EXECUTION COPY
STOCK PURCHASE AGREEMENT
among
DIMON INCORPORATED,
INTABEX HOLDINGS WORLDWIDE S.A.
and
THE SHAREHOLDERS LISTED ON
THE SIGNATURE PAGES HEREOF
As of February 14, 1997
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TABLE OF CONTENTS
Page
ARTICLE I SALE OF SHARES AND CLOSING. . . . . . . . . . . . . . . 1
1.01. Sale of Shares. . . . . . . . . . . . . . . . . . . . . 1
1.02. Purchase Price. . . . . . . . . . . . . . . . . . . . . 1
1.03. Exchange of Certificates . . . . . . . . . . . . . . . 1
1.04. Closing . . . . . . . . . . . . . . . . . . . . . . . . 2
1.05. Final Balance Sheet: Adjustment of Purchase Price. . . .2
ARTICLE II REPRESENTATIONS AND WARRANTIES OF COMPANY AND
SHAREHOLDERS. . . . . . . . . . . . . . . . . . . . . . 3
2.01 Representations and Warranties of the Company . . . . . 3
2.02 Representations of the Shareholders. . . . . . . . . . 15
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PURCHASER . . . . . .18
3.01. Corporate Existence. . . . . . . . . . . . . . . . . . 18
3.02. Authority. . . . . . . . . . . . . . . . . . . . . . . 18
3.03. No Conflicts.. . . . . . . . . . . . . . . . . . . . . 18
3.04. Governmental Approvals and Filings . . . . . . . . . . 19
3.05. Books and Records. . . . . . . . . . . . . . . . . . . 19
3.06. SEC Reports; Purchaser Financial Statements. . . . . . 19
3.07. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . 20
3.08. Legal Proceedings. . . . . . . . . . . . . . . . . . . 20
3.09. Compliance With Laws and Orders. . . . . . . . . . . . 20
3.10. Brokers. . . . . . . . . . . . . . . . . . . . . . . . 20
3.11. Financing. . . . . . . . . . . . . . . . . . . . . . . 21
3.12. Purchase for Investment. . . . . . . . . . . . . . . . 21
3.13. Investigation by Purchaser.. . . . . . . . . . . . . . 21
3.14. FIRPTA . . . . . . . . . . . . . . . . . . . . . . . . 21
3.15. Control Share Statute. . . . . . . . . . . . . . . . . 22
3.16. Investment Company Act . . . . . . . . . . . . . . . . 22
3.17. Public Utility Holding Company Act . . . . . . . . . . 22
3.18. Absence of Certain Events. . . . . . . . . . . . . . . 22
3.19. Accuracy of Information. . . . . . . . . . . . . . . . 22
3.20. No Other Representations . . . . . . . . . . . . . . . 22
ARTICLE IV COVENANTS OF THE COMPANY AND THE SHAREHOLDERS . . . . .22
4.01. Regulatory and Other Approvals. . . . . . . . . . . . .23
4.02. HSR Filings. . . . . . . . . . . . . . . . . . . . . . 23
4.03. Investigation by Purchaser.. . . . . . . . . . . . . . 23
4.04. Conduct of Business. . . . . . . . . . . . . . . . . . 24
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4.05. No Solicitations.. . . . . . . . . . . . . . . . . . . 25
4.06. Fulfillment of Conditions. . . . . . . . . . . . . . . 26
4.07. Resignations . . . . . . . . . . . . . . . . . . . . . 26
4.08. Transfer of Excluded Items . . . . . . . . . . . . . . 26
ARTICLE V COVENANTS OF PURCHASER . . . . . . . . . . . . . . . . 26
5.01. Regulatory and Other Approvals.. . . . . . . . . . . . 26
5.02. HSR Filings. . . . . . . . . . . . . . . . . . . . . . 27
5.03. Release of Guarantees. . . . . . . . . . . . . . . . . 27
5.04. Fulfillment of Conditions. . . . . . . . . . . . . . . 27
ARTICLE VI CONDITIONS TO OBLIGATIONS OF PURCHASER. . . . . . . . .27
6.01. Representations and Warranties. . . . . . . . . . . . .27
6.02. Performance. . . . . . . . . . . . . . . . . . . . . . 28
6.03. Officers' Certificates.. . . . . . . . . . . . . . . . 28
6.04. Orders and Laws. . . . . . . . . . . . . . . . . . . . 28
6.05. Regulatory Consents and Approvals. . . . . . . . . . . 28
6.06. Third Party Consents.. . . . . . . . . . . . . . . . . 28
6.07. Opinion of Counsel.. . . . . . . . . . . . . . . . . . 28
6.08. Purchase of Certain Assets of Tabex (PVT) Limited. . . 28
6.09. Noncompetition Agreement and Consulting Agreement. . . 29
6.10. Resignations of Officers and Directors . . . . . . . . 29
6.11. Warrants. . . . . . . . . . . . . . . . . . . . . . . 29
6.12. Tax and Withholding Matters. . . . . . . . . . . . . . 29
6.13. Agreement of Accountants. . . . . . . . . . . . . . . 29
6.14. Transfer of Excluded Items.. . . . . . . . . . . . . . 29
6.15. Settlement of Related Party Accounts.. . . . . . . . . 29
6.16. Agreements of Malawi Joint Venture Partners. . . . . . 29
6.17. Coordinating Agreement.. . . . . . . . . . . . . . . . 30
6.18. Additional Certificates. . . . . . . . . . . . . . . . 30
ARTICLE VII CONDITIONS TO OBLIGATIONS OF THE COMPANY AND THE
SHAREHOLDERS. . . . . . . . . . . . . . . . . . . . . .30
7.01. Representations and Warranties.. . . . . . . . . . . . 30
7.02. Performance. . . . . . . . . . . . . . . . . . . . . . 30
7.03. Officers' Certificates.. . . . . . . . . . . . . . . . 30
7.04. Orders and Laws. . . . . . . . . . . . . . . . . . . . 30
7.05. Regulatory Consents and Approvals. . . . . . . . . . . 30
7.06. Third Party Consents.. . . . . . . . . . . . . . . . . 31
7.07. Opinion of Counsel.. . . . . . . . . . . . . . . . . . 31
7.08. Purchase of Certain Assets of Tabex (PVT) Limited. . . 31
7.09. Folium Agreements. . . . . . . . . . . . . . . . . . . 31
7.10. Listing of Purchaser Common Stock. . . . . . . . . . . 31
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7.11 Board of Directors.. . . . . . . . . . . . . . . . . . 31
7.12 Registration Rights. . . . . . . . . . . . . . . . . . 31
7.13. Additional Certificates. . . . . . . . . . . . . . . . 31
ARTICLE VIII TERMINATION . . . . . . . . . . . . . . . . . . . . . .31
8.01. Termination. . . . . . . . . . . . . . . . . . . . . . 31
8.02. Effect of Termination. . . . . . . . . . . . . . . . . 32
ARTICLE IX DEFINITIONS . . . . . . . . . . . . . . . . . . . . . .32
9.01. Definitions. . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE X MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . .39
10.01. Notices.. . . . . . . . . . . . . . . . . . . . . . . .39
10.02. Entire Agreement. . . . . . . . . . . . . . . . . . . .42
10.03. Expenses. . . . . . . . . . . . . . . . . . . . . . . .42
10.04. Public Announcements. . . . . . . . . . . . . . . . . .42
10.05. Confidentiality.. . . . . . . . . . . . . . . . . . . .42
10.06. Further Assurances; Post-Closing Cooperation. . . . . .43
10.07. Waiver. . . . . . . . . . . . . . . . . . . . . . . . .43
10.08. Amendment. . . . . . . . . . . . . . . . . . . . . . .44
10.09. No Third Party Beneficiary. . . . . . . . . . . . . . .44
10.10. No Assignment; Binding Effect.. . . . . . . . . . . . .44
10.11. Headings. . . . . . . . . . . . . . . . . . . . . . . .44
10.12. Invalid Provisions. . . . . . . . . . . . . . . . . .44
10.13. Counterparts. . . . . . . . . . . . . . . . . . . . . .44
10.14. WAIVER OF JURY TRIAL. . . . . . . . . . . . . . . . . .44
10.15. Tobacco Industry Generally. . . . . . . . . . . . . . .45
10.16. Specific Performance. . . . . . . . . . . . . . . . . .45
10.17. Release of Claims . . . . . . . . . . . . . . . . . . .45
10.18. Consent to Assignment of Supply Agreement . . . . . . .45
ARTICLE XI SURVIVAL OF REPRESENTATIONS, WARRANTIES,COVENANTS
AND AGREEMENTS. . . . . . . . . . . . . . . . . . . . .45
11.01. Survival of Representations, Warranties, Covenants and
Agreements . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE XII INDEMNIFICATION . . . . . . . . . . . . . . . . . . . .46
12.01. Indemnification. . . . . . . . . . . . . . . . . . . . 46
12.02. Method of Asserting Claims . . . . . . . . . . . . . . 47
12.03. Method of Calculating Losses.. . . . . . . . . . . . . 49
12.04. Exclusivity. . . . . . . . . . . . . . . . . . . . . . 50
12.05. Right of Set-Off; Restriction on Transfer
of Convertible Debentures. . . . . . . . . . . . . . .50
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ARTICLE XIII GOVERNING LAW AND SUBMISSION TO JURISDICTION. . . . . .55
13.01 Governing Law. . . . . . . . . . . . . . . . . . . . . 55
13.02 Dispute Resolution . . . . . . . . . . . . . . . . . . 55
13.03 Agent for Service of Process.. . . . . . . . . . . . . 55
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT dated as of February 14, 1997 is
made and entered by and among DIMON INCORPORATED, a Virginia corporation
("Purchaser"), INTABEX HOLDINGS WORLDWIDE S.A., a Luxembourg holding
company ("the "Company"), and each of the shareholders listed on the
signature pages hereof (each, a "Shareholder" and collectively, the
"Shareholders"). Capitalized terms not otherwise defined herein have the
meanings set forth in Section 9.01.
WHEREAS, Folium Inc. ("Folium") owns 466,679 Class A
Shares and 466,521 Class B Shares; Tabacalera S.A. ("Tabacalera") owns
466,521 Class B Shares; and Leaf Management Investments Ltd. ("LMI") owns
66,800 Class A Shares;
WHEREAS, the Shareholders desire to sell, and Purchaser
desires to purchase, the Shares on the terms and subject to the
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
SALE OF SHARES AND CLOSING
1.01. Sale of Shares. The Shareholders agree to sell to
Purchaser, and Purchaser agrees to purchase from the Shareholders, all of
the right, title and interest of the Shareholders in and to the Shares at
the Closing free and clear of all Liens on the terms and subject to the
conditions set forth in this Agreement.
1.02. Purchase Price. (a) The purchase price for the Shares and
all outstanding Options shall be paid as follows: (i) $49,250,000 in
cash; (ii) the issuance of 2,000,000 shares of common stock of Purchaser,
no par value (the "Purchaser Common Stock"); and (iii) the issuance of
the Convertible Debentures.
(b) As additional consideration for the Shares,
Purchaser shall pay Shareholders an additional amount in cash equal to
the net proceeds received by Compania de Filipinas S.A. ("CdeF") for the
sale of the Barcelona Building received in cash. For purposes of the
preceding sentence, net proceeds shall mean that amount equal to the
gross proceeds received in cash by CdeF less an amount equal to all
out-of-pocket costs and expenses of Purchaser in connection with such
sale and the net expenses of ownership or operation of the Barcelona
Building following Closing, including, without limitation, all real
estate, sales, transfer and other taxes (including income taxes
calculated at the highest applicable marginal rate on any gain recognized
on the sale), deposits,
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insurance, interest and maintenance and any costs incurred or payments
made in connection with the settlement or discharge of any Liens related
to the Barcelona Building or the proceeds therefrom.
(c) The foregoing shall be allocated among the
Shareholders and Warrantholders as set forth on Schedule 1.02(a).
1.03. Exchange of Certificates. (a) If a certificate for
Purchaser Common Stock or a Convertible Debenture is to be delivered to a
person other than the person in whose name the certificates for Shares or
Options (the "Certificates") surrendered for exchange are registered, it
shall be a condition of the exchange that the person requesting such
exchange shall pay to the Purchaser any transfer or other taxes required
by reason of the delivery of such Certificate to a person other than the
registered holder of the Certificate surrendered, or shall establish to
the satisfaction of the Purchaser that such tax has been paid or is not
applicable.
(b) The cash paid and the shares of Purchaser Common
Stock and Convertible Debentures issued upon the surrender of
Certificates in accordance with the terms hereof shall be deemed to have
been paid and issued in full satisfaction of all rights pertaining to
such Shares.
1.04. Closing. (a) The Closing will take place at the offices
of King & Spalding, 000 Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx 00000, or at
such other place as Purchaser and the Company mutually agree, at 10:00
A.M. local time, on the Closing Date. At the Closing, (i) all
outstanding Shares and Options shall be surrendered, accompanied by funds
sufficient for the payment of any transfer or other taxes payable by the
Shareholders pursuant to Section 1.03(a), to Purchaser and (ii) Purchaser
(A) will issue the number of shares of Purchaser Common Stock required
pursuant to Section 1.02(a) registered in the names and denominations as
set forth on Schedule 1.02(a); (B) shall pay the cash consideration
required to be paid pursuant to Section 1.02(a) by wire transfer of
immediately available funds to such accounts as the Shareholders may
reasonably direct; and (C) will issue the Convertible Debentures required
pursuant to Section 1.02(a) registered in the names and denominations set
forth on Schedule 1.02(a). At the Closing, there shall also be delivered
to Purchaser and the Company the documents, certificates and opinions to
be delivered under Articles VI and VII.
(b) The purchase price to be paid pursuant to Section
1.02(b) shall be paid within five (5) business days after the closing of
the sale of the Barcelona Building by wire transfer of immediately
available funds to such accounts as the Shareholders may reasonably
request.
1.05. Final Balance Sheet: Adjustment of Purchase Price.
(a) Within forty-five (45) days after the Closing,
Ernst & Young LLP, independent public accountants for the Company
("Accountants"), shall, at the Company's expense, audit and deliver draft
Final Financial Statements, which shall be prepared in a manner
consistent with the Unaudited Financial Statements and in accordance with
GAAP as modified by the specific accounting principles set forth on
Schedule 1.05. The Shareholders will cooperate with, and will cause
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their Affiliates to cooperate with, the Company and the Purchaser in the
preparation of the Final Financial Statements and shall deliver such
representations and certificates reasonably requested by the Accountants
in their audit of such statements.
(b) If Purchaser has no objections to the draft Final
Financial Statements, such draft shall be certified by Accountants and
shall constitute the Final Financial Statements. If Purchaser has
objections to the draft Final Financial Statements, it will deliver a
detailed statement describing its objections to Accountants and the
Shareholders within thirty (30) days after receiving the draft Final
Financial Statements. Purchaser, Accountants and the Shareholders will
use their reasonable best efforts to resolve any such objections. If a
final resolution is not obtained within thirty (30) days after
Accountants and the Shareholders have received the statement of
objections, Purchaser and the Shareholders will select a nationally-
recognized accounting firm mutually acceptable to them to resolve any
remaining objections. If Purchaser and the Shareholders are unable to
agree on the choice of an accounting firm, they will select a nationally-
recognized accounting firm by lot (after excluding Accountants).
(c) Accountants will revise the draft Final Financial
Statements as appropriate to reflect the resolution of Purchaser's
objections (as agreed upon by Purchaser, Accountants and the Shareholders
or as determined by such selected accounting firm) and deliver it to
Purchaser and the Shareholders within ten (10) days after the resolution
of such objections. Such revised balance sheet shall be certified by
Accountants and shall constitute the Final Financial Statements.
(d) To the extent that the Final Balance Sheet shows
that the Final Net Worth calculated in accordance with the specified
accounting principles set forth in Schedule 1.05 is less than the
September Net Worth, the Shareholders shall pay such difference to
Purchaser in immediately available funds within five business days of
Accountants' delivery of such Final Balance Sheet. Payments pursuant to
this Section 1.05 shall be accompanied by accrued interest thereon from
the Closing at the prevailing prime rate as announced by NationsBank,
N.A. in Charlotte, North Carolina, on the Closing Date. Acceptance of
the Final Balance Sheet or receipt of any payment pursuant to this
Section 1.05(d) shall not constitute a waiver of any other rights
Purchaser may have under this Agreement.
(e) If any unresolved objections are submitted to an
accounting firm for resolution as provided above, Purchaser, on the one
hand, and the Shareholders, on the other hand, will share equally the
fees and expenses of such accounting firm.
(f) Accountants will make the work papers used in
preparing the draft Final Financial Statements and the Final Financial
Statements available to Purchaser and its representatives at reasonable
times and upon reasonable notice at any time during the preparation by
Accountants of the draft Final Financial Statements and the resolution of
any objections with respect thereto.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COMPANY AND SHAREHOLDERS
2.01 Representations and Warranties of the Company. The
Company hereby represents and warrants to Purchaser as follows:
(a) Corporate Existence of the Company. The Company is
a corporation validly existing and in good standing under the Laws of
Luxembourg, and has full corporate power and authority to conduct its
business as and to the extent now conducted and to own, use and lease its
Assets and Properties. The Company is duly qualified, licensed or
admitted to do business in those jurisdictions specified in Section
2.01(a) of the Disclosure Schedule, which are the only jurisdictions in
which the ownership, use or leasing of its Assets and Properties, or the
conduct or nature of its business, makes such qualification, licensing or
admission necessary, except for those jurisdictions in which the adverse
effects of all such failures by the Company and the Subsidiaries to be
qualified, licensed or admitted and in good standing could not in the
aggregate reasonably be expected to have a material adverse effect on the
Business or Condition of the Company. The Company has prior to the
execution of this Agreement delivered to Purchaser true and complete
copies of the certificate or articles of incorporation and bylaws or
other comparable corporate charter documents of the Company as in effect
on the date hereof.
(b) Authority. The execution and delivery of this
Agreement and of all of the other documents and instruments required
hereby by the Company and the performance by the Company of its
obligations hereunder and thereunder, have been duly and validly
authorized by the Board of Directors of the Company and the Shareholders,
no other corporate action on the part of the Company or its shareholders
being necessary. This Agreement and all of the other documents and
instruments required hereby have been or will be duly and validly
executed and delivered by the Company and constitute or will, upon
execution and delivery thereof, constitute valid and binding obligations
of the Company, enforceable against the Company in accordance with their
terms.
(c) Capital Stock. The authorized capital stock of the
Company consists solely of 580,599 Class A Shares and 933,042 Class B
Shares, of which only the Shares listed on Section 2.02(a) of the
Disclosure Schedule have been issued and are outstanding. The
outstanding Shares are duly authorized, validly issued, fully paid and
nonassessable. Except for this Agreement and as disclosed in
Section 2.01 (c) of the Disclosure Schedule, there are no outstanding
Options with respect to the Company's Shares.
(d) Subsidiaries.
(i) Each Subsidiary is a corporation, limited
liability company, partnership, joint venture, or other entity
validly existing and in good standing under the Laws of its
jurisdiction of organization identified in Section 2.01(d)(i) of
the Disclosure Schedule, and has full power and authority to
conduct its business as and to the extent now conducted and to
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own, use and lease its Assets and Properties. Each Subsidiary
is duly qualified, licensed or admitted to do business and is
in good standing in those jurisdictions specified in Section
2.01(d)(i) of the Disclosure Schedule, which are the only
jurisdictions in which the ownership, use or leasing of such
Subsidiary's Assets and Properties, or the conduct or nature of
its business, makes such qualification, licensing or admission
necessary, except for those jurisdictions in which the adverse
effects of all such failures by the Company and the Subsidiaries
to be qualified, licensed or admitted and in good standing could
not in the aggregate reasonably be expected to have a material
adverse effect on the Business or Condition of the Company.
Section 2.01(d)(i) of the Disclosure Schedule lists for each
Subsidiary that is a corporation, the name and jurisdiction of
incorporation of each Subsidiary, the amount of its authorized
capital stock, the amount of its outstanding capital stock and
the record owners of such outstanding capital stock.
Except as disclosed in Section 2.01(d)(i) of the Disclosure
Schedule, all of the outstanding shares of capital stock of each
Subsidiary have been duly authorized and validly issued, are fully
paid and nonassessable, and are owned, beneficially and of record,
by the Company, or Subsidiaries of the Company, free and clear of
all Liens. Section 2.01(d)(i) of the Disclosure Schedule lists
for each Subsidiary that is a limited liability company,
partnership, joint venture or other entity that is not a
corporation the name and jurisdiction of organization of such
Subsidiary, the type of entity and the nature and extent of the
Company's interest in each such Subsidiary. Except as disclosed
in Section 2.01(d)(i) of the Disclosure Schedule, the interests of
the Company in each such Subsidiary are owned, beneficially and
of record, by the Company, or Subsidiaries of the Company, free
and clear of all Liens. Except as disclosed in Section 2.01(d)(i)
of the Disclosure Schedule, there are no outstanding Options with
respect to any Subsidiary. The Company has prior to the execution
of this Agreement delivered to Purchaser true and complete copies
of the certificate or articles of incorporation and bylaws or
other comparable organizational and other documents governing the
operation of each of the Subsidiaries as in effect on the date
hereof. The Company has no Subsidiaries other than those listed
in Section 2.01(d)(i) of the Disclosure Schedule.
(ii) Section 2.01(d)(ii) of the Disclosure
Schedule lists all corporations, limited liability companies,
partnerships,joint ventures and other entities in which the
Company or any of its Subsidiaries has an interest, and sets forth
the name and jurisdiction of incorporation for such entity and the
amount and nature of such interest. All of such interests are
owned by the Company or Subsidiaries of the Company free and clear
of all Liens.
(e) No Conflicts. The execution and delivery by the
Company of this Agreement do not, and the performance by the Company of
its obligations under this Agreement and the consummation of the
transactions contemplated hereby will not:
(i) conflict with or result in a violation or
breach by the Company or any Subsidiary of any of the certificate
or articles of incorporation or bylaws or other comparable
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organizational and other documents governing the operation of the
Company or any such Subsidiary;
(ii) subject to obtaining the consents,
approvals and actions, making the filings and giving the notices
disclosed in Section 2.01(f) of the Disclosure Schedule, conflict
with or result in a violation or breach of any Law or Order
applicable to the Company or any Subsidiary or any of their
respective Assets and Properties; or
(iii) except as disclosed in Section 2.01(e) of the
Disclosure Schedule, (A) conflict with or result in a violation or
breach of, (B) constitute (with or without notice or lapse of time
or both) a default under, (C) require the Company or any Subsidiary
to obtain any consent, approval or authorization of, make any
filing with or give any notice to any Person as a result or under
the terms of, (D) result in the creation or imposition of any Lien
upon the Company or any Subsidiary or any of their respective
Assets and Properties under, any Contract or License to which the
Company or any Subsidiary is a party or by which any of their
respective Assets and Properties is bound or (E) give rise to any
right of any party to any Contract to cancel, terminate or exercise
any option under such Contract.
(f) Governmental Approvals and Filings. Except as
disclosed in Section 2.01(f) of the Disclosure Schedule, no consent,
approval or action of, filing with, or notice to any Governmental or
Regulatory Authority on the part of the Company or any Subsidiary is
required in connection with the execution, delivery and performance of
this Agreement or the consummation of the transactions contemplated
hereby.
(g) Books and Records. The minute books and other
similar records of the Company and the Subsidiaries as made available to
Purchaser prior to the execution of this Agreement and thereafter contain
a true and complete record, in all material respects, of all action taken
at all meetings and by all written consents in lieu of meetings of the
stockholders, the boards of directors and committees of the boards of
directors of the Company and the Subsidiaries.
(h) Financial Statements and Condition.
(i) Prior to the execution of this Agreement, the
Company has delivered to Purchaser true and complete copies of
(A) the audited balance sheets of the Company and its consolidated
subsidiaries as of March 31, 1996, 1995, 1994, 1993 and 1992, and
the related audited consolidated statements of operations,
stockholders' equity and cash flows for each of the fiscal years
then ended, (B) the unaudited balance sheets of the Company and its
consolidated subsidiaries as of September 30, 1996 and 1995, and
the related unaudited consolidated statements of operations,
stockholders' equity and cashflows for the portion of the fiscal
years then ended and (C) the unaudited pro forma balance sheet of
the Company and its consolidated subsidiaries as of September 30,
1996, and the related unaudited pro forma consolidated statements
of operations, stockholders' equity and cash flows for the six-
month period then ended, showing separately all adjustments
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necessary to eliminate the effect on such financial statements of
the Excluded Items. All such financial statements were, and the
Final Financial Statements will be, prepared in accordance with
GAAP, and all such financial statements, and the Final Financial
Statements will, fairly present in all material respects the
consolidated financial condition and results of operations of the
Company and its consolidated subsidiaries as of the respective
dates thereof and for the respective periods covered thereby. In
addition, the Final Balance Sheet also will be prepared in
accordance with the specific accounting principles specified on
Schedule 1.05.
(ii) Except for the execution and delivery of this
Agreement and the consummation of transactions contemplated hereby
on or prior to the Closing Date, since the Financial Statement Date
there has not been any material adverse change in the Business or
Condition of the Company.
(iii) Neither the Company nor any of its
Subsidiaries has any liabilities or obligations of any kind,
whether absolute, accrued, asserted or unasserted, contingent
or otherwise, except liabilities, obligations or contingencies
that are accrued or reserved against in the consolidated balance
sheet of the Company as of the Financial Statement Date delivered
to the Purchaser pursuant to this Section or in the Final
Financial Statements, as the case may be, or reflected in the notes
thereto, or that were incurred after the Financial Statement Date
in the ordinary course of business and consistent with past
practices or as otherwise specifically contemplated by this
Agreement.
(i) Taxes.
(i) Each of the Company and its Subsidiaries has
filed all Tax Returns that it was required to file, and has paid
all Taxes shown thereon as owing. The Tax Returns so filed are
true and complete in all material respects and there is not a
material amount of unpaid Tax incurred by the Company or any
Subsidiary or by any other person that is or could become a Lien on
any asset of, or otherwise have a material adverse effect on, the
Company and its Subsidiaries. None of the Company and its
Subsidiaries has waived any statute of limitation in respect of
Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency. None of the Company and its Subsidiaries
is a party to any Tax allocation or sharing agreement.
(ii) Each of the Company and its Subsidiaries is
in compliance with and its records contain all information and
documents necessary to comply with, all information reporting and
tax withholding requirements under federal, state, local and
foreign laws, rules and regulations applicable to the Company and
its Subsidiaries.
(iii) The consolidated balance sheet included in
the Unaudited Financial Statements fully and properly reflects, as
of the date thereof, the liabilities of the Company and its
- 17 -
Subsidiaries for all accrued taxes, additions to tax, penalties and
interest, and for periods ending after the date of such statements,
the books and records of each such entity fully and properly
reflect its liability for all taxes, additions to tax, penalties
and interest due and payable.
(j) Legal Proceedings. Except as disclosed in
Section 2.01(j) of the Disclosure Schedule (with paragraph references
corresponding to those set forth below):
(i) there are no Actions or Proceedings pending
or, to the Knowledge of the Company, threatened against,
relating to or affecting the Company or any Subsidiary or
any of their respective Assets and Properties which (A)
could reasonably be expected to result in the issuance of
an Order restraining, enjoining or otherwise prohibiting
or making illegal the consummation of any of the
transactions contemplated by this Agreement, or (B) could
individually or in the aggregate have an adverse effect
on the Business or Condition of the Company; and
(ii) there are no Orders outstanding
against the Company or any Subsidiary.
(k) Compliance With Laws and Orders; Permits. Except as
disclosed in Section 2.01(k) of the Disclosure Schedule, each of the
Company and its Subsidiaries has complied with all Laws or Orders
applicable to the Company or any Subsidiary or any of their respective
Assets and Properties including, without limitation, Laws and Orders
relating to customs, shipping, import and export of goods, currency
restrictions and exchange controls. All Permits required by the Company
and its Subsidiaries to conduct their businesses have been obtained, are
in full force and effect and are being complied with in all material
respects. All such Permits will remain in full force and effect
immediately following the consummation of the transactions contemplated
herein.
(l) Employee Benefit Plans. Section 2.01(l) of the
Disclosure Schedule lists each Employee Benefit Plan that any of the
Company and its Subsidiaries maintains or to which any of the Company and
its Subsidiaries contributes (true and complete copies of which, together
with all amendments and supplements thereto, have been delivered to
Purchaser prior to the execution of this Agreement). Each such Employee
Benefit Plan (and each related trust, insurance contract, or fund)
complies in form and in operation in all respects with the applicable
requirements of the Laws of the jurisdiction in which the Employee
Benefit Plan is in effect. All contributions (including all employer
contributions and employee salary contributions) which are due have been
paid to each Employee Benefit Plan. The Company and each of its
Subsidiaries has filed or caused to be filed on a timely basis returns,
reports, statements, notices, declarations and other documents required
by any governmental agency with respect to each Employee Benefit Plan
sponsored or maintained by the Company or any of its Subsidiaries.
(m) Contracts. Section 2.01(m) of the Disclosure
Schedule contains a true and complete list of the material Contracts (true
and complete copies of which, together with all amendments and supplements
thereto, have been delivered to Purchaser prior to the execution of this
- 18 -
Agreement), to which the Company or any Subsidiary is a party or by which
any of their respective Assets and Properties is bound. No event has
occurred that would, with the passage of time or compliance with any
applicable notice requirements, constitute a default by the Company or
any of its Subsidiaries or, to the Knowledge of the Company, any other
party under any of such Contracts, and, to the Knowledge of the Company,
no party to any such Contracts intends to cancel, terminate or exercise
any option under any of such Contracts, the result of which would have a
material adverse effect on the Business or Condition of the Company. For
purposes of this Section, a Contract shall be deemed material if it
involves (i) a lease of any interest in real property; (ii) a lease of
any personal property with (A) aggregate remaining rental payments in
excess of $100,000 or (B) a remaining term in excess of one year (unless
cancelable without penalty upon not more than 90 days notice); (iii) an
agreement to purchase or sell a capital asset for a price in excess of
$100,000; (iv) an agreement relating to the borrowing or lending of more
than $1,000,000; (v) a guaranty, contribution agreement or other
agreement that includes any indemnification, contribution or support
obligation; (vi) any agreement limiting in any respect the ability of the
Company or any Subsidiary to compete in any line of business or with any
person; and (vii) any other agreement involving more than $100,000.
(n) Brokers. Except as disclosed in Section 2.01(n) of
the Disclosure Schedule, all negotiations relative to this Agreement and
the transactions contemplated hereby have been carried out by the Company
directly with Purchaser without the intervention of any Person on behalf
of the Company in such manner as to give rise to any valid claim by any
Person against the Company, or any Subsidiary or Purchaser for a finder's
fee, brokerage commission or similar payment.
(o) Absence of Certain Events. Except as set forth on
Section 2.01(o) of the Disclosure Schedule, there has not been since
March 31, 1996: (i) any entry into any agreement or understanding between
the Company or any of its Subsidiaries on the one hand, and any of their
respective officers or employees on the other hand, providing for
employment of any such officer or employee or any general or material
increase in compensation, severance or termination benefits payable or to
become payable by the Company or any of its Subsidiaries to any of their
respective officers or employees, or any increase in any bonus,
insurance, pension or other employee benefit plan, payment or arrangement
made to, for or with any such officer or employee; (ii) any labor dispute
which is or could reasonably be expected to be material to the Business
or Condition of the Company; (iii) any entry by the Company or any of its
Subsidiaries into any material commitment, agreement, license or
transaction (including, without limitation, any borrowing, capital
expenditure, sale of assets or any mortgage, pledge, lien or encumbrances
made on any of the properties or assets of the Company or its
Subsidiaries) other than in the ordinary and usual course of business;
(iv) any change in the accounting methods of the Company or any of its
Subsidiaries; or (v) any agreement to do any of the foregoing. Except as
set forth in Section 2.01(o) of the Disclosure Schedule, since September
30, 1996, (i) the Company has not declared, set aside for payment or
agreed to declare or set aside for payment any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of its capital stock, (ii) the Company and its
Subsidiaries (a) have operated only in the ordinary course of business
consistent with past practices, (b) have not paid, discharged or
satisfied or agreed to pay, discharge or satisfy any material claims,
liabilities or obligations (absolute, accrued or unaccrued, asserted or
- 19 -
unasserted, contingent or otherwise), other than the payment, discharge
or satisfaction in the ordinary course of business of liabilities
reflected or reserved against in the Unaudited Financial Statements or
incurred after the date of such Unaudited Financial Statements in the
ordinary course of business consistent with past practices and (c) have
not made any payments to any Related Party other than pursuant to the
terms of any Contract or Employee Benefit Plan properly listed in the
Disclosure Schedule, or agreed to make any such payments.
(p) Title to Assets; Tangible Assets. The Company and
each of its Subsidiaries own good and marketable title to or a valid
leasehold in the assets used by them, located on their premises or
reflected on the consolidated balance sheet included in the Unaudited
Financial Statements, free and clear of any and all Liens, except Permitted
Liens described on Section 2.01(p) of the Disclosure Schedule, and except
for assets disposed of in the ordinary course of business since the date of
such balance sheet. The Company and each of its Subsidiaries own or
lease all buildings, machinery, equipment and other tangible assets
necessary for the conduct of their businesses as presently conducted and
as presently proposed to be conducted. Such tangible assets are free
from material defects (patent and latent), have been maintained in
accordance with normal industry practice, are in good operating condition
and repair (subject to normal wear and tear and obsolescence), and are
suitable for the purposes for which they presently are used.
(q) Inventory. Except as set forth in Section 2.01(q)
of the Disclosure Schedule, the inventory of the Company and its
Subsidiaries consists of raw materials, goods in process and finished
goods, all of which are merchantable and fit for the purpose for which
they were procured or manufactured and are legally qualified for export
and sale subject to minimum pricing laws (none of which will preclude the
fulfillment of any commitments or orders) and none of which is slow-
moving, distressed, damaged or defective. Section 2.01(q) of the
Disclosure Schedule sets forth (i) all tobacco inventories, showing type,
origin, grade, crop year, quantity and book value, and, for committed
inventories of the Company and its Subsidiaries other than Intabex S.A.
(ZUG), the committed price, and, for committed inventories of Intabex
S.A. (ZUG), the committed value, and (ii) all commitments to purchase or
deliver tobacco, showing type, origin, grade, crop year, quantity and
purchase price, all as of December 31, 1996. The Company and its
Subsidiaries have no material commitments to purchase or deliver tobacco
other than as set forth in Section 2.01(q) of the Disclosure Schedule.
The schedule of inventories supporting the Final Financial Statements
referred to in Schedule 1.05 will be true and complete and, subject to
subsection (ii) below, (i) each item of inventory shown in the Final
Financial Statements will be recorded at the least of cost, fair market
value or commitment price; subject, in the case of such contracts that do
not by their terms provide for the payment of interest, to a net present
value adjustment determined by reference to Seller's Average Borrowing
Rate (as defined herein) for any amounts to be collected after the 180th
day following the Closing Date; and (ii) each item of inventory shown in
the Final Financial Statements that is subject to a legally binding
contract will be sold upon terms and at a price no less favorable than
those set forth in the applicable contract subject to a reserve against
inventory set forth on the face of the Final Balance Sheet; provided,
however, that the representation contained in clause (ii) above shall not
- 20 -
be deemed to have been breached if such inventory is not sold as a result
of Purchaser's failure to deal with such inventory in good faith or to
use its commercially reasonable best efforts to sell such inventory in
accordance with the terms of any applicable contract. For purposes of
this Agreement "Seller's Average Borrowing Rate" shall mean the weighted
average interest rate of all borrowings of the Company outstanding at the
Closing Date, which shall in no event be less than the LIBO Rate.
(r) Accounts and Advances on Tobacco Purchases. (i) All
Accounts owned by the Company and its Subsidiaries are reflected properly
on their books and records, are valid receivables subject to no setoffs
or counterclaims, are current and collectible, and will be collected in
accordance with their respective terms at their recorded amounts, subject
only to any reserve against accounts set forth on the face of the Final
Balance Sheet. Unless interest is paid on such Accounts in accordance
with their terms, Accounts that by their terms are not collectible by the
180th day following the Closing Date shall be adjusted to their net
present value determined by reference to Seller's Average Borrowing Rate.
Section 2.01(r)(i) of the Disclosure Schedule includes a summary
indicating the aggregate balance of all of the Accounts of the Company
and its consolidated Subsidiaries as of December 31, 1996;
(ii) All Advances on Tobacco Purchases of the
Company and its Subsidiaries are reflected properly on their books and
records, have arisen from bona fide transactions in the ordinary course of
business and the Company and its Subsidiaries will receive tobacco having
a fair market value at least equal to the amount of each such advance as
reflected on the Final Balance Sheet (or, if applicable, at least equal
to the amount of such advance plus any additional amounts that the
Company is required to pay pursuant to the terms of such advance) or a
refund of all amounts advanced, all in accordance with the terms of such
advance and subject to any reserve against advances collected set forth
on the face of the Final Balance Sheet; and
(iii) All accounts payable of the Company and its
Subsidiaries have arisen from bona fide transactions in the ordinary
course of business and are to be paid in accordance with normal trade
practice.
(s) Real Property. Section 2.01(s) of the Disclosure
Schedule sets forth a list of each of the Company's factories and the
Company's Wokingham, England, headquarters (each, a "Facility") and the
address and record owner of such Facility. With respect to each such
Facility, except as set forth in Section 2.01(s) of the Disclosure
Schedule:
(i) there are no pending or, to the Knowledge
of the Company, threatened condemnation proceedings, lawsuits or
administrative actions relating to the Facility or other matters
adversely affecting the current use, occupancy or value thereof;
(ii) each Facility has received all approvals of
Governmental or Regulatory Authorities (including permits) required
- 21 -
in connection with the ownership, occupation or operation thereof
and has been operated and maintained in accordance with applicable
laws;
(iii) there are no leases, subleases, licenses,
concessions or other agreements, written or oral, granting to any
Person the right of use or occupancy of any portion of a Facility
and no Person other than the Company or its Subsidiaries is in
possession of any Facility or part thereof;
(iv) there are no outstanding options or rights of
first refusal to purchase a Facility or interest therein;
(v) each Facility is supplied with utilities and
other services necessary and adequate for the operation of the
Facility and each Facility is located on, or has irrevocable access
to, a public road; and
(vi) none of the Company or its Subsidiaries
owns any material parcel of Real Property that is material to
the Business or Condition of the Company other than the Facilities.
(t) Intellectual Property.
(i) Except as set forth in Section 2.01(t) of the
Disclosure Schedule, the Company and its Subsidiaries own
exclusively or have the exclusive right to use pursuant to license,
sublicense, agreement or permission all Intellectual Property used
in their businesses as presently conducted; each item of
Intellectual Property owned or used by any of the Company and its
Subsidiaries immediately prior to Closing will be owned or
available for use by Purchaser on identical terms and conditions
immediately subsequent to closing; the Company and its Subsidiaries
have taken all necessary and desirable action to maintain and
protect each item of Intellectual Property that they own or use; no
owned item of Intellectual Property has been abandoned; each item
of Intellectual Property used by the Company or any of its
Subsidiaries pursuant to license or other authorization of a third
party is used with the authorization of every other claimant
thereto, and the execution, delivery and performance of this
Agreement by the Company and the Purchaser will not impair such
use. To the Knowledge of the Company, no third party has
interfered with, infringed upon, misappropriated or otherwise come
into conflict with any Intellectual Property rights of the Company
or any of its Subsidiaries. Section 2.01(t) of the Disclosure
Schedule identifies each patent, trademark, copyright or other
- 22 -
registration that has been issued to the Company or any of its
Subsidiaries with respect to any of their Intellectual Property,
identifies each pending application or application for registration
that the Company or any of its Subsidiaries has made with respect
to any of its Intellectual Property and identifies each license,
agreement or other permission that the Company or any of its
Subsidiaries has granted to any third party with respect to any of
its Intellectual Property (together with any exceptions thereto).
Except as set forth in Section 2.01(t) of the Disclosure Schedule,
with respect to each item of Intellectual Property required to be
identified therein; (i) the item is not subject to any outstanding
injunction, judgment, order, decree, ruling or charge; (ii) no
action, suit, proceeding, hearing, investigation, charge,
complaint, claim or demand is pending or, to the Knowledge of the
Company, is threatened which challenges the legality, validity,
enforceability, use or ownership of the item; and (iii) neither the
Company nor any of its Subsidiaries has licensed or permitted any
third party to use any such item.
(u) Insurance. Except as set forth in Section 2.01(u) of
the Disclosure Schedule, with respect to each insurance policy to which
the Company or any of its Subsidiaries has been a party, a named insured
or otherwise the beneficiary of coverage at any time which is still in
effect or under which the Company or any of its Subsidiaries has any
continuing rights or obligations: (i) the policy will continue to be
legal, valid, binding, enforceable and in full force and effect on
identical terms following the consummation of the transactions
contemplated hereby; (ii) neither the Company nor its Subsidiaries is in
breach or default thereunder (including with respect to the payment of
premiums or the giving of notices), and no event has occurred that, with
notice or the lapse of time, would constitute such a breach or default by
the Company or its Subsidiaries, or permit termination, modification or
acceleration under the policy; and (iii) to the Knowledge of the Company,
no party to the policy has repudiated any provision thereof. Each of the
Company and its Subsidiaries has been covered during the past ten years
by insurance in scope and amount customary and reasonable for the
businesses in which it has been engaged during such ten-year period.
Schedule 2.01(u) of the Disclosure Schedule describes any self-insurance
arrangements affecting the Company or any of its Subsidiaries.
(v) Environmental Matters.
(i) Except as set forth in Section 2.01(v) of the
Disclosure Schedule, (y) neither the Company, any of its
Subsidiaries nor any of the Former Subsidiaries has used, stored,
treated, transported, manufactured, refined, handled, produced or
disposed of any Hazardous Materials or Petroleum Products on,
under, at, from or in any way affecting any of their properties or
assets (including, without limitation, any properties or assets now
or previously owned or operated by the Company, any of its
Subsidiaries or any of the Former Subsidiaries), or otherwise, in
any manner which at the time of the action in question violated any
Environmental Law governing the use, storage, treatment,
transportation, manufacture, refinement, handling, production or
disposal of Hazardous Materials or Petroleum Products, and (z) to
the Knowledge of the Company, no prior owner of such property or
asset or any tenant, subtenant, prior tenant or prior subtenant
thereof has used Hazardous Materials or Petroleum Products on, from
or in any way affecting any such property or asset, or otherwise,
in any manner which at the time of the action in question violated
any Environmental Law governing the use, storage, treatment,
transportation, manufacture, refinement, handling, production or
disposal of Hazardous Materials or Petroleum Products.
- 23 -
(ii) Except as set forth in Section 2.01(v) of the
Disclosure Schedule, neither the Company nor any of its
Subsidiaries has any obligations or liabilities, whether absolute
or contingent, accrued or unaccrued, asserted or unasserted, known
or unknown, or otherwise, that could have a material effect on
Business or Condition of the Company and no pending claims have
been made against any of the foregoing and no presently outstanding
citations or notices have been issued against any of the foregoing,
that could have a material adverse effect on the Business or
Condition of the Company, and that in the case of any of the
foregoing, have been or are imposed by reason of or based upon any
provision of any Environmental Laws, including, without limitation,
any such obligations or liabilities relating to or arising out of
or attributable, in whole or in part, to the manufacture,
processing, distribution, use, treatment, storage, release,
disposal, arranging for disposal, transport or handling of any
Hazardous Materials or Petroleum Products by the Company, any of
its Subsidiaries or any of the Former Subsidiaries or, to the
Knowledge of the Company, by any predecessors in interest in
connection with or in any way arising from or relating to the
Company, any of its Subsidiaries or any of the Former Subsidiaries
or any of their respective properties, or relating to or arising
from or attributable, in whole or in part, to the manufacture,
processing, distribution, use, treatment, storage, disposal,
transport or handling of any such substance by any other person at
or on or under any of the real properties owned or used by the
Company, any of its Subsidiaries or any of the Former Subsidiaries.
(iii) The Company and its Subsidiaries have
received all Permits as may be required of them under applicable
Environmental Laws to conduct their respective businesses, and each
of the Company and its Subsidiaries is in compliance in all
material respects with the terms and conditions of all such
Permits.
(w) Transactions With Related Parties. Except as set
forth in Section 2.01(w) of the Disclosure Schedule, since March 31, 1996,
neither the Company nor any of its Subsidiaries has, in the ordinary
course of business or otherwise, purchased, leased or otherwise acquired
any material property or assets or obtained any material services from,
or sold, leased or otherwise disposed of any material property or assets
or provided any material services to (except with respect to remuneration
for services rendered as a director, officer or employee of one or more
of the Company and its Subsidiaries) (i) any holder of 5% or more of the
voting securities of the Company, (ii) any director, officer or employee
of the Company or any of its Subsidiaries, (iii) except for any
transactions among the Company and its Subsidiaries, any person, firm or
corporation that directly or indirectly controls, is controlled by or is
under common control with the Company or any of its Subsidiaries or (iv)
any member of the immediate families of any such persons (collectively, a
"Related Party"). Except as set forth in Section 2.01(w) of the
Disclosure Schedule, (i) the Contracts do not include any obligation or
commitment between the Company or any of its Subsidiaries and any Related
Party, and (ii) the assets of the Company do not include any receivable
or other obligation or commitment from an Related Party to the Company or
any of its Subsidiaries.
- 24 -
(x) Labor Matters. Section 2.01(x) of the Disclosure
Schedule lists all collective bargaining or similar agreements to which
the Company or any of its Subsidiaries is a party. Except as set forth
in Section 2.01(x) of the Disclosure Schedule, with respect to employees
of the Company and its Subsidiaries:
(i) each of the Company and its Subsidiaries is
and has been in compliance in all material respects with all
applicable laws respecting employment and employment practices,
terms and conditions of employment and wages and hours;
(ii) no grievance or any arbitration proceeding
arising out of or under collective bargaining or similar agreements
is pending and, to the Knowledge of the Company, no claims therefor
exist or have been threatened; and
(iii) there is no litigation, arbitration
proceeding, governmental investigation, citation or action of any
kind pending or, to the Knowledge of the Company, proposed or
threatened against the Company or any of its Subsidiaries relating
to employment, employment practices, terms and conditions of
employment or wages and hours.
(y) Business in Certain Countries. Except for the
dealings listed in Section 2.01(y) of the Disclosure Schedule, neither the
Company nor any of its Subsidiaries has further obligation to (i) purchase,
(ii) sell, (iii) deal in or assist in dealing in any goods for export to,
import from, or transhipment through Cuba, Iraq, Iran, Libya, or North
Korea. Except for those Persons and assets listed in Section 2.01(y) of
the Disclosure Schedule, to the Knowledge of the Company (i) neither the
Company nor any of its Subsidiaries will hold any assets of the
governments (including any agencies or subdivisions thereof) of the
countries listed above or the Federal Republic of Yugoslavia (including
the governments of Serbia and Montenegro) to the extent any such assets
of the Federal Republic of Yugoslavia are "blocked" for purposes of
applicable U.S. law, their nationals, or Persons located in such
countries or organized under their laws, (ii) no assets of the Company or
any of its Subsidiaries will be held by any of such Persons, or (iii) no
amounts will be due to or from the Company or any of its subsidiaries
from or to any of such Persons.
(z) Accuracy of Information. This Agreement and all
other documents provided by the Company to Purchaser in connection with the
transactions contemplated herein, taken as a whole, do not contain an
untrue statement of a material fact or omit to state a material fact
necessary to make the statements contained therein not misleading.
(aa) No Other Representations. Notwithstanding anything
to the contrary contained in this Agreement, it is the explicit intent of
each party hereto that the Company is making no representation or
warranty whatsoever, express or implied, except those representations and
warranties contained in this Section 2.01 and in any certificate
delivered pursuant to Section 6.03.
- 25 -
2.02 Representations of the Shareholders. Each Shareholder
hereby severally represents and warrants, solely with respect to itself, to
Purchaser as follows:
(a) Corporate Existence of Shareholders. Folium is a
corporation validly existing under the Laws of the British Virgin
Islands. Tabacalera is a corporation validly existing under the Laws of
the Kingdom of Spain. LMI is a corporation validly existing under the
Laws of the British Virgin Islands. Each Shareholder has full corporate
power and authority to execute and deliver this Agreement and to perform
its obligations hereunder and to consummate the transactions contemplated
hereby, including without limitation to own, hold, sell and transfer
(pursuant to this Agreement) the Shares. Each Shareholder owns the
Shares set forth in Section 2.02(a) of the Disclosure Schedule,
beneficially and of record, free and clear of all Liens, except as set
forth in such Section 2.02(a) of the Disclosure Schedule.
(b) Authority. The execution and delivery by such
Shareholder of this Agreement and the performance by such Shareholder of
its obligations hereunder, have been duly and validly authorized by the
respective Board of Directors of such Shareholder, no other corporate
action on the part of such Shareholder or its stockholders being
necessary. This Agreement has been duly and validly executed and
delivered by such Shareholder and constitutes a legal, valid and binding
obligation of such Shareholder enforceable against such Shareholder in
accordance with its terms.
(c) Investigation by Shareholders; Investment Intent.
The Shareholders have conducted their own independent review and analysis
of the businesses, assets, condition, operations and prospects of the
Purchaser and its Subsidiaries and acknowledge that they have been
provided access satisfactory to them to the properties and records of the
Purchaser and its Subsidiaries for this purpose and have been afforded an
opportunity satisfactory to them to discuss the foregoing with management
of Purchaser. In entering into this Agreement, the Shareholders have
relied solely upon their own respective investigations and analysis and
the representations contained herein and the Shareholders:
(i) except as otherwise set forth in this
Agreement, acknowledge that none of Purchaser, the Company,
their respective Subsidiaries or any of their respective
directors, officers, employees, Affiliates, agents or
representatives make any representation or warranty, either
express or implied, as to the accuracy or completeness of any
of the information provided or made available to the Shareholders
or their agents or representatives prior to the execution of
this Agreement;
(ii) understand that the shares of Purchaser
Common Stock and Convertible Debentures have not been registered
under the Securities Act of 1933, as amended (the "1933 Act"), and
may not be transferred in the absence of an effective registration
statement for such securities under the 1933 Act or an opinion of
counsel satisfactory to the Company that registration is not
required under the 1933 Act. Certificates representing the shares
of Purchaser Common Stock and the Convertible Debentures may bear
a legend to such effect;
- 26 -
(iii) agree, to the fullest extent permitted by
law, that none of the Purchaser, its Subsidiaries or any of their
respective directors, officers, employees, Affiliates, agents or
representatives shall have any liability or responsibility
whatsoever to the Shareholders on any basis (including, without
limitation, in contract or tort, under federal or state securities
laws or otherwise) based upon any information provided or made
available, or statements made, to the Company or the Shareholders
prior to the execution of this Agreement, except that the foregoing
limitations shall not apply to the Purchaser to the extent that the
Purchaser makes the specific representations and warranties set
forth in this Agreement and in the Schedules, but always subject
to the limitations and restrictions contained in this Agreement
and the Schedules;
(iv) represent that they are not "U.S.
Persons" (and they are not purchasing for the account of any U.S.
Person) within the meaning of Regulation S under 1933 Act;
(v) agree that they will not, prior to the
expiration of the 40-day restricted period provided for in Rule 903
of Regulation S under the 1933 Act, sell or otherwise dispose of
(including by means of a short sale or other hedging transaction)
any Purchaser Common Stock or the Convertible Debentures; and
(vi) any Purchaser Common Stock or Convertible
Debentures acquired by them will be acquired for their own accounts
for the purpose of investment.
(d) Beneficial Ownership. As of the date hereof, none of
the Shareholders was the "beneficial owner," as such term is defined in
Sections 13.1-725 and 13.728.1 of the Virginia Code, of any shares of
Purchaser Common Stock except as disclosed in Schedule 2.02(d).
(e) No Conflicts. The execution and delivery by the
Shareholders of this Agreement do not, and the performance by the
Shareholders of their obligations under this Agreement and the
consummation of the transactions contemplated hereby will not:
(i) conflict with or result in a violation or
breach of any of the certificate or articles of incorporation or
bylaws or other comparable organizational and other documents
governing the operation of any of the Shareholders;
(ii) subject to obtaining the consents, approvals
and actions, making the filings and giving the notices disclosed in
Section 2.02(e)(ii) of the Disclosure Schedule, conflict with or
result in a violation or breach of any Law or Order applicable to
any of the Shareholders or any of their Assets or Properties;
(iii) except as disclosed in Section 2.02(e)(iii)
of the Disclosure Schedule, (x) conflict with or result in a
violation or breach of, (y) constitute (with or without notice or
lapse of time or both) a default under, or (z) require any
Shareholder to obtain any consent, approval or action of, make any
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filing with or give any notice to any Person as a result or under
the terms of, any Contract or License to which such Shareholder is
a party or by which any of its Assets and Properties is bound.
(f) Governmental Approvals and Filings. Except as
disclosed in Section 2.02(f) of the Disclosure Schedule, no consent,
approval or action of, filing with, or notice to any Governmental or
Regulatory Authority on the part of any of the Shareholders is required
in connection with the execution delivery and performance of this
Agreement or the consummation of the transactions contemplated hereby.
(g) Legal Proceedings. Except as disclosed in
Section 2.02(g) of the Disclosure Schedule, there are no Actions or
Proceedings pending or, to the respective knowledge of the Shareholders,
threatened against, relating to or affecting any of them or their Shares,
that could reasonably be expected to result in the issuance of an Order
restraining, enjoining or otherwise prohibiting or making illegal the
consummation of any of the transactions contemplated by the Agreement.
(h) Receipt of Disclosure. Each of the Shareholders
acknowledge that it has received complete disclosure with respect to the
terms and conditions of all of the transactions contemplated by this
Agreement and the consideration to be received by each other Shareholder
and its Affiliates in connection with such transactions, including,
without limitation, in connection with the acquisition by Purchaser of
certain assets of Tabex (PVT) Limited.
(i) No Immunity. In any proceedings taken in relation to
this Agreement or the related documents, none of the Shareholders will be
entitled to claim for itself or any of its assets immunity from suit,
execution, attachment or other legal process.
(j) No Other Representations. Notwithstanding anything
to the contrary contained in this Agreement, it is the explicit intent of
each party hereto that each Shareholder is making no representation or
warranty whatsoever, express or implied, except those representations and
warranties contained in this Section 2.02.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to the Company and each
Shareholder as follows:
3.01. Corporate Existence. Purchaser is a corporation validly
existing and in good standing under the Laws of the Commonwealth of
Virginia. Purchaser has full corporate power and authority to execute
and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby.
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3.02. Authority. The execution and delivery by Purchaser of this
Agreement, and the performance by Purchaser of its obligations hereunder,
have been duly and validly authorized by the Board of Directors of
Purchaser, no other corporate action on the part of Purchaser or its
stockholders being necessary. This Agreement has been duly and validly
executed and delivered by Purchaser and constitutes a legal, valid and
binding obligation of Purchaser enforceable against Purchaser in
accordance with its terms.
3.03. No Conflicts. The execution and delivery by Purchaser of
this Agreement do not, and the performance by Purchaser of its
obligations under this Agreement and the consummation of the transactions
contemplated hereby will not:
(a) conflict with or result in a violation or breach by
Purchaser of the Amended and Restated Articles of Incorporation or
Amended and Restated Bylaws of Purchaser;
(b) subject to obtaining the consents, approvals and
actions, making the filings and giving the notices disclosed in
Schedule 3.03 hereto, conflict with or result in a violation or breach of
any Law or Order applicable to Purchaser or any of its Assets and
Properties; or
(c) except as disclosed in Schedule 3.03 hereto, (i)
conflict with or result in a violation or breach of, (ii) constitute
(with or without notice or lapse of time or both) a default under, (iii)
require Purchaser to obtain any consent, approval or action of, make any
filing with or give any notice to any Person as a result or under the
terms of, (iv) result in the creation or imposition of any Lien upon
Purchaser or any of their respective Assets or Properties under, any
Contract or License to which Purchaser is a party or by which any of
their respective Assets and Properties is bound or (v) give rise to any
right of any party to any Contract to cancel, terminate or exercise any
option under such Contract; other than such conflicts, violations,
defaults, breaches, consents, approvals, authorizations, filings,
notices, liens or rights referred to in paragraphs (a), (b) or (c)
which could not in the aggregate reasonably be expected to materially
adversely affect the validity or enforceability of this Agreement or
to have a material adverse effect on the Business or Condition of the
Purchaser.
3.04. Governmental Approvals and Filings. Except as disclosed in
Schedule 3.04, no consent, approval or action of, filing with or notice
to any Governmental or Regulatory Authority on the part of Purchaser is
required in connection with the execution, delivery and performance of
this Agreement or the consummation of the transactions contemplated
hereby, except where the failure to obtain any such consent, approval or
action to make any such filing or to give any such notice could not
reasonably be expected to materially adversely affect the validity or
enforceability of this Agreement or to have a material adverse effect on
the Business or Condition of the Purchaser.
3.05. Books and Records. The minute books and other similar
records of Purchaser and its Subsidiaries as made available to the
Company prior to the execution of this Agreement contain a true and
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complete record, in all material respects, of all action taken at all
meetings and by all written consents in lieu of meetings of the
stockholders, the boards of directors and committees of the boards of
directors of Purchaser and its Subsidiaries.
3.06. SEC Reports; Purchaser Financial Statements.
(a) Except as disclosed in Schedule 3.06, since
January 1, 1995, Purchaser has timely filed all reports, registration
statements, proxy statements or information statements and all other
documents, together with any amendments required to be made thereto,
required to be filed with the SEC (collectively, the "Purchaser Reports")
under the 1933 Act, as amended or the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). Purchaser has made available to Company true
copies of all the Purchaser Reports, together with all exhibits thereto,
that Company has requested. Included in such Purchaser Reports are (i)
audited consolidated balance sheets of Purchaser and its Subsidiaries at
June 30, 1996 and the related consolidated statements of income,
stockholders' equity and cash flows for the fiscal years then ended, and
the notes thereto and (ii) the unaudited consolidated balance sheets of
Purchaser and its Subsidiaries at September 30, 1996 and 1995, and the
related unaudited consolidated statements of income, stockholders' equity
and cash flows for the periods then ended and the notes thereto.
(b) All of the financial statements included in the
Purchaser Reports (which are collectively referred to herein as the
"Purchaser Consolidated Financial Statements") fairly presented in all
material respects the consolidated financial position of Purchaser and
its Subsidiaries as at the dates mentioned and the consolidated results
of operations, changes in stockholders' equity and cash flows for the
periods then ended in conformity with GAAP applied on a consistent basis
(subject to any exceptions as to consistency specified therein or as may
be indicated in the notes thereto or in the case of the unaudited
statements, as may be permitted by Form 10-Q of the Exchange Act and
subject, in the case of unaudited statements, to normal, recurring audit
adjustments). As of their respective dates, the Purchaser Reports
complied in all material respects with all applicable rules and
regulations promulgated by the SEC and did not contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading.
3.07. Taxes. Except as disclosed in the Purchaser Reports filed
on or before the date of this Agreement, there is not a material amount of
unpaid Tax incurred by Purchaser or any of its Subsidiaries that is or
could become a Lien on any asset of Purchaser and its Subsidiaries and
that would thereby or otherwise have a material adverse effect on the
Business or Condition of Purchaser.
3.08. Legal Proceedings. Except as disclosed in the Purchaser
Reports filed on or before the date of this Agreement:
(a) There are no Actions or Proceedings pending or, to
the Knowledge of Purchaser, threatened against, relating to or affecting
Purchaser or any of its Subsidiaries or any of their respective Assets
and Properties which (i) could reasonably be expected to result in the
- 30 -
issuance of an Order restraining, enjoining or otherwise prohibiting or
making illegal the consummation of any of the transactions contemplated
by this Agreement, or (ii) could individually or in the aggregate have a
material adverse effect on the Business or Condition of Purchaser; and
(b) there are no Orders outstanding against Purchaser or
any of its Subsidiaries that could, individually or in the aggregate,
have a material adverse effect on the Business or Condition of Purchaser.
3.09. Compliance With Laws and Orders. Except as disclosed in the
Purchaser Reports filed on or before the date of this Agreement,
Purchaser and any of its Subsidiaries have complied with all Laws and
Orders applicable to Purchaser or such Subsidiary or any of their
respective Assets or Properties, except for any non-compliance that could
not reasonably be expected to have a material adverse effect on the
Business or Condition of the Purchaser.
3.10. Brokers. All negotiations relative to this Agreement and
the transactions contemplated hereby have been carried out by Purchaser
directly with the Company without the intervention of any Person on
behalf of Purchaser in such manner as to give rise to any valid claim by
any Person against the Company, any Subsidiary or any Shareholder for a
finder's fee, brokerage commission or similar payment.
3.11. Financing. Purchaser has sufficient cash and/or available
credit facilities (and has provided the Company with evidence thereof) to
pay the cash consideration for the Shares and to make all other necessary
payments of fees and expenses in connection with the transactions
contemplated by this Agreement.
3.12. Purchase for Investment. The Shares will be acquired by
Purchaser (or, if applicable, its assignee pursuant to Section 10.10(b))
for its own account for the purpose of investment. Purchaser (or such
assignee, as the case may be) will refrain from transferring or otherwise
disposing of any of the Shares, or any interest therein, in such manner
as to cause any Shareholder to be in violation of the registration
requirements of the 1933 Act or applicable state securities or blue sky
laws.
3.13. Investigation by Purchaser. Purchaser has conducted its own
independent review and analysis of the businesses, assets, condition,
operations and prospects of Company and its Subsidiaries and acknowledges
that Purchaser has been provided access to the properties, premises and
records of the Company and its Subsidiaries for this purpose and has been
afforded an opportunity satisfactory to it to discuss the foregoing with
management of Purchases. In entering into this Agreement, Purchaser has
relied solely upon its own investigation and analysis and the
representations and warranties contained herein, and Purchaser:
(a) except as otherwise set forth in this Agreement,
acknowledges that none of the Company, its Subsidiaries, the Shareholders
or any of their respective directors, officers, employees, Affiliates,
agents or representatives makes any representation or warranty, either
- 31 -
express or implied, as to the accuracy or completeness of any of the
information provided or made available to Purchaser or its agents or
representatives prior to the execution of this Agreement; and
(b) understands that the Shares have not been registered
under the 1933 Act; and
(c) agrees, to the fullest extent permitted by law, that
none of the Company, its Subsidiaries, the Shareholders or any of their
respective directors officers, employees, Affiliates, agents or
representatives shall have any liability or responsibility whatsoever to
Purchaser on any basis (including, without limitation, in contract or
tort, under federal or state securities laws or otherwise) based upon any
information provided or made available, or statements made, to Purchaser
prior to the execution of this Agreement, except that the foregoing
limitations shall not apply to the Company or any Shareholder to the
extent the Company or such Shareholder makes the specific representations
and warranties set forth in this Agreement and in the Disclosure
Schedule, but always subject to the limitations and restrictions
contained in this Agreement and in the Disclosure Schedule.
3.14. FIRPTA. Purchaser is not a United States real property
holding corporation within the meaning of Xxxxxxx 000 xx xxx Xxxxxx
Xxxxxx Internal Revenue Code of 1986, as amended.
3.15. Control Share Statute. Based solely upon the information
provided on Schedule 1.02(a) and in Section 2.02(d) of the Disclosure
Schedule with respect to the number of shares of Purchaser Common Stock
to be issued to each Shareholder at Closing or upon conversion of the
Convertible Debentures and the beneficial ownership by the Shareholders
of Purchaser Common Stock and assuming that no Shareholder beneficially
owns the shares of Purchaser Common Stock held of record by any other
Shareholder, no Shareholder is, or will be solely as a result of the
transactions contemplated by this Agreement, an "interested shareholder"
of Purchaser within the meaning of Section 13.1-725 of the Virginia Code.
3.16. Investment Company Act. Purchaser is not an "investment
company" or a company "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
3.17. Public Utility Holding Company Act. Purchaser is not
subject to regulation as an "electric utility company," a "public utility
company," a "holding company," a "subsidiary company" of a holding
company or an "associate company" of a holding company or an "affiliate"
of any of the foregoing under the Public Utility Holding Company Act of
1935, as amended.
3.18. Absence of Certain Events. Except as disclosed in the
Purchaser Reports filed on or before the date of this Agreement, there
has not been, since June 30, 1996: (i) any material adverse change in the
Business or Condition of Purchaser; or (ii) any change in the accounting
methods of the Purchaser or any of its Subsidiaries.
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3.19. Accuracy of Information. This Agreement and all other
documents provided by Purchaser to the Company in connection with the
transactions contemplated herein, taken as a whole, do not contain an
untrue statement of a material fact or omit to state a material fact
necessary to make the statements contained therein not misleading.
3.20. No Other Representations. Notwithstanding anything to the
contrary contained in this Agreement, it is the explicit intent of each
party hereto that Purchaser is making no representation or warranty
whatsoever, express or implied, except those representations and
warranties contained in this Article III and in any certificate delivered
pursuant to Section 7.03.
ARTICLE IV
COVENANTS OF THE COMPANY AND THE SHAREHOLDERS
The Company and the Shareholders covenant and agree with Purchaser
that, at all times from and after the date hereof until the Closing, the
Company and the Shareholders will comply with all covenants and
provisions of this Article IV applicable to the Company and the
Shareholders, except to the extent Purchaser may otherwise consent in
writing.
4.01. Regulatory and Other Approvals. The Company will (a) use
all commercially reasonable efforts and proceed diligently and in good
faith as promptly as practicable to obtain all consents, approvals or
actions of, to make all filings with and to give all notices to
Governmental or Regulatory Authorities or any other Person required of
the Company or any Subsidiary to consummate the transactions contemplated
hereby, including without limitation those described in Sections 2.01(e)
and (f) of the Disclosure Schedule, (b) provide such other information
and communications to such Governmental or Regulatory Authorities or other
Persons as such Governmental or Regulatory Authorities or other Persons
may reasonably request and (c) provide reasonable cooperation to
Purchaser in obtaining all consents, approvals or actions of, making all
filings with and giving all notices to Governmental or Regulatory
Authorities or other Persons required of Purchaser to consummate the
transactions contemplated hereby. The Company will provide prompt
notification to Purchaser when any such consent, approval, action, filing
or notice referred to in clause (a) above is obtained, taken, made or
given, as applicable, and will advise Purchaser of any communications
(and, unless precluded by Law, provide copies of any such communications
that are in writing) with any Governmental or Regulatory Authority or
other Person regarding any of the transactions contemplated by this
Agreement.
4.02. HSR Filings. In addition to and not in limitation of its
covenants contained in Section 4.01, the Company will (a) take promptly
all actions necessary to make the filings required of the Company or its
Affiliates under the HSR Act, (b) comply at the earliest practicable date
with any request for additional information received by the Company or
its Affiliates from the Federal Trade Commission or the Antitrust
Division of the Department of Justice pursuant to the HSR Act and (c) use
all commercially reasonable efforts to cooperate with Purchaser in
- 33 -
connection with their filing under the HSR Act and in connection with
resolving any investigation or other inquiry concerning the transactions
contemplated by this Agreement commenced by either the Federal Trade
Commission or the Antitrust Division of the Department of Justice or
state attorneys general; provided that the Company shall not be required
to expend any material sum, dispose of any material assets or incur any
material liabilities in pursuing any such resolution.
4.03. Investigation by Purchaser. The Company will (a) provide
Purchaser, its officers, employees, counsel, accountants, financial
advisors, consultants and other representatives (together,
"Representatives") with access, upon reasonable prior notice and during
normal business hours, to all officers, employees, agents and accountants
of the Company and its Subsidiaries and their Assets and Properties and
Books and Records as Purchaser or any such Representative may reasonably
request, but only to the extent that such access does not unreasonably
interfere with the business and operations of the Company and its
Subsidiaries, and (b) furnish Purchaser and such other Persons with all
such information and data (including without limitation copies of
Contracts, Benefit Plans and other Books and Records) concerning the
business and operations of the Company and its Subsidiaries as Purchaser
or any of such other Persons reasonably may request in connection with
such investigation, but only to the extent that furnishing any such
information or data would not violate any Law, Order, Contract or License
applicable to the Company or any Subsidiary or by which any of their
respective Assets and Properties is bound; provided that the Company has
identified such information or data that it is unable to furnish pursuant
to the preceding clause in Section 4.03 of the Disclosure Schedule.
4.04. Conduct of Business. The Company and its Subsidiaries will
conduct business only in the ordinary course. Without limiting the
generality of the foregoing, the Company and its Subsidiaries will use
commercially reasonable efforts, to the extent the officers of the
Company believe such action to be in best interests of the Company and
its Subsidiaries, to (a) preserve intact the present business
organization and reputation of the Company and its Subsidiaries, (b) keep
available (subject to dismissals and retirements in the ordinary course
of business) the services of the key officers and employees of the
Company and its Subsidiaries in all material respects, (c) maintain the
Assets and Properties of the Company and its Subsidiaries in good working
order and condition, ordinary wear and tear excepted, and (d) maintain
the good will of customers and suppliers of the Company or any of its
Subsidiary. Without limiting the generality of the foregoing, and except
as otherwise expressly provided in this Agreement, prior to the Closing,
neither the Company nor any of its Subsidiaries will, without the prior
written consent of Purchaser:
(a) amend its Articles or Certificate of Incorporation,
bylaws, partnership or joint venture agreements or other
organizational documents;
(b) authorize for issuance or issue, sell or deliver
(whether through the issuance or granting of options, warrants,
commitments, subscriptions, rights to purchase or otherwise) any
stock of any class or any other securities of interests, except as
- 34 -
required by the terms of any options, warrants, rights or other
securities outstanding as of the date hereof;
(c) split, combine or reclassify any shares of its
capital stock, declare, set aside or pay any dividend or other
distribution (whether in cash, stock or property or any
combination thereof) in respect of its capital stock, or redeem
or otherwise acquire any of its securities or any securities of
their respective Subsidiaries;
(d) (i) incur or assume any long-term debt not currently
outstanding, (ii) assume, guarantee, endorse or otherwise become
liable or responsible for the obligations of any person, other than
a Subsidiary, (iii) make any loans, advances or capital
contributions to, or investments in, any other person (other than
customary loans or advances to employees in accordance with past
practice), (iv) enter into any contract or agreement other than in
the ordinary course of business or in connection with the
transactions contemplated by this Agreement or (v) authorize any
single capital expenditure which is in excess of $100,000 or
capital expenditures which are, in the aggregate, in excess of $1.0
million, other than capital expenditures pursuant to contracts
entered into prior to the date hereof and set forth in
Section 4.04(d) of the Disclosure Schedule;
(e) adopt or amend (except as may be required by Law or
as provided in this Agreement) any bonus, profit sharing,
compensation, severance, termination, stock option, stock
appreciation right, restricted stock, pension, retirement, deferred
compensation, employment, severance or other employee benefit
agreements, trusts, plans, funds or other arrangements for the
benefit or welfare of any director, officer or employee, or (except
for normal increases in the ordinary course of business that are
consistent with past practices and that, in the aggregate, do not
result in a material increase in benefits or compensation expense)
increase in any manner the compensation or fringe benefits of any
director, officer, or employee or pay any benefit not required by
any existing plan and arrangement (including, without limitation,
the granting of stock options, stock appreciation rights, shares of
restricted stock or performance units) or enter into any contract,
agreement, commitment or arrangement to do any of the foregoing;
(f) acquire, sell, lease or dispose of any material
assets, other than acquisitions, sales and dispositions of
inventory in the ordinary course of business, or as set forth
in Section 4.04(f) of the Disclosure Schedule, provided that DIMON
shall have approved in advance the terms and conditions of any
transaction set forth therein;
(g) take any action other than in the ordinary course of
business and in a manner consistent with past practice with respect
to accounting policies or procedures;
(h) make any material Tax election or settle or
compromise any material Tax liability;
(i) pay, discharge or satisfy any material claims,
liabilities or obligations (absolute, accrued or unasserted,
contingent or otherwise), other than the payment, discharge or
satisfaction in the ordinary course of business of liabilities
- 35 -
reflected or reserved against in the Unaudited Financial
Statements;
(j) enter into any individual commitment (binding or
otherwise) to purchase or sell tobacco of a discrete grade, type or
origin having a fair market value at the time of the commitment in
excess of $2,000,000; or
(k) agree in writing or otherwise to take any of the
foregoing actions.
4.05. No Solicitations. Neither the Company nor the Shareholders
will take, nor will the Company permit its Subsidiaries or any Affiliate
thereof (or authorize or permit any investment banker, financial advisor,
attorney, accountant or other person retained by or acting for or on
behalf of the Company, the Shareholders, the Subsidiaries or any such
Affiliate) to take, directly or indirectly, any action to initiate,
assist, solicit, receive, negotiate, encourage or accept any offer or
inquiry from any Person (a) to engage in any Business Combination with
the Company or any Subsidiary; (b) to reach any agreement for, or
otherwise attempt to consummate, any Business Combination with the
Company or any Subsidiary or (c) to furnish or cause to be furnished any
information with respect to the Company or any Subsidiary to any Person
(other than as contemplated by Section 4.03) who the Company, any
Subsidiary or any such Affiliate (or any such Person acting for or on
their behalf) knows or has reason to believe is in the process of
considering any Business Combination with the Company or any Subsidiary.
4.06. Fulfillment of Conditions. The Company and the Shareholders
will use all commercially reasonable efforts and proceed diligently and
in good faith to satisfy each condition to the obligations of Purchaser
contained in this Agreement and will not, and will not permit the Company
or any Subsidiary to, take or fail to take any action that could
reasonably be expected to result in the nonfulfillment of any such
condition.
4.07. Resignations. The Shareholders shall cause their respective
representatives on the Board of Directors of the Company to resign
immediately upon the Closing. The Company shall cause its representatives
on the Board of Directors of each Subsidiary designated by DIMON in
writing at least two weeks in advance of the Closing to resign effective
as of the Closing.
4.08. Transfer of Excluded Items. Prior to Closing, the Company
shall take whatever actions are necessary to effectively transfer
ownership and responsibility for the Excluded Items to Purchaser's
satisfaction.
4.09. Valuation of Philippine Property. The Company shall cause
the valuation of the Philippine Property to be recorded on the Final
Balance Sheet at an amount not greater than the lesser of cost and the
then-current market value of the Philippine Property.
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ARTICLE V
COVENANTS OF PURCHASER
Purchaser covenants and agrees with the Company and each
Shareholder that, at all times from and after the date hereof until the
Closing, Purchaser will comply with all covenants and provisions of this
Article V, except to the extent the Company may otherwise consent in
writing.
5.01. Regulatory and Other Approvals. Purchaser will (a) use all
commercially reasonable efforts and proceed diligently and in good faith
as promptly as practicable to obtain all consents, approvals or actions
of, to make all filings with and to give all notices to Governmental or
Regulatory Authorities or any other Person required of Purchaser to
consummate the transactions contemplated hereby, including without
limitation those described in Schedules 3.03 and 3.04 hereto, (b) provide
such other information and communications to such Governmental or
Regulatory Authorities or other Persons as such Governmental or
Regulatory Authorities or other Persons may reasonably request and (c)
provide reasonable cooperation to the Company and its Subsidiaries in
obtaining all consents, approvals or actions of, making all filings with
and giving all notices to Governmental or Regulatory Authorities or other
Persons required of the Company or any of its Subsidiary to consummate
the transactions contemplated hereby. Purchaser will provide prompt
notification to the Company when any such consent, approval, action,
filing or notice referred to in clause (a) above is obtained, taken, made
or given, as applicable, and will advise the Company of any
communications (and, unless precluded by Law, provide copies of any such
communications that are in writing) with any Governmental or Regulatory
Authority or other Person regarding any of the transactions contemplated
by this Agreement.
5.02. HSR Filings. In addition to and without limiting
Purchaser's covenants contained in Section 5.01, Purchaser will (i)
take promptly all actions necessary to make the filings required of
Purchaser or its Affiliates under the HSR Act, (ii) comply at the
earliest practicable date with any request for additional
information received by Purchaser or its Affiliates from the Federal
Trade Commission or the Antitrust Division of the Department of
Justice pursuant to the HSR Act and (iii) use all commercially
reasonable efforts to cooperate with the Company in connection with
filing under the HSR Act and in connection with resolving any
investigation or other inquiry concerning the transactions
contemplated by this Agreement commenced by either the Federal Trade
Commission or the Antitrust Division of the Department of Justice or
state attorneys general; provided that Purchaser shall not be required to
expend any material sum, dispose of any material assets, or incur any
material liabilities in pursuing any such resolution.
5.03. Release of Guarantees. Following the Closing, Purchaser
shall cooperate with the Company in seeking to have the Shareholders
released from, and will indemnify and hold the Shareholders harmless
against payments the Company is required to make from and after the
Closing in respect of, the guarantees that the Shareholders have given in
respect of Indebtedness of the Company and the Subsidiaries described in
Section 5.03 of the Disclosure Schedule.
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5.04. Fulfillment of Conditions. Purchaser will use all
commercially reasonable efforts and proceed diligently and in good faith
to satisfy each condition to the obligations of the Company contained in
this Agreement and will not take or fail to take any action that could
reasonably be expected to result in the nonfulfillment of any such
condition.
5.05. Barcelona Building. (a) Purchaser shall cause CdeF to use
its best efforts to sell the Barcelona Building at a price equal to the
book value thereof as promptly as practicable after the Closing;
provided, that in the event Purchaser has not caused the Barcelona
Building to be sold within 12 months of the Closing Date, Purchaser shall
be entitled to sell the Barcelona Building in good faith for whatever
price it can obtain.
(b) Purchaser shall, within five (5) Business days of
receipt of the final settlement or rendering of a final nonappealable
judgment amount in the COISA litigation referred to in Section 2.01(j) of
the Disclosure Schedule relating to the Barcelona Building pay to the
Shareholders, in such manner as the Shareholders shall direct, any
amounts in excess of 250 million Spanish pesetas that CdeF shall be
entitled to retain or receive as a result of such settlement or
nonappealable judgment.
(c) The Shareholders shall hold Purchaser harmless from
and against any and all claims and losses relating to or arising out of
the prosecution of the litigation related to the Barcelona Building or
the sale, ownership and operation of the Barcelona Building after the
Closing, except for those claims and losses arising solely from the gross
negligence or willful misconduct of Purchaser.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF PURCHASER
The obligations of Purchaser hereunder are subject to the
fulfillment, at or before the Closing, of each of the following
conditions (all or any of which may be waived in whole or in part by
Purchaser in its sole discretion):
6.01. Representations and Warranties. The representations and
warranties made by the Company and the Shareholders in this Agreement
(without regard to the qualification of the last sentence of Section
10.15) shall be true and correct in all material respects on and as of
the Closing Date as though made on and as of the Closing Date or, in the
case of representations and warranties made as of a specified date
earlier than the Closing Date, on and as of such earlier date.
6.02. Performance. The Company shall have performed and complied
with, in all material respects, the agreements, covenants and obligations
required by this Agreement to be so performed or complied with by the
Company at or before the Closing.
- 38 -
6.03. Officers' Certificates. The Company and each Shareholder
shall have delivered to Purchaser a certificate, dated the Closing Date
and executed by the Chairman of the Board and Chief Financial Officer of
the Company or by the Chief Executive Officer, Chief Financial Officer or
any two directors of the Shareholders, respectively, substantially in the
form and to the effect of Exhibits X-0, X-0, X-0 and A-4 hereto, and a
certificate, dated the Closing Date and executed by the Secretary or any
Assistant Secretary of the Company and each Shareholder, substantially in
the form and to the effect of Exhibits X-0, X-0, X-0 and B-4 hereto.
6.04. Orders and Laws. There shall not be in effect on the
Closing Date any Order or Law restraining, enjoining or otherwise
prohibiting or making illegal the consummation of any of the transactions
contemplated by this Agreement.
6.05. Regulatory Consents and Approvals. All consents, approvals
and actions of, filings with and notices to any Governmental or
Regulatory Authority necessary to permit Purchaser, the Company and the
Shareholders to perform their obligations under this Agreement and to
consummate the transactions contemplated hereby, which are listed in
Schedule 6.05 hereto, shall have been duly obtained, made or given and
shall be in full force and effect, and all terminations or expirations of
waiting periods imposed by any Governmental or Regulatory Authority
necessary for the consummation of the transactions contemplated by this
Agreement, including under the HSR Act, shall have occurred.
6.06. Third Party Consents. The consents (or in lieu thereof
waivers) listed in Schedule 6.06 hereto shall have been obtained and
shall be in full force and effect.
6.07. Opinion of Counsel. Purchaser shall have received the
opinion of Xxxxxxx & Xxxxxxxx; Cuatrecasas Abogados; Xxxxx-Xxxxxx Raworth
& MacKenzie; Xxxxxx Xxxxxxx Xxxxxx; and Xxxx & Xxxxxxxx; counsel to the
Company and the respective Shareholders, dated the Closing Date,
substantially in the form and to the effect of Exhibit C-1, C-2, C-3, C-4
and C-5 hereto, respectively, with such changes as are reasonably
acceptable to Purchaser.
6.08. Purchase of Certain Assets of Tabex (PVT) Limited.
Simultaneously with the Closing hereunder, Purchaser or an affiliate
shall have purchased from Tabex (PVT) Limited certain assets of Tabex
(PVT) Limited pursuant to that certain Asset Purchase Agreement between
Purchaser and Tabex (PVT) Limited dated as of the date hereof (the "Asset
Purchase Agreement").
- 39 -
6.09. Noncompetition Agreements and Consulting Agreement. There
shall have been executed and delivered to Purchaser the Noncompetition
Agreements and Consulting Agreement in substantially the form attached
hereto as Exhibits X-0, X-0 and D-3 (the "Folium Agreements").
6.10. Resignations of Officers and Directors. The officers and
directors of the Company and its Subsidiaries designated by DIMON
pursuant to Section 4.07 shall have resigned, effective as of Closing.
6.11. Warrants. Each Warrantholder shall have surrendered its
respective Options for the consideration specified in Schedule 1.02 and
shall have executed and delivered to Purchaser an investment letter,
substantially in the form and to the effect of Exhibit E hereto.
6.12. Tax and Withholding Matters. Purchaser shall have received
from the Shareholders and the Warrantholders all documents it shall
reasonably require to enable it to comply with any and all tax and
withholding requirements in connection with the transactions contemplated
hereby, including, without limitation, Forms W-8 or W-9 as applicable and
all elections pursuant to Section 338 of the Internal Revenue Code or
similar provisions of foreign, state or local law.
6.13. Agreement of Accountants. Ernst & Young LLP and each other
accounting firm on which Ernst & Young LLP has relied in preparing its
reports on any Financial Statements of the Company and the Final
Financial Statements shall have agreed in writing (i) to provide
Purchaser and its agents and employees reasonable access after the
Closing to its workpapers relating to such Financial Statements and the
Final Financial Statements and to their personnel who have participated
in the preparation or review of such Final Financial Statements, (ii) to
provide Purchaser with such additional manually-executed copies of such
reports as it may reasonably request, and (iii) to consent to the
inclusion or incorporation by reference of such reports in Purchaser's
filings under the 1933 Act, the Exchange Act and the related rules and
regulations.
6.14. Transfer of Excluded Items. Purchaser shall have received
evidence satisfactory to it that the Excluded Items have been effectively
transferred by the Company or the appropriate Subsidiary.
6.15. Settlement of Related Party Accounts. All amounts owed by
all of the Company's Related Parties to the Company or any of its
Subsidiaries or any other Person in which any of the Company or any of
its Subsidiaries has an interest, and all amounts owed to DIMON by the
Company or any of its Subsidiaries or owed by DIMON to the Company or any
of its Subsidiaries shall have been paid in full, including, without
limitation, all accounts receivable listed in Section 2.01(w) of the
Disclosure Schedule and all other receivables set forth on Schedule 6.15.
6.16. Agreements of Malawi Joint Venture Partners. Subject to
Schedule 6.16, the parties shall mutually agree on a satisfactory
resolution of the status of the Company's interest in its Malawi joint
ventures.
- 40 -
6.17. Additional Certificates. Purchaser shall have received such
other certificates of officers of the Company and the Shareholders as it
may reasonably request.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF THE COMPANY AND THE
SHAREHOLDERS
The obligations of the Company and the Shareholders hereunder are
subject to the fulfillment, at or before the Closing, of each of the
following conditions (all or any of which may be waived in whole or in
part by the Company in its sole discretion):
7.01. Representations and Warranties. The representations and
warranties made by Purchaser in this Agreement (without regard to the
qualification of the last sentence of Section 10.15) shall be true and
correct in all material respects on and as of the Closing Date as though
made on and as of the Closing Date.
7.02. Performance. Purchaser shall have performed and complied
with, in all material respects, the agreements, covenants and obligations
required by this Agreement to be so performed or complied with by
Purchaser at or before the Closing.
7.03. Officers' Certificates. Purchaser shall have delivered to
the Company a certificate, dated the Closing Date and executed by the
Chief Executive Officer and the Chief Financial Officer of Purchaser,
substantially in the form and to the effect of Exhibit F hereto, and a
certificate, dated the Closing Date and executed by the Secretary or
Assistant Secretary of Purchaser, substantially in the form and to the
effect of Exhibit G hereto.
7.04. Orders and Laws. There shall not be in effect on the
Closing Date any Order or Law restraining, enjoining or otherwise
prohibiting or making illegal the consummation of any of the
transactions contemplated by this Agreement.
7.05. Regulatory Consents and Approvals. All consents, approvals
and actions of, filings with and notices to any Governmental or
Regulatory Authority necessary to permit the Company, the Shareholders
and the Purchaser to perform their obligations under this Agreement and
to consummate the transactions contemplated hereby, which are listed on
Schedule 7.05 hereto, shall have been duly obtained, made or given and
shall be in full force and effect, and all terminations or expirations of
waiting periods imposed by any Governmental or Regulatory Authority
necessary for the consummation of the transactions contemplated by this
Agreement, including under the HSR Act, shall have occurred.
7.06. Third Party Consents. The consents (or in lieu thereof
waivers) listed in Schedule 7.06 shall have been obtained and shall be
in full force and effect.
- 41 -
7.07. Opinion of Counsel. The Company shall have received the
opinion of Hunton & Xxxxxxxx, counsel to Purchaser, dated the Closing
Date, substantially in the form and to the effect of Exhibit H hereto
with such changes as are reasonably acceptable to the Company and the
Shareholders.
7.08. Purchase of Certain Assets of Tabex (PVT) Limited.
Simultaneously with the Closing hereunder, Purchaser or an affiliate
shall have purchased from Tabex (PVT) Limited certain assets of Tabex
(PVT) Limited pursuant to the Asset Purchase Agreement.
7.09. Folium Agreements. Purchaser shall have executed and
delivered the Folium Agreements.
7.10. Listing of Purchaser Common Stock. Purchaser shall have
done all things necessary to cause the Purchaser Common Stock to be issued
at Closing and to be issued upon conversion of the Convertible Debentures
to be listed on the New York Stock Exchange, upon official notice of
issuance.
7.11. Board of Directors. Effective on the Closing Date,
Purchaser will (a) expand the size of its Board of Directors from
twelve directors to thirteen directors and will elect a nominee of
Folium, reasonably acceptable to Purchaser, to fill the vacancy created
for a term expiring at its 1997 Annual Meeting of Shareholders.
Purchaser will cause such nominee to be nominated to stand for election
as a director at the 1997 Annual Meeting of Shareholders for a three
year term and will use its reasonable best efforts to cause him to be
so elected; (b) cause A.C.B. Taberer to be elected non-executive
Chairman of the Board of the Company.
7.12. Registration Rights. Purchaser shall have executed and
delivered the Registration Rights Agreement in substantially the form of
Exhibit I hereto.
7.13. Additional Certificates. The Company and the Shareholders
shall have received such other certificates of officers of Purchaser as
it may reasonably request.
ARTICLE VIII
TERMINATION
8.01. Termination. This Agreement may be terminated, and the
transactions contemplated hereby may be abandoned:
(a) at any time before the Closing, by mutual written
agreement of the Company, Purchaser and Shareholders;
- 42 -
(b) at any time before the Closing, by the Company,
Purchaser or the Shareholders in the event that any Order or Law becomes
effective restraining, enjoining or otherwise prohibiting or making
illegal the consummation of any of the transactions contemplated by this
Agreement, upon notification of the non-terminating party by the
terminating party; provided that the terminating party has used its best
efforts to have any such Order removed;
(c) at any time before the Closing, by the Company,
Purchaser or the Shareholders upon notification of the non-terminating
party by the terminating party if the Asset Purchase Agreement shall have
been terminated prior to a closing thereunder pursuant to and in
accordance with the terms thereof;
(d) [intentionally omitted]; or
(e) at any time after June 30, 1997 by the Company,
Purchaser or the Shareholders upon notification of the non-terminating
party by the terminating party if the Closing shall not have occurred on
or before such date and such failure to consummate is not caused by a
breach of this Agreement by the terminating party.
8.02. Effect of Termination. If this Agreement is validly
terminated pursuant to Section 8.01, this Agreement will forthwith become
null and void, and there will be no liability or obligation on the part
of the Company, Purchaser or the Shareholders (or any of their respective
officers, directors, employees, agents or other representatives or
Affiliates), except that the provisions with respect to expenses in
Section 10.03 and confidentiality in Section 10.05 will continue to apply
following any such termination. Notwithstanding any other provision in
this Agreement to the contrary, upon termination of this Agreement
pursuant to Section 8.01(b), (c), (d) or (e), the Company will remain
liable to Purchaser for any willful breach of Section 4.06 of this
Agreement by the Company existing at the time of such termination, and
Purchaser will remain liable to the Company and the Shareholders for any
willful breach of Section 5.04 of this Agreement by Purchaser existing at
the time of such termination, and the Company, Purchaser or the
Shareholders may seek such remedies, including damages and fees of
attorneys, against the other with respect to any such willful breach as
are provided in this Agreement or as are otherwise available at Law or in
equity.
ARTICLE IX
DEFINITIONS
9.01. Definitions. (a) As used in this Agreement, the
following defined terms shall have the meanings indicated below:
"Accounts" shall mean accounts receivable, notes receivable and
associated rights.
- 43 -
"Actions or Proceedings" means any action, suit, proceeding,
arbitration or Governmental or Regulatory Authority investigation.
"Advances on Tobacco Purchases" shall mean all loans, advances and
extensions of credit made by the Company or any of its Subsidiaries to
growers and other suppliers of tobacco and tobacco growers' cooperatives,
whether short-term or long-term, to finance the growing or processing of
tobacco.
"Affiliate" means any Person that directly, or indirectly through
one of more intermediaries, controls or is controlled by or is under
common control with the Person specified. For purposes of this
definition, control of a Person means the power, direct or indirect, to
direct or cause the direction of the management and policies of such
Person whether by Contract or otherwise and, in any event and without
limitation of the previous sentence, any Person owning more than fifty
(50%) of the voting securities of a second Person shall be deemed to
control that second Person.
"Agreement" means this Stock Purchase Agreement and the Exhibits,
the Disclosure Schedule and the Schedules hereto and the certificates
delivered in accordance with Sections 6.03 and 7.03, as the same shall be
amended from time to time.
"Assets and Properties" of any Person means all assets and
properties of every kind, nature, character and description (whether
real, personal or mixed, whether tangible or intangible, and wherever
situated), operated, owned or leased by such Person which are material to
the business, financial condition or results of operations of such Person
and its Subsidiaries taken as a whole.
"Barcelona Building" means that building located at Xxxxxxx 000,
Xxxxxxxxx 00000 Xxxxx and all rights and liabilities associated
therewith.
"Beheer Option" means the stock option agreement made as of the 6th
day of March 1995 by and among the Company and all of the shareholders of
LPL Beheer B.V.
"Books and Records" means all files, documents, instruments,
papers, books and records relating to the Business or Condition of the
Company, including without limitation financial statements, Tax Returns
and related work papers and letters from accountants, budgets, pricing
guidelines, ledgers, journals, deeds, title policies, minute books, stock
certificates and books, stock transfer ledgers, Contracts, Licenses,
customer lists, computer files and programs, retrieval programs,
operating data and plans and environmental studies and plans.
"Business Combination" shall mean any merger, consolidation or sale
of substantially all assets in one or a series of related transactions.
"Business Day" means a day other than Saturday, Sunday or any day
on which banks located in London, England, New York, New York and
Danville, Virginia are authorized or obligated to close.
- 44 -
"Business or Condition of the Company" and "Business or Condition
of Purchaser" means the business, financial condition or results of
operations of either the Company and its Subsidiaries, taken as a whole,
or the Purchaser and its Subsidiaries, taken as a whole, as the case may
be.
"Claim Notice" means written notification pursuant to
Section 12.02(a) of a Third Party Claim as to which indemnity under
Section 12.01 is sought by an Indemnified Party, enclosing a copy of all
papers served, if any, and specifying the nature of and basis for such
Third Party Claim and for the Indemnified Party's claim against the
Indemnifying Party under Section 12.01, together with the amount or, if
not then reasonably ascertainable, the estimated amount, determined in
good faith, of such Third Party Claim.
"Class A Shares" means the Class A ordinary shares of the Company.
"Class B Shares" means the Class B ordinary shares of the Company.
"Closing" means the closing of the transactions contemplated by
Section 1.04.
"Closing Date" means (a) April 1, 1997 or (b) such other date as
Purchaser, the Shareholders and the Company mutually agree upon in
writing.
"Confidentiality Agreement" means the Nondisclosure Agreement dated
October 17, 1996 among Purchaser, the Company and Tabex (PVT) Limited.
"Contract" means any agreement, lease, evidence of Indebtedness,
mortgage, indenture, security agreement or other contract.
"Convertible Debentures" means the $140,000,000 6.25% Convertible
Subordinated Debentures due 2007 of the Purchaser.
"Cut-off Date" means, with respect to any representation, warranty,
covenant or agreement contained in this Agreement, the date on which such
representation, warranty, covenant or agreement ceases to survive as
provided in clause (a) or (b) of Section 11.01, as applicable.
"Disclosure Schedule" means the record delivered to Purchaser by
the Company herewith and dated as of the date hereof, containing all
lists, descriptions, exceptions and other information and materials as
are required to be included therein by the Company pursuant to this
Agreement.
"Dispute Period" means the period ending fifteen (15) calendar
days following receipt by an Indemnifying Party of either a Claim Notice
or an Indemnity Notice.
"Employee Benefit Plan" means any plan, program, policy or
arrangement to, or on behalf of, one, or more than one, current or former
employee or director or any of their dependents.
- 45 -
"Environmental Laws" shall mean any and all national, federal,
state, provincial, local or municipal laws, rules, orders, regulations,
statutes, ordinances, codes, decrees or requirements of any Governmental
or Regulatory Authority regulating, relating to or imposing liability or
standards of conduct concerning any Hazardous Materials or Petroleum
Products or environmental protection as now or at any time hereafter in
effect, together with any amendment or re-authorization thereto or
thereof.
"Excluded Items" means the Beheer Option and the Zanzibar Assets.
"Final Balance Sheet" shall mean the Final Balance sheet of the
Company as of the Closing Date, prepared in accordance with Section 1.05.
"Final Financial Statements" shall mean the audited consolidated
balance sheet of the Company and its subsidiaries as of the Closing Date
and the related audited consolidated statements of operations,
stockholders' equity and cash flows for the fiscal year, or portion
thereof, then ended, prepared in accordance with Section 1.05.
"Final Net Worth" shall mean the difference between the total
assets and total liabilities as reflected on the Final Balance Sheet.
"Financial Statement Date" means the last day of the most recent
fiscal quarter of the Company for which Financial Statements are
delivered to Purchaser pursuant to Section 2.01(h).
"Financial Statements" means the consolidated financial statements
of the Company and its consolidated Subsidiaries delivered to Purchaser
pursuant to Section 2.01(h).
"Former Subsidiaries" means all corporations, limited liability
companies, partnerships, joint ventures and other entities in which the
Company, directly or indirectly, owned an interest during the five years
prior to the date of this Agreement, which entities would have been
Subsidiaries of the Company had such interest been owned on the date of
this Agreement.
"GAAP" means generally accepted accounting principles in the United
States of America, consistently applied throughout the specified period
and in the immediately prior comparable period.
"Governmental or Regulatory Authority" means any court, tribunal,
arbitrator, authority, agency, commission, official or other
instrumentality of any country, state, province, county, city or other
political subdivision.
"HSR Act" means Section 7A of the Xxxxxxx Act (Title II of the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended) and the
rules and regulations promulgated thereunder.
"Hazardous Materials" shall mean any hazardous material, hazardous
wast, infectious medical waste, hazardous or toxic substance defined or
- 46 -
regulated as such in any or under any Environmental Law, including
without limitation, materials exhibiting the characteristics of
ignitability, corrosivity, reactivity or extraction procedure toxicity,
as such terms are now or hereafter defined in connection with hazardous
materials or hazardous wastes or hazardous or toxic substances in any
Environmental Law.
"Indebtedness" of any Person means all obligations of such Person
(i) for borrowed money, (ii) evidenced by notes, bonds, debentures or
similar instruments, (iii) for the deferred purchase price of goods or
services (other than trade payables or accruals incurred in the ordinary
course of business), (iv) under capital leases and (v) in the nature of
guarantees of the obligations described in clauses (i) through (iv) above
of any other Person.
"Indemnity Notice" means written notification pursuant to Section
12.02(b) of a claim for indemnity under Article XII by an Indemnified
Party, specifying the nature of and basis for such claim, together with
the amount or, if not then reasonably ascertainable, the estimated
amount, determined in good faith, of such claim.
"Indemnified Party" means any Person claiming indemnification under
any provision of Article XII.
"Indemnifying Party" means any Person against whom a claim for
indemnification is being asserted under any provision of Article XII.
"Indenture" means the Indenture dated as of the Closing between
Purchaser and the trustee named therein, substantially in the form of
Exhibit J hereto, pursuant to which the Convertible Debentures are to be
issued.
"Intellectual Property" shall mean (a) inventions (whether
patentable or unpatentable and whether or not reduced to practice),
improvements thereto and patents, patent applications and patent
disclosures, together with reissuance, continuations, continuations-in-
part, revisions, extensions and reexaminations thereof, (b) trademarks,
service marks, trade dress, logos, trade names and corporate names,
together with translations, adaptations, derivations and combinations
thereof and including goodwill associated therewith and applications,
registrations and renewals in connection therewith, (c) copyrightable
works, copyrights and applications, registrations and renewals in
connection therewith, (d) trade secrets and confidential business
information (including ideas, research and development, know-how,
formulas, compositions, manufacturing and production processes and
techniques, technical data, designs, drawings, specifications, customer
and supplier lists, pricing and cost information and business and
marketing plans and proposals, (e) computer software (including data and
related documentation), (f) other proprietary rights, (g) rights as a
licensee or authorized user of the intellectual property of any third
party and (h) copies and tangible embodiments thereof (in whatever form
or medium), in each case that are material to the business of the Company
and its Subsidiaries.
- 47 -
"Knowledge of the Company" means the actual knowledge of the
officers and employees of the Company listed in Section 9.01 of the
Disclosure Schedule.
"Knowledge of Purchaser" means the actual knowledge of the officers
and employees of Purchaser listed on Schedule 9.01.
"Laws" means all laws, statutes, rules, regulations, ordinances and
other pronouncements having the effect of law of any country, state,
province, county, city or other political subdivision or of any
Governmental or Regulatory Authority.
"LIBO Rate" means a per annum interest rate equal to the rate per
annum at which deposits in U.S. Dollars are offered in the London
interbank market as of the date prior to any calculation and published in
The Financial Times; provided that if no such rate is published on the
date of calculation the LIBO Rate shall be equal to the rate appearing on
the Telerate Page 3750 as of 11:00 A.M. London time on the date of
calculation.
"Liens" means any mortgage, pledge, assessment, security interest,
lease, lien, adverse claim, levy, charge or other encumbrance.
"Loss" means any and all damages, fines, penalties, deficiencies,
losses and expenses (including without limitation interest, court costs,
reasonable fees of attorneys, accountants and other experts or other
reasonable expenses of litigation or other proceedings or of any claim,
default or assessment) and any amounts incurred in mitigation of the
foregoing.
"Option" with respect to any Person means any security, right,
subscription, warrant, option or other Contract that gives the right to
purchase or otherwise receive or be issued any shares of capital stock of
such Person or any security of any kind convertible into or exchangeable
or exercisable for any shares of capital stock of such Person.
"Order" means any writ, judgment, decree, injunction or similar
order of any Governmental or Regulatory Authority (in each such case
whether preliminary or final).
"Permits" means permits, licenses and governmental authorizations,
registrations and approvals.
"Permitted Liens" shall mean those Liens listed on Section 2.01(p)
of the Disclosure Schedule.
"Person" means any natural person, corporation, general
partnership, limited partnership, limited liability company,
proprietorship, other business organization, trust, union, association or
Governmental or Regulatory Authority.
- 48 -
"Petroleum Products" shall mean gasoline, diesel fuel, motor oil,
waste or used oil, heating oil, kerosene and other petroleum products.
"Philippine Property" means all property associated with La Union
Ventures Inc. and listed on Schedule 4.09.
"Representatives" has the meaning ascribed to it in Section 4.03.
"September Net Worth" shall mean $138.5 million (after adjustment
for write up of the Senior Notes to face value) plus $3.5 million (or
such lesser amount of costs and expenses actually incurred by the Company
pursuant to Section 10.03).
"Shares" means the Class A Shares and the Class B Shares.
"Specified Investments" means (i) direct obligations of the United
States of America or any country in the European Union and agencies
thereof for which the full faith and credit of the United States of
America or such country is pledged, (ii) obligations fully guaranteed by
the United States of America or any country in the European Union, (iii)
certificates of deposit issued by, or bankers' acceptances of, or time
deposits (including overnight deposits) with, any bank, trust company or
national banking association incorporated or doing business under the
laws of the United States of America or one of the states thereof or any
country in the European Union having combined capital and surplus and
retained earnings of at least $500,000,000; (iv) repurchase agreements
with any financial institution described in clause (iii) above having a
combined capital and surplus of at least $750,000,000 fully
collateralized by obligations of the type described in clauses (i)
through (iii) above; and (v) any equity or investment grade debt security
listed on any stock exchange or equivalent in the United States of
America or any country in the European Union or any equity or investment
grade debt security included for trading in The Nasdaq National Market.
"Subsidiary" means any corporation or limited liability company in
which the Company or the Purchaser directly or indirectly through
subsidiaries or otherwise, beneficially owns 50% or more of the
outstanding equity interests or other interests having the right to elect
directors or managers or which the Company or the Purchaser, directly or
indirectly, otherwise controls or has the right to control, and each
partnership, joint venture or other entity which is not a corporation or
limited liability company in which the Company or the Purchaser has an
interest.
"Supply Agreement" means the supply agreement dated July 29, 1994
between Tabacalera and Compania General de Tabacos de Filipinas, S.A.
"Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to taxes, including
any schedule or attachment thereto, and including any amendment thereof.
- 49 -
"Tax" means any federal, state, local or foreign income, capital
gains, profits, gross receipts, payroll, capital stock, franchise,
employment, withholding, social security, unemployment, disability, real
property, personal property, stamp, excise, occupation, sales, use,
transfer, mining, value-added, investment credit recapture, alternative
or add-on minimum, environmental, estimated or other taxes duties or
assessments of any kind, including interest, penalty and additions
imposed with respect to such amounts.
"Unaudited Financial Statements" means the unaudited pro forma
consolidated Financial Statements of the Company as of and for the six
months ended September 30, 1996, delivered to Purchaser pursuant to
Section 2.01(h).
"Warrantholders" means each of the Xxxx Xxxxxxx Mutual Life
Insurance Company and Xxxx Xxxxxxx Life Insurance Company of America.
"Zanzibar Assets" means a 13% ownership interest in Zanzibar
Cigarette Company Limited.
Unless the context of this Agreement otherwise requires, (i) words
of any gender include each other gender; (ii) words using the singular or
plural number also include the plural or singular number, respectively;
(iii) the terms "hereof," "herein," "hereby" and derivative or similar
words refer to this entire Agreement; (iv) the terms "Article" or
"Section" refer to the specified Article or Section of this Agreement;
and (v) the phrase "ordinary course of business" refers to the business
of the Company or a Subsidiary. All accounting terms used herein and not
expressly defined herein shall have the meanings given to them under
GAAP. Any representation or warranty contained herein as to the
enforceability of a Contract shall be subject to the effect of any
bankruptcy, insolvency, reorganization, moratorium or other similar law
affecting the enforcement of creditors' rights generally and to general
equitable principles (regardless of whether such enforceability is
considered in a proceeding in equity or at Law).
ARTICLE X
MISCELLANEOUS
10.01. Notices. All notices, requests and other
communications hereunder must be in writing and will be deemed to have
been duly given only if delivered personally or by facsimile transmission
or mailed (first class postage prepaid) to the parties at the following
addresses or facsimile numbers:
- 50 -
If to Purchaser, to:
DIMON Incorporated
000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000-0000
Facsimile No.: 804/791-0377
Attn: Xx. Xxxxxx X. Xxxx, Xx.
with a copy to:
Hunton & Xxxxxxxx
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Facsimile No.: 804/788-8218
Attn: Xx. Xxxxxxxx X. Xxxxx
If to the Company, to:
Intabex Holdings Worldwide S.A.
Xxxxxxx Xxxxx
00 Xxxxx Xxx
Xxxxxxxxx Xxxxxxxxx XX00 0XX
Facsimile No.: 01734792063
Attn.: Xxxxx X. Xxxxxxxxx
with a copy to:
King & Spalding
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Facsimile No.: 404/572-5100
Attn.: Xxxx X. Xxxxxx, Xx., Esq.
If to Folium, to:
Maitland & Co.
00 Xxx xx Xxxxxx
Xxxxx, Xxxxxx 00000
Facsimile No.: 33-1-53-89-1121
Attn.: Xxxxxx Xxxxxxxx
- 51 -
with a copy to:
Intabex Holdings Worldwide S.A.
Xxxxxxx Xxxxx
00 Xxxxx Xxx
Xxxxxxxxx Xxxxxxxxx XX00 0XX
Facsimile No.: 01734792063
Attn.: Xxxxx X. Xxxxxxxxx
If to Tabacalera, to:
Tabacalera X.X.
Xxxxxx 00
00000 Xxxxxx, Xxxxx
Facsimile No.: (00) 000 0000
Attn.: Xxxxxxx Xxxx
with a copy to:
Tabacalera X.X.
Xxxxxx 00
00000 Xxxxxx, Xxxxx
Facsimile No.: (00) 000 0000
Attn.: Xxxxxx Xxxxxxx xx Xxxxx
If to LMI, to:
Maitland & Co.
00 Xxx xx Xxxxxx
Xxxxx, Xxxxxx 00000
Facsimile No.: 33-1-53-89-1121
Attn.: Xxxxxx Xxxxxxxx
with a copy to:
Intabex Holdings Worldwide S.A.
Xxxxxxx Xxxxx
00 Xxxxx Xxx
Xxxxxxxxx Xxxxxxxxx XX00 0XX
Facsimile No.: 01734792063
Attn.: Xxxxx X. Xxxxxxxxx
- 52 -
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given
upon delivery, (ii) if delivered by facsimile transmission to the
facsimile number as provided in this Section, be deemed given upon
receipt, and (iii) if delivered by mail in the manner described above to
the address as provided in this Section, be deemed given upon receipt (in
each case regardless of whether such notice is received by any other
Person to whom a copy of such notice, request or other communication is
to be delivered pursuant to this Section). Any party from time to time
may change its address, facsimile number or other information for the
purpose of notices to that party by giving notice specifying such change
to the other party hereto.
10.02. Entire Agreement. This Agreement supersedes all
prior discussions and agreements between the parties with respect to
the subject matter hereof and contains the sole and entire agreement
between the parties hereto with respect to the subject matter hereof;
provided, however, that nothing herein shall affect (i) the validity
of the Confidentiality Agreement and (ii) any other written agreements
or understandings entered into by the parties or their Affiliates
contemporaneously with the execution and delivery of this Agreement, all
of which shall remain in full force and effect.
10.03. Expenses. Except as otherwise expressly provided in
this Agreement, whether or not the transactions contemplated hereby are
consummated, each party will pay its own costs and expenses incurred in
connection with the negotiation, execution and closing of this Agreement
and the transactions contemplated hereby; provided that any costs and
expenses incurred by the Company excluding the costs of preparation of
the Final Financial Statements in excess of $3,500,000 shall be paid by
the Shareholders.
10.04. Public Announcements. At all times at or before the
Closing, the Company, Purchaser and the Shareholders will not issue or
make any reports, statements or releases to the public or generally to
the employees, customers, suppliers or other Persons to whom the Company
and the Subsidiaries sell goods or provide services or with whom the
Company and the Subsidiaries otherwise have significant business
relationships with respect to this Agreement or the transactions
contemplated hereby without the consent of the other, which consent shall
not be unreasonably withheld. The Company, Purchaser and the
Shareholders will also obtain each other party's prior approval of any
press release to be issued immediately following the Closing announcing
the consummation of the transactions contemplated by this Agreement. If
either party is unable to obtain the approval of its public report,
statement or release from the other party and such report, statement or
release is, in the opinion of legal counsel to such party, required by
Law in order to discharge such party's legal or contractual disclosure
obligations, then such party may make or issue the required report,
statement or release and promptly furnish the other party with a copy
thereof.
10.05. Confidentiality. Each party hereto will hold, and
will use all commercially reasonable efforts to cause its Affiliates,
and their respective Representatives to hold, in strict confidence from
any Person (other than any such Affiliate or Representative), all
documents and information concerning the other party or any of its
- 53 -
Affiliates furnished to it by the other party or such other party's
Representatives in connection with this Agreement or the
transactions contemplated hereby in accordance with the terms of
the Confidentiality Agreement.
10.06. Further Assurances; Post-Closing Cooperation.
(a) Subject to the terms and conditions of this
Agreement, at any time or from time to time after the Closing, each of
the parties hereto shall execute and deliver such other documents and
instruments, provide such materials and information and take such other
actions as may reasonably be necessary, proper or advisable, to the
extent permitted by Law, to fulfill its obligations under this
Agreement.
(b) Following the Closing, each party will afford the
other party, its counsel and its accountants, during normal business
hours, reasonable access to the books, records and other data relating to
the Business or Condition of the Company in its possession with respect
to periods prior to the Closing and the right to make copies and extracts
therefrom, to the extent that such access may be reasonably required by
the requesting party in connection with (i) the preparation of Tax
Returns, (ii) the determination or enforcement of rights and obligations
under this Agreement, (iii) compliance with the requirements of any
Governmental or Regulatory Authority, (iv) the determination or
enforcement of the rights and obligations of any Indemnified Party or (v)
in connection with any actual or threatened Action or Proceeding.
Further, each party agrees for a period extending six (6) years after the
Closing Date not to destroy or otherwise dispose of any such books,
records and other data unless such party shall first offer in writing to
surrender such books, records and other data to the other party and such
other party shall not agree in writing to take possession thereof during
the ten (10) day period after such offer is made.
(c) If, in order properly to prepare its Tax Returns,
other documents or reports required to be filed with Governmental or
Regulatory Authorities or its financial statements or to fulfill its
obligations hereunder, it is necessary that a party be furnished with
additional information, documents or records relating to the Business or
Condition of the Company not referred to in paragraph (b) above, and
such information, documents or records are in the possession or control
of the other party, such other party agrees to use all commercially
reasonable efforts to furnish or make available such information,
documents or records (or copies thereof) at the recipient's request,
cost and expense. Any information obtained by any party in accordance
with this paragraph shall be held confidential by such party in
accordance with Section 10.05. In addition, the Shareholders agree
to furnish to Purchaser all documents its shall reasonably require to
enable it to comply with any and all tax and withholding requirements
in connection with the transactions contemplated hereby and any
dealings after the Closing by the Shareholders with the Purchaser
Common Stock or the Convertible Debentures, including, without
limitation, Forms W-8 or W-9 as applicable and all elections pursuant
to Section 338 of the Internal Revenue Code or similar provisions of
foreign, state or local law.
10.07. Waiver. Any term or condition of this Agreement may
be waived at any time by the party that is entitled to the benefit thereof,
- 54 -
but no such waiver shall be effective unless set forth in a written
instrument duly executed by or on behalf of the party waiving such term
or condition. No waiver by any party of any term or condition of this
Agreement, in any one or more instances, shall be deemed to be or
construed as a waiver of the same or any other term or condition of this
Agreement on any future occasion. All remedies, either under this
Agreement or by Law or otherwise afforded, will be cumulative and not
alternative.
10.08. Amendment. This Agreement may be amended,
supplemented or modified only by a written instrument duly executed by or
on behalf of each party hereto.
10.09. No Third Party Beneficiary. The terms and
provisions of this Agreement are intended solely for the benefit of each
party hereto and their respective successors or permitted assigns, and it
is not the intention of the parties to confer third-party beneficiary
rights upon any other Person.
10.10. No Assignment; Binding Effect. Neither this
Agreement nor any right, interest or obligation hereunder may be assigned
by any party hereto without the prior written consent of each other party
hereto and any attempt to do so will be void, (a) except for assignments
and transfers by operation of Law and (b) that Purchaser may assign any
or all of its rights, interests and obligations hereunder to a wholly-
owned Subsidiary; provided that any such Subsidiary agrees in writing
to be bound by all of the terms, conditions and provisions of this
Agreement, but no such assignment referred to in clause (b) shall
relieve Purchaser of its obligation hereunder. Subject to the
preceding sentence, this Agreement is binding upon, inures to the
benefit of and is enforceable by the parties hereto and their
respective successors and assigns.
10.11. Headings. The headings used in this Agreement have
been inserted for convenience of reference only and do not define or
limit the provisions hereof.
10.12. Invalid Provisions. If any provision of this
Agreement is held to be illegal, invalid or unenforceable under any
present or future Law, and if the rights or obligations of any party
hereto under this Agreement will not be materially and adversely
affected thereby, (a) such provision will be fully severable, (b)
this Agreement will be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part hereof,
(c) the remaining provisions of this Agreement will remain in full force
and effect and will not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom and (d) in lieu
of such illegal, invalid or unenforceable provision, there will be
added automatically as a part of this Agreement a legal, valid and
enforceable provision as similar in terms to such illegal, invalid
or unenforceable provision as may be possible.
10.13. Counterparts. This Agreement may be executed in any
number of counterparts, each of which will be deemed an original, but all
of which together will constitute one and the same instrument.
10.14. WAIVER OF JURY TRIAL. EACH PARTY HERETO
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
- 55 -
OR COUNTERCLAIM (WHETHER BASED UPON ANY CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE TRANSACTIONS
CONTEMPLATED HEREBY OR IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE
OR ENFORCEMENT THEREOF.
10.15. Tobacco Industry Generally. The parties acknowledge
that there have been, and are likely to continue to be, developments
affecting the tobacco industry generally which may have an adverse impact
on the Business or Condition of the Company or the Business or Condition
of the Purchaser, including, without limitation, governmental
investigations and proceedings, legislative and regulatory developments
and civil litigation. The parties agree that the representations and
warranties of the Company and the Purchaser contained herein are
qualified in their entirety by reference to such developments affecting
the tobacco industry generally.
10.16. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any of the provisions of this
Agreement were not performed in accordance with the terms hereof and that
the parties shall be entitled to specific performance of the terms
hereof, in addition to any other remedy at law or equity for the breach
of any representation, warranty or covenant contained herein.
10.17. Release of Claims. Each Shareholder, for itself and
its successors and assigns, agrees that as of the Closing, it remises,
releases, acquits and forever discharges the Company and its Subsidiaries
and all present or former officers, directors and employees of the
Company and its Subsidiaries in their capacities as such, and each of
them, from any and all actions and causes of action (whether at law or in
equity), losses, damages, costs, expenses, liabilities, obligations and
claims or demand of any kind, including, without limitation, attorneys'
fees and other legal costs and expenses, known and unknown, foreseen and
unforseen, whether now existing or arising at any time in the future,
other than those arising under the terms of this Agreement (collectively,
the "Claims"); provided that Tabacalera may raise claims related to the
Supply Agreement for routine commercial matters after January 1, 1997.
10.18. Consent to Assignment of Supply Agreement. Effective
upon the Closing, Tabacalera shall be deemed to have consented to the
indirect transfer of the Supply Agreement to Purchaser pursuant to this
Agreement.
ARTICLE XI
SURVIVAL OF REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS
11.01. Survival of Representations, Warranties, Covenants
and Agreements. The representations, warranties, covenants and agreements
of Company, Purchaser and the Shareholders contained in this Agreement will
- 56 -
survive the Closing (a) indefinitely with respect to the representations
and warranties contained in Sections 2.01(b), 2.01(c) and 2.01(d) (but
only insofar as it relates to the capital 2.01(o)stock or other equity
interests as of the Subsidiaries), 2.01(n), 2.01(o), 2.01(w), the fourth
and fifth sentences of Section 2.02(a), 2.02(b), 2.02(i), 3.02 and 3.10
and the indemnity obligation set forth in Section 12.01(a)(ii); (b) the
longer of three years or the expiration of any applicable statute of
limitations for any underlying tax claim with respect to the
representations and warranties contained in Sections 2.01(i) and 2.01(l);
and (c) until September 30, 1998 in the case of each other
representation, warranty, covenant and agreement, except that any
representation, warranty, covenant or agreement that would otherwise
terminate in accordance with clause (a), (b) or (c) above will continue
to survive if a Claim Notice or Indemnity Notice (as applicable) shall
have been timely given in good faith based on facts reasonably expected
to establish a valid claim under Article XII on or prior to such
termination date, until the related claim for indemnification has been
satisfied or otherwise resolved as provided in Article XII. This Section
shall not limit in any way the survival and enforceability of any
covenant or agreement of the parties hereto which by its terms
contemplates performance after the Closing Date, which shall survive for
the respective periods set forth herein.
ARTICLE XII
INDEMNIFICATION
12.01. Indemnification.
(a) Subject to paragraph (c) and (d) of this Section and
the other Sections of this Article XII, each Shareholder shall severally
indemnify Purchaser and its officers, directors, employees, agents and
Affiliates in respect of, and hold each of them harmless from and
against, any and all Losses suffered, incurred or sustained by any of
them or to which any of them becomes subject, resulting from, arising out
of or relating to (i) any misrepresentation, breach of warranty or breach
of any covenant or agreement on the part of the Company contained in this
Agreement and (ii) the Excluded Items and the Barcelona Building.
(b) Subject to paragraph (c) and (d) of this Section and
the other Sections of this Article XII, Purchaser agrees to indemnify
each Shareholder and their respective officers, directors, employees,
agents and Affiliates in respect of, and hold each of them harmless from
and against, any and all Losses suffered, incurred or sustained by any of
them or to which any of them becomes subject, resulting from, arising out
of or relating to any misrepresentation, breach of warranty or breach of
any covenant or agreement on the part of Purchaser contained in this
Agreement.
(c) Notwithstanding anything to the contrary contained in
this Agreement, no amounts of indemnity shall be payable as a result of
any claim arising under paragraphs (a) and (b) of Section 12.01:
- 57 -
(i) with respect to claims arising under
paragraph (a) only, unless, until and then only to the extent that
the Indemnified Parties thereunder have suffered, incurred,
sustained or become subject to Losses referred to in such paragraph
in excess of $3,500,000 in the aggregate (the "Loss Threshold"),
and then to the full extent of such Losses; provided that in
determining whether the Loss Threshold has been met, no Loss under
$10,000 shall be aggregated and provided, further that the
limitations of this clause (i) shall not apply to the Losses
referred to in clause (ii) of paragraph (a), for which indemnity
shall be payable regardless of the amount of the Loss;
(ii) with respect to any claim for indemnification
thereunder, unless the Indemnified Party has given each
Indemnifying Party a Claim Notice or Indemnity Notice, as
applicable, with respect to such claim, setting forth in reasonable
detail the specific facts and circumstances pertaining thereto, (A)
as soon as practical following the time at which Indemnified Party
discovered such claim (except to the extent each Indemnifying Party
is not prejudiced by any delay in the delivery of such notice) and
(B) in any event prior to the applicable Cut-off Date;
(iii) with respect to any Loss resulting from a
misrepresentation, breach of warranty or breach of a covenant or
agreement that is disclosed in a written notice (which shall be
deemed to include the Disclosure Schedules and all other schedules
or exhibits attached hereto), setting forth in reasonable detail
the specific facts and circumstances pertaining thereto and
specifically indicating that such notice is intended to modify the
Disclosure Schedules or other schedule and exhibit attached hereto
or the Purchaser Reports, delivered by the Company or any
Shareholder to Purchaser or by Purchaser to each Shareholder and
the Company after the date of this Agreement and at or prior to the
Closing (regardless of whether the recipient waives such breach or
modification in writing or otherwise);
(iv) with respect to any Loss as to which the
Indemnified Parties had a reasonable opportunity, but failed, in
good faith to mitigate their Loss, including but not limited to
their failure to use commercially reasonable efforts to recover
under a policy of insurance or under a contractual right of set-off
or indemnity; or
(v) with respect to any Loss to the extent it
arises from or was caused solely by actions taken by the
Indemnified Party or any of its Affiliates after the Closing.
(d) Notwithstanding anything to the contrary contained in
this Agreement, neither the Shareholders nor the Purchaser shall be
liable for any amounts under this Article XII in excess of $90 million.
12.02. Method of Asserting Claims. All claims for indemnification
by any Indemnified Party under Section 12.01 will be asserted and
resolved as follows:
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(a) In the event any claim or demand in respect of which
an Indemnifying Party might seek indemnity under Section 12.01 is asserted
against or sought to be collected from such Indemnified Party by a Person
other than any Shareholder, the Company, any Subsidiary, Purchaser or any
Affiliate of any Purchaser (a "Third Party Claim"), the Indemnified Party
shall deliver a Claim Notice with reasonable promptness to the
Indemnifying Party. The Indemnifying Party will notify the Indemnified
Party as soon as practicable within the Dispute Period whether the
Indemnifying Party disputes its liability to the Indemnified Party under
Section 12.01 and whether the Indemnifying Party desires, at its sole
cost and expense, to defend the Indemnified Party against such Third
Party Claim.
(i) If the Indemnifying Party notifies the
Indemnified Party within the Dispute Period that the Indemnifying
Party desires to defend the Indemnified Party with respect to the
Third Party Claim pursuant to this Section 12.02(a), then the
Indemnifying Party will have the right to defend, at the sole cost
and expense of the Indemnifying Party, such Third Party Claim by
all appropriate proceedings, which proceedings will be vigorously
and diligently prosecuted by the Indemnifying Party to a final
conclusion or will be settled at the discretion of the Indemnifying
Party (with the consent of the Indemnified Party, which consent
will not be unreasonably withheld). The Indemnifying Party will
have full control of such defense and proceedings, including
(except as provided in the immediately preceding sentence) any
settlement thereof; provided, however, that the Indemnified Party
may, at the sole cost and expense of the Indemnified Party, at any
time prior to the Indemnifying Party's delivery of the notice
referred to in the first sentence of this clause (i), file any
motion, answer or other pleadings or take any other action that the
Indemnified Party reasonably believes to be necessary or
appropriate to protect its interests and not prejudicial to the
Indemnifying Party (it being understood and agreed that, except as
provided in clause (ii) below, if an Indemnified Party takes any
such action that is prejudicial and causes a final adjudication
that is adverse to the Indemnifying Party, the Indemnifying Party
will be relieved of its obligations hereunder with respect to the
portion of such Third Party Claim prejudiced by the Indemnified
Party's action); and provided further, that if requested by the
Indemnifying Party, the Indemnified Party will, at the sole cost
and expense of the Indemnifying Party, cooperate with the
Indemnifying Party and its counsel in contesting any Third Party
Claim that the Indemnifying Party elects to contest, or, if
appropriate and related to the Third Party Claim in question, in
making any counterclaim against the Person asserting the Third
Party Claim, or any cross-complaint against any Person (other than
the Indemnified Party or any of its Affiliates). The Indemnified
Party may participate in, but not control, any defense or
settlement of any Third Party Claim controlled by the Indemnifying
Party pursuant to this clause (i), and except as provided in the
preceding sentence, the Indemnified Party will bear its own costs
and expenses with respect to such participation. Notwithstanding
the foregoing, the Indemnified Party may take over the control of
the defense or settlement of a Third Party Claim at any time if it
irrevocably waives its right to indemnity under Section 12.01 with
respect to such Third Party Claim.
- 59 -
(ii) If the Indemnifying Party fails to notify the
Indemnified Party within the Dispute Period that the Indemnifying
Party desires to defend the Third Party Claim pursuant to Section
12.02(a), or if the Indemnifying Party gives such notice but fails
to prosecute vigorously and diligently or settle the Third Party
Claim, or if the Indemnifying Party fails to give any notice
whatsoever within the Dispute Period, then the Indemnified Party
will have the right to defend, at the sole cost and expense of the
Indemnifying Party, the Third Party Claim by all appropriate
proceedings, which proceedings will be vigorously and diligently
prosecuted by the Indemnified Party to a final conclusion or will
be settled at the discretion of the Indemnified Party (with the
consent of the Indemnifying Party, which consent will not be
unreasonably withheld). The Indemnified Party will have full
control of such defense and proceedings, including (except as
provided in the immediately preceding sentence) any settlement
thereof; provided, however, that if requested by the Indemnified
Party, the Indemnifying Party will, at the sole cost and expense of
the Indemnifying Party, cooperate with the Indemnified Party and
its counsel in contesting any Third Party Claim which the
Indemnified Party is contesting, or, if appropriate and related to
the Third Party Claim in question, in making any counterclaim
against the Person asserting the Third Party Claim, or any cross-
complaint against any Person (other than the Indemnifying Party or
any of its Affiliates). Notwithstanding the foregoing provisions
of this clause (ii), if the Indemnifying Party has notified the
Indemnified Party within the Dispute Period that the Indemnifying
Party disputes its liability hereunder to the Indemnified Party
with respect to such Third Party Claim and if such dispute is
resolved in favor of the Indemnifying Party, the Indemnifying Party
will not be required to bear the costs and expenses of the
Indemnified Party's defense pursuant to this clause (ii) or of the
Indemnifying Party's participation therein at the Indemnified
Party's request, and the Indemnified Party will reimburse the
Indemnifying Party in full for all reasonable costs and expenses
incurred by the Indemnifying Party in connection with such
litigation. The Indemnifying Party may participate in, but not
control, any defense or settlement controlled by the Indemnified
Party pursuant to this clause (ii), and the Indemnifying Party will
bear its own costs and expenses with respect to such participation.
(b) In the event any Indemnified Party should have a
claim under Section 12.01 against any Indemnifying Party that does not
involve a Third Party Claim, the Indemnified Party shall deliver an
Indemnity Notice with reasonable promptness to the Indemnifying Party.
(c) In the event of any claim for indemnity under
Section 12.01(a), Purchaser agrees to give each Shareholder reasonable
access to the Books and Records and employees of the Company and the
Subsidiaries in connection with the matters for which indemnification is
sought to the extent each Shareholder reasonably deems necessary in
connection with its rights and obligations under this Article XII.
12.03. Method of Calculating Losses. The amount of any
indemnification payable under any of the provisions of this Article XII
shall be (i) net of any tax benefit realized or the then-present value
(based on a discount rate equal to the prime rate as published in The
Wall Street Journal from time to time) of any such income tax benefit
- 60 -
reasonably expected to be realized by the Indemnified Party on a
consolidated basis by reason of the facts and circumstances giving rise
to the indemnification, and (ii) increased by the amount of any tax
required to be paid by the Indemnified Party on a consolidated basis as a
result of the accrual or receipt of the indemnification payment.
12.04. Exclusivity. After the Closing, to the extent permitted by
Law, the indemnities set forth in this Article XII shall be the exclusive
remedies of Purchaser and the Shareholders and their respective officers,
directors, employees, agents and Affiliates for any misrepresentation,
breach of warranty or breach of any covenant or agreement contained in
this Agreement, and the parties shall not be entitled to a rescission of
this Agreement or to any further indemnification rights or claims of any
nature whatsoever in respect thereof, all of which the parties hereto
hereby waive.
12.05. Right of Set-Off; Restriction on Transfer of Convertible
Debentures. (a) At Closing, the Shareholders shall designate Convertible
Debentures having an aggregate principal amount of $90 million against
which Purchaser shall be entitled to set-off any amounts due to it from
the Shareholders pursuant to this Article 12 (the "Set-Off Debentures").
The Set-Off Debentures shall be released in accordance with Section
12.05(e). The holders of the Set-Off Debentures agree that, prior to the
final resolution and payment, if required, of all claims or demands by
Purchaser for indemnification pursuant to Section 12.01 made prior to
September 30, 1998 until the relevant Release Date (as defined below) (i)
the Set-Off Debentures may not be transferred or converted except as
provided in Section 12.05(d), and (ii) unless the Set-Off Debentures are
transferred or converted in accordance with this Section 12.05,
certificates representing the Set-Off Debentures shall bear a legend
indicating that they are subject to restrictions on transfer and set-off
pursuant to this Section 12.05.
(b) Notwithstanding the identity of the record or
beneficial owner of the Set-Off Debentures or that the liability of the
Shareholders hereunder may be several and not joint, the Purchaser, at
its sole option, shall be entitled at any time and from time to time to
set-off against any amounts due pursuant to the Set-Off Debentures in
satisfaction of any or all amounts due to it by any of the Shareholders
pursuant to Section 12.01. Notwithstanding the foregoing, Purchaser
shall not be entitled to exercise its rights of set-off in respect of any
claim hereunder until such time as the Shareholders have agreed to pay
such claim or such claim has been reduced to a final, non-appealable
judgment obtained in accordance with Section 13.02, the amount that the
Shareholders agree to pay or the amount of any such judgment is referred
to herein as the "Set-Off Amount". Purchaser shall give the Shareholders
at least five business days written notice of its intention to set-off
pursuant to this Section 12.05, which notice will specify in reasonable
detail the basis for the set-off and the amount thereof (a "Notice of
Set-Off"). At the Purchaser's sole option, such set-off may be made by
reduction of any interest payment due pursuant to the Set-Off Debentures
or by cancellation of Set-Off Debentures having a present principal
amount equal to the Set-Off Amount (or combination thereof). In
determining the principal amount of Set-Off Debentures canceled, accrued,
but unpaid, interest to the date of such cancellation shall be added to
the principal amount of the Set-Off Debentures to be canceled. Except as
provided in the preceding sentence, nothing in this Section 12.05 shall
relieve Purchaser from paying interest on the Set-Off Debentures in
accordance with the terms of the Indenture. Any amounts set-off pursuant
to this Section 12.05 shall be made pro rata among the contributing
- 61 -
Shareholders based on the amounts contributed by each such Shareholder.
If Purchaser elects to cancel Set-Off Debentures, within ten business
days of the date of the Company's Notice of Set-Off, the holders thereof
shall submit to the Company for cancellation certificates representing a
principal amount of Set-Off Debentures equal to or exceeding the amount
to be set-off. The Company shall cause to be issued promptly a
certificate representing the excess principal amount of Set-Off
Debentures submitted, registered in such names as the record holder
thereof shall designate.
(c) Purchaser's right of set-off pursuant to this Section
12.05 shall not exceed $90 million. The rights of Purchaser under this
Section 12.05 are in addition to any other rights and remedies that
Purchaser may have.
(d) In the event any Shareholder desires to transfer,
other than to an Affiliate or Related Party, or convert any Set-Off
Debentures, including pursuant to an exercise of rights pursuant to Section
1401 of the Indenture, such Shareholder and Purchaser shall enter into an
escrow agreement having terms substantially identical to this Section 12.05
with an escrow agent domiciled in the United States mutually acceptable to
Purchaser and such Shareholder. Upon any transfer or conversion of Set-
Off Debentures, the Shareholder shall deposit U.S. dollars, Specified
Investments and/or Purchaser Common Stock having a value equal to the
aggregate principal amount of Set-Off Debentures transferred or converted
with the escrow agent. At Purchaser's sole option, any set-off to which
it is entitled under this Section 12.05 may be made against any Set-Off
Debentures as provided in Section 12.05(b) or against the cash or
securities deposited with the escrow agent, or any combination thereof,
subject to the seventh sentence of Section 12.05(b). Shareholders agree
that the amount held in escrow shall be equal to $90 million less amounts
set-off or released and amounts of Set-Off Debentures subject to the
provisions of this Section 12.05. In the event such Shareholder deposits
shares of Purchaser Common Stock or Specified Investments pursuant to the
preceding sentence, Purchaser shall be entitled to determine the value of
such deposited securities on the last Business Day of each month (the
"Calculation Date"). The value shall be determined based on the closing
price of the Specified Investments or Purchaser Common Stock on the
principal national securities exchange are listed or, if the Purchaser
Common Stock is not listed on a national securities exchange, on the
Nasdaq National Market, if authorized for inclusion therein, or if not
listed or included, in such manner as Purchaser and such Shareholder
shall agree. In the event the value of the Specified Investment or
Purchaser Common Stock shall have declined from the last Calculation
Date, such Shareholder shall deposit U.S. dollars or additional Specified
Investments, no later than two business days after notice from Purchaser,
in an amount equal to such decline with the escrow agent. In determining
whether a cash deposit is necessary pursuant to the preceding sentence,
Purchaser shall add any cash amounts previously deposited by such
Shareholder pursuant to such preceding sentence to the value of the
Specified Investments and Purchaser Common Stock held by the escrow
agent. Cash amounts held in escrow shall be invested in Specified
Investments at the direction of the relevant Shareholder. If, on any
Calculation Date the sum of the value of the Purchaser Common Stock,
Specified Investments plus any cash held in escrow, including amounts
invested and earnings thereon, together with the principal amount of Set-
Off Debentures exceeds $90 million less any amounts previously set-off or
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released, Purchaser shall direct that such excess cash be released to the
Shareholder entitled thereto. The Shareholders may transfer Set-Off
Debentures to an Affiliate or Related Party upon the prior written
consent of Purchaser, which consent shall not be unreasonably withheld;
provided prior to such transfer, such Affiliate or Related Party agrees
in writing to be bound by the terms of this Section 12.05, appoints
CT Corporation System its agent for service of process, as set forth in
Section 13.03 and delivers to Purchaser an opinion of counsel that this
Section 12.05 is enforceable against such Affiliate or Related Party.
(e)(i) On October 1, 1998, any Set-Off Debentures,
cash Specified Investments and Purchaser Common Stock held in escrow
pursuant to Section 12.05(d) in excess of $15 million, plus any amounts
then claimed or demanded by Purchaser pursuant to Section 12.01, shall
be released from the restrictions of Section 12.05 and any escrow. On
and after October 1, 1998, as each claim or demand outstanding on that
date is satisfied or settled, an aggregate amount of Set-Off Debentures,
cash, Specified Investments and Purchaser Common Stock equal to the
amount of such claim shall be set-off or released, as the case may be,
provided, that no such release shall cause the aggregate Set-Off
Debentures, cash, Specified Investments and Purchaser Common Stock
remaining subject to set-off under this Section 12.05 after
October 1, 1998, and prior to the date of the last day of the 27th
month following the Closing Date to be less than $15 million.
(ii) On the first day of the 28th month following
the Closing Date, any Set-Off Debentures, cash, Specified Investments and
Purchaser Common Stock held in escrow pursuant to Section 12.05(d) in
excess of $10 million, plus any amounts then claimed or demanded by
Purchaser pursuant to Section 12.01, shall be released from the
restrictions of Section 12.05 and any escrow. On and after the first day
of the 28th month following the Closing Date, as each claim or demand
outstanding on that date is satisfied or settled, an aggregate amount of
Set-Off Debentures, cash Specified Investments and Purchaser Common Stock
equal to the amount of such claim shall be set-off or released, as the
case may be, provided, that no such release shall cause the aggregate
Set-Off Debentures, cash, Specified Investments and Purchaser Common
stock remaining subject to set-off under this Section 12.05 after such
first day of the 28th month following the Closing Date and prior to the
third anniversary of the Closing Date to be less than $10 million.
(iii) On the third anniversary of the Closing Date,
any Set-Off Debentures, cash, Specified Investments and Purchaser Common
Stock held in escrow in excess of amounts then claimed or demanded by
Purchaser pursuant to Section 12.01 shall be released from the
restrictions of Section 12.05 and any escrow. On and after the third
anniversary of the Closing Date, as each claim or demand outstanding on
that date is satisfied or settled, an amount of Set-Off Debentures, cash,
Specified Investments and Purchaser Common Stock equal to the amount of
such claim shall be set-off or released, as the case may be.
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(iv) Purchaser, in its sole discretion, shall
determine the proportions of Set-Off Debentures, cash, Specified
Investments and Purchaser Common Stock to be released at any time. Upon
any such release, any legends on the Set-Off Debentures or Purchaser
Common Stock relating to the restrictions of this Article XII shall be
removed. All releases shall be made to the Shareholders pro rata based
upon the amounts contributed by them.
(v) For purposes of this Section 12.05(e), the
value of Set-Off Debentures released shall be equal to their principal
amount and the value of Specified Investments and Purchaser Common Stock
released shall be determined in the manner set forth in Section 12.05(d)
with the Calculation Date being the Business Day immediately prior to the
date of such release.
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IN WITNESS WHEREOF, this Agreement has been duly executed
and delivered by the duly authorized officer of each party hereto as of
the date first above written.
DIMON INCORPORATED
By: /s/ X. X. Xxxx, Xx.
Name: X. X. Xxxx, Xx.
Title: Chairman and
Chief Executive Officer
INTABEX HOLDINGS WORLDWIDE S.A.
By: /s/ P. M. Xxxxxxxxx
Name: P. M. Xxxxxxxxx
Title: Authorized Agent
INTABEX SHAREHOLDERS:
FOLIUM INC.
By: /s/ P. M. Xxxxxxxxx
Name: P. M. Xxxxxxxxx
Title: Authorized Agent
TABACALERA S.A.
By: /s/ Xxxxxxx Xxxx
Name: Xxxxxxx Xxxx
Title: Authorized Agent
LEAF MANAGEMENT INVESTMENTS LTD.
By: /s/ P. M. Xxxxxxxxx
Name: P. M. Xxxxxxxxx
Title: Authorized Agent
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ARTICLE XIII
GOVERNING LAW AND SUBMISSION TO JURISDICTION
13.01 Governing Law. This Agreement shall be governed by and
construed in accordance with the Laws of the State of New York applicable
to a Contract executed and performed in such State without giving effect
to the conflicts of laws principles thereof.
13.02 Dispute Resolution. Each party hereto consents to submit to
the exclusive jurisdiction of the United States District Court for the
Southern District of New York or, in the event (but only in the event)
such court does not have subject matter jurisdiction, of the courts of
the State of New York sitting in the County of New York for any actions,
suits or proceedings arising out of or relating to this Agreement and the
transactions contemplated hereby. Each party hereto agrees not to
commence any action, suit or proceeding relating thereto except in such
courts and further agree that service of any process, summons, notice or
document by U.S. registered mail to the address set forth above shall be
effective service of process for any action, suit or proceeding brought
against you in any such court. Each party hereto unconditionally waives
any objection to the laying of venue of any action, suit or proceeding
arising out of this Agreement or the transactions contemplated hereby, in
such courts, and waives and agrees not to plead or claim in any such
court that any such action, suit or proceeding brought in any such court
has been brought in an inconvenient forum.
13.03 Agent for Service of Process. Each of the Shareholders
hereby irrevocably designates, appoints, and empowers CT Corporation
System, at 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or such other
address where such representative office may be located in New York City,
and its successors and assigns, as its true and lawful agent for service
of process to receive and accept on its behalf service of process in any
actions, suits or proceedings arising out of or relating to this
Agreement and the transactions contemplated hereby. The Shareholders
agree that the failure of such process agent to give any notice of any
service of process to it shall not impair or affect the validity of
service upon such agent or of any judgment based thereon. Purchaser
shall be responsible for all fees and expenses payable to CT Corporation
System.
IN WITNESS WHEREOF, this Article has been duly executed and
delivered by the duly authorized officer of each party hereto as of the
date first above written.
DIMON INCORPORATED
By: /s/ X. X. Xxxx, Xx.
Name: X. X. Xxxx, Xx.
Title: Chairman and
Chief Executive Officer
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INTABEX HOLDINGS WORLDWIDE S.A.
By: /s/ P. M. Xxxxxxxxx
Name: P. M. Xxxxxxxxx
Title: Authorized Agent
INTABEX SHAREHOLDERS:
FOLIUM INC.
By: /s/ P. M. Xxxxxxxxx
Name: P. M. Xxxxxxxxx
Title: Authorized Agent
TABACALERA S.A.
By: /s/ Xxxxxxx Xxxx
Name: Xxxxxxx Xxxx
Title: Authorized Agent
LEAF MANAGEMENT INVESTMENTS LTD.
By: /s/ P. M. Xxxxxxxxx
Name: P. M. Xxxxxxxxx
Title: Authorized Agent
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Schedule 1.05
Specific Accounting Principles
1. All expenses relating to employees or agents of Intabex or its
Subsidiaries incurred on or prior to the Closing Date shall be
fully provided for in the Final Financial Statements. Such
expenses include, without limitation, compensation expenses such as
salaries, bonuses, commissions (whether or not contingent on the
receipt of customer payment, settlement of claims or similar
matters), employee health and welfare benefits, fringe benefits,
any deferred compensation or expenses and all related taxes, and
all travel and entertainment expenses.
2. All adjustments required to be made by Section 8.1 of the Warrant
to Purchase Common Stock of the Company held by Xxxx Xxxxxxx Mutual
Life Insurance Company as a result of events occurring on or prior
to the Closing Date, and all expenses relating to any such
adjustments, including, without limitation, fees and expenses of
independent experts, shall be fully provided for in the Final
Financial Statements.
3. Adequate reserve shall be made for all commitments to sell
inventory below cost or to purchase inventory at prices exceeding
its realizable value.
4. The Final Financial Statements shall be supported by an audited
schedule setting forth (i) all tobacco inventories, showing type,
origin, grade, crop year, quantity and book value, and, for
committed inventories, the committed price and material financing
and delivery terms, and (ii) all commitments to purchase or deliver
tobacco, showing type, origin, grade, crop year, quantity, purchase
price and material financing and delivery terms, all as of March
31, 1996.
5. All other accounting methods and principles set forth or described
in the Agreement shall modify or supplement GAAP in the preparation
of the Final Financial Statements.
6. Adjustments in the Final Balance Sheet that would be required by
FAS 52 in connection with the unrecognized gain or loss arising
from the translation of foreign currency financial statements that
are incorporated by reference in the Final Balance Sheet by
consolidation, combination or the equity method of accounting shall
be ignored.
7. The Senior Notes shall be written up to their face amount and any
corresponding write-up recognized as an expense in the Final
Financial Statements.
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Schedule 6.16
- Folium leads negotiations.
- DIMON will support negotiations until the time when StanCom
takes action to exercise its buyout option or terminate
Intabex's access to facility at which point DIMON shall
assume the lead in negotiations.
- If Intabex must make any payments to acquire StanCom's
waiver or other agreement satisfactory to DIMON, DIMON
will make 50% of the payment up to $500,000.
- DIMON will agree to guarantee Intabex's throughput to the
venture facility for current crop season and will state
current nonbinding intention to continue at same levels in
future. Current levels equal 15.5% of current market.
- Costs paid to get StanCom consent will be paid outside
Intabex.
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