defined below), (b) have received no
notice of violation from any government authority or the commencement of any
claim, suit or proceeding by any government authority or other party with
respect to environmental conditions concerning the Real Property, (c) are not
aware of any activity conducted on Real Property which would likely result in a
violation of any applicable Environmental Requirement in any material respect,
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and (d) to the knowledge of Seller no Hazardous Material (as defined below) is
located on, at, in, under or about the Real Property, in a manner which creates
risk to human health or the environment. For the purpose of this Agreement, the
following terms shall have the following meanings:
(i) The term "Hazardous Material" means any material,
substance or constituent, including any petroleum product, that,
whether by its nature or its use, is subject to regulation under any
Environmental Requirement, excluding for purposes of this Section 2.20
tobacco leaf.
(ii) The term "Environmental Requirement" or "Environmental
Requirements" means any and all laws, ordinances, statutes, codes,
rules, regulations, decrees, orders, directives, permits, or licenses
of or by any federal, state, regional, municipal or local governmental
authority addressing protection of the environment, including but not
limited to the, Law on Protection of the Natural Environment (RF 1991);
Land Code (RF 1991); Law on Subsoil (RF 1992); and Law on Air
Protection (RF 1982).
2.21. EMPLOYEE BENEFIT PLANS; TERMINATION AND SEVERANCE
AGREEMENTS.
(a) Except as indicated on Schedule 2.21(a), neither the
Company nor any of the U.S. Subsidiaries has ever maintained, sponsored,
participated in, administered, contributed to or incurred any obligation to or
any liability under any savings, profit sharing, annuity, retirement, deferred
compensation, bonus, incentive (including, without limitation, cash, stock
options, stock bonus, stock appreciation rights, phantom stock, restricted stock
and stock purchase), medical, dental, vision, hospitalization, prescription drug
and other health, employee assistance, cafeteria, flexible benefits, life
insurance, short and long term disability, vacation pay, severance pay, other
welfare and fringe benefit and similar plans, programs, understandings,
arrangements or agreements, including without limitation any employee benefit
plan as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), whether written or oral, direct or indirect, or
actual or contingent ("Plan").
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(b) Neither the Company nor any of the Subsidiaries has ever
incurred or is reasonably expected to incur any liability under or related to
any Plan that is a defined benefit pension plan of any ERISA Affiliate. Except
as set forth on Schedule 2.21(b), no employee of the Company or any of the
Subsidiaries is or has ever been within the six-year period preceding the date
of this Agreement entitled to participate in or receive benefits under any Plan
that is a defined benefit pension plan of any ERISA Affiliate. For purposes of
this Agreement, "ERISA Affiliate" means any entity, person or individual that,
together with the Company or any of the Subsidiaries, is or was treated as a
single-employer within the meaning of Section 414(b), (c), (m) or (o) of the
Internal Revenue Code of 1986, as amended (the "Code"), or ERISA Section
4001(b).
(c) Each Plan that is intended to be qualified under Code
Section 401(a) is so qualified.
(d) Except as indicated on Schedule 2.21(d)(i), no "reportable
event" within the meaning of ERISA Section 4043 (other than an event described
in PBGC Regulation Section 4043.22, .27, .29 and .31 for which notice is waived)
has occurred with respect to any Plan within the six year period preceding the
date of this Agreement that is or was subject to Title IV of ERISA. Neither the
Company, any of the U.S. Subsidiaries nor any ERISA Affiliate has any liability
to the Pension Benefit Guaranty Corporation, other than for premiums the payment
of which is not yet due. No Plan that is or was an "employee pension benefit
plan" within the meaning of ERISA Section 3(2) ("Pension Plan") has been
terminated or merged, in whole or in part, within the six-year period preceding
the date of this Agreement, except as indicated on Schedule 2.21(d)(ii). The
present value of the accrued benefits (both vested and unvested) under each
Pension Plan (determined as of the most recent actuarial valuation date for such
Pension Plan (January 1, 1999) and determined in accordance with the same
actuarial assumptions and methods as used by the actuary for such Pension Plan
as of such valuation date) did not exceed the value of such assets for such
Pension Plan on such valuation date. There are no "underfunded benefit
liabilities" (as defined in ERISA Section 4001(a)(16)) under any Pension Plan as
of the most recent actuarial valuation date for such Pension Plan (January 1,
1999). Each Pension Plan is in compliance with Code Section 412 and ERISA Title
I. No Pension Plan has incurred any "accumulated funding deficiency" (whether or
not waived) within the meaning of Code Section 412.
(e) No "prohibited transaction" within the meaning of ERISA
Section 406 or Code Section 4975 has occurred with respect to any Plan sponsored
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or administered by the Company or any of the U.S. Subsidiaries. All Plans
sponsored or administered by the Company or any of the U.S. Subsidiaries comply
currently, and have complied in the past in form and in operation, with the
provisions of ERISA, the Code, the rules and regulations promulgated under these
statutes, all other applicable federal, state, or common law and with their
respective benefit plans and trust agreements. There are no actions, suits or
claims pending (other than routine claims for benefits) which could reasonably
be expected to be asserted against any Plan or the assets or fiduciaries of any
Plan sponsored or maintained by the Company or any of the U.S. Subsidiaries or
any Plan established or maintained by any ERISA Affiliate which would have a
Material Adverse Effect. No civil or criminal action under ERISA Title I,
Subtitle B, Part 5 is pending or threatened against any fiduciary of any Plan
sponsored or maintained by the Company or any of the U.S. Subsidiaries. No Plan
nor any fiduciary of a Plan sponsored or maintained by the Company or any of the
U.S. Subsidiaries has been the direct or indirect subject of an audit,
investigation or examination by any governmental or quasi-governmental agency.
(f) Every Plan of the Company or any U.S. Subsidiary that is a
"group health plan" within the meaning of Code Section 4980B(g)(2) has been
administered in accordance with ERISA Title I, Subtitle B, Part 6 of ERISA and
has met the requirements of Section 4980B of the Code. Apart from benefits from
Pension Plans, benefits described under Code Section 4980B and health benefits
provided to retirees under welfare plans listed and categorized in Schedule
2.21(a) as plans providing retiree health benefits, neither the Company nor any
of the U.S. Subsidiaries has any obligation to provide benefits under any Plan
except to its active employees.
(g) Neither the Company, any of the U.S. Subsidiaries nor any
ERISA Affiliate has incurred any obligation to contribute to any "multiemployer
plan" within the meaning of ERISA Section 4001(a)(3).
(h) Neither the Company nor any of the U.S. Subsidiaries has
contracted with any "leased employee" within the meaning of Code Section 414.
Each person who performs services for the Company or any of the U.S.
Subsidiaries is and has been properly classified, to the extent reasonably
determinable under existing regulatory guidance at the time of such
classification, as a "common law employee," "leased employee" or "independent
contractor" for all purposes under U.S. federal income tax laws.
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(i) Except as set forth in Schedule 2.16, neither the Company
nor any of the Subsidiaries is a party to any employment, termination or
severance agreement, contract, arrangement or understanding with any employee or
former employee of the Company or any of the Subsidiaries that has an aggregate
future severance liability in excess of that required by Russian Law. The
purchase by Buyer of the Membership Interests will not result in any obligation
of the Company or any of the Subsidiaries to pay any employee of the Company or
any of the Subsidiaries severance pay or termination benefits so long as such
employee remains employed by the Company or any of the Subsidiaries after the
Closing.
(j) Except for any employee benefits that are required to be
provided pursuant to Russian law and the Western Tobacco Employee Benefits Trust
dated January 11, 1999 between the Company and Abacus Corporate Trustee Limited,
neither the Company nor any of the non-U.S. Subsidiaries has ever maintained,
sponsored, participated in, administered, contributed to or incurred any
obligation to or any liability under any employee benefit plan, program,
arrangement, agreement or fund for any employees of the Company or any of the
Subsidiaries who are not U.S. citizens and are not employed in the United
States.
2.22. EMPLOYEE AND LABOR MATTERS.
(a) Neither the Company nor any of the Subsidiaries is a party
to any collective bargaining agreement or other contract with or commitment to
any labor union or association representing any employee of the Company or any
of the Subsidiaries, nor does any labor union or collective bargaining agent
represent any employees of the Company or any of the Subsidiaries. No such
agreement, contract or other commitment has been requested by, or is under
discussion by management of the Company or any of the Subsidiaries (or any
management group or association of which the Company or any of the Subsidiaries
is a member or otherwise a participant) with, any group of employees or others,
nor are there any other current activities known to the Company, any of the
Subsidiaries or Seller to organize any employees of the Company or any of the
Subsidiaries into a collective bargaining unit. The Company and the Subsidiaries
are in compliance with all applicable employment, labor and similar laws, except
such instances of non-compliance as will not individually or in the aggregate
have a Material Adverse Effect. Except as disclosed in Schedule 2.22, there is,
and during the past two years there has been, no labor strike, dispute,
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slow-down or work stoppage pending, or, to the knowledge of Seller, threatened
against the Company or any of the Subsidiaries. Except as set forth in Schedule
2.22, there are no pending, or, to the knowledge of Seller, threatened, charges
against the Company or any of the Subsidiaries or any current or former
employee, officer or director of the Company or any of the Subsidiaries before
any federal, state or local or foreign agency responsible for the prevention of
unlawful employment practices.
(b) All foreign employees of the Company or any of the
Subsidiaries working in the Russian Federation or in Germany have a valid work
permit and are authorized for employment in such countries in accordance with
applicable law.
2.23. CAPITAL EXPENDITURES.
The aggregate contractual commitments of the Company and the
Subsidiaries for capital expenditures do not exceed $8,800,000 at May 31, 2000.
Except as set forth on Schedule 2.23 attached hereto, there are no such
commitments involving individual capital expenditure items in excess of
$100,000.
2.24. POWERS OF ATTORNEY.
Schedule 2.24 attached hereto contains a complete and accurate
list of all outstanding powers of attorney or similar authorizations given by
the Company or any of the Subsidiaries, other than powers of attorney granted to
employees for routine business tasks that are terminable at will.
2.25. CUSTOMER ACCOUNTS RECEIVABLE; INVENTORIES.
(a) All customer accounts receivable of the Company and each
of the Subsidiaries, whether reflected on the Balance Sheet or subsequently
created, have arisen from bona fide transactions in the ordinary course of
business and, to the knowledge of Seller are good and collectible at the
aggregate recorded amounts thereof, net of any applicable reserves for doubtful
accounts which are reflected on the Balance Sheet or accrued after the date of
the Balance Sheet in the ordinary course of business consistent with past
practice. The Company or the applicable Subsidiary has good and marketable title
to their respective accounts receivable, free and clear of all liens or other
encumbrances. During the two year period prior to the date hereof, neither the
Company nor any of the Subsidiaries has sold, pledged or otherwise disposed of
any of its accounts receivable in connection with any receivables-type financing
or factoring-type financing or similar transaction.
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(b) The inventories of the Company and each of the
Subsidiaries, whether reflected on the Balance Sheet or subsequently acquired,
are generally of a quality and quantity usable and/or salable at book value in
the ordinary course of business. The inventories of the Company and each of the
Subsidiaries are reflected on the Balance Sheet and in their respective books
and records in accordance with accounting principles generally accepted in the
United States of America applied on a basis consistent with past practice
(except as described in the notes to the Balance Sheet).
2.26. CUSTOMERS AND SUPPLIERS.
Schedule 2.26 accurately lists (a) the 10 largest customers of
the Company and each of the Subsidiaries for the 12 months ended March 31, 2000
and the percentage of the Company's and each Subsidiary's total sales
represented by sales to each such customer during such period, and (b) the 10
largest suppliers of the Company and each of the Subsidiaries for the 12 months
ended March 31, 2000 and the amount of purchases therefrom during such period.
2.27. NO U.S. ASSETS.
Immediately prior to the Closing, the Company and the
Subsidiaries will have no United States assets other than intangible assets
(E.G., intercompany receivables and ownership interests in the Subsidiaries).
2.28 NO MATERIAL MISSTATEMENT OR OMISSION.
No representation or warranty of Seller in this Agreement, the
Schedules delivered herewith or any certificate furnished by Seller in
connection herewith contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements contained herein or
therein, in light of the circumstances under which such statements are made, not
misleading. Seller has not knowingly withheld from Buyer any facts relating to
the Company or any of the Subsidiaries which materially adversely affect, or, so
far as Seller can reasonably now foresee, are likely to result in a Material
Adverse Effect.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller, as of the date
hereof and as of the Closing Date, as follows:
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3.01. ORGANIZATION AND AUTHORITY.
Buyer is a private limited company validly incorporated under
the laws of England in accordance with the Companies Act of 1985, with full
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
hereby.
3.02. DUE AUTHORIZATION; BINDING OBLIGATION.
The execution, delivery and performance by Buyer of this
Agreement, and the consummation of the transactions contemplated hereby, have
been duly authorized by all necessary corporate action on the part of Buyer.
This Agreement has been duly and validly executed and delivered by Buyer. This
Agreement constitutes the valid and binding obligations of Buyer, enforceable in
accordance with its terms, subject to the qualification, however, that the
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 availability of 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.
3.03. NON-CONTRAVENTION.
The execution, delivery and performance of this Agreement by
Buyer and the consummation of the transactions contemplated hereby do not and
will not, with or without the giving of notice or the lapse of time, or both,
violate, conflict with, result in the breach of or constitute a default under,
or give rise to any right of termination, cancellation or acceleration of any
obligation of any person or to the loss of any material right of any person
under or to increased, additional, accelerated or guaranteed rights or
entitlements of any person under, or result in the creation of any pledge, lien,
charge or other encumbrance upon any of the properties or assets of Buyer under,
any of the terms, conditions or provisions of (a) the memorandum and articles of
association of Buyer or (b) any covenant, agreement or understanding to which
Buyer is a party or by which its properties or assets are bound, or (c) any
order, ruling, decree, judgment, arbitration award, law, rule, permit,
regulation or stipulation to which Buyer is subject, other than, in the case of
clauses (b) and (c) above, any such items that, individually or in the
aggregate, would not have a material adverse effect on the ability of Buyer to
consummate the transactions contemplated hereby.
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3.04. REGULATORY APPROVALS.
Except as set forth in Schedule 3.04, Buyer is not required to
file, seek or obtain any governmental notice, filing, authorization, approval,
order or consent, or any bond in satisfaction of any governmental regulation, in
connection with the execution, delivery and performance of this Agreement by
Buyer.
3.05. INVESTMENT INTENT.
Buyer is acquiring the Membership Interests for its own
account for investment purposes only and not with a view to, or for sale or
resale in connection with, any public distribution thereof or with any present
intention of selling, distributing or otherwise disposing of the Membership
Interests.
3.06. ABSENCE OF FINANCIAL CONTINGENCY.
Buyer has sufficient financial means available to it to
consummate the purchase of the Membership Interests for the Purchase Price
described herein, without any financial contingency or third-party consent.
3.07. DISCLOSURE.
No representation or warranty of Buyer in this Agreement or
any certificate furnished by Buyer in connection herewith contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements of fact contained herein or therein, in light of the
circumstances under which such statements are made, not misleading.
ARTICLE IV
FURTHER AGREEMENTS AND ASSURANCES
4.01. GOVERNMENT FILINGS AND APPROVALS.
Buyer agrees promptly to submit an application with the
Antimonopoly Ministry seeking approval of the transactions contemplated
hereunder. Seller and Buyer further agree to use their best efforts to comply
promptly with all requests or requirements which applicable federal, state,
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regional, local or municipal law or governmental officials may impose on them
with respect to the transactions which are the subject of this Agreement. The
best efforts of Seller and Buyer shall include, but shall not be limited to, a
good faith response, in cooperation with each other, to all requests for
information, documentary or otherwise, by any governmental agency in connection
with obtaining approval from the Antimonopoly Ministry; PROVIDED, HOWEVER, that
neither Buyer nor any of its affiliates shall be required to divest any
operations, assets or business.
4.02. CORPORATE INVESTIGATION BY BUYER.
Seller shall give and shall cause the Company and the
Subsidiaries to give to Buyer and its attorneys, accountants and other
representatives, reasonable access during normal business hours to make or cause
to be made such investigation of the properties and business of the Company and
the Subsidiaries and of their financial and legal condition as Buyer deems
reasonably necessary or advisable to familiarize itself with such properties and
business, PROVIDED that such investigation shall not interfere unnecessarily
with normal operations. Seller agrees to furnish, and to cause the Company and
the Subsidiaries to furnish, such financial and operating data and other
information with respect to the business and properties of the Company and the
Subsidiaries as Buyer shall from time to time reasonably request.
4.03. CONFIDENTIALITY.
(a) Until the Closing Date, Buyer shall, and shall cause each
of its affiliates and each of the directors, officers, employees, agents,
advisors and representatives ("Representatives") of Buyer and its affiliates to,
(i) maintain in confidence any and all information concerning the Company and
the Subsidiaries provided to them by Seller, any of the Subsidiaries or the
Company or otherwise learned by them in the course of the negotiation of this
Agreement and the transactions contemplated hereby and by their investigation of
the Company and the Subsidiaries and (ii) disclose such information only to
persons, corporations or other entities which are under the control of Buyer or
an affiliate thereof, or to third parties serving as Buyer's advisors. If the
transactions contemplated by this Agreement shall not be consummated (whether
this Agreement is terminated pursuant to Article X or otherwise), such
confidence shall be maintained and the Buyer and its affiliates shall refrain
from using any and all such information for their own benefit or in competition
with or otherwise to the detriment of the Company or any of the Subsidiaries. It
is understood that Buyer shall have no liability hereunder for disclosure or use
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of any such information which (i) is in or, through no fault of Buyer, its
affiliates, the Representatives of Buyer or its affiliates, comes into the
public domain, or (ii) was known to Buyer prior to January 1, 2000, or (iii) was
acquired by Buyer from other sources, provided such sources are not, to Buyer's
knowledge, bound by any confidentiality agreement with Seller or the Company or
any of the Subsidiaries or any affiliate thereof or (iv) which Buyer is legally
required to disclose.
(b) If the transactions contemplated by this Agreement shall
be consummated, Seller shall, and shall cause each of its affiliates and each of
the Representatives of Seller and its affiliates to (i) maintain in confidence
any and all information concerning the Company and the Subsidiaries and (ii)
refrain from using any and all such information for their own benefit or in
competition with or otherwise to the detriment of Buyer or its affiliates, the
Company or any of the Subsidiaries. It is understood that Seller shall have no
liability hereunder for disclosure or use of any such information which (i) is
in or, through no fault of Seller, its affiliates, the Representatives of Seller
or its affiliates, comes into the public domain, or (ii) was acquired by Seller
from other sources after the Closing, provided such sources are not, to Seller's
knowledge, bound by any confidentiality agreement with Buyer, any affiliate of
Buyer or the Company or (iii) which Seller is legally required to disclose.
(c) If the transactions contemplated by this Agreement are not
consummated, Buyer will return to Seller (or certify to Seller that it has
destroyed) all copies of any data or information, including, but not limited to,
financial information, customer lists, business and corporate records,
worksheets, test reports, tax returns, lists, memoranda and other documents
prepared by or made available to Buyer in connection with such transactions.
4.04. SALES AND TRANSFER TAXES.
Seller shall pay half and Buyer shall pay half of all sales,
use, transfer and other related taxes, if any, arising from the sale by Seller
and the purchase by Buyer of the Membership Interests.
4.05. MAINTENANCE OF INSURANCE.
Until the Closing Date, Seller shall maintain or cause the
Company and the Subsidiaries to maintain in full force and effect all presently
existing insurance coverage or equivalent substitutes therefor with respect to
the Company and the Subsidiaries and their respective businesses, and will take
no action that will cause a cancellation, or a lapse or reduction in benefits
thereof. Seller shall take such action as may be necessary to assure the
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availability to the Company and the Subsidiaries on or after the Closing Date of
the full benefits of liability insurance purchased on an "occurrence basis" by
Seller and its affiliates (other than the Company or any of the Subsidiaries)
covering the Company and the Subsidiaries for the periods prior to the Closing
Date, subject to the terms, conditions and limitations in such policies, and
shall cooperate with Buyer in making any claims thereunder.
4.06. REASONABLE BEST EFFORTS.
Subject to the terms and conditions of this Agreement, each
party shall use reasonable best efforts to cause the Closing to occur.
4.07. ADDITIONAL DISCLOSURE.
(a) Seller shall promptly notify Buyer of, and furnish Buyer
any information it may reasonably request with respect to, the occurrence to the
knowledge of Seller of any event or condition or the existence to the knowledge
of Seller of any fact that would cause any of the conditions to Buyer's or
Seller's obligation to consummate the purchase and sale of the Membership
Interests not to be fulfilled.
(b) Buyer shall promptly notify Seller of, and furnish Seller
any information it may reasonably request with respect to, the occurrence to the
Buyer's knowledge of any event or condition or the existence to the knowledge of
Buyer of any fact that would cause any of the conditions to Seller's or Buyer's
obligation to consummate the purchase and sale of the Membership Interests not
to be fulfilled.
4.08. CERTAIN LICENSES AND PERMITS.
Seller covenants that all licenses, permits and authorizations
which are held in the name of Seller or any of its affiliates, or any of their
respective employees, officers, directors, stockholders, agents or otherwise on
behalf of the Company or any of the Subsidiaries shall be duly and validly
transferred to the Company or the applicable Subsidiary without consideration
prior to the Closing and that the warranties, representations, covenants and
conditions contained in this Agreement shall apply to the same as if held by the
Company or the applicable Subsidiary as of the date hereof.
4.09. RESIGNATIONS.
On the Closing Date, Seller shall cause to be delivered to
Buyer duly signed resignations (including waivers of any claims against the
Company or any of the Subsidiaries, as applicable), effective immediately after
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the Closing, of the members of the boards of directors and management of the
Company and the Subsidiaries as shall be specified in writing by Buyer and
delivered to Seller on or before the fifth day prior to the Closing and Seller
shall take all action as is necessary to accomplish the foregoing.
4.10. NON-COMPETITION; NON-INTERFERENCE; OTHER TRANSACTIONS.
(a) None of Seller nor any of its affiliates shall, for a
period of three years following the Closing Date, engage in or cause, directly
or indirectly, the manufacture or sale of tobacco products in any political
subdivision of the Russian Federation. Notwithstanding the foregoing, Seller or
any of its affiliates shall not be in violation of the terms of this Section
4.10 by reason of unauthorized third-party sales of Seller's or any of its
affiliates' tobacco products in any political subdivision of the Russian
Federation.
(b) None of Seller nor any of its affiliates shall, for a
period of three years following the Closing Date, interfere with the Company's
or any Subsidiary's relationships with, or endeavor to employ or entice away
from the Company or any Subsidiary, any person who at any time on or after March
31, 2000 was an employee of the Company or any of the Subsidiaries (other than
those individuals resigning as contemplated by Section 4.09), except that solely
with respect to the employee currently serving as the Director of Corporate and
Legal Affairs of LDJSC the restrictions on Seller and its affiliates contained
in this Section 4.10(b) will apply for a period of one year following the
Closing Date.
(c) None of Buyer nor any of its affiliates shall for a period
of three years following the Closing Date, interfere with Seller's or its
affiliates' relationships with, or endeavor to employ or entice away from Seller
or any of its affiliates, any person who at any time on or after March 31, 2000
was an employee of Seller or any of its affiliates involved in Seller's or its
affiliates' real estate development business in Moscow.
(d) In the event the Closing does not occur, for any reason
whatsoever, Buyer and its affiliates shall refrain for a period of three years
following the termination of this Agreement from interfering with Seller's, its
affiliates', the Company's or any Subsidiary's relationships with, or endeavor
to employ or entice away from Seller, any of its affiliates, the Company or any
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of the Subsidiaries, any person who at any time on or after March 31, 2000 was
an employee of (i) Seller's or its affiliates' real estate development business
in Moscow or (ii) Seller's, the Company's or any Subsidiary's tobacco business
in the Russian Federation.
(e) From the date of this Agreement to the Closing, none of
Seller, the Company or any Subsidiary nor any other affiliate of Seller shall,
nor shall they permit any of their respective officers, directors or other
representatives to, directly or indirectly, encourage, solicit, initiate or
participate in discussions or negotiations with, or provide any information or
assistance to, any person or group (other than Buyer and its representatives)
concerning any merger, sale of securities, sale of substantial assets or similar
transaction involving the Company or any of the Subsidiaries. Without limiting
the foregoing, it is understood that any violation of the restrictions set forth
in the preceding sentence by any officer, director or other representative of
Seller, the Company, any of the Subsidiaries or any other affiliate of Seller,
whether or not such person is purporting to act on behalf of Seller, the
Company, any of the Subsidiaries, any other affiliate of Seller or otherwise,
shall be deemed to be a breach of this Section 4.10 by Seller. In the event that
Seller, the Company, any of the Subsidiaries or any other affiliate of Seller
receives a proposal relating to any such transaction, Seller shall promptly
notify Buyer of such proposal.
4.11 SETTLEMENT OF LOANS, INTERCOMPANY ACCOUNTS, ETC.
As of the Closing Date, any indebtedness (including interest
accrued thereon and unpaid) and all other amounts owed by the Company or any
Subsidiary to Seller or any affiliate of Seller (other than the Company or any
Subsidiary) shall, with respect to the Company and any Subsidiary other than the
Russian Subsidiaries, be canceled and contributed to the capital of the Company
and such Subsidiary and, with respect to the Russian Subsidiaries, be canceled
or, at the option of Buyer upon reasonable prior notice to Seller, assigned to
the Company, and all agreements, contracts and other arrangements, if any,
between Seller or any affiliate of Seller (other than the Company or any
Subsidiary) and the Company or any Subsidiary shall be terminated, and the
Company and the Subsidiaries shall have no further obligation to make any
payments in respect thereof to Seller or any of its affiliates (other than the
Company and the Subsidiaries).
Without limiting the generality of the foregoing, on or prior
to the Closing Date, Seller shall cause to be terminated or canceled (i) the
Participating Loan Agreement, dated April 28, 1998, as amended, by and among
Western Realty Development LLC, the Company and Seller (the "Participating
Loan"), (ii) the Russian Loan (as defined in the Participating Loan) and (iii)
the working capital loan of $1,600,000 made by Seller to the Company in 1999,
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and all liabilities and obligations of the Company and the Subsidiaries under
such loans to be fully discharged and satisfied, all without cost or any
continuing liability to or obligation of the Company and the Subsidiaries, and
shall cause all pledges, security interests, liens and other encumbrances on the
ownership, membership or other equity interests in, and any assets of, the
Company and any of the Subsidiaries, created to secure the payment and
performance obligations under such loans, to be discharged, all without cost or
any continuing liability to or obligation of the Company and the Subsidiaries.
4.12. RELEASE OF ENCUMBRANCES SECURING OBLIGATIONS.
Prior to the Closing, Seller shall take, or cause to be taken,
all necessary action to terminate and release, without any continuing liability
of the Company or any of the Subsidiaries, all pledges, mortgages, security
interests, liens and other encumbrances on the ownership, membership or other
equity interests in, and any assets of, the Company and any of the Subsidiaries
that secure the payment and performance of obligations of the Seller or any of
Seller's affiliates (other than the Company and any of the Subsidiaries).
Without limiting the generality of the foregoing, in the event that U.S. Bank
Trust National Association (the "Collateral Agent") has not released at the
Closing the pledge of 50.1% of the Membership Interests that are pledged (the
"Pledged Membership Interests") pursuant to the Amended and Restated Pledge
Agreement dated as of February 9, 1999 (the "Pledge Agreement") between Seller,
the Collateral Agent and the other parties thereto, Seller shall deliver to
Buyer all consents, notices, waivers, releases and other documentation, in form
and substance satisfactory to Buyer, confirming that with the deposit in the
account of the Trustee and the Collateral Agent of the portion of the Purchase
Price to be paid to the Trustee and the Collateral Agent pursuant to Sections
1.01 and 1.03 hereof, the Secured Obligations (as defined in the Pledge
Agreement) will be satisfied in full and that the pledge of the Pledged
Membership Interests pursuant to the Pledge Agreement will, without any
condition other than the passage of time and irrespective of whether the funds
remain in the possession and control of the Collateral Agent or are subject to
any clawbacks, claims, liens, demands, attachments, injunctions or stays,
whether automatic or otherwise, of any kind or nature, whether in law or equity,
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be terminated and released automatically on the Redemption Date and that the
certificates for the Pledged Membership Interests will be delivered on such date
by the Collateral Agent to Buyer.
4.13. EXECUTION OF ADDITIONAL DOCUMENTS.
Without further consideration, at any time and from time to
time after the Closing, as and when requested by either party, each party shall
execute and deliver, or cause to be executed and delivered, to the other party
all such documents and instruments, and shall take, or cause to be taken, all
such other actions, as the first party may reasonably deem necessary or
desirable to evidence the consummation of the transactions contemplated by this
Agreement.
4.14. RECORD ACCESS AND RETENTION.
Buyer agrees to retain or cause to be retained all accounting,
business, litigation, financial and tax records (including, without limitation,
work papers) (i) relating to the Company, the Subsidiaries or their respective
businesses in existence on the Closing Date, or (ii) coming into existence after
the Closing Date which relate to the Company, the Subsidiaries or their
respective businesses prior to the Closing Date (the "Business Documents"), in
each case for a period of six years from the Closing Date (or, for records
relating to a Tax return, the later of the expiration of the relevant statute of
limitations or six years from the date such Tax return was filed). At any time
following eight years from the Closing Date, Buyer, at its election, may notify
Seller of its desire to transfer records to Seller and, if Seller does not
desire to receive such records, Buyer may destroy or otherwise dispose of such
undesired records. In addition, Buyer agrees that from and after the Closing
Date, it will not unreasonably refuse to provide Seller or its representatives,
after reasonable notice and during normal business hours, access to and copies
of such Business Documents as are necessary to properly prepare for, file,
prove, answer, prosecute and/or defend any financial statements, Tax return and
any other filing, audit, judicial or administrative proceeding relating to
Taxes, or any third party protest, claim, suit, inquiry or other proceeding by
any third party against Seller or any of its affiliates and, if requested by
Seller, will use reasonable efforts to abide with any record retention agreement
entered into with tax authorities.
4.15. REPLACEMENT GUARANTEES.
From and after the Closing, Buyer shall promptly, in
coordination with Seller, offer to substitute itself for Seller or any of its
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affiliates under any guarantee or equivalent obligation issued by Seller or any
of its affiliates to the extent relating solely to the business carried on by
the Company or any of the Subsidiaries (each a "Guarantee"). If the beneficiary
of any such Guarantee does not accept Buyer in substitution, Buyer shall cause
Xxxxxxxx Group Plc to offer to substitute itself for Seller or its affiliate, as
applicable, under such Guarantee. A list of Guarantees (to the knowledge of
Seller) is set forth in Schedule 4.15 attached hereto. Buyer's obligations under
this Section 4.15 are irrespective of whether or not all Guarantees are listed
in Schedule 4.15. In any event, if the Closing occurs, Buyer shall indemnify and
hold harmless Seller in accordance with the indemnity obligations set forth in
Section 9.03 with respect to such Guarantees.
4.16. OPTION TO ACQUIRE ADJACENT LAND.
Seller hereby grants to Buyer the option, exercisable prior to
the Closing Date, to require that Seller cause LDTJSC to enter into an agreement
to purchase as soon as practicable after the Closing Date, but in any event
prior to December 31, 2000, for $1,500,000 all of the right, title and interest
of OAO VNIIkholodmash and its affiliates to the land lease rights relating to
the land plot located at 00/0 Xxxxxxxxxxx Xxxxxx, Xxxxxx, Russian Federation,
adjacent to the site of LDTJSC's new cigarette facility, such agreement to
provide for the sale of such rights on an "as is" basis, without additional
representations, warranties or indemnities by Seller. In the event that such
option is exercised, the Purchase Price shall be reduced by $1,500,000.
4.17. COOPERATION; FURTHER ASSURANCES.
The parties hereto shall without further consideration
reasonably cooperate with each other, and shall cause their respective
affiliates, officers, employees, agents, accountants and representatives to
reasonably cooperate with each other in connection with the preparation of tax
returns and conducting any tax audit or other proceedings in respect of Taxes.
In the event of any tax audit, tax hearing or other such tax proceeding
involving either the Company or any of the Subsidiaries for which either Buyer
or Seller may be liable under this Agreement, each party shall provide
reasonable notification to the other party prior to the commencement of such
event. During any such tax proceeding, each party agrees to reasonably consult
and take into account the views (in a manner consistent with positions taken
prior to April 1, 2000) of the other party. Each party shall also have the right
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to request that a representative be present during such tax audit, tax hearing
or other such tax proceeding. At Seller's request, Buyer agrees to execute a
Power of Attorney authorizing Seller's representative to argue at any tax
proceeding for any Taxes arising in any period for which Seller may be liable
under this Agreement.
ARTICLE V
CONDUCT OF BUSINESS
5.01. CONDUCT OF BUSINESS.
Seller agrees to cause the Company and each of the
Subsidiaries, prior to the Closing Date, (a) to conduct its business in the
ordinary course in accordance with present policies and as heretofore conducted,
(b) to preserve its business organization intact, (c) consistent with efficient
and economical management, to retain the services of its present officers,
employees and agents to the end that it may retain the goodwill of the Company
and each of the Subsidiaries and preserve their respective business
relationships with customers, suppliers and others, and (d) to maintain all
existing business permits, licenses, qualifications and authorizations and to
comply in all material respects with all of the terms and conditions thereof.
Seller shall not, and shall not permit the Company or any of the Subsidiaries
to, take any action that would, or that could reasonably be expected to, result
in any of the conditions to the purchase and sale of the Membership Interests
set forth in Article VII not being satisfied. From and after the date hereof,
and prior to the Closing Date, Seller will prevent the Company and each of the
Subsidiaries, without the prior written approval of Buyer (which except for
clauses (ii), (v) and (xiv) below shall not be unreasonably withheld or
delayed), from:
(i) except as disclosed in Schedule 2.07 attached hereto,
changing or altering the Company's or any Subsidiary's corporate
structure or amending its charter documents or by-laws or other
governing documents;
(ii) except for the disposition of LDJSC's ownership
interests in BrookeMil Ltd. and Commercial Bank Khleb Rossii (Bread of
Russia), issuing or selling any shares of its ownership, membership or
equity interests, capital stock or any other securities or issuing any
securities convertible into or exchangeable for, or options, warrants
to purchase, scrip, rights to subscribe for, calls or commitments of
any character whatsoever relating to, or entering into any contract,
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understanding or arrangement with respect to the issuance of, any
ownership, membership or equity interests, shares of its capital stock
or any of its other securities, or entering into any arrangement or
contract with respect to the purchase, redemption or voting of its
ownership, membership or equity interests or shares of capital stock,
or adjusting, splitting, reacquiring, redeeming, combining or
reclassifying any of its securities, or making any other changes in its
capital structure;
(iii) incurring (contingently or otherwise) any indebtedness
for borrowed money, other than in the ordinary course of business from
existing credit lines (and routine renewals thereof) extended by
parties other than Seller or any of its affiliates;
(iv) incurring (contingently or otherwise) any other
obligation or liability except trade or other obligations or
liabilities to parties other than Seller or any of its affiliates in
the ordinary course of business and, with respect to capital
expenditures, amounts in increments of $500,000 in excess of
$8,800,000, each of which will require a separate consent;
(v) declaring, setting aside or paying any dividends (in
cash or in kind) on, or making any distributions in respect of, the
outstanding ownership, membership or equity interests in or other
securities of the Company or any Subsidiary or making any other payment
to the Seller or any of its affiliates (other than to the Company or
any of the Subsidiaries);
(vi) entering into, amending or affirmatively renewing or
terminating any contract, commitment, lease (whether of real or
personal property) or other agreement, except in the ordinary course of
business and, with respect to capital expenditures, amounts in
increments of $500,000 in excess of $8,800,000, each of which will
require a separate consent;
(vii) guaranteeing or entering into any obligation to
guarantee the obligation of any person, firm, corporation or other
entity (other than endorsements for the purpose of collection in the
ordinary course of business);
(viii) mortgaging, pledging or subjecting to any lien, charge
or other encumbrance any of the assets, properties or business of the
Company or any of the Subsidiaries which would not be a Permitted Lien
if existing on the date hereof;
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(ix) selling or otherwise transferring or leasing any
properties or assets or canceling any debt or claim or waiving any
right, or purchasing or otherwise acquiring or leasing any properties
or assets, in each case except for transactions in the ordinary course
of business with parties other than Seller or any of its affiliates
and, with respect to capital expenditures, amounts in increments of
$500,000 in excess of $8,800,000, each of which will require a separate
consent;
(x) permitting to lapse any right with respect to any
Intellectual Property or other intangible asset used in the conduct of
the business of the Company or any of the Subsidiaries;
(xi) granting any increase in wages or salary rates or in
employment, retirement, severance, termination or other benefits or
paying any bonus or making any loan to any officer, director or
employee, other than increases or bonuses in the ordinary course
consistent with past practice or required by any agreement in effect as
of the date of this Agreement and which is disclosed in any of the
Schedules hereto, or entering into any employment contract with any
person (other than non-management factory workers in the ordinary
course of business), or adopting any bonus, profit sharing,
compensation, stock option, pension, retirement, deferred compensation,
employment or other employee benefit plan, agreement, trust, plan, fund
or other arrangement for the benefit or welfare of any employee of the
Company or any of the Subsidiaries;
(xii) accelerating the collection of accounts receivable,
delaying the payment of accounts payable or deferring maintenance and
other expenses, reducing inventories, or otherwise increasing cash on
hand, in a manner inconsistent with past practice or not in the
ordinary course of business;
(xiii) repaying any indebtedness for borrowed money, except (a)
as required by existing debt instruments listed on Schedule 2.16 or (b)
as contemplated by Section 4.11, provided that no funds or assets of
the Company or of the Subsidiaries are used for such purpose;
(xiv) making any material tax election, settling or
compromising any liability for Taxes, preparing and filing tax returns
or declarations other than on a basis consistent with the Company's and
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the Subsidiaries' past practices or, other than in the ordinary course
of business, engaging in any transaction or operating the business in a
manner that would directly or indirectly result in any liability for
Taxes of the Company or any of the Subsidiaries;
(xv) making any changes in the type or amount of the
insurance coverages of the Company or any of the Subsidiaries;
(xvi) making any change in its accounting methods or
practices; or
(xvii) agreeing, in writing or otherwise, to do any of the
foregoing.
ARTICLE VI
CONDITIONS TO BUYER'S OBLIGATIONS
The obligations of Buyer hereunder are subject to the
satisfaction, or waiver in writing by Buyer, on or prior to the Closing Date, of
the following conditions:
6.01. ACCURACY OF REPRESENTATIONS AND WARRANTIES.
(a) The representations and warranties of Seller made in this
Agreement qualified as to materiality shall be true and correct, and those not
so qualified shall be true and correct in all material respects as of the date
hereof and (except to the extent such representations and warranties expressly
relate to a prior date) as of the date of the Closing as though made as of such
date, and Seller shall have delivered to Buyer a certificate to that effect,
dated the Closing Date, and signed by the President or a Vice President of
Seller.
(b) For purposes of satisfying the condition described in
6.01(a) to Buyer's obligations hereunder only and not for any other purpose
(including, but not limited to, quantifying any materiality standard of any
provision of this Agreement), such condition shall be fully satisfied if on the
Closing Date there shall exist no basis in fact to support a claim or claims for
Losses under Section 9.01 as a result of alleged breaches of representations and
warranties of Seller in this Agreement which, individually or in the aggregate,
exceed $10,000,000 (without taking into account the $7,000,000 threshold amount
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referred to in Section 9.01). If the Closing occurs, Buyer shall not be deemed
to have waived its right to pursue any such claims after the Closing pursuant to
Section 9.01 irrespective of Buyer's knowledge thereof as of the Closing Date.
6.02. PERFORMANCE OF COVENANTS.
Each and all of the covenants and agreements of Seller to be
performed or complied with prior to or on the Closing Date shall have been duly
performed or complied with by Seller, and Seller shall have delivered to Buyer a
certificate to that effect, dated the Closing Date, and signed by the President
or a Vice President of Seller.
6.03. GOVERNMENT APPROVALS.
Approval from the Antimonopoly Ministry of the transactions
contemplated hereunder shall have been obtained and such approval shall be in
full force and effect as of the Closing Date.
6.04. RUSSIAN GOVERNMENT APPROVALS.
LDJSC and/or LDTJSC shall have obtained all necessary Russian
government approvals, in form and substance reasonably satisfactory to Buyer, to
produce up to 45 billion cigarettes annually or such other language acceptable
to Buyer, including without limitation such approvals as may be required from
the Center of Moscow Sanitary and Epidemiological Control and the Moscow
Environmental Protection Committee.
6.05. NO LEGAL PROCEEDINGS.
No injunction shall be in effect prohibiting or restraining
the transactions contemplated by this Agreement and no investigation, action or
proceeding by or before any court or other governmental authority shall have
been commenced or threatened by any governmental entity to restrain or challenge
the transactions contemplated by this Agreement or seeking to obtain material
damages from Buyer or its affiliates or the Company or the Subsidiaries if such
transactions are consummated.
6.06. MEMBERSHIP INTEREST CERTIFICATES.
Seller shall have delivered to Buyer certificates representing
the Membership Interests, duly endorsed in blank, or accompanied by appropriate
stock powers in proper form for transfer or, in the event that the Collateral
Agent has not released at the Closing the pledge of the Pledged Membership
Interests, Seller shall have delivered to Buyer certificates representing the
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Membership Interests (other than the Pledged Membership Interests), duly
endorsed in blank, or accompanied by appropriate stock powers in proper form for
transfer, and duly executed stock powers for the Pledged Membership Interests.
6.07. OPINION OF U.S. COUNSEL.
Buyer shall have received the opinion of Coudert Brothers,
U.S. counsel for Seller, substantially in the form of Exhibit A attached hereto.
6.08. OPINION OF SPECIAL RUSSIAN COUNSEL.
Buyer shall have received the opinion of Freshfields, Special
Russian counsel for Seller, substantially in the form of Exhibit B attached
hereto.
6.09. INTERCOMPANY ACCOUNTS.
Effective immediately prior to the Closing, all amounts then
payable by Seller or any affiliate of Seller to the Company or any of the
Subsidiaries shall have been repaid in full.
6.10. REQUIRED ACTION IN RESPECT OF SELLER OBLIGATIONS.
Seller shall have taken and caused to be taken all action
required under Sections 4.11 and 4.12.
ARTICLE VII
CONDITIONS TO SELLER'S OBLIGATIONS
The obligations of Seller hereunder are subject to the
satisfaction, or waiver in writing by Seller, on or prior to the Closing Date of
the following conditions:
7.01. ACCURACY OF REPRESENTATIONS AND WARRANTIES.
The representations and warranties of Buyer made in this
Agreement qualified as to materiality shall be true and correct, and those not
so qualified shall be true and correct in all material respects as of the date
hereof and (except to the extent such representations and warranties expressly
relate to a prior date) as of the date of the Closing as though made as of such
date, and Buyer shall have delivered to Seller a certificate to that effect,
dated the Closing Date, and signed by a Director of Buyer.
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7.02. PERFORMANCE OF COVENANTS.
Each and all of the covenants and agreements of Buyer to be
performed or complied with prior to or on the Closing Date shall have been duly
performed or complied with by Buyer, and Buyer shall have delivered to Seller a
certificate to that effect, dated the Closing Date, and signed by a Director of
Buyer.
7.03. GOVERNMENT APPROVALS.
Approval from the Antimonopoly Ministry of the transactions
contemplated hereunder shall have been obtained and such approval shall be in
full force and effect as of the Closing Date.
7.04. NO LEGAL PROCEEDINGS.
No injunction shall be in effect prohibiting or restraining
the transactions contemplated by this Agreement and no suit, action or
proceeding by or before any court or other governmental authority shall have
been commenced or threatened by any governmental entity to restrain or challenge
the transactions contemplated by this Agreement or seeking to obtain material
damages from Seller if such transactions are consummated.
7.05. PAYMENT OF PURCHASE PRICE.
Buyer shall have delivered to Seller, the Trustee and, if
permitted hereunder, the Collateral Agent and Seller, Trustee and the Collateral
Agent shall have received, the Purchase Price payable at the Closing pursuant to
Section 1.01 above.
7.06. OPINION OF U.S. COUNSEL.
Seller shall have received the opinion of Xxxxxxxxxx & Xxxxx
LLP, U.S. counsel for Buyer, substantially in the form of Exhibit C attached
hereto.
7.07. OPINION OF U.K. COUNSEL.
Seller shall have received the opinion of Xxxxxxx and Xxxxxxx,
U.K. counsel for Buyer, substantially in the form of Exhibit D attached hereto.
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ARTICLE VIII
SURVIVAL
8.01. SURVIVAL.
The representations, warranties and covenants set forth in
this Agreement shall survive the Closing Date. All representations and
warranties contained in this Agreement (including the Schedules hereto) or in
any certificate delivered with respect thereto will be deemed to be
representations and warranties hereunder and, except for those representations
and warranties contained in Sections 2.01, 2.02, 2.05, 2.06, 2.07, 2.18, 3.01,
3.02, 3.05 and 11.06 shall remain in full force and effect for two years
following the Closing Date; and the representations and warranties in Sections
2.01, 2.02, 2.05, 2.06, 2.07, 2.18, 3.01, 3.02, 3.05 and 11.06 shall remain in
full force and effect until the expiration of any applicable statute of
limitations.
ARTICLE IX
INDEMNIFICATION
9.01. INDEMNIFICATION BY SELLER.
Seller will indemnify, defend, save and hold Buyer and any of
its affiliates (including the Company and the Subsidiaries) and any of its and
their respective directors, officers, employees or agents ("Buyer's Affiliates")
harmless from and against any and all damage, liability, loss, penalty, expense,
assessment, judgment or deficiency of any nature whatsoever (including, without
limitation, reasonable attorneys' fees and expenses, consultants' and
investigators' fees and expenses and other costs and expenses incident to any
suit, action or proceeding) (together, "Losses") incurred or sustained by Buyer
or any of Buyer's Affiliates which shall arise out of or result from (a) any
breach of any representation and warranty given or made by Seller herein or in
any certificate delivered with respect thereto (except for any breach of any
representation and warranty given or made by Seller in Sections 2.01, 2.02,
2.05, 2.06, 2.07, 2.11(c) and 11.06 or in any certificate delivered with respect
thereto) if and only to the extent Losses incurred as a result of such breach
and all other breaches exceed $7,000,000 in the aggregate, (b) any breach of any
representation and warranty given or made by Seller in Sections 2.01, 2.02,
2.05, 2.06, 2.07, 2.11(c) and 11.06 or any certificate delivered with respect
thereto, or (c) the noncompliance with or nonperformance of any agreement,
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obligation or covenant of Seller under this Agreement, PROVIDED, HOWEVER, that
in the case of breaches of representations and warranties in Section 2.18 or the
covenant in Section 5.01(xiv), the amount of any indemnification for Losses
otherwise indemnifiable hereunder shall be reduced to the extent that the
aggregate reserves for Taxes reflected on the Balance Sheet exceed the aggregate
liability for Taxes for periods through the date thereof not paid prior thereto
(which liability shall be reduced by refunds of Taxes with respect to such
periods received after the date thereof and not reflected on such Balance Sheet
and shall be reduced (or increased) to reflect the present value of any future
tax savings (or expense) resulting from the deferral or acceleration of
deductions or income) and, PROVIDED, FURTHER, that any liabilities for Taxes of
the Company or any of the Subsidiaries for any tax periods including but not
ending on March 31, 2000 shall be determined on a closing-of-the books basis,
except for periodic Taxes (such as real property Taxes) which shall be
determined on a daily pro rata basis, in each case using the statutory tax rates
in effect during the three month period ending March 31, 2000. Any claim for
indemnification hereunder must be made by notice to Seller within the applicable
time period specified in Section 8.01.
9.02. INDEMNIFICATION BY BUYER.
Buyer will indemnify, defend, save and hold Seller and any of
its affiliates and any of its or their respective directors, officers, employees
or agents ("Seller's Affiliates") harmless from and against any and all Losses
incurred or sustained by Seller or any of Seller's Affiliates which shall arise
out of or result from (a) any breach of any representation and warranty given or
made by Buyer herein or in any certificate delivered with respect thereto or (b)
the noncompliance with or nonperformance of any agreement, obligation or
covenant of Buyer under this Agreement. Any claim for indemnification hereunder
must be made by notice to Buyer within the applicable time period specified in
Section 8.01.
9.03. THIRD-PARTY CLAIMS.
Reasonably promptly after service of notice of any claim or of
process by any third person in any matter in respect of which indemnity may be
sought from the other party pursuant to this Agreement, the party in receipt of
the claim (the "Indemnified Party") shall notify the other party (the
"Indemnifying Party") of the receipt thereof. Failure to give such notice
reasonably promptly shall not relieve the Indemnifying Party of its obligation
hereunder; PROVIDED, HOWEVER, that if such failure to give notice reasonably
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promptly adversely affects the ability of the Indemnifying Party to defend such
claims or materially increases the amount of indemnification which the
Indemnifying Party is obligated to pay hereunder, the amount of indemnification
to which the Indemnified Party will be entitled to receive shall be reduced to
an amount which the Indemnified Party would have been entitled to receive had
such notice been timely given. Unless the Indemnifying Party shall notify the
Indemnified Party that it elects to assume the defense of any such claim or
process or settlement thereof (such notice to be given as promptly as reasonably
possible in view of the necessity to arrange for such defense (and in no event
later than 10 days following the aforesaid notice) and to be accompanied by an
acknowledgment of the Indemnifying Party's obligation to indemnify the
Indemnified Party in respect of such matter), the Indemnified Party shall assume
the defense of any such claim or process or settlement thereof. Such defense
shall be conducted expeditiously (but with due regard for obtaining the most
favorable outcome reasonably likely under the circumstances, taking into account
costs and expenditures) and the Indemnifying Party or Indemnified Party, as the
case may be, shall be advised promptly of all developments. If the Indemnifying
Party assumes the defense, the Indemnified Party will have the right to
participate fully in any such action or proceeding and to retain its own
counsel, but the fees and expenses of such counsel will be at its own expense
unless (i) the Indemnifying Party shall have agreed to the retention of such
counsel for both the Indemnifying and Indemnified Parties or (ii) the named
parties to any such suit, action or proceeding (including any impleaded parties)
include both the Indemnifying Party and the Indemnified Party and representation
of both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. No settlement of a claim by either
party shall be made without the prior written consent of the other party, which
consent shall not be unreasonably withheld or delayed. Notwithstanding the
foregoing, the Indemnifying Party shall not be entitled to assume the defense of
any such action or proceeding (and shall be liable for the fees and expenses of
counsel incurred by the Indemnified Party in defending such matter) to the
extent that the action or proceeding seeks an order, injunction or other
equitable relief or relief for other than money damages against the Indemnified
Party subject to the same requirements referred to above for the Indemnifying
Party when it is entitled to assume such defense and the Indemnified Party shall
have the right to settle such matter without the prior written consent of the
Indemnifying Party unless such settlement involves the payment of money, in
which event the required prior written consent shall not be unreasonably
withheld or delayed.
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9.04. PROCEDURES FOR ENVIRONMENTAL CLAIMS.
In addition to, and not by way of limitation of, the
procedures set forth in Section 9.03 (which shall be deemed superseded to the
extent inconsistent herewith) regarding indemnification for third party claims,
Buyer shall provide notice to and consult with Seller before incurring costs for
which indemnification for breach of any representations and warranties of Seller
under Section 2.20 is provided hereunder, except for reasonable costs of
investigating any such matter. Such notice shall include a report from an
environmental consulting firm briefly describing the condition which is the
subject of Buyer's notice and an evaluation of and recommendation on the scope
of any further investigation, clean-up or other remediation proposed with
respect to the condition. Within 30 days after Buyer's notice, Buyer will meet
with Seller to discuss the proposed actions, PROVIDED, HOWEVER, that no such
notice shall preclude Buyer from proposing further actions, and PROVIDED,
further, that it shall not be a condition to any claim for Losses under Section
9.01 for breach of any representations and warranties of Seller under Section
2.20 that Seller has consented to such actions. Any claim for indemnification
under Section 9.01 for breach of any representations and warranties of Seller
under Section 2.20 must be made by notice to Seller within the applicable time
period specified in Section 8.01.
9.05. INDEMNIFICATION AS SOLE REMEDY AFTER CLOSING.
After the Closing, the sole liability of Seller to Buyer, and
Buyer to Seller, shall be limited to indemnification pursuant to this Article IX
absent fraud or willful misrepresentation.
ARTICLE X
TERMINATION
10.01. MUTUAL AGREEMENT.
This Agreement may be terminated at any time prior to the
Closing by mutual written agreement of Buyer and Seller.
10.02. NONCOMPLIANCE OR NONPERFORMANCE.
This Agreement may be terminated by written notice by Buyer to
Seller or by Seller to Buyer, without prejudice to the terminating party's
rights to claim damages or other relief, if (a)(i) any of the conditions of this
Agreement to be complied with at or before the Closing by the party to whom
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notice is addressed shall have become incapable of fulfillment prior to October
31, 2000, and (ii) such noncompliance shall not have been waived by the party
giving notice of termination or (b) the Closing shall not have occurred on or
prior to October 31, 2000.
ARTICLE XI
MISCELLANEOUS
11.01. INTEGRATION; AMENDMENT.
This Agreement (including the Schedules and Exhibits attached
hereto) constitutes the entire agreement and understanding of the parties
relating to the subject matter hereof and supersedes all prior agreements and
understandings, whether oral or written, relating to the subject matter hereof.
The terms of this Agreement cannot be changed, modified, released or discharged
orally.
11.02. ASSIGNMENT.
This Agreement shall be binding upon, and inure to the benefit
of, the parties hereto and their respective successors and permitted assigns.
This Agreement may not be assigned by Buyer without the prior written consent of
Seller or by Seller without the prior written consent of Buyer; PROVIDED,
HOWEVER, that this Agreement may be assigned by Buyer to any corporate parent or
any directly or indirectly wholly-owned subsidiary of such corporate parent,
PROVIDED that Buyer shall continue to be bound by this Agreement after such
assignment.
11.03. COUNTERPARTS.
This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
11.04. HEADINGS.
The headings in this Agreement are included for convenience of
reference only and shall not in any way affect the meaning or interpretation of
this Agreement.
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11.05. WAIVER; REQUIREMENT OF WRITING.
This Agreement cannot be changed or any performance, term or
condition waived in whole or in part except by a writing signed by the party
against whom enforcement of the change or waiver is sought. Any term or
condition of this Agreement may be waived at any time by the party hereto
entitled to the benefit thereof. No delay or failure on the part of any party in
exercising any rights hereunder, and no partial or single exercise thereof, will
constitute a waiver of such rights or of any other rights hereunder.
11.06. FINDER'S FEES; BROKERS.
Seller and Buyer represent and warrant that there are no
claims (or any basis for any claims) for brokerage commissions, finder's fees or
like payments in connection with this Agreement or the transactions contemplated
hereby resulting from any action taken by it or on its behalf, except that (a)
Xxxxxxx and X. Xxxxxxxxxxxx, Inc. has been retained by Seller and Seller shall
be responsible for any fees and expenses that may be due to such company, and
(b) Dresdner Kleinwort Xxxxxx has been retained by Buyer and Buyer shall be
responsible for any fees and expenses that may be due to such company. Seller
shall indemnify and hold Buyer harmless and Buyer shall indemnify and hold
Seller harmless with respect to their respective representations and warranties
set forth in this Section 11.06.
11.07. EXPENSES.
Each of the parties hereto shall pay, without right of
reimbursement from the other party or from the Company or any of the
Subsidiaries, all the costs incurred by it incident to the preparation,
execution and delivery of this Agreement and the performance of its obligations
hereunder, whether or not the transactions contemplated by this Agreement shall
be consummated.
11.08. NOTICES.
Any notice, request, consent, waiver or other communication
required or permitted hereunder shall be effective only if it is in writing and
personally delivered or sent by telecopy or sent, postage prepaid, by registered
or certified mail, return receipt requested, or by recognized overnight courier
service, postage or other charges prepaid, and shall be deemed given when so
delivered by hand or telecopied, or when received if sent by mail or by courier,
as follows:
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If to Seller:
Brooke (Overseas) Ltd.
c/o Vector Group Ltd.
000 XX Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxx, Xxxxxxx 00000
Xxxxxx Xxxxxx of America
Fax: (000) 000-0000
Attention: Xxxxxx Xxxxxxxxx
Xxxxxxx Xxxxxx
with a copy to:
Coudert Brothers
1114 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000
Xxxxxx Xxxxxx of America
Fax: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, III
If to Buyer:
Xxxxxxxx Overseas (Holdings) Limited
Members Hill
Brooklands Road
Weybridge
Surrey KT 13OQU
United Kingdom
Fax: 000 00 000 000
Attention: Company Secretary and
Xxxxxxxxxxx X. Xxxxxxx
with a copy to:
Xxxxxxxxxx & Xxxxx LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Xxxxxx Xxxxxx of America
Fax: (000) 000-0000
Attention: A. Xxxxxx Xxxxx
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and with a copy to:
Xxxxxxx & Xxxxxxx
00 Xxxxxx Xxxxxx
Xxxxxx XX0X 0XX
Xxxxxx Xxxxxxx
Fax: 000 0000 0000
Attention: Xxx Xxxxxxxxx
or such other person or address as the addressee may have specified in a notice
duly given to the sender as provided herein.
11.09. APPLICABLE LAW.
This Agreement will be construed and interpreted in accordance
with and governed by the internal laws of the State of New York without regard
to conflicts of laws principles.
11.10. CONSENT TO JURISDICTION.
Each of the parties irrevocably submits to the jurisdiction of
(a) the Supreme Court of the State of New York, New York County, and (b) the
United States District Court for the Southern District of New York, for the
purposes of any suit, action or other proceeding arising out of this Agreement
or any transaction contemplated hereby. Each of the parties agrees to commence
any action, suit or proceeding relating hereto either in the United States
District Court for the Southern District of New York or if such suit, action or
other proceeding may not be brought in such court for jurisdictional reasons, in
the Supreme Court of the State of New York, New York County. Each of the parties
further agrees that service of any process, summons, notice or document by hand
delivery or U.S. or foreign registered mail to such party's respective address
set forth in Section 11.08 hereof shall be effective service of process for any
action, suit or proceeding brought against such party in any such court. Each of
the parties irrevocably and unconditionally waives any objection to the laying
of venue of any action, suit or proceeding arising out of this Agreement or the
transactions contemplated hereby in (i) the Supreme Court of the State of New
York, New York County, or (ii) the United States District Court for the Southern
District of New York, and hereby further irrevocably and unconditionally waives
and agrees not to plead or claim in any such court that any such action, suit or
proceeding brought in any such court has been brought in an inconvenient forum.
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11.11. PUBLIC ANNOUNCEMENTS.
None of the parties shall make any press release or public
announcement with respect to the transactions contemplated hereby without (a) in
the case of Buyer, obtaining the prior written approval of Seller and (b) in the
case of Seller, obtaining the prior written approval of Buyer, except as may be
required by law or regulations of securities exchanges. Approvals under this
Section 11.11 shall not be unreasonably withheld or delayed.
11.12. NO THIRD-PARTY BENEFICIARIES.
Nothing in this Agreement will be construed as giving any
person, firm, corporation or other entity, other than the parties hereto, their
successors and permitted assigns, any right, remedy or claim under or in respect
of this Agreement or any provision hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers thereunto duly
authorized as of the date first above written.
XXXXXXXX OVERSEAS (HOLDINGS) LIMITED
By /s/ XXXXX X. XXXXXXX
--------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Director
BROOKE (OVERSEAS) LTD.
By /s/ XXXXXXX X. XXXXXX
--------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Executive Vice-President
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