EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
BY AND AMONG
NORTH ATLANTIC TRADING COMPANY, INC.,
XXXXX XXXXXX,
XXXXXX XXXXXX,
XXXXXX XXXXXX XXXXXX,
BSF PARTNERS, L.P.,
JFS PARTNERS, L.P.,
AND
RBJ MACHINERY CO., LLC
Dated as of NOVEMBER 17, 2003
TABLE OF CONTENTS
Section Page
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Article I. SALE AND PURCHASE OF SHARES..............................................................................1
1.1 Sale and Purchase of Shares......................................................................................1
Article II. PURCHASE PRICE AND PAYMENT...............................................................................1
2.1 Amount of Purchase Price.........................................................................................1
2.2 Payment of Purchase Price........................................................................................1
2.3 Adjustment of Purchase Price.....................................................................................2
Article III. CLOSING AND TERMINATION..................................................................................3
3.1 Closing Date.....................................................................................................3
3.2 Termination of Agreement.........................................................................................4
3.3 Procedure Upon Termination.......................................................................................4
3.4 Effect of Termination............................................................................................4
Article IV. REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDERS..............................................5
4.1 Authorization of Agreement.......................................................................................5
4.2 Conflicts; Consents of Third Parties.............................................................................5
4.3 Ownership and Transfer of Shares.................................................................................6
4.4 Organization and Good Standing...................................................................................6
4.5 Capitalization...................................................................................................6
4.6 Subsidiaries.....................................................................................................6
4.7 Corporate Records................................................................................................7
4.8 Financial Statements.............................................................................................7
4.9 No Undisclosed Liabilities.......................................................................................8
4.10 Absence of Certain Developments..................................................................................8
4.11 Taxes...........................................................................................................10
4.12 Real Property...................................................................................................12
4.13 Tangible Personal Property......................................................................................13
4.14 Intellectual Property...........................................................................................14
4.15 Material Contracts..............................................................................................16
4.16 Employee Benefits Plans.........................................................................................18
4.17 Employees and Labor.............................................................................................21
4.18 Litigation......................................................................................................22
4.19 Compliance with Laws; Permits...................................................................................22
4.20 Tobacco Matters.................................................................................................22
4.21 Environmental Matters...........................................................................................23
4.22 Insurance.......................................................................................................24
4.23 Inventories; Receivables; Payables..............................................................................25
4.24 Related Party Transactions......................................................................................25
4.25 Customers and Suppliers.........................................................................................25
4.26 Banks...........................................................................................................26
4.27 Disclosure......................................................................................................26
4.28 Financial Advisors..............................................................................................26
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Section Page
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Article V. REPRESENTATIONS AND WARRANTIES OF PURCHASER.............................................................26
5.1 Organization and Good Standing..................................................................................26
5.2 Authorization of Agreement......................................................................................26
5.3 Conflicts; Consents of Third Parties............................................................................27
5.4 Litigation......................................................................................................27
5.5 Investment Intention............................................................................................27
5.6 Financial Advisors..............................................................................................27
Article VI. COVENANTS...............................................................................................28
6.1 Access to Information...........................................................................................28
6.2 Conduct of the Business Pending the Closing.....................................................................28
6.3 Consents........................................................................................................31
6.4 Further Assurances..............................................................................................31
6.5 Preservation of Records.........................................................................................31
6.6 Publicity.......................................................................................................31
6.7 Use of Name.....................................................................................................32
6.8 Environmental Matters...........................................................................................32
6.9 Cooperation with Financing......................................................................................32
6.10 Escrow Obligations Under Qualifying Statutes....................................................................32
6.11 Private Letter Ruling...........................................................................................34
6.12 Allocable Share Refunds.........................................................................................35
6.13 Pension Plan...................................................................................................35
6.14 Post-Closing Transition Period..................................................................................36
Article VII. CONDITIONS TO CLOSING...................................................................................36
7.1 Conditions Precedent to Obligations of Purchaser................................................................36
7.2 Conditions Precedent to Obligations of the Selling Stockholders.................................................38
Article VIII. INDEMNIFICATION.........................................................................................39
8.1 Survival of Representations and Warranties......................................................................39
8.2 Indemnification.................................................................................................39
8.3 Indemnification Procedures......................................................................................40
8.4 Limitations on Indemnification for Breaches of Representations and Warranties...................................42
8.5 Tax Matters.....................................................................................................42
8.6 Adjustment to Purchase Price....................................................................................45
Article IX. MISCELLANEOUS...........................................................................................45
9.1 Certain Definitions.............................................................................................45
9.2 Payment of Sales, Use or Similar Taxes..........................................................................53
9.3 Stockholder Representative......................................................................................53
9.4 Expenses........................................................................................................54
9.5 Specific Performance............................................................................................54
9.6 Further Assurances..............................................................................................54
9.7 Submission to Jurisdiction; Consent to Service of Process.......................................................54
9.8 Entire Agreement; Amendments and Waivers........................................................................55
9.9 Governing Law...................................................................................................55
9.10 Table of Contents and Headings..................................................................................55
9.11 Notices.........................................................................................................55
9.12 Severability....................................................................................................56
9.13 Binding Effect; Assignment......................................................................................57
9.14 Non-Recourse....................................................................................................57
9.15 Counterparts....................................................................................................57
Exhibits
--------
Exhibit A - Shareholder Information
Exhibit B - Lease for Xxxxxx Highway property
Exhibit C - Lease for 201 North property
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of November 17, 2003 (the "Agreement"), by
and among North Atlantic Trading Company, Inc., a Delaware corporation
("Purchaser"), Xxxxx Xxxxxx, Xxxxxx Xxxxxx, Xxxxxx Xxxxxx Xxxxxx, BSF Partners,
L.P., a Tennessee limited partnership, JFS Partners, L.P., a Tennessee limited
partnership and RBJ Machinery Co., LLC, a Tennessee limited liability company
(each, a "Selling Stockholder" and, collectively, the "Selling Stockholders").
W I T N E S S E T H:
WHEREAS, the Selling Stockholders own an aggregate of 1,130.376
shares of the Company's common stock, $1.00 par value per share (the "Shares"),
which Shares constitute all of the issued and outstanding shares of capital
stock of Xxxxxx, Inc., a Tennessee corporation (the "Company");
WHEREAS, the Selling Stockholders desire to sell to Purchaser, and
Purchaser desires to purchase from the Selling Stockholders, the Shares for the
purchase price and upon the terms and conditions hereinafter set forth; and
WHEREAS, certain terms used in this Agreement are defined in Section
9.1;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter contained, the parties hereto, intending to
be legally bound, hereby agree as follows:
ARTICLE I.
SALE AND PURCHASE OF SHARES
1.1 Sale and Purchase of Shares. Upon the terms and subject to the
satisfaction or waiver of the conditions contained herein, on the Closing Date
each Selling Stockholder shall sell, assign, transfer, convey and deliver to
Purchaser, and Purchaser shall purchase from each Selling Stockholder, the
Shares owned by such Selling Stockholder as set forth opposite such Selling
Stockholder's name on Exhibit A hereto.
ARTICLE II.
PURCHASE PRICE AND PAYMENT
2.1 Amount of Purchase Price. Subject to adjustments as provided in
Sections 2.3, 6.11 and 6.12, the aggregate purchase price for all of the Shares
shall be Twenty-Two Million Five Hundred Thousand Dollars ($22,500,000.00) (the
"Purchase Price") and the purchase price per Share shall be $19,904.881 (the
"Purchase Price Per Share").
2.2 Payment of Purchase Price. On the Closing Date, Purchaser shall
pay to each Selling Stockholder the Purchase Price per Share for each Share
owned by such Selling Stockholder as set forth opposite such Selling
Stockholder's name on Exhibit A, by wire transfer of immediately available funds
to an account designated in writing by such Selling Stockholder to Purchaser not
later than three (3) Business Days prior to the Closing Date.
2.3 Adjustment of Purchase Price.
(a) The Selling Stockholders shall provide to Purchaser, their good
faith estimate of Closing Working Capital (as defined below) not later than
three (3) Business Days prior to the Closing, which estimate shall be reasonably
acceptable to Purchaser.
(b) As promptly as practicable, but no later than sixty (60) days
after the Closing Date, Purchaser shall cause to be prepared and delivered to
the Stockholder Representative the Closing Statement (as defined below) and a
certificate based on such Closing Statement setting forth Purchaser's
calculation of Closing Working Capital (as defined below). The closing statement
(the "Closing Statement") shall set forth the consolidated Net Working Capital
of the Company as of the end of business on the Closing Date ("Closing Working
Capital") and the components thereof. For purposes hereof, "Net Working Capital"
means the current assets of the Company reduced by the current liabilities of
the Company, in each case as determined in accordance with GAAP except as
otherwise set forth on Schedule 2.3(b) (the "Agreed Principles").
(c) If the Selling Stockholders disagree with Purchaser's calculation
of Closing Working Capital delivered pursuant to Section 2.3(b), the Selling
Stockholders may, within fifteen (15) days after delivery of the Closing
Statement, deliver a notice to Purchaser disagreeing with such calculation and
setting forth the Selling Stockholders' calculation of such amount. Any such
notice of disagreement shall specify those items or amounts as to which the
Selling Stockholders disagree and, except to the extent that other items or
amounts are integrally related to those in dispute, the Selling Stockholders
shall be deemed to have agreed with all other items and amounts contained in the
Closing Statement and the calculation of Closing Working Capital delivered
pursuant to Section 2.3(b).
(d) If a notice of disagreement shall be duly delivered pursuant to
Section 2.3(c), Purchaser and the Stockholder Representative shall, during the
fifteen (15) days following such delivery, use their best efforts to reach
agreement on the disputed items or amounts in order to determine the amount of
Closing Working Capital, which amount shall not be less than the amount thereof
shown in Purchaser's calculation delivered pursuant to Section 2.3(b) nor more
than the amount thereof shown in the Selling Stockholders calculation delivered
pursuant to Section 2.3(c). If, during such period, Purchaser and the
Stockholder Representative are unable to reach such agreement, they shall
promptly thereafter cause KPMG LLP or, if such firm shall fail or refuse to
serve in such capacity, another firm of certified public accountants selected by
the parties hereto in accordance with the rules of the American Arbitration
Association (the "Accounting Referee") to review this Agreement and the disputed
items or amounts for the purpose of calculating Closing Working Capital (it
being understood that in making such calculation, the Accounting Referee shall
be functioning as an expert and not as an arbitrator). In making such
calculation, the Accounting Referee shall consider only those items or amounts
in the Closing Statement and the Selling Stockholders' calculation of Closing
Working Capital as to which the Selling Stockholders have disagreed and any
other items or amounts that are integrally related thereto. The Accounting
Referee shall deliver to Purchaser and the Stockholder Representative, as
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promptly as practicable (but in any case no later than thirty (30) days from the
date of engagement of the Accounting Referee), a report setting forth such
calculation. Such report shall be final and binding upon Purchaser and the
Selling Stockholders. The cost of such review and report shall be borne equally
by Purchaser, on the one hand, and the Selling Stockholders, on the other.
(e) Purchaser and the Selling Stockholders shall, and shall cause
their respective representatives to, cooperate and assist in the preparation of
the Closing Statement and the calculation of Closing Working Capital and in the
conduct of the review referred to in this Section 2.3, including, without
limitation, making available, to the extent necessary, books, records, work
papers and personnel.
(f) If Final Working Capital (as defined below) is less than $2.0
million, the Purchase Price shall be decreased by the amount by which $2.0
million exceeds the Final Working Capital. If Final Working Capital is greater
than $2.0 million, the Purchase Price shall be increased by the amount by which
the Final Working Capital exceeds $2.0 million. For purposes hereof, "Final
Working Capital" means the Net Working Capital as (i) shown on the Closing
Statement pursuant to Section 2.3(b) if no timely and otherwise sufficient
notice of disagreement is delivered to Purchaser in accordance with Section
2.3(c) or (ii) if a timely and otherwise sufficient notice of disagreement is
delivered to Purchaser in accordance with Section 2.3(c), as determined pursuant
to Section 2.3(d).
(g) Within three Business Days after Final Working Capital has been
determined pursuant to this Section 2.3, (i) Purchaser shall pay the amount of
any increase in Purchase Price as determined pursuant to Section 2.3(f) to the
Selling Stockholders by wire transfer of immediately available funds to each
Selling Stockholder (to an account designated by such Selling Stockholder for
such purpose) of his or her Proportionate Share thereof or (ii) the Selling
Stockholders shall pay the amount of any decrease in the Purchase Price as
determined pursuant to Section 2.3(f) to Purchaser (to an account designated by
Purchaser for such purpose) by wire transfer of immediately available funds by
each Selling Stockholder of his or her Proportionate Share thereof; provided,
however, that the Selling Stockholders shall be jointly and severally liable to
pay the total amount of any such decrease in the Purchase Price. The amount of
any payment to be made pursuant to this Section 2.3 shall be accompanied by an
amount equal to interest thereon from and including the Closing Date to but
excluding the date of payment at a rate per annum equal to the rate of interest
announced by Citibank, N.A. from time to time as its prime rate in New York City
("Prime Rate") in effect from time to time during the period from the Closing
Date to the date of payment. Such interest shall be payable at the same time as
the payment to which it relates and shall be calculated daily on the basis of a
year of three hundred sixty five (365) days and the actual number of days
elapsed.
ARTICLE III.
CLOSING AND TERMINATION
3.1 Closing Date. Subject to the satisfaction of the conditions set
forth in Article VII hereof (or the waiver thereof by the party entitled to
waive that condition), the closing of the sale and purchase of the Shares
provided for in Section 1.1 hereof (the "Closing") shall take place at 10:00
a.m. (New York City time) at the offices of Weil, Gotshal & Xxxxxx LLP, located
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at 000 Xxxxx Xxxxxx, Xxx Xxxx, XX on such date as the parties may designate in
writing, which date shall be no later than the third Business Day after the
satisfaction or waiver of the conditions set forth in Article VII (other than
those conditions that by their terms are to be satisfied at the Closing, but
subject to the satisfaction or waiver of those terms). The date on which the
Closing shall be held is referred to in this Agreement as the "Closing Date".
Purchaser shall be responsible for the payment of any New York State share
transfer tax.
3.2 Termination of Agreement. This Agreement may be terminated prior
to the Closing as follows:
(a) At the election of the Stockholder Representative or Purchaser on
or after November 17, 2003 if the Closing shall not have occurred by the close
of business on such date, provided that the terminating party is not in material
default of any of its obligations hereunder;
(b) by mutual written consent of the Stockholder Representative and
Purchaser;
(c) by written notice from Purchaser to the Stockholder
Representative if any Material Adverse Change has occurred with respect to the
Company;
(d) by the Stockholder Representative or Purchaser if there shall be
in effect a final nonappealable Order of a Governmental Body of competent
jurisdiction restraining, enjoining or otherwise prohibiting the consummation of
the transactions contemplated hereby; it being agreed that the parties hereto
shall promptly appeal any adverse determination which is not nonappealable (and
pursue such appeal with reasonable diligence);
(e) by the Stockholder Representative if there shall have been a
material breach of any representation, warranty, covenant or other agreement on
the part of Purchaser set forth in this Agreement, which breach would give rise
to a failure of a condition set forth in Sections 7.2(a) or 7.2(b), as
applicable, and is incapable of being cured or, if capable of being cured, shall
not have been cured within ten (10) days following receipt by Purchaser of
notice of such breach from the Stockholder Representative; or
(f) by Purchaser if there shall have been a material breach of any
representation, warranty, covenant or other agreement on the part of any of the
Selling Stockholders set forth in this Agreement, which breach would give rise
to a failure of a condition set forth in Sections 7.1(a) or 7.1(b), as
applicable, and is incapable of being cured or, if capable of being cured, shall
not have been cured within ten (10) days following receipt by any of the Selling
Stockholders of notice of such breach from Purchaser.
3.3 Procedure Upon Termination. In the event of termination and
abandonment by Purchaser or the Stockholder Representative, or both, pursuant to
Section 3.2 hereof, written notice thereof shall forthwith be given to the other
party or parties, and this Agreement shall terminate, and the purchase of the
Shares hereunder shall be abandoned, without further action by Purchaser or the
Stockholder Representative.
3.4 Effect of Termination. In the event that this Agreement is
validly terminated as provided herein, then each of the parties shall be
relieved of their duties and obligations arising under this Agreement after the
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date of such termination and such termination shall be without liability to
Purchaser, the Company or any Selling Stockholder; provided, however, that the
obligations of the parties under any Confidentiality Agreement previously signed
by the parties, this Section 3.4 and Article VIII shall survive any such
termination and shall be enforceable and, provided, further, that nothing in
this Section 3.4 shall relieve Purchaser or any Selling Stockholder of any
liability for a breach of this Agreement prior to termination.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
OF THE SELLING STOCKHOLDERS
The Selling Stockholders, jointly and severally, hereby represent and
warrant to Purchaser that:
4.1 Authorization of Agreement. Each Selling Stockholder has all
requisite power, authority and legal capacity to execute and deliver this
Agreement and each other agreement, document, or instrument or certificate to be
executed by such Selling Stockholder in connection with the consummation of the
transactions contemplated by this Agreement (together with this Agreement, the
"Selling Stockholder Documents"), and to consummate the transactions
contemplated hereby and thereby. This Agreement has been, and each of the
Selling Stockholder Documents will be at or prior to the Closing, duly and
validly executed and delivered by each Selling Stockholder and (assuming the due
authorization, execution and delivery by the other parties hereto and thereto)
this Agreement constitutes, and each of the Selling Stockholder Documents when
so executed and delivered will constitute, legal, valid and binding obligations
of each Selling Stockholder, enforceable against each Selling Stockholder in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally, and subject, as to enforceability, to general
principles of equity, including principles of commercial reasonableness, good
faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).
4.2 Conflicts; Consents of Third Parties.
(a) Except as set forth on Schedule 4.2(a), none of the execution and
delivery by any Selling Stockholder of this Agreement and the Selling
Stockholder Documents, the consummation of the transactions contemplated hereby
or thereby, or compliance by any Selling Stockholder with any of the provisions
hereof or thereof will conflict with, or result in any violation or breach of or
default under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit under, or give
rise to any obligation of any Selling Stockholder or the Company to make any
payment under (i) the certificate of incorporation and bylaws or comparable
organizational documents of the Company or any Subsidiary; (ii) any Contract, or
Permit to which the Company or any Subsidiary is a party or by which any of the
properties or assets of the Company or any Subsidiary are bound; (iii) any
statute, rule, regulation or Order of any Governmental Body applicable to the
Company or any Subsidiary or any of the properties or assets of the Company or
any Subsidiary or any applicable Law, except that the Selling Stockholders make
no representation regarding the applicability of antitrust laws with respect to
the transactions contemplated hereby.
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(b) Except as set forth on Schedule 4.2(b), no consent, waiver,
approval, Order, Permit or authorization of, or declaration or filing with, or
notification to, any Person or Governmental Body is required on the part of any
Selling Stockholder or the Company in connection with the execution and delivery
of this Agreement or the Selling Stockholder Documents, or the compliance by
each Selling Stockholder with any of the provisions hereof or thereof, the
consummation of the transactions contemplated hereby or the taking by Selling
Stockholder of any other action contemplated hereby.
4.3 Ownership and Transfer of Shares. Each Selling Stockholder is the
record and beneficial owner of the Shares indicated opposite such Selling
Stockholders name on Exhibit A, free and clear of any and all Liens. Each
Selling Stockholder has the power and authority to sell, transfer, assign and
deliver such Shares as provided in this Agreement, and such delivery will convey
to Purchaser good title to such Shares, free and clear of any and all Liens.
4.4 Organization and Good Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Tennessee and has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as now conducted. The
Company is duly qualified or authorized to do business as a foreign corporation
and is in good standing under the laws of each jurisdiction in which it owns or
leases real property and each other jurisdiction in which the conduct of its
business or the ownership of its properties requires such qualification or
authorization.
4.5 Capitalization.
(a) The authorized capital stock of the Company consists of 100,000
shares, 1,130.376 of which are issued and outstanding. The Shares constitute the
only issued and outstanding shares of capital stock of the Company and are duly
authorized for issuance, validly issued, fully paid and non-assessable.
(b) There is no existing option, warrant, call, right, commitment or
other agreement of any character to which any Selling Stockholder or the Company
is a party requiring, and there are no securities of the Company outstanding
which upon conversion or exchange would require, the issuance, sale or transfer
of any additional shares of capital stock or other equity securities of the
Company or other securities convertible into, exchangeable for or evidencing the
right to subscribe for or purchase shares of capital stock or other equity
securities of the Company. None of the Selling Stockholders or the Company is a
party to any voting trust or other voting agreement with respect to any of the
Shares or to any agreement relating to the issuance, sale, redemption, transfer
or other disposition of any capital stock of the Company.
4.6 Subsidiaries.
(a) Schedule 4.6 sets forth the name of each Subsidiary, and, with
respect to each Subsidiary, the jurisdiction in which it is incorporated or
organized, the jurisdictions, if any, in which it is qualified to do business,
the number of shares of its authorized capital stock, the number and class of
shares thereof duly issued and outstanding, the names of all stockholders or
other equity owners and the number of shares of stock owned by each stockholder
or the amount of equity owned by each equity owner.
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(b) The outstanding shares of capital stock or equity interests of
each Subsidiary are validly issued, fully paid and non-assessable, and all such
shares or other equity interests represented as being owned by Company or
another Subsidiary are owned by it free and clear of any and all Liens, except
as set forth in Schedule 4.6.
(c) No shares of capital stock are held by any Subsidiary as treasury
stock. There is no existing option, warrant, call, commitment or agreement to
which any Subsidiary is a party requiring, and there are no convertible
securities of any Subsidiary outstanding which upon conversion would require,
the issuance of any additional shares of capital stock or other equity interests
of any Subsidiary or other securities convertible into shares of capital stock
or other equity interests of any Subsidiary or other equity security of any
Subsidiary.
(d) Each Subsidiary is a duly organized and validly existing
corporation or other entity in good standing under the laws of the jurisdiction
of its organization and is duly qualified to do business and is in good standing
under the laws of (i) each jurisdiction in which it owns or leases real property
and (ii) each other jurisdiction in which the conduct of its business or the
ownership of its assets requires such qualification and where a failure to be so
qualified, individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect. Each Subsidiary has all requisite corporate
power and authority to own its properties and carry on its business as presently
conducted.
4.7 Corporate Records.
(a) The Company has delivered to Purchaser true, correct and complete
copies of the certificate of incorporation (each certified by the Secretary of
State or other appropriate official of the applicable jurisdiction of
organization) and by-laws (each certified by the secretary, assistant secretary
or other appropriate officer) or comparable organizational documents of the
Company and each of its Subsidiaries.
(b) The stock certificate books and stock transfer ledgers of the
Company and its Subsidiaries previously made available to Purchaser are true,
correct and complete. All stock transfer taxes levied or payable with respect to
all transfers of shares of the Company and its Subsidiaries prior to the date
hereof have been paid and appropriate transfer tax stamps affixed.
4.8 Financial Statements.
(a) The Company has delivered to Purchaser copies of (i) the audited
consolidated balance sheets of the Company and its Subsidiaries as at January
31, 2003 and 2002 and the audited consolidated statements of income and of cash
flows of the Company and its Subsidiaries for the years ended January 31, 2003,
2002 and 2001 and (ii) the unaudited consolidated balance sheet of the Company
and its Subsidiaries as at September 30, 2003 and the consolidated statements of
income and cash flows of the Company and its Subsidiaries for the nine-month
period then ended (such audited and unaudited statements, including the related
notes and schedules thereto, are referred to herein as the "Financial
Statements"). Each of the Financial Statements (A) is complete and correct in
all material respects, (B) has been prepared in accordance with Regulation S-X
under the Securities Exchange Act, (C) has been prepared in accordance with GAAP
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consistently applied by the Company without modification of the accounting
principles used in the preparation thereof throughout the periods presented and
(D) presents fairly in all material respects the financial condition, results of
operations and cash flows of the Company and its Subsidiaries as at the dates
and for the periods indicated.
For the purposes hereof, the audited consolidated balance sheet of
the Company and its Subsidiaries as at January 31, 2003 is referred to as the
"Balance Sheet" and January 31, 2003 is referred to as the "Balance Sheet Date".
(b) The Company and its Subsidiaries make and keep books, records and
accounts which, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of their respective assets. The Company and its
Subsidiaries maintain systems of internal accounting controls sufficient to
provide reasonable assurances that: (i) transactions are executed in accordance
with management's general or specific authorization; (ii) transactions are
recorded as necessary to permit the preparation of financial statements in
conformity with GAAP and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the actual levels at reasonable intervals and appropriate action is taken with
respect to any differences.
4.9 No Undisclosed Liabilities. Except as set forth on Schedule 4.9,
neither the Company nor any Subsidiary has any indebtedness, obligations or
Liabilities of any kind (whether accrued, absolute, contingent or otherwise, and
whether due or to become due) that would have been required to be reflected in,
reserved against or otherwise described on the Balance Sheet or in the notes
thereto in accordance with GAAP which was not fully reflected in, reserved
against or otherwise described in the Balance Sheet or the notes thereto or was
not incurred in the Ordinary Course of Business since the Balance Sheet Date.
4.10 Absence of Certain Developments. Except as expressly
contemplated by this Agreement or as set forth on Schedule 4.10, since the
Balance Sheet Date (i) the Company and its Subsidiaries have conducted their
business in all material respects only in the Ordinary Course of Business and in
substantially the same manner as previously conducted and (ii) there has not
been any event, change, occurrence or circumstance that, individually or in the
aggregate, has had or could reasonably be expected to have a Material Adverse
Effect. Without limiting the generality of the foregoing, since the Balance
Sheet Date:
(i) there has not been any damage, destruction or loss, whether
or not covered by insurance, with respect to the property and assets
of the Company or any Subsidiary having a replacement cost of more
than $100,000 for any single loss or $250,000 for all such losses;
(ii) there has not been any declaration, setting aside or payment
of any dividend or other distribution in respect of any shares of
capital stock of the Company or any repurchase, redemption or other
acquisition by any Selling Stockholder or the Company or any
Subsidiary of any outstanding shares of capital stock or other
securities of, or other ownership interest in, the Company or any
Subsidiary;
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(iii) neither the Company nor any Subsidiary has awarded or paid
any bonuses to employees of the Company or any Subsidiary with respect
to the fiscal year ended January 31, 2003, except to the extent
accrued on the Balance Sheet or entered into any employment, deferred
compensation, severance or similar agreement (nor amended any such
agreement) or agreed to increase the compensation payable or to become
payable by it to any of the Company's or any Subsidiary's directors,
officers, employees, agents or representatives or agreed to increase
the coverage or benefits available under any severance pay,
termination pay, vacation pay, company awards, salary continuation for
disability, sick leave, deferred compensation, bonus or other
incentive compensation, insurance, pension or other employee benefit
plan, payment or arrangement made to, for or with such directors,
officers, employees, agents or representatives;
(iv) there has not been any change by the Company or any
Subsidiary in accounting or Tax reporting principles, methods or
policies;
(v) the Company has not made or rescinded any election relating
to Taxes or settled or compromised any claim relating to Taxes;
(vi) neither the Company nor any Subsidiary has entered into any
transaction or Contract or conducted its business other than in the
Ordinary Course of Business;
(vii) neither the Company nor any Subsidiary has failed to
promptly pay and discharge current liabilities except where disputed
in good faith by appropriate proceedings;
(viii) neither the Company nor any Subsidiary has made any loans,
advances or capital contributions to, or investments in, any Person or
paid any fees or expenses to any member of the Selling Stockholders
(except for the payment of compensation and expense reimbursement to
members of the Selling Stockholders who are employees of the Company
or its Subsidiaries in the Ordinary Course of Business);
(ix) neither the Company nor any Subsidiary has mortgaged,
pledged or subjected to any Lien any of its assets, or acquired any
assets or sold, assigned, transferred, conveyed, leased or otherwise
disposed of any assets of the Company or any Subsidiary, except for
assets acquired or sold, assigned, transferred, conveyed, leased or
otherwise disposed of in the Ordinary Course of Business;
(x) neither the Company nor any Subsidiary has discharged or
satisfied any Lien, or paid any obligation or liability (fixed or
contingent), except in the Ordinary Course of Business and which, in
the aggregate, would not be material to the Company and its
Subsidiaries taken as a whole;
(xi) neither the Company nor any Subsidiary has canceled or
compromised any debt or claim or amended, canceled, terminated,
relinquished, waived or released any Contract or right except in the
Ordinary Course of Business and which, in the aggregate, would not be
material to the Company and its Subsidiaries taken as a whole;
9
(xii) neither the Company nor any Subsidiary has made or
committed to make any capital expenditures or capital additions or
betterments in excess of $100,000 individually or $250,000 in the
aggregate;
(xiii) the Company has not granted any license or sublicense of
any rights under or with respect to any Intellectual Property;
(xiv) neither the Company nor any Subsidiary has instituted or
settled any material Legal Proceeding; and
(xv) none of the Selling Stockholders nor the Company has agreed,
arranged, or entered into an understanding to do anything set forth in
this Section 4.10.
4.11 Taxes. Except as set forth on Schedule 4.11,
(a) (i) All Tax Returns required to be filed by or on behalf of the
Company or any Subsidiary have been properly prepared and duly and timely filed
with the appropriate taxing authorities in all jurisdictions in which such Tax
Returns are required to be filed (after giving effect to any valid extensions of
time in which to make such filings), and all such Tax Returns are true, complete
and correct in all material respects; and (ii) all Taxes due and owing by or on
behalf of the Company or any Subsidiary have been fully and timely paid. With
respect to any period for which Tax Returns have not yet been filed, or for
which Taxes are not yet due or owing, the Company and its Subsidiaries have made
due and sufficient current accruals for such Taxes in the Financial Statements
and their books and records. All required estimated Tax payments sufficient to
avoid any underpayment penalties have been made by or on behalf of the Company
or its Subsidiaries.
(b) The Company and its Subsidiaries have complied in all material
respects with all applicable Laws relating to the payment and withholding of
Taxes and have duly and timely withheld and paid over to the appropriate taxing
authorities all amounts required to be so withheld and paid over for all periods
prior to Closing under all applicable Laws.
(c) The Purchaser has received complete copies of (i) all federal,
state, local and foreign income or franchise Tax Returns of the Company and its
Subsidiaries relating to the taxable periods since December 31, 2000 and (ii)
any audit report issued within the last three years relating to Taxes due from
or with respect to the Company or any of its Subsidiaries. No income or
franchise Tax Returns that have been filed by or on behalf of the Company have
been examined by any taxing authority.
(d) Schedule 4.11(d) lists all material types of Taxes paid and
material types of Tax Returns filed by or on behalf of the Company and its
Subsidiaries and no claim has been made by a taxing authority in a jurisdiction
where the Company and its Subsidiaries do not file Tax Returns such that the
Company or any of its Subsidiaries is or may be subject to taxation by that
jurisdiction.
(e) Except as set forth on Schedule 4.11(e), all deficiencies
asserted or assessments made as a result of any examinations by any taxing
authority of the Tax Returns of the Company and its Subsidiaries have been fully
paid, and there are no other audits or investigations by any taxing authority in
progress, nor have the Selling Stockholders, the Company or any of its
Subsidiaries received any notice from any taxing authority that it intends to
conduct such an audit or investigation.
10
(f) Neither the Company nor any of its Subsidiaries or other Person
(including any of the Selling Stockholders) on behalf of the Company or its
Subsidiaries has (i) agreed to or is required to make any adjustments pursuant
to Section 481(a) of the Code or any similar provision of Law or has any
knowledge that any taxing authority has proposed any such adjustment, or has any
application pending with any taxing authority requesting permission for any
change in accounting methods that relate to the Company or any of its
Subsidiaries, (ii) executed or entered into a closing agreement pursuant to
Section 7121 of the Code or any similar provision of Law with respect to the
Company or any of its Subsidiaries, or (iii) requested any extension of time
within which to file any Tax Return, which Tax Return has since not been filed
or for the assessment or collection of Taxes, which Taxes have not since been
paid.
(g) No property owned by the Company or any of its Subsidiaries is
(i) property required to be treated as being owned by another Person pursuant to
the provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as
amended and in effect immediately prior to the enactment of the Tax Reform Act
of 1986, (ii) "tax-exempt use property" within the meaning of Section 168(h)(1)
of the Code, (iii) "tax-exempt bond financed property" within the meaning of
Section 168(g) of the Code, (iv) subject to Section 168(g)(1)(A) of the Code, or
(v) "limited use property" within the meaning of Rev. Proc. 76-30.
(h) No Selling Stockholder is a foreign person within the meaning of
Section 1445 of the Code.
(i) Neither the Company nor any of its Subsidiaries is a party to any
tax sharing, allocation, indemnity or similar agreement or arrangement (whether
or not written) pursuant to which it will have any obligation to make any
payments after the Closing.
(j) There is no contract, agreement, plan or arrangement covering any
Person that, individually or collectively, could give rise to the payment of any
amount that would not be deductible by the Purchaser, its Affiliates or their
respective Affiliates by reason of Section 280(G) of the Code.
(k) Except for the Private Letter Ruling, neither the Company nor any
of its Subsidiaries is subject to any private letter ruling of the Internal
Revenue Service or comparable rulings of other taxing authorities.
(l) There are no liens as a result of any Taxes upon any of the
assets of the Company.
(m) Neither the Company nor its Subsidiaries has ever been a member
of any consolidated, combined, affiliated or unitary group of corporations for
any Tax purposes (other than the group, the common parent of which is the
Company) nor has any liability for the Taxes of any Person (other than the
Company or its Subsidiaries) under Treasury Regulation Section 1.1502-6 or any
similar provision of Law.
11
(n) Neither the Company nor any of its Subsidiaries has constituted a
"controlled corporation" (within the meaning of Section 355(a)(1)(A) in a
distribution of stock qualifying for tax-free treatment under Section 355 of the
Code (i) in the two (2) years prior to the date hereof or (ii) in a distribution
which could otherwise constitute part of a "plan" or "series or related
transactions" (within the meaning of Section 355(e) of the Code) in conjunction
with the transactions contemplated by this Agreement.
(o) Except as set forth on Schedule 4.11(o), there is no taxable
income of the Company or any of its Subsidiaries that will be required under
applicable Tax Law to be reported by the Purchaser or its Affiliates, including
the Company, for a taxable period beginning after the Closing Date which taxable
income was realized (and reflects economic income arising) prior to the Closing
Date.
4.12 Real Property.
(a) No real property or interests in real property are owned in fee
by the Company or any of its Subsidiaries (individually, an "Owned Property" and
collectively, the "Owned Properties"). Schedule 4.12(a) sets forth a complete
and correct list of all real property and interests in real property leased by
the Company and its Subsidiaries (individually, a "Real Property Lease" and the
real properties specified in such leases, being referred to herein individually
as a "Company Property" and collectively as the "Company Properties") as lessee
or lessor. Each Real Property Lease is in full force and effect and all rent due
thereon has been paid as required. The Company Property constitutes all
interests in real property currently used or currently held for use in
connection with the business of the Company and its Subsidiaries and which are
necessary for the continued operation of the business of the Company and its
Subsidiaries as the business is currently conducted.
(b) The Company and its Subsidiaries have a valid and enforceable
leasehold interest under each of the Real Property Leases, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally and subject, as to enforceability, to
general principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity), and neither the Company nor any Subsidiary has
received any written notice of any default or event that with notice or lapse of
time, or both, would constitute a default by the Company or any Subsidiary under
any of the Real Property Leases and to the knowledge of the Selling
Stockholders, no other party is in default thereof, and no party of the Real
Property Leases has exercised any termination rights with respect thereto. All
of the Company Property, buildings, fixtures and improvements thereon owned or
leased by the Company and its Subsidiaries are in good operating condition and
repair (subject to normal wear and tear). The Company has delivered or otherwise
made available to Purchaser true, correct and complete copies of the Real
Property Leases, together with all amendments, modifications or supplements, if
any, thereto.
(c) The Company and its Subsidiaries have all certificates of
occupancy and Permits of any Governmental Body necessary or useful for the
current use and operation of each Company Property, and the Company and its
Subsidiaries have fully complied with all material conditions of the Permits
applicable to them. No default or violation, or event that with the lapse of
time or giving of notice or both would become a default or violation, has
occurred in the due observance of any Permit which would have a Material Adverse
Effect on the Company.
12
(d) There does not exist any actual or, to the knowledge of the
Selling Stockholders, threatened or contemplated condemnation or eminent domain
proceedings that affect any Company Property or any part thereof, and none of
the Selling Stockholders has received any notice, oral or written, of the
intention of any Governmental Body or other Person to take or use all or any
part thereof.
(e) None of the Selling Stockholders or the Company or its
Subsidiaries has received any notice from any insurance company that has issued
a policy with respect to any Company Property requiring performance of any
structural or other repairs or alterations to such Company Property.
(f) Neither the Company nor any Subsidiary owns or holds, and is not
obligated under or a party to, any option, right of first refusal or other
Contractual right to purchase, acquire, sell, assign or dispose of any real
estate or any portion thereof or interest therein.
4.13 Tangible Personal Property.
(a) Except as set forth on Schedule 4.13(a), the Company and its
Subsidiaries have good and marketable title to all of the items of tangible
personal property reflected on the Balance Sheet (except as sold or disposed of
subsequent to the date thereof in the Ordinary Course of Business consistent
with past practice), free and clear of any and all Liens other than the
Permitted Exceptions. All such items of tangible personal property which,
individually or in the aggregate, are material to the operation of the business
of the Company and its Subsidiaries are in good condition and in a state of good
maintenance and repair (ordinary wear and tear excepted) and are suitable for
the purposes used. The Company owns all assets necessary to operate its business
consistent with past practice.
(b) Schedule 4.13(b) sets forth all leases of personal property
("Personal Property Leases") involving annual payments in excess of $10,000
relating to personal property used in the business of the Company or any of its
Subsidiaries or to which the Company or any of its Subsidiaries is a party or by
which the properties or assets of the Company or any of its Subsidiaries is
bound. The Company has delivered or otherwise made available to Purchaser true,
correct and complete copies of the Personal Property Leases, together with all
amendments, modifications or supplements thereto. All of the items of personal
property under the Personal Property Leases are in good condition and repair
(ordinary wear and tear excepted) and are suitable for the purposes used.
(c) The Company and each of its Subsidiaries have a valid and
enforceable leasehold interest under each of the Personal Property Leases under
which it is a lessee, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally and subject, as to enforceability, to general principles of
equity (regardless of whether enforcement is sought in a proceeding at law or in
equity), and there is no default under any Personal Property Lease by the
Company or any of its Subsidiaries or, to the knowledge of the Selling
Stockholders, by any other party thereto, and no event has occurred that with
the lapse of time or the giving of notice or both would constitute a default
thereunder. No party to any Personal Property Lease has exercised any
termination rights with respect thereto. Each of the Personal Property Leases is
in full force and effect.
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4.14 Intellectual Property
(a) The Company does not own any patents or registered copyrights.
Except as disclosed in Schedule 4.14(a), the Company or its Subsidiaries are the
sole and exclusive owners of all right, title and interest in and to all the
Marks and pending applications filed by the Company or its Subsidiaries
therefor. To the knowledge of the Selling Stockholders, the Company or its
Subsidiaries are the sole and exclusive owners of, or have valid and continuing
rights to use, sell and license, as the case may be, all other of the
Intellectual Property and products used, sold or licensed by the Company or its
Subsidiaries in the business as presently conducted and as currently proposed to
be conducted, free and clear of all Liens or obligations to others (except for
those specified licenses, if any, included in Schedule 4.14(a)).
(b) The Intellectual Property owned, used, practiced or otherwise
commercially exploited by the Company or its Subsidiaries, the manufacturing,
licensing, marketing, importation, offer for sale, sale or use of the products
or technology in connection with the business as presently conducted, and the
Company's or its Subsidiaries' present business practices and methods do not
constitute an unauthorized use or misappropriation of any patent, copyright,
trade secret or other similar right, of any Person and, to the knowledge of the
Selling Stockholders, do not infringe, constitute an unauthorized use of, or
violate any other right of any Person (including, without limitation, pursuant
to any non-disclosure agreements or obligations to which the Company or its
Subsidiaries or any of its present or former employees is a party). The
Intellectual Property owned by or licensed to the Company includes all of the
intellectual property rights necessary to enable the Company or its Subsidiaries
to conduct their business in the manner in which such business is currently
being conducted.
(c) Except with respect to licenses of commercial off-the-shelf
Software, and except pursuant to the Intellectual Property Licenses listed in
Schedule 4.14(c), neither the Company nor any of it Subsidiaries is required,
obligated, or under any liability whatsoever, to make any payments by way of
royalties, fees or otherwise to any owner, licensor of, or other claimant to any
Intellectual Property, or other third party, with respect to the use thereof or
in connection with the conduct of the business of the Company and its
Subsidiaries as currently conducted or proposed to be conducted.
(d) Schedule 4.14(d) sets forth an accurate and complete list of all
Patents, registered Marks, pending applications for registrations of any Marks
and unregistered Marks, registered Copyrights, and pending applications for
registration of Copyrights, owned or filed by the Company or its Subsidiaries.
Schedule 4.14(d) lists the jurisdictions in which each such item of Intellectual
Property has been issued or registered or in which any such application for such
issuance and registration has been filed.
(e) Schedule 4.14(e) sets forth a complete and accurate list of all
Contracts to which Company, its Subsidiaries or the Selling Stockholders are a
party (i) granting any Intellectual Property Licenses or (ii) containing a
covenant not to compete or otherwise limiting its ability to (A) exploit fully
any of the Intellectual Property or (B) conduct the business in any market or
geographical area or with any Person.
14
(f) Each of the Intellectual Property Licenses is in full force and
effect and is the legal, valid and binding obligation of the Company and/or its
Subsidiaries, enforceable against them in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity). Neither the Company
nor any Subsidiary is in default under any Intellectual Property License, nor,
to the knowledge of the Company or the Selling Stockholders, is any other party
to any Intellectual Property License in default thereunder, and to the knowledge
of the Selling Stockholders, no event has occurred that with the lapse of time
or the giving of notice or both would constitute a default thereunder. No party
to any of the Intellectual Property Licenses has exercised any termination
rights with respect thereto.
(g) No Trade Secret or any other non-public, proprietary information
material to the business of the Company as presently conducted has been
authorized to be disclosed or, to the knowledge of the Selling Stockholders, has
been actually disclosed by the Company to any employee or any third party other
than pursuant to a non-disclosure agreement restricting the disclosure and use
of the Intellectual Property. The Company and the Selling Stockholders have
taken adequate security measures to protect the secrecy, confidentiality and
value of all the Trade Secrets of the Company or its Subsidiaries and any other
confidential information, including invention disclosures, not covered by any
patents owned or patent applications filed by the Company or its Subsidiaries,
which measures are reasonable in the industry in which the Company operates.
Except as disclosed on Schedule 4.14(g), each employee, consultant and
independent contractor of the Company, has entered into a written non-disclosure
and invention assignment agreement with the Company in a form reasonably
satisfactory to the Company and provided to Purchaser.
(h) As of the date hereof neither the Company nor its Subsidiaries
are the subject of any pending or, to the knowledge of the Selling Stockholders,
threatened Legal Proceedings which involve a claim of infringement, unauthorized
use, or violation by any Person against the Company or its Subsidiaries or
challenging the ownership, use, validity or enforceability of, any material
Intellectual Property. The Company has not received written (including, without
limitation, by electronic mail) notice of any such threatened claim and, to the
knowledge of the Selling Stockholders, there are no facts or circumstances that
would form the basis for any claim of infringement, unauthorized use, or
violation by any Person against the Company or its Subsidiaries, or challenging
the ownership, use, validity or enforceability of any material Intellectual
Property. All of the Company's and its Subsidiaries' rights in and to material
Intellectual Property are valid and enforceable.
(i) To the knowledge of the Selling Stockholders, no Person is
infringing, violating, misusing or misappropriating any material Intellectual
Property of the Company or its Subsidiaries, and no such claims have been made
against any Person by the Company or its Subsidiaries.
15
(j) There are no Orders to which the Company or its Subsidiaries are
a party or by which the Company or its Subsidiaries are bound which restrict, in
any material respect, the rights to use any of the Intellectual Property.
(k) The consummation of the transactions contemplated hereby will not
result in the loss or impairment of Purchaser's right to own or use any of the
Intellectual Property.
(l) No present or former employee has any right, title, or interest,
directly or indirectly, in whole or in part, in any material Intellectual
Property owned or used by the Company or its Subsidiaries. To the knowledge of
the Selling Stockholders, no employee, consultant or independent contractor of
the Company or its Subsidiaries are, as a result of or in the course of such
employee's, consultant's or independent contractor's engagement by the Company
or its Subsidiaries, in default or breach of any material term of any employment
agreement, non-disclosure agreement, assignment of invention agreement or
similar agreement.
(m) Schedule 4.14(m) lists all written Contracts pursuant to which
the Company has agreed to indemnify any other Person against any charge of
infringement of any Intellectual Property
(n) Schedule 4.14(n) sets forth a complete and accurate list of (i)
all Software that is owned exclusively by the Company or its Subsidiaries and is
material to the operation of the business and (ii) all Software that is used by
the Company or its Subsidiaries in the business that is not exclusively owned by
the Company, excluding Software available on reasonable terms through commercial
distributors or in consumer retail stores for a license fee of no more than
$10,000.
(o) Schedule 4.14(o), sets forth a complete and accurate list of all
casings and tobacco blends for the Company's Tobacco Products as well as the
names of all individuals with knowledge of the details of any such casings or
tobacco blends. The parties hereby agree that Schedule 4.14(o) will be delivered
at Closing and that the contents of this schedule will be kept confidential.
4.15 Material Contracts.
(a) Schedule 4.15 sets forth a list of all of the following Contracts
to which the Company or any of its Subsidiaries is a party or by which it is
bound (collectively, the "Material Contracts"):
(i) Contracts with any Selling Stockholder or any current officer
or director of the Company or any of its Subsidiaries;
(ii) Contracts with any labor union or association representing
any employee of the Company or any of its Subsidiaries;
(iii) Contracts pursuant to which any party is required to
purchase or sell a stated portion of its requirements or output from
or to another party;
16
(iv) Contracts for the sale of any of the assets of the Company
or any of its Subsidiaries other than in the Ordinary Course of
Business or for the grant to any person of any preferential rights to
purchase any of its assets;
(v) joint venture alliance or partnership agreements;
(vi) Contracts containing covenants of the Company or any of its
Subsidiaries not to compete in any line of business or with any person
in any geographical area or covenants of any other person not to
compete with the Company or any of its Subsidiaries in any line of
business or in any geographical area;
(vii) Contracts relating to the acquisition by the Company or any
of its Subsidiaries of any operating business or the capital stock of
any other person;
(viii) Contracts relating to the borrowing of money, advances,
loans or guarantees of Indebtedness;
(ix) any other Contracts, other than Real Property Leases, which
involve the expenditure of more than $50,000 in the aggregate or
$25,000 annually or require performance by any party more than one
year from the date hereof;
(x) Contracts providing for severance, retention, change in
control or other similar payments;
(xi) Contracts for the employment of any individual on a
full-time, part-time or consulting or other basis providing annual
compensation in excess of $50,000; and
(xii) Contracts that are otherwise material to the Company and
its Subsidiaries.
(b) There have been made available to Purchaser, and its
representatives true and complete copies of all of the Material Contracts
together with all amendments, modifications or supplements thereto.
(c) Except as set forth on Schedule 4.15, all of the Material
Contracts and other agreements are in full force and effect and are the legal,
valid and binding obligation of the Company and/or its Subsidiaries, enforceable
against them in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally and subject, as to enforceability, to general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity). The Company and/or its Subsidiaries have
performed in all material respects and, to the knowledge of the Selling
Stockholders, the other parties thereto have performed in all material respects
all obligations required to be performed under the Material Contracts. Neither
the Company nor any Subsidiary is in default under any Material Contract, nor,
to the knowledge of the Selling Stockholders, is any other party to any Material
Contract in default thereunder, and no event has occurred that with the lapse of
time or the giving of notice or both would constitute a default thereunder. No
party to any of the Material Contracts has exercised any termination rights with
respect thereto.
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4.16 Employee Benefits Plans.
(a) Schedule 4.16(a) sets forth a correct and complete list of: (i)
all "employee benefit plans" as defined in Section 3(3) of ERISA, including any
"multiemployer plans" as defined in Section 3(37) of ERISA ("Multiemployer
Plans"), (ii) all other benefit arrangements or payroll practices, including,
without limitation, bonus or other incentive compensation, stock or
equity-related award, restricted stock, stock ownership, stock purchase, stock
option, stock appreciation right, phantom stock, deferred compensation,
profit-sharing, retirement, severance, retention, sick leave, vacation, salary
continuation, leave of absence, layoff, disability, hospitalization, medical,
life insurance, accident, employee loan, educational assistance, scholarship,
dependent care assistance, legal assistance, cafeteria, club membership,
employee discount and fringe Company Plans, programs, agreements or
arrangements, and (iii) all employment, consulting, termination, severance,
retention, change in control and individual compensation agreements or
arrangements; in each case which the Company or any of its Subsidiaries has any
obligation or liability (contingent or otherwise) (collectively, the "Company
Plans"). None of the Company Plans is subject to Title IV of ERISA ("Title IV
Plan"), and neither the Company nor any of its Subsidiaries nor any of their
respective ERISA Affiliates has ever had any obligation (contingent or
otherwise) with respect to any Title IV Plan, except as set forth in Schedule
4.16(a).
(b) True, correct and complete copies of the following documents (if
applicable), with respect to each of the Company Plans, have been delivered to
Purchaser: (i) the most recent document constituting the Company Plan and
related trust documents and insurance contracts, and all amendments thereto,
(ii) the most recent Forms 5500 and attached schedules filed with the Internal
Revenue Service, (iii) the most recent financial statements and actuarial
valuations (including for purposes of Financial Accounting Standards Board
reports nos. 87, 106 and 112), (iv) the most recent Internal Revenue Service
determination letter, (v) the most recent summary plan description (including
letters or other documents updating such descriptions) and all related summaries
of material modifications, and (vi) a written description of any non-written
Company Plan or any non-written agreement relating to any Company Plan.
(c) Each of the Company Plans intended to qualify under Section 401
of the Code so qualifies, the trust maintained thereto is exempt from federal
income taxation under Section 501 of the Code, each such plan has applied for a
favorable determination letter as to its qualified status from the Internal
Revenue Service and indicating that such plan meets the requirements of GUST (as
that term is defined in IRS Revenue Procedure 2002-6, 2002-1 I.R.B. 203), and
nothing has occurred with respect to the operation of any such plan which could
cause the loss of such qualification or exemption or the imposition of any
liability, penalty or Tax under ERISA or the Code.
(d) Each of the Company Plans complies, and has been administered and
operated in compliance, in all material respects in accordance with its terms
and all provisions of applicable Law. All amendments and actions required to
bring each of the Company Plans into conformity in all material respects with
all of the applicable provisions of the Code, ERISA and other applicable Laws
have been made or taken except to the extent that such amendments or actions are
not required by Law to be made or taken until a date after the Closing Date and
as disclosed on Schedule 4.16(d). No individual who has performed services for
18
any of the Company Entities has been improperly excluded from participation in
any Company Plan. There are no audits or proceedings initiated pursuant to the
Employee Plans Compliance Resolution System or similar proceedings pending with
the Internal Revenue Service or the United States Department of Labor with
respect to any Company Plan. Neither the Company nor any of its Subsidiaries nor
any "party in interest" or "disqualified person" with respect to the Company
Plans has engaged in a non-exempt "prohibited transaction" within the meaning of
Section 4975 of the Code or Section 406 of ERISA. No fiduciary has any liability
for breach of fiduciary duty or any other failure to act or comply in connection
with the administration or investment of the assets of any Company Plan.
(e) Neither the Company nor any of its Subsidiaries nor any of their
respective ERISA Affiliates has withdrawn in a complete or partial withdrawal
from any Multiemployer Plan prior to the Closing Date, nor has any of them
incurred any liability due to the termination or reorganization of a
Multiemployer Plan. Purchaser shall not have (i) any obligation to make any
contribution to any Multiemployer Plan or (ii) any withdrawal liability from any
Multiemployer Plan under Section 4201 of ERISA which it would not have had but
for the consummation of the transactions contemplated by this Agreement.
(f) All contributions, premiums and other payments required by Law or
by the terms of any Company Plan or any agreement relating thereto have been
timely made (without regard to any waivers granted with respect thereto) to any
fund or trust established thereunder or in connection therewith, no accumulated
funding deficiencies exist in any of such plans subject to Section 412 of the
Code, and all contributions, liabilities or expenses of any Company Plan
(including workers' compensation) for any period ending on or before the Closing
Date which are not yet due will have been paid or accrued on the Closing
Statement on or prior to the Closing Date.
(g) Except as set forth on Schedule 4.16(a), there is no "amount of
unfunded benefit liabilities" (as defined in Section 4001(a)(18) of ERISA) in
any of the Title IV Plans. Subject to Section 6.13, each of the Title IV Plans
are fully funded in accordance with the actuarial assumptions used by the
Pension Benefit Guaranty Corporation ("PBGC") to determine the level of funding
required in the event of the termination of a Title IV Plan and the "benefit
liabilities" (as defined in Section 4001(a)(16) of ERISA) of such Title IV Plan
using such PBGC assumptions do not exceed the assets of such Title IV Plan.
(h) There has been no "reportable event" (as defined in Section 4043
of ERISA) with respect to the Title IV Plans that would require the giving of
notice or any event requiring disclosure under Section 4041(c)(3)(C) or 4063(a)
of ERISA.
(i) Neither the Company nor any its Subsidiaries nor any of their
respective ERISA Affiliates has terminated any Title IV Plan, or incurred any
outstanding liability under Section 4062 of ERISA to the PBGC or to a trustee
appointed under Section 4042 of ERISA. All premiums due the PBGC with respect to
the Title IV Plans have been paid.
(j) No liability under any Company Plan or Title IV Plan has been
funded nor has any such obligation been satisfied with the purchase of a
contract from an insurance company that is not rated AA by Standard & Poor's
Corporation or the equivalent by any other nationally recognized rating agency.
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(k) Neither the Company nor any of its Subsidiaries nor any of their
respective ERISA Affiliates, or any organization to which the Company or any of
its Subsidiaries is a successor corporation or parent corporation within the
meaning of Section 4069(b) of ERISA has engaged in any transaction within the
meaning of Section 4069 or 4212(c) of ERISA.
(l) There are no pending or, to the knowledge of the Selling
Stockholders, threatened actions, claims or lawsuits which have been asserted or
instituted against any of the Company Plans, the assets of any such plans, or
the plan sponsor, plan administrator or any fiduciary of the Company Plans with
respect to the administration or operation of such plans (other than routine,
uncontested benefit claims in the ordinary course of business), and there are no
facts or circumstances which could form the basis for any such action, claim or
lawsuit.
(m) There has been no material violation of ERISA or the Code with
respect to the filing of applicable returns, reports, documents and notices
regarding any of the Company Plans with the Secretary of Labor or the Secretary
of the Treasury or the furnishing of such notices or documents to the
participants or beneficiaries of the Company Plans. Any bonding required with
respect to the Company Plans in accordance with applicable provisions of ERISA
has been obtained and is in full force and effect.
(n) Neither the Company nor any of its Subsidiaries provides, or is
obligated to provide, any life insurance or health benefits, including
prescription drugs (whether or not insured) to any individual after his or her
termination of employment or service with the Company or any of its
Subsidiaries, except as may be required under COBRA and at the expense of the
individual or the individual's beneficiary. Each of the Company, its
Subsidiaries and their respective ERISA Affiliates which maintains a "group
health plan" within the meaning of Section 5000(b)(1) of the Code has complied
in all material respects with the notice and continuation requirements of COBRA
and the regulations thereunder.
(o) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will, either alone or in
combination with another event, (i) result in any payment becoming due, or
increase the amount of compensation due, to any current or former employee of
the Company or any of its Subsidiaries, (ii) increase any benefits otherwise
payable under any Company Plan, or (iii) result in the acceleration of the time
of payment or vesting of any such compensation or benefits.
(p) Neither the Company nor any of its Subsidiaries has a contract,
plan or commitment, whether legally binding or not, to create any additional
Company Plan or to modify any existing Company Plan.
(q) No stock or other security issued by the Company or any of its
Subsidiaries forms or has formed a material part of the assets of any Company
Plan.
(r) Any individual who performs services for the Company or any of
its Subsidiaries (other than through a contract with an organization other than
such individual) and who is not treated as an employee of the Company or any of
its Subsidiaries for Federal income tax purposes by the Company or any of its
Subsidiaries is not an employee for such purposes.
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(s) The Company does not and has not maintained a Plan described in
Section 4(b)(4) of ERISA (a "Foreign Plan").
4.17 Employees and Labor.
(a) Neither the Company nor any of its Subsidiaries is a party to or
otherwise bound by any labor or collective bargaining agreement and there are no
labor or collective bargaining agreements which pertain to employees of the
Company or any of its Subsidiaries.
(b) No labor organization or group of employees of the Company or any
of its Subsidiaries has ever made a pending demand for recognition, and there
has never been any representation or certification proceeding, or petition
seeking a representation proceeding, pending or, to the knowledge of the Selling
Stockholders, threatened to be brought or filed, with the National Labor
Relations Board, other labor relations tribunal or Governmental Body with
respect to the Company or any of its Subsidiaries. There has never been any
organizing activity involving the Company or any of its Subsidiaries by any
labor organization or group of employees of the Company or any of its
Subsidiaries.
(c) There has never been any strikes, work stoppages, slowdowns,
picketing, walkouts, lockouts, other job actions, arbitrations, grievances,
unfair labor practice charges or complaints or other labor disputes pending or,
to the knowledge of the Selling Stockholders, threatened against or involving
the Company or any of its Subsidiaries and, to the knowledge of the Selling
Stockholders, there are no acts or circumstances which could form the basis for
any of the foregoing.
(d) Except as disclosed on Schedule 4.17(d), there are no complaints,
charges, actions, claims or lawsuits against the Company or any of its
Subsidiaries pending or, to knowledge of the Selling Stockholders, threatened,
with any Governmental Body based on, arising out of, in connection with or
otherwise relating to the employment or services, termination of employment or
services, or failure to employ or retain by the Company or any of its
Subsidiaries of any individual, including but not limited to claims under ERISA,
the Civil Rights laws, Americans with Disabilities Act, Age Discrimination in
Employment Act (as amended by the Older Workers Benefit Protection Act),
Pregnancy Discrimination Act, Equal Pay Act, Fair Labor Standards Act, Worker
Adjustment and Retraining Notification Act and any similar state or local Law
("WARN"), and Family and Medical Leave Act, and, to the knowledge of the Selling
Stockholders, there are no facts or circumstances which could form the basis for
any of the foregoing. There are no pending or, to the knowledge of the Selling
Stockholders, threatened investigations of or relating to the Company or any of
its Subsidiaries by any Governmental Body responsible for the enforcement of
labor or employment Laws. Each of the Company and its Subsidiaries is in
compliance with all Laws and Orders relating to the employment of labor,
including all such Laws and Orders relating to wages, hours, collective
bargaining, discrimination, civil rights, safety and health, workers'
compensation and the collection and payment of withholding and/or social
security Taxes and any similar Tax except for immaterial non-compliance. There
has been no "mass layoff" or "plant closing" (as defined by WARN) with respect
to the Company or any of its Subsidiaries within the six months prior to
Closing.
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4.18 Litigation. Except as set forth in Schedule 4.18, there is no
Legal Proceeding pending or, to the knowledge of the Selling Stockholders,
threatened against the Company or any of its Subsidiaries (or to the knowledge
of the Selling Stockholders, pending or threatened, against any of the officers,
directors or employees of the Company or any of its Subsidiaries with respect to
their business activities on behalf of the Company), or to which the Selling
Stockholders or the Company or any of its Subsidiaries is otherwise a party,
before any Governmental Body; nor to the knowledge of the Selling Stockholders
is there any reasonable basis for any such Legal Proceeding. Neither the Company
nor any Subsidiary is subject to any Order except to the extent the same are not
reasonably likely individually or in the aggregate to have a Material Adverse
Effect. Except as set forth in Schedule 4.18, neither the Company nor any
Subsidiary is engaged in any legal action to recover monies due it or for
damages sustained by it.
4.19 Compliance with Laws; Permits.
(a) The Company and its Subsidiaries are in compliance in all
material respects with all Laws of any Governmental Body applicable to its
business, operations or assets. Neither the Company nor any Subsidiary have
received any notice or been charged with the violation of any Laws. To the
knowledge of the Selling Stockholders, neither the Company nor any Subsidiary is
under investigation with respect to the violation of any Laws and, to the
knowledge of the Company or the Selling Stockholders, there are no facts or
circumstances which could form the basis for any such violation.
(b) Schedule 4.19 contains a list of all Permits which are held by
the Company or its Subsidiaries for the operation of the business as presently
conducted and as presently intended to be conducted. The Company and its
Subsidiaries currently have all Permits which are required for the operation of
the business as presently conducted.
(c) Neither the Company nor its Subsidiaries are in default or
violation (and no event has occurred which, with notice or the lapse of time or
both, would constitute a default or violation) in any material respect of any
term, condition or provision of any Permit to which it is a party, to which the
business is subject or by which its properties or assets are bound, and to the
knowledge of the Selling Stockholders, there are no facts or circumstances which
could form the basis for any such default or violation.
4.20 Tobacco Matters.
(a) The licenses, approvals, consents, franchises and other permits
described on Schedule 4.20(a) are in full force and effect, and such licenses,
approvals, consents, franchises and Permits constitute all of the licenses,
approvals, consents, franchises and Permits that are required under the Tobacco
Laws as of the date of this Agreement to permit the Company and its Subsidiaries
to conduct its business operations as currently conducted.
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(b) Except as set forth on Schedule 4.20(b), (i) no written notices
of any violation or alleged violation of any Tobacco Law relating to the
operations or properties of the Company or its Subsidiaries have been received
by the Selling Stockholders, the Company or its Subsidiaries, (ii) the Company
or its Subsidiaries are in material compliance with all Tobacco Laws and (iii)
there are no writs, injunctions, decrees, orders or judgments outstanding, or
any actions, suits, claims, proceedings or, to the knowledge of the Selling
Stockholders, investigations pending or, to the knowledge of the Selling
Stockholders, threatened, against the Company or its Subsidiaries, and, to the
knowledge of the Selling Stockholders, there are no disputes involving the
Company or its Subsidiaries, relating to compliance with any Tobacco Laws.
(c) Except as set forth in Schedule 4.20(c), neither the Company nor
any of its Subsidiaries have made any written Health Claims in or on any
packaging, label, marketing or promotional materials used or held for use by the
Company or any Subsidiaries in marketing any (a) product that contains nicotine,
is intended to be burned or heated under ordinary conditions of use, and
consists of or contains (i) any roll of tobacco wrapped in paper or in any
substance not containing tobacco; (ii) tobacco, in any form, that is functional
in the product, which, because of its appearance, the type of tobacco used in
the filler, or its packaging and labeling, is likely to be offered to, or
purchased by, consumers as a cigarette; or (iii) any roll of tobacco wrapped in
any substance containing tobacco which, because of its appearance, the type of
tobacco used in the filler, or its packaging and labeling, is likely to be
offered to, or purchased by, consumers as a cigarette described in clause (i) of
this definition, including "roll-your-own" tobacco, which means any tobacco
which, because of its appearance, type, packaging, or labeling is suitable for
use and likely to be offered to, or purchased by, consumers as tobacco for
making cigarettes, (b) any smokeless tobacco products, including but not limited
to chew products or moist snuff, or (c) pipe tobacco products ("Tobacco
Products"). For the purposes of this Section 4.20, the term "Health Claims"
means any claims that using Tobacco Products marketed by the Company or any
Subsidiaries is not injurious to human health or less injurious to human health
than using Tobacco Products marketed by other companies.
4.21 Environmental Matters. Except as set forth on Schedule 4.21
hereto:
(a) the operations of the Company and each of its Subsidiaries are
and have been in material compliance with all applicable Environmental Laws
which compliance includes obtaining, maintaining in good standing and complying
with all Permits required by Environmental Laws ("Environmental Permits") and no
action or proceeding is pending or, to the knowledge of the Selling
Stockholders, threatened to revoke, modify or terminate any such Environmental
Permit and, to the knowledge of the Selling Stockholders, no facts,
circumstances or conditions currently exist that could adversely affect such
continued material compliance with Environmental Laws and Environmental Permits;
(b) neither the Company nor any of its Subsidiaries is the subject of
any outstanding written order or Contract with any Governmental Body or person
respecting (i) Environmental Laws, (ii) Remedial Action or (iii) any Release or
threatened Release of a Hazardous Material;
(c) no claim has been made or is pending, or to the knowledge of the
Selling Stockholders, threatened against the Company or any Subsidiary alleging
that the Company or any of its Subsidiaries may be in violation of any
Environmental Law or Environmental Permit, or may have any liability under any
Environmental Law;
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(d) to the knowledge of the Selling Stockholders no facts,
circumstances or conditions exist with respect to the Company or any of the
Subsidiaries or any property currently or formerly owned, operated or leased by
the Company or any of its Subsidiaries or any property to which the Company or
any of its Subsidiaries arranged for the storage, disposal or treatment of
Hazardous Materials that could reasonably be expected to result in the Company
or any of its Subsidiaries incurring unbudgeted Environmental Costs and
Liabilities;
(e) to the knowledge of the Selling Stockholders, there are no
investigations of the business, operations, or currently or previously owned,
operated or leased property of the Company or any of its Subsidiaries pending
or, to the knowledge of the Selling Stockholders, threatened which could lead to
the imposition of any Environmental costs and liabilities or liens under
Environmental Law;
(f) there is not located at any of the properties of the Company or
any of its Subsidiaries any (i) underground storage tanks, (ii)
asbestos-containing material or (iii) equipment containing polychlorinated
biphenyls;
(g) the transaction contemplated hereunder does not require the
consent of or filings with any Governmental Body with jurisdiction over the
Company or the Subsidiaries and environmental matters, and no real estate owned
or leased by the Company or any Subsidiary is located in New Jersey or
Connecticut; and
(h) the Selling Stockholders have provided to Purchaser all
environmental audits, studies, reports, analyses, and results of investigations
that have been performed with respect to the currently or previously owned,
leased or operated properties of the Company or any of its Subsidiaries.
4.22 Insurance. The Company and its Subsidiaries have insurance
policies in full force and effect for such amounts as are sufficient for all
requirements of Law and all agreements to which the Company or any of its
Subsidiaries is a party or by which it is bound. Set forth in Schedule 4.22 is a
list of all insurance policies and all fidelity bonds held by or applicable to
the Company or any of its Subsidiaries setting forth, in respect of each such
policy, the policy name, policy number, carrier, term, type and amount of
coverage and annual premium. Except as set forth on Schedule 4.22, no event
relating to the Company or any of its Subsidiaries has occurred which could
reasonably be expected to result in a retroactive upward adjustment in premiums
under any such insurance policies. Excluding insurance policies that have
expired and been replaced in the Ordinary Course of Business, no insurance
policy has been canceled within the last two (2) years and, to the knowledge of
the Selling Stockholders, no threat has been made to cancel any insurance policy
of the Company or any of its Subsidiaries during such period. Except as noted on
Schedule 4.22, all such insurance will remain in full force and effect
immediately following the consummation of the transactions contemplated hereby.
No event has occurred, including, without limitation, the failure by the Company
or any of its Subsidiaries to give any notice or information or the Company or
any of its Subsidiaries giving any inaccurate or erroneous notice or
information, which limits or impairs the rights of the Company or any of its
Subsidiaries under any such insurance policies.
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4.23 Inventories; Receivables; Payables.
(a) The inventories of the Company and its Subsidiaries are in good
and merchantable condition, and are saleable in the Ordinary Course of Business.
The inventories of the Company and its Subsidiaries set forth in the Balance
Sheet were properly stated therein in accordance with GAAP consistently applied.
Adequate reserves have been reflected in the Balance Sheet for excess, obsolete
or otherwise unusable inventory, which reserves were calculated in a manner
consistent with past practice and in accordance with GAAP consistently applied.
The inventories of the Company and its Subsidiaries constitute sufficient
quantities for the normal operation of business in accordance with past
practice.
(b) All accounts and notes receivable of the Company and its
Subsidiaries have arisen from bona fide transactions in the Ordinary Course of
Business consistent with past practice and payable on ordinary trade terms. All
accounts and notes receivable of the Company and its Subsidiaries reflected on
the Balance Sheet are good and collectible at the aggregate recorded amounts
thereof, net of any applicable reserve for returns or doubtful accounts
reflected thereon, which reserves are adequate and were calculated in a manner
consistent with past practice and in accordance with GAAP consistently applied.
All accounts and notes receivable arising after the Balance Sheet Date are good
and collectible at the aggregate recorded amounts thereof, net of any applicable
reserve for returns or doubtful accounts, which reserves are adequate and were
calculated in a manner consistent with past practice and in accordance with GAAP
consistently applied.
(c) All accounts payable of the Company and its Subsidiaries
reflected in the Balance Sheet or arising after the date thereof are the result
of bona fide transactions in the Ordinary Course of Business and have been paid
or are not yet due and payable.
4.24 Related Party Transactions.
(a) Except as set forth on Schedule 4.24, no member of the Selling
Stockholders has borrowed any moneys from or has outstanding any indebtedness or
other similar obligations to the Company. Except as set forth in Schedule 4.24,
no member of the Selling Stockholders (i) owns any direct or indirect interest
of any kind in, or controls or is a director, officer, employee or partner of,
or consultant to, or lender to or borrower from or has the right to participate
in the profits of, any Person which is (A) a competitor, supplier, customer,
landlord, tenant, creditor or debtor of the Company or any of its Subsidiaries,
(B) engaged in a business related to the business of the Company or any of its
Subsidiaries, or (C) a participant in any transaction to which the Company or
any of its Subsidiaries is a party or (ii) is a party to any Contract with the
Company or any of its Subsidiaries.
(b) Each Contract between the Company or any Subsidiary, on the one
hand, and any member of the Selling Stockholders, on the other hand, is on
commercially reasonable terms no more favorable to any party thereto than what
any third party negotiating on an arms-length basis could expect.
4.25 Customers and Suppliers. Schedule 4.25 sets forth a list of the
twenty (20) largest customers and the twenty (20) largest suppliers of the
Company and its Subsidiaries, as measured by the dollar amount of purchases
there from or thereby, during each of the fiscal years ended January 31, 2003
25
and January 31, 2002, showing the approximate total sales and the types of
products sold by the Company and its Subsidiaries to each such customer and the
approximate total purchases and types of materials purchased by the Company and
its Subsidiaries from each such supplier, during such period. Since the Balance
Sheet Date, there has not been any material adverse change in the business
relationship of the Company and its Subsidiaries with any customer or supplier
listed on Schedule 4.25 and to the knowledge of the Selling Stockholders, no
customer or supplier listed on Schedule 4.25 has notified the Company or its
Subsidiaries that it intends to terminate or materially reduce or change the
pricing or other terms of its business with the Company or any of its
Subsidiaries.
4.26 Banks. Schedule 4.26 contains a complete and correct list of the
names and locations of all banks in which Company or any Subsidiary has accounts
or safe deposit boxes and the names of all persons authorized to draw thereon or
to have access thereto. Except as set forth on Schedule 4.26, no person holds a
power of attorney to act on behalf of the Company or any Subsidiary.
4.27 Disclosure. This Agreement and the Selling Stockholder Documents
and their respective schedules and exhibits delivered by or on behalf of the
Selling Stockholders hereunder and thereunder are true, correct and complete in
all material respects. No representation or warranty of the Selling Stockholders
contained in this Agreement or in any of the Selling Stockholder Documents and
no written statement made by or on behalf of the Selling Stockholders to
Purchaser or any of its Affiliates pursuant to this Agreement or any of the
Selling Stockholder Documents contains an untrue statement of a material fact or
omits to state a material fact necessary to make the statements contained herein
or therein not misleading.
4.28 Financial Advisors. Except as set forth on Schedule 4.28, no
Person has acted, directly or indirectly, as a broker, finder or financial
advisor for the Selling Stockholders or the Company in connection with the
transactions contemplated by this Agreement and no Person is entitled to any fee
or commission or like payment in respect thereof.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to the Selling Stockholders
that:
5.1 Organization and Good Standing. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
5.2 Authorization of Agreement. Purchaser has full corporate power
and authority to execute and deliver this Agreement and each other agreement,
document, instrument or certificate contemplated by this Agreement or to be
executed by Purchaser in connection with the consummation of the transactions
contemplated hereby and thereby (the "Purchaser Documents"), and to consummate
the transactions contemplated hereby and thereby. The execution, delivery and
performance by Purchaser of this Agreement and each Purchaser Document have been
duly authorized by all necessary corporate action on behalf of Purchaser. This
26
Agreement has been, and each Purchaser Document will be at or prior to the
Closing, duly executed and delivered by Purchaser and (assuming the due
authorization, execution and delivery by the other parties hereto and thereto)
this Agreement constitutes, and each Purchaser Document when so executed and
delivered will constitute, legal, valid and binding obligations of Purchaser,
enforceable against Purchaser in accordance with their respective terms, subject
to applicable bankruptcy, insolvency, reorganization, moratorium and similar
laws affecting creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
5.3 Conflicts; Consents of Third Parties.
(a) Except as set forth on Schedule 5.3, none of the execution and
delivery by Purchaser of this Agreement and of Purchaser Documents, consummation
of the transactions contemplated hereby or thereby, or the compliance by
Purchaser with any of the provisions hereof or thereof will (i) conflict with,
or result in the breach of, any provision of the certificate of incorporation or
by-laws of Purchaser, (ii) conflict with, violate, result in the breach of, or
constitute a default under any note, bond, mortgage, indenture, license,
agreement or other obligation to which Purchaser is a party or by which
Purchaser or its properties or assets are bound or (iii) violate any statute,
rule, regulation, order or decree of any Governmental Body or authority by which
Purchaser is bound, except, in the case of clauses (ii) and (iii), for such
violations, breaches or defaults as individually or in the aggregate, could not
reasonably be expected to have a material adverse effect on the ability of
Purchaser to consummate the transactions contemplated by this Agreement.
(b) No consent, waiver, approval, Order, Permit or authorization of,
or declaration or filing with, or notification to, any Person or Governmental
Body is required on the part of Purchaser in connection with the execution and
delivery of this Agreement or Purchaser Documents or the compliance by Purchaser
with any of the provisions hereof or thereof.
5.4 Litigation. There are no Legal Proceedings pending or, to the
knowledge of Purchaser, threatened that are reasonably likely to prohibit or
obtain substantial damages in connection with the consummation of the
transactions contemplated hereby.
5.5 Investment Intention. Purchaser is acquiring the Shares for its
own account, for investment purposes only and not with a view to the
distribution (as such term is used in Section 2(11) of the Securities Act.
Purchaser understands that the Shares have not been registered under the
Securities Act and cannot be sold unless subsequently registered under the
Securities Act or an exemption from such registration is available.
5.6 Financial Advisors. Except as set forth on Schedule 5.6, no
Person has acted, directly or indirectly, as a broker, finder or financial
advisor for Purchaser in connection with the transactions contemplated by this
Agreement and no person is entitled to any fee or commission or like payment in
respect thereof.
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ARTICLE VI.
COVENANTS
6.1 Access to Information. The Selling Stockholders agree that, prior
to the Closing Date, they shall cause the Company and its Subsidiaries to permit
Purchaser, through its officers, employees and representatives (including,
without limitation, its legal and financial advisors and accountants), to make
such investigation of the properties, businesses and operations of the Company
and its Subsidiaries and such examination of the books, records and financial
condition of the Company and its Subsidiaries as it reasonably requests and to
make extracts and copies of such books and records. Any such investigation and
examination shall be conducted during regular business hours and under
reasonable circumstances, and the Selling Stockholders shall cooperate, and
shall cause the Company and its Subsidiaries to cooperate, fully therein. No
investigation by Purchaser prior to or after the date of this Agreement shall
diminish or obviate any of the representations, warranties, covenants or
agreements of the Selling Stockholders contained in this Agreement or the
Selling Stockholder Documents. In order that Purchaser may have full opportunity
to make such physical, business, accounting and legal review, examination or
investigation as it may reasonably request of the affairs of the Company and its
Subsidiaries, the Selling Stockholders shall cause the officers, employees,
consultants, agents, accountants, attorneys and other representatives of the
Company and its Subsidiaries to cooperate fully with such representatives in
connection with such review and examination.
6.2 Conduct of the Business Pending the Closing.
(a) Except as otherwise expressly contemplated by this Agreement or
with the prior written consent of Purchaser (which consent shall not
unreasonably be withheld), the Selling Stockholders shall cause the Company and
its Subsidiaries to:
(i) conduct the respective businesses of the Company and its
Subsidiaries only in the Ordinary Course of Business;
(ii) use their best efforts to (A) preserve their present
business operations, organization (including, without limitation,
management and the sales force) and goodwill of the Company and its
Subsidiaries and (B) preserve their present relationship with Persons
having business dealings with the Company and its Subsidiaries;
(iii) maintain (A) all of the assets and properties of the
Company and its Subsidiaries in their current condition, ordinary wear
and tear excepted and (B) insurance upon all of the properties and
assets of the Company and its Subsidiaries in such amounts and of such
kinds comparable to that in effect on the date of this Agreement;
(iv) (A) maintain the books, accounts and records of the Company
and its Subsidiaries in the Ordinary Course of Business, (B) continue
to collect accounts receivable and pay accounts payable utilizing
normal procedures and without discounting or accelerating payment of
such accounts, and (C) comply in all material respects with all
contractual and other obligations applicable to the operation of the
Company and its Subsidiaries; and
28
(v) comply in all material respects with applicable laws,
including, without limitation, Environmental Laws.
(b) Except as otherwise expressly contemplated by this Agreement or
with the prior written consent of Purchaser, the Selling Stockholders shall
cause the Company and its Subsidiaries not to:
(i) declare, set aside, make or pay any dividend or other
distribution in respect of the capital stock of the Company or
repurchase, redeem or otherwise acquire any outstanding shares of the
capital stock or other securities of, or other ownership interests in,
the Company or any of its Subsidiaries;
(ii) transfer, issue, sell or dispose of any shares of capital
stock or other securities of the Company or any of its Subsidiaries or
grant options, warrants, calls or other rights to purchase or
otherwise acquire shares of the capital stock or other securities of
the Company or any of its Subsidiaries;
(iii) effect any recapitalization, reclassification, stock split
or like change in the capitalization of the Company or any of its
Subsidiaries;
(iv) amend the certificate of incorporation or by-laws of the
Company or any of its Subsidiaries;
(v) (A) increase the annual level of compensation of any employee
of the Company or any of its Subsidiaries, (B) increase the annual
level of compensation payable or to become payable by the Company or
any of its Subsidiaries to any of their respective executive officers,
(C) grant any unusual or extraordinary bonus, benefit or other direct
or indirect compensation to any employee, director or consultant, (D)
increase the coverage or benefits available under any (or create any
new) severance pay, termination pay, vacation pay, company awards,
salary continuation for disability, sick leave, deferred compensation,
bonus or other incentive compensation, insurance, pension or other
employee benefit plan or arrangement made to, for, or with any of the
directors, officers, employees, agents or representatives of the
Company or any of its Subsidiaries or otherwise modify or amend or
terminate any such plan or arrangement or (E) enter into any
employment, deferred compensation, severance, consulting,
non-competition or similar agreement (or amend any such agreement) to
which the Company or any of its Subsidiaries is a party or involving a
director, officer or employee of the Company or any of its
Subsidiaries in his or her capacity as a director, officer or employee
of the Company or any of its Subsidiaries;
(vi) incur or assume any Indebtedness;
(vii) subject to any Lien (except for leases that do not
materially impair the use of the property subject thereto in their
respective businesses as presently conducted), any of the properties
or assets (whether tangible or intangible) of the Company or any of
its Subsidiaries;
29
(viii) acquire any material properties or assets or sell, assign,
transfer, convey, lease or otherwise dispose of any of the material
properties or assets of the Company and its Subsidiaries;
(ix) cancel or compromise any debt or claim or waive or release
any material right of the Company or any of its Subsidiaries except in
the Ordinary Course of Business;
(x) enter into any commitment for capital expenditures of the
Company and its Subsidiaries in excess of $25,000 for any individual
commitment and $50,000 for all commitments in the aggregate;
(xi) enter into, modify or terminate any labor or collective
bargaining agreement of the Company or any of its Subsidiaries or,
through negotiation or otherwise, make any commitment or incur any
liability to any labor organization with respect to the Company or any
of its Subsidiaries;
(xii) introduce any material change with respect to the operation
of the Company or any of its Subsidiaries, including any material
change in the types, nature, composition or quality of its products or
services, make any change in any of its product lines or make any
material change in product specifications or prices or terms of
distributions of such products;
(xiii) permit the Company or any of its Subsidiaries to enter
into any transaction or to make or enter into any Contract which by
reason of its size, nature or otherwise is not in the Ordinary Course
of Business;
(xiv) except as provided on Schedule 6.2(a), permit the Company
or any of its Subsidiaries to enter into or agree to enter into any
merger or consolidation with, any corporation or other entity, and
engage in any new business or invest in, make a loan, advance or
capital contribution to, or otherwise acquire the securities of any
other Person;
(xv) except as provided on Schedule 6.2(b), and except for
transfers of cash pursuant to normal cash management practices in the
Ordinary Course of Business, permit the Company or any of its
Subsidiaries to make any investments in or loans to, or pay any fees
or expenses to, or enter into or modify any Contract with any Selling
Stockholder, any Affiliate or family member of any Selling
Stockholder, or director, officer or employee of the Company or its
Affiliates (other than the continuation of current salary and benefit
arrangements for employees of the Company and its Subsidiaries);
(xvi) make or rescind any election relating to Taxes, settle or
compromise any claim relating to Taxes, or except as required by
applicable law or GAAP, make any change to any of its accounting or
Tax reporting principles, methods or practices;
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(xvii) enter into any Contract or commitment which restrains,
restricts, limits or impedes the ability of the Company or any of its
Subsidiaries to compete with or conduct any business or line of
business in any geographic area;
(xviii) agree to do anything prohibited by this Section 6.2 or
anything which would make any of the representations and warranties of
the Selling Stockholders in this Agreement or the Selling Stockholder
Documents untrue or incorrect in any material respect; or
(xix) enter into an agreement to become a participating
manufacturer under the Master Settlement Agreement with respect to the
business of the Company or its Subsidiaries.
6.3 Consents. The Selling Stockholders shall use (and shall cause the
Company and its Subsidiaries to use) their reasonable best efforts, and
Purchaser shall cooperate with the Selling Stockholders, to obtain at the
earliest practicable date all consents and approvals required to consummate the
transactions contemplated by this Agreement, including, without limitation, the
consents and approvals referred to in Section 4.2 hereof.
6.4 Further Assurances. Each of the Selling Stockholders and
Purchaser shall use its commercially reasonable best efforts to (i) take all
actions necessary or appropriate to consummate the transactions contemplated by
this Agreement and (ii) cause the fulfillment at the earliest practicable date
of all of the conditions to their respective obligations to consummate the
transactions contemplated by this Agreement.
6.5 Preservation of Records. Subject to Section 8.5(d), hereof
(relating to the preservation of Tax records), the Selling Stockholders and
Purchaser agree that each of them shall preserve and keep the records held by
them relating to the business of the Company and its Subsidiaries for a period
of five (5) years from the Closing Date and shall make such records and
personnel available to the other as may be reasonably required by such party in
connection with, among other things, any insurance claims by, legal proceedings
against or governmental investigations of the Selling Stockholders, the Company
or its Subsidiaries or Purchaser or any of their Affiliates or in order to
enable the Selling Stockholders or Purchaser to comply with their respective
obligations under this Agreement and each other agreement, document or
instrument contemplated hereby or thereby. In the event the Selling Stockholders
or Purchaser wishes to destroy such records after that time, such party shall
first give ninety (90) days prior written notice to the other and such other
party shall have the right at its option and expense, upon prior written notice
given to such party within that ninety (90) day period, to take possession of
the records within one hundred and eighty (180) days after the date of such
notice.
6.6 Publicity. None of the Selling Stockholders nor Purchaser shall
issue any press release or public announcement concerning this Agreement or the
transactions contemplated hereby without obtaining the prior written approval of
the other party hereto, which approval will not be unreasonably withheld or
delayed, unless, in the sole judgment of Purchaser or the Selling Stockholders,
disclosure is otherwise required by applicable Law, provided that, to the extent
required by applicable law, the party intending to make such release shall use
its best efforts consistent with such applicable Law to consult with the other
party with respect to the text thereof.
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6.7 Use of Name. The Selling Stockholders hereby agree that upon the
consummation of the transactions contemplated hereby, Purchaser and the Company
shall have the sole right to the use of the names "Xxxxxx, Inc.", "RBJ Sales,
Inc." and "Xxxx Xxxxxx & Sons, Inc." and any service marks, trademarks, trade
names, logos, emblems, signs or insignias related thereto (but not the name RBJ
Machinery LLC or any related service marks, trademarks, trade names, logos,
emblems, signs or insignias) and, the Selling Stockholders shall not, and shall
cause their Affiliate not to, use such name or any variation or simulation
thereof in any business involving the manufacture, packaging, or importing of
tobacco products for sale or distribution within the United States or any
related business.
6.8 Environmental Matters.
(a) The Company shall permit, and the Selling Stockholders shall
cause the Company to permit, Purchaser and Purchaser's environmental consultant,
to conduct such investigations (including investigations known as "Phase I" and
"Phase II" environmental Site Assessments) of the environmental conditions of
any real property owned, operated or leased by or for the Company or any
Subsidiary and the operations conducted there at (subject to any limitations
contained in valid, previously executed leases as Purchaser, in its sole
discretion, shall deem necessary or prudent ("Purchaser's Environmental
Assessments"). Purchaser's Environmental Assessment shall be conducted by a
qualified environmental consulting firm, possessing reasonable levels of
insurance, in compliance with applicable Laws and in a manner that minimizes the
disruption of the operations of the Company.
(b) The Company shall, and the Selling Stockholders shall cause the
Company, to promptly file all materials required by Environmental Laws as a
result of or in furtherance of the transaction contemplated hereunder, and all
requests required or necessary for the transfer or re-issuance of Environmental
Permits required to conduct the Company's business. Purchaser shall cooperate
with Selling Stockholders with respect to such filings.
6.9 Cooperation with Financing. In order to assist Purchaser with any
financing relating to the transactions contemplated hereby, the Selling
Stockholders shall, and shall cause the Company and its Subsidiaries to, provide
such assistance and cooperation as Purchaser and its Affiliates may reasonably
request, including, but not limited to, cooperation in the preparation of any
offering memorandum or similar document, cooperating with initial purchasers or
placements agents, cooperation with prospective lenders in performing their due
diligence, performing environmental assessments and causing the Company's
auditors to provide such opinions or "comfort letters" as may be reasonably
requested by the initial purchasers or placement agents for any securities to be
issued by Purchaser.
6.10 Escrow Obligations Under Qualifying Statutes.
(a) The Selling Stockholders shall cause the Company and each of its
Subsidiaries to be in compliance on the Closing Date with the Qualifying
Statutes to which it is subject, including, without limitation, by making
payment of the amount of any and all Escrow Obligations required to be paid into
the Company's escrow accounts maintained in accordance with the Qualifying
Statutes, and any other statutory or penalty payments required under the
Qualifying Statutes, as shall be necessary, as determined by the Applicable
States (as defined below).
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(b) The Selling Stockholders shall provide to Purchaser, at least
five (5) Business Days prior to the Closing Date, based on the shipping records
of the Company and each of its Subsidiaries relating to sales of Tobacco
Products into the Applicable States in form and substance reasonably
satisfactory to Purchaser, a spread sheet setting forth the number of ounces of
roll-your-own tobacco products sold in each Applicable State and the Escrow
Obligations of the Company and its Subsidiaries in each Applicable State during
calendar year 2003 through and including October 31st, 2003 (the "Estimated 2003
Pre-Closing Escrow Obligations"). No later than five (5) Business Days after the
Closing Date, Selling Stockholders shall deliver to Purchaser a spread sheet
setting forth the number of ounces of roll-your-own tobacco products sold in
each Applicable State and the Escrow Obligations of the Company and its
Subsidiaries in each Applicable State from November 1, 2003 through and
including the Closing Date. The Selling Stockholders and Purchaser agree to use
their best efforts to reach agreement on the amount of the Estimated 2003
Pre-Closing Escrow Obligations in each Applicable State. If Purchaser and the
Selling Stockholders are unable to reach such agreement, they shall promptly
thereafter cause the Accounting Referee to review this Agreement and the
shipping records of the Company and each of its Subsidiaries relating to sales
into the Applicable States for the purpose of calculating the Estimated 2003
Pre-Closing Escrow Obligations (it being understood that in making such
calculation, the Accounting Referee shall be functioning as an expert and not as
an arbitrator). The Accounting Referee shall deliver to Purchaser and the
Selling Stockholders, as promptly as practicable (but in any case no later than
ten (10) days from the date of engagement of the Accounting Referee), a report
setting forth such calculation. Such report shall be final and binding upon
Purchaser and the Selling Stockholders. The cost of such review and report shall
be borne equally by Purchaser, on the one hand, and the Selling Stockholders, on
the other. The amount of the Estimated 2003 Pre-Closing Escrow Obligations, as
determined pursuant to this Section 6.10(b), shall be deposited on the Closing
Date into a separate account of the Company (the "Separate Account") by the
Company or a Subsidiary (in which event such amount, to the extent not otherwise
reflected as a liability on the Closing Date Balance Sheet, shall be so
reflected) or the Selling Stockholders.
(c) The amount of the obligations of the Company and its Subsidiaries
to pay Escrow Obligations in respect of calendar year 2003 prior to and
including the Closing Date (the "2003 Pre-Closing Escrow Obligations") shall, as
between Purchaser and the Selling Stockholders, be determined as provided in
this Section 6.10.
(d) On the Closing Date, Purchaser and the Selling Stockholders
jointly shall cause the Company to notify the tobacco enforcement section (or
comparable department) of the office of the Attorney General (or other
applicable regulatory office) for each State and the District of Columbia for
which Qualifying Statutes apply (each "Applicable State"), of the Closing and
the transfer of the Shares to Purchaser effective as of the Closing Date. Such
notice shall request that the applicable agency in each Applicable State confirm
to Purchaser, with a copy to the Selling Stockholders, the number of units of
Tobacco Products the Company or any Subsidiary sold on or prior to the Closing
Date and the amount of the Escrow Obligations in respect thereof (such confirmed
amount being referred to as the "Final 2003 Pre-Closing Escrow Obligations" with
respect to such Applicable State). In the event that the confirmation of any
Applicable State indicates that the portion of the Estimated 2003 Pre-Closing
Escrow Obligations relating to such Applicable State exceeded the Final 2003
33
Pre-Closing Escrow Obligations relating to such Applicable State, the excess
amount will promptly be distributed from the Separate Account to the Selling
Stockholders. In the event that the confirmation of any Applicable State
indicates that the Final 2003 Pre-Closing Escrow Obligations for such Applicable
State exceeded the Estimated 2003 Pre-Closing Escrow Obligations relating to
such Applicable State, the Selling Stockholders shall, within five Business Days
after receiving notice thereof, contribute an amount equal to such excess to the
Separate Account.
(e) In the event that any Applicable State does not provide the
confirmation requested pursuant to Section 6.10(d) on or before April 1, 2004,
the 2003 Pre-Closing Escrow Obligations, as determined by the shipping records
of the Company and each of its Subsidiaries, shall be the Final 2003 Pre-Closing
Escrow Obligations for purposes hereof; provided, however, if any Applicable
State subsequently asserts that the Company's Escrow Obligations for 2003 are
greater or less than the Escrow Obligations paid based on the shipping records
of the Company and each of its Subsidiaries for 2003 and any amount is either
paid to or refunded in respect of such difference, the Selling Stockholders
shall promptly pay to the Company the Applicable Fraction of any such greater
amount or the Company shall promptly pay to the Selling Stockholders the
Applicable Fraction of any such lesser amount. For purposes hereof, the
"Applicable Fraction" shall mean the number of units of Tobacco Products shipped
into the Applicable State during 2003 prior to the Closing Date and the
denominator is the number of tobacco products shipped by the Company and its
Subsidiaries into the Applicable State during the sales year 2003, in each case
as determined by the shipping records of the Company and each of its
Subsidiaries.
(f) The payments required by subsections (d) and (e) (whether to or
by the Selling Stockholders) shall be made no later than April 1, 2004. The
obligations of the Selling Stockholders to contribute to the Separate Account
shall be joint and several. The distribution by the Company of the excess funds
to the Selling Stockholders, if any, shall be made in Proportionate Shares to
the Selling Stockholders.
6.11 Private Letter Ruling. The Company has in process a request for
the Private Letter Ruling. If a favorable ruling (whether pursuant to the
Private Letter Ruling or otherwise) is issued and the Company determines to
claim a deduction based on the ruling, the Company (i) shall use reasonable
commercial efforts to obtain any refund of taxes paid by the Company to which
the Company is entitled by reason of the ruling and shall pay the actual amount
of any refunds actually received (less any costs and expenses of the Company
incurred in connection with or arising out of obtaining such refunds) to the
Selling Stockholders, in their respective Proportionate Shares, as additional
Purchase Price, within ten days after the receipt thereof and (ii) to the extent
the deduction creates a loss carryforward for the Company, the Company shall pay
to the Selling Stockholders, in their respective Proportionate Shares, as
additional Purchase Price, the present value of the amount of the loss
carryforward on the assumption that the loss carryforward will be utilized
ratably over a three-year period (or such lesser period as the Company expects,
as of the time when the ruling is granted, to use such carryforward) and
utilizing a 10% discount rate. Baker, Donelson, Bearman, Xxxxxxxx & Xxxxxxxxx,
34
or other counsel reasonably acceptable to Purchaser, shall represent the Company
in the Ruling request and the Selling Stockholders shall have the right to
direct counsel in this matter subject to the approval and consent of the Company
(which approval and consent will not be unreasonably withheld), it being
understood that the Company would be reasonable in withholding its consent and
approval if, among other things, the granting of a favorable Ruling is
conditioned or otherwise based upon (i) any waiver or relinquishment of the
Company's right to receive a return of any escrow deposits under the Qualifying
Statutes or (ii) any other action or matter that is contrary to the ongoing
interests of the Company.
6.12 Allocable Share Refunds.
(a) The Company has asserted its right to receive an allocable share
refund pursuant to the Qualifying Statutes with respect to Applicable States for
the sales years 1999, 2000, 2001 and 2002 in the amounts listed on Schedule 6.12
(each, a "CAP Release"). The Company has previously provided to the Purchaser
its calculation of each CAP Release. The Selling Stockholders shall be entitled
to retain the amounts of any distributions from the Company's Qualifying
Statutes escrow accounts in respect of each such CAP Release requested prior to
the Closing.
(b) With respect to the sales year 2003, the Selling Stockholders
shall be entitled to a portion of any CAP Release for units sold in sales year
2003 on or before the Closing Date, in the event that the CAP Release efforts
are successful on or before December 31, 2005. The determination of the number
of units of Tobacco Products for the entire sales year 2003 shall be based on
the shipping records of the Company and each of its Subsidiaries of sales into
the Applicable States and shall be in form and substance reasonably satisfactory
to Purchaser. With respect to any CAP Release relating to sales year 2003, the
Selling Stockholders shall be entitled to an amount thereof equal to the product
of (i) the applicable 2003 CAP Release amount and (ii) a fraction, the numerator
of which is the number of units of Tobacco Products sold by the Company into
such Applicable State in 2003, prior to and including the Closing Date, as
determined by the shipping records of the Company and each of its Subsidiaries
and the denominator of which is the number of units sold by the Company for the
2003 year as determined by the shipping records of the Company and each of its
Subsidiaries. The Selling Stockholders and the Company shall work together and
use reasonable commercial efforts to effectuate the payment of any CAP Release
from the Applicable States; provided, however, that the Company shall not be
required to institute legal proceedings against any Applicable State or take any
other action that might prejudice its treatment by the Applicable State on a
going-forward basis and, provided further, the Selling Stockholders shall
promptly reimburse the Company (upon submission of documentation therefor) for
any costs or expenses incurred by the Company in connection with the CAP Release
efforts. Purchaser shall deliver, or cause the Company to deliver, to the
Stockholder Representative a copy of any correspondence between the Company and
any Applicable State in respect of CAP Release efforts. Purchaser shall have no
liability to any party to this Agreement in the event that the CAP Release
efforts are unsuccessful.
6.13 Pension Plan. The parties intend and agree that the Company
shall terminate its pension plan (the "Plan") fifteen (15) days after the
Closing Date and the Selling Stockholders shall be responsible for any and all
costs and expenses related to such termination. Prior to the Closing Date, the
35
Company shall request and obtain from its actuary an estimate of the amount of
money required to fund the Company's pension plan obligations. At Closing, the
Selling Stockholders hereby direct the Purchaser to deposit $750,000 of the
Purchase Price with _______________, as escrow agent (the "Pension Escrow
Agent") under an escrow agreement by and among the Selling Stockholders,
Purchaser and the Escrow Agent dated the Closing Date (the "Pension Escrow
Agreement"), which $750,000 represents an estimate of the amount required to
fund such obligations (such $750,000 deposited into such escrow together with
any interest or income actually earned thereon being referred to as the "Pension
Escrow Fund"). The Selling Stockholders are the Plan Trustees (as defined in the
Plan) and hereby are designated as the agent to the Company and its Subsidiaries
for the purpose of terminating the plan, including but not limited to filings
with the IRS and the PBGC and distribution of the assets from the plan. Within
ten (10) days after receiving the final determination by the IRS and PBGC of the
amount required to fund the Plan, the Selling Stockholders shall give notice to
the Company. To the extent the actual amount exceeds the Pension Escrow Fund,
the Selling Stockholders shall pay such excess amount (for which they agree to
be jointly and severally liable) to the Pension Escrow Agent, which payment
shall be added to the Pension Escrow Fund and the Stockholder Representative,
acting on behalf of the Selling Stockholders, and the Purchaser shall jointly
instruct the Pension Escrow Agent to pay the Pension Escrow Fund as required to
satisfy the Company's pension plan obligations. To the extent the Pension Escrow
Fund exceeds the actual amount, the Stockholder Representative, acting on behalf
of the Selling Stockholders, and the Purchaser shall jointly instruct the
Pension Escrow Agent to (i) pay such portion of the Pension Escrow Fund as
required to satisfy the Company's pension plan obligations and (ii) pay the
balance of the Pension Escrow Fund to the Selling Stockholders in their
respective Proportionate Shares. In the event that the Selling Stockholders do
not make any payment required by the penultimate sentence within ten (10) days
after receipt of the notice referred to above, any such payment shall be
accompanied by an amount equal to interest thereon from the date of such notice
until the date of payment at the Prime Rate in effect during such period.
6.14 Post-Closing Transition Period. At the time of or subsequent to
the Closing, the Purchaser shall provide any notice required by the WARN Act
regarding the termination of employment of any employees. After the Closing,
Purchaser shall either continue to operate the business of the Company in
Tennessee for a period of at least sixty (60) days after the provision of such
notice or, if the Purchaser does not operate the business of the Company for the
full 60 days after the provision of such notice with the employees listed on
Schedule 6.12, the Purchaser shall pay to such employees their wages and
benefits (if applicable) for the remainder of the 60 day period in accordance
with the WARN Act.
ARTICLE VII.
CONDITIONS TO CLOSING
7.1 Conditions Precedent to Obligations of Purchaser. The obligation
of Purchaser to consummate the transactions contemplated by this Agreement is
subject to the fulfillment, on or prior to the Closing Date, of each of the
following conditions (any or all of which may be waived by Purchaser in whole or
in part to the extent permitted by applicable Law):
36
(a) the representations and warranties of the Selling Stockholders
qualified as to materiality shall be true and correct, and those not qualified
as to materiality shall be true and correct in all material respects, as of the
date of this Agreement and as of the Closing Date as though made at and as of
the Closing, except to the extent such representations and warranties expressly
relate to an earlier date (in which case such representations and warranties
qualified as to materiality shall be true and correct, and those not so
qualified shall be true and correct in all material respects, on and as of such
earlier date);
(b) the Company and the Selling Stockholders shall have performed and
complied in all material respects with all obligations and covenants required by
this Agreement to be performed or complied with by them on or prior to the
Closing Date;
(c) Purchaser shall have been furnished with certificates (dated the
Closing Date and in form and substance reasonably satisfactory to Purchaser)
executed by Xxxxx Xxxxxx, Xxxxxx Xxxxxx and Xxxxxx Xxxxxx Xxxxxx certifying as
to the fulfillment of the conditions specified in Sections 7.1(a) and 7.1(b)
hereof;
(d) each of the Selling Stockholders shall have delivered, or caused
to be delivered, to Purchaser stock certificates representing the Shares, duly
endorsed in blank or accompanied by stock transfer powers duly executed in
blank;
(e) there shall not have been or occurred any event, change,
occurrence or circumstance that has had or could reasonably be expected to have
a Material Adverse Change;
(f) the Selling Stockholders shall have obtained all consents and
waivers denoted with an asterisk on Schedule 4.2(b) hereof, in a form reasonably
satisfactory to Purchaser, with respect to the transactions contemplated by this
Agreement and the Selling Stockholder Documents;
(g) no Legal Proceedings shall have been instituted or threatened or
claim or demand made against the Selling Stockholders, the Company or any of its
Subsidiaries, or Purchaser seeking to restrain or prohibit or to obtain
substantial damages with respect to the consummation of the transactions
contemplated hereby, and there shall not be in effect any Order by a
Governmental Body of competent jurisdiction restraining, enjoining or otherwise
prohibiting the consummation of the transactions contemplated hereby;
(h) each of the Selling Stockholders shall have provided Purchaser
with an affidavit of non-foreign status that complies with Section 1445 of the
Code (a "FIRPTA Affidavit");
(i) Purchaser shall have received the written resignations of each
director of the Company and its Subsidiaries;
(j) Purchaser shall have obtained all financing necessary for it to
consummate the transactions contemplated hereby;
(k) Purchaser's Environmental Assessment at the properties shall not
have revealed any circumstances which could reasonably be expected to result in
(1) the criminal prosecution of the Company or any Subsidiary or any employee of
the Company or any Subsidiary under Environmental Laws, or (2) any Environmental
costs and liabilities which, individually or in the aggregate, could reasonably
give rise to a Material Adverse Effect; provided, Purchaser waives its right to
rely on this provision as a basis for not closing if Purchaser failed to
exercise reasonable efforts to conduct Purchaser's Environmental Assessment;
37
(l) the Company shall have no Outstanding Indebtedness and all of the
tangible and intangible assets of the Company shall be free and clear of any and
all Liens, subject to Permitted Exceptions and those Liens listed on Schedule
4.13(a);
(m) the Company shall be in full compliance with all Qualifying
Statutes, including the appearance of the Company and all brands of Tobacco
Products manufactured by the Company on State compliant manufacturer and brand
lists published by the State offices of attorney general (or other applicable
regulatory office) pursuant to the Qualifying Statutes;
(n) the Company shall have on deposit amounts, determined by a
qualified, independent firm or firms, sufficient to fund (a) all of its
obligations under its defined benefit or contribution plans on a plan
termination basis as set forth in Section 6.11 and (b) the Estimated 2003
Pre-Closing Escrow Obligations;
(o) the Stockholder Representative shall have delivered, or caused to
be delivered, to Purchaser certificates of good standing as of a recent date
with respect to the Company issued by the Secretary of State of the State of
Tennessee and for each state in which the Company is qualified to do business as
a foreign corporation;
(p) Leases substantially in the form attached as Exhibits B and C
shall have been executed and delivered by the parties thereto;
(q) the Company shall have Net Working Capital of not less than $2.0
million; and
(r) each of the Selling Stockholders shall have delivered, or caused
to be delivered, to Purchaser such other documents as Purchaser shall reasonably
request.
7.2 Conditions Precedent to Obligations of the Selling Stockholders.
The obligations of the Selling Stockholders to consummate the transactions
contemplated by this Agreement are subject to the fulfillment, prior to or on
the Closing Date, of each of the following conditions (any or all of which may
be waived by the Stockholder Representative in whole or in part to the extent
permitted by applicable law):
(a) the representations and warranties of Purchaser qualified as to
materiality shall be true and correct, and those not qualified as to materiality
shall be true and correct in all material respects, as of the date of this
Agreement and as of the Closing Date as though made at and as of the Closing;
and
(b) Purchaser shall have performed and complied in all material
respects with all obligations and covenants required by this Agreement to be
performed or complied with by Purchaser on or prior to the Closing Date;
38
(c) the Selling Stockholders shall have been furnished with
certificates (dated the Closing Date and in form and substance reasonably
satisfactory to the Selling Stockholders) executed by the Chief Executive
Officer and Chief Financial Officer of Purchaser certifying as to the
fulfillment of the conditions specified in Sections 7.2(a) and 7.2(b);
(d) there shall not be in effect any Order by a Governmental Body of
competent jurisdiction restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated hereby; and
(e) Purchaser shall have delivered, or caused to be delivered, to the
Selling Stockholders evidence of the wire transfer referred to in Section 2.2
hereof.
ARTICLE VIII.
INDEMNIFICATION
8.1 Survival of Representations and Warranties. The representations
and warranties of the parties contained in Articles IV, V and VI of this
Agreement shall survive the Closing through and including the eighteen-month
anniversary of the Closing Date; provided, however, that the representations and
warranties of the Selling Stockholders set forth in Sections 4.1, 4.2, 4.3, 4.5,
4.11, 4.16 and 4.21 and the representations and warranties of Purchaser set
forth in Sections 5.1 and 5.2 and shall survive the Closing until sixty (60)
days following the expiration of the applicable statute of limitations with
respect to the particular matter that is the subject matter thereof (in each
case, the "Survival Period"); provided, however, that any obligations to
indemnify and hold harmless shall not terminate with respect to any Losses as to
which the Person to be indemnified shall have given notice (stating in
reasonable detail the basis of the claim for indemnification) to the
indemnifying party in accordance with Section 9.3(a) before the termination of
the applicable Survival Period.
8.2 Indemnification.
(a) Subject to Sections 8.1, 8.4 and 8.5 hereof, the Selling
Stockholders hereby agree to jointly and severally indemnify and hold Purchaser,
the Company, and their respective directors, officers, employees, Affiliates,
agents, attorneys, representatives, successors and assigns (collectively, the
"Purchaser Indemnified Parties") harmless from and against:
(i) any and all losses, liabilities, obligations, damages, costs
and expenses (individually, a "Loss" and, collectively, "Losses")
based upon, attributable to or resulting from the failure of any
representation or warranty of the Selling Stockholders set forth in
this Agreement or in any Selling Stockholder Document, to be true and
correct in all respects the date hereof and at the Closing Date;
(ii) any and all Losses based upon, attributable to or resulting
from the breach of any covenant or other agreement on the part of the
Selling Stockholders under this Agreement or any Selling Stockholder
Document;
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(iii) any and all Losses (including any loss of use of Company
Property or any tangible personal property of the Company or any of
its Subsidiaries) imposed under or pursuant to Environmental Laws
arising from or related to any condition, act or omission, by the
Company or any Subsidiary or any predecessor thereof or related to the
operations of the Company or any Subsidiary or any predecessor thereof
at any real property currently or formerly owned, operated or leased
by the Company or any Subsidiary, whether known or unknown, accrued or
contingent, to the extent existing on or prior to the Closing Date,
including, but not limited to any Environmental Costs and Liabilities,
any liabilities including those imposed pursuant to common law
associated with a Release of Hazardous Materials; and
(iv) any and all notices, actions, suits, proceedings, claims,
demands, assessments, judgments, costs, penalties and expenses,
including attorneys' and other professionals' fees and disbursements
(collectively, "Expenses") incident to any and all Losses with respect
to which indemnification is provided hereunder.
(b) Subject to Sections 8.1 and 8.4, Purchaser hereby agrees to
indemnify and hold the Selling Stockholders and their respective Affiliates,
agents, attorneys, representatives, successors and assigns (collectively, the
"Selling Stockholder Indemnified Parties") harmless from and against:
(i) any and all Losses based upon, attributable to or resulting
from the failure of any representation or warranty of Purchaser set
forth in this Agreement or any Purchaser Document, to be true and
correct at the date hereof and at the Closing Date;
(ii) any and all Losses based upon, attributable to or resulting
from the breach of any covenant or other agreement on the part of
Purchaser under this Agreement or any Purchaser Document; and
(iii) any and all Expenses incident to any and all Losses with
respect to which indemnification is provided hereunder.
8.3 Indemnification Procedures.
(a) In the event that any Legal Proceedings shall be instituted or
that any claim or demand ("Claim") shall be asserted by any Person in respect of
which payment may be sought under Section 8.2 hereof (regardless of the
limitations set forth in Section 8.4), the indemnified party shall promptly
cause written notice of the assertion of any Claim of which it has knowledge
which is covered by this indemnity to be forwarded to the indemnifying party.
The indemnifying party shall have the right, at its sole expense, to be
represented by counsel of its choice, which must be reasonably satisfactory to
the indemnified party, and to defend against, negotiate, settle or otherwise
deal with any Claim which relates to any Losses indemnified against hereunder.
If the indemnifying party elects to defend against, negotiate, settle or
otherwise deal with any Claim which relates to any Losses indemnified against
hereunder, it shall within five (5) days (or sooner, if the nature of the Claim
so requires) notify the indemnified party of its intent to do so. If the
indemnifying party elects not to defend against, negotiate, settle or otherwise
deal with any Claim which relates to any Losses indemnified against hereunder or
fails to notify the indemnified party of its election as herein provided, the
indemnified party may defend against, negotiate, settle or otherwise deal with
such Claim and the indemnifying party shall reimburse the indemnified party for
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the expenses of defending such claim upon submission of periodic bills (to the
extent the Claim relates to Losses required to be indemnified against
hereunder). If the indemnifying party shall assume the defense of any Claim, the
indemnified party may participate, at his or its own expense, in the defense of
such Claim; provided, however, that such indemnified party shall be entitled to
participate in any such defense with separate counsel at the expense of the
indemnifying party if (i) so requested by the indemnifying party to participate
or (ii) in the reasonable opinion of counsel to the indemnified party, a
conflict or potential conflict exists between the indemnified party and the
indemnifying party that would make such separate representation advisable; and
provided, further, that the indemnifying party shall not be required to pay for
more than one such counsel for all indemnified parties in connection with any
Claim. The parties hereto agree to cooperate fully with each other in connection
with the defense, negotiation or settlement of any such Claim. Notwithstanding
anything in this Section 8.3 to the contrary, neither the indemnifying party nor
the indemnified party shall, without the written consent of the other party,
settle or compromise any indemnifiable Claim or permit a default or consent to
entry of any judgment unless the Claimant and such party provide to such other
party an unqualified release from all liability in respect of the indemnifiable
Claim. Notwithstanding the foregoing, if a settlement offer solely for money
damages is made by the applicable third party claimant, and the indemnifying
party notifies the indemnified party in writing of the indemnifying party's
willingness to accept the settlement offer and, subject to the applicable
limitations of Section 8.4, pay the amount called for by such offer, and the
indemnified party declines to accept such offer, the indemnified party may
continue to contest such indemnifiable Claim, free of any participation by the
indemnifying party, and the amount of any ultimate liability with respect to
such indemnifiable Claim that the indemnifying party has an obligation to pay
hereunder shall be limited to the lesser of (A) the amount of the settlement
offer that the indemnified party declined to accept plus the Expenses of the
indemnified party relating to such indemnifiable Claim through the date of its
rejection of the settlement offer or (B) the aggregate Losses of the indemnified
party with respect to such indemnifiable Claim. If the indemnifying party makes
any payment on any indemnifiable Claim, the indemnifying party shall be
subrogated, to the extent of such payment, to all rights and remedies of the
indemnified party to any insurance benefits or other Claims of the indemnified
party with respect to such indemnifiable Claim.
(b) After any final judgment or award shall have been rendered by a
Governmental Body of competent jurisdiction and the expiration of the time in
which to appeal therefrom, or a settlement shall have been consummated, or the
indemnified party and the indemnifying party shall have arrived at a mutually
binding agreement with respect to a Claim hereunder, the indemnified party shall
forward to the indemnifying party notice of any sums due and owing by the
indemnifying party pursuant to this Agreement with respect to such matter and,
the indemnifying party shall be required to pay all of the sums so due and owing
to the indemnified party by wire transfer of immediately available funds within
ten (10) Business Days after the date of such notice.
(c) The failure of the indemnified party to give reasonably prompt
notice of any Claim shall not release, waive or otherwise affect the
indemnifying party's obligations with respect thereto except to the extent that
the indemnifying party can demonstrate actual loss and prejudice as a result of
such failure.
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8.4 Limitations on Indemnification for Breaches of Representations
and Warranties.
(a) An indemnifying party shall not have any liability under Section
8.2(a)(i) or Section 9.2(b)(i) hereof unless the aggregate amount of Losses and
Expenses to the indemnified parties finally determined to arise thereunder based
upon, attributable to or resulting from the failure of any representation or
warranty to be true and correct, other than the representations and warranties
set forth in Sections 4.1, 4.2, 4.3, 4.5, 4.11, 4.16 and 4.21 and the
representations and warranties of Purchaser set forth in Sections 5.1 and 5.2
hereof, exceeds $500,000 (the "Basket") and, in such event, the indemnifying
party shall be required to pay the entire amount of all such Losses and
Expenses.
(b) Neither the Selling Stockholders nor Purchaser shall be required
to indemnify, any Person under Section 8.2(a)(i) or 8.2(b)(i) for an aggregate
amount of Losses exceeding $11,250,000 (the "Cap") in connection with Losses
related to the breach of any representation and warranty of the Selling
Stockholders or Purchaser in Articles IV and V, respectively, other than for the
breach of any representation or Warranty contained in Sections 4.1, 4.2, 4.3,
4.5, 4.11, 4.16 and 4.21 and the representations and warranties of Purchaser set
forth in Sections 5.1 and 5.2 of this Agreement.
(c) For purposes of establishing breaches of representations,
warranties, covenants and agreements and of calculating Losses hereunder, any
materiality or material adverse effect qualifications in the representations,
warranties, covenants and agreements shall be ignored.
(d) The Selling Stockholders shall have no recourse against the
Company or its Subsidiaries or their respective directors, officers, employees,
Affiliates, agents, attorneys, representatives, assigns or successors for any
Claims asserted by Purchaser Indemnified Parties.
(e) The Selling Stockholders and Purchaser acknowledge and agree that
the foregoing indemnification provisions of this Article VIII.
(f) shall be the exclusive remedy for breach of this Agreement and
the transactions contemplated thereby.
8.5 Tax Matters.
(a) Tax Indemnification. The Selling Stockholders hereby agree,
jointly and severally, to be liable for and to indemnify and hold the Purchaser
Indemnified Parties harmless from and against any and all Losses and Expenses in
respect of (i) all Taxes of the Company and its Subsidiaries (A) for any taxable
period ending on or before the Closing Date, and (B) for the portion of any
Straddle Period ending at the close of business on the Closing Date (determined
as provided in 8.5(c)), but only to the extent such Taxes are in excess of the
amount, if any, reserved as a current liability for Taxes on the Balance Sheet
and are taken into account in the Purchase Price Adjustment; (ii) the failure of
any of the representations and warranties contained in Section 4.11 to be true
and correct in all respects (determined without regard to any qualification
related to materiality contained therein) or the failure to perform any covenant
contained in this Agreement with respect to Taxes; and (iii) any failure by the
Selling Stockholders to timely pay any and all Taxes required to be borne by the
Selling Stockholders pursuant to Section 8.5(e).
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(b) Filing of Tax Returns; Payment of Taxes.
(i) The Selling Stockholders shall cause the Company and its
Subsidiaries to timely file all Tax Returns required to be filed by
them on or prior to the Closing Date and shall pay or cause to be paid
all Taxes shown due thereon. The Selling Stockholders shall cause the
Company to provide Purchaser with copies of such completed Tax Returns
at least twenty (20) days prior to the due date for filing thereof,
along with supporting workpapers, for Purchaser's review and approval.
The Selling Stockholders and Purchaser shall attempt in good faith to
resolve any disagreements regarding such Tax Returns prior to the due
date for filing. In the event that the Selling Stockholders and the
Purchaser are unable to resolve any dispute with respect to such Tax
Return at least ten (10) days prior to the due date for filing, such
dispute shall be resolved pursuant to Section 8.5, which resolution
shall be binding on the parties.
(ii) Following the Closing, Purchaser shall cause to be timely
filed all Tax Returns required to be filed by the Company and its
Subsidiaries after the Closing Date and, subject to the rights to
payment from the Selling Stockholders under Section 8.5(b)(iii), pay
or cause to be paid all Taxes shown due thereon. If the Tax Return
relates to a Straddle Period (as defined below), the Tax Return shall,
not later than twenty (20) days prior to the due date of any Tax
Returns (which due date shall include any extensions), be disclosed to
and subject to the approval of the Selling Stockholders, which
approval shall not be unreasonably withheld or delayed.
(iii) Not later than ten (10) days prior to the due date for the
payment of Taxes on any Tax Returns which Purchaser has the
responsibility to cause to be filed pursuant to Section 8.5(b)(ii),
the Selling Stockholders shall pay to Purchaser the amount of Taxes,
as reasonably determined by Purchaser and Selling Stockholders, owed
by the Selling Stockholders pursuant to the provisions of Section
8.5(a). No payment pursuant to this Section 8.5(b)(iii) shall excuse
the Selling Stockholders from its indemnification obligations pursuant
to Section 8.5(a) if the amount of Taxes as ultimately determined (on
audit or otherwise) for the periods covered by such Tax Returns
exceeds the amount of the Selling Stockholders' payment under this
Section 8.5(b)(iii).
(c) Straddle Period Tax Allocation. The Selling Stockholders and
Purchaser will, unless prohibited by applicable law, close the taxable period of
the Company and its Subsidiaries as of the close of business on the Closing
Date. If applicable law does not permit the Company and its Subsidiaries to
close its taxable year on the Closing Date or in any case in which a Tax is
assessed with respect to a taxable period which includes the Closing Date (but
does not begin or end on that day) (a "Straddle Period"), the Taxes, if any,
attributable to a Straddle Period shall be allocated (i) to the Selling
Stockholders for the period up to and including the close of business on the
Closing Date, and (ii) to Purchaser for the period subsequent to the Closing
Date. Any allocation of income or deductions required to determine any Taxes
attributable to a Straddle Period shall be made by means of a closing of the
books and records of the Company and its Subsidiaries as of the close of the
Closing Date, provided that exemptions, allowances or deductions that are
calculated on an annual basis (including, but not limited to, depreciation and
amortization deductions) shall be allocated between the period ending on the
Closing Date and the period after the Closing Date in proportion to the number
of days in each such period.
43
(d) Tax Audits.
(i) If notice of any Legal Proceeding with respect to Taxes of
the Company or any of its Subsidiaries (a "Tax Claim") shall be
received by either party for which the other party may reasonably be
expected to be liable pursuant to Section 8.5(a), the notified party
shall notify such other party in writing of such Tax Claim; provided,
however, that the failure of the notified party to give the other
party notice as provided herein shall not relieve such failing party
of its obligations under Section 8.5 except to the extent that the
other party is actually and materially prejudiced thereby.
(ii) Purchaser shall have the right, at the expense of the
Selling Stockholders to the extent such Tax Claim is subject to
indemnification by the Selling Stockholders pursuant to Section 8.5(a)
hereof, to represent the interests of the Company and its Subsidiaries
in any Tax Claim; provided, that with respect to a Tax Claim relating
exclusively to taxable periods ending on or before the Closing Date,
Purchaser shall not settle such claim without the consent of the
Selling Stockholders, which consent shall not be unreasonably
withheld. Purchaser agrees to notify, or cause the Company to notify,
Xxxxxx Xxxxxx, advisor to the Selling Stockholders, of any actions
taken with respect to any Tax Claim.
(e) Transfer Taxes. The Selling Stockholders shall be liable for and
shall pay (and shall indemnify and hold harmless the Purchaser Indemnified
Parties against) all sales, use, stamp, documentary, filing, recording, transfer
or similar fees or taxes or governmental charges as levied by any Governmental
Body including any interests and penalties) in connection with the transactions
contemplated by this Agreement, except as otherwise provided in Section 3.1.
(f) Disputes. Any dispute as to any matter covered hereby shall be
resolved by the Accounting Referee or another independent accounting firm
mutually acceptable to the Selling Stockholders and the Purchaser. The fees and
expenses of such accounting firm shall be borne fifty percent (50%) by the
Selling Stockholders, on the one hand, and fifty percent (50%) by the Purchaser
on the other. If any dispute with respect to a Tax Return is not resolved prior
to the due date of such Tax Return, such Tax Return shall be filed in the manner
which the party responsible for preparing such Tax Return deems correct.
(g) Time Limits. Any claim for indemnity under this Section 8.5 may
be made at any time prior to sixty (60) days after the expiration of the
applicable Tax statute of limitations with respect to the relevant taxable
period (including all periods of extension, whether automatic of permissive).
(h) Exclusivity. The indemnification provided for in this Section 8.5
shall be the sole remedy for any claim in respect of Taxes, including any claim
arising out of or relating to a breach of Section 4.11. In the event of a
conflict between the provisions of this Section 8.5, on the one hand, and the
provisions of Sections 8.1 through 8.4 on the other, the provisions of this
Section 8.5 shall control.
44
8.6 Adjustment to Purchase Price. The parties agree to treat all
payments made under Article VIII (Indemnification) as adjustments to the
Purchase Price for Tax purposes, unless a contrary treatment is required by Law.
ARTICLE IX.
MISCELLANEOUS
9.1 Certain Definitions.
(a) For purposes of this Agreement, the following terms shall have
the meanings specified in this Section 9.1:
"Accounting Referee" shall have the meaning ascribed to such term in
Section 2.3 hereof.
"Affiliate" means, with respect to any Person, any other Person that,
directly or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such Person, and the term
"control" (including the terms "controlled by" and "under common control with")
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such Person, whether through
owners of voting securities, by contract or otherwise.
"Agreement" shall have the meaning ascribed to such term in the
recitals hereof.
"Applicable State" shall have the meaning ascribed to such term in
Section 6.10(d) hereof.
"Applicable Fraction" shall have the meaning ascribed to such term in
Section 6.10(e) hereof.
"Balance Sheet Date" shall have the meaning ascribed to such term in
Section 4.8 hereof.
"Balance Sheet" shall have the meaning ascribed to such term in
Section 4.8 hereof.
"Basket" shall have the meaning ascribed to such term in Section 8.4
hereof.
"Business Day" means any day of the year on which national banking
institutions in New York are open to the public for conducting business and are
not required or authorized to close.
"Cap" shall have the meaning ascribed to such term in Section 8.4
hereof.
"Cap Release" shall have the meaning ascribed to such term in Section
6.12(a) hereof.
"Claim" shall have the meaning ascribed to such term in Section 8.3
hereof.
"Closing" shall have the meaning ascribed to such term in Section 3.1
hereof.
"Closing Date" shall have the meaning ascribed to such term in
Section 3.1 hereof.
45
"Closing Statement" shall have the meaning ascribed to such term in
Section 2.3 hereof.
"Closing Working Capital" shall have the meaning ascribed to such
term in Section 2.3 hereof.
"COBRA" means Section 4980B of the Code and Part 6 of Subtitle B of
Title I of ERISA.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Company" shall have the meaning ascribed to such term in the
recitals hereof.
"Company Plan" shall have the meaning ascribed to such term in
Section 4.16(a) hereof.
"Company Property" shall have the meaning ascribed to such term in
Section 4.12(a) hereof.
"Contract" means any contract, agreement, indenture, note, bond,
loan, instrument, lease, commitment or other arrangement or agreement, whether
written or oral.
"Documents" shall mean all files, documents, instruments, papers,
books, reports, records, tapes, microfilms, photographs, letters, budgets,
forecasts, ledgers, journals, title policies, customer lists, regulatory
filings, operating data and plans, technical documentation (design
specifications, functional requirements, operating instructions, logic manuals,
flow charts, etc), user documentation (installation guides, user manuals,
training materials, release notes, working papers, etc.), marketing
documentation (sales brochures, flyers, pamphlets, web pages, etc.), and other
similar materials related to the business of the Company and its Subsidiaries in
each case whether or not in electronic form.
"Environmental Costs and Liabilities" means, with respect to any
Person, all liabilities, obligations, responsibilities, Remedial Actions,
losses, damages, punitive damages, consequential damages, treble damages, costs
and expenses (including all reasonable fees, disbursements and expenses of
counsel, experts and consultants and costs of investigation and feasibility
studies), fines, penalties, sanctions and interest incurred as a result of any
claim or demand by any other Person or in response to any violation of
Environmental Law, whether known or unknown, accrued or contingent, whether
based in contract, tort, implied or express warranty, strict liability, criminal
or civil statute, to the extent based upon, related to, or arising under or
pursuant to any Environmental Law, Environmental Permit, order or agreement with
any Governmental Body or other Person, which relates to any environmental,
health or safety condition, violation of Environmental Law or a Release or
threatened Release of Hazardous Materials.
"Environmental Law" means any foreign, federal, state or local
statute, regulation, ordinance, rule of common law or other legal requirement,
as now in effect, in any way relating to the protection of human health and
safety, the environment or natural resources including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act (42
X.X.X.xx. 9601 et seq.), the Hazardous Materials Transportation Act (49 U.S.C.
App. ss. 1801 et seq.), the Resource Conservation and Recovery Act (42 X.X.X.xx.
6901 et seq.), the Clean Water Act (33 X.X.X.xx. 1251 et seq.), the Clean Air
Act (42 X.X.X.xx. 7401 et seq.) the Toxic Substances Control Act (15 X.X.X.xx.
2601 et seq.), the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C.
ss. 136 et seq.), and the Occupational Safety and Health Act (29 X.X.X.xx. 651
et seq.), as each has been amended and the regulations promulgated pursuant
thereto.
46
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means, with respect to any Person, any trade or
business (whether or not incorporated) (i) under common control within the
meaning of Section 4001(b)(1) of ERISA with such Person or (ii) which together
with such Person is treated as a single employer under Section 414(b), (c), (m),
(n) or (o) of the Code.
"Escrow Obligations" means all obligations to make, or cause to be
made, escrow deposits under Qualifying Statutes for sale of tobacco products in
those states that are parties to the Master Settlement Agreement and that have
enacted Qualifying Statutes.
"Estimated 2003 Pre-Closing Escrow Obligations" shall have the
meaning ascribed to such term in Section 6.10(b) hereof.
"Expenses" shall have the meaning ascribed to such term in Section
8.2 hereof.
"Final 2003 Pre-Closing Escrow Obligations" shall have the meaning
ascribed to such term in Section 6.10(d) hereof.
"Final Working Capital" shall have the meaning ascribed to such term
in Section 2.3 hereof.
"Financial Statements" shall have the meaning ascribed to such term
in Section 4.8 hereof.
"FIRPTA Affidavit" shall have the meaning ascribed to such term in
Section 7.1(h) hereof.
"Foreign Plan" shall have the meaning ascribed to such term in
Section 4.16(s) hereof.
"GAAP" means United States generally accepted accounting principles
as of the date hereof.
"Governmental Body" means any government or governmental or
regulatory body thereof, or political subdivision thereof, whether federal,
state, local or foreign, or any agency, instrumentality or authority thereof, or
any court or arbitrator (public or private).
"Hazardous Material" means any substance, material or waste that is
regulated, classified, or otherwise characterized under or pursuant to any
Environmental Law as "hazardous," "toxic," "pollutant," "contaminant,"
"radioactive," or words of similar meaning or effect, including without
limitation, petroleum and its by-products, asbestos, polychlorinated biphenyls,
radon, mold, urea formaldehyde insulation.
47
"Indebtedness" of any Person means, without duplication, (i) the
principal of and premium (if any) in respect of (A) indebtedness of such Person
for money borrowed and (B) indebtedness evidenced by notes, debentures, bonds or
other similar instruments for the payment of which such Person is responsible or
liable; (ii) all obligations of such Person issued or assumed as the deferred
purchase price of property, all conditional sale obligations of such Person and
all obligations of such Person under any title retention agreement (but
excluding trade accounts payable and other accrued current liabilities arising
in the Ordinary Course of Business); (iii) all obligations of such Person under
leases required to be capitalized in accordance with GAAP; (iv) all obligations
of such Person for the reimbursement of any obligor on any letter of credit,
banker's acceptance or similar credit transaction; (v) the liquidation value of
all redeemable preferred stock of such Person; (vi) all obligations of the type
referred to in clauses (i) through (v) of any Persons for the payment of which
such Person is responsible or liable, directly or indirectly, as obligor,
guarantor, surety or otherwise, including guarantees of such obligations; and
(vii) all obligations of the type referred to in clauses (i) through (vi) of
other Persons secured by any Lien on any property or asset of such Person
(whether or not such obligation is assumed by such Person).
"Intellectual Property Licenses" means (i) any grant to a third
Person of any right to use any of the Intellectual Property, and (ii) any grant
to the Company of a right to use a third Person's intellectual property rights
which is necessary for the use of any Intellectual Property.
"Intellectual Property" means all intellectual property rights used
by the Company and its Subsidiaries arising from or in respect of the following,
whether protected, created or arising under the laws of the United States or any
other jurisdiction: (i) all patents and applications therefore, including
continuations, divisionals, continuations-in-part, or reissues of patent
applications and patents issuing thereon (collectively, "Patents"), (ii) all
trademarks, service marks, trade names, service names, brand names, trade dress
rights, logos, Internet domain names and corporate names and general intangibles
of a like nature, together with the goodwill associated with any of the
foregoing, and all applications, registrations and renewals thereof,
(collectively, "Marks"), (iii) copyrights and registrations and applications
therefore, works of authorship and mask work rights (collectively,
"Copyrights"), (iv) discoveries, concepts, ideas, research and development,
know-how, formulae, inventions, compositions, manufacturing and production
processes and techniques, technical data, procedures, designs, drawings,
specifications, databases, and other proprietary and confidential information,
including customer lists, supplier lists, pricing and cost information, and
business and marketing plans and proposals of the Company and its Subsidiaries,
in each case excluding any rights in respect of any of the foregoing that
comprise or are protected by Copyrights or Patents (collectively, "Trade
Secrets"), and (v) all Software and Technology of the Company and its
Subsidiaries.
"Law" means any federal, state, local or foreign law (including
common law), statute, code, ordinance, rule, regulation or other requirement.
"Legal Proceeding" means any judicial, administrative or arbitral
actions, suits, proceedings (public or private), claims or governmental
proceedings.
"Liability" means any debt, loss, damage, adverse claim, liability or
obligation (whether direct or indirect, known or unknown, asserted or
unasserted, absolute or contingent, accrued or unaccrued, liquidated or
unliquidated, or due or to become due, and whether in contract, tort, strict
liability or otherwise), and including all costs and expenses relating thereto.
48
"Lien" means any lien, pledge, mortgage, deed of trust, security
interest, claim, lease, charge, option, right of first refusal, easement,
servitude, transfer restriction under any shareholder or similar agreement,
encumbrance or any other restriction or limitation whatsoever.
"Loss" shall have the meaning ascribed to such term in Section 8.2
hereof.
"Master Settlement Agreement" means the tobacco master settlement
agreement, dated November 28, 1998, as amended, among 46 of the United States,
certain territories of the United States, and certain tobacco companies.
"Material Adverse Change" means any fact, event, change, circumstance
or occurrence which has resulted in or could reasonably be expected to result in
a Material Adverse Effect.
"Material Adverse Effect" means (i) a material adverse effect on the
historical, near-term or long-term projected business, assets, properties,
results of operations, condition (financial or otherwise) or prospects of the
Company and its Subsidiaries, taken as a whole, (ii) a material adverse effect
on the value of the Company and its Subsidiaries, taken as a whole, or (iii) a
material adverse effect on the ability of Selling Stockholder to consummate the
transactions contemplated by this Agreement or perform its obligations under
this Agreement or the Selling Stockholder Documents.
"Material Contracts" shall have the meaning ascribed to such term in
Section 4.15 hereof.
"Multiemployer Plan" shall have the meaning ascribed to such term in
Section 4.16(a) hereof.
"Net Working Capital" shall have the meaning ascribed to such term in
Section 2.3(b) hereof.
"Order" means any order, injunction, judgment, decree, ruling, writ,
assessment or arbitration award.
"Ordinary Course of Business" means the ordinary and usual course of
day to day operations of the business as conducted prior to the Closing.
"Outstanding Indebtedness" shall mean indebtedness for borrowed
money, any other debt to banks, financial institutions or stockholders and
equipment lease obligations but shall not include accounts payable, salary
accruals and other ordinary course operating liabilities.
"Owned Properties" shall have the meaning ascribed to such term in
Section 4.12(a) hereof.
"Pension Escrow Agent" shall have the meaning ascribed to such term
in Section 6.13 hereof.
49
"Pension Escrow Agreement" shall have the meaning ascribed to such
term in Section 6.13 hereof.
"Pension Escrow Fund" shall have the meaning ascribed to such term in
Section 6.13 hereof.
"Permits" means any approvals, authorizations, consents, licenses,
permits or certificates.
"Permitted Exceptions" means (i) all defects, exceptions,
restrictions, easements, rights of way and encumbrances disclosed in policies of
title insurance which have been made available to Purchaser; (ii) statutory
liens for current taxes, assessments or other governmental charges not yet
delinquent or the amount or validity of which is being contested in good faith
by appropriate proceedings, provided an appropriate reserve is established
therefore; (iii) mechanics', carriers', workers', repairers' and similar Liens
arising or incurred in the Ordinary Course of Business that are not material to
the business, operations and financial condition of the property so encumbered
or the Company; (iv) zoning, entitlement and other land use and environmental
regulations by any Governmental Body, provided that such regulations have not
been violated; and (v) such other imperfections in title, charges, easements,
restrictions and encumbrances which do not materially detract from the value of
or materially interfere with the present use of any Company Property subject
thereto or affected thereby.
"Person" means any individual, corporation, partnership, firm, joint
venture, association, joint-stock company, trust, unincorporated organization,
Governmental Body or other entity.
"Personal Property Lease" shall have the meaning ascribed to such
term in Section 4.13 hereof.
"Prime Rate" shall have the meaning ascribed to such term in Section
2.3(g).
"Private Letter Ruling" shall mean the request submitted to the IRS
on behalf of the Company and its Subsidiaries requesting a ruling that the
escrow payments pursuant to the Qualifying Statutes are deductible in the
taxable year during which they were made, a copy of which was previously
provided to Purchaser.
"Proportionate Share" with respect to any Selling Stockholder shall
be equal to a fraction, the numerator of which is the number of Shares set forth
opposite the name of such Selling Stockholder on Exhibit A and the denominator
of which is the total number of Shares.
"Purchaser" shall have the meaning ascribed to such term in the
recitals hereof.
"Purchase Price" shall have the meaning ascribed to such term in
Section 2.1 hereof.
"Purchase Price Per Share" shall have the meaning ascribed to such
term in Section 2.1.
"Purchaser Documents" shall have the meaning ascribed to such term in
Section 5.2 hereof.
50
"Purchaser Indemnified Party" shall have the meaning ascribed to such
term in Section 8.2 hereof.
"Qualifying Statutes" means the "qualifying statutes" that are
enacted by the respective states of the United States and the District of
Columbia that are participants in the Master Settlement Agreement, which
statutes are substantially in the form of the model statute attached to the
Master Settlement Agreement as Exhibit T, as may be amended from time to time,
and all statutes, regulations and rules enacted in connection with such
"qualifying statutes", including, without limitation, such statutes, regulations
and rules providing for contraband treatment of cigarettes for non-compliance.
"Real Property Lease" shall have the meaning ascribed to such term in
Section 4.12 hereof.
"Release" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, or leaching into the indoor
or outdoor environment, or into or out of any property;
"Remedial Action" means all actions to (w) clean up, remove, treat or
in any other way address any Hazardous Material; (x) prevent the Release of any
Hazardous Material so it does not endanger or threaten to endanger public health
or welfare or the indoor or outdoor environment; or (y) perform pre-remedial
studies and investigations or post-remedial monitoring and care; or (z) to
correct a condition of noncompliance with Environmental Laws.
"Securities Act" means the Securities Act of 1933, as amended.
"Selling Stockholder" shall have the meaning ascribed to such term in
the recitals hereof.
"Selling Stockholder Documents" shall have the meaning ascribed to
such term in Section 4.1 hereof.
"Selling Stockholders Indemnified Parties" shall have the meaning
ascribed to such term in Section 8.2(b) hereof.
"Separate Account" shall have the meaning ascribed to such term in
Section 6.10(b) hereof.
"Shares" shall have the meaning ascribed to such term in the
recitals hereof.
"Software" means all computer programs embodied in the products of
the Company and its Subsidiaries or used in the manufacture or testing of such
products.
"Stockholders' Representative" shall have the meaning ascribed to
such term in Section 9.3 hereof.
"Straddle Period" shall have the meaning ascribed to such term in
Section 8.5(c) hereof.
51
"Subsidiary" means any Person of which a majority of the outstanding
voting securities or other voting equity interests are owned, directly or
indirectly, by the Company.
"Survival Period" shall have the meaning ascribed to such term in
Section 8.1 hereof.
"Tax Return" means all returns, declarations, reports, estimates,
information returns and statements required to be filed in respect of any Taxes.
"Taxes" means (i) all federal, state, local or foreign taxes, duties
or other similar assessments, including, without limitation, all net income,
gross receipts, capital, sales, use, ad valorem, value added, transfer,
franchise, profits, inventory, capital stock, license, withholding, payroll,
employment, social security, unemployment, excise, severance, stamp, occupation,
property and estimated taxes and customs duties, (ii) all interest, penalties,
fines, additions to tax or additional amounts imposed by any taxing authority in
connection with any item described in clause (i), and (iii) any transferee
liability in respect of any items described in clauses (i) and/or (ii).
"Title IV Plan" shall have the meaning ascribed to such term in
Section 4.16(a) hereof.
"Tobacco Laws" means all laws, statutes, rules regulations and
ordinances related to (1) the development, manufacture, advertising, marketing,
distribution, sale, or use (including without limitation, any related health
effects) of, (2) the exposure to, or (3) warnings regarding, tobacco, smokeless
tobacco, and "roll-your-own" products, including without limitation chewing
tobacco, moist snuff, dry snuff, pipe tobacco, and tobacco plugs and twists.
"Tobacco Products" shall have the meaning ascribed to such term in
Section 4.20 hereof.
"WARN" shall have the meaning ascribed to such term in Section
4.17(d) hereof.
The term "knowledge" means the knowledge, after due inquiry, of the
officers and directors of the respective party.
(b) Other Definitional and Interpretive Matters. Unless otherwise expressly
provided, for purposes of this Agreement, the following rules of interpretation
shall apply:
Calculation of Time Period. When calculating the period of time
before which, within which or following which any act is to be done or step
taken pursuant to this Agreement, the date that is the reference date in
calculating such period shall be excluded. If the last day of such period is a
non-Business Day, the period in question shall end on the next succeeding
Business Day.
Dollars. Any reference in this Agreement to $ shall mean U.S.
dollars.
Exhibits/Schedules. The Exhibits and Schedules to this Agreement are
hereby incorporated and made a part hereof and are an integral part of this
Agreement. All Exhibits and Schedules annexed hereto or referred to herein are
hereby incorporated in and made a part of this Agreement as if set forth in full
herein. Any capitalized terms used in any Schedule or Exhibit but not otherwise
defined therein shall be defined as set forth in this Agreement.
52
Gender and Number. Any reference in this Agreement to gender shall
include all genders, and words imparting the singular number only shall include
the plural and vice versa.
Headings. The provision of a Table of Contents, the division of this
Agreement into Articles, Sections and other subdivisions and the insertion of
headings are for convenience of reference only and shall not affect or be
utilized in construing or interpreting this Agreement. All references in this
Agreement to any "Section" are to the corresponding Section of this Agreement
unless otherwise specified.
Herein. The words such as "herein," "hereinafter," "hereof," and
"hereunder" refer to this Agreement as a whole and not merely to a subdivision
in which such words appear unless the context otherwise requires.
Including. The word "including" or any variation thereof means
"including, without limitation" and shall not be construed to limit any general
statement that it follows to the specific or similar items or matters
immediately following it.
(c) The parties hereto have participated jointly in the negotiation
and drafting of this Agreement and, in the event an ambiguity or question of
intent or interpretation arises, this Agreement shall be construed as jointly
drafted by the parties hereto and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any provision
of this Agreement.
9.2 Payment of Sales, Use or Similar Taxes. All sales, use, transfer,
intangible, recordation, documentary stamp or similar Taxes or charges, of any
nature whatsoever, applicable to, or resulting from, the transactions
contemplated by this Agreement shall be borne by the Selling Stockholders.
9.3 Stockholder Representative. Each Selling Stockholder hereby
irrevocably appoints Xxxxx Xxxxxx (the "Stockholder Representative") as such
Selling Stockholder's representative, attorney-in-fact and agent, with full
power of substitution to act in the name, place and stead of such Selling
Stockholder with respect to the transfer of such Selling Stockholder's Shares to
the Company in accordance with the terms and provisions of this Agreement and to
act on behalf of such Selling Stockholder in any amendment of or litigation or
arbitration involving this Agreement and to do or refrain from doing all such
further acts and things, and to execute all such documents, as such Stockholder
Representative shall deem necessary or appropriate in conjunction with any of
the transactions contemplated by this Agreement, including, without limitation,
the power:
(i) to take all action necessary or desirable in connection with
the waiver of any condition to the obligations of the Selling
Stockholders to consummate the transactions contemplated by this
Agreement;
(ii) to negotiate, execute and deliver all ancillary agreements,
statements, certificates, statements, notices, approvals, extensions,
waivers, undertakings, amendments and other documents required or
permitted to given in connection with the consummation of the
transactions contemplated by this Agreement (it being understood that
such Selling Stockholder shall execute and deliver any such documents
which the Stockholder Representative agrees to execute);
53
(iii) to terminate this Agreement if the Selling Stockholders are
entitled to do so;
(iv) to give and receive all notices and communications to be
given or received under this Agreement and to receive service of
process in connection with the any claims under this Agreement,
including service of process in connection with arbitration; and
(v) to take all actions which under this Agreement may be taken
by the Selling Stockholders and to do or refrain from doing any
further act or deed on behalf of the Selling Stockholder which the
Stockholder Representative deems necessary or appropriate in his sole
discretion relating to the subject matter of this Agreement as fully
and completely as such Selling Stockholder could do if personally
present.
If Xxxxx Xxxxxx becomes unable to serve as Stockholder Representative, Xxxxxx
Xxxxxx Xxxxxx, or if she is not able to serve, then Xxxxxx Xxxxxx, or such other
Person or Persons as may be designated by a majority of the Selling
Stockholders, shall succeed as the Stockholder Representative.
9.4 Expenses. Except as otherwise provided in this Agreement, the
Selling Stockholders and Purchaser shall each bear its own expenses incurred in
connection with the negotiation and execution of this Agreement and each other
agreement, document and instrument contemplated by this Agreement and the
consummation of the transactions contemplated hereby and thereby, it being
understood that in no event shall the Company bear any of such costs and
expenses.
9.5 Specific Performance. The parties acknowledge and agree that the
breach of this Agreement by one party would cause irreparable damage to the
other party and that the one party will not have an adequate remedy at law.
Therefore, the obligations of the parties under this Agreement, including,
without limitation, the Selling Stockholders' obligation to sell the Shares to
Purchaser and the Purchaser's obligation to purchase the Shares, shall be
enforceable by a decree of specific performance issued by any court of competent
jurisdiction, and appropriate injunctive relief may be applied for and granted
in connection therewith. Such remedies shall, however, be cumulative and not
exclusive and shall be in addition to any other remedies which any party may
have under this Agreement or otherwise.
9.6 Further Assurances. The Selling Stockholders and Purchaser each
agrees to execute and deliver such other documents or agreements and to take
such other action as may be reasonably necessary or desirable for the
implementation of this Agreement and the consummation of the transactions
contemplated hereby.
9.7 Submission to Jurisdiction; Consent to Service of Process.
(a) The parties hereto hereby irrevocably submit to the non-exclusive
jurisdiction of any federal or state court located within the State of Delaware
over any dispute arising out of or relating to this Agreement or any of the
transactions contemplated hereby and each party hereby irrevocably agrees that
54
all claims in respect of such dispute or any suit, action proceeding related
thereto may be heard and determined in such courts. The parties hereby
irrevocably waive, to the fullest extent permitted by applicable law, any
objection which they may now or hereafter have to the laying of venue of any
such dispute brought in such court or any defense of inconvenient forum for the
maintenance of such dispute. Each of the parties hereto agrees that a judgment
in any such dispute may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.
(b) Each of the parties hereto hereby consents to process being
served by any party to this Agreement in any suit, action or proceeding by the
mailing of a copy thereof in accordance with the provisions of Section 9.11.
9.8 Entire Agreement; Amendments and Waivers. This Agreement
(including the schedules and exhibits hereto) represents the entire
understanding and agreement between the parties hereto with respect to the
subject matter hereof and supersedes all other prior agreements, arrangements,
communications and understandings, both written and oral, among the parties
hereto or any of them with respect to the subject matter hereof and thereof, and
any prior drafts or versions of this Agreement shall not be considered in
interpreting or construing any of the terms or provisions hereof. This Agreement
can be amended, supplemented or changed, and any provision hereof can be waived,
only by written instrument making specific reference to this Agreement signed by
the party against whom enforcement of any such amendment, supplement,
modification or waiver is sought. No action taken pursuant to this Agreement,
including without limitation, any investigation by or on behalf of any party,
shall be deemed to constitute a waiver by the party taking such action of
compliance with any representation, warranty, covenant or agreement contained
herein. The waiver by any party hereto of a breach of any provision of this
Agreement shall not operate or be construed as a further or continuing waiver of
such breach or as a waiver of any other or subsequent breach. No failure on the
part of any party to exercise, and no delay in exercising, any right, power or
remedy hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of such right, power or remedy by such party preclude any other
or further exercise thereof or the exercise of any other right, power or remedy.
All remedies hereunder are cumulative and are not exclusive of any other
remedies provided by law.
9.9 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware.
9.10 Table of Contents and Headings. The table of contents and
section headings of this Agreement are for reference purposes only and are to be
given no effect in the construction or interpretation of this Agreement.
9.11 Notices. All notices and other communications under this
Agreement shall be in writing and shall be deemed given when delivered
personally or mailed by certified mail, return receipt requested, to the parties
(and shall also be transmitted by facsimile to the Persons receiving copies
thereof) at the following addresses (or to such other address as a party may
have specified by notice given to the other party pursuant to this provision):
55
If to any Selling Stockholder, to:
Xxxxx X. Xxxxxx
X.X. Xxx 000
Xxxxxxx, XX 00000
Xxxxxx X. Xxxxxx
X.X. Xxx 000
Xxxxxxx, XX 00000
Xxxxxx X. Xxxxxx
000 Xxx Xxxxx Xxxx
Xxxxxxx, XX 00000
BSF Partners, L.P.
X.X. Xxx 000
Xxxxxxx, XX 00000
JFS Partners, L.P.
X.X. Xxx 000
Xxxxxxx, XX 00000
RBJ Machinery Co., LLC
X.X. Xxx 000
Xxxxxxx, XX 00000
With a copy to:
Baker, Donelson, Bearman, Xxxxxxxx & Xxxxxxxxx
000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxx
If to Purchaser, to:
North Atlantic Trading Company, Inc.
000 Xxxx Xxxxxx Xxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxx Xxxxxxx, President and
Chief Financial Officer
Telecopy No.: (000) 000-0000
With a copy to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Telecopy No.: (000) 000-0000
9.12 Severability. If any provision of this Agreement is invalid or
unenforceable, the balance of this Agreement shall remain in effect.
56
9.13 Binding Effect; Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
permitted assigns. Nothing in this Agreement shall create or be deemed to create
any third party beneficiary rights in any person or entity not a party to this
Agreement except as provided below. No assignment of this Agreement or of any
rights or obligations hereunder may be made by either the Selling Stockholders
or Purchaser (by operation of law or otherwise) without the prior written
consent of the other parties hereto and any attempted assignment without the
required consents shall be void; provided, however, that Purchaser may assign
this Agreement and any or all rights or obligations hereunder (including,
without limitation, Purchaser's rights to purchase the Shares and Purchaser's
rights to seek indemnification hereunder) to any Affiliate of Purchaser. Upon
any such permitted assignment, the references in this Agreement to Purchaser
shall also apply to any such assignee unless the context otherwise requires.
9.14 Non-Recourse. No past, present or future director, officer,
employee, incorporator, member, partner or stockholder of Purchaser shall have
any liability for any obligations or liabilities of Purchaser under this
Agreement of or for any claim based on, in respect of, or by reason of, the
transactions contemplated hereby and thereby.
9.15 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
** REMAINDER OF PAGE INTENTIONALLY LEFT BLANK**
57
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first written above.
NORTH ATLANTIC TRADING COMPANY, INC.
By: /s/ Xxxxxx X. Xxxxx, Xx.
--------------------------------------------
Name: Xxxxxx X. Xxxxx, Xx.
Title: Chairman
SELLING STOCKHOLDERS
By: /s/ Xxxxx Xxxxxx
--------------------------------------------
Name: Xxxxx Xxxxxx
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------------
Name: Xxxxxx Xxxxxx
By: /s/ Xxxxxx Xxxxxx Xxxxxx
--------------------------------------------
Name: Xxxxxx Xxxxxx Xxxxxx
By: /s/ Xxxxx Xxxxxx, General Partner
--------------------------------------------
Name: BSF Partners, L.P.
By: /s/ Xxxxxx Xxxxxx Xxxxxx, General Partner
--------------------------------------------
Name: JFS Partners, L.P.
By: /s/ Xxxxxx X. Xxxxxx, Chief Manager
--------------------------------------------
Name: RBJ Machinery Co., LLC
58
EXHIBIT A
Selling Stockholder Number of Shares Owned
------------------- ----------------------
Xxxxx Xxxxxx 285.165
Xxxxxx X. Xxxxxx 363.469
Xxxxxx Xxxxxx Xxxxxx 259.750
BSF Partners, L.P. 77.880
JFS Partners, L.P. 103.847
RBJ Machinery Co., LLC 40.265
-------
1130.376
EXHIBIT B
LEASE AGREEMENT
---------------
THIS LEASE AGREEMENT is made and entered into between XXXX XXXXXXX
XXXXXX, an individual resident of Shelby County, Tennessee, hereinafter referred
to as "Lessor," and XXXXXX, INC., a Tennessee corporation, hereinafter referred
to as "Lessee."
W I T N E S S E T H:
1. Certain Basic Terms. The following terms and provisions are in
effect and apply to the provisions of this Lease:
(a) "Leased Premises" shall mean the real property and improvements
located in the 0xx Xxxxx Xxxxxxxx of Xxxxxxx County, Tennessee as more
particularly described on Exhibit A attached hereto and incorporated herein.
(b) "Lease Term" shall mean the term commencing November 17, 2003
(the "Commencement Date"), and ending on the earlier to occur of (i) the first
anniversary of the Commencement Date, (ii) the date on which Lessee ceases to
occupy the Leased Premises in its business or (iii) the date the Lease is
terminated pursuant to paragraph 26(i) (the "Expiration Date").
(c) "Base Rent" shall mean the sum of Five Thousand Dollars
($5,000.00) per month due and payable on the first day of each month of the
Lease Term.
(d) "Additional Rent" shall mean any and all amounts at any time
payable by Lessee under the provisions hereof, but excluding the Base Rent.
(e) "Permitted Use" shall mean the use of the Leased Premises in
Lessee's business of manufacturing tobacco products and uses related thereto.
Except as specified, no other use shall be a Permitted Use for the Leased
Premises.
2. Granting Clause. In consideration of the rents, terms, provisions
and covenants of this Lease Agreement, Lessor hereby leases, lets and demises
the Leased Premises to Lessee for the Lease Term herein specified.
3. Rent. (a) Commencing on the Commencement Date, Lessee agrees to
pay the Base Rent herein specified in accordance with the provisions of
paragraph 1(c) hereof, at Lessor's address hereinafter specified. Lessee further
agrees to pay those items of Additional Rent herein specified in accordance with
the provisions relating thereto.
(b) In addition to any other remedies available to Lessor for
nonpayment of Rent, if any payment of Base Rent or Additional Rent (to the
extent that Additional Rent is due under the provisions hereof on the first day
of a calendar month) is not received by Lessor on or before the fifth (5th) day
of the month when such Rent is due, or if any other payment of Additional Rent
due Lessor by Lessee is not received by Lessor on or before the fifth (5th) day
of the month next following the month in which Lessee was invoiced, such past
due amount shall accrue interest at the rate of five percent (5%) per annum from
the date due until the date paid, and such interest shall become due and payable
as Additional Rent in addition to such amounts owed under this Lease.
(c) The Base Rent and Additional Rent are sometimes collectively
herein referred to as the "Rent." The burden of proof of payment of Rent in case
of controversy shall be upon Lessee.
4. Use. (a) Lessee shall use and occupy the Leased Premises only for
the Permitted Use specified in paragraph 1(e) hereof. Lessee shall occupy the
Leased Premises, and control its agents, employees, invitees and visitors, in
such a way as is lawful and will not create any nuisance, and Lessee will
promptly xxxxx any such improper conduct at Lessee's cost. Lessee shall not
commit, or suffer to be committed, any waste on the Leased Premises. Lessee
shall maintain the Leased Premises in a clean, sanitary and safe condition and
dispose of all rubbish, garbage and other waste in a clean and sanitary manner.
(b) Lessee shall not permit the Leased Premises to be used in any way
which would be extra hazardous on account of fire or explosion such that such
use would increase the premium for or render void the property insurance on the
Leased Premises.
5. Utility Service. Lessee shall pay the cost of all utility services
affecting the Leased Premises, including, but not limited to, initial connection
charges and all charges for gas, water and electricity used in the Leased
Premises. Lessee shall pay all charges for pest control and extermination,
janitorial and sanitation services.
6. Repairs and Maintenance. (a) Lessor shall not be required to make
any improvements, replacements or repairs of any kind or character to the Leased
Premises during the Lease Term.
(b) Lessee shall not be required to make any replacements or repairs
to the Leased Premises, other than replacements or repairs required due to
damage caused by Lessee, its agents, servants, employees or invitees, damage by
fire or other casualty excepted. The provisions of paragraph 11 shall control in
the event of fire or other casualty.
(c) At the expiration or earlier termination of this Lease, Lessee
shall deliver the Leased Premises (together with any alterations and
improvements which are to be retained by Lessor pursuant to paragraph 9) "broom
clean" in the same good order and condition as existed at the Commencement Date
of this Lease, ordinary wear, natural deterioration beyond the control of
Lessee, damage by fire, tornado or other casualty excepted.
7. Compliance with Laws. Lessee shall comply with all laws,
ordinances, orders, rules and regulations of state, federal, municipal or other
agencies or bodies having jurisdiction relating to the use, condition and
occupancy of the Leased Premises; notwithstanding the foregoing, Lessee shall
not be obligated to repair, modify or alter the Leased Premises in order to
eliminate such non-complying use or condition, and should Lessee elect not to
make such repair, modification or alteration, Lessee will either cease said
non-compliant use or condition, or terminate this Lease. Lessee shall not cause
or permit any hazardous or toxic substances, wastes or materials, any pollutants
or contaminants (including, without limitation, gasoline, kerosene or other
petroleum distillates), or any other similar substances to be stored, located,
discharged, processed, managed, possessed or otherwise handled in or upon the
Leased Premises and shall comply with all environmental laws, rules and
regulations affecting the Leased Premises or Lessee's use thereof. Lessee shall
indemnify and hold Lessor harmless against loss, cost, penalty or damage
resulting from Lessee's violation or noncompliance with such laws or any of the
provisions of this paragraph, such indemnification to survive the termination of
this Lease.
8. Property Taxes and Assessments. During the Lease Term, Lessee
shall pay all real property taxes attributable to the Leased Premises. Any
personal property taxes attributable to Lessee's personal property shall be the
responsibility of Lessee.
9. Alterations and Improvements. Lessee shall not make or allow to be
made any alterations or physical additions in or to the Leased Premises without
first obtaining the written consent of Lessor. Lessor does not consent to any
mechanics' or materialmen's liens upon the Leased Premises, nor Lessee's
interest therein, and Lessee shall not suffer any such lien to exist and shall
promptly discharge or bond the same. Any alterations, physical additions or
improvements to the Leased Premises made by Lessee with Lessor's consent shall
be made at Lessee's sole cost and expense, in good and workmanlike manner, in
accordance with all applicable laws, rules, regulations and codes, and shall at
once become the property of Lessor and shall be surrendered to Lessor upon the
expiration or earlier termination of this Lease, except that movable equipment
or other assets owned by Lessee may be removed by Lessee at the end of the Lease
Term if Lessee is not then in default and if such equipment and assets are not
then subject to any other rights, liens and interests of Lessor. Lessor, at her
option and at any time, may require Lessee to remove any physical additions
and/or repair any alterations made without Lessor's consent in order to restore
the Leased Premises to the condition existing prior to the time Lessee took
possession, all costs of removal and/or alterations to be borne by Lessee.
10. Condemnation. (a) If during the Lease Term all or substantially
all of the Leased Premises is taken for any public or quasi-public use under any
governmental law, ordinance or regulation, or by right of eminent domain or by
private purchase in lieu thereof, and the taking would prevent or materially
interfere with the use of the Leased Premises for the Permitted Use, this Lease
shall terminate, such termination to be effective on the date of such taking.
(b) In the event that only a portion of the Leased Premises shall be
taken for any public or any quasi-public use under any governmental law,
ordinance or regulation, or by right of eminent domain or by private sale in
lieu thereof, and the taking would not prevent or materially interfere with the
use of the Leased Premises for the Permitted Use, this Lease shall not
terminate, but shall continue in effect, and the Base Rent for the remainder of
the Lease Term shall be equitability adjusted in relation to the portion of the
Leased Premises so taken.
(c) Lessee shall have no claim to any condemnation award relating to
the Leased Premises.
11. Fire and Casualty. (a) If the Leased Premises should be so
damaged or destroyed by fire, tornado or other casualty as to prevent or
materially interfere with the use of the Leased Premises by Lessee, then this
Lease shall terminate, such termination to be effective on the date of such
casualty.
(b) If the Leased Premises should be damaged or destroyed by fire,
tornado or other casualty which does not prevent or materially interfere with
the use of the Leased Premises by Lessee, then Lessor shall, at its sole
election, either (i) subject to the rights of Lessor's mortgagee, if any, and to
the extent of the insurance proceeds payable with respect to the Leased
Premises, restore or replace the damaged or destroyed portion of the Leased
Premises to substantially the same condition as existed prior to such casualty,
or (ii) terminate this Lease, such termination to be effective on the date of
such casualty; provided, however, in the event of de minimis damage to the
Leased Premises, Lessor shall not have the right to terminate the Lease, but
Lessor shall not be obligated to repair or restore such de minimis damage.
(c) In the event of a casualty described in subparagraph 11(a) or
11(b) above, any and all insurance proceeds payable with respect to the real
property and improvements shall belong solely to Lessor, and any insurance
proceeds payable with respect to Lessee's personal property or fixtures shall
belong solely to Lessee.
12. Insurance. Lessee shall at all times during the Lease Term
maintain a policy or policies of insurance with the premium paid in advance,
issued by some solvent insurance company, insuring the Leased Premises (and any
personal property or fixtures of Lessee) against loss or damage by fire,
explosion or other hazards and contingencies for the full replacement value,
which names Lessor and Lessee jointly as loss payee. The deductible under such
insurance policies shall be acceptable to Lessor in her reasonable discretion.
Lessee shall at all times during the Lease Term maintain public liability
insurance coverage in an amount not less than One Million Dollars
($1,000,000.00) naming Lessor as additional insured, with premiums prepaid and
issued by some solvent insurance company reasonably satisfactory to Lessor. Upon
request, Lessee will furnish Lessor proof of such insurance coverage.
13. Waiver of Subrogation. Lessor and Lessee hereby waive and release
each other of and from any and all rights of recovery, claims, actions or causes
of action, against each other, their agents, officers and employees, for any
loss or damage that may occur to the Leased Premises, improvements, or personal
property (or contents) within the Leased Premises, by reason of fire or the
elements regardless of cause or origin, including negligence of Lessor or Lessee
and their agents, officers, employees, invitees and visitors; provided, however,
that the foregoing waiver and release is effective only if and to the extent
that it does not invalidate the insurance policies maintained by either party.
Each party agrees immediately to give to its insurance company which has issued
any such policy of insurance in respect of the Leased Premises, written notice
of the terms of the waivers contained in this paragraph, and to have the
insurance policies properly endorsed, if necessary, to prevent the invalidation
of the insurance coverage by reason of the waivers contained in this paragraph.
14. Hold Harmless. Lessor shall not be liable to Lessee or its
employees, agents, invitees, licensees or visitors, or to any other person, for
any injury to person or damage to property on or about the Leased Premises,
whether caused by the negligence or misconduct of Lessee or its agents,
servants, employees or invitees, or of any other person entering upon the Leased
Premises under express or implied invitation by Lessee, or caused by the Leased
Premises and improvements located thereon becoming out of repair, or caused by
leakage of gas, oil, water or steam or by electricity emanating from the Leased
Premises or caused otherwise, except to the extent that such injury or damage is
caused by the Lessor's negligence or misconduct, or that of her agents,
servants, employees or invitees. Lessee agrees to indemnify and hold harmless
Lessor of and from any loss, cost, damage, attorneys' fees, expenses or claims
arising out of such damage or injury, such indemnification to survive the
termination of this Lease.
15. Quiet Enjoyment. Lessor warrants that it has full right to
execute and to perform this Lease and to grant the estate demised, and that
Lessee, upon payment of the required rents and performing the terms, conditions,
covenants and agreements contained in this Lease, shall peaceably and quietly
have, hold and enjoy the Leased Premises during the full Lease Term.
16. Lessor's Right of Entry. Lessor shall have the right, at all
reasonable hours on reasonable notice, to enter the Leased Premises for any
reason related to Lessor's protection of her investment in the Leased Premises
or the performance of Lessor's obligations hereunder, including, without
limitation, inspection, cleaning or making repairs (but without obligation to do
so except as otherwise herein provided); determining Lessee's use of the Leased
Premises; determining the condition or state of repair of the Leased Premises;
determining whether an Event of Default under this Lease has occurred; or
showing the Leased Premises to persons who may be interested in purchasing the
Leased Premises; but Lessor may not interfere with Lessee's conduct of its
business.
17. Assignment/Sublease. Lessee shall not have the right to assign
this Lease or sublet all or any part of the Leased Premises; provided, however,
that Lessee may assign this Lease to North Atlantic Trading Company, Inc., or
any of the affiliates or subsidiaries of North Atlantic Trading Company, Inc.,
at any time without the prior written consent of Lessor.
18. Default by Lessee. The occurrence of any one or more of the
following shall be deemed to be an Event of Default by Lessee under this Lease:
(a) Lessee shall fail to pay when due any installment of Rent or any
other payment required pursuant to this Lease and the failure is not cured
within ten (10) days after written notice to Lessee;
(b) Lessee shall abandon the Leased Premises (For the purposes of
this Lease, the term "abandon" shall mean to vacate the Leased Premises with the
intent not to return.);
(c) Lessee shall fail to perform or comply with any term, provision
or covenant of this Lease, other than the payment of Rent or any other payment
required pursuant to this Lease, and the failure is not cured within thirty (30)
days after written notice to Lessee or such longer period as may be necessary
provided that Lessee commences the cure within said thirty (30) day period and
continues with due diligence to cure the same;
(d) Lessee shall do or permit to be done any act which results in a
lien being filed against the Leased Premises, and such lien is not discharged or
bonded within thirty (30) days after written notice to Lessee of the filing
thereof.
19. Remedies for Lessee's Default. Upon the occurrence of any Event
of Default which remains uncured after the expiration of any cure period
provided for herein, Lessor shall have, in addition to any other right or remedy
available at law or in equity, the option to pursue any one or more of the
following remedies without any notice or demand:
(a) Terminate this Lease, in which event Lessee shall immediately
surrender the Leased Premises to Lessor, and if Lessee fails to surrender the
Leased Premises, Lessor may, without prejudice to any other remedy which it may
have for possession or arrearages in Rent, enter upon and take possession of the
Leased Premises, by picking or changing locks if necessary, and lock out, expel
or remove Lessee and any other person who may be occupying all or any part of
the Leased Premises and remove all goods and properties therefrom, all without
being liable for prosecution of any claim for damages.
(b) Enter upon the Leased Premises, by picking or changing locks if
necessary, without being liable for prosecution of any claim for damages, and do
whatever Lessee is obligated to do under the terms of this Lease; however,
Lessor shall be liable for any damages resulting from effecting compliance with
Lessee's obligations under this subparagraph caused by the negligence or willful
misconduct of Lessor.
20. Waiver of Default or Remedy. Failure of Lessor to declare an
Event of Default immediately upon its occurrence, or delay in taking any action
in connection with an Event of Default, shall not constitute a waiver of the
default, but Lessor shall have the right, so long as the Event of Default
continues, to declare the default at any time and take such action as is lawful
or authorized under this Lease. No waiver of a breach of any covenant contained
herein shall be construed to be a waiver of any succeeding breach of the same or
any other covenant. Pursuit of any one or more of the remedies set forth in
paragraph 19 above shall not preclude pursuit of any one or more of the other
remedies provided elsewhere in this Lease or provided by law, nor shall pursuit
of any remedy provided constitute a forfeiture or waiver of any Rent or damages
accruing to Lessor by reason of the violation of any of the terms, provisions or
covenants of this Lease.
21. Force Majeure. Neither Lessor nor Lessee shall be required to
perform any covenant or obligation in this Lease, or be liable in damages to the
other party hereto, so long as the performance or non-performance of the
covenant or obligation is delayed, caused by or prevented by Force Majeure. As
used herein, "Force Majeure" shall mean strike, lockout, sit-down, material or
labor restrictions by any governmental authority, riot, flood, washout,
explosion, earthquake, fire, storm, acts of the public enemy, war, insurrection,
terrorism, and any other cause not reasonably within the control of Lessor or
Lessee as applicable and which by the exercise of due diligence such party is
unable to prevent or overcome.
22. Attorneys' Fees. If subsequent to an Event of Default under this
Lease, Lessor places in the hands of an attorney the enforcement of all or any
part of this Lease, the collection of any Rent due or to become due or recovery
of the possession of the Leased Premises, the losing party agrees to pay the
prevailing party's reasonable attorneys' fees and costs of collection.
23. Surrender of Premises; Holding Over. (a) Upon the expiration or
earlier termination of this Lease, Lessee shall promptly remove Lessee's
furniture, furnishings and other personal property at Lessee's expense and shall
surrender to Lessor possession of the Leased Premises, broom clean, with all
debris and personal property removed therefrom.
(b) In the event of holding over by Lessee after the expiration or
termination of this Lease, the holdover Lessee shall be as a tenant at
sufferance. No holding over by Lessee, whether with or without consent of
Lessor, shall operate to extend the Lease Term unless the parties shall agree
otherwise in writing.
24. Rights of Mortgagee. Lessee accepts this Lease subject and
subordinate to any recorded mortgage or deed of trust presently existing or
hereafter placed upon the Leased Premises, and to any renewals, modifications
and extensions thereof. The foregoing provisions shall be self-operative and no
further instrument of subordination shall be required for the purpose; provided,
however, that in confirmation of such subordination, Lessee shall, upon request
of Lessor or Lessor's mortgagee, execute and deliver, in recordable form, any
instrument of subordination requested by Lessor or Lessor's mortgagee. Anything
in the foregoing to the contrary notwithstanding, in the event of a foreclosure
under any such mortgage or deed of trust, this Lease shall continue in full
force and effect and Lessee shall attorn to the purchaser at such foreclosure
sale, as Lessor and such purchaser shall accept such attornment and become the
Lessor under the Lease. Any such mortgage or deed of trust may at any time, at
the instance of the holder of the note secured thereby, be subordinated to this
Lease, such subordination to be accomplished by the execution by such holder of
an instrument of subordination and recording of the same in the recording office
where such mortgage or deed of trust is recorded; provided, however,
notwithstanding that this Lease may be (or may be made to be) superior to such
mortgage or deed of trust, the provisions of the mortgage or deed of trust
governing the rights of the mortgagee with respect to condemnation or insurance
proceeds shall be prior and superior to and shall prevail over any contrary
provisions contained in this Lease with respect to the payment or usage thereof.
25. Notice. (a) All Rent and other payments required to be made by
Lessee to Lessor pursuant to this Lease shall be payable to Lessor at the
address set forth below, or such other address as Lessor may specify from time
to time by written notice to Lessee.
(b) Any notice or document required or permitted to be delivered by
this Lease shall be deemed to be effective upon delivery, if delivered
personally, or three (3) days after mailing by depositing the same by United
States Mail, postage prepaid, certified mail, return receipt requested,
addressed to the parties at the respective addresses set out below:
LESSOR: Xxxx Xxxxxxx Xxxxxx
0000 Xxxxxx Xxxxxxx 00
Xxxxxxx, Xxxxxxxxx 00000
LESSEE: Xxxxxx, Inc.
Xxxxx 0, X. X. Xxx 000
Xxxxxxx, Xxxxxxxxx 00000
or to such other address as either party may from time to time specify in
written notice complying with this subparagraph to the other party.
26. Miscellaneous. (a) This Lease shall be binding upon and inure to
the benefit of Lessor and Lessee and their respective heirs, personal
representatives, successors and permitted assigns, but subject always to the
restrictions on Lessee's assignment and subletting set out in paragraph 17.
(b) Lessee shall pay for all landscaping maintenance expenses
incurred with respect to the Leased Premises and agrees to keep the lawn and all
existing landscaping in good and sightly condition and in compliance with all
applicable state or local requirements or guidelines.
(c) The captions appearing in this Lease are inserted only as a
matter of convenience and in no way define, limit, construe or describe the
scope or intent of such paragraph.
(d) It is expressly agreed by Lessee, as a material consideration for
the execution of this Lease, that this Lease, with any other written documents
specifically referred to herein, is the entire agreement of the parties; and
that there are, and were, no written or verbal representations, warranties,
understandings, stipulations, agreements or promises pertaining to this Lease or
other written documents which are not incorporated in writing in this Lease.
Lessor and Lessee expressly agree that there are and shall be no implied
warranties of merchantability, fitness or of any other kind arising out of this
Lease. It is likewise agreed that this Lease may not be altered, waived, amended
or extended except by an instrument in writing signed by both Lessor and Lessee.
(e) If any term, covenant, condition or provision of this Lease is
held by a court of competent jurisdiction to be invalid, void or unenforceable,
the remainder of the provisions hereof shall remain in full force and effect and
shall in no way be affected, impaired or invalidated thereby.
(f) Lessor and Lessee agree that this Lease shall not be filed in the
real property records maintained by Xxxxxxx County, Tennessee.
(g) This Lease shall be governed by, construed and enforced in
accordance with the laws of the State of Tennessee.
(h) Time is of the essence of this Lease.
(i) This Lease may be executed in counterparts and by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be deemed an original, but all of which taken together shall constitute
but one and the same document.
(j) Lessee shall have the right to terminate this Lease at any time
during the Lease Term upon thirty (30) days written notice to Lessor, and upon
such termination, both Lessee and Lessor shall be relieved of all obligations
hereunder with respect to the Leased Premises first arising or accruing after
the date of such termination.
IN WITNESS WHEREOF, Lessor has executed this Lease and Lessee has
caused this Lease to be executed by its duly authorized representative, this
17th day of November, 2003.
LESSOR:
-------------------------------------------
XXXX XXXXXXX XXXXXX
LESSEE:
XXXXXX, INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
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Exhibit A
BEGINNING at a point in the South right-of-way of Highway #89, point being North
68 degrees and 46 minutes East, for a distance of 240.87 feet east of the
Northeast corner of Xxxxxx Xxxxxx and the Northwest corner of the tract herein
described; thence North 69 degrees and 40 minutes East with the South
right-of-way of Highway #89 for a distance of 58.52 feet to a point in the said
right-of-way; thence for the next five (5) calls, making a new line through Xxxx
Xxxxxx (Parcel 85), South 51 degrees and 19 minutes East for a distance of
159.55 feet, South 89 degrees and 44 minutes East for a distance of 460.76 feet,
South 1 degrees and 22 minutes West for a distance of 560.40 feet, South 89
degrees and 57 minutes West for a distance of 635.44 feet, North 0 degrees and
46 minutes East for a distance of 642.37 feet to the point of beginning, and
containing 8.4907 acres. (Description provided by Xxxx Xxxxxxx Xxxxxx.)
EXHIBIT C
LEASE AGREEMENT
---------------
THIS LEASE AGREEMENT, made and entered into on this the 17th day of
November, 2003, by and between GB DESIGNS, INC., a Tennessee Corporation with
offices located in Xxxxxxx County, Tennessee, Party of the First Part
(hereinafter for convenience designated as "Lessor") and XXXXXX, INC., a
Tennessee Corporation with offices located in Xxxxxxx County, Tennessee, Party
of the Second Part (hereinafter for convenience designated as "Lessee") (the
"Lease Agreement").
W-I-T-N-E-S-S-E-T-H
1. That for and in consideration of the lease payments hereinafter
reserved and the conditions, covenants and agreements herein contained on the
part of the Lessee, to be observed and performed by the Lessee, the Lessor does
hereby lease and demise, and the Lessee (in consideration of the execution
hereof by Lessor) does hereby take, the following premises (hereinafter referred
to as the "Leased Premises") situated in the City of Dresden, County of Xxxxxxx,
State of Tennessee, in the 0xx Xxxxx Xxxxxxxx of said County, and more
particularly described as follows, to-wit:
TRACT NO. 1: BEGINNING at a point, the intersection of the north
right-of-way of North Street with the west right-of-way of State
Highway #118, and running thence north with the west right-of-way of
State Highway #118 approximately 242 feet to the intersection of the
south right-of-way of Park Street with the west right-of-way of State
Highway #118, and running thence west with the south right-of-way of
Park Street approximately 425 feet to the northeast corner of the
First Baptist Church of Xxxxxx Street; and running thence south with
the Church's east line approximately 56 feet to Xxxxxxxxx Xxxxx'
north line; and running thence east with Xxxxx' north line
approximately 20 feet to Xxxxx' northeast corner; and running thence
south with Xxxxx' east line approximately 95 feet to Xxxxxx X. Xxxxx'
north line; and running thence east with Xxxxx' north line
approximately 40 feet to Xxxxx' northeast corner; and running thence
south with Xxxxx' east line approximately 120 feet to the north
right-of-way of North Street; and running thence east with the north
right-of-way of north Street approximately 366 feet to the point of
beginning, containing 2.2 acres, more or less.
TRACT NO. 2: BEGINNING at a stake on the east side of Xxxxxx Street
where it is intersected by Park Street; thence east 100 feet with the
south margin of Park Street to a stake on the west boundary of lands
owned by the City of Dresden, thence south 80 feet with the west
boundary of City of Dresden property to a stake at McDonald's
northeast corner; thence west 100 feet with McDonald's north line to
a stake on the east margin of Xxxxxx Street; thence north 80 feet
with the east margin of Xxxxxx Street to the beginning corner.
TRACT NO. 3: BOUNDED on the north by the Colored Baptist Church;
bounded on the south by Xxxxxxx Xxxxx; bounded on the east by Xxxxxxx
County Jail Lot; and bounded on the west by the Old Dresden and
Xxxxxx Road.
TRACT NO. 1 BEING the same land conveyed to Universal Metal Concepts,
Inc., by deed of the City of Dresden, dated April 29, 1994, which
deed is of record in the Register's Office of Xxxxxxx County,
Tennessee, in Deed Book 334 at page 473.
TRACT NOS. 2 and 3 BEING the same land conveyed to Universal Metal
Concepts, Inc, by deed of Xxxxx Xxxxxx, dated September 20, 2000,
which deed is of record in the Register's Office of Xxxxxxx County,
Tennessee, in Deed Book D380 at page 302.
"Universal Metal Concepts, Inc." is the same corporation now known as
"GB Designs, Inc." by virtue of a Charter amendment duly filed with
and approved by the Tennessee Secretary of State on November 2, 2000,
and of record in the Register's Office of Xxxxxxx County, Tennessee,
in Charter Book "H", page 395-397.
2. The term of this lease shall commence with the execution of this
Lease Agreement (which shall be the same date that the existing Lease between
RBJ Machinery and GB Designs, Inc. is terminated) and end on December 31, 2005.
3. The Leased Premises shall be used for any legal conforming usage,
including, but not limited to office work and warehouse area.
4. In consideration whereof, the Lessee agrees to pay unto the
Lessor, in such place in Dresden as the Lessor may designate, as lease payment
for the Leased Premises, the sum of Seventy-Three Thousand Three Hundred
Thirty-Eight and 32/100 Dollars ($73,338.32) PLUS One Hundred and 46/100 Dollars
($100.46) per day from the date of the execution of this Lease Agreement through
December 31, 2003, payable in eight (8) installments as follows: the first
installment is to be paid on the date of execution of this Lease Agreement, in
the sum of One Hundred and 46/100 Dollars ($100.46) per day from the date of the
execution of this Lease Agreement through December 31, 2003; PLUS Nine Thousand
One Hundred Sixty-Seven and 29/100 Dollars ($9,167.29) (this representing the
pro-rated rent from the execution of the Lease Agreement until the end of 2003
plus rent for the first calendar quarter of 2004); the remaining seven (7)
installments shall each be in the sum of Nine Thousand One Hundred Sixty-Seven
and 29/100 Dollars ($9,167.29), payable beginning on April 1, 2004, and
continuing on the same day of each third month thereafter (in other words, at
intervals of one calendar quarter, with the last installment to be paid on
October 1, 2005). In addition to the payments specified above, and as part of
the lease payments to be paid, Lessee agrees to reimburse Lessor for the County
and City property taxes levied against the Leased Premises during the term of
this Lease Agreement; such reimbursement is to be made within fifteen (15) days
after Lessor provides Lessee a receipt showing Lessor has paid such taxes. In
the event Lessor fails to pay such taxes in timely fashion, Lessee shall have
the right, but not the obligation, to pay such taxes directly to the taxing
authority. Such payment to the taxing authority shall constitute full
satisfaction of Lessee's duty in connection with such taxes (except that Lessor
is to be furnished a copy of the receipt issued by the taxing authority showing
payment has been made).
5. Lessee shall not be required to make any replacements or repairs
to any portion of the Leased Premises, other than replacements or repairs
required due to damaged caused by Lessee, its agents, servants, employees or
invitees, damage by fire, wind or other casualty excepted. If the Leased
Premises should be damaged or destroyed by fire, tornado or other casualty: (a)
so as to prevent or materially interfere with the use of, or conduct of business
at, the Leased Premises by Lessee and cannot be cured by Lessor within the ten
(10) business day period following such damage or other casualty, then this
Lease Agreement shall terminate and Lessee shall vacate the Leased Premises
within thirty (30) days from the date of such damage or other casualty, during
which thirty (30) day period Lessee will allow prospective future tenants to
inspect the Leased Premises (by appointment with Lessee only, with Lessor to be
present at said inspection), such termination to be effective on the date of
such casualty; or (b) which does not prevent or materially interfere with the
use of any portion of the Leased Premises by Lessee, then Lessor shall, at its
sole election, either (i) subject to the rights of Lessor's mortgagee, if any,
and to the extent of the insurance proceeds payable with respect to the Leased
Premises, restore or replace the damaged or destroyed portion of the Leased
Premises to substantially the same condition as existed prior to such casualty,
or (ii) terminate this Lease Agreement, such termination to be effective on the
date of such casualty; provided, however, in the event of de minimis damage to
any portion of the Leased Premises, Lessor shall not have the right to terminate
this Lease Agreement, but Lessor shall not be obligated to repair or restore
such de minimis damage.
6. Lessee shall have the right to make such alterations to the
interior of the building as it may desire, provided, however, that any repairs
or alterations undertaken by the Lessee shall not impair the structural safety
of the building. Lessor reserves the right to inspect the premises at all
reasonable times on reasonable notice to Lessee.
7. Lessee will pay all bills for water, light and heat used on the
Leased Premises or any other utility bills not herein enumerated, including
sewer service charges if any be levied. Lessee further covenants to keep and
maintain the interior of the Leased Premises, including lighting fixtures, all
electric wiring, water pipes, water closets and other plumbing on the Leased
Premises in such good repair and order as may be required by the rules,
regulations and ordinances of the governmental authority having jurisdiction
thereof.
8. Lessor shall not be liable for any damages caused by, or growing
out of, leaks in roof or any defect in the Leased Premises.
9. Lessor shall not be liable for any damages caused by, or growing
out of, any breakage, leakage, getting out of order, or defective condition of
said electric wiring, pipes, closets or plumbing, or any of them.
10. Lessor shall have the right, at the option of Lessor, to annul
this Lease Agreement, upon ten (10) days' written notice to Lessee, and to
thereupon re-enter and take possession of the said premises, upon the happening
of any one or more of the following events:
(a) In the event the Lessee should fail to pay any one or more of
said quarterly installments of lease payments, as and when the
same becomes due, and such default should continue for thirty
(30) days after written demand for the payment thereof is made by
the Lessor upon the Lessee.
(b) In the event a petition in bankruptcy is filed by or against the
Lessee and such petition is not dismissed within thirty (30) days
from the filing thereof, or the Lessee is adjudged bankrupt.
(c) In the event an assignment for the benefit of creditors is made
by the Lessee.
(d) In the event of an appointment by any Court of a receiver or
other Court officer of Lessee's property and such receivership is
not dismissed within thirty (30) days from such appointment.
(e) In the event the Lessee, before the expiration of said term, and
without the written consent of the Lessor, vacates said premises
or abandons the possession thereof without the intent to return,
or uses the same for purposes other than the purposes for which
the same are hereby let, or cease to use said premises for the
purpose herein expressed. (If the Lessee removes the majority of
its personal property from the Leased premises such removal shall
indicate Lessee has abandoned the premises and has no "intent to
return".)
(f) In the event the Lessee violates any other terms, conditions or
covenants on the part of the Lessee herein contained, and fails
to commence and to proceed with diligence and dispatch to remedy
the same within ten (10) days after written notice thereof is
given by Lessor to Lessee.
11. Lessee shall have the right, at the option of Lessee, to annul
this Lease Agreement , upon ten (10) days' written notice to Lessor upon the
happening of any one or more of the following events:
(a) In the event a petition in bankruptcy is filed by or against the
Lessor and such petition is not dismissed within thirty (30) days
from the filing thereof, or the Lessor is adjudged bankrupt.
(b) In the event an assignment for the benefit of creditors is made
by the Lessor.
(c) In the event of an appointment by any Court of a receiver or
other Court officer of Lessee's property and such receivership is
not dismissed within thirty (30) days from such appointment.
(d) In the event the Lessor violates any other terms, conditions or
covenants on the part of the Lessor herein contained, and fails
to commence and to proceed with diligence and dispatch to remedy
the same within ten (10) days after written notice thereof is
given by Lessee to Lessor.
12. A first lien is expressly reserved by the lessor and granted by
the Lessee upon the terms of this Lease Agreement and upon all interest of the
Lessee in this leasehold for the payment of lease payments and also for the
satisfaction of any cause of action which may accrue to the Lessor by the
provisions of this Lease Agreement. A lien is also expressly reserved by the
Lessor and granted by the Lessee upon its interest in all buildings,
improvements, store fixtures, water fixtures and gas fixtures and all other
fixtures to be erected and put in place or that may be erected or put in place
upon the Leased Premises by or through the Lessee or other occupants for other
lease payments and also for the satisfaction of any causes of action which may
accrue to Lessor by the provisions of this Lease Agreement.
13. In the event the Lessee abandons the Leased Premises before the
expiration of the term hereof, whether voluntarily or involuntarily, or violates
any of the terms, conditions, or covenants hereof, the Lessor shall have the
privilege, at Lessor's option, of re-entering and taking possession of the
Leased Premises and leasing all or any portion of the Leased Premises for such
term and for such use deemed satisfactory to the Lessor, applying each quarter
the net proceeds obtained from said leasing to the credit of the Lessee herein,
and said leasing shall not release the Lessee from liability hereunder for the
lease payments reserved for the residue of the term hereof. Any lease payments
collected by the Lessor under the terms of this section in excess of the lease
payments reserved hereunder shall be paid to the Lessee.
14. No re-entry hereunder shall bar the recovery of lease payments or
damages for the breach of any of the terms, conditions or covenants on the part
of the Lessee herein contained. The receipt of lease payments after breach or
condition broken, or delay on the part of the Lessor to enforce any right
hereunder, shall not be deemed a waiver or forfeiture of the right of the Lessor
to annul this Lease Agreement or to re-enter the Leased Premises or to re-let
the same. The failure of any party to insist in any instance on strict
performance of any covenant herein, or to exercise any option herein contained
shall not prevent such party from insisting on strict performance on any
subsequent occasion.
15. Any provision in this Lease Agreement to the contrary
notwithstanding, in the event the Lessee abandons, without intent to return, the
Leased Premises or fails to pay within thirty (30) days after written demand for
the payment thereof made by the Lessor, Lessor shall, at Lessor's option, have
the right by giving ten (10) days written notice to the Lessee, to declare due
the whole of the lease payments reserved in this Lease Agreement for the residue
of the term hereof, payable at the expiration of ten (10) days from the date of
said written notice, and the Lessor shall thereupon have the right to enter upon
the Leased Premises and to take possession thereof and to lease the same or any
portion thereof for such term and for such use and to such tenant and upon such
terms and conditions as the lessor may deem advisable, and with or without
taking such possession, at any time after the expiration of ten (10) days from
the giving of such notice be entitled to recover from the Lessee a sum of money
equivalent to the amount of lease payments reserved in this Lease Agreement for
the residue of the term hereof, less the net lease payments, if any, theretofore
received by the Lessor by virtue of any subsequent leasing, all net lease
payments thereafter accruing shall inure to the benefit of the Lessee. (If the
Lessee removes the majority of its personal property from the Leased premises
such removal shall indicate Lessee has abandoned the premises and has no "intent
to return". Lessee shall notify Lessor at least 10 days in advance if Lessee
intends to remove the majority of its personal property from the Leased
Premises.) (In the event the Lessor "declares the whole of the lease payments
reserved in this Lease Agreement for the residue of the term hereof" under the
provisions of this paragraph, the amount to be paid by Lessee shall be
discounted to the Net Present Value of such lease payments, using as a discount
rate the average interest rate then being paid by banks in Xxxxxxx County,
Tennessee, on 1-year Certificates of Deposit.)
16. All improvements and additions to the Leased Premises shall
adhere to the Leased Premises and become the property of the Lessor, with the
exception of such additions as are usually classed as furniture or fixtures, and
also with the exception of refrigeration equipment; said furniture, fixtures and
refrigeration equipment are to remain the property of the Lessee and may be
removed by the Lessee at the expiration of this Lease Agreement. Lessee shall
repair any damages to the Leased Premises caused by such removal.
17. Lessee may not assign, transfer sublet or encumber its interest
in the Leased Premises in any manner without the prior written consent of the
Lessor, such consent not to be unreasonably withheld or delayed; provided,
however, that the Lessee may assign its interest to North Atlantic Trading
Company, Inc. or any of the affiliates or subsidiaries of North American Trading
Company, Inc. at any time without the prior written consent of the Lessor. No
assignment shall release Lessee from liability for performance of its
obligations hereunder. Lessor shall be notified of any assignment at least ten
(10) days prior to the effective date of the assignment. (Such notice shall
contain the name and correct address of the assignee as well as the name and
telephone number of the individual spokesperson for the assignee to be
contacted, if such contact is needed).
18. Lessee agrees to maintain, at Lessee's expense, insurance
coverage on this property (including both "all risk" casualty coverage in an
amount not less than the replacement value of the improvements and liability
coverage in an amount not less than $500,000.00), with deductibles not more than
$5,000.00, and have Lessor named as an additional insured party with Lessor to
be furnished a copy of said policy. (In the preceding sentence, the word
"improvements" shall included the building on the Leased Premises and all its
components). In the alternative, in the event Lessee is unable to obtain such a
policy, Lessee shall notify Lessor of that fact and Lessor shall obtain such a
policy with Lessee named as an additional insured party. Lessee agrees to
reimburse Lessor for the reasonable cost of such a policy, such reimbursement to
be made within fifteen (15) days after Lessor furnishes Lessee a receipt showing
Lessor has paid such insurance costs. Lessor and Lessee hereby waive and release
each other of and from any and all rights of recovery, claims, actions or causes
of action, against each other, their agents, officers and employees, for any
loss or damage that may occur to the Leased Premises, improvements, or personal
property (or contents) within the Leased Premises, by reason of fire or the
elements regardless of cause or origin, including negligence of Lessor or Lessee
and their agents, officers, employees, invitees and visitors; provided, however,
that the foregoing waiver and release is effective only if and to the extent
that it does not invalidate the insurance policies so maintained. The insuring
party agrees immediately to give to its insurance company which has issued any
such policy of insurance in respect of the Leased Premises, written notice of
the terms of the waivers contained in this paragraph, to use commercially
reasonable efforts to obtain a waiver of subrogation clause in such policy, and
to have the insurance policies properly endorsed, if necessary, to prevent the
invalidation of the insurance coverage by reason of the waivers contained in
this paragraph. (In the event a casualty occurs which is covered by the above
designated insurance policies, any and all insurance proceeds payable with
respect to the real property and improvements shall belong solely to Lessor, and
any insurance proceeds payable with respect to Lessee's personal property or
fixtures shall belong solely to Lessee.)
19. Lessee covenants, throughout the term of this Lease Agreement, or
any extension thereof, to protect and save harmless the Lessor, his servants,
agents, employees or invitees, from any and all liability for claims for damages
to the Leased Premises, or injury to the person, or death, sustained by any
third party, in, on or about the Leased Premises caused by the negligence or
misconduct of Lessee, its servants, agents, employees or invitees, except to the
extent that such liability for claims for damage to the Leased Premises, or
injury to the person or death, sustained by any third party in or about the
leased premises is caused by Lessor's negligence or misconduct, or that of
Lessor's servants, agents, employees or invitees.
20. Lessor hereby covenants to and with the Lessee that the Lessor
has a good title to the Leased Premises, and that at the commencement of the
term of this Lease Agreement, Lessor will put, and will thereafter keep the
Lessee in quiet and peaceful possession thereof during the term of this Lease
Agreement, subject to the Lessee's complying with the provisions of this Lease
Agreement on its part to be performed.
21. In the event either party breaches or violates the terms,
conditions or covenants of this Lease Agreement and it is reasonably necessary
for the other party to employ an attorney in connection with such breach or
violation, then the losing party in such dispute will pay the reasonable
attorney's fees of the prevailing party. This Lease Agreement shall be governed
by, construed and enforced in accordance with the laws of the State of
Tennessee.
22. Lessee is hereby given an Option to Renew this Lease Agreement
for two (2) additional one (1) year terms under the same terms and conditions
and at the same rent as the initial term of this Lease Agreement, PROVIDED
HOWEVER, that Lessor must notify Lessor in writing of its exercise of this
Option at least four (4) months prior to the end of the then current term.
23. At the end of the term of this Lease Agreement, or any renewal or
extensions hereof, or should the Lease Agreement be terminated for any other
reason herein provided, Lessee agrees to surrender the Leased Premises to Lessor
in as good condition as received, ordinary wear and tear and casualty not
Lessee's fault excepted.
24. All notices herein authorized or required to be given to the
Lessor shall be sent by Registered or Certified Mail, addressed to the Lessor in
care of Xxxxx Xxxxxx at 0000 Xxxxxxxxxxx-Xxxxxxx Xxxx, Xxxxxxx, XX 00000, or to
such other place as the Lessor may from time to time designate in writing to the
Lessee. All notices herein authorized or required to be given to the Lessee
shall be sent by Registered or Certified Mail, addressed to the Lessee at Xxxxx
0, X.X. Xxx 000, Xxxxxxx, Xxxxxxxxx 00000, or to such other place as the Lessee
may from time to time designate in writing to the Lessor.
25. This Lease Agreement and all covenants, obligations and
conditions hereof shall inure to the benefit of and be binding upon the
successors and assigns of Lessor and shall inure to the benefit of and be
binding upon the successors and assigns (to the extent permitted) of the Lessee.
26. Should any provision of this Lease Agreement be held invalid for
any reason, the remaining provisions hereof shall be given effect to the extent
possible absent the invalid provision. To this end, the provisions of this Lease
Agreement are declared to be severable.
27. This Lease Agreement may be executed in counterparts and by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all of which taken together shall
constitute but one and the same document.
THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK
IN WITNESS WHEREOF, the Parties above named have hereunto set their
hands and seals on the day and date first above written.
GB DESIGNS, INC.
BY:________________________________
Xxxxx Xxxxxx, President
XXXXXX, INC.
BY:_________________________________
Name:_______________________________
Title:______________________________
STATE OF ____________
COUNTY OF ____________
Personally appeared before me the undersigned Notary Public, XXXXX
XXXXXX, with whom I am personally acquainted (or proved to me on the basis of
satisfactory evidence), and who acknowledged that he executed the within
instrument for the purposes therein contained, and who further acknowledged that
he is the President of GB DESIGNS, INC. (the maker) and is authorized by the
maker to execute this instrument on behalf of the maker.
Witness, my hand, at office, this _______ day of November, 2003.
---------------------------
Notary Public
My commission expires: _________________
******************************************************************************
STATE OF _______________
COUNTY OF _____________
Personally appeared before me the undersigned Notary Public,
_______________________, with whom I am personally acquainted (or proved to me
on the basis of satisfactory evidence), and who acknowledged that he executed
the within instrument for the purposes therein contained, and who further
acknowledged that he is the ___________ of XXXXXX, INC., (the maker) and is
authorized by the maker to execute this instrument on behalf of the maker.
Witness, my hand, at office, this _____ day of November, 2003.
---------------------------
Notary Public
My commission expires: _________________