Exhibit (5)
INDEMNIFICATION AGREEMENT
December 16, 1998
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The parties to this agreement are Mafco Holdings, Inc. ("Mafco Holdings"),
Mafco Consolidated Group Inc. ("Mafco"), Societe Nationale d'Exploitation
Industrielle des Tabacs et Allumettes, a joint stock company registered in the
Commercial Register of Paris ("Parent"), Dorsay Acquisition Corp., a Delaware
corporation ("Purchaser") and Consolidated Cigar Holdings Inc., a Delaware
corporation ("Company").
Mafco, Parent and Purchaser are parties to a Tender and Voting Agreement
dated as of December 16, 1998, which was entered into in connection with the
Agreement and Plan of Merger dated as of December 16, 1998 among Parent,
Purchaser and the Company (the "Merger Agreement"). This Agreement is the
Indemnification Agreement referred to in the Tender and Voting Agreement.
The parties agree as follows:
1. Indemnification. Mafco Holdings and Mafco shall jointly and severally
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indemnify, save harmless and defend Parent, Purchaser and the Company and each
of their stockholders, affiliates, directors, officers, agents and
representatives, from and against any and all losses, liabilities, fines,
judgments, claims, damages, penalties, obligations, payments, actions or causes
of action, liens, costs and expenses (including reasonable attorney's fees)
incurred by any of them by reason of, or arising out of, (a) any liability for
income and franchise taxes arising out of the inclusion of the Company and any
Subsidiaries in any consolidated federal income tax return, or any consolidated,
combined or unitary state or local tax return, of Mafco Holdings or Mafco,
except for any such liability as is directly attributable to the operations of
the Company and any Subsidiaries, and (b) any liability or obligation of an
entity, whether or not incorporated, which is or was part of a controlled group
or under common control with the Company or otherwise treated as a "single
employer" with the Company within the meaning of Section 414(b), (c), (m) or (o)
of the Internal Revenue Code of 1986, as amended (the "Code") or under Section
4001 of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") (other than the Company or any Subsidiary of the Company as defined in
Section 3.1 of the Merger Agreement), with respect to any "employee benefit
plan" (as defined in Section 3(3) of ERISA, but which is not a Benefit Plan as
defined in Section 3.8(a) of the Merger Agreement) established, maintained,
sponsored or contributed to by such entity, including, but not limited to (i)
liabilities for complete and partial withdrawals under any "multiemployer plan"
(as defined in Section 3(37) of ERISA) pursuant to Section 4203 or 4205 of
ERISA, respectively; (ii) liabilities to the Pension Benefit Guaranty
Corporation (including, without limitation, liabilities for premiums and
terminations); (iii) liabilities under Section 4980B of the Code or Part 6 of
Subtitle B of Title I of ERISA; and (iv) liabilities arising under Section 412
of the Code or Section 302(a)(2) of ERISA.
2. Proceedings. If there is an audit, examination or administrative or
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judicial proceeding (a "Tax Proceeding") relating to any liability for taxes as
to which the Company and any Subsidiaries were included in a consolidated
federal income tax return or a consolidated, combined or unitary state or local
tax return of Mafco Holdings or Mafco, Mafco Holdings and Mafco will control the
audit or other proceedings; provided, however, the Company shall be entitled to
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participate in that portion of the Tax Proceeding, if any, relating solely to
items for which the Company is liable pursuant to Section 1 of this Agreement
("Company Items"). In the event that either Mafco Holdings or Mafco believes
that a position in the Tax Proceeding that the Company proposes to take with
respect to a Company Item is unreasonable, the parties will in good faith
attempt to negotiate a prompt settlement of the disagreement, and if the parties
are unable to negotiate a resolution of the disagreement within 15 days, the
dispute will be submitted to the New York office of a firm of independent
accountants of nationally recognized standing reasonably satisfactory to Mafco
and the Company (or, if Mafco and the Company do not agree on such a firm, then
a firm chosen by the Arbitration and Mediation Committee of the New York Society
of Certified Public Accountants) (the "Tax Dispute Accountants") for a
determination as to whether the position is unreasonable, and, if so, what is a
reasonable position. The decision of the Tax Dispute Accountants shall be
conclusive and binding on the parties, and the fees and expenses of the Tax
Dispute Accountants in resolving the dispute will be borne equally by Mafco
Holdings and Mafco on the one hand and the Company on the other.
3. Certain Payments. Notwithstanding anything to the contrary herein, in
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the Amended and Restated Tax Sharing Agreement dated as of June 15, 1995 among
Mafco Holdings, Mafco, the Company (then named Consolidated Cigar (Parent)
Holdings Inc.) and Consolidated Cigar Corporation, or in any other agreement,
the Company and Subsidiaries shall have no obligation to make any payment with
respect to any liability for Taxes that duplicates any other payment by the
Company or any Subsidiary with respect to the same liability (whether either
such payment was to a taxing authority, to Mafco Holdings or to Mafco).
4. Miscellaneous.
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a. This Agreement constitutes the entire agreement between the parties with
respect to the subject matter hereof and supersedes all other prior agreements
and understandings, both written and oral, between the parties with respect to
the subject matter hereof.
b. All costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid by the party incurring such
expenses.
c. This Agreement and all of the provisions hereof shall be binding upon
and inure to the benefit of the parties and their respective successors,
personal or legal representatives, executors, administrators, heirs,
distributees, devisees, legatees and permitted
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assigns, but neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by either party (whether by operation of
law or otherwise) without the prior written consent of the other party;
provided, that Parent and the Purchaser may assign their rights and obligations
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hereunder to any assignee of such parties' rights and obligations under the
Merger Agreement or to any other Subsidiary of Parent.
d. This Agreement may not be amended, changed, supplemented, or
otherwise modified or terminated, except upon the execution and delivery of a
written agreement executed by each of the parties hereto. The parties may waive
compliance by the other parties hereto with any representation, agreement or
condition otherwise required to be complied with by such other party hereunder,
but any such waiver shall be effective only if in writing executed by the
waiving party.
e. All notices and other communications hereunder shall be in
writing and shall be deemed given upon (i) transmitter's confirmation of a
receipt of a facsimile transmission, (ii) confirmed delivery by a standard
overnight carrier or when delivered by hand or (iii) the expiration of five
business days after the day when mailed by certified or registered mail, postage
prepaid, addressed at the following addresses (or at such other address for a
party as shall be specified by like notice):
If to Parent or Purchaser: Societe Nationale d'Exploitation
Industrielle des Tabacs et Allumettes
53, quai d'Orsay
75347 Xxxxx Xxxxx 00, Xxxxxx
Att: Xxxxxxx Xxxxxx
Telecopier Number: (00-0) 00-00-00-00
Att: Xxxx-Xxxxxxxx Xxxxxxxx
Telecopier Number: (00-0) 00-00-00-00
Copy to: Proskauer Rose LLP
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Att: Xxxxxx Xxxx, Esq.
Telecopier Number: (000) 000-0000
And copy to: Xxxxxxxxx Xxxx
0, xxx Xx Xxxxx
00000 Xxxxx, Xxxxxx
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Att: Xxxxx Xxxxxxx, Esq.
Telecopier Number: (00-0) 00-00-00-00
If to Mafco Holdings or Mafco: Mafco Consolidated Group Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Att: General Counsel
Telecopier Number: (000) 000-0000
Copy to: Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Att: Xxxxxxxx X. Xxxxxx, Esq. and
Xxxx X. Xxxxx, Esq.
Telecopier Number: (000) 000-0000
or to such other address or facsimile number as the Person to whom notice is
given shall have previously furnished to the others in writing in the manner set
forth above.
f. Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without affecting the validity or
enforceability of the remaining provisions hereof. Any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
g. This Agreement shall be governed and construed in accordance with the
laws of the State of Delaware without giving effect to the principles of
conflicts of law thereof.
h. The descriptive headings used herein are inserted for convenience of
reference only and are not intended to be part of or to affect the meaning or
interpretation of this Agreement. "Include," "includes," and "including" shall
be deemed to be followed by "without limitation" whether or not they are in fact
followed by such words or words of like import.
i. This Agreement may be executed in counterparts, each of which shall be
deemed to be an original, but all of which, taken together, shall constitute one
and the same instrument.
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j. Any legal action or proceeding with respect to this Agreement or any
matters arising out of or in connection with this Agreement or otherwise, and
any action for enforcement of any judgment in respect thereof shall be brought
exclusively in the courts of the State of New York or of the United States of
America for the Southern District of New York, the Court of Chancery of Delaware
or the courts of the United States of America for the District of Delaware and,
by execution and delivery of this Agreement, Mafco Holdings, Mafco, Parent and
the Purchaser each hereby accepts for itself and in respect of its property,
generally and unconditionally, the exclusive jurisdiction of the aforesaid
courts and appellate courts thereof. Mafco Holdings, Mafco, Parent and the
Purchaser irrevocably consent to service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, or by recognized
international express carrier or delivery service, to Mafco Holdings, Mafco,
Parent or the Purchaser at their respective addresses referred to in Section
4(e) hereof.
k. Each of Parent and the Purchaser hereby designates C T Corporation as
its respective agent for service of process, and service upon Parent or the
Purchaser shall be deemed to be effective upon service of C T Corporation System
as aforesaid or of its successor designated in accordance with the following
sentence. Parent or the Purchaser may designate another corporate agent or law
firm reasonably acceptable to Mafco and located in the Borough of Manhattan, in
the City of New York, as successor agent for service of process upon 30-days
prior written notice to Mafco.
l. Mafco Holdings, Mafco, Parent and the Purchaser each hereby irrevocably
waives any objection which it may now or hereafter have to the laying of venue
of any of the aforesaid actions or proceedings arising out of or in connection
with this Agreement or otherwise brought in the courts referred to above and
hereby further irrevocably waives and agrees, to the extent permitted by
applicable law, not to plead or claim in any such court that any such action or
proceeding brought in any such court has been brought in an inconvenient forum.
Nothing herein shall affect the right of any party hereto to serve process in
any other manner permitted by law.
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IN WITNESS WHEREOF, Parent, Purchaser, Mafco Holdings and Mafco have caused
this Agreement to be duly executed as of the day and year first above written.
SOCIETE NATIONALE D'EXPLOITATION INDUSTRIELLE
DES TABACS ET ALLUMETTES, S.A.
By: /s/ Xxxx-Xxxxxxxxx Xxxxxxx
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Name: Xxxx-Xxxxxxxxx Xxxxxxx
Title: Chairman and Chief Executive Officer
DORSAY ACQUISITION CORP.
By: /s/ Xxxxxxx Xxxxxx
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Name: Xxxxxxx Xxxxxx
Title: President
MAFCO CONSOLIDATED GROUP INC.
By: /s/ Xxxxx Xxxxxx
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Name: Xxxxx Xxxxxx
Title: Vice President
MAFCO HOLDINGS INC.
By: /s/ Xxxxx Xxxxxx
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Name: Xxxxx Xxxxxx
Title: Senior Vice President
CONSOLIDATED CIGAR HOLDINGS INC.
By: /s/ Xxxx X. Xxxx
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Name: Xxxx X. Xxxx
Title: Chairman, President and Chief
Executive Officer
