<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION
14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
----------------
CONSOLIDATED CIGAR HOLDINGS INC.
(NAME OF SUBJECT COMPANY)
SOCIETE NATIONALE D'EXPLOITATION INDUSTRIELLE
DES TABACS ET ALLUMETTES ("SEITA")
DORSAY ACQUISITION CORP.
(BIDDERS)
----------------
CLASS A COMMON STOCK, PAR VALUE $0.01 PER SHARE
CLASS B COMMON STOCK, PAR VALUE $0.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
----------------
1-20902E10
(CUSIP NUMBER OF CLASS OF SECURITIES)
----------------
JEAN-PHILIPPE CARRIERE
SEITA
53, QUAI D'ORSAY
75347 PARIS CEDEX 07, FRANCE
(33-1) 45.56.62.17
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE
NOTICES AND COMMUNICATIONS ON BEHALF OF THE BIDDERS)
----------------
Copies to:
DELIA B. SPITZER, ESQ. RONALD R. PAPA, ESQ.
PROSKAUER ROSE PROSKAUER ROSE LLP
9, RUE LE TASSE 1585 BROADWAY
75116 PARIS, FRANCE NEW YORK, NEW YORK 10036, USA
(33-1)44.30.25.30. (212) 969.3000
<TABLE>
<CAPTION>
CALCULATION OF FILING FEE
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TRANSACTION VALUATION AMOUNT OF FILING FEE (2)
- -----------------------------------------------------------------------------------
<S> <C>
$531,360,871 (1) $106,273
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</TABLE>
(1) For purposes of calculating the filing fee only. Calculated by multiplying
$17.85, the per share cash tender offer price, by 29,768,116, the total
number of shares of Class A Common Stock, par value $0.01 per share, and
Class B Common Stock, par value $0.01 per share, being sought in the
tender offer. Such number of shares represents all of the shares of Class
A Common Stock and Class B Common Stock outstanding as of December 21,
1998.
(2) The amount of the filing fee, calculated in accordance with Rule 0-11(d)
of the Securities Exchange Act of 1934, as amended, equals 1/50th of one
percent of the aggregate cash amount offered by Dorsay Acquisition Corp.
for such number of shares.
[_] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing.
Amount Previously Paid: None Filing Party:
Form or Registration No.: Date Filed:
<PAGE>
SCHEDULE 14D-1
-------------------------
CUSIP No. 1-20902E10
-------------------------
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NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NUMBER OF ABOVE PERSON
1 Dorsay Acquisition Corp.
Employer Tax Id:
--------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [X]
2 (b) [_]
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SEC USE ONLY
3
--------------------------------------------------------------------------
SOURCE OF FUNDS*
4
AF
--------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(e) OR 2(f) [_]
5
--------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Delaware
--------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
7
19,600,000 shares of Class B Common Stock (right to acquire)
--------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES*
8
--------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
9
65.8%
--------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
10
CO
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2
<PAGE>
SCHEDULE 14D-1
-------------------------
CUSIP No. 1-20902E10
-------------------------
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NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NUMBER OF ABOVE PERSON
1 Societe Nationale d'Exploitation Industrielle des Tabacs et
Allumettes ("Seita")
--------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [X]
2 (b) [_]
--------------------------------------------------------------------------
SEC USE ONLY
3
--------------------------------------------------------------------------
SOURCE OF FUNDS*
4
WC
--------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(e) OR 2(f) [_]
5
--------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
France
--------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
7
19,600,000 shares of Class B Common Stock (right to acquire)
--------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES*
8
--------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
9
65.8%
--------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
10
CO
--------------------------------------------------------------------------
3
<PAGE>
This Tender Offer Statement on Schedule 14D-1 (the "Statement") relates to the
offer by Dorsay Acquisition Corp., a corporation organized and existing under
the laws of the State of Delaware ("Purchaser") and a wholly owned subsidiary
of Societe Nationale d'Exploitation Industrielle des Tabacs et Allumettes
("Seita"), a corporation organized and existing under the laws of France
("Parent"), to purchase all of the outstanding shares of Class A Common Stock,
par value $0.01 per share, (the "Class A Shares"), and Class B Common Stock,
par value $0.01 per share (the "Class B Shares," and together with the Class A
Shares, the "Shares"), of Consolidated Cigar Holdings Inc., a corporation
organized and existing under the laws of the State of Delaware (the
"Company"), at a price of $17.85 per Share, net to the seller in cash (subject
to applicable withholding of taxes), without interest, upon the terms and
subject to the conditions set forth in Purchaser's Offer to Purchase, dated
December 22, 1998 (the "Offer to Purchase"), and in the related Letter of
Transmittal (which, together with any amendments or supplements thereto,
collectively constitute the "Offer"), copies of which are filed herewith as
Exhibits (a)(1) and (a)(2), respectively.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Consolidated Cigar Holdings Inc. and
its principal executive offices are located at 5900 North Andrews Avenue, 10th
Floor, Fort Lauderdale, Florida 33309-2369.
(b) The classes of equity securities and the exact amount of such securities
being sought are 10,168,116 Class A Shares and 19,600,000 Class B Shares of
the Company. As of December 16, 1998, there were 10,168,116 Class A Shares and
19,600,000 Class B Shares issued and outstanding, as represented by the
Company in the Agreement and Plan of Merger, dated as of December 16, 1998,
among Parent, Purchaser and the Company. The information set forth in the
Introduction and Section 1 ("Terms of the Offer; Expiration Date") of the
Offer to Purchase is incorporated herein by reference.
(c) The information concerning the principal market in which the Shares are
traded and certain high and low sales prices for the Shares in such principal
market is set forth in Section 6 ("Price Range of Shares; Dividends") of the
Offer to Purchase and is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d) and (g) This Statement is being filed by Purchaser and Parent. The
information set forth in the Introduction, Section 8 ("Certain Information
Concerning Purchaser and Parent") and Schedule I of the Offer to Purchase and
is incorporated herein by reference.
(e) and (f) During the last five years, none of Purchaser or Parent and, to
the best knowledge of Purchaser and Parent, none of the persons listed in
Schedule I of the Offer to Purchase has been (i) convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or (ii) a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to, federal or state securities laws or finding any
violation of such laws.
ITEM 3. PAST CONTRACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) The information set forth in Section 8 ("Certain Information Concerning
Purchaser and Parent") of the Offer to Purchase is incorporated herein by
reference.
(b) The information set forth in the Introduction, Section 8 ("Certain
Information Concerning Purchaser and Parent") and Section 10 ("Background of
the Offer; Contacts with the Company; The Merger Agreement; The Tender and
Voting Agreement; The Indemnification Agreement") of the Offer to Purchase is
incorporated herein by reference.
4
<PAGE>
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(c) The information set forth in Section 9 ("Financing of the Offer and
the Merger") of the Offer to Purchase is incorporated herein by reference.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(e) The information set forth in the Introduction, Section 10
("Background of the Offer; Contacts with the Company; The Merger Agreement;
The Tender and Voting Agreement; The Indemnification Agreement") and Section
11 ("Purpose of the Offer; Plans for the Company After the Offer and the
Merger") of the Offer to Purchase is incorporated herein by reference.
(f) and (g) The information set forth in Section 12 ("Effect of the Offer on
the Market for the Shares, Exchange Listing and Exchange Act Registration") of
the Offer to Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) The information set forth on the cover page and in the Introduction,
Section 8 ("Certain Information Concerning Purchaser and Parent") and Section
10 ("Background of the Offer; Contacts with the Company; The Merger Agreement;
The Tender and Voting Agreement; The Indemnification Agreement") of the Offer
to Purchase is incorporated herein by reference.
(b) The information set forth in the Introduction, Section 8 ("Certain
Information Concerning Purchaser and Parent") and Section 10 ("Background of
the Offer; Contacts with the Company; The Merger Agreement; The Tender and
Voting Agreement; The Indemnification Agreement") of the Offer to Purchase is
incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Introduction, Section 8 ("Certain
Information Concerning Purchaser and Parent") and Section 10 ("Background of
the Offer; Contacts with the Company; The Merger Agreement; The Tender and
Voting Agreement; The Indemnification Agreement") of the Offer to Purchase is
incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Introduction and Section 15 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
Not applicable.
ITEM 10. ADDITIONAL INFORMATION.
(a) Not applicable
(b)-(c) The information set forth in Section 14 ("Certain Legal Matters and
Regulatory Approvals") of the Offer to Purchase is incorporated herein by
reference.
(d) Not applicable
(e) Not applicable
5
<PAGE>
(f) The information set forth in the Offer to Purchase is incorporated
herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase dated December 22, 1998
(a)(2) Letter of Transmittal
(a)(3) Notice of Guaranteed Delivery
(a)(4) Letter to brokers, dealers, commercial banks, trust companies and
nominees
(a)(5) Letter to clients for use by brokers, dealers, commercial banks,
trust companies and nominees
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9
(a)(7) Summary Advertisement as published in THE WALL STREET JOURNAL on
December 22, 1998
(a)(8) Press release issued on December 16, 1998
(b) Not applicable
(c)(1) Agreement and Plan of Merger, dated as of December 16, 1998, among
Parent, Purchaser and the Company
(c)(2) Tender and Voting Agreement, dated as of December 16, 1998, among
Parent, Purchaser and Mafco Consolidated Group Inc.
(c)(3) Indemnification Agreement, dated as of December 16, 1998, among
Parent, Purchaser, Mafco Holdings, Inc. and Mafco Consolidated Group, Inc.
(d) Not applicable
(e) Not applicable
(f) Not applicable
6
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
Dated: December 22, 1998
Seita
/s/ Jean-Dominique Comolli
By: _________________________________
Name: Jean-Dominique Comolli
Title: Chairman and Chief Executive
Officer
Dorsay Acquisition Corp.
/s/ Charles Lebeau
By: _________________________________
Name: Charles Lebeau
Title: President, Secretary and
Treasurer
7
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO.
-----------
<C> <S>
(a)(1) Offer to Purchase dated December 22, 1998
(a)(2) Letter of Transmittal
(a)(3) Notice of Guaranteed Delivery
(a)(4) Letter to brokers, dealers, commercial banks, trust companies and
nominees
(a)(5) Letter to clients for use by brokers, dealers, commercial banks,
trust companies and nominees
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9
(a)(7) Summary Advertisement as published in THE WALL STREET JOURNAL on
December 22, 1998
(a)(8) Press release issued on December 16, 1998
(b) Not applicable
(c)(1) Agreement and Plan of Merger, dated as of December 16, 1998, among
Parent, Purchaser and the Company
(c)(2) Tender and Voting Agreement, dated as of December 16, 1998, among
Parent, Purchaser and Mafco Consolidated Group Inc.
(c)(3) Indemnification Agreement, dated as of December 16, 1998, among
Parent, Purchaser, Mafco Holdings, Inc. and Mafco Consolidated
Group Inc.
(d) Not applicable
(e) Not applicable
(f) Not applicable
</TABLE>
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF CLASS A COMMON STOCK
AND
ALL OUTSTANDING SHARES OF CLASS B COMMON STOCK
OF
CONSOLIDATED CIGAR HOLDINGS INC.
AT
$17.85 NET PER SHARE
BY
DORSAY ACQUISITION CORP.
A DIRECT, WHOLLY OWNED SUBSIDIARY OF
SOCIETE NATIONALE D'EXPLOITATION INDUSTRIELLE DES TABACS ET ALLUMETTES
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON THURSDAY, JANUARY 21, 1999, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (i) THERE BEING VALIDLY
TENDERED AND NOT PROPERLY WITHDRAWN, PRIOR TO THE EXPIRATION OF THE OFFER,
AT LEAST 19,600,000 SHARES OF CLASS B COMMON STOCK, PAR VALUE $0.01 PER
SHARE (THE "CLASS B SHARES"), OF CONSOLIDATED CIGAR HOLDINGS INC. (THE
"COMPANY"), WHICH REPRESENT APPROXIMATELY 65.8% OF THE TOTAL NUMBER
OF SHARES OF OUTSTANDING COMPANY COMMON STOCK (AS DEFINED BELOW)
AND (ii) THE SATISFACTION OF CERTAIN OTHER TERMS AND CONDITIONS
CONTAINED IN THIS OFFER TO PURCHASE. SEE INTRODUCTION AND
SECTION 1 -- "TERMS OF THE OFFER; EXPIRATION DATE" AND
SECTION 13 -- "CERTAIN CONDITIONS OF THE OFFER" OF THIS
OFFER TO PURCHASE.
THE OFFER IS BEING MADE IN CONNECTION WITH THE AGREEMENT AND PLAN OF MERGER,
DATED AS OF DECEMBER 16, 1998, BY AND AMONG SOCIETE NATIONALE
D'EXPLOITATION INDUSTRIELLE DES TABACS ET ALLUMETTES, DORSAY
ACQUISITION CORP. AND THE COMPANY. THE BOARD OF DIRECTORS OF THE
COMPANY HAS UNANIMOUSLY APPROVED AND FOUND ADVISABLE THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING
THE OFFER AND THE MERGER, HAS DETERMINED THAT THE TERMS
OF THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST
INTERESTS OF, THE STOCKHOLDERS OF THE COMPANY AND
RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER AND
TENDER THEIR SHARES PURSUANT TO THE OFFER.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
shares of Class A Common Stock, par value $0.01 per share (the "Class A
Shares"), and Class B Shares (the Class A Shares and the Class B Shares,
defined together herein as the "Shares" or "Company Common Stock"), of the
Company should either (1) complete and sign the Letter of Transmittal (or a
facsimile thereof) in accordance with the instructions in the Letter of
Transmittal and (a) mail or deliver it together with the certificate(s)
evidencing tendered Shares, and any other required documents, to the
Depositary or (b) tender such Shares pursuant to the procedures for book-entry
transfer set forth in Section 3--"Procedures for Accepting the Offer and
Tendering Shares" or (2) request such stockholder's broker, dealer, commercial
bank, trust company or other nominee to effect the transaction for such
stockholder. Any stockholder whose Shares are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee must contact
such broker, dealer, commercial bank, trust company or other nominee if such
stockholder desires to tender such Shares.
A stockholder who desires to tender Shares and whose certificates evidencing
such Shares are not immediately available, or who cannot comply with the
procedures for book-entry transfer on a timely basis, may tender such Shares
by following the procedures for guaranteed delivery set forth in Section 3--
"Procedures for Accepting the Offer and Tendering Shares".
Questions or requests for assistance may be directed to the Information
Agent or to the Dealer Manager at their respective addresses and telephone
numbers set forth on the back cover of this Offer to Purchase. Additional
copies of this Offer to Purchase, the Letter of Transmittal and the Notice of
Guaranteed Delivery may also be obtained from the Information Agent, the
Dealer Manager or from brokers, dealers, commercial banks or trust companies.
[LOGO]
The Dealer Manager for the Offer is:
December 22, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
INTRODUCTION............................................................ 1
1. Terms of the Offer; Expiration Date............................... 3
2. Acceptance for Payment and Payment for Shares..................... 4
3. Procedures for Accepting the Offer and Tendering Shares........... 5
4. Withdrawal Rights................................................. 8
5. Certain Federal Income Tax Consequences........................... 8
6. Price Range of Class A Shares; Dividends.......................... 9
7. Certain Information Concerning the Company........................ 9
8. Certain Information Concerning Purchaser and Parent............... 15
9. Financing of the Offer and the Merger............................. 16
10. Background of the Offer; Contacts with the Company; The Merger
Agreement; The Tender and Voting Agreement; The Indemnification
Agreement.......................................................... 16
11. Purpose of the Offer; Plans for the Company After the Offer and
the Merger........................................................... 28
12. Effect of the Offer on the Market for the Shares; Exchange Listing
and Exchange Act Registration...................................... 29
13. Certain Conditions of the Offer................................... 29
14. Certain Legal Matters and Regulatory Approvals.................... 31
15. Fees and Expenses................................................. 34
16. Miscellaneous..................................................... 34
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF PARENT AND PURCHASER.............. SCHI-1
</TABLE>
<PAGE>
To the Holders of Common Stock of Consolidated Cigar Holdings Inc.:
INTRODUCTION
Dorsay Acquisition Corp., a corporation organized and existing under the
laws of the State of Delaware ("Purchaser") and a direct, wholly owned
subsidiary of Societe Nationale d'Exploitation Industrielle des Tabacs et
Allumettes ("Seita"), a corporation organized and existing under the laws of
France ("Parent"), hereby offers to purchase all of the outstanding shares of
Class A Common Stock, par value $0.01 per share (the "Class A Shares"), and
Class B Common Stock, par value $0.01 per share (the "Class B Shares", and
together with the Class A Shares, the "Shares" or "Company Common Stock"), of
Consolidated Cigar Holdings Inc., a corporation organized and existing under
the laws of the State of Delaware (the "Company"), at a price of $17.85 per
Share (such amount, or any greater amount per Share paid pursuant to the
Offer, being hereinafter referred to as the "Offer Price"), net to the seller
in cash (subject to applicable withholding of taxes), without interest, upon
the terms and subject to the conditions set forth in this Offer to Purchase
and in the related Letter of Transmittal (which, together with any amendments
or supplements hereto or thereto, collectively constitute the "Offer").
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as otherwise provided in Instruction 6--"Stock Transfer
Taxes" of the Letter of Transmittal, stock transfer or other similar taxes
with respect to the purchase of Shares by Purchaser pursuant to the Offer.
Purchaser will pay all charges and expenses of Credit Suisse First Boston
Corporation ("Credit Suisse First Boston" or "CSFB") which is acting as Dealer
Manager for the Offer (in such capacity, the "Dealer Manager"), American Stock
Transfer & Trust Company (the "Depositary") and D.F. King & Co., Inc. (the
"Information Agent") incurred in connection with the Offer. See Section 15--
"Fees and Expenses".
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT PROPERLY WITHDRAWN, PRIOR TO THE EXPIRATION OF THE OFFER,
19,600,000 CLASS B SHARES, WHICH ARE TO BE TENDERED PURSUANT TO THE TENDER AND
VOTING AGREEMENT (THE "TENDER AND VOTING AGREEMENT"), DATED AS OF DECEMBER 16,
1998 AMONG PARENT, PURCHASER AND MAFCO CONSOLIDATED GROUP INC., A DELAWARE
CORPORATION ("MAFCO") (THE "MINIMUM CONDITION"). THE OFFER IS ALSO SUBJECT TO
CERTAIN OTHER TERMS AND CONDITIONS CONTAINED IN THIS OFFER TO PURCHASE. SEE
SECTION 1--"TERMS OF THE OFFER; EXPIRATION DATE" AND SECTION 13--"CERTAIN
CONDITIONS OF THE OFFER", WHICH SETS FORTH IN FULL THE CONDITIONS TO THE
OFFER.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of December 16, 1998 (the "Merger Agreement"), by and among Purchaser,
Parent and the Company. The Merger Agreement provides, among other things,
that as promptly as practicable following the completion of the Offer and the
satisfaction or waiver of certain conditions set forth in the Merger Agreement
and in accordance with the relevant provisions of the General Corporation Law
of the State of Delaware ("Delaware Law") and, if required under Delaware Law,
the approval and adoption of the Merger Agreement by the stockholders of the
Company, Purchaser will be merged with and into the Company (the "Merger").
Upon consummation of the Merger, the Company will continue as the surviving
corporation (the "Surviving Corporation") and will be a wholly owned
subsidiary of Parent. In the Merger, each issued and outstanding Share (other
than Dissenting Shares (as hereinafter defined)) not owned directly or
indirectly by the Company will be converted into and represent the right to
receive $17.85 in cash, without interest (the "Merger Price"). See Section
10--"Background of the Offer; Contacts with the Company; The Merger Agreement;
The Tender and Voting Agreement; The Indemnification Agreement". "Dissenting
Shares" means those Shares which are held by holders of Shares other than
Mafco who have not voted such Shares in favor of the Merger or consented
thereto in writing, who have filed with the Company a written notice of
election to dissent and who otherwise comply with the applicable procedures
for perfecting appraisal rights under Delaware Law.
1
<PAGE>
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD") HAS UNANIMOUSLY APPROVED
AND FOUND ADVISABLE THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
THEREBY, INCLUDING THE OFFER AND THE MERGER, AND RECOMMENDS THAT STOCKHOLDERS
ACCEPT THE OFFER AND TENDER ALL THEIR SHARES PURSUANT TO THE OFFER.
Chase Securities Inc. (the "Company's Financial Advisor"), independent
financial advisor to the Company, has advised the Board that, in its opinion,
as of the date of such opinion, the consideration to be received by the
holders of Class A Shares (other than Parent and its affiliates) in the Offer
and the Merger, taken together, is fair to such holders from a financial point
of view. A copy of such opinion is to be included with the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9")
and should be read carefully in its entirety for a description of the
assumptions made, matters considered and limitations on the review undertaken
by the Company's Financial Advisor.
In connection with the execution of the Merger Agreement, Parent and
Purchaser entered into the Tender and Voting Agreement, pursuant to which
Mafco has, among other things, (i) agreed to tender pursuant to the Offer all
Shares owned by it, (ii) granted to Purchaser an irrevocable option, subject
to the terms and conditions of the Tender and Voting Agreement, to purchase
such Shares for a cash purchase price per Share equal to the Offer Price,
(iii) agreed to vote such Shares in favor of the Merger and the Merger
Agreement and (iv) granted to Parent and certain officers of Parent an
irrevocable proxy to vote such Shares in favor of the transactions
contemplated by the Merger Agreement. As of December 21, 1998, the 19,600,000
Class B Shares owned by Mafco and subject to the Tender and Voting Agreement
constituted approximately 65.8% of the outstanding Shares, and 100% of the
outstanding Class B Shares, of the Company. Mafco's tender of its Shares
pursuant to the Tender and Voting Agreement will be sufficient to satisfy the
Minimum Condition. See Section 10--"Background of the Offer; Contacts with the
Company; The Merger Agreement; The Tender and Voting Agreement; The
Indemnification Agreement".
The Merger Agreement provides that, promptly upon the purchase of and
payment for Shares by Parent or any of its subsidiaries which represent at
least a majority of the outstanding shares of Company Common Stock (on a fully
diluted basis), Parent will be entitled to designate such number of directors,
rounded up to the next whole number, on the Board as is equal to the product
of the total number of directors on such Board (giving effect to the directors
designated by Parent pursuant to this sentence) multiplied by the percentage
that the aggregate number of Shares beneficially owned by Purchaser, Parent
and any of their affiliates bears to the total number of shares of Company
Common Stock then outstanding. The Company will, upon request of Purchaser,
use all reasonable efforts promptly either to increase the size of the Board
(which, pursuant to the Company's Certificate of Incorporation, has no maximum
number of directors) or, at Purchaser's election, secure the resignations of
such number of its incumbent directors as is necessary to enable Parent's
designees to be so elected to the Board, and will cause Parent's designees to
be so elected. Notwithstanding the foregoing, until the Effective Time, the
Company will retain as members of its Board at least two directors who are
directors of the Company on the date of the Merger Agreement; provided, that
subsequent to the purchase of and payment for Shares pursuant to the Offer,
Parent will always have its designees represent at least a majority of the
entire Board. See Section 10--"Background of the Offer; Contacts with the
Company; The Merger Agreement; The Tender and Voting Agreement; The
Indemnification Agreement". Parent intends for Mr. Jean-Dominique Comolli, Mr.
Eric Albrand and Mr. Charles Lebeau to be its initial designees to the Board.
Information regarding Messrs. Comolli, Albrand and Lebeau is contained in
Schedule I to this Offer to Purchase and in the Information Statement that
forms part of the Schedule 14D-9.
The consummation of the Merger is subject to the satisfaction or waiver of
certain conditions, including the approval and adoption of the Merger
Agreement by the requisite vote of the stockholders of the Company, if
required under Delaware Law. See Section 10--"Background of the Offer;
Contacts with the Company; The Merger Agreement; The Tender and Voting
Agreement; The Indemnification Agreement". If so required, a Proxy Statement
(as defined in Section 10--"Background of the Offer; Contacts with the
Company; The Merger Agreement; The Tender and Voting Agreement; The
Indemnification Agreement")
2
<PAGE>
containing detailed information concerning the Merger will be furnished to
stockholders of the Company in connection with a special meeting to be called
by the Company to vote on the Merger. Purchaser will vote all Shares acquired
pursuant to the Offer in favor of the Merger. Under Delaware Law, the
affirmative vote of the holders of a majority of the outstanding Shares is
required to approve and adopt the Merger Agreement and the Merger.
Consequently, Mafco's tender of its Shares pursuant to the Tender and Voting
Agreement will provide Purchaser with sufficient voting power to approve and
adopt the Merger Agreement and the Merger without the vote of any other
stockholder. Notwithstanding the foregoing, if Parent and Purchaser
collectively own, following consummation of the Offer, at least 90% of the
outstanding Shares, Parent, Purchaser and the Company will cause the Merger to
become effective as soon as practicable, without a meeting of the stockholders
of the Company, in accordance with the "short-form" merger provisions of
Section 253 of Delaware Law.
1. TERMS OF THE OFFER; EXPIRATION DATE
Upon the terms and subject to the conditions of the Merger Agreement and the
Offer (including if the Offer is extended or amended, the terms and conditions
of such extension or amendment), Purchaser will accept for payment and pay for
all Shares validly tendered on or prior to the Expiration Date (as defined
below) and not properly withdrawn as permitted by Section 4--"Withdrawal
Rights". The term "Expiration Date" means 12:00 Midnight, New York City time,
on January 21, 1999; provided, however, that Purchaser may, without the
consent of the Company (but subject to the terms and conditions of the Merger
Agreement, as described below), extend the period during which the Offer is
open, in which event the term "Expiration Date" will mean the latest time and
date at which the Offer, as so extended by Purchaser, will expire.
Purchaser may, and the Company may require Purchaser to, extend the Offer,
up to 40 days in the aggregate, in increments of up to ten business days each,
if any condition to the Offer has not been satisfied or waived. In addition,
Purchaser may, without the consent of the Company, (A) extend the Offer for up
to an additional 40 days, in one or more periods of not more than 10 business
days, if any condition to the Offer is not satisfied or waived, (B) extend the
Offer on one occasion for up to 10 business days if, on the Expiration Date,
the Shares validly tendered pursuant to the Offer and not withdrawn are
sufficient to satisfy the Minimum Condition but equal less than 90% of the
outstanding Shares (notwithstanding that all the conditions to the Offer have
been satisfied, so long as Purchaser irrevocably waives the satisfaction of
any of the conditions to the Offer (other than the non-occurrence of any
statute, rule or regulation, judgment, order or injunction making illegal or
prohibiting the consummation of the Offer)), and (C) extend the Offer or
increase the Offer Price to the extent required by law. Purchaser will only be
required to extend the Offer, up to 40 days in the aggregate, in one or more
periods of not more than 10 business days, if (i) each condition is reasonably
capable of being satisfied and (ii) the Company is in material compliance with
all of its covenants under the Merger Agreement after Purchaser has given the
Company five business days prior written notice of any such non-compliance.
Purchaser is required to give oral or written notice of any such extension to
the Depositary. During any such extension, all Shares previously tendered and
not withdrawn will remain tendered pursuant to the Offer, subject to the
rights of a tendering stockholder to withdraw his, her or its Shares. See
Section 4--"Withdrawal Rights".
Subject to the applicable regulations of the Securities and Exchange
Commission (the "Commission"), Purchaser also expressly reserves the right, in
its sole discretion (but subject to the terms and conditions of the Merger
Agreement), at any time and from time to time, (i) to delay acceptance for
payment of, or, regardless of whether such Shares were theretofore accepted
for payment, payment for, any Shares, or to terminate the Offer and not accept
for payment, or not pay for, any Shares if, at the Expiration Date, any of the
conditions specified in Section 13--"Certain Conditions of the Offer" exists
and (ii) to waive any of the conditions specified in Section 13--"Certain
Conditions of the Offer", in whole or in part. The Merger Agreement provides
that, without the consent of the Company, Purchaser will not
3
<PAGE>
(i) decrease the Offer Price, (ii) reduce the number of Shares sought to be
purchased in the Offer or (iii) amend the conditions to the Offer set forth in
Section 13--"Certain Conditions of the Offer" or impose conditions to the
Offer in addition to those set forth in Section 13--"Certain Conditions of the
Offer". Purchaser acknowledges that (i) Rule 14e-1(c) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), requires Purchaser to
pay the consideration offered or return the Shares tendered promptly after the
termination or withdrawal of the Offer and (ii) Purchaser may not delay
acceptance for payment of, or payment for (except as provided in clause (i) of
the first sentence of this paragraph), any Shares upon the occurrence of any
of the conditions specified in Section 13--"Certain Conditions of the Offer"
without extending the period of time during which the Offer is open.
Any such extension, delay, termination, waiver or amendment will be followed
as promptly as practicable by public announcement thereof, such announcement
in the case of an extension to be made no later than 9:00 a.m., New York City
time, on the next business day after the previously scheduled Expiration Date.
Subject to applicable law (including Rules 14d-4(c) and 14d-6(d) under the
Exchange Act, which require that material changes be promptly disseminated to
stockholders in a manner reasonably designed to inform them of such changes)
and without limiting the manner in which Purchaser may choose to make any
public announcement, Purchaser will have no obligation to publish, advertise
or otherwise communicate any such public announcement other than by issuing a
press release to the Dow Jones News Service.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer, Purchaser will extend the Offer to the extent required by Rules 14d-
4(c), 14d-6(d) and 14e-1(d) under the Exchange Act.
If, prior to the Expiration Date, Purchaser should decide to increase the
consideration being offered in the Offer or, subject to the Company's consent,
to decrease the number of Shares being sought or the consideration being
offered in the Offer, such decrease in the number of Shares being sought or
such increase or decrease in the consideration being offered will be
applicable to all stockholders whose Shares are accepted for payment pursuant
to the Offer. If at the time notice of any such decrease in the number of
Shares being sought or such increase or decrease in the consideration being
offered is first published, sent or given to holders of such Shares, the Offer
is scheduled to expire at any time earlier than the period ending on the tenth
business day from and including the date that such notice is first so
published, sent or given, the Offer will be extended at least until the
expiration of such ten business day period. For purposes of the Offer, a
"business day" means any day, other than Saturday, Sunday or a federal
holiday, and consists of the time period from 12:01 a.m. through 12:00
Midnight New York City time.
The Company has provided Purchaser with the Company's stockholder list and
security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase and the related Letter of
Transmittal will be mailed to record holders of Shares whose names appear on
the Company's stockholder list and will be furnished, for subsequent
transmittal to beneficial owners of Shares, to brokers, dealers, commercial
banks, trust companies and similar persons whose names, or the names of whose
nominees, appear on the stockholder list or, if applicable, who are listed as
participants in a clearing agency's security position listing.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will accept for payment, and will pay for, all Shares
validly tendered on or prior to the Expiration Date and not properly withdrawn
as soon as it is legally permitted to do so under applicable law. The
obligations of Purchaser to consummate the Offer and to accept for payment and
to pay for all Shares validly tendered and not
4
<PAGE>
properly withdrawn will be subject only to the satisfaction or waiver of the
conditions to the Offer set forth in Section 13--"Certain Conditions of the
Offer". Subject to applicable rules of the Commission and to the terms of the
Merger Agreement, Purchaser expressly reserves the right to delay acceptance
for payment of, or payment for, Shares pending receipt of any regulatory
approvals specified in Section 14--"Certain Legal Matters and Regulatory
Approvals" or in order to comply in whole or in part with any other applicable
law.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of (i)
the certificates evidencing such Shares (the "Share Certificates") or timely
confirmation (a "Book-Entry Confirmation") of a book-entry transfer of such
Shares into the Depositary's account at The Depository Trust Company (the
"Book-Entry Transfer Facility") pursuant to the procedures set forth in
Section 3--"Procedures for Accepting the Offer and Tendering Shares", (ii) the
Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, with any required signature guarantees, or an Agent's Message (as
defined below) in connection with a book-entry transfer, and (iii) any other
documents required by the Letter of Transmittal.
The term "Agent's Message" means a message, transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility
has received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares, that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that
Purchaser may enforce such agreement against such participant.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered and not properly
withdrawn as, if and when Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance for payment of such Shares pursuant to
the Offer. Upon the terms and subject to the conditions of the Offer, payment
for Shares accepted for payment pursuant to the Offer will be made by deposit
of the purchase price therefor with the Depositary, which will act as agent
for tendering stockholders for the purpose of receiving payments from
Purchaser and transmitting such payments to tendering stockholders whose
Shares have been accepted for payment. Under no circumstances will interest on
the purchase price for Shares be paid, regardless of any extension of the
Offer or any delay in making such payment.
If any tendered Shares are not accepted for payment for any reason pursuant
to the terms and conditions of the Offer, Share Certificates evidencing
unpurchased Shares will be returned, without expense to the tendering
stockholder (or, in the case of Shares tendered by book-entry transfer into
the Depositary's account at the Book-Entry Transfer Facility pursuant to the
procedures set forth in Section 3--"Procedures for Accepting the Offer and
Tendering Shares", such Shares will be credited to an account maintained at
such Book-Entry Transfer Facility), as promptly as practicable following the
expiration or termination of the Offer.
3. PROCEDURES FOR ACCEPTING THE OFFER AND TENDERING SHARES
VALID TENDER. In order for a holder of Shares validly to tender Shares
pursuant to the Offer, the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, together with any required signature
guarantees, or an Agent's Message in connection with a book-entry transfer of
Shares, and any other documents required by the Letter of Transmittal, must be
received by the Depositary at its address set forth on the back cover of this
Offer to Purchase and either (i) the Share Certificates evidencing tendered
Shares must be received by the Depositary at such address or such Shares must
be tendered pursuant to the procedures for book-entry transfer described below
and a Book-Entry Confirmation must be received by the Depositary, in each case
on or prior to the Expiration Date, or (ii) the tendering stockholder must
comply with the guaranteed delivery procedures described below.
5
<PAGE>
THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY, IS AT
THE OPTION AND RISK OF THE TENDERING STOCKHOLDER, AND THE DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
BOOK-ENTRY TRANSFER. The Depositary will establish an account with respect
to the Shares at the Book-Entry Transfer Facility for purposes of the Offer
within two business days after the date of this Offer to Purchase. Any
financial institution that is a participant in the system of the Book-Entry
Transfer Facility may make a book-entry delivery of Shares by causing such
Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account at such Book-Entry Transfer Facility in accordance with such Book-
Entry Transfer Facility's procedures for such transfer. However, although
delivery of Shares may be effected through book-entry transfer at the Book-
Entry Transfer Facility, the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, together with any required signature
guarantees, or an Agent's Message in connection with a book-entry transfer,
and any other required documents, must, in any case, be received by the
Depositary at its address set forth on the back cover of this Offer to
Purchase on or prior to the Expiration Date, or the tendering stockholder must
comply with the guaranteed delivery procedures described below. DELIVERY OF
DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO
THE DEPOSITARY.
SIGNATURE GUARANTEES. Signatures on all Letters of Transmittal must be
guaranteed by a firm which is a member of the Securities Transfer Agents
Medallion Program, or by any other "eligible guarantor institution," as such
term is defined in Rule 17Ad-15 under the Exchange Act (each of the foregoing
being referred to as an "Eligible Institution"), except in cases where Shares
are tendered (i) by a registered holder of Shares who has not completed either
the box entitled "Special Payment Instructions" or the box entitled "Special
Delivery Instructions" on the Letter of Transmittal or (ii) for the account of
an Eligible Institution. If a Share Certificate is registered in the name of a
person other than the person who or that signs the Letter of Transmittal, or
if payment is to be made, or a Share Certificate not accepted for payment or
not tendered is to be returned, to a person other than the registered
holder(s), then the Share Certificate must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear on the Share Certificate, with the signature(s) on
such Share Certificate or stock powers guaranteed by an Eligible Institution.
See Instruction 1 --"Guarantee of Signatures" and Instruction 5 --"Signatures
on Letter of Transmittal; Stock Powers and Endorsements" of the Letter of
Transmittal.
GUARANTEED DELIVERY. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's Share Certificates evidencing such Shares are
not immediately available or such stockholder cannot deliver the Share
Certificates and all other required documents to the Depositary on or prior to
the Expiration Date, or such stockholder cannot complete the procedures for
delivery by book-entry transfer on a timely basis, such Shares may
nevertheless be tendered, provided that all the following conditions are
satisfied:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form made available by Purchaser, is
received by the Depositary on or prior to the Expiration Date as provided
below; and
(iii) the Share Certificates (or a Book-Entry Confirmation) evidencing
all tendered Shares, in proper form for transfer, in each case together
with the Letter of Transmittal (or a facsimile thereof), properly completed
and duly executed, with any required signature guarantees (or, in the case
of a book-entry transfer, an Agent's Message), and any other documents
required by the Letter of Transmittal, are received by the Depositary
within three New York Stock Exchange ("NYSE") trading days after the date
of execution of such Notice of Guaranteed Delivery.
6
<PAGE>
The Notice of Guaranteed Delivery may be delivered by hand or mail or
transmitted by telegram or facsimile transmission to the Depositary and must
include a guarantee by an Eligible Institution in the form set forth in the
form of Notice of Guaranteed Delivery made available by Purchaser.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of the
Share Certificates evidencing such Shares, or a Book-Entry Confirmation of the
delivery of such Shares, and the Letter of Transmittal (or a facsimile
thereof), properly completed and duly executed, with any required signature
guarantees (or, in the case of a book-entry transfer, an Agent's Message), and
any other documents required by the Letter of Transmittal.
DETERMINATION OF VALIDITY. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any
tender of Shares will be determined by Purchaser in its sole discretion, which
determination will be final and binding on all parties. Purchaser reserves the
absolute right to reject any and all tenders determined by it not to be in
proper form or the acceptance for payment of which may, in the opinion of its
counsel, be unlawful. Purchaser also reserves the absolute right to waive any
condition to the Offer or any defect or irregularity in the tender of any
Shares of any particular stockholder, whether or not similar defects or
irregularities are waived in the case of other stockholders. No tender of
Shares will be deemed to have been validly made until all defects and
irregularities have been cured or waived. None of Purchaser, Parent, the
Dealer Manager, the Depositary, the Information Agent or any other person will
be under any duty to give notification of any defects or irregularities in
tenders or incur any liability for failure to give any such notification.
Purchaser's interpretation of the terms and conditions of the Offer (including
the Letter of Transmittal and the instructions thereto) will be final and
binding.
APPOINTMENT. By executing the Letter of Transmittal as set forth above, a
tendering stockholder irrevocably appoints designees of Purchaser as such
stockholder's proxies, each with full power of substitution, in the manner set
forth in the Letter of Transmittal, to the full extent of such stockholder's
rights with respect to the Shares tendered by such stockholder and accepted
for payment by Purchaser (and with respect to any and all other Shares or
other securities issued or issuable in respect of such Shares on or after the
date of this Offer to Purchase). All such proxies will be considered coupled
with an interest in the tendered Shares. Such appointment will be effective
when, and only to the extent that, Purchaser accepts such Shares for payment.
Upon such acceptance for payment, all prior proxies given by such stockholder
with respect to such Shares (and such other Shares and securities) will be
revoked without further action, and no subsequent proxies may be given nor any
subsequent written consent executed by such stockholder (and, if given or
executed, will not be deemed to be effective) with respect thereto. The
designees of Purchaser will, with respect to the Shares (and such other Shares
and securities) for which the appointment is effective, be empowered to
exercise all voting and other rights of such stockholder as they in their sole
discretion may deem proper at any annual or special meeting of the Company's
stockholders or any adjournment or postponement thereof, by written consent in
lieu of any such meeting or otherwise. Purchaser reserves the right to require
that, in order for Shares to be deemed validly tendered, immediately upon
Purchaser's payment for such Shares, Purchaser must be able to exercise full
voting rights with respect to such Shares (and such other Shares and
securities).
The acceptance for payment by Purchaser of Shares pursuant to any of the
procedures described above will constitute a binding agreement between the
tendering stockholder and Purchaser upon the terms and subject to the
conditions of the Offer.
UNDER THE FEDERAL INCOME TAX LAWS, THE DEPOSITARY WILL BE REQUIRED TO
WITHHOLD 31 PERCENT OF THE AMOUNT OF ANY PAYMENTS MADE TO CERTAIN STOCKHOLDERS
PURSUANT TO THE OFFER ("BACKUP WITHHOLDING") UNLESS SUCH STOCKHOLDER PROVIDES
THE DEPOSITARY WITH APPROPRIATE CERTIFICATION SUCH AS THE STOCKHOLDER'S
CORRECT TAXPAYER IDENTIFICATION NUMBER AND A CERTIFICATION THAT SUCH
STOCKHOLDER IS NOT SUBJECT TO BACKUP WITHHOLDING BY COMPLETING THE SUBSTITUTE
FORM W-9 IN THE LETTER OF TRANSMITTAL. SEE INSTRUCTION 9--"SUBSTITUTE FORM W-
9" OF THE LETTER OF TRANSMITTAL.
7
<PAGE>
4. WITHDRAWAL RIGHTS
Tenders of Shares made pursuant to the Offer are irrevocable except that
such Shares may be withdrawn at any time on or prior to the Expiration Date
and, unless theretofore accepted for payment by Purchaser pursuant to the
Offer, may also be withdrawn at any time after February 20, 1999. If Purchaser
extends the Offer, is delayed in its acceptance for payment of Shares or is
unable to accept Shares for payment pursuant to the Offer for any reason,
then, without prejudice to Purchaser's rights under the Offer, the Depositary
may, nevertheless, on behalf of Purchaser, retain tendered Shares, and such
Shares may not be withdrawn except to the extent that tendering stockholders
are entitled to withdrawal rights as described in this Section 4. Any such
delay will be by an extension of the Offer to the extent required by law.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
its address set forth on the back cover page of this Offer to Purchase. Any
such notice of withdrawal must specify the name of the person who tendered the
Shares to be withdrawn, the number of Shares to be withdrawn and the name of
the registered holder of such Shares, if different from that of the person who
tendered such Shares. If Share Certificates evidencing Shares to be withdrawn
have been delivered or otherwise identified to the Depositary, then, prior to
the physical release of such Share Certificates, the serial numbers shown on
such Share Certificates must be submitted to the Depositary and the
signature(s) on the notice of withdrawal must be guaranteed by an Eligible
Institution, unless such Shares have been tendered for the account of an
Eligible Institution. If Shares have been tendered pursuant to the procedures
for book-entry transfer as set forth in Section 3--"Procedures for Accepting
the Offer and Tendering Shares", any notice of withdrawal must also specify
the name and number of the account at the Book-Entry Transfer Facility to be
credited with the withdrawn Shares, in which case a notice of withdrawal will
be effective if delivered to the Depositary by any method described in the
first sentence of this paragraph.
All questions as to the form and validity (including time of receipt) of any
notice of withdrawal will be determined by Purchaser, in its sole discretion,
whose determination will be final and binding. None of Purchaser, Parent, the
Dealer Manager, the Depositary, the Information Agent or any other person will
be under any duty to give notification of any defects or irregularities in any
notice of withdrawal or incur any liability for failure to give any such
notification.
Any Shares properly withdrawn will thereafter be deemed not to have been
validly tendered for purposes of the Offer. However, withdrawn Shares may be
re-tendered at any time on or prior to the Expiration Date by following one of
the procedures described in Section 3--"Procedures for Accepting the Offer and
Tendering Shares".
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The receipt of cash for Shares pursuant to the Offer or to the Merger will
be a taxable transaction to the stockholders of the Company for federal income
tax purposes and may also be a taxable transaction under applicable state,
local or foreign tax laws. This will be the case whether a stockholder sells
Shares pursuant to the Offer, the Merger or both.
A tendering stockholder whose Shares are accepted for sale pursuant to the
Offer generally will recognize gain or loss on the date the Offer is
consummated equal to the difference between such stockholder's tax basis in
the Shares accepted for purchase and the amount of cash received in exchange
therefor. A stockholder who receives cash in exchange for Shares pursuant to
the Merger will recognize gain or loss at the Effective Time equal to the
difference between such stockholder's tax basis in such Shares and the amount
of cash received in exchange therefor.
Gain or loss will be capital gain or loss if the Shares were capital assets
in the hands of the stockholder, and will be long-term capital gain or loss
if, on the date the Offer is consummated, the Shares were held by the
stockholder for more than 12 months. Under present U.S. federal law, long-term
capital gains are generally taxable at a maximum rate of 20% for individuals
and 35% for corporations.
8
<PAGE>
The Merger will not be a taxable transaction to Purchaser, Parent or the
Company for federal income tax purposes.
THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE TO CERTAIN TYPES OF
STOCKHOLDERS, INCLUDING STOCKHOLDERS WHO ACQUIRED SHARES PURSUANT TO THE
EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS COMPENSATION, INDIVIDUALS
WHO ARE NOT CITIZENS OR RESIDENTS OF THE UNITED STATES AND FOREIGN
CORPORATIONS.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND IS BASED UPON PRESENT LAW. STOCKHOLDERS ARE URGED TO
CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF
THE OFFER AND THE MERGER TO THEM, INCLUDING THE APPLICATION AND EFFECT OF THE
ALTERNATIVE MINIMUM TAX AND STATE, LOCAL AND FOREIGN TAX LAWS.
6. PRICE RANGE OF CLASS A SHARES; DIVIDENDS
The Class A Shares have been listed and traded principally on the NYSE since
August 1996 under the symbol "CIG". The following table sets forth, for the
quarters indicated, the high and low sales prices per Class A Share on the
NYSE as reported by the Dow Jones News Service. The Company has not paid any
dividends on the Shares during the periods set forth below.
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
1996:
Fourth Quarter................................................... $31.25 $33.50
1997:
First Quarter.................................................... $27.25 $22.25
Second Quarter................................................... 30.25 21.75
Third Quarter.................................................... 40.33 24.67
Fourth Quarter................................................... 44.20 26.00
1998:
First Quarter.................................................... $28.75 $15.50
Second Quarter................................................... 16.00 9.75
Third Quarter.................................................... 12.19 7.00
Fourth Quarter (through December 21)............................. 17.56 8.12
</TABLE>
On December 15, 1998, the last full trading day prior to the announcement of
the execution of the Merger Agreement and of Purchaser's intention to commence
the Offer, the closing price per Share as reported on the NYSE was $15.87. On
December 21, 1998, the last full trading day prior to the date of this Offer
to Purchase, the closing price per Share as reported on the NYSE was $17.44.
STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
7. CERTAIN INFORMATION CONCERNING THE COMPANY
Except as otherwise set forth herein, the information concerning the Company
contained in this Offer to Purchase, including financial information, has been
furnished by the Company or has been taken from or based upon publicly
available documents and records on file with the Commission and other public
sources. None of Purchaser, Parent or the Dealer Manager assumes any
responsibility for the accuracy or completeness of the information concerning
the Company, furnished by the Company or contained in such documents and
records or for any failure by the Company to disclose events which may have
occurred or may affect the significance or accuracy of any such information
but which are unknown to Purchaser and Parent.
9
<PAGE>
BACKGROUND. The Company is a holding company with no business operations of
its own. The Company was formed as a Delaware corporation on January 6, 1993
to hold all of the outstanding capital stock of Consolidated Cigar
Corporation, through which the Company conducts its business operations. The
Company's executive offices are located at 5900 North Andrews Avenue, 10th
Floor, Fort Lauderdale, Florida, 33309-2369.
On August 21, 1996, the Company, then a direct, wholly owned subsidiary of
Mafco, completed an initial public offering (the "IPO") in which it issued and
sold 6,075,000 Class A Shares for $23.00 per share. The net proceeds of $127.8
million were paid as a dividend to Mafco. On March 20, 1997, the Company
completed a secondary offering (the "Offering") of 5,000,000 Class A Shares
sold by Mafco, reducing its own ownership in the Company to approximately
63.9%. The Company did not receive any of the proceeds from the Offering.
Since July 9, 1997, Mafco has been a direct, wholly owned subsidiary of
Mafco Holdings Inc. ("Mafco Holdings"), which is owned by Ronald O. Perelman.
GENERAL. The Company is the largest manufacturer and marketer of cigars sold
in the United States in terms of dollar sales, with a 1997 market share of
approximately 24% according to the Company's estimates. The Company markets
its cigar products under a number of well-known brand names at all price
levels and in all segments of the growing cigar market, including premium
large cigars, mass market large cigars and mass market little cigars. The
Company attributes its leading market position to the following competitive
strengths: (i) well-known brand names, many of wich are the leading brands in
their category; (ii) broad range of product offerings within both the premium
and mass market segments of the United States cigar market; (iii) commitment
to and reputation for manufacturing quality cigars; (iv) marketing expertise
and close attention to customer service; (v) efficient manufacturing
operations; and (vi) an experienced management team. The Company is also a
leading producer of pipe tobacco and is the largest supplier of private label
and branded generic pipe tobacco to mass market retailers. In addition, the
Company distributes a variety of pipe and cigar smokers' accessories.
The Company's cigars and pipe tobacco products are marketed under a number
of well-known brand names. The Company's premium cigars include the H. UPMANN,
MONTECRISTO, POR LARRANAGA, DON DIEGO, TE-AMO, SANTA DAMIANA, ROYAL JAMAICA,
PRIMO DEL REY, MONTECRUZ, LAS CABRILLAS and SANTA ROSA brands. The Company's
mass market large cigars include the ANTONIO Y CLEOPATRA (also known as AYC),
DUTCH MASTERS, EL PRODUCTO, MURIEL, BACKWOODS, SUPER VALUE AND SUPRE SWEETS
brands. The Company's mass market little cigars include the DUTCH TREATS,
SUPER VALUE and SUPRE SWEETS brands. The Company's pipe tobacco products
include the MIXTURE NO. 79 and CHINA BLACK brands.
FINANCIAL INFORMATION. Set forth below is certain selected historical
information which has been excerpted or derived from the financial statements
contained in the Company's Annual Report on Form 10-K for the year ended
December 31, 1997 (the "Form 10-K") and the unaudited financial statements
contained in the Company's Quarterly Report on Form 10-Q for the quarter ended
October 3, 1998 (the "Form 10-Q"). The Company's only material asset is all of
the outstanding capital stock of Consolidated Cigar Corporation through which
the Company conducts its business operations. The selected historical
financial data, therefore, reflects the consolidated results of Consolidated
Cigar Corporation and its predecessors. More comprehensive information is
included in the Form 10-K, the Form 10-Q and other documents filed by the
Company with the Commission. The financial information that follows is
qualified in its entirety by reference to such reports and other documents,
including the financial statements and related notes contained therein. Such
reports and other documents may be examined and copies may be obtained from
the offices of the Commission in the manner set forth below under "Available
Information".
10
<PAGE>
CONSOLIDATED CIGAR CORPORATION
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------
1995 1996 1997
-------- -------- --------
(IN THOUSANDS, EXCEPT PER
SHARE DATA)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net Sales....................................... $158,166 $216,868 $299,067
Cost of Sales................................... 94,347 126,013 167,285
-------- -------- --------
Gross Profit.................................... 63,819 90,855 131,782
Selling, general and administrative expenses.... 32,393 36,776 39,468
-------- -------- --------
Operating income................................ 31,426 54,079 92,314
-------- -------- --------
Interest expense, net........................... (12,635) (10,619) (10,551)
Minority interest............................... (262) (310) (1,598)
Miscellaneous, net.............................. (1,000) (906) (1,355)
-------- -------- --------
Income before provision for income taxes........ 17,529 42,244 78,810
Provision for income taxes...................... 3,599 12,449 25,219
-------- -------- --------
Net income...................................... $ 13,930 $ 29,795 $ 53,591
======== ======== ========
Basic net income per common share(a)............ $ 0.57 $ 1.11 $ 1.75
======== ======== ========
Basic weighted average common shares
outstanding(a)................................. 24,600 26,891 30,682
======== ======== ========
Diluted net income per common shares(a)......... $ 0.57 $ 1.11 $ 1.73
======== ======== ========
Diluted weighted average common shares
outstanding(a)................................. 24,600 26,964 31,019
======== ======== ========
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
NINE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 27, OCTOBER 3,
1997 1998
------------- -----------
(IN THOUSANDS, EXCEPT PER
SHARE DATA)
(UNAUDITED)
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net Sales........................................... $ 214,907 $ 198,668
Cost of Sales....................................... 119,929 117,806
---------- ----------
Gross Profit........................................ 94,978 80,862
Selling, general and administrative expenses........ 29,050 31,568
---------- ----------
Operating income.................................... 65,928 49,294
---------- ----------
Other expenses: 7,618 7,394
Interest expense, net............................... 854 1,180
Minority interest................................... 983 708
---------- ----------
Miscellaneous, net.................................. 9,455 9,282
---------- ----------
Income before provision for income taxes and
extraordinary item................................. 56,473 40,012
Provision for income taxes.......................... 18,082 12,804
---------- ----------
Income before extraordinary item.................... 38,391 27,208
Extraordinary item--Early extinguishment of debt,
net of tax......................................... -- 3,174
---------- ----------
Net income.......................................... $ 38,391 $ 24,034
========== ==========
Basic and diluted net income per common share:
Income before extraordinary item.................... $ 1.25 $ 0.90
Extraordinary item.................................. -- (0.11)
---------- ----------
Basic net income per common share (a)............... $ 1.25 $ 0.79
========== ==========
Income before extraordinary item.................... $ 1.24 $ 0.90
Extraordinary item.................................. -- (0.11)
---------- ----------
Diluted net income per common shares (a)............ 1.24 0.79
========== ==========
Basic weighted average common shares outstanding
(a)................................................ 30,677,913 30,396,917
========== ==========
Diluted weighted average common shares outstanding
(a)................................................ 30,854,306 30,396,917
========== ==========
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31
-----------------
1996 1997
-------- --------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA (AT PERIOD END):
Total assets............................................. $205,511 $279,433
Long-term debt (including current portion and a
promissory note issued to Mafco)........................ 167,500 173,557
Total stockholders' equity............................... 1,355 55,137
</TABLE>
<TABLE>
<CAPTION>
OCTOBER 3, 1998
---------------
(IN THOUSANDS)
<S> <C>
BALANCE SHEET DATA (AT PERIOD END):
Total assets............................................... 329,127
Long-term debt (including current portion and a promissory
note issued to Mafco)..................................... 201,351
Total stockholders' equity................................. 69,722
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------
1995 1996 1997
------- ------- -------
<S> <C> <C> <C>
OTHER DATA:
Gross margin (b)................................... 40.3% 41.9% 44.1%
Operating margin (b)............................... 19.9 24.9 30.9
EBITDA (c)......................................... $38,125 $60,547 $99,287
EBITDA margin (c).................................. 24.1% 27.9% 33.2%
Capital expenditures............................... $ 983 $ 5,278 $ 6,176
Amortization of goodwill........................... 1,771 1,651 1,702
Cash flows provided by (used for) financial
activities........................................ 19,801 32,583 17,250
Cash flows provided by (used for) financing
activities........................................ (989) (5,875) (20,290)
Cash flows provided by operating activities........ (19,367) (25,947) (4,365)
</TABLE>
- --------
(a) Basic and diluted net income per common share has been computed assuming
the conversion of the Company's common stock, prior to the IPO, into Class
B Common Stock as of the beginning of all periods presented and is
therefore based upon the weighed average of 24,600,000 shares of Common
Stock outstanding prior to the IPO and in 1996, 30,675,000 shares of
Common Stock outstanding after the IPO. The weighted average of Common
Stock outstanding for 1997 is based on 30,693,332 shares of Common Stock
outstanding. For 1997 and 1996, the only difference between the basic and
diluted net income per common share calculation is the dilutive effect of
stock options which are included in the diluted net income per common
share calculation. For the years 1995 and earlier, there is no difference
between the basic and the diluted net income per common share calculation.
(b) Gross margin is defined as gross profit as a percentage of net sales, and
operating margin is defined as operating income as a percentage of net
sales.
(c) EBITDA is defined as earnings before interest expense, taxes,
extraordinary items, depreciation and amortization and minority interest.
The Company believes that EBITDA is a measure commonly used by analysts,
investors and others interested in the cigar industry. Accordingly, this
information has been disclosed herein to permit a more complete analysis
of the Company's operating performance. EBITDA should not be considered in
isolation or as a substitute for net income or other consolidated
statement of operations or cash flows data prepared in accordance with
generally accepted accounting principles as a measure of the profitability
or liquidity of the Company. EBITDA does not take into account the
Company's debt service requirements and other commitments and,
accordingly, is not necessarily indicative of amounts that may be
available for discretionary uses. EBITDA margin is defined as EBITDA as a
percentage of net sales.
CERTAIN COMPANY PROJECTIONS. To the knowledge of Parent and Purchaser, the
Company does not as a matter of course make public forecasts as to its future
financial performance. However, in connection with the discussions and
negotiations described in Section 10--"Background of the Offer; Contacts with
the Company; The Merger Agreement; The Tender and Voting Agreement; The
Indemnification Agreement", the Company furnished Parent with certain
financial projections which Parent and Purchaser believe are not publicly
available. Neither Parent nor Purchaser verified the accuracy of such
financial projections.
According to the projections, the Company has estimated that it will have
net sales of $268.7 million, EBITDA of $75.4 million, and net income of $34.6
million (after extraordinary item) for the year ending December 31, 1998 and
net sales of $296.1 million, EBITDA of $96.6 million, and net income of $52.2
million for the year ended December 31, 1999.
IT IS THE UNDERSTANDING OF PARENT AND PURCHASER THAT THE PROJECTIONS WERE
NOT PREPARED WITH A VIEW TO PUBLIC DISCLOSURE OR COMPLIANCE WITH PUBLISHED
GUIDELINES OF THE COMMISSION OR THE GUIDELINES ESTABLISHED BY THE AMERICAN
INSTITUTE OF
13
<PAGE>
CERTIFIED PUBLIC ACCOUNTANTS REGARDING PROJECTIONS OR FORECASTS AND ARE
INCLUDED HEREIN ONLY BECAUSE SUCH INFORMATION WAS PROVIDED TO PARENT AND
PURCHASER. THESE FORWARD-LOOKING STATEMENTS (AS THAT TERM IS DEFINED IN THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995) ARE SUBJECT TO CERTAIN RISKS
AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM
THE PROJECTIONS. THE COMPANY HAS ADVISED PURCHASER AND PARENT THAT ITS
INTERNAL FINANCIAL FORECASTS (UPON WHICH THE PROJECTIONS PROVIDED TO PARENT
WERE BASED IN PART) ARE, IN GENERAL, PREPARED SOLELY FOR INTERNAL USE AND
CAPITAL BUDGETING AND OTHER MANAGEMENT DECISIONS, AND ARE SUBJECTIVE IN MANY
RESPECTS AND THUS SUSCEPTIBLE TO INTERPRETATIONS AND PERIODIC REVISION BASED
ON ACTUAL EXPERIENCE AND BUSINESS DEVELOPMENTS. THE PROJECTIONS ALSO REFLECT
NUMEROUS ASSUMPTIONS (NOT ALL OF WHICH WERE PROVIDED TO PARENT), ALL MADE BY
MANAGEMENT OF THE COMPANY, WITH RESPECT TO INDUSTRY PERFORMANCE, GENERAL
BUSINESS, ECONOMIC, MARKET AND FINANCIAL CONDITIONS AND OTHER MATTERS,
INCLUDING EFFECTIVE TAX RATES CONSISTENT WITH HISTORICAL LEVELS FOR THE
COMPANY, ALL OF WHICH ARE DIFFICULT TO PREDICT, MANY OF WHICH ARE BEYOND THE
COMPANY'S CONTROL AND NONE OF WHICH WERE SUBJECT TO APPROVAL BY PARENT OR
PURCHASER. ACCORDINGLY, THERE CAN BE NO ASSURANCE THAT THE ASSUMPTIONS MADE IN
PREPARING THE PROJECTIONS WILL PROVE ACCURATE, AND ACTUAL RESULTS MAY BE
MATERIALLY GREATER OR LESS THAN THOSE CONTAINED IN THE PROJECTIONS. THE
INCLUSION OF THE PROJECTIONS HEREIN SHOULD NOT BE REGARDED AS AN INDICATION
THAT ANY OF PARENT, PURCHASER, THE COMPANY OR THEIR RESPECTIVE AFFILIATES OR
REPRESENTATIVES CONSIDERED OR CONSIDER THE PROJECTIONS TO BE A RELIABLE
PREDICTION OF FUTURE EVENTS, AND THE PROJECTIONS SHOULD NOT BE RELIED UPON AS
SUCH. NONE OF PARENT, PURCHASER OR ANY OF THEIR RESPECTIVE AFFILIATES ASSUMES
ANY RESPONSIBILITY FOR THE VALIDITY, REASONABLENESS, ACCURACY OR COMPLETENESS
OF THE PROJECTIONS. NONE OF PARENT, PURCHASER, THE COMPANY OR ANY OF THEIR
RESPECTIVE AFFILIATES OR REPRESENTATIVES HAS MADE, OR MAKES, ANY
REPRESENTATION TO ANY PERSON REGARDING THE INFORMATION CONTAINED IN THE
PROJECTIONS AND NONE OF THEM INTENDS TO UPDATE OR OTHERWISE REVISE THE
PROJECTIONS TO REFLECT CIRCUMSTANCES EXISTING AFTER THE DATE WHEN MADE OR TO
REFLECT THE OCCURRENCE OF FUTURE EVENTS EVEN IN THE EVENT THAT ANY OR ALL OF
THE ASSUMPTIONS UNDERLYING THE PROJECTIONS ARE SHOWN TO BE IN ERROR.
AVAILABLE INFORMATION. The Shares are registered under the Exchange Act, and
the Company is therefore subject to the reporting requirements of the Exchange
Act. In accordance with the Exchange Act, the Company is required to file
periodic reports, proxy statements and other information with the Commission
relating to its business, financial condition and other matters. Information,
as of particular dates, concerning the Company's directors and officers, their
remuneration, stock options granted to them, the principal holders of the
Company's securities and any material interest of such persons in transactions
with the Company is required to be disclosed in proxy statements distributed
to the Company's stockholders and filed with the Commission. Such reports,
proxy statements and other information should be available for inspection at
the public reference facilities maintained by the Commission at Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549, and at the following regional
offices of the Commission: New York Regional Office, Seven World Trade Center,
3rd Floor, New York, New York 10048; and Chicago Regional Office, Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies
of such materials may be obtained by mail, upon payment of the Commission's
customary fees, by writing to its principal office at 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Commission also maintains a Website
(http://www.sec.gov) that contains reports, proxy and information statements
and other information regarding issuers that file electronically with the
Commission. In addition, reports, proxy statements and other information
concerning the Company can be inspected and copied at the NYSE, 20 Broad
Street, New York, New York 10005, on which the Shares are listed.
14
<PAGE>
8. CERTAIN INFORMATION CONCERNING PURCHASER AND PARENT
Purchaser, a direct, wholly owned subsidiary of Parent, is a newly
incorporated corporation organized and existing under the laws of the State of
Delaware, was formed in connection with the Offer and the Merger and has not
carried on any unrelated activities since its formation. The principal offices
of Purchaser are located at 53, quai d'Orsay, 75347 Paris Cedex 07, France.
Until immediately prior to the time that Purchaser purchases Shares pursuant
to the Offer, it is not anticipated that Purchaser will have any significant
assets or liabilities or engage in activities other than those incident to its
formation and capitalization and the transactions contemplated by the Offer
and the Merger. Because Purchaser is newly formed and has minimal assets and
capitalization, no meaningful financial information regarding Purchaser is
available.
Parent, a publicly owned corporation organized and existing under the laws
of France and listed on the Paris Bourse since its privatization on February
24, 1995, is France's leading tobacco company and a major international player
in two key businesses: (i) manufacturing of tobacco products: blond and dark
cigarettes, cigars and cigarillos, rolling and pipe tobaccos and matches
(which are marketed in France and internationally under well-known brand names
such as Gauloises, Gitanes, Royale, Fine, Meccarillos, Fleur de Savane and
Amsterdamer) and (ii) distribution to state-licensed French tobacconists of
Parent-brand products and those of other manufacturers under distribution
agreements. Parent has expanded this distribution activity to include
telephone and parking-meter cards. In addition, Parent provides tobacconists
with sales-point computerization and modernization consulting services.
Parent's principal offices are located at 53, quai d'Orsay, 75347 Paris Cedex
07, France.
The name, citizenship, business address, principal occupation or employment,
and five-year employment history of each of the directors and executive
officers of Parent and Purchaser and certain other information are set forth
in Schedule I hereto.
The Common Stock, par value FF 50 per share, of Parent is listed and traded
on the monthly settlement market (marche a reglement mensuel) on the Paris
Bourse under the symbol "ITA".
Except as described in this Offer to Purchase and in the Tender and Voting
Agreement, (i) none of Purchaser, Parent or, to the best knowledge of
Purchaser and Parent, any of the persons listed in Schedule I to this Offer to
Purchase or any affiliate or majority owned subsidiary of Purchaser, Parent or
any of the persons so listed beneficially owns or has any right to acquire,
directly or indirectly, any Shares and (ii) none of Purchaser, Parent or, to
the best knowledge of Purchaser and Parent, any of the persons or entities
referred to above, or any director, executive officer or subsidiary of any of
the foregoing, has effected any transaction in the Shares during the past 60
days.
Except as provided in the Merger Agreement and in the Tender and Voting
Agreement and as otherwise described in this Offer to Purchase, none of
Purchaser, Parent or, to the best knowledge of Purchaser and Parent, any of
the persons listed in Schedule I to this Offer to Purchase has any contract,
arrangement, understanding or relationship with any other person with respect
to any securities of the Company, including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer or voting
of such securities, joint ventures, loan or option arrangements, puts or
calls, guaranties of loans, guaranties against loss or the giving or
withholding of proxies. Except as set forth in this Offer to Purchase, since
January 1, 1995, neither Purchaser, Parent nor, to the best knowledge of
Purchaser and Parent, any of the persons listed in Schedule I hereto, has had
any business relationship or transaction with the Company or any of its
executive officers, directors or affiliates that is required to be reported
under the rules and regulations of the Commission applicable to the Offer.
Except as set forth in this Offer to Purchase, since January 1, 1995, there
have been no contacts, negotiations or transactions between any of Purchaser,
Parent or any of their respective subsidiaries or, to the best knowledge of
Purchaser and Parent, any of the persons listed in Schedule I to this Offer to
Purchase, on the one hand,
15
<PAGE>
and the Company or its affiliates, on the other hand, concerning a merger,
consolidation or acquisition, tender offer or other acquisition of securities,
an election of directors or a sale or other transfer of a material amount of
assets.
9. FINANCING OF THE OFFER AND THE MERGER
The total amount of funds required by Purchaser to consummate the Offer and
the Merger (including the refinancing of certain existing indebtedness of the
Company) and to pay related fees and expenses is estimated to be approximately
$735 million. Purchaser will obtain all of such funds from Parent. Parent
currently intends to provide such funds, other than the funds to refinance
approximately $200 million of indebtedness of the Company, from cash on hand.
Parent will cause Purchaser to refinance existing indebtedness of the Company
through Parent's cash on hand, Parent's existing indebtedness or otherwise.
10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY; THE MERGER AGREEMENT;
THE TENDER AND VOTING AGREEMENT; THE INDEMNIFICATION AGREEMENT
BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY
Beginning in September of 1998, the Company's management, in periodic
consultation with the Company's directors, began to explore various possible
strategic alternatives to improve stockholder value.
On October 7, 1998, senior officers of the Company met to discuss an
unsolicited letter sent by a potential acquiror (the "Other Party") expressing
interest in exploring an acquisition of the Company.
In mid-October, Parent, through its financial advisor Credit Suisse First
Boston, orally indicated an interest in exploring the possibility of Parent
acquiring the Company in a transaction pursuant to which the Company's
stockholders would receive between $15 and $18 per Share in cash. Parent
noted, however, that its indication of interest was subject to Parent
conducting a due diligence review of the Company's business and operations.
In separate meetings during late October, 1998, senior officers of the
Company met with senior officers of Parent and the Other Party and their
respective financial advisors, in order for each of the Other Party and Parent
to conduct preliminary due diligence on the Company. At the meetings, the
Company provided each of the Other Party and Parent with certain materials
describing the Company, its operations and projected results of operations,
and each of the Other Party and Parent executed a confidentiality agreement
with the Company.
On November 5, 1998, the Company issued a press release stating that it had
hired Chase Securities Inc., as financial advisor, to consider strategic
opportunities to enhance stockholder value including a merger,
recapitalization or the possible sale of the Company.
From November 5 through November 20, the Company received expressions of
interest from 12 potential acquirors, including Parent and the Other Party.
Senior officers of the Company, Mafco and the Company's Financial Advisor had
various discussions and meetings with these parties in order to assess the
level of interest of each such party in pursuing a transaction. As a result of
this process, one additional potential acquiror entered into a confidentiality
agreement with the Company.
Throughout the remainder of November, the Other Party and Parent continued
their due diligence reviews of the Company and on separate occasions visited
the Company's offices in Ft. Lauderdale, Florida, and various factory
locations.
Beginning in mid-November, 1998, the Company and Mafco commenced
negotiations with each of Parent and the Other Party, in each case, with
respect to the terms of a merger agreement and a related
16
<PAGE>
tender and voting agreement pursuant to which Mafco would, among other things,
agree to tender all of the Shares owned by it into a tender offer and to vote
its Shares in favor of the relevant merger.
On December 2, 1998, the Other Party, through its financial advisor,
submitted a preliminary, non-binding proposal to acquire the Company in a
merger transaction (providing, as its first step, a cash tender offer)
pursuant to which the Company's stockholders would receive $15.25 per Share in
cash. The Other Party's proposal was subject to numerous conditions,
including, among others, the completion of due diligence. On several occasions
thereafter, the Company's financial advisor advised the Other Party's senior
management and financial advisor that the Other Party's proposal was
inadequate in a number of significant respects, including price, and that the
Other Party should make its best and final proposal.
On December 9, 1998, Parent's board of directors met to consider an
acquisition of the Company. As a result of that meeting, Parent indicated an
interest in acquiring the Company in a merger transaction (also providing, as
its first step, a cash tender offer) at a price of $17.00 per Share in cash,
but could not submit a proposal until after consulting with its workers'
council.
On December 10, 1998, the Other Party submitted a revised written proposal
pursuant to which the Company's stockholders would receive $15.75 per Share in
cash. Later that afternoon, the Board held a special meeting to analyze and
review, with the advice and assistance of the Company's financial and legal
advisors, certain strategic, financial and legal considerations concerning a
possible transaction with each of Parent and the Other Party, the terms of
each party's most recent indication of interest, the potential impact on the
Company's employees of a transaction with either party, and the terms and
conditions of the most recent draft of the Merger Agreement submitted by each
party. The Company's management and its legal advisors also reported to the
Board on the status of the negotiations with both parties. No decision was
reached by the Board at the meeting; rather, it was the consensus of the
directors that the Company should continue to hold discussions with both
Parent and the Other Party and report back to the Board once management was
prepared to make a recommendation.
On December 11, 1998, representatives of the Company met with
representatives of the Other Party. At that meeting, the Other Party indicated
that, subject to, among other things, the satisfactory resolution of certain
issues relating to the terms and conditions of a merger agreement, it would be
willing to propose purchasing all of the Shares at a price of $17.00 per Share
in cash.
On December 12, 1998, representatives of the Company and the Company's legal
and financial advisors met with representatives of the Other Party and the
Other Party's legal and financial advisors to continue negotiating the terms
and conditions of a merger agreement and a tender and voting agreement.
During the morning of December 12, 1998, Parent informed the Company that it
intended to submit a bid on Wednesday, December 16, 1998, pursuant to which it
would propose to acquire the Company at a purchase price of $17.75 per Share
in cash. Parent indicated that its ability to submit such a proposal was
contingent upon confirmatory due diligence, which Parent anticipated
completing prior to December 16, 1998, and completion of the negotiation of
the definitive form of a merger agreement and related agreements. In addition,
as indicated above, Parent would not be in a position to submit a proposal
until after completion of a meeting with its workers' council scheduled for
December 16, 1998.
At a December 13, 1998 meeting, the Company's legal and financial advisors
brought the Board up-to-date as to the status of the possible transactions
with Parent and the Other Party. In light of Parent's indication of its
willingness to bid of $17.75 per Share, the Board rejected the Other Party's
bid of $17.00 per Share. It was the consensus of the directors that, prior to
December 16, 1998, the Company's management and legal and financial advisors
should continue to negotiate with Parent, determine whether the Other Party
was prepared to improve its proposal and report back to the Board.
17
<PAGE>
During the afternoon of December 13, 1998, the Other Party withdrew its bid
to acquire the Company for $17.00 per Share, but, on December 15, 1998, sent a
letter in which it stated that it intended to submit a revised offer to
acquire the Company prior to the next special meeting of the Board.
On the morning of December 16, 1998, the Other Party, through its financial
advisor, submitted a written bid to acquire the Company for $17.75 per share.
The Board held a special meeting the morning of December 16, 1998, at which
it reviewed the proposals from Parent and the Other Party, each offering
$17.75 per Share in cash. The Company's management discussed certain factors
that it believed favored Parent's offer, including a perceived risk of
incremental delay relating to the antitrust review associated with a
transaction with the Other Party, Parent's intention to employ substantially
all of the Company's employees, and Parent's intention not to terminate any of
the Company's operations. The Company's senior management believed that a
transaction with the Other Party would result in a reduction of employees and
the contraction of certain of the Company's operations. The Board
conditionally approved a transaction with Parent, but indicated that if a
revised proposal were received promptly from either party, it would consider
it. Shortly thereafter, the Other Party and Parent each increased its offer
price to $17.85 per Share. Whereupon, the Board definitively approved the
acceptance of Parent's offer and the documents relating thereto.
Later on the morning of December 16, 1998, the Company and Parent executed
and delivered the Merger Agreement; Parent, Purchaser and Mafco executed and
delivered the Tender and Voting Agreement, and Parent, Purchaser, the Company,
Mafco and Mafco Holdings executed and delivered the Indemnification Agreement.
Immediately thereafter, the Company and Parent issued a press release
announcing the execution of the Merger Agreement and the transactions
contemplated thereby, a copy of which is filed as Exhibit (a)(8) of the
Schedule 14D-1 filed by Purchaser and Parent with the Commission in connection
with the Offer (the "Schedule 14D-1") and which is incorporated herein by
reference.
THE MERGER AGREEMENT
The following is a summary of the Merger Agreement, a copy of which is filed
as an exhibit to the Tender Offer Statement on Schedule 14D-1. Such summary is
qualified in its entirety by reference to the Merger Agreement.
THE OFFER. The Merger Agreement provides for the commencement of the Offer
as promptly as reasonably practicable, but in no event later than five
business days after the initial public announcement on the date of the Merger
Agreement or the following day of Purchaser's intention to commence the Offer.
Purchaser has commenced the Offer in accordance with the terms of the Merger
Agreement.
Subject to the terms and conditions of the Offer (including, without
limitation, the Minimum Condition), Purchaser will accept for payment and pay
for, as soon as it is legally permitted to do so under applicable law, all
Shares validly tendered and not withdrawn. The obligation of Purchaser to
accept for payment and pay for Shares validly tendered on or prior to the
expiration of the Offer and not withdrawn is subject to the satisfaction of
the Minimum Condition and certain other conditions that are described in
Section 13--"Certain Conditions of the Offer" hereof. Purchaser and Parent
have agreed that Purchaser will not decrease the Offer Price or decrease the
number of Shares sought, amend the conditions to the Offer or impose
conditions to the Offer in addition to those set forth in Section 13--"Certain
Conditions of the Offer" hereof without the prior consent of the Company.
18
<PAGE>
Purchaser may, and the Company may require Purchaser to, extend the Offer up
to 40 days in the aggregate, in increments of up to ten business days each, if
any condition to the Offer has not been satisfied or waived. In addition,
Purchaser may, without the Consent of the Company, (A) extend the Offer for up
to an additional 40 days, in one or more periods of not more than 10 business
days, if any condition to the Offer is not satisfied or waived, (B) extend the
Offer on one occasion for up to 10 business days if, on the Expiration Date,
the Shares validly tendered pursuant to the Offer and not withdrawn are
sufficient to satisfy the Minimum Condition but equal less than 90% of the
outstanding Shares (regardless of whether all the conditions to the Offer have
been satisfied so long as Purchaser irrevocably waives the satisfaction of any
of the conditions to the Offer (other than the non-occurrence of any statute,
rule or regulation, judgment, order or injunction making illegal or
prohibiting the consummation of the Offer)), and (C) extend the Offer or
increase the Offer Price to the extent required by law. Purchaser will only be
required to extend the Offer, up to 40 days in the aggregate, in one or more
periods of not more than 10 business days, if (i) each condition is reasonably
capable of being satisfied and (ii) the Company is in material compliance with
all of its covenants under the Merger Agreement after Purchaser has given the
Company five business days prior written notice of any such non-compliance.
BOARD REPRESENTATION; DIRECTORS. The Merger Agreement provides that,
promptly upon the purchase of and payment for Shares by Parent or any of its
subsidiaries which represent at least a majority of the outstanding shares of
Company Common Stock (on a fully diluted basis), Parent will be entitled to
designate such number of directors, rounded up to the next whole number, on
the Board as is equal to the product of the total number of directors on such
Board (giving effect to the directors designated by Parent pursuant to this
sentence) multiplied by the percentage that the aggregate number of Shares
beneficially owned by Purchaser, Parent and any of their affiliates bears to
the total number of shares of Company Common Stock then outstanding. The
Company will, upon request of Purchaser, use all reasonable efforts promptly
either to increase the size of the Board (which, pursuant to the Company's
Certificate of Incorporation, has no maximum number of directors) or, at
Purchaser's election, secure the resignations of such number of its incumbent
directors as is necessary to enable Parent's designees to be so elected to the
Board, and will cause Parent's designees to be so elected. Notwithstanding the
foregoing, until the Effective Time, the Company will retain as members of its
Board at least two directors who are directors of the Company on the date of
the Merger Agreement; provided, that subsequent to the purchase of and payment
for Shares pursuant to the Offer, Parent will always have its designees
represent at least a majority of the entire Board. See Section 10--"Background
of the Offer; Contacts with the Company; The Merger Agreement; The Tender and
Voting Agreement; The Indemnification Agreement".
From and after the time, if any, that Parent's designees constitute a
majority of the Board, any amendment of the Merger Agreement, any termination
of the Merger Agreement by the Company, any extension of time for performance
of any of the obligations of Parent or Purchaser thereunder, any waiver of any
condition or any of the Company's rights thereunder or other action by the
Company thereunder may be effected only by the unanimous vote of the entire
Board.
THE MERGER. Following completion of the Offer, upon the terms and subject to
the conditions of the Merger Agreement and in accordance with Delaware Law,
Purchaser will be merged with and into the Company. As a consequence of the
Merger, the separate corporate existence of Purchaser will cease and the
Company will continue as the successor or surviving corporation and will be a
wholly-owned subsidiary of Parent (the "Surviving Corporation"). Hereinafter,
the date on which the Closing of the Merger will take place is referred to as
the "Closing Date". The Merger will become effective at such time as a duly
prepared certificate of merger is filed with the Secretary of State of the
State of Delaware in accordance with Delaware Law (the "Effective Time").
The Merger Agreement provides that the directors of Purchaser immediately
prior to the Effective Time will be the initial directors of the Surviving
Corporation and that the officers of the Company immediately
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prior to the Effective Time will be the initial officers of the Surviving
Corporation. The Merger Agreement also provides that, at the Effective Time,
the Certificate of Incorporation and the By-Laws of Purchaser will be the
Certificate of Incorporation and the By-Laws of the Surviving Corporation,
provided that such Certificate of Incorporation will be amended to change the
name of the corporation to Consolidated Cigar Holdings Inc.
CONVERSION OF SECURITIES. Pursuant to the Merger Agreement, at the Effective
Time, each share of common stock, par value $0.01 per share, of Purchaser
issued and outstanding immediately prior to the Effective Time will be
converted into and exchanged for one share of common stock, par value $0.01
per share, of the Surviving Corporation. In addition, the Shares outstanding,
immediately prior to the Effective Time (other than the Dissenting Shares),
will, by reason of the Merger and without any action by the holders thereof,
be converted into the right to receive the Merger Price (the "Merger
Consideration"), without interest. All such Shares, when so converted, will no
longer be outstanding and will automatically be canceled and retired and will
cease to exist, and each certificate previously evidencing such Shares will
thereafter represent only the right to receive the Merger Consideration. Each
Share which is held in the treasury of the Company immediately prior to the
Effective Time and any Share owned by a subsidiary of the Company, Parent,
Purchaser or any wholly owned subsidiary of Parent will, by virtue of the
Merger, cease to be outstanding and will be canceled and retired without
payment of any consideration therefor.
Notwithstanding the above, any Dissenting Shares will not be converted into
the right to receive, or be exchangeable for, the Merger Consideration, but
instead holders of Dissenting Shares will be entitled only to the rights
granted by the provisions of Section 262 of Delaware Law, which entitles
dissenting stockholders to receive a judicial determination of the fair value
of their shares and to receive payment of such fair value in cash, together
with a fair rate of interest, if any. Such judicially determined fair value
could be more or less than the Merger Consideration. See Section 14--"Certain
Legal Matters and Regulatory Approvals".
Parent and the Company will take all actions necessary to provide that,
effective as of the Effective Time, (i) each outstanding employee stock option
to purchase Shares (an "Option") granted under the Company's 1996 Stock Option
Plan (the "1996 Plan"), whether or not then exercisable or vested, will be
cancelled and (ii) in consideration of such cancellation, the Company (or, at
Parent's option, Purchaser) will pay to such holders of Options an amount in
respect thereof equal to the product of (A) the excess, if any, of the Offer
Price over the exercise price of each such Option and (B) the number of Shares
subject thereto (such payment, if any, to be net of applicable withholding
taxes). As of the Effective Time, the 1996 Plan will terminate. The Company
will take all action necessary to ensure that, after the Effective Time, no
person will have any right under the 1996 Plan or any other plan, program or
arrangement with respect to equity securities of the Company or any direct or
indirect subsidiary of the Company.
STOCKHOLDERS' APPROVAL. Pursuant to the Merger Agreement, if required by
applicable law, the Company will (i) duly call, give notice of, convene and
hold a special meeting of its stockholders (the "Special Meeting") as soon as
practicable following the acceptance for payment and purchase of Shares by
Purchaser pursuant to the Offer for the purposes of considering and taking
action upon the Merger Agreement; (ii) prepare in accordance with applicable
law and mail to its stockholders a proxy statement relating to the Special
Meeting (the "Proxy Statement"); (iii) use its reasonable efforts to obtain
the necessary stockholder approval of the Merger and Merger Agreement; and
(iv) subject to the fiduciary obligations of the Board, include in the Proxy
Statement the recommendation of the Board that stockholders of the Company
vote in favor of the approval of the Merger and the adoption of the Merger
Agreement. However, if Parent, Purchaser or another subsidiary of Parent
acquires more than 90% of the outstanding Shares pursuant to the Offer or
otherwise, each of the parties will cause the Merger to become effective as
soon as practicable after such acquisition, without a meeting of stockholders
of the Company, in accordance with the "short-form" merger provisions of
Section 253 of Delaware Law.
REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains various
customary representations and warranties of the parties thereto, including
representations and warranties by the
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Company with respect to organization; capitalization; authorization relative
to the Merger Agreement; validity of the Merger Agreement; consents and
approvals; Commission reports and financial statements; undisclosed
liabilities; absence of certain changes; employee benefit matters; litigation;
compliance with applicable laws; taxes; real property; environmental matters;
intellectual property; inventory; labor matters; restrictions on business
activities; year 2000 compliance; brokers and other matters.
CONDUCT OF BUSINESS PENDING THE MERGER. Under the Merger Agreement, the
Company has agreed that during the period from the date of the Merger
Agreement and continuing until the election of Purchaser's designees
representing at least a majority of the members of the Board, unless Parent
otherwise agrees in writing and unless otherwise expressly permitted under the
Merger Agreement, the business of the Company and its subsidiaries will be
conducted only in the ordinary and usual course of business consistent with
past practices and:
(a) the Company will not, directly or indirectly, (i) sell, transfer or
pledge or agree to sell, transfer or pledge any Company Common Stock or any
other securities of the Company or capital stock or any other securities of
any of its subsidiaries beneficially owned by it; (ii) amend its
Certificate of Incorporation or By-laws or similar organizational documents
of any of its subsidiaries; or (iii) split, combine or reclassify the
outstanding Company Common Stock or any outstanding capital stock of any of
the subsidiaries of the Company;
(b) neither the Company nor any of its subsidiaries will: (i) declare,
set aside or pay any dividend or other distribution with respect to its
capital stock; (ii) issue, sell, pledge, dispose of or encumber any
additional shares of, or securities convertible into or exchangeable for,
or options, warrants or rights of any kind to acquire, any shares of
capital stock of the Company or its subsidiaries (other than shares of
Company Common Stock reserved for issuances pursuant to the exercise of
Options outstanding on the date of the Merger Agreement); (iii) transfer,
lease, license, sell, mortgage, pledge, dispose of or encumber any right to
any trademark, service mark or trade name owned by it or over which it has
any right whatsoever; (iv) transfer, lease, license, sell, mortgage,
pledge, dispose of or encumber any other material assets other than in the
ordinary and usual course of business; (v) incur or modify any material
indebtedness or other material liability, except that the Company may
borrow money for use in the ordinary and usual course of business if
neither the Company nor any of its subsidiaries makes any borrowing or
incurs any indebtedness or other liability that would cause the Company's
consolidated net debt (including the indebtedness currently outstanding
under a promissory note issued by the Company to Mafco) to exceed $205
million; (vi) make any capital expenditures in excess of $2 million in the
aggregate; or (vii) redeem, purchase or otherwise acquire any of its
capital stock;
(c) neither the Company nor any of its subsidiaries will modify, amend or
terminate any of its material agreements or waive, release or assign any
material right or claims;
(d) neither the Company nor any of its subsidiaries will permit any
material insurance policy naming it as a beneficiary or a loss payable
payee to be terminated without notice to Parent;
(e) neither the Company nor any of its subsidiaries will: (i) assume,
guarantee or otherwise become responsible for the obligations of any other
person, except in the ordinary course of business; (ii) make any loans,
advances or capital contributions to, or investments in, or acquisitions
of, any other person (other than subsidiaries of the Company), other than
in the ordinary course of business; or (iii) enter into any commitment or
transaction with respect to any of the foregoing;
(f) neither the Company nor any of its subsidiaries will change any of
the accounting methods used by it unless required by United States
Generally Accepted Accounting Principles ("GAAP") or applicable law;
(g) neither the Company nor any of its subsidiaries will adopt a plan of
complete or partial liquidation, dissolution, merger, consolidation,
recapitalization or other reorganization of the Company or any of its
subsidiaries (other than the Merger);
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(h) neither the Company nor any of its subsidiaries will take, or agree
to take, any action that would make any representation or warranty of the
Company contained in the Merger Agreement inaccurate in any material
respect;
(i) except as described under "The Merger Agreement--Conversion of
Securities" above, the Company will not amend or change the period of
exercisability of Options granted under the 1996 Plan or authorize cash
payments in exchange for any Options;
(j) except for year-end bonuses and salary increases made in the ordinary
course of business, which in the case of year-end bonuses may not exceed
$2.2 million in the aggregate, neither the Company nor any subsidiary will
increase the compensation payable or to become payable to its officers or
directors;
(k) neither the Company nor any of its subsidiaries will grant any
severance or termination pay to, or enter into any employment or severance
agreement with, any director or officer of the Company or any subsidiary or
establish, adopt, enter into or terminate or amend any employee benefit
plan; and
(l) neither the Company nor any of its subsidiaries will authorize or
enter into an agreement to do any of the foregoing.
CONFIDENTIALITY AGREEMENT. Unless otherwise required by law, Parent has
agreed to hold any information furnished to it by the Company which is non-
public in confidence in accordance with the provisions of the Confidentiality
Agreement between the Company and Parent dated as of October 20, 1998 (the
"Confidentiality Agreement").
REPAYMENT OF BORROWINGS UNDER CREDIT AGREEMENT. At the consummation of the
Offer, Parent has agreed to cause the Company to repay all outstanding
borrowings under the Credit Agreement, dated March 2, 1998, between
Consolidated Cigar Corporation and Chase Manhattan Bank, as administrative
agent, as amended by Amendment No. 1 thereto, dated as of April 27, 1998 (the
"Credit Agreement") (through Parent's cash on hand, existing credit
arrangements or otherwise), such that no event of default will exist as a
result of the consummation of the transactions contemplated in the Merger
Agreement.
EMPLOYEE BENEFITS. Parent and Purchaser have agreed to continue the
employment of all persons who, immediately prior to the Effective Time, were
employees of the Company or its subsidiaries ("Retained Employees"). Parent
and Purchaser have agreed that, effective as of the Effective Time and for a
one-year period following the Effective Time, the Surviving Corporation and
its subsidiaries and successors will provide the Retained Employees with
employee plans and programs which are, in the aggregate, substantially
comparable to those provided to them immediately prior to the date of the
Merger Agreement (other than with regard to the 1996 Plan). However, Parent
and Purchaser are not required to continue the employment of any Retained
Employee for any particular period of time after the Effective Time, and,
subject to the terms of the Merger Agreement, Parent and Purchaser have the
right to amend, modify, suspend or terminate any employee plan or program in
accordance with the terms of such employee plan or program and applicable law.
Parent and Purchaser have agreed to honor, and cause the Surviving
Corporation to honor, without modification, all employment and severance
agreements and arrangements, as amended through the date of the Merger
Agreement, with respect to employees and former employees of the Company.
NO SOLICITATION. The Company and its subsidiaries have agreed not to, and to
use their best efforts to cause their respective officers, directors,
employees and investment bankers, attorneys or other agents retained by or
acting on behalf of the Company or any of its subsidiaries not to, (i)
initiate, solicit or encourage any inquiries or the making of any proposal
that constitutes or is reasonably likely to lead to any Acquisition Proposal
(as defined below), (ii) engage in negotiations or discussions with, or
furnish any information or data to, any third party relating to an Acquisition
Proposal or (iii) enter into any agreement with respect to any Acquisition
Proposal or approve any Acquisition Proposal. The Company is also required to
promptly request each person that has executed a confidentiality agreement in
connection with its consideration of an Acquisition Proposal to return all
non-public information furnished to such person by or on behalf of the Company
or any of its subsidiaries.
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However, the Company and the Board (i) may participate in discussions or
negotiations (including, as a part thereof, making any counterproposal) with
or furnish information to any third party making an unsolicited Acquisition
Proposal (a "Potential Acquiror") if the Board determines in good faith, based
upon advice of its outside legal counsel, that the failure to participate in
such discussions or negotiations or to furnish such information would be
inconsistent with its fiduciary duties under applicable law, and (ii) will be
permitted to take and disclose to the Company's stockholders a position with
respect to any tender or exchange offer by a third party, or amend or withdraw
such position, pursuant to Rules 14d-9 and 14e-2 under the Exchange Act.
Any non-public information furnished to a Potential Acquiror will be
pursuant to a confidentiality agreement substantially similar to the
confidentiality provisions of the Confidentiality Agreement. In the event that
the Company determines to provide any information as described above, or
receives any Acquisition Proposal, it will promptly inform Parent in writing
as to the fact that information is to be provided and will furnish to Parent
the identity of the recipient of such information or the Potential Acquiror
and the terms of such Acquisition Proposal, except to the extent that the
Board determines in good faith, based upon advice of its outside legal
counsel, that any such action described in this sentence would be inconsistent
with its fiduciary duties under applicable law. The Company has agreed to keep
Parent reasonably informed of the status of any such Acquisition Proposal
except to the extent that the Board determines in good faith, based upon
advice of its outside legal counsel, that any such action would be
inconsistent with the Board's fiduciary duties under applicable law.
The Board may not (i) withdraw or modify or propose to withdraw or modify,
in any manner adverse to Parent, its approval or recommendation of the Merger
Agreement, the Offer or the Merger or (ii) approve or recommend, or propose to
approve or recommend, any Acquisition Proposal; provided that the Board may
withdraw or modify or propose to withdraw or modify its recommendation of the
Merger Agreement, the Offer or the Merger or recommend or propose to recommend
an Acquisition Proposal if, in each case, the Board determines in good faith,
after receiving advice from its financial advisor, that such Acquisition
Proposal is a Superior Proposal (as defined below) and determines in good
faith, based upon advice of its outside legal counsel, that it would be
inconsistent not to do so in order to comply with its fiduciary duties to the
Company's stockholders under applicable law. The Board may not authorize the
Company to enter into any agreement with respect to an Acquisition Proposal
(even if it is a Superior Proposal).
"Acquisition Proposal" means any offer or proposal, whether in writing or
otherwise, made by a third party to acquire beneficial ownership of all or a
material portion of the assets of, or any material equity interest in, the
Company or its material subsidiaries pursuant to a merger, consolidation or
other business combination, recapitalization, reorganization, sale of assets,
tender offer or exchange offer or similar transaction involving the Company or
its material subsidiaries (other than the transactions contemplated by the
Merger Agreement). The term "Superior Proposal" means any proposal to acquire
directly or indirectly, for consideration consisting of cash or securities,
more than a majority of the Shares then outstanding or all or substantially
all the assets of the Company, and otherwise on terms which the Board
determines in good faith to be more favorable to the Company and its
stockholders than the Offer and the Merger (based on advice of the Company's
financial advisor that the value of the consideration provided for in such
proposal is superior to the value of the consideration provided for in the
Offer and the Merger), for which financing, to the extent required, is then
committed.
DIRECTORS' AND OFFICERS' INSURANCE AND INDEMNIFICATION. Parent has agreed,
from and after the consummation of the Offer, to cause the Surviving
Corporation to indemnify, defend and hold harmless any person who is now, or
has been at any time prior to the date of the Merger Agreement, or who becomes
prior to the Effective Time, an officer, director, employee or agent (the
"Indemnified Party") of the Company or any of its subsidiaries against all
losses, claims, damages, liabilities, costs and expenses, judgments, fines,
losses and amounts paid in settlement in connection with any actual or
threatened action, suit, claim, proceeding or investigation (each a "Claim")
to the extent that any such Claim is based on, or arises out of, (i) the fact
that such person is or was a director, officer, employee or agent of the
Company
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or any of its subsidiaries or is or was serving at the request of the Company
or any of its subsidiaries as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise or
(ii) the Merger Agreement, or any of the transactions contemplated thereby, in
each case to the extent that any such Claim pertains to any matter or fact
arising or existing prior to or at the Effective Time, regardless of whether
such Claim is asserted or claimed prior to, at or after the Effective Time, to
the fullest extent permitted under Delaware Law or the Company's Certificate
of Incorporation, By-laws or indemnification agreements in effect at the date
of the Merger Agreement, including provisions relating to advancement of
expenses incurred in the defense of any action or suit. In the event any
Indemnified Party becomes involved in any capacity in any Claim, then from and
after consummation of the Offer, Parent has agreed to cause the Company to
periodically advance to such Indemnified Party its legal and other expenses,
subject to the provision by such Indemnified Party of an undertaking to
reimburse the amounts so advanced in the event of a final non-appealable
determination by a court of competent jurisdiction that such Indemnified Party
is not entitled thereto.
Pursuant to the Merger Agreement, all rights to indemnification and all
limitations of liability existing in favor of the Indemnified Party as
provided under Delaware Law or the Company's Certificate of Incorporation, By-
laws or indemnification agreements in effect at the date of the Merger
Agreement will survive the Merger and will continue in full force and effect
for a period of six years from the Effective Time. However, in the event any
Claim is asserted within such six year period, all rights to indemnification
in respect of any such Claim will continue until disposition of such Claim. In
addition, any determination required to be made with respect to whether an
Indemnified Party's conduct complies with the standards set forth under
Delaware Law, the Company's Certificate of Incorporation or By-laws or such
agreements, as the case may be, will be made by independent legal counsel
selected by the Indemnified Party and reasonably acceptable to Parent.
In the event Parent or Purchaser or any of their successors or assigns (i)
consolidates with or merges into any other person and is not the continuing or
surviving corporation or entity of such consolidation or merger or (ii)
transfers or conveys all or substantially all of its properties and assets to
any person, then, in each such case, proper provision will be made so that the
successors and assigns of Parent and Purchaser assume the obligations
described above.
In addition, Purchaser has agreed to, at the Effective Time, deliver
insurance policies (the "Run-Off Policies") covering any person who is covered
under the Company's existing officers' and directors' liability insurance
policy. Such Run-Off Policies will cover, for a period of not less than six
years, claims for liability brought against such directors and officers after
the Effective Time but alleging acts or omissions occurring before the
Effective Time. The Run-Off Policies will be written in amounts and with terms
and conditions no less favorable than the insurance policies covering such
directors and officers as of the date of the Merger Agreement. However,
Purchaser is not required to obtain such insurance to the extent that the
premium for the Run-Off Policies exceeds 300% of the annual premium paid by
the Company and its subsidiaries for its officers' and directors' as of the
date of the Merger Agreement. If the premiums for the Run-Off Policies exceed
such amount, Purchaser will only be obligated to obtain Run-Off Policies with
the greatest coverage for a cost not exceeding such amount. The Company and
its subsidiaries have represented to Parent and Purchaser that the annual
premium paid for its officers' and directors' liability policies as of the
date of the Merger Agreement does not exceed $175,000.
FEES AND EXPENSES. All costs and expenses incurred in connection with the
Merger Agreement and the transactions contemplated thereby will be paid by the
party incurring such expenses. The Company has agreed that all fees and
expenses that have been or will be incurred by it in connection with the
Merger Agreement and the transactions contemplated thereby (including a $3
million fee plus reasonable expenses payable to the Company's Financial
Advisor) will not, in the aggregate, exceed $5,000,000.
MAFCO NOTE. The Merger Agreement provides that promptly upon the earlier to
occur of the consummation of the Offer or the purchase of Shares pursuant to
the Tender and Voting Agreement, the
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Company will pay the promissory note dated August 21, 1996 made by the Company
to Mafco (the "Mafco Note") at its outstanding face value, and Purchaser will,
to the extent the Company does not have funds available to pay such note at
such time, provide the Company with such funds.
CONDITIONS TO THE MERGER. The respective obligations of each party to effect
the Merger are subject to the satisfaction on or prior to the Closing Date of
each of the following conditions:
(a) Stockholder Approval. The Merger Agreement shall have been approved
and adopted by the requisite vote of the holders of Company Common Stock,
if required by applicable law and the Company's Certificate of
Incorporation, in order to consummate the Merger;
(b) HSR Act. Any waiting period applicable to the Offer under the Hart-
Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act") shall have
expired or been terminated.
(c) Statutes; Consents. No statute, rule, order, decree or regulation
shall have been enacted or promulgated by any foreign or domestic
governmental entity or authority of competent jurisdiction which prohibits
the consummation of the Merger and all foreign or domestic governmental
consents, orders and approvals required for the consummation of the Merger
and the transactions contemplated thereby shall have been obtained and
shall be in effect at the Effective Time;
(d) Injunctions. There shall be no order or injunction of a foreign or
United States federal or state court or other governmental authority of
competent jurisdiction in effect precluding, restraining, enjoining or
prohibiting consummation of the Merger; and
(e) Purchase of Shares in Offer. Parent, Purchaser or their affiliates
shall have purchased Shares pursuant to the Offer or the Tender and Voting
Agreement, except that Parent and Purchaser will not be entitled to rely on
this condition if Purchaser has failed to purchase Shares pursuant to the
Offer in breach of its obligations under the Merger Agreement.
TERMINATION. The Merger Agreement may be terminated at any time prior to the
Effective Time, whether before or after stockholder approval:
(a) By the mutual consent of the Board of Directors of Parent and the
Board;
(b) By the consent of the Board or the Board of Directors of Parent:
(i) if any governmental entity issues a final and non-appealable
order, decree or ruling or takes any other action, in each case
permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by the Merger Agreement; provided that the
party seeking to terminate the Merger Agreement has used all reasonable
efforts to challenge such order, decree or ruling;
(ii) if the Offer expires without any Shares being purchased therein
and the period in the Tender and Voting Agreement during which the
option granted therein is exercisable expires without such option
having been exercised (however, the right to terminate the Merger
Agreement is not available to any party whose failure to fulfill any
obligation under the Merger Agreement has been the cause of, or
resulted in, the failure of Purchaser to purchase Shares in the Offer);
or
(iii) if the Effective Time does not occur by August 31, 1999 (unless
the Effective Time has not occurred because of a material breach of the
Merger Agreement by the party seeking to terminate the Merger
Agreement).
(c) By the Board of Directors of Parent: if, prior to the purchase of
Shares pursuant to the Offer, the Board withdraws, or modifies or changes
in a manner adverse to Parent or Purchaser, its approval or recommendation
of the Offer, the Merger Agreement or the Merger or recommends a Superior
Proposal or resolves to do either of the foregoing.
In the event of the termination of the Merger Agreement as provided above,
the Merger Agreement will become null and void, and there will be no liability
on the part of Parent or the Company, except nothing in the Merger Agreement
will relieve any party of liability for fraud or for breach of the Merger
Agreement (other than a breach arising solely out of the inaccuracy of a
representation or warranty made by the Company that was accurate when made on
the date thereof and which inaccuracy was not intentional on the part of the
Company).
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THE TENDER AND VOTING AGREEMENT.
The following is a summary of the Tender and Voting Agreement, a copy of
which is filed as an exhibit to the Schedule 14D-1. Such summary is qualified
in its entirety by reference to the Tender and Voting Agreement.
Pursuant to the Tender and Voting Agreement and in order to induce Parent
and Purchaser to enter into the Merger Agreement, Mafco, which beneficially
owns 19,600,000 Class B Shares, representing approximately 65.8% of the
outstanding shares of Company Common Stock, has agreed to tender all its
Shares pursuant to the Offer and not to withdraw any Shares tendered in the
Offer.
Mafco has further agreed to vote all Shares held of record or beneficially
owned by it (i) in favor of the Merger and the Merger Agreement and (ii)
against any action or agreement that would impede, interfere with or prevent
the Offer or the Merger. Mafco also has granted Parent and certain officers of
Parent an irrevocable proxy to vote its Shares in favor of the transactions
contemplated by the Merger Agreement and against any Acquisition Proposal.
In addition, Mafco has granted to Purchaser an irrevocable option (the
"Stock Option") to purchase Mafco's Shares at a price per Share equal to the
Offer Price. Purchaser may exercise the Stock Option, in whole but not in
part, in the event that the Offer is terminated without Purchaser purchasing
Shares thereunder and such failure to purchase is not in contravention of
Purchaser's or Parent's obligations under the Merger Agreement or the Offer.
In any such case, the Stock Option will remain exercisable until 60 days after
the date of such event (the "60 Day Period"), provided that the waiting period
under the HSR Act has expired or been waived and there is not in effect any
preliminary injunction or other order issued by any governmental authority
prohibiting the exercise of the Stock Option.
However, if the HSR Act waiting period has not expired or been waived or any
such injunction or order is in effect, in each case on the expiration date of
the 60 Day Period, the 60 Day Period will be extended until five business days
after the later of the date of expiration or waiver of the HSR Act waiting
period and the date of removal or lifting of such injunction or order, but in
no event will the Stock Option be exercisable after July 23, 1999. Purchaser
will not be entitled to purchase the Shares pursuant to the Stock Option if
Purchaser fails to purchase Shares pursuant to the Offer in breach of its
obligations under the Merger Agreement. Upon the purchase of Mafco's Shares
pursuant to the Stock Option, Purchaser will, unless the Company has breached
its obligation not to authorize the Company to enter any agreement with
respect to an Acquisition Proposal not to authorize the Company to enter into
any agreement with respect to an Acquisition Proposal, subject to applicable
law, offer to purchase any and all remaining Shares of Company Common Stock at
the Offer Price, by way of merger or otherwise.
In addition, in the event that, after the consummation of the Offer, the
Company or any of its subsidiaries suffers any loss, arising out of a third-
party claim or otherwise, that Parent in good faith notifies Mafco would be
covered by any insurance policy maintained by or for the benefit of Mafco or
any of its affiliates (an "Insured Claim"), Mafco will present and cooperate
by all reasonable means in the pursuit of claims for payment under such policy
in respect of such loss, but will not be required to sue or otherwise litigate
with its insurers (in which case, Mafco will assign to Parent all such rights
to sue under the policies as are assignable under applicable law), and pay to
the Company the proceeds of such claim under such policy as reimbursement in
respect of the amount of such loss. Until the Effective Time, Mafco and the
Company have agreed to take all reasonable steps necessary to ensure the
continuation of all such insurance policies in order to permit the Company to
recover under such policies. Mafco is not obligated to present any claim under
any such insurance policy with respect to any Insured Claim unless (i) such
Insured Claim is based upon bodily injury, property damage, wrongful or other
acts or another condition or event that arose or occurred prior to the
consummation of the Offer and (ii) the Company or the relevant affiliate of
the Company cooperates fully at its expense with Mafco's insurers in the
investigation of such Insured Claim and (in the case of any Insured Claim
arising out of a third-party claim) the defense thereof.
The amount of proceeds of any such insurance claim to be paid over to the
Company is limited to the amount actually received by Mafco from its insurers
with respect to such claim (net of any self-insured
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retention amount, deductible amount or other amount that Mafco is required to
reimburse its insurers under its contractual agreements with them or to pay
prior to the insurer paying any funds, in each case with respect to such
claim, its defense or investigation), minus the aggregate amount of all
reasonable out-of-pocket expenses incurred by Mafco in presenting such claim
(to the extent not paid or reimbursed by its insurers). Mafco is not
responsible for any such sums which would be payable under insurance policies
not paid as a result of insurer bankruptcy, insurer schemes or arrangements,
insurer reorganizations, insurer liquidations, acts of governmental
authorities and take overs of the administration of any insurer or other or
like situations. Mafco is not required to advance any funds for
investigations, defense or payment of any judgment or settlement of any claim.
In the event Mafco is forced to advance any such funds because of the failure
of Parent or Purchaser to make prompt payment of such sums, Parent will
immediately pay Mafco such funds.
Mafco has also agreed, in its capacity as a stockholder of the Company, that
it and its subsidiaries will not, and Mafco will cause its officers,
directors, partners, employees, representatives and agents, including, but not
limited to, investment bankers, attorneys and accountants, not to, directly or
indirectly, initiate, encourage, solicit any inquiry or the making of any
proposal that is or is reasonably likely to lead to an Acquisition Proposal or
engage in negotiations or discussions with, or furnish any information or data
to, any third party relating to an Acquisition Proposal. Finally, Mafco will
immediately inform Parent of the terms of any proposal, discussion,
negotiation or inquiry (and will disclose any written materials received by it
in connection with such proposal, discussion, negotiation or inquiry) and the
identity of the party making such proposal or inquiry.
THE INDEMNIFICATION AGREEMENT.
The following is a summary of the Indemnification Agreement, dated as of
December 16, 1998, among Mafco Holdings, Mafco, Purchaser, Parent and the
Company (the "Indemnification Agreement"), a copy of which is filed as an
exhibit to the Schedule 14D-1 filed by Purchaser and Parent with the
Commission in connection with the Offer. Such summary is qualified in its
entirety by reference to the Indemnification Agreement.
In connection with the execution of the Merger Agreement, Mafco Holdings and
Mafco entered into the Indemnification Agreement with Purchaser, Parent and
the Company, pursuant to which Mafco and Mafco Holdings agreed to jointly and
severally indemnify, save harmless and defend Parent, Purchaser and the
Company and each of their stockholders, affiliates, directors, officers,
agents and representatives from and against any and all losses, liabilities,
fines, judgments, claims, damages, penalties, obligations, payments, actions
or causes of action, liens, costs and expenses (including reasonable
attorney's fees) incurred by any of them by reason of, or arising out of, (a)
any liability for income and franchise taxes arising out of the inclusion of
the Company and any subsidiaries in any consolidated federal income tax
return, or any consolidated, combined or unitary state or local tax return, of
Mafco Holdings or Mafco, except for any such liability as is directly
attributable to the operations of the Company and any subsidiaries, and (b)
any liability or obligation of an entity, whether or not incorporated, which
is or was part of a controlled group or under common control with the Company
or otherwise treated as a "single employer" with the Company within the
meaning of Section 414(b), (c), (m) or (o) of the Internal Revenue Code of
1986, as amended (the "Code") or under Section 4001 of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), (other than the Company or
any subsidiary of the Company), with respect to employee benefit plans;
established, maintained, sponsored or contributed to by such entity,
including, but not limited to (i) liabilities for complete and partial
withdrawals under any "multiemployer plan" (as defined in Section 3(37) of
ERISA) pursuant to Sections 4203 or 4205 of ERISA, respectively; (ii)
liabilities to the Pension Benefit Guaranty Corporation (including, without
limitation, liabilities for premiums and terminations); (iii) liabilities
under Section 4980B of the Code or Part 6 of Subtitle B of Title I of ERISA;
and (iv) liabilities arising under Section 412 of the Code or Section
302(a)(2) of ERISA.
If there is an audit, examination or administrative or judicial proceeding
(a "Tax Proceeding") relating to any liability for taxes as to which the
Company and any subsidiaries were included in a consolidated
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federal income tax return or a consolidated, combined or unitary state or
local tax return of Mafco Holdings or Mafco, Mafco Holdings and Mafco will
control the audit or other proceedings; provided, however, the Company will be
entitled to participate in that portion of the Tax Proceeding, if any,
relating solely to items for which the Company is liable pursuant to the
Indemnification Agreement ("Company Items"). In the event that either Mafco
Holdings or Mafco believes that a position in the Tax Proceeding that the
Company proposes to take with respect to a Company Item is unreasonable, the
parties will in good faith attempt to negotiate a prompt settlement of the
disagreement, and if the parties are unable to negotiate a resolution of the
disagreement within 15 days, the dispute will be submitted to the New York
office of a firm of independent accountants of nationally recognized standing
reasonably satisfactory to Mafco and the Company (or, if Mafco and the Company
do not agree on such a firm, then a firm chosen by the Arbitration and
Mediation Committee of the New York Society of Certified Public Accountants)
(the "Tax Dispute Accountants") for a determination as to whether the position
is unreasonable, and, if so, what is a reasonable position. The decision of
the Tax Dispute Accountants will be conclusive and binding on the parties, and
the fees and expenses of the Tax Dispute Accountants in resolving the dispute
will be borne equally by Mafco Holdings and Mafco on the one hand and the
Company on the other.
11. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY AFTER THE OFFER AND THE MERGER
PURPOSE OF THE OFFER. The purpose of the Offer and the Merger is for Parent
to acquire control of, and the entire equity interest in, the Company. The
purpose of the Merger is for Parent to acquire all Shares not purchased
pursuant to the Offer. Upon consummation of the Merger, the Company will be a
wholly owned subsidiary of Parent. The Offer is intended to increase the
likelihood that the Merger will be completed promptly.
VOTE REQUIRED TO APPROVE MERGER. Delaware Law requires, among other things,
that the adoption of any plan of merger or consolidation of the Company must
be approved by the Board and by the holders of a majority of the outstanding
Shares. The Board has approved the Offer and the Merger; in addition, under
the Tender and Voting Agreement, Mafco has agreed to tender and sell all of
its Shares pursuant to the Offer. As Mafco beneficially owns approximately
65.8% of all outstanding Shares, Purchaser will have sufficient voting power
to effect the Merger without the vote of any other stockholder of the Company.
The Company would, however, be required to provide certain notice of the
Merger to stockholders, as required by law. However, Delaware Law also
provides that if a parent company owns at least 90% of each class of stock of
a subsidiary, the parent company can effect a "short form" merger with that
subsidiary without the action of the other stockholders of the subsidiary.
Accordingly, if, as a result of the Offer or otherwise, the Offeror acquires
or controls at least 90% of the outstanding Shares, Purchaser could, and
intends to, effect the Merger without prior notice to, or any action by, other
stockholders of the Company.
PLANS FOR THE COMPANY. It is expected that, initially following the Merger,
the business and operations of the Company will, except as set forth in this
Offer to Purchase, be continued by the Company substantially as they are
currently being conducted. Parent will continue to evaluate the business and
operations of the Company during the pendency of the Offer and after the
consummation of the Offer and the Merger, and will take such actions as it
deems appropriate under the circumstances then existing. Parent intends to
seek additional information about the Company during this period. Thereafter,
Parent intends to review such information as part of a comprehensive review of
the Company's business, operations, capitalization and management with a view
to optimizing exploitation of the Company's potential in conjunction with
Parent's business.
Except as indicated in this Offer to Purchase, Parent does not have any
present plans or proposals which relate to or would result in an extraordinary
corporate transaction, such as a merger, reorganization or liquidation,
involving the Company or any of its subsidiaries, a sale or transfer of a
material amount of assets of the Company or any of its subsidiaries, any
material change in the Company's capitalization or dividend policy or any
other material change in the Company's corporate structure or business.
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12. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES, EXCHANGE LISTING AND
EXCHANGE ACT REGISTRATION
The purchase of Shares by Purchaser pursuant to the Offer will reduce the
number of Shares that might otherwise trade publicly and will reduce the
number of holders of Shares, which could adversely affect the liquidity and
market value of the remaining Shares, if any, held by the public.
If the Offer and Merger are consummated, the Shares will no longer meet the
requirements of the NYSE for continued listing and will be delisted from the
NYSE. According to the NYSE's published guidelines, the NYSE considers
delisting the Shares if, among other things, the number of record holders of
at least 100 Shares falls below 1,200, the number of publicly held Shares
(exclusive of holdings of officers, directors and their immediate families and
other concentrated holdings of ten percent or more ("NYSE Excluded Holdings"))
falls below 600,000 or the aggregate market value of publicly held Shares
(exclusive of NYSE Excluded Holdings) falls below $5,000,000. If, as a result
of the purchase of Shares pursuant to the Offer or otherwise, the Shares no
longer meet the requirements of the NYSE for continued listing and the listing
of the Shares is discontinued, the market for the Shares could be adversely
affected.
If the NYSE delists the Shares, it is possible that the Shares would
continue to trade on another securities exchange or in the over-the-counter
market and that price or other quotations would be reported by such exchange
or through the National Association of Securities Dealers Automated Quotation
System ("NASDAQ") or other sources. The extent of the public market therefor
and the availability of such quotations would depend, however, upon such
factors as the number of stockholders and/or the aggregate market value of the
Shares remaining at such time, the interest in maintaining a market in the
Shares on the part of securities firms, the possible termination of
registration under the Exchange Act as described below and other factors.
Purchaser cannot predict whether the reduction in the number of Shares that
might otherwise trade publicly would have an adverse or beneficial effect on
the market price for or marketability of the Shares or whether it would cause
future market prices to be greater or less than the Offer Price.
The Shares are currently "margin securities", as such term is defined under
the rules of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which has the effect, among other things, of
allowing brokers to extend credit on the collateral of the Shares. Following
the Offer, the Shares will no longer constitute "margin securities" for
purposes of the margin regulations of the Federal Reserve Board, in which
event such Shares will no longer be used as collateral for loans made by
brokers.
Purchaser currently intends to seek to cause the Company to terminate the
registration of the Shares under the Exchange Act as soon after consummation
of the Offer as the requirements for termination of registration are met.
Registration of the Shares under the Exchange Act may be terminated upon
application of the Company to the Commission if the Shares are neither listed
on a national securities exchange nor held by 300 or more holders of record.
The termination of the registration of the Shares under the Exchange Act would
substantially reduce the information required to be furnished by the Company
to holders of Shares and to the Commission and would make certain provisions
of the Exchange Act, such as the short-swing profit recovery provisions of
Section 16(b), the requirement of furnishing a proxy statement in connection
with stockholders' meetings and the requirements of Rule 13e-3 under the
Exchange Act with respect to "going private" transactions, no longer
applicable to the Shares. In addition, "affiliates" of the Company and persons
holding "restricted securities" of the Company may be deprived of the ability
to dispose of their Shares pursuant to Rule 144 promulgated under the
Securities Act of 1933, as amended. If registration of the Shares under the
Exchange Act is terminated, the Shares will no longer be "margin securities"
or be eligible for NYSE or NASDAQ reporting.
13. CERTAIN CONDITIONS OF THE OFFER
Purchaser will not be required to accept for payment or, subject to
applicable rules and regulations of the Commission, pay for any Shares
tendered pursuant to the Offer, and may terminate or amend the Offer and may
postpone the acceptance for payment for Shares tendered, if, at the Expiration
Date, (i) the
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Minimum Condition has not been satisfied, (ii) any applicable waiting period
under the HSR Act has not expired or been terminated prior to the expiration
of the Offer (the "HSR Condition") or (iii) any of the following conditions
exists:
(a) there shall be any statute, rule, regulation, judgment, order or
injunction promulgated, entered, enforced, enacted, issued or applicable to
the Offer or the Merger by any domestic or foreign federal or state
governmental regulatory or administrative agency or authority or court or
legislative body or commission which (l) prohibits, or imposes any material
limitations on, Parent's or Purchaser's ownership or operation of all or a
material portion of the Company's businesses or assets, (2) prohibits, or
makes illegal the acceptance for payment, payment for or purchase of Shares
or the consummation of the Offer or the Merger, (3) results in a material
delay in or restricts the ability of Purchaser, or renders Purchaser
unable, to accept for payment, pay for or purchase some or all of the
Shares, or (4) imposes material limitations on the ability of Purchaser or
Parent effectively to exercise full rights of ownership of the Shares,
including, without limitation, the right to vote the Shares purchased by it
on all matters properly presented to the Company's stockholders, provided
that Parent shall have used all reasonable efforts to cause any such
judgment, order or injunction to be vacated or lifted;
(b) there shall be any action or proceeding pending or instituted by any
domestic or foreign federal or state governmental regulatory or
administrative agency or authority which (1) seeks to prohibit, or impose
any material limitation on, Parent's or Purchaser's ownership or operation
of all or a material portion of the Company's businesses or assets, (2)
seeks to prohibit or make illegal the acceptance for payment, payment for
or purchase of Shares or the consummation of the Offer or the Merger, (3)
is reasonably likely to result in a material delay in or seeks to restrict
the ability of Purchaser, or render Purchaser unable, to accept for
payment, pay for or purchase some or all of the Shares or (4) seeks to
impose material limitations on the ability of Purchaser or Parent
effectively to exercise full rights of ownership of the Shares, including,
without limitation, the right to vote the Shares purchased by it on all
matters properly presented to the Company's stockholders; provided that
Parent shall have used all reasonable efforts to cause any such action or
proceeding to be dismissed;
(c) the representations and warranties of the Company set forth in the
Merger Agreement shall not be true and correct in any respect, disregarding
for this purpose any standard of materiality contained in any such
representation or warranty, as of the date of consummation of the Offer as
though made on or as of such date, or the Company shall have breached or
failed in any material respect to perform or comply with any material
obligation, agreement or covenant required by the Merger Agreement to be
performed or complied with by it (including without limitation if the
Company shall have entered into any definitive agreement or any agreement
in principle with any person with respect to an Acquisition Proposal or
similar business combination with the Company), except, in the case of the
failure of any representation or warranty, (i) for changes specifically
permitted by the Merger Agreement and (ii) (A) those representations and
warranties that address matters only as of a particular date which are true
and correct as of such date or (B) where the failure of such
representations and warranties to be true and correct, do not, individually
or in the aggregate, have a material adverse effect on the Company and its
subsidiaries, taken as a whole;
(d) it shall have been publicly disclosed that any person, entity or
"group" (as defined in Section 13(d)(3) of the Exchange Act), shall have
acquired and has beneficial ownership (determined pursuant to Rule 13d-3
promulgated under the Exchange Act) of more than 15% of any class or series
of capital stock of the Company (including the Shares), through the
acquisition of stock, the formation of a group or otherwise, or shall have
been granted an option, right or warrant, conditional or otherwise, to
acquire beneficial ownership of more than 10% of any class or series of
capital stock of the Company (including the Shares), other than any person
or group existing on the date hereof which beneficially owns more than 9%
of any class or series of capital stock of the Company;
(e) (1) any general suspension of trading in securities on any national
securities exchange or in the over-the-counter market, (2) the declaration
of a banking moratorium or any suspension of
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payments in respect of banks in the United States or France (whether or not
mandatory), or (3) any limitation (whether or not mandatory) by a United
States or French governmental authority or agency on the extension of
credit by banks or other financial institutions;
(f) the Board shall have withdrawn, or modified or changed in a manner
adverse to Parent or Purchaser (including by amendment of the Schedule 14D-
9) its recommendation of the Offer, the Merger Agreement, or the Merger, or
recommended another proposal or offer, or shall have resolved to do any of
the foregoing; or
(g) the Merger Agreement shall have been terminated in accordance with
its terms;
which, in the reasonable judgment of Parent or Purchaser, in any such case,
and regardless of the circumstances giving rise to any such condition, makes
it inadvisable to proceed with the Offer or with such acceptance for payment
or payments.
The foregoing conditions are for the sole benefit of Purchaser and Parent
and may be asserted by either of them or may be waived by Purchaser or Parent,
in whole or in part at any time and from time to time in their sole
discretion.
14. CERTAIN LEGAL MATTERS AND REGULATORY APPROVALS
GENERAL. Based upon its examination of publicly available information with
respect to the Company, the review of certain information furnished by the
Company to Parent and discussions of representatives of Parent with
representatives of the Company during Parent's investigation of the Company
(see Section 10), neither Purchaser nor Parent is aware of any license or
other regulatory permit that appears to be material to the business of the
Company and its subsidiaries, taken as a whole, which might be adversely
affected by the acquisition of Shares by Purchaser pursuant to the Offer or,
except as set forth below, of any approval or other action by any domestic
(federal or state) or foreign governmental, administrative or regulatory
authority or agency which would be required prior to the acquisition of Shares
by Purchaser pursuant to the Offer. Should any such approval or other action
be required, it is Purchaser's present intention to seek such approval or
action. There can be no assurance that any such approval or other action, if
needed, would be obtained without substantial conditions or that adverse
consequences might not result to the business of the Company, Purchaser or
Parent or that certain parts of the businesses of the Company, Purchaser or
Parent might not have to be disposed of or held separate or other substantial
conditions complied with in order to obtain such approval or other action or
in the event that such approval was not obtained or such other action was not
taken. Purchaser's obligation under the Offer to accept for payment and pay
for Shares is subject to certain conditions, including conditions relating to
the legal matters discussed in this Section 14. See Section 13--"Certain
Conditions of the Offer".
STATE TAKEOVER LAWS. The Company is incorporated under the laws of the State
of Delaware. In general, Section 203 of Delaware Law prevents an "interested
stockholder" (generally a person who owns or has the right to acquire 15% or
more of a corporation's outstanding voting stock or an affiliate or associate
thereof) from engaging in a "business combination" (defined to include mergers
and certain other transactions) with a Delaware corporation for a period of
three years following the date such person became an interested stockholder
unless, among other things, prior to such date the board of directors of the
corporation approved either the business combination or the transaction in
which the interested stockholder became an interested stockholder. The
Company, in its Certificate of Incorporation, elected not to be governed by
Section 203. Accordingly, Section 203 is inapplicable to the Offer and the
Merger.
A number of other states have adopted laws and regulations applicable to
attempts to acquire securities of corporations that are incorporated, or have
substantial assets, stockholders, principal executive offices or principal
places of business, or whose business operations otherwise have substantial
economic effects, in such states. In Edgar v. Mite Corp., the Supreme Court of
the United States invalidated on constitutional grounds the Illinois Business
Takeover Statute, which, as a matter of state securities law, made takeovers
of corporations meeting certain requirements more difficult. However, in 1987,
in CTS Corp. v. Dynamics Corp. of America, the Supreme Court held that the
State of Indiana may,
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as a matter of corporate law and, in particular, with respect to those aspects
of corporate law concerning corporate governance, constitutionally disqualify
a potential acquiror from voting on the affairs of a target corporation
without the prior approval of the remaining stockholders, provided that such
laws were applicable only under certain conditions. Subsequently, in TLX
Acquisition Corp. v. Telex Corp., a Federal district court in Oklahoma ruled
that the Oklahoma statutes were unconstitutional insofar as they applied to
corporations incorporated outside Oklahoma in that they would subject such
corporations to inconsistent regulations. Similarly, in Tyson Foods, Inc. v.
McReynolds, a Federal district court in Tennessee ruled that four Tennessee
takeover statutes were unconstitutional as applied to corporations
incorporated outside Tennessee. This decision was affirmed by the United
States Court of Appeals for the Sixth Circuit. In December 1988, a federal
district court in Florida held in Grand Metropolitan PLC v. Butterworth that
the provisions of the Florida Affiliated Transactions Act and Florida Control
Share Acquisition Act were unconstitutional as applied to corporations
incorporated outside of Florida.
The Company, directly or through subsidiaries, conducts business in a number
of states throughout the United States, some of which may have enacted
takeover laws. Purchaser does not know whether any of these laws will, by
their terms, apply to the Offer or the Merger and has not attempted to comply
with any such laws. Should any person seek to apply any state takeover law,
Purchaser reserves the right to challenge the validity or applicability of any
such statute allegedly applicable to the Offer in appropriate court
proceedings or otherwise, and nothing contained in this Offer to Purchase nor
any action taken in connection herewith is intended as a waiver of that right.
In the event it is asserted that one or more state takeover laws applies to
the Offer or the Merger, and an appropriate court does not determine that it
is inapplicable or invalid as applied to the Offer or the Merger, Purchaser
might be required to file certain information with, or receive approvals from,
the relevant state authorities. In addition, if enjoined, Purchaser might be
unable to accept for payment any Shares tendered pursuant to the Offer or be
delayed in continuing or consummating the Offer and the Merger. In such case,
Purchaser may not be obligated to accept for payment, or pay for, any Shares
tendered. See Section 13 --"Certain Conditions of the Offer".
ANTITRUST. Under the HSR Act and the rules that have been promulgated
thereunder by the Federal Trade Commission (the "FTC"), certain acquisition
transactions may not be consummated unless certain information has been
furnished to the Antitrust Division of the Department of Justice (the
"Antitrust Division") and the FTC and certain waiting period requirements have
been satisfied. The acquisition of Shares by Purchaser pursuant to the Offer
is subject to such requirements. See Section 2 --"Acceptance for Payment and
Payment for Shares".
Pursuant to the HSR Act, Parent intends to file a Premerger Notification and
Report Form (the "HSR Report") with the Antitrust Division and the FTC in
connection with the purchase of Shares pursuant to the Offer. Under the
provisions of the HSR Act applicable to the Offer, the purchase of Shares
pursuant to the Offer may not be consummated until the expiration of a 15-
calendar day waiting period following the filing by Parent. Parent intends to
file the HSR Report on December 22, 1998, so as to allow the applicable HSR
Act waiting period for the Offer to expire on or prior to 11:59 p.m., New York
City time, on January 6, 1999. Pursuant to the HSR Act, Parent intends to
request early termination of the waiting period applicable to the Offer. There
can be no assurance, however, that the 15-day HSR Act waiting period will be
terminated early. If either the FTC or the Antitrust Division were to request
additional information or documentary material from Parent with respect to the
Offer, the waiting period with respect to the Offer would expire at 11:59
p.m., New York City time, on the tenth calendar day after the date of
substantial compliance by Parent with such request. Thereafter, the waiting
period could be extended only by court order. If the acquisition of Shares is
delayed pursuant to a request by the FTC or the Antitrust Division for
additional information or documentary material pursuant to the HSR Act, the
Offer may be extended and, in any event, the purchase of and payment for
Shares will be deferred until ten days after the request is substantially
complied with, unless the extended period expires on or before the date when
the initial 15-day period would otherwise have expired, or unless the waiting
period is sooner terminated by the FTC and the Antitrust Division. Only one
extension of such waiting period pursuant to a request for additional
information is authorized by the HSR Act and the rules promulgated thereunder,
except by court order. Any
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such extension of the waiting period will not give rise to any withdrawal
rights not otherwise provided for by applicable law. See Section 4--
"Withdrawal Rights". It is a condition to the consummation of the Merger that
the waiting period applicable under the HSR Act to the Offer expire or be
terminated. See Section 2 --"Acceptance for Payment and Payment for Shares"
and Section 13 --"Certain Conditions of the Offer".
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed acquisition of Shares
by Purchaser pursuant to the Offer. At any time before or after the purchase
of Shares pursuant to the Offer by Purchaser, the FTC or the Antitrust
Division could take such action under the antitrust laws as it deems necessary
or desirable in the public interest, including seeking to enjoin the purchase
of Shares pursuant to the Offer or seeking the divestiture of Shares purchased
by Purchaser or the divestiture of substantial assets of Parent, the Company
or their respective subsidiaries. Private parties and state attorneys general
may also bring legal action under federal or state antitrust laws under
certain circumstances. Based upon an examination of information available to
Parent relating to the businesses in which Parent, the Company and their
respective subsidiaries are engaged, Parent and Purchaser believe that the
Offer will not violate the antitrust laws. Nevertheless, there can be no
assurance that a challenge to the Offer on antitrust grounds will not be made
or, if such a challenge is made, what the result would be. See Section 13--
"Certain Conditions of the Offer" for certain conditions to the Offer,
including conditions with respect to litigation.
DISSENTERS' RIGHTS. Holders of Shares do not have dissenters' rights as a
result of the Offer. However, if the Merger is consummated, holders of Shares
may have rights pursuant to the provisions of Section 262 of Delaware Law to
dissent and demand appraisal of, and to receive payment in cash of the fair
value of, their Shares. If the statutory procedures were complied with, such
rights could lead to a judicial determination of the fair value required to be
paid in cash to such dissenting holders for their Dissenting Shares. Any such
judicial determination of the fair value of the Dissenting Shares could be
based upon considerations other than, or in addition to, the Offer Price, the
market value of the Dissenting Shares, including asset values, and the
investment value of the Dissenting Shares. The value so determined could be
greater or lower than the Offer Price.
If any holder of Shares who demands appraisal under Section 262 of Delaware
Law fails to perfect, or effectively withdraws or loses his right to
appraisal, as provided in Delaware Law, the Shares of such stockholder will be
converted into the right to receive the Merger Consideration in accordance
with the Merger Agreement. A stockholder may withdraw his demand for appraisal
by delivery to Parent of a written withdrawal of his demand for appraisal and
acceptance of the terms of the Merger.
A stockholder seeking to exercise dissenters' rights under Section 262 of
Delaware Law may not tender his Shares in the Offer and will be further
advised by the Company as to the steps necessary to exercise such rights.
FAILURE TO FOLLOW THE STEPS REQUIRED BY SECTION 262 OF DELAWARE LAW FOR
PERFECTING APPRAISAL RIGHTS MAY RESULT IN THE LOSS OF SUCH RIGHTS.
GOING PRIVATE TRANSACTIONS. The Commission has adopted Rule 13e-3 under the
Exchange Act which is applicable to certain "going private" transactions and
which may under certain circumstances be applicable to the Merger or another
business combination following the purchase of Shares pursuant to the Offer in
which Purchaser seeks to acquire any remaining Shares not held by it. However,
Rule 13e-3 will not be applicable to the Merger or any such other business
combination if (i) the Shares are deregistered under the Exchange Act prior to
the Merger or other business combination, or (ii) the Merger or other business
combination is consummated within one year after the purchase of the Shares
pursuant to the Offer and the value of the consideration paid per Share in the
Merger or other business combination (measured at the time of consummation of
the Merger) is at least equal to the amount paid per Share in the Offer. If
applicable, Rule 13e-3 requires, among other things, that certain financial
information concerning the Company and certain information relating to the
fairness of the proposed transaction and the consideration offered to minority
stockholders in such transaction be filed with the Commission and disclosed to
stockholders prior to consummation of the transaction.
33
<PAGE>
15. FEES AND EXPENSES
Except as set forth below, Purchaser will not pay any fees or commissions to
any broker, dealer or other person for soliciting tenders of Shares pursuant
to the Offer.
CSFB is acting as Dealer Manager in connection with the Offer and as
financial advisor to Parent in connection with Parent's proposed acquisition
of the Company, for which services CSFB will receive customary compensation.
Parent has also agreed to reimburse CSFB for its out-of-pocket expenses,
including the fees and expenses of legal counsel, incurred in connection with
its engagement, and to indemnify CSFB and certain related persons against
certain liabilities and expenses in connection with its engagement, including
certain liabilities under the federal securities laws. In the ordinary course
of business, CSFB and its affiliates may actively trade the debt and equity
securities of Parent and the Company for their own account and for the
accounts of customers and, accordingly, may at any time hold a long or short
position in such securities.
Purchaser and Parent have retained D.F. King & Co., as the Information
Agent, and American Stock Transfer & Trust Company, as the Depositary, in
connection with the Offer. The Information Agent may contact holders of Shares
by mail, telephone, telex, telecopy, telegraph and personal interview and may
request banks, brokers, dealers and other nominee stockholders to forward
materials relating to the Offer to beneficial owners.
The Information Agent and the Depositary will receive reasonable and
customary compensation for their services in connection with the Offer, plus
reimbursement for their reasonable out-of-pocket expenses, and will be
indemnified against certain liabilities in connection with the Offer,
including certain liabilities under the federal securities laws. Brokers,
dealers, commercial banks and trust companies will be reimbursed by Purchaser
for customary handling and mailing expenses incurred by them in forwarding
material to their customers.
16. MISCELLANEOUS
Purchaser is not aware of any jurisdiction where the making of the Offer is
prohibited by any administrative or judicial action pursuant to any valid
state statute. If Purchaser becomes aware of any valid state statute
prohibiting the making of the Offer or the acceptance of Shares pursuant
thereto, Purchaser will make a good faith effort to comply with any such state
statute. If, after such good faith effort, Purchaser cannot comply with any
such state statute, the Offer will not be made to (nor will tenders be
accepted from or on behalf of) the holders of Shares in such state. In any
jurisdiction where the securities, blue sky or other laws require the Offer to
be made by a licensed broker or dealer, the Offer will be deemed to be made on
behalf of Purchaser by the Dealer Manager or by one or more registered brokers
or dealers licensed under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF PURCHASER OR THE COMPANY NOT CONTAINED IN THIS
OFFER TO PURCHASE OR IN THE LETTER OF TRANSMITTAL, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED.
Pursuant to Rule 14d-3 of the General Rules and Regulations under the
Exchange Act, Parent and Purchaser have filed with the Commission the Schedule
14D-1, together with exhibits, furnishing certain additional information with
respect to the Offer. The Schedule 14D-1 and any amendments thereto, including
exhibits, may be inspected at, and copies may be obtained from, the same
places and in the same manner as set forth in Section 7--"Certain Information
Concerning the Company" (except that they will not be available at the
regional offices of the Commission).
Societe Nationale d'Exploitation Industrielle des
Tabacs et Allumettes
Dorsay Acquisition Corp.
December 22, 1998
34
<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
PARENT AND PURCHASER
1. EXECUTIVE OFFICERS AND DIRECTORS OF PARENT
The following table sets forth the name, current business address,
citizenship and present principal occupation or employment, and material
occupations, positions, offices or employments during the last five years, of
each director and executive officer of Parent. Unless otherwise indicated, the
current business address of each person is 53, quai d'Orsay, 75347 Paris,
Cedex 07, France. Unless otherwise indicated, each such person is a citizen of
France, or, if the person is a corporation, partnership or other entity, the
place of its organization is France. Unless otherwise indicated, each of the
following persons has held his or her present position as set forth below for
the past five years. Unless otherwise indicated, each occupation set forth
opposite an individual's name refers to employment with Parent.
OFFICERS
JEAN-DOMINIQUE COMOLLI
Mr. Comolli has been Chairman and Chief Executive Officer of Parent since
December 1993.
ERIC ALBRAND
Mr. Albrand has been Senior Executive Vice President-Finance since December
1997 and Chief Financial Officer since 1995. Prior to 1995, Mr. Albrand held
the following positions with Parent: Deputy Financial Director in 1994, and
Director of Strategic Planning and Audit from 1991 until 1993.
BRUNO GERMAIN-THOMAS
Mr. Germain-Thomas has been Senior Executive Vice President-Marketing and
Sales since May 1997. From 1996 until May 1997, Mr. Germain-Thomas was Senior
Executive Vice President of Larousse Bordas, 21, Boulevard du Montparnasse,
Paris 75006, France, a publishing company. From 1993 until 1996, he was Senior
Executive Vice President of Volvic Mineral Waters at Danone, 7-9 rue de
Teheran, 75382 Paris, Cedex 08, France, a food and beverage company.
GERARD BLANC
Mr. Gerard Blanc has been Executive Vice President-Human Resources since May
1998. Mr. Blanc was Industrial Director of Parent from 1991 until May 1998.
FRANCOIS DUTREIL
Mr. Dutreil has been Executive Vice President-Distribution since January
1998. From 1993 until January 1998, Mr. Dutreil was Chief Executive Officer of
Societe Allumettiere Francaise, a subsidiary of Parent, 2, rue Louis de
Broglie, 77400 Saint-Thibault des Vignes, France.
CHARLES LEBEAU
Mr. Lebeau has been Executive Vice President-International Development and
Cigars since February 1998. From 1995 until February 1998, Mr. Lebeau was
Executive Vice President-International Development. From 1989 until 1995, Mr.
Lebeau was Director of Marketing and International Sales.
JEAN-PAUL LEBONDIDIER
Mr. Lebondidier has been Executive Vice President-Production since June
1998. From 1990 until June 1998, Mr. Lebondidier was Director of Production
for dairy products of Danone, 7-9 rue de Teheran, 75382 Paris, Cedex 08,
France, a food and beverage company.
SCHI-1
<PAGE>
GUY DUTREIX
Mr. Dutreix was nominated Executive Vice President-Advisor to the Chairman
in 1998. From 1995 until 1998, Mr. Dutreix was Executive Vice President in
charge of Production, Research, Tobacco Sourcing, Cigars and Matches. From
1988 until 1995, Mr. Dutreix was Executive Vice President--Tobacco.
ISABELLE OCKRENT
Ms. Ockrent has been Executive Vice President-Corporate Communications and
External Relations since April 1998. From 1990 until April 1998, Ms. Ockrent
was Director of Communications and External Relations.
DIRECTORS
JEAN-DOMINIQUE COMOLLI
Mr. Comolli has been Chairman and Chief Executive Officer since December
1993.
BIC S.A., REPRESENTED BY BRUNO BICH
Bic S.A., 8, impasse des Cailloux, 92110 Clichy, France, specializes in the
production and marketing of stationery goods, haute couture and ready-to-wear
clothing, and fine arts supplies.
Mr. Bich has been President of the Bic Group since 1993.
VINCENT BOLLORE
Since 1981, Mr. Bollore has been Chairman and Chief Executive Officer of
Bollore Technologies S.A., 31-32 Quai de Dion-Bouton, 92800, Puteaux, France,
a diversified industrial and shipping conglomerate.
SOCIETE SUISSE D'ASSURANCES GENERALES SUR LA VIE HUMAINE, REPRESENTED BY JEAN-
ANTOINE CHABANNES
Societe Suisse d'Assurances Generales sur la Vie Humaine, 41, rue de
Chateaudun, 75034 Paris Cedex 09, France, provides insurance, banking, and
financial services.
Since January 1993, Mr. Chabannes has been President of the Groupe Societe
Suisse, 41, rue de Chateaudun, 75034 Paris 75009, France, a division of
Societe Suisse d'Assurances Generales sur la Vie Humaine, which provides
insurance and banking services.
GERARD DAVION
Mr. Davion has been the head of the national union for Parent's foremen
("Federation Syndicale des Agents de la Seita") and a director of Parent since
May 1995. Mr. Davion has been a foreman at Parent since 1970.
FRENCH STATE, REPRESENTED BY PIERRE-MATHIEU DUHAMEL
Since 1996, Mr. Duhamel has been France's General Director of Customs and
Indirect Taxes, 2 rue de Montalembert, 75700, Paris, 07 SP, France. From 1995
until 1996, Mr. Duhamel was Deputy Director of the Cabinet of the Prime
Minister, 57, rue de Varennes, 75007, Paris, France and from 1994 until 1995,
Director of Public Accounting Regulation (Finance Ministry), 139, rue de
Bercy, 75012 Paris, France. From 1992 until 1994, Mr. Duhamel was Director of
Finance and Economic Affairs of the City of Paris, 4 Place de L'Hotel de
Ville, 75004, Paris.
SCHI-2
<PAGE>
CREDIT COMMERCIAL DE FRANCE, REPRESENTED BY CHARLES-HENRI FILIPPI
Credit Commercial de France ("CCF"), 103 Avenue des Champs-Elysees, 75008,
Paris, France, specializes in retail banking, investment banking and fund
management both in France and abroad.
Mr. Filippi has held the following positions at the CCF: Chairman and Chief
Executive Officer (April 1998-present), Senior Executive Vice President (1995-
April 1998), and Executive Vice President (1993-1995).
LA FRANCAISE DES JEUX, REPRESENTED BY MR. BERTRAND DE GALLE
La Francaise des Jeux, 5/7, rue de Beffroy, 92200 Neuilly-sur-Seine, France,
specializes in lottery and lottery-related games.
Mr. de Galle has been Chairman and Chief Executive Officer of La Francaise
des Jeux since 1994. Mr. de Galle was Chairman and Chief Executive Officer of
Parent from 1988 until 1993.
SOCIETE FINANCIERE SIPA, REPRESENTED BY MR. JACQUES LEJEUNE
Societe Financiere SIPA, 11 Bd du Prince Henri, Luxembourg, is a Luxembourg
holding company through which Mr. Lejeune, a private investor, makes his
investments in various areas of activities. Mr. Lejeune has been a director of
Parent since May 1995.
GENEVAL (SOCIETE GENERALE), REPRESENTED BY MR. JEAN-PIERRE MARCHAND
Geneval is a division of Societe Generale, 29 Bd Haussman, 75009, Paris,
France, and specializes in retail banking, investment banking and fund
management both in France and abroad.
Mr. Marchand has held the following positions at Societe Generale: Executive
Vice-President (1997-Present), Managing Director--Large Companies (1995-1997),
and Managing Director--Specialized Financing (1991-1995).
GILBERT MONTANT
Since November 1996, Mr. Montant has been an employee representative on the
Board of Directors of Parent as the representative of the Confederation
Generale du Travail ("C.G.T.") union. Mr. Montant has been a foreman at Parent
since 1973.
DOMINIQUE DE MONTGOLFIER
Mr. de Montgolfier has been an employee representative on the Board of
Directors of Parent since 1989. Mr. de Montgolfier has been an engineer at
Parent since 1970.
EDOUARD STERN
Since April 1998, Mr. Stern has been President of I.R.R. Investment Real
Returns, 14 rue Etienne-Dumont, 1204 Geneve, Switzerland, a swiss commercial
and financial consulting firm. In addition, since April 1997, Mr. Stern has
been Executive Vice President of Eurafrance, 12 avenue Percier, Paris 75008,
France (a French holding company, the portfolio of which includes companies in
the banking and insurance sectors, as well as participations in several
investment funds). Mr. Stern was a managing partner at Lazard Freres (Paris),
121 Bd Haussman, 75008, Paris, France, from 1994 until April 1997.
REMY TRITSCHLER
Since 1993, Mr. Tritschler has been President of the Confederation of
Tobacconists of France ("Confederation des Debitants de Tabac de France"), 75
rue d'Amsterdam, 75008, Paris, France. Mr. Tritschler has been a director of
Parent since 1989.
SCHI-3
<PAGE>
2. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER
The only director of Purchaser is Mr. Charles Lebeau. The only executive
officer of Purchaser is Mr. Charles Lebeau (President, Secretary and
Treasurer). The biographical information for such director and executive
officer is listed above.
SCHI-4
<PAGE>
Facsimiles of the Letter of Transmittal will be accepted. The Letter of
Transmittal and certificates evidencing Shares and any other required documents
should be sent or delivered by each stockholder or his broker, dealer,
commercial bank, trust company or other nominee to the Depositary at its
address set forth below.
The Depositary for the Offer is:
AMERICAN STOCK TRANSFER & TRUST COMPANY
By Mail, Hand or Overnight Delivery:
By Facsimile Transmission:
(For Eligible Institutions Only)
40 Wall Street
46th Floor (718) 234-5001
New York, New York 10005
Confirm Receipt of Facsimile by
Telephone:
(718) 921-8200
----------------
Questions or requests for assistance may be directed to the Information Agent
or the Dealer Manager at their respective addresses and telephone numbers
listed below. Additional copies of this Offer to Purchase, the Letter of
Transmittal and the Notice of the Guaranteed Delivery may be obtained from the
Dealer Manager or the Information Agent. A stockholder may also contact
brokers, dealers, commercial banks or trust companies for assistance concerning
the Offer.
The Information Agent for the Offer is:
D.F. King & Co., Inc.
77 Water Street
New York, New York 10005
Banks and Brokers Call Collect: (212) 269-5550
All Others Call Toll Free: (800) 290-6427
The Dealer Manager for the Offer is:
CREDIT SUISSE FIRST BOSTON CORPORATION
Eleven Madison Avenue
New York, New York 10010-3629
Call Toll Free (800) 881-8320
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER
SHARES OF CLASS A COMMON STOCK
AND CLASS B COMMON STOCK
OF
CONSOLIDATED CIGAR HOLDINGS INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED DECEMBER 22, 1998
BY
DORSAY ACQUISITION CORP.
A DIRECT, WHOLLY OWNED SUBSIDIARY OF
SOCIETE NATIONALE D'EXPLOITATION INDUSTRIELLE DES TABACS ET ALLUMETTES
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON THURSDAY, JANUARY 21, 1999, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
The Depositary for the Offer is:
AMERICAN STOCK TRANSFER & TRUST COMPANY
By Mail, Hand or Overnight Delivery By Facsimile Transmission:
(For Eligible Institutions Only)
40 Wall Street
46th Floor (718) 234-5001
New York, New York 10005
Confirm Receipt of Facsimile by
Telephone:
(718) 921-8200
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER THAN AS
SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS SET FORTH IN THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
The names and addresses of the registered holders should be printed, if not
already printed below, exactly as they appear on the certificates evidencing
Shares ("Share Certificates") tendered hereby. The Share Certificates and the
Shares (as defined below) that the undersigned wishes to tender should be
indicated in the appropriate boxes.
- --------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) SHARES CERTIFICATE(S) AND SHARE(S) TENDERED
APPEAR(S) ON SHARE CERTIFICATE(S)) (ATTACH ADDITIONAL LIST, IF NECESSARY)
- ----------------------------------------------------------------------------------------------------
TOTAL NUMBER OF
SHARE SHARES EVIDENCED BY NUMBER OF
CERTIFICATE SHARE SHARES
NUMBER(S) * CERTIFICATE(S) * TENDERED **
---------------------------------------------------
<S> <C> <C> <C>
---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
TOTAL SHARES
- ----------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by stockholders delivering by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares evidenced
by Share Certificates delivered to the Depositary are being tendered
hereby. See Instruction 4.
<PAGE>
This Letter of Transmittal is to be completed by stockholders of
Consolidated Cigar Holdings Inc. either if Share Certificates are to be
forwarded herewith or, unless an Agent's Message (as defined in the Offer to
Purchase, dated December 22, 1998 (the "Offer to Purchase")) is utilized, if
delivery of Shares is to be made by book-entry transfer to the Depositary's
account at The Depository Trust Company (the "Book-Entry Transfer Facility")
pursuant to the book-entry transfer procedures described in Section 3 --
"Procedures for Accepting the Offer and Tendering Shares" of the Offer to
Purchase. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
Stockholders whose Share Certificates are not immediately available or who
cannot deliver their Share Certificates and all other documents required
hereby to the Depositary on or prior to the Expiration Date (as defined in the
Offer to Purchase) or who cannot complete the procedures for delivery by book-
entry transfer on a timely basis and who wish to tender their Shares must do
so pursuant to the guaranteed delivery procedures described in Section 3 --
"Procedures for Accepting the Offer and Tendering Shares" of the Offer to
Purchase. See Instruction 2.
[_]CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO AN
ACCOUNT MAINTAINED BY THE DEPOSITARY WITH THE BOOK-ENTRY TRANSFER FACILITY
AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN THE SYSTEM OF THE BOOK-
ENTRY TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution: _____________________________________________
Account Number: ____________________________________________________________
Transaction Code Number: ___________________________________________________
[_]CHECK HERE IF SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING.
PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED DELIVERY.
Name(s) of Registered Holder(s): ___________________________________________
Window Ticket Number (if any): _____________________________________________
Date of Execution of Notice of Guaranteed Delivery: ________________________
Name of Institution which Guaranteed Delivery: _____________________________
If Delivery by Book-Entry Transfer Facility, please check this box: [_]
Account Number: ____________________________________________________________
Transaction Code Number: ___________________________________________________
[_]CHECK HERE IF ANY OF YOUR SHARE CERTIFICATES HAS BEEN LOST, DESTROYED OR
STOLEN. SEE INSTRUCTION 10.
2
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Dorsay Acquisition Corp., a corporation
organized and existing under the laws of the State of Delaware ("Purchaser")
and a direct, wholly owned subsidiary of Societe Nationale d'Exploitation
Industrielle des Tabacs et Allumettes, a corporation organized and existing
under the laws of France ("Parent"), the above-described shares of Class A
Common Stock, par value $0.01 per share (the "Class A Shares"), and/or Class B
Common Stock, par value $0.01 per share (the "Class B Shares," and together
with the Class A Shares, the "Shares"), of Consolidated Cigar Holdings Inc., a
corporation organized and existing under the laws of the State of Delaware
(the "Company"), pursuant to Purchaser's offer to purchase all outstanding
Shares at a price of $17.85 per Share, net to the seller in cash (subject to
applicable withholding of taxes), without interest, upon the terms and subject
to the conditions set forth in the Offer to Purchase, receipt of which is
hereby acknowledged, and in this Letter of Transmittal (which, together with
the Offer to Purchase and any amendments or supplements hereto or thereto,
collectively constitute the "Offer"). The undersigned understands that
Purchaser reserves the right to transfer or assign, in whole or from time to
time in part, to Parent or any direct or indirect wholly owned subsidiary of
Parent, the right to purchase all or any portion of the Shares tendered
pursuant to the Offer.
Subject to, and effective upon, acceptance for payment of the Shares
tendered herewith in accordance with the terms of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension
or amendment), the undersigned hereby sells, assigns and transfers to, or upon
the order of, Purchaser all right, title and interest in and to all the Shares
that are being tendered hereby and all dividends, distributions (including,
without limitation, distributions of additional Shares) and rights declared,
paid or distributed in respect of such Shares on or after December 16, 1998
(collectively, "Distributions") and irrevocably appoints the Depositary the
true and lawful agent and attorney-in-fact of the undersigned with respect to
such Shares and all Distributions, with full power of substitution (such power
of attorney being deemed to be an irrevocable power coupled with an interest),
to (i) deliver Share Certificates evidencing such Shares and all
Distributions, or transfer ownership of such Shares and all Distributions on
the account books maintained by the Book-Entry Transfer Facility, together, in
either case, with all accompanying evidences of transfer and authenticity, to
or upon the order of Purchaser, (ii) present such Shares and all Distributions
for transfer on the books of the Company and (iii) receive all benefits and
otherwise exercise all rights of beneficial ownership of such Shares and all
Distributions, all in accordance with the terms of the Offer.
The undersigned hereby irrevocably appoints Mr. Eric Albrand and Mr. Charles
Lebeau, and each of them, as the attorneys-in-fact and proxies of the
undersigned, each with full power of substitution, to vote in such manner as
each such attorney and proxy or his substitute shall, in his sole discretion,
deem proper and to otherwise act (by written consent or otherwise) with
respect to all the Shares tendered hereby which have been accepted for payment
by Purchaser prior to the time of such vote or other action and all Shares,
and other securities issued in Distributions in respect of such Shares, which
the undersigned is entitled to vote at any meeting of stockholders of the
Company (whether annual or special and whether or not an adjourned or
postponed meeting) or by written consent in lieu of any such meeting or
otherwise. This proxy and power of attorney is coupled with an interest in the
Shares tendered hereby, is irrevocable and is granted in consideration of, and
is effective upon, the acceptance for payment of such Shares by Purchaser in
accordance with the terms of the Offer. Such acceptance for payment shall
revoke, without further action, all other proxies and powers of attorney
granted by the undersigned at any time with respect to such Shares (and all
Shares and other securities issued in Distributions in respect of such
Shares), and no subsequent proxy or power of attorney shall be given or
written consent executed (and if given or executed, shall not be effective) by
the undersigned with respect thereto. The undersigned understands that, in
order for Shares to be deemed validly tendered, immediately upon Purchaser's
acceptance for payment of such Shares, Purchaser or its designees must be able
to exercise full voting and other rights with respect to such Shares and all
Distributions, including, without limitation, voting at any meeting of the
Company's stockholders.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby and all Distributions, and that when and to the extent such Shares are
accepted for payment by Purchaser, Purchaser will acquire good, marketable and
unencumbered title thereto and to all Distributions, free and clear of all
liens, restrictions, charges, encumbrances, conditional sales agreements or
3
<PAGE>
other obligations relating to the sale or transfer thereof, and that none of
such Shares and Distributions will be subject to any adverse claims. The
undersigned, upon request, shall execute and deliver all additional documents
deemed by the Depositary or Purchaser to be necessary or desirable to complete
the sale, assignment and transfer of the Shares tendered hereby and all
Distributions. In addition, the undersigned shall remit and transfer promptly
to the Depositary for the account of Purchaser all Distributions in respect of
the Shares tendered hereby, accompanied by appropriate documentation of
transfer, and, pending such remittance and transfer or appropriate assurance
thereof, Purchaser shall be entitled to all rights and privileges as owner of
each such Distribution and may withhold the entire purchase price of the
Shares tendered hereby, or deduct from such purchaser price, the amount or
value of such Distribution as determined by Purchaser in its sole discretion.
No authority herein conferred or agreed to be conferred shall be affected
by, and all such authority shall survive, the death or incapacity of the
undersigned. All obligations of the undersigned hereunder shall be binding
upon the heirs, executors, administrators, legal representatives, successors
and assigns of the undersigned. Except as stated in the Offer to Purchase,
this tender is irrevocable, provided that the Shares tendered pursuant to the
Offer may be withdrawn at any time on or prior to the Expiration Date and,
unless theretofore accepted for payment as provided in the Offer to Purchase,
may also be withdrawn at any time after February 20, 1999.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 3 -- " Procedures for Accepting the Offer
and Tendering Shares" of the Offer to Purchase and in the instructions hereto
and Purchaser's acceptance for payment of such Shares will constitute a
binding agreement between the undersigned and Purchaser upon the terms and
subject to the conditions of the Offer.
Unless otherwise indicated herein in the box entitled "Special Payment
Instructions," please issue the check for the purchase price of all Shares
purchased, and return all Share Certificates evidencing Shares not purchased
or not tendered, in the name(s) of the registered holder(s) appearing under
"Description of Shares Tendered." Similarly, unless otherwise indicated in the
box entitled "Special Delivery Instructions," please mail the check for the
purchase price of all Shares purchased and all Share Certificates evidencing
Shares not tendered or not purchased (and accompanying documents, as
appropriate) to the address(es) of the registered holder(s) appearing under
"Description of Shares Tendered." In the event that the boxes entitled
"Special Payment Instructions" and "Special Delivery Instructions" are both
completed, please issue the check for the purchase price of all Shares
purchased, and return all Share Certificates evidencing Shares not purchased
or not tendered, in the name(s) of, and mail such check and Share Certificates
to, the person(s) so indicated. Stockholders tendering Shares by book-entry
transfer may request that any Shares not accepted for payment be returned by
crediting the account maintained at the Book-Entry Transfer Facility by making
an appropriate entry under "Special Payment Instructions." The undersigned
recognizes that Purchaser has no obligation pursuant to the "Special Payment
Instructions" to transfer any Shares from the name of the registered holder(s)
thereof if Purchaser does not purchase any of such Shares.
4
<PAGE>
SPECIAL PAYMENT INSTRUCTIONS (SEE SPECIAL DELIVERY INSTRUCTIONS
INSTRUCTIONS 1, 5, 6 AND 7) (SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if Share To be completed ONLY if Share
Certificates not tendered or not Certificates not tendered or not
purchased and/or the check for purchased and/or the check for
the purchase price of Shares pur- the purchase price of Shares pur-
chased are to be issued in the chased are to be sent to someone
name of someone other than the other than the undersigned or to
undersigned, or if Shares ten- the undersigned at an address
dered by book-entry transfer other than that shown on the
which are not purchased are to be front cover.
returned by credit to an account
maintained at the Book-Entry Mail check and/or certificates
Transfer Facility other than that to:
designated on the front cover.
Name______________________________
Issue check and/or certificates (PLEASE PRINT)
to:
Address __________________________
Name _____________________________
(PLEASE PRINT) __________________________________
Address __________________________ __________________________________
(INCLUDE ZIP CODE)
__________________________________
(INCLUDE ZIP CODE) __________________________________
(TAXPAYER IDENTIFICATION OR
__________________________________ SOCIAL SECURITY NO.)
(TAXPAYER IDENTIFICATION OR
SOCIAL SECURITY NO.)
(SEE SUBSTITUTE FORM W-9 ON PAGE
11)
[_]Credit unpurchased Shares
tendered by book-entry
transfer to the Book-Entry
Transfer Facility account set
forth below:
__________________________________
(ACCOUNT NUMBER)
5
<PAGE>
SIGN HERE
(PLEASE COMPLETE SUBSTITUTE FORM W-9 ON PAGE 11)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SIGNATURE(S) OF HOLDER(S)
Dated: _____________________________
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
the Share Certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by Share Certificates and
documents transmitted herewith. If signature is by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of a corporation or
others acting in a fiduciary or representative capacity, please provide
the necessary information. See Instruction 5.)
Name(s):
-----------------------------------------------------------------------
-----------------------------------------------------------------------
(PLEASE PRINT)
Capacity (full title):
---------------------------------------------------------
Address:
-----------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number:
------------------------------------------------
Tax Identification or
Social Security No.:
-----------------------------------------------------------
(SEE SUBSTITUTE FORM W-9 ON PAGE 11)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5)
Authorized Signature:
----------------------------------------------------------
Name:
--------------------------------------------------------------------------
Name of Firm:
------------------------------------------------------------------
Address:
-----------------------------------------------------------------------
(INCLUDE ZIP CODE)
Title:
-------------------------------------------------------------------------
Area Code and Telephone Number:
------------------------------------------------
Dated:
-------------------------------------------------------------------------
6
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee Of Signatures. All signatures on this Letter of Transmittal
must be medallion guaranteed by a firm which is a member of the Securities
Transfer Agents Medallion Program, or by any other "eligible guarantor
institution," as such term is defined in Rule 17Ad-15 under the Securities
Exchange Act of 1934, as amended, (each of the foregoing being referred to as
an "Eligible Institution"), unless (i) this Letter of Transmittal is signed by
the registered holder(s) (which term, for purposes of this Letter of
Transmittal, shall include any participant in the Book-Entry Transfer Facility
whose name appears on a security position listing as the owner of Shares) of
the Shares tendered hereby and such holder(s) has (have) not completed either
the box entitled "Special Payment Instructions" or the box entitled "Special
Delivery Instructions" on page 5 or (ii) such Shares are tendered for the
account of an Eligible Institution. See Instruction 5.
2. Delivery Of Letter Of Transmittal And Share Certificates. This Letter of
Transmittal is to be used either if Share Certificates are to be forwarded
herewith or, unless an Agent's Message (as defined in the Offer to Purchase)
is utilized, if Shares are to be delivered by book-entry transfer pursuant to
the procedures set forth in Section 3 --"Procedures for Accepting the Offer
and Tendering Shares" of the Offer to Purchase. Share Certificates evidencing
all physically tendered Shares, or a timely confirmation of a book-entry
transfer into the Depositary's account at the Book-Entry Transfer Facility of
all Shares delivered by book-entry transfer, as well as a properly completed
and duly executed Letter of Transmittal (or a manually signed facsimile
hereof), with any required signature guarantees, or an Agent's Message in the
case of a book-entry delivery, and any other documents required by this Letter
of Transmittal, must be received by the Depositary at its address set forth
herein on or prior to the Expiration Date. If Share Certificates are forwarded
to the Depositary in multiple deliveries, a properly completed and duly
executed Letter of Transmittal must accompany each such delivery.
Stockholders whose Share Certificates are not immediately available, who
cannot deliver their Share Certificates and all other required documents to
the Depositary on or prior to the Expiration Date or who cannot complete the
procedure for delivery by book-entry transfer on a timely basis may tender
their Shares pursuant to the guaranteed delivery procedures described in
Section 3 --"Procedures for Accepting the Offer and Tendering Shares" of the
Offer to Purchase. Pursuant to such procedures: (i) such tender must be made
by or through an Eligible Institution; (ii) a properly completed and duly
executed Notice of Guaranteed Delivery, substantially in the form made
available by Purchaser, must be received by the Depositary prior to the
Expiration Date; and (iii) the Share Certificates evidencing all tendered
Shares, in proper form for transfer, or a timely confirmation of a book-entry
transfer into the Depositary's account at the Book-Entry Transfer Facility of
all Shares delivered by book-entry transfer, in each case together with a
Letter of Transmittal (or a manually signed facsimile hereof), properly
completed and duly executed, with any required signature guarantees (or, in
the case of a book-entry delivery, an Agent's Message), and any other
documents required by this Letter of Transmittal, must be received by the
Depositary within three New York Stock Exchange, Inc. trading days after the
date of execution of such Notice of Guaranteed Delivery, all as described in
Section 3 --"Procedures for Accepting the Offer and Tendering Shares" of the
Offer to Purchase.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
facsimile transmission or mailed to the Depositary and must include a
guarantee by an Eligible Institution on the form set forth in such notice.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES, THIS LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY
TRANSFER FACILITY, IS AT THE OPTION AND SOLE RISK OF THE TENDERING
STOCKHOLDER, AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED
BY THE DEPOSITARY (INCLUDING IN THE CASE OF A BOOK-ENTRY TRANSFER, BY A TIMELY
CONFIRMATION). IF DELIVERY IS BY MAIL, REGISTERED MAIL, WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. By execution of this Letter of
Transmittal (or a manually signed facsimile hereof), all tendering
stockholders waive any right to receive any notice of the acceptance of their
Shares for payment.
7
<PAGE>
3. Inadequate Space. If the space provided herein under "Description of
Shares Tendered" is inadequate, the Share Certificate numbers, the number of
Shares evidenced by such Share Certificates and the number of Shares tendered
should be listed on a separate schedule and attached hereto and separately
signed on each page thereof in the same manner as this Letter of Transmittal.
4. Partial Tenders (Not Applicable to Stockholders Who Tender by Book-Entry
Transfer). If fewer than all the Shares evidenced by any Share Certificate
delivered to the Depositary herewith are to be tendered, fill in the number of
Shares that is to be tendered in the box entitled "Number of Shares Tendered."
In such cases, new Share Certificate(s) evidencing the remainder of the Shares
that were evidenced by the Share Certificate(s) delivered to the Depositary
herewith will be sent to the person(s) signing this Letter of Transmittal,
unless otherwise provided in the box entitled "Special Delivery Instructions"
on this Letter of Transmittal, as soon as practicable after the Expiration
Date. All Shares evidenced by Share Certificates delivered to the Depositary
will be deemed to have been tendered unless otherwise indicated.
5. Signatures On Letter of Transmittal; Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written
on the face of the Share Certificates evidencing such Shares without
alteration, enlargement or any other change whatsoever.
If any Share tendered hereby is owned of record by two or more persons, all
such persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby is registered in the names of different
holders, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of such Shares.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of Share Certificates or separate
stock powers are required, unless payment is to be made to, or Share
Certificates evidencing Shares not tendered or not purchased are to be issued
in the name of, a person other than the registered holder(s), in which case
the Share Certificate(s) evidencing the Shares tendered hereby must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name(s) of the registered holder(s) appear(s) on such Share
Certificate(s). Signatures on such Share Certificate(s) and stock powers must
be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, the Share Certificate(s)
evidencing the Shares tendered hereby must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on such Share Certificate(s). Signatures on
such Share Certificate(s) and stock powers must be guaranteed by an Eligible
Institution.
If this Letter of Transmittal or any Share Certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or
representative capacity, such person should so indicate when signing, and
proper evidence satisfactory to Purchaser of such person's authority so to act
must be submitted.
6. Stock Transfer Taxes. Except as otherwise provided in this Instruction 6,
Purchaser will pay or cause to be paid all stock transfer taxes with respect
to the sale and transfer of any Shares to it or its order pursuant to the
Offer. If, however, payment of the purchase price of any Shares is to be made
to, or Share Certificate(s) evidencing Shares not tendered or not purchased
are to be issued in the name of, a person other than the registered holder(s),
or if tendered Shares are registered in the name of any person other than the
registered holder(s), or if tendered Share Certificates are registered in the
name of any person other than the person(s) signing this Letter of
Transmittal, the amount of any stock transfer taxes (whether imposed on the
registered holder(s), such other person or otherwise) payable on account of
the transfer to such other person will be deducted from the purchase price of
such Shares purchased, unless evidence satisfactory to Purchaser of the
payment of such taxes, or exemption therefrom, is submitted. Except as
provided in this Instruction 6, it will not be necessary for transfer tax
stamps to be affixed to the Share Certificates evidencing the Shares tendered
hereby.
8
<PAGE>
7. Special Payment and Delivery Instructions. If a check for the purchase
price of any Shares tendered hereby is to be issued, or Share Certificate(s)
evidencing Shares not tendered or not purchased are to be issued, in the name
of a person other than the person(s) signing this Letter of Transmittal or if
such check or any such Share Certificate(s) is to be sent to someone other
than the person(s) signing this Letter of Transmittal or to the person(s)
signing this Letter of Transmittal but at an address other than that shown in
the box entitled "Description of Shares Tendered," the appropriate boxes on
this Letter of Transmittal must be completed. Stockholders delivering Shares
tendered hereby by book-entry transfer may request that Shares not purchased
be credited to such account maintained at the Book-Entry Transfer Facility as
such stockholder may designate in the box entitled "Special Payment
Instructions." If no such instructions are given, all such Shares not
purchased will be returned by crediting the account at the Book-Entry Transfer
Facility as the account from which such Shares were delivered.
8. Questions and Requests For Assistance or Additional Copies. Questions and
requests for assistance may be directed to the Information Agent or the Dealer
Manager at their respective addresses and telephone numbers set forth below.
Additional copies of the Offer to Purchase, this Letter of Transmittal and
other tender offer materials may be obtained from the Information Agent or the
Dealer Manager as set forth below, and will be furnished promptly at
Purchaser's expense. You may also contact your broker, dealer, commercial
bank, trust company or other nominee for assistance concerning the Offer.
9. Substitute Form W-9. Each tendering stockholder is required to provide
the Depositary with a correct Taxpayer Identification Number ("TIN") on the
Substitute Form W-9 which is provided under "Important Tax Information" below
and to certify whether such stockholder is subject to backup withholding of
federal income tax. If a tendering stockholder has been notified by the
Internal Revenue Service that such stockholder is subject to backup
withholding, such stockholder must cross out item (2) of the Certification box
of the Substitute Form W-9, unless such stockholder has since been notified by
the Internal Revenue Service that such stockholder is no longer subject to
backup withholding. Failure to provide the information on the Substitute Form
W-9 may subject the tendering stockholder to 31% federal income tax
withholding on the payment of the purchase price of all Shares purchased from
such stockholder. If the tendering stockholder has not been issued a TIN and
has applied for one or intends to apply for one in the near future, such
stockholder should write "Applied For" in the space provided for the TIN in
Part 1 of the Substitute Form W-9 and sign and date the Substitute Form W-9.
If "Applied For" is written in Part 1 and the Depositary is not provided with
a TIN within 60 days, the Depositary will withhold 31% on all payments of the
purchase price to such stockholder until a TIN is provided to the Depositary.
10. Lost, Destroyed or Stolen Certificates. If any Share Certificate has
been lost, destroyed or stolen, the stockholder should promptly call American
Stock Transfer & Trust Company at (718) 921-8900. The stockholder will then be
instructed as to the steps that must be taken in order to replace the Share
Certificate. This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost, destroyed or stolen Share
Certificates has been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A MANUALLY SIGNED FACSIMILE
HEREOF), PROPERLY COMPLETED AND DULY EXECUTED (TOGETHER WITH ANY REQUIRED
SIGNATURE GUARANTEES), OR AN AGENT'S MESSAGE IN THE CASE OF BOOK-ENTRY
DELIVERY, TOGETHER WITH SHARE CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY
TRANSFER AND ALL OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE DEPOSITARY,
OR A NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE DEPOSITARY, ON OR
PRIOR TO THE EXPIRATION DATE AS DEFINED IN SECTION 1--"TERMS OF THE OFFER;
EXPIRATION DATE" OF THE OFFER TO PURCHASE.
9
<PAGE>
IMPORTANT TAX INFORMATION
Under the federal income tax laws, a stockholder whose tendered Shares are
accepted for payment is required by law to provide the Depositary with such
stockholder's correct TIN on the Substitute Form W-9 below. If such
stockholder is an individual, the TIN is such stockholder's social security
number. If the tendering stockholder has not been issued a TIN and has applied
for a TIN or intends to apply for a TIN in the near future, the stockholder
should so indicate on the Substitute Form W-9. If the Depositary is not
provided with the correct TIN, the Internal Revenue Service may subject the
stockholder to a $50 penalty. In addition, payments that are made to such
stockholder with respect to Shares purchased pursuant to the Offer may be
subject to backup withholding.
If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the stockholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will
be reduced by the amount of tax withheld. If backup withholding results in an
overpayment of taxes, a refund may be obtained from the Internal Revenue
Service.
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are exempt recipients not subject to these backup
withholding and reporting requirements. In order for a foreign individual to
qualify as an exempt recipient, such individual must submit an Internal
Revenue Form W-8, signed under penalties of perjury, attesting to such
individual's exempt status. A Form W-8 may be obtained from the Depositary.
See the enclosed Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 for additional instructions.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a stockholder
with respect to Shares purchased pursuant to the Offer, a tendering
stockholder is required to notify the Depositary of such stockholder's correct
TIN by completing the form below certifying that the TIN provided on the
Substitute Form W-9 is correct (or that such stockholder is awaiting a TIN)
and that (i) such stockholder has not been notified by the Internal Revenue
Service that he is subject to backup withholding as a result of a failure to
report all interest or dividends or (ii) the Internal Revenue Service has
notified such stockholder that such stockholder is no longer subject to backup
withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the social security
number or TIN of the record holder of the Shares tendered hereby. If the
Shares are in more than one name or are not in the name of the actual owner,
consult the enclosed Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 for additional guidance on which number to
report. If the tendering stockholder has not been issued a TIN and has applied
for a number or intends to apply for a number in the near future, the
stockholder should write "Applied For" in the space provided for the TIN in
Part 1 and sign and date the Substitute Form W-9. If "Applied For" is written
in Part 1, the Depositary will reserve 31% of all payments of the purchase
price to such stockholder until a TIN is provided to the Depositary. If the
Depositary is not provided with a TIN within 60 days, the Depositary will
withhold 31% of all payments of the purchase price to such stockholder.
10
<PAGE>
TO BE COMPLETED BY ALL TENDERING STOCKHOLDERS
(SEE INSTRUCTION 9)
- --------------------------------------------------------------------------------
PAYER'S NAME:
- --------------------------------------------------------------------------------
PART 1--PLEASE PROVIDE PART 3--Social Security
SUBSTITUTE YOUR TIN IN THE BOX AT Number or Employer
FORM W-9 THE RIGHT AND CERTIFY BY Identification Number
SIGNING AND DATING BELOW.
DEPARTMENT OF --------------------------
THE TREASURY (If awaiting TIN write
INTERNAL REVENUE "Applied For")
SERVICE ---------------------------------------------------------
PART 2--For Payees exempt from backup withholding, see
the enclosed Guidelines for Certification of Taxpayer
PAYER'S Identification Number on Substitute Form W-9 and
REQUEST FOR complete as instructed therein.
TAXPAYER Certification--Under penalties of perjury, I certify
IDENTIFICATION that:
NUMBER ("TIN")
(1) The number shown on this form is my correct TIN
(or I am waiting for a number to be issued to me);
and
(2) I am not subject to backup withholding either
because I have not been notified by the Internal
Revenue Service (IRS) that I am subject to backup
withholding as a result of a failure to report all
interest or dividends, or the IRS has notified me
that I am no longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS--You must cross out Item
(2) above if you have been notified by the IRS that
you are subject to backup withholding because of
underreporting interest or dividends on your tax
return. However, if after being notified by the IRS
that you were subject to backup withholding, you
received another notification from the IRS that you
were no longer subject to backup withholding, do not
cross out Item (2). (Also see instructions in the
enclosed Guidelines).
---------------------------------------------------------
SIGNATURE __________________________ DATE ____________
- --------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE
OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
THE BOX IN PART 3 OF SUBSTITUTE FORM W-9.
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (1) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate IRS Center or
Social Security Administration Office or (2) I intend to mail or deliver an
application in the near future. I understand that if I do not provide a
taxpayer identification number by the time of payment, 31% of all reportable
payments made to me will be withheld, but that such amounts will be refunded to
me if I then provide a taxpayer identification number within sixty (60) days.
Signature: ________________________________________________ Date: ___________
- --------------------------------------------------------------------------------
11
<PAGE>
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 WATER STREET
NEW YORK, NEW YORK 10005
BANKS AND BROKERS CALL COLLECT: (212) 269-5550
ALL OTHERS CALL TOLL FREE: (800) 290-6427
The Dealer Manager for the Offer is:
CREDIT SUISSE FIRST BOSTON CORPORATION
ELEVEN MADISON AVENUE
NEW YORK, NEW YORK 10010-3629
CALL TOLL FREE (800) 881-8320
12
<PAGE>
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF CLASS A COMMON STOCK
AND CLASS B COMMON STOCK
OF
CONSOLIDATED CIGAR HOLDINGS INC.
TO
DORSAY ACQUISITION CORP.
A DIRECT, WHOLLY OWNED SUBSIDIARY OF
SOCIETE NATIONALE D'EXPLOITATION INDUSTRIELLE DES TABACS ET ALLUMETTES
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, JANUARY 21, 1999, UNLESS THE OFFER IS EXTENDED.
This Notice of Guaranteed Delivery, or one substantially in the form hereof,
must be used to accept the Offer (as defined in the Offer to Purchase, dated
December 22, 1998 (the "Offer to Purchase")) (i) if certificates ("Share
Certificates") evidencing shares of Class A Common Stock, par value $0.01 per
share (the "Class A Shares"), and Class B Common Stock, par value $0.01 per
share (the "Class B Shares," and together with the Class A Shares, the
"Shares"), of Consolidated Cigar Holdings Inc., a corporation organized and
existing under the laws of the State of Delaware (the "Company"), are not
immediately available, (ii) if Share Certificates and all other required
documents cannot be delivered to American Stock Transfer & Trust Company, as
Depositary (the "Depositary"), on or prior to the Expiration Date (as defined
in the Offer to Purchase) or (iii) if the procedures for delivery of Shares by
book-entry transfer cannot be completed on a timely basis. This Notice of
Guaranteed Delivery may be delivered by hand or mail or transmitted by
telegram or facsimile transmission to the Depositary and must include a
guarantee by an "Eligible Institution" (as defined in the Offer to Purchase).
See Section 3--"Procedures for Accepting the Offer and Tendering Shares" of
the Offer to Purchase.
The Depositary for the Offer is:
AMERICAN STOCK TRANSFER & TRUST COMPANY
By Mail, Hand or Overnight Delivery By Facsimile Transmission:
(For Eligible Institutions Only)
40 Wall Street
46th Floor (718) 234-5001
New York, New York 10005
Confirm Receipt of Facsimile by
Telephone:
(718) 921-8200
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION
OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an "Eligible Institution" under the instructions thereto, such
signature guarantee must appear in the applicable space provided in the
signature box on the Letter of Transmittal.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal or an
Agent's Message and Share Certificates to the Depositary within the time
period shown herein. Failure to do so could result in a financial loss to such
Eligible Institution.
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Dorsay Acquisition Corp., a corporation
organized and existing under the laws of the State of Delaware and a direct,
wholly owned subsidiary of Societe Nationale d'Exploitation Industrielle des
Tabacs et Allumettes, a corporation organized and existing under the laws of
France, upon the terms and subject to the conditions set forth in the Offer to
Purchase and the related Letter of Transmittal, receipt of each of which is
hereby acknowledged, the number of Shares specified below pursuant to the
guaranteed delivery procedures described in Section 3--"Procedures for
Accepting the Offer and Tendering Shares" of the Offer to Purchase.
Number of Shares: ___________________
Share Certificate Number(s) (if Name(s) of Record Holder(s): ________
available): _________________________ _____________________________________
_____________________________________ _____________________________________
_____________________________________ _____________________________________
(PLEASE TYPE OR PRINT)
If Share(s) will be delivered by Address(es): ________________________
book-entry transfer, check this
box. [_] _____________________________________
_____________________________________
(ZIP CODE)
Account Number: _____________________ Area Code and Telephone Number(s): __
_____________________________________
_____________________________________
_____________________________________
SIGNATURE(S)
Dated: ________________________ ,199
2
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a financial institution which is a member of the Securities
Transfer Agents Medallion Program or an "eligible guarantor institution," as
such term is defined in Rule 17Ad-15 under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), hereby (a) represents that the tender
of Shares effected hereby complies with Rule 14e-4 under the Exchange Act and
(b) guarantees to deliver to the Depositary, at its address set forth above,
Share Certificates evidencing the Shares tendered hereby, in proper form for
transfer, or a timely confirmation of book-entry transfer of such Shares into
the Depositary's account at The Depository Trust Company, in each case with
delivery of a Letter of Transmittal (or a manually signed facsimile thereof),
properly completed and duly executed, with any required signature guarantees,
or, in the case of a book-entry delivery, an Agent's Message (as defined in
the Offer to Purchase), and any other required documents, all within three New
York Stock Exchange, Inc. trading days of the date of execution of this Notice
of Guaranteed Delivery.
_____________________________________ _____________________________________
NAME OF FIRM AUTHORIZED SIGNATURE
_____________________________________ Name: _______________________________
ADDRESS (PLEASE PRINT OR TYPE)
_____________________________________ Title: ______________________________
ZIP CODE
Area Code and
Telephone Number: ___________________ Dated: _______________________ , 199
NOTE: DO NOT SEND SHARE CERTIFICATES WITH THIS NOTICE OF GUARANTEED DELIVERY.
SHARE CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
3
<PAGE>
[LOGO OF CSFB APPEARS HERE] CREDIT SUISSE FIRST BOSTON CORPORATION
Seven Madison Avenue
New York, NY 10010-8629
Telephone 212 325 2000
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF CLASS A COMMON STOCK
AND
ALL OUTSTANDING SHARES OF CLASS B COMMON STOCK
OF
CONSOLIDATED CIGAR HOLDINGS INC.
AT
$17.85 NET PER SHARE
BY
DORSAY ACQUISITION CORP.
A DIRECT, WHOLLY OWNED SUBSIDIARY OF
SOCIETE NATIONALE D'EXPLOITATION INDUSTRIELLE DES TABACS ET ALLUMETTES
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON THURSDAY, JANUARY 21, 1999, UNLESS THE OFFER IS EXTENDED.
December 22, 1998
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by Dorsay Acquisition Corp., a corporation organized
and existing under the laws of the State of Delaware ("Purchaser") and a
direct, wholly owned subsidiary of Societe Nationale d'Exploitation
Industrielle des Tabacs et Allumettes, a corporation organized and existing
under the laws of France ("Parent"), to act as Dealer Manager in connection
with Purchaser's offer to purchase all outstanding shares of Class A Common
Stock, par value $0.01 per share (the "Class A Shares"), and Class B Common
Stock, par value $0.01 per share (the "Class B Shares," and together with the
Class A Shares, the "Shares"), of Consolidated Cigar Holdings Inc., a
corporation organized and existing under the laws of the State of Delaware (the
"Company"), at a price of $17.85 per Share, net to the seller in cash (subject
to applicable withholding of taxes), without interest, upon the terms and
subject to the conditions set forth in Purchaser's Offer to Purchase, dated
December 22, 1998 (the "Offer to Purchase"), and the related Letter of
Transmittal (which, together with any amendments or supplements thereto,
collectively constitute the "Offer") enclosed herewith. The Offer is made in
connection with the Agreement and Plan of Merger, dated December 16, 1998 (the
"Merger Agreement"), among Parent, Purchaser and the Company.
Please furnish copies of the enclosed materials to those of your clients for
whose accounts you hold Shares registered in your name or in the name of your
nominee.
The Offer is conditioned upon, among other things, there having been validly
tendered and not withdrawn on or prior to the Expiration Date (as hereinafter
defined) all outstanding Class B Shares (the "Minimum Condition"). Pursuant to
the terms of the Tender and Voting Agreement, dated December 16, 1998, among
Parent, Purchaser and Mafco Consolidated Group Inc., a Delaware corporation
("Mafco"), Mafco has, among other things, agreed to tender pursuant to the
Offer all Class B Shares owned by it. The tender of Mafco's shares will be
sufficient to satisfy the Minimum Condition. The Offer is also conditioned upon
certain other terms and conditions contained in the Offer to Purchase. See the
Introduction and Section 1--"Terms of the Offer; Expiration Date" and Section
13--"Certain Conditions of the Offer" of the Offer to Purchase. The Board of
Directors of the Company has unanimously approved and found advisable the
Merger Agreement and the transactions contemplated thereby, including the Offer
and the Merger (as defined in the Offer to Purchase), has determined that the
terms of the Offer and the Merger are fair to, and in the best interests of,
the stockholders of the Company and recommends that stockholders accept the
Offer and tender their Shares pursuant to the Offer.
<PAGE>
Enclosed for your information and forwarding to your clients are copies of
the following documents:
1. Offer to Purchase, dated December 22, 1998;
2. Letter of Transmittal to be used by holders of Shares in accepting the
Offer and tendering Shares. Facsimile copies of the Letter of Transmittal
may be used to tender Shares;
3. Notice of Guaranteed Delivery to be used to accept the Offer if
certificates evidencing Shares ("Share Certificates") and all other
required documents are not immediately available or cannot be delivered to
American Stock Transfer & Trust Company (the "Depositary") by the
Expiration Date or if, in the case of book-entry delivery of Shares, the
procedures for book-entry transfer set forth in Section 3--"Procedures for
Accepting the Offer and Tendering Shares" of the Offer to Purchase cannot
be completed by the Expiration Date;
4. Solicitation/Recommendation Statement on Schedule 14D-9 filed with the
Securities and Exchange Commission by the Company;
5. A letter which may be sent to your clients for whose accounts you hold
Shares registered in your name or in the name of your nominee, with space
provided for obtaining such client's instructions with regard to the Offer;
6. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9; and
7. Return envelope addressed to the Depositary.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE
AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, JANUARY 21, 1999 (THE
"EXPIRATION DATE"), UNLESS THE OFFER IS EXTENDED.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (i) Share
Certificates (or a confirmation of a book-entry transfer of such Shares into
the Depositary's account at the Book-Entry Transfer Facility (as defined in
the Offer to Purchase)), (ii) a Letter of Transmittal (or a manually signed
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or an Agent's Message (as defined in the Offer to
Purchase) in connection with a book-entry delivery of Shares and (iii) any
other documents required by the Letter of Transmittal.
If holders of Shares wish to tender Shares, but cannot deliver their Share
Certificates or other required documents, or cannot comply with the procedures
for book-entry transfer, on or prior to the Expiration Date, a tender may be
effected by following the guaranteed delivery procedures described in Section
3--"Procedures for Accepting the Offer and Tendering Shares" of the Offer to
Purchase.
Purchaser will not pay any fees or commissions to any broker, dealer or
other person (other than the Dealer Manager, Depositary and Information Agent,
as described in the Offer to Purchase) in connection with the solicitation of
tenders of Shares pursuant to the Offer. However, Purchaser will, upon
request, reimburse you for customary mailing and handling expenses incurred by
you in forwarding any of the enclosed materials to your clients. Purchaser
will pay or cause to be paid any stock transfer taxes payable with respect to
the transfer of Shares to it, except as otherwise provided in Instruction 6 of
the Letter of Transmittal.
Any inquiries you may have with respect to the Offer should be addressed to,
and additional copies of the enclosed materials may be obtained by contacting,
Credit Suisse First Boston Corporation, the Dealer Manager, or D.F. King &
Co., Inc., the Information Agent, at their respective addresses and telephone
numbers set forth on the back cover of the Offer to Purchase.
Very truly yours,
CREDIT SUISSE FIRST BOSTON CORPORATION
<PAGE>
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL AUTHORIZE YOU OR
ANY OTHER PERSON TO ACT ON BEHALF OF OR AS THE AGENT OF PARENT, PURCHASER, THE
COMPANY, THE DEALER MANAGER, THE INFORMATION AGENT OR THE DEPOSITARY, OR OF
ANY AFFILIATE OF ANY OF THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY
DOCUMENT OR TO MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH
THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED
THEREIN.
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF CLASS A COMMON STOCK
AND
ALL OUTSTANDING SHARES OF CLASS B COMMON STOCK
OF
CONSOLIDATED CIGAR HOLDINGS INC.
AT
$17.85 NET PER SHARE
BY
DORSAY ACQUISITION CORP.
A DIRECT, WHOLLY OWNED SUBSIDIARY
OF
SOCIETE NATIONALE D'EXPLOITATION INDUSTRIELLE DES TABACS ET ALLUMETTES
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON THURSDAY, JANUARY 21, 1999, UNLESS THE OFFER IS EXTENDED.
December 22, 1998
To Our Clients:
Enclosed for your consideration are an Offer to Purchase, dated December 22,
1998 (the "Offer to Purchase"), and a related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute
the "Offer") in connection with the offer by Dorsay Acquisition Corp., a
corporation organized and existing under the laws of the State of Delaware
("Purchaser") and a direct, wholly owned subsidiary of Societe Nationale
d'Exploitation Industrielle des Tabacs et Allumettes, a corporation organized
and existing under the laws of France ("Parent"), to purchase all outstanding
shares of Class A Common Stock, par value $0.01 per share (the "Class A
Shares"), and Class B Common Stock, par value $0.01 per share (the "Class B
Shares," and together with the Class A Shares, the "Shares"), of Consolidated
Cigar Holdings Inc., a corporation organized and existing under the laws of
the State of Delaware (the "Company"), at a price of $17.85 per Share, net to
the seller in cash (subject to applicable withholding of taxes), without
interest, upon the terms and subject to the conditions set forth in the Offer.
The Offer is made in connection with the Agreement and Plan of Merger, dated
December 16, 1998 (the "Merger Agreement"), among Parent, Purchaser and the
Company. Holders of Shares whose certificates evidencing such Shares (the
"Share Certificates") are not immediately available or who cannot deliver
their Share Certificates and all other required documents to the Depositary
(as hereinafter defined) on or prior to the Expiration Date (as hereinafter
defined), or who cannot complete the procedures for book-entry transfer on a
timely basis, must tender their Shares according to the guaranteed delivery
procedures set forth in Section 3--"Procedures for Accepting the Offer and
Tendering Shares" of the Offer to Purchase.
WE ARE (OR OUR NOMINEE IS) THE HOLDER OF RECORD OF SHARES HELD BY US FOR
YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF
RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS
FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER
SHARES HELD BY US FOR YOUR ACCOUNT.
Accordingly, we request instructions as to whether you wish to have us
tender on your behalf any or all of the Shares held by us for your account
upon the terms and subject to the conditions set forth in the Offer.
Please note the following:
1. The tender price is $17.85 per Share, net to the seller in cash
(subject to applicable withholding of taxes), without interest, upon the
terms and subject to the conditions set forth in the Offer.
<PAGE>
2. The Offer is being made for all of the outstanding Shares.
3. The Board of Directors of the Company has unanimously approved and
found advisable the Merger Agreement and the transactions contemplated
thereby, including the Offer and the Merger (as defined in the Offer to
Purchase), has determined that the terms of the Offer and the Merger are
fair to, and in the best interests of, the stockholders of the Company, and
recommends that stockholders accept the Offer and tender their Shares
pursuant to the Offer.
4. The Offer and withdrawal rights will expire at 12:00 Midnight, New
York City time, on Thursday, January 21, 1999 (the "Expiration Date"),
unless the Offer is extended.
5. The offer is conditioned upon, among other things, there having been
validly tendered and not withdrawn on or prior to the Expiration Date all
outstanding Class B Shares (the "Minimum Condition"). The Offer is also
subject to certain other conditions contained in the Offer to Purchase. See
the Introduction and Section 1--"Terms of the Offer; Expiration Date" and
Section 13--"Certain Conditions of the Offer" of the Offer to Purchase.
6. Pursuant to the terms of the Tender and Voting Agreement, dated
December 16, 1998, among Parent, Purchaser and Mafco Consolidated Group
Inc., a Delaware corporation ("Mafco"), Mafco has, among other things,
agreed to tender pursuant to the Offer all Class B Shares owned by it. The
tender of Mafco's Shares will be sufficient to satisfy the Minimum
Condition.
7. Tendering stockholders will not be obligated to pay brokerage fees or
commissions to the Dealer Manager, the Information Agent or the Depositary
or, except as otherwise provided in Instruction 6 of the Letter of
Transmittal, stock transfer taxes with respect to the purchase of Shares by
Purchaser pursuant to the Offer.
8. Payment for Shares purchased pursuant to the Offer will in all cases
be made only after timely receipt by American Stock Transfer & Trust
Company (the "Depositary") of (a) Share Certificates or, in the case of
book-entry delivery of Shares, timely confirmation of the book-entry
transfer of such Shares into the Depositary's account at the Book-Entry
Transfer Facility (as defined in the Offer to Purchase) pursuant to the
procedures set forth in Section 3--"Procedures for Accepting the Offer and
Tendering Shares" of the Offer to Purchase, (b) the Letter of Transmittal
(or a manually signed facsimile thereof), properly completed and duly
executed, with any required signature guarantees, or an Agent's Message (as
defined in the Offer to Purchase) in connection with a book-entry delivery
and (c) any other documents required by the Letter of Transmittal.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing and returning to us the instruction form contained
in this letter. An envelope in which to return your instructions to us is
enclosed. If you authorize the tender of your Shares, all such Shares will be
tendered unless otherwise specified in your instructions. YOUR INSTRUCTIONS
SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US TO SUBMIT A TENDER ON
YOUR BEHALF PRIOR TO THE EXPIRATION OF THE OFFER.
The Offer is made solely by the Offer to Purchase and the related Letter of
Transmittal and is being made to all holders of Shares. Purchaser is not aware
of any jurisdiction where the making of the Offer is prohibited by
administrative or judicial action pursuant to any valid state statute. If
Purchaser becomes aware of any valid state statute prohibiting the making of
the Offer or the acceptance of Shares pursuant thereto, Purchaser will make a
good faith effort to comply with such state statute. If, after such good faith
effort, Purchaser cannot comply with such state statute, the Offer will not be
made to, nor will tenders be accepted from or on behalf of, the holders of
Shares in such state. In any jurisdiction where the securities, blue sky or
other laws require the Offer to be made by a licensed broker or dealer, the
Offer shall be deemed to be made on behalf of Purchaser by Credit Suisse First
Boston Corporation, the Dealer Manager, or one or more registered brokers or
dealers licensed under the laws of such jurisdiction.
<PAGE>
INSTRUCTIONS WITH RESPECT TO
THE OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF CLASS A COMMON STOCK
AND
ALL OUTSTANDING SHARES OF CLASS B COMMON STOCK
OF
CONSOLIDATED CIGAR HOLDINGS INC.
BY
DORSAY ACQUISITION CORP.
A DIRECT, WHOLLY OWNED SUBSIDIARY OF
SOCIETE NATIONALE D'EXPLOITATION INDUSTRIELLE DES TABACS ET ALLUMETTES
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase, dated December 22, 1998 (the "Offer to Purchase"), and the
related Letter of Transmittal in connection with the offer by Dorsay
Acquisition Corp., a corporation organized and existing under the laws of the
State of Delaware and a direct, wholly owned subsidiary of Societe Nationale
d'Exploitation Industrielle des Tabacs et Allumettes, a corporation organized
and existing under the laws of France, to purchase all outstanding shares of
Class A Common Stock, par value $0.01 per share (the "Class A Shares"), and
Class B Common Stock, par value $0.01 per share (the "Class B Shares," and
together with the Class A Shares, the "Shares"), of Consolidated Cigar
Holdings Inc., a corporation organized and existing under the laws of the
State of Delaware, at a price of $17.85 per Share, net to the seller in cash
(subject to applicable withholding of taxes), without interest, upon the terms
and subject to the conditions set forth in the Offer to Purchase.
This will instruct you to tender the number of Shares indicated below (or,
if no number is indicated below, all Shares) that are held by you for the
account of the undersigned, upon the terms and subject to the conditions set
forth in the Offer.
Dated: _______________ , 199
Number of Shares to be Tendered: _ Shares*
- --------
* Unless otherwise indicated, it will be assumed that all Shares held by us
for your account are to be tendered.
SIGN HERE
_______________________________________________________________
SIGNATURE(S) OF HOLDER(S)
Name(s) of Holder(s):
_______________________________________________________________
PLEASE TYPE OR PRINT
_______________________________________________________________
ADDRESS(ES)
_______________________________________________________________
ZIP CODE(S)
_______________________________________________________________
AREA CODE AND TELEPHONE NUMBER(S)
_______________________________________________________________
TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER(S)
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER--
Social Security numbers have nine digits separated by two hyphens: i.e., 000-
00-0000. Employer identification numbers have nine digits separated by only one
hyphen: i.e., 00-0000000. The table below will help determine the number to
give the payer.
- ----------------------------------- -----------------------------------
<TABLE>
<CAPTION>
GIVE THE
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- --------------------------------------------
<S> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner
(joint account) of the account
or, if combined
funds, any one
of the
individuals(1)
3. Husband and wife (joint The actual owner
account) of the account
or, if joint
funds, either
person(1)
4. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult or, if
account) the minor is the
only
contributor, the
minor(1)
6. Account in the name of The ward, minor
guardian or committee or incompetent
for a designated ward, person(3)
minor or incompetent
person
7.a. The usual revocable The grantor-
savings trust account trustee(1)
(grantor is also
trustee)
b. So-called trust account The actual
that is not a legal or owner(1)
valid trust under state
law
8. Sole proprietorship The owner(4)
account
- --------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
GIVE THE EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
---
<S> <C>
9. A valid trust, estate The legal entity
or pension trust (Do not furnish
the identifying
number of the
personal
representative
or trustee
unless the legal
entity itself is
not designated
in the account
title.)(5)
10. Corporate account The corporation
11. Religious, charitable The organization
or educational
organization account
12. Partnership account The partnership
held in the name of the
business
13. Association, club or The organization
other tax-exempt
organization
14. A broker or registered The broker or
nominee nominee
15. Account with the The public
Department of entity
Agriculture in the name
of a public entity
(such as a state or
local government,
school district or
prison) that receives
agricultural program
payments
---
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's, or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate or pension trust.
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or
Form SS-4, Application for Employer Identification Number, at the local office
of the Social Security Administration or the Internal Revenue Service and apply
for a number.
PAYEE EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include
the following:
. A corporation.
. A financial institution.
. An organization exempt from tax under Section 501(a) or an individual
retirement plan.
. The United States or any agency or instrumentality thereof.
. A state, the District of Columbia, a possession of the United States or
any subdivision or instrumentality thereof.
. A foreign government, a political subdivision of a foreign government or
any agency or instrumentality thereof.
. An international organization or any agency or instrumentality thereof.
. A registered dealer in securities or commodities registered in the U.S. or
a possession of the U.S.
. A real estate investment trust.
. A common trust fund operated by a bank under Section 584(a).
. An exempt charitable remainder trust or a nonexempt trust described in
Section 4947(a)(1).
. An entity registered at all times under the Investment Company Act of
1940.
. A foreign central bank of issue.
PAYMENTS NOT GENERALLY SUBJECT TO BACKUP WITHHOLDING
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under section 1441.
. Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.
. Payments of patronage dividends where the amount received is not paid in
money.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals. Note: You may
be subject to backup withholding if this interest is $600 or more and is
paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.
. Payments of tax-exempt interest (including exempt interest dividends under
section 852).
. Payments described in section 6049(b)(5) to non-resident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
. Payments made to nominee.
EXEMPT PAYEES DESCRIBED ABOVE SHOULD FILE FORM W-9 TO AVOID POSSIBLE ERRONEOUS
BACKUP WITHHOLDING. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM AND RETURN IT TO
THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS OR PATRONAGE DIVIDENDS, ALSO
SIGN AND DATE THE FORM.
Certain payments other than interest, dividends and patronage dividends that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under section 6041, 6041A(a),
6045 and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest or other payments to give taxpayer identification numbers to payers
who must report the payments to the IRS. The IRS uses the numbers for
identification purposes. Payers must be given the numbers whether or not
recipients are required to file tax returns. Payers must generally withhold 31%
of taxable interest, dividend and certain other payments to a payee who does
not furnish a taxpayer identification number to a payer. Certain penalties may
also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
clause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Willfully falsifying
certifications of affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE>
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The Offer is made solely by the Offer to Purchase dated December
22, 1998 and the related Letter of Transmittal and any amendments or supplements
thereto, and is being made to all holders of Shares. The Offer is not being made
to, nor will tenders be accepted from or on behalf of, holders of Shares in any
jurisdiction in which the making of the Offer or acceptance thereof would not be
in compliance with the laws of such jurisdiction. In those jurisdictions where
securities, blue sky or other laws require the Offer to be made by a licensed
broker or dealer, the Offer shall be deemed to be made on behalf of the
Purchaser by Credit Suisse First Boston Corporation ("Credit Suisse First
Boston") or one or more registered brokers or dealers licensed under the laws of
such jurisdiction.
Notice of Offer to Purchase for Cash
All Outstanding Shares of Class A Common Stock
and
All Outstanding Shares of Class B Common Stock
of
Consolidated Cigar Holdings Inc.
at
$17.85 Net Per Share
by
Dorsay Acquisition Corp.
a direct wholly owned subsidiary
of
Seita
-----
Societe Nationale d'Exploitation Industrielle des Tabacs et Allumettes
Dorsay Acquisition Corp. a Delaware corporation (the "Purchaser") and a
direct wholly owned subsidiary of Societe Nationale d'Exploitation Industrielle
des Tabacs et Allumettes, a corporation organized and existing under the laws of
France ("Parent"), is offering to purchase all of the outstanding shares of
Class A Common Stock, par value $0.01 per share (the "Class A Shares"), and
Class B Common Stock, par value $0.01 per share (the "Class B Shares," and
together with the Class A Shares, the "Shares"), of Consolidated Cigar Holdings
Inc., a Delaware corporation (the "Company"), at a purchase price of $17.85 per
Share, net to the seller in cash (subject to applicable withholding of tax),
without interest, upon the terms and subject to the conditions set forth in the
Offer to Purchase dated December 22, 1998 (the "Offer to Purchase") and in the
related Letter of Transmittal (which, as amended or supplemented, together
constitute the "Offer"). Tendering stockholders who have Shares registered in
their own name and who tender directly to the Depositary will not be obligated
to pay brokerage fees or commissions or, subject to Instruction 6 of the Letter
of Transmittal, transfer taxes on the purchase of Shares pursuant to the Offer.
The purpose of the Offer is to acquire for cash as many outstanding Shares as
possible as a first step in acquiring the entire equity interest in the Company.
Following the consummation of the Offer, the Purchaser intends to effect the
merger described below.
-------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON THURSDAY, JANUARY 21, 1999, UNLESS THE OFFER IS EXTENDED.
-------------------------------------------------------------------------
<PAGE>
The Offer is conditioned upon, among other things, (1) there having been
validly tendered and not withdrawn prior to the Expiration Date (as defined
below) 19,600,000 Class B Shares, which are required to be tendered pursuant to
the Tender and Voting Agreement, dated December 16, 1998, by and among Parent,
Purchaser and Mafco Consolidated Group Inc., a Delaware corporation (the
"Minimum Condition"), and (2) any waiting period under the Hart-Scott-Rodino
Antitrust Improvement Act of 1976, as amended, and the regulations thereunder
applicable to the purchase of the Shares pursuant to the Offer having expired or
been terminated. See Section 13 of the Offer to Purchase.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
December 16, 1998 (the "Merger Agreement"), by and among the Purchaser, Parent
and the Company, The Merger Agreement provides, among other things, that the
Purchaser will make the Offer and that as promptly as practicable following the
consummation of the Offer and the satisfaction or waiver of certain conditions
set forth in the Merger Agreement and in accordance with relevant provisions of
the Delaware General Corporation Law, the Purchaser will merge with and into
the Company (the "Merger"). Upon the consummation of the Merger, the Company
will continue as the surviving corporation and will be a wholly owned subsidiary
of Parent. At the effective time of the Merger (the "Effective Time"), each
Share issued and outstanding immediately prior to the Effective Time (other than
Shares held by the Company as treasury stock or by any subsidiary of the
Company, Parent, the Purchaser or any other subsidiary of Parent and other than
Shares held by a holder who has not voted in favor of the Merger or consented
thereto in writing and who has demanded appraisal for such Shares in accordance
with Section 262 of the Delaware General Corporation Law) will be converted into
the right to receive cash without interest in an amount equal to the price per
Share paid pursuant to the Offer.
The Board of Directors of the Company has unanimously determined that the
Offer and the Merger are fair to, and in the best interests of, the Company and
its stockholders, has approved the Offer and the Merger and recommends that the
Company's stockholders accept the Offer and tender their Shares pursuant to the
Offer.
<PAGE>
The Purchaser may, and may be required to, subject to the terms of the
Merger Agreement, extend the Offer. Any such extension will be followed as
promptly as practicable by public announcement thereof no later than 9:00 a.m.,
New York City time, on the next business day after the previously scheduled
Expiration Date.
The Offer is subject to certain conditions set forth in the Offer to
Purchase. If any such condition is not satisfied, the Purchaser may, subject to
certain terms of the Merger Agreement, (a) terminate the Offer and not accept
for payment or pay for any Shares and return all tendered Shares to tendering
stockholders or (b) waive all the unsatisfied conditions and accept for payment
and pay for all Shares validly tendered prior to the Expiration Date or (c)
extend the Offer and, subject to the right of stockholders to withdraw Shares
until the Expiration Date as set forth below, retain the Shares that have been
tendered during the period for which the Offer is extended.
For purposes of the Offer, the Purchaser shall be deemed to have accepted
for payment (and thereby purchased) validly tendered Shares, if, as and when the
Purchaser gives oral or written notice to American Stock Transfer & Stock
Company (the "Depositary") of the Purchaser's acceptance of such Shares for
payment pursuant to the Offer. In all cases, payment for Shares accepted for
payment pursuant to the Offer will be made by deposit of the purchase price
therefor with the Depositary, which will act as agent for tendering stockholders
for the purpose of receiving payment from the Purchaser and transmitting payment
to tendering stockholders. Under no circumstances will interest on the purchase
price of the Shares be paid by the Purchaser by reason of any delay in making
payment. Payment for Shares purchased pursuant to the Offer will in all cases be
made only after timely receipt by the Depositary of (i) certificates for such
Shares (or timely confirmation of a book-entry transfer of such Shares into the
Depositary's account at the Book-Entry Transfer Facility (as defined in the
Offer to Purchase)), and (ii) the Letter of Transmittal (or a facsimile thereof)
properly completed and duly executed with all required signature guarantees or
an Agent's Message (as defined in the Offer to Purchase) in connection with a
book-entry transfer of Shares, together with any other documents required by the
Letter of Transmittal.
The term "Expiration Date" means 12:00 Midnight, New York City time, on
Thursday, January 21, 1999, unless and until the Purchaser shall have extended
the period of time for which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date at which the Offer, as so
extended by the Purchaser, shall expire.
Tenders of Shares made pursuant to the Offer may be withdrawn at any time
prior to the Expiration Date. Thereafter, such tenders are irrevocable, except
that they also may be withdrawn at any time after February 20, 1999 unless
theretofore accepted for payment as provided in the Offer to Purchase. To be
effective, a written or facsimile transmission notice of withdrawal must be
timely received by the Depositary at one of its addresses set forth in the Offer
to Purchase and must specify the name of the person who tendered the Shares to
be withdrawn and the number of Shares to be withdrawn and the name of the
registered holder, if different from that of the person who tendered such
Shares. If certificates for the Shares to be withdrawn have been delivered or
otherwise identified to the Depositary, a signed notice of withdrawal with
signatures guaranteed by an Eligible Institution (as defined in the Offer to
Purchase) must be submitted prior to the release of such Shares, unless such
Shares were tendered by an Eligible Institution. In addition, such notice must
specify, in the case of Shares tendered by delivery of certificates, the serial
numbers shown on the particular certificates evidencing the Shares to be
withdrawn or, in the case of Shares tendered by a book-entry transfer, the name
and number of the account at the Book-Entry Transfer Facility (as defined in the
Offer to Purchase) to be credited with the withdrawn Shares.
The information required to be disclosed by paragraph (e)(1)(vii) of Rule
14d-6 of the General Rules and Regulations under the Securities Exchange Act of
1934, as amended, is contained in the Offer to Purchase and is incorporated
herein by reference.
The Company has provided the Purchaser with the Company's stockholder lists
and security position listings for the purpose of disseminating the Offer to
holders of Shares. The Offer to Purchase and the related Letter of Transmittal
and other related materials will be mailed to record holders of Shares whose
names appear on the Company's stockholder lists, and will be furnished to
brokers, dealers, commercial banks, trust companies and similar persons whose
names, or the names of whose nominees, appear on the stockholder list or, if
applicable, who are listed as participants in a clearing agency's security
position listing for subsequent transmittal to beneficial owners of Shares.
The Offer to Purchase and the related Letter of Transmittal contain
important information which should be read carefully before any decision is made
with respect to the Offer.
Questions or requests for assistance may be directed to the Information
Agent or to the Dealer Manager at their respective addresses and telephone
numbers set forth below. Additional copies of the Offer to Purchase, the Letter
of Transmittal and other tender offer materials may be obtained from the
Information Agent or the Dealer Manager, and copies will be furnished promptly
at the Purchaser's expense. The Purchaser will not pay any fees or commissions
to any broker or dealer or any other person (other than the Information Agent
and the Dealer Manager) for soliciting tenders of Shares pursuant to the Offer.
The Information Agent for the Offer is:
D.F. King & Co., Inc.
77 Water Street
New York, New York 10005
Banks and Brokers Call (212) 269-5500 (collect)
All Others Call Toll Free (800) 290-6427
The Dealer Manager for the Offer is:
CREDIT FIRST
SUISSE BOSTON
Eleven Madison Avenue
New York, New York 10010-3629
Call Toll Free (800) 881-8320
December 22, 1998
<PAGE>
Paris, France and Fort Lauderdale, Florida
December 16, 1998
SEITA ANNOUNCES AGREEMENT TO ACQUIRE US CIGAR MAKER
CONSOLIDATED CIGAR HOLDINGS INC.
Seita S.A., (SBF Paris Bourse: Seita), France's largest producer and distributor
of tobacco products, announced today that it has signed a definitive agreement
to acquire Consolidated Cigar Holdings Inc. (NYSE: CIG), the leading cigar maker
in the United States in revenue terms, for 17.85 $ per share, net to the seller
in cash.
Consolidated Cigar Holdings, which in 1997 had sales of $299 million (around FRF
1.7 billion) and net income of $54 million (around FRF 300 million), employs
5,400 people, including 550 in the United States. The company is headquartered
in Fort Lauderdale, Florida and operates eight plants--two in the United States,
two in Puerto Rico, two in the Honduras, one in Dominican Republic and one in
Jamaica.
Consolidated Cigar realizes almost all its sales in the United States, where it
has a market share of approximately 24% with such brands as Dutch Treats,
Antonio y Cleopatra, Dutch Masters, Muriel and Backwoods, Don Diego, Te-Amo,
Montecruz and Henry Clay. It also holds the US marketing rights to the
prestigious H. Upmann, Montecristo and Por Larranaga brands, which are made
from tobacco grown outside of Cuba.
With FRF 18.4 billion (3.3 billion US$) in sales and FRF 827 million (150
million US$) in net income in 1997, Seita is France's leading tobacco products
company. Its shares are listed on the Paris Bourse. It sold 64.3 billion
cigarettes in 1997, of which nearly 50% outside France. In the cigar segment,
the company is number one in France, with 38% of the market, number four in
Europe and number seven worldwide. It is strategically committed to expanding
in the global marketplace, supported by sustained growth in sales and an active
acquisitions program.
The United States is the world's largest cigar market. The Consolidated Cigar
acquisition will provide Seita with extensive expertise in the premium,
hand-rolled cigar market and will enable it to develop synergies in tobacco
purchasing and in the production and marketing of its Pleiades brand in the
United States. In addition, the transaction will make Seita the world's leading
cigar company, with total volume of 1.6 billion cigars. In this way, it will
create, in line with Seita's strategic vision, a second strong business
alongside the cigarettes division, which is focusing on the international
development of the Gauloises Blondes brand.
The agreement calls for a wholly owned subsidiary of Seita to commence a tender
offer at the latest December 22, 1998 for all of Consolidated Cigar's
outstanding shares. The
<PAGE>
offer will be conditioned upon, among other things, the expiration or earlier
termination of the applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 and the tender of approximately 65% of the
shares of common stock of Consolidated Cigar outstanding. Following the
consummation of the offer, Seita's subsidiary will be merged with Consolidated
Cigar and any remaining shares will be converted into the right to receive
$17.85 per share in cash.
As a part of the transaction, Mafco Consolidated Group Inc., a wholly owned
subsidiary of MacAndrews and Forbes Holdings Inc., has agreed to tender all of
its Consolidated Cigar shares, representing approximately 65% of the outstanding
shares, and has granted Seita an option to purchase all its Consolidated Cigar
shares under certain circumstances.
The closing is expected to occur in the first quarter of 1999.
The acquisition of 100% of shares would represent an investment of approximately
$530 million. The total value of the transaction is approximately $730 million,
including assumed debt.
Theo Folz, Consolidated Cigar's current President and Chief Executive Officer,
will continue to manage the company.
The tender offer will be made only pursuant to an offer to purchase and related
documents to be filed with the U.S. Securities and Exchange Commission.
Consolidated Cigar will be from 1999 fully integrated in Seita's accounts.
According to present expectations, after amortization of goodwill, the company
is expected to make a positive contribution to Seita's consolidated income
from the first year.
The Consolidated Cigar Holdings brands portfolio
------------------------------------------------
Cigares "premium" Cigares "mass-market"
H. Upmann Antonio y Cleopatra
Montecristo Backwoods
Por Larranga Dutch Masters
Henry Clay Dutch Treats
Montecruz El Producto
Royal Jamaica Muriel
Primo del Rey
Cabanas
Don Diego
La Corona
Santa Damiana
<PAGE>
Las Cabrillas
Te-Amo
Santa Rosa
<PAGE>
[LOGO OF SEITA APPEARS HERE] December 16,1998
Seita Group + Consolidated Cigar combined economic sales
--------------------------------------------------------
in FRF millions
- -----------------------------------------------------------------------
Seita France International Total
Cigarette + Pipe & Rolling tobacco 3,785 1,815 5,60 78%
Cigar 300 35 335 5%
Other 188 111 299 4%
Distribution (gross margin) 793 181 974 14%
Total economic sales 5,066 2,142 7,208 100%
- -----------------------------------------------------------------------
70% 30% 100%
in FRF millions
- -----------------------------------------------------------------------
Consolidated Cigar USA International Total
----------------
1 dollar = 5.56
----------------
Pipe tobacco 59 0 59 4%
Cigar 1,511 57 1,568 94%
Other 36 0 36 2%
Total 1,606 57 1,663 100%
- -----------------------------------------------------------------------
97% 3% 100%
in FRF millions
- -----------------------------------------------------------------------
New stucture France International Total
Cigarette + Pipe & Rolling tobacco 3,785 1,874 5,659 64%
Cigar 300 1,603 1,903 21%
Other 188 147 335 4%
Distribution (gross margin) 793 181 974 11%
Total economic sales 5,066 3,805 8,871 100%
- -----------------------------------------------------------------------
57% 43% 100%
<PAGE>
Exhibit (c)(1)
AGREEMENT AND PLAN OF MERGER
by and among
SOCIETE NATIONALE D'EXPLOITATION
INDUSTRIELLE DES TABACS ET ALLUMETTES
DORSAY ACQUISITION CORP.
and
CONSOLIDATED CIGAR HOLDINGS INC.
December 16, 1998
<PAGE>
AGREEMENT AND PLAN OF MERGER
----------------------------
AGREEMENT AND PLAN OF MERGER, dated as of December 16, 1998, by and
among SOCIETE NATIONALE D'EXPLOITATION INDUSTRIELLE DES TABACS ET ALLUMETTES, a
corporation organized under the laws of France ("Parent"), DORSAY ACQUISITION
CORP. , a Delaware corporation and a wholly owned subsidiary of Parent(the
"Purchaser"), and Consolidated Cigar Holdings Inc., a Delaware corporation (the
"Company").
WHEREAS, Parent and the Purchaser have proposed acquiring all of the
outstanding Class A common stock, par value $.01 per share, of the Company (the
"Class A Common Stock")and all of the outstanding Class B common stock, par
value $.01 per share, of the Company (the "Class B Common Stock," together with
the Class A Common Stock, the "Shares" or "Company Common Stock") at a price of
$17.85 per Share in cash;
WHEREAS, the Company, Parent and Purchaser desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger;
WHEREAS, as a condition and inducement to Parent's and Purchaser's
entering into this Agreement and incurring the obligations set forth herein,
Mafco Consolidated Group Inc. ("Mafco"), concurrently herewith, is entering into
a Tender and Voting Agreement (the "Tender Agreement"), dated as of the date
hereof, with Parent and Purchaser, pursuant to which, among other things, Mafco
is agreeing to tender its Shares in the Offer and vote such Shares, all upon the
terms and subject to the conditions set forth in the Tender and Voting
Agreement;
WHEREAS, the Boards of Directors of Parent, the Purchaser and the
Company have approved, and deem it advisable and in the best interests of their
respective stockholders to consummate, the acquisition of the Company by Parent
and Purchaser upon the terms and subject to the conditions set forth herein; and
<PAGE>
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
THE OFFER AND MERGER
Section 1.1 The Offer. (a) Provided this Agreement shall not have
---------
been terminated in accordance with Section 7.1, as promptly as practicable (but
in no event later than five business days after the public announcement of the
execution hereof), the Purchaser shall, and Parent shall cause Purchaser to,
commence (within the meaning of Rule 14d-2 under the Securities Exchange Act of
1934, as amended (the "Exchange Act")) an offer (the "Offer") to purchase for
cash any and all shares of the issued and outstanding Company Common Stock at a
price of $17.85 per Share, net to the seller in cash (such price, or such higher
price per Share as may be paid in the Offer, being referred to herein as the
"Offer Price"), subject to the conditions set forth in Annex A hereto. The
Company shall not tender Shares held by it or by any of its subsidiaries
pursuant to the Offer. The Purchaser shall, on the terms and subject to the
prior satisfaction or waiver of the conditions of the Offer, accept for payment
and pay for Shares tendered as soon as it is legally permitted to do so under
applicable law. The obligations of the Purchaser to consummate the Offer and to
accept for payment and to pay for any Shares validly tendered on or prior to the
expiration of the Offer and not withdrawn shall be subject only to the
conditions set forth in Annex A hereto.
(b) The Offer shall be made by means of an offer to purchase (the
"Offer to Purchase") containing the terms set forth in this Agreement and the
conditions set forth in Annex A hereto. The Purchaser shall not decrease the
Offer Price or decrease the number of Shares sought, amend the conditions to the
Offer set forth in Annex A or impose conditions to the Offer in addition to
those set forth in Annex A, without the prior written
2
<PAGE>
consent of the Company (such consent to be authorized by the Board of Directors
of the Company or a duly authorized committee thereof). Notwithstanding the
foregoing, the Purchaser shall be entitled to and shall, and Parent agrees to
cause the Purchaser to, extend the Offer at any time up to 40 days in the
aggregate, in one or more periods of not more than 10 business days, if at the
initial expiration date of the Offer, or any extension thereof, any condition to
the Offer is not satisfied or waived; provided however, that the Purchaser shall
not be required to extend the Offer as provided in this sentence unless (i) each
such condition is reasonably capable of being satisfied and (ii) the Company is
in material compliance with all of its covenants under this Agreement after the
Purchaser shall have given the Company five business days prior written notice
of any such non-compliance. In addition, without limiting the foregoing, the
Purchaser may, without the consent of the Company, (A) extend the Offer for up
to an additional 40 days, in one or more periods of not more than 10 business
days, if any condition to the Offer is not satisfied or waived and (B) if, on
the expiration date of the Offer, the Shares validly tendered and not withdrawn
pursuant to the Offer are sufficient to satisfy the Minimum Condition (as
defined in Annex A hereto) but equal less than 90% of the outstanding Shares,
extend the Offer on one occasion for up to 10 business days notwithstanding that
all the conditions to the Offer have been satisfied so long as Purchaser
irrevocably waives the satisfaction of any of the conditions to the Offer (other
than in the case of paragraph (a) of Annex A hereto the occurrence of any
statute, rule, regulation, judgment, order or preliminary or permanent
injunction making illegal or prohibiting the consummation of the Offer) that
subsequently may not be satisfied during any such extension of the Offer. In
addition, the Offer Price may be increased and the Offer may be extended to the
extent required by law in connection with such increase in each case without the
consent of the Company.
(c) As soon as practicable on the date the Offer is commenced, Parent
and the Purchaser shall file with the United States Securities and Exchange
Commission (the "SEC") a Tender Offer Statement on
3
<PAGE>
Schedule 14D-1 with respect to the Offer (together with all amendments and
supplements thereto and including the exhibits thereto, the "Schedule 14D-1").
The Schedule 14D-1 shall include, as exhibits, the Offer to Purchase and a form
of letter of transmittal and summary advertisement (collectively, together with
any amendments and supplements thereto, the "Offer Documents"). The Offer
Documents shall comply in all material respects with the provisions of
applicable federal securities laws and, on the date filed with the SEC and on
the date first published, sent or given to the Company's stockholders, shall not
contain any untrue statement of a material fact or omit to state any 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, except that no representation is made by Parent or the Purchaser
with respect to information supplied by the Company for inclusion in the Offer
Documents. Each of Parent and the Purchaser shall further take all steps
necessary to cause the Offer Documents to be filed with the SEC and to be
disseminated to holders of Shares, in each case as and to the extent required by
applicable federal securities laws. Each of Parent and the Purchaser, on the one
hand, and the Company, on the other hand, shall promptly correct any information
provided by it for use in the Offer Documents if and to the extent that it shall
have become false and misleading in any material respect and the Purchaser
further shall take all steps necessary to cause the Offer Documents as so
corrected to be filed with the SEC and to be disseminated to holders of Shares,
in each case as and to the extent required by applicable federal securities
laws. The Company and its counsel shall be given an opportunity to review and
comment upon the Schedule 14D-1 (and shall provide any comments thereon as soon
as practicable) prior to the filing thereof with the SEC. In addition, Parent
and the Purchaser shall provide the Company and its counsel in writing with any
comments that Parent, Purchaser or their counsel may receive from the SEC or its
staff with respect to the Offer Documents promptly after receipt of such
comments and with copies of any written responses and telephonic notification of
any verbal responses by Parent, Purchaser or their counsel.
4
<PAGE>
(d) Parent shall provide or cause to be provided to Purchaser all of
the funds necessary to purchase any shares of Company Common Stock that
Purchaser becomes obligated to purchase pursuant to the Offer.
Section 1.2 Company Actions.
---------------
(a) The Company hereby approves of and consents to the Offer and
represents that its Board of Directors, at a meeting duly called and held, has
(i) approved this Agreement (including all terms and conditions set forth
herein) and the transactions contemplated hereby, including the Offer and the
Merger (as defined in Section 1.4) (collectively, the "Transactions"),
determining that the Merger is advisable and that the terms of the Offer and the
Merger are fair to, and in the best interests of, the Company's stockholders and
recommending that the Company's stockholders accept the Offer and approve the
Merger and this Agreement and (ii) resolved to recommend that the stockholders
of the Company accept the Offer, tender their Shares thereunder to the Purchaser
and approve and adopt this Agreement and the Merger; provided, that such
-------- ----
recommendation may be withdrawn, modified or amended if, in the opinion of the
Board of Directors, after consultation with independent legal counsel, such
recommendation would be inconsistent with its fiduciary duties to the Company's
stockholders under applicable law. The Company represents that Section 203 of
the Delaware General Corporation Law (the "DGCL") is inapplicable to the
transactions contemplated by this Agreement. The Company hereby consents to the
inclusion in the Offer Documents of the recommendation of its Board of Directors
described in clause (ii) of the immediately preceding sentence.
(b) Concurrently with the commencement of the Offer, the Company
shall file with the SEC a Solicitation/Recommendation Statement on Schedule 14D-
9 (together with all amendments and supplements thereto and including the
exhibits thereto, the "Schedule 14D-9") which shall, subject to the fiduciary
duties of the Company's directors under applicable law, as determined
5
<PAGE>
by the Board of Directors after consultation with independent legal counsel, and
to the provisions of this Agreement, contain the recommendation referred to in
clause (ii) of Section 1.2(a) hereof. The Schedule 14D-9 shall comply in all
material respects with the provisions of applicable federal securities laws and,
on the date filed with the SEC and on the date first published, sent or given to
the Company's stockholders, shall not contain any untrue statement of a material
fact or omit to state any 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, except that no representation is
made by the Company with respect to information supplied by Parent or the
Purchaser for inclusion in the Schedule 14D-9. The Company further shall take
all steps necessary to cause the Schedule 14D-9 to be filed with the SEC and to
be disseminated to holders of Shares, in each case as and to the extent required
by applicable federal securities laws. Each of the Company, on the one hand, and
Parent and the Purchaser, on the other hand, shall promptly correct any
information provided by it for use in the Schedule 14D-9 if and to the extent
that it shall have become false and misleading in any material respect and the
Company further shall take all steps necessary to cause the Schedule 14D-9 as so
corrected to be filed with the SEC and to be disseminated to holders of the
Shares, in each case as and to the extent required by applicable federal
securities laws. Parent, the Purchaser and their counsel shall be given an
opportunity to review and comment upon the Schedule 14D-9 (and shall provide any
comments thereon as soon as practicable) prior to the filing thereof with the
SEC. In addition, the Company shall provide Parent, the Purchaser and their
counsel in writing with any comments the Company or its counsel may receive from
the SEC or its staff with respect to the Schedule 14D-9 promptly after receipt
of such comments and with copies of any written responses and telephonic
notification of any verbal responses by the Company or its counsel.
(c) Parent shall provide or cause to be provided to Purchaser all of
the funds necessary to purchase any shares of Company Common Stock that
6
<PAGE>
Purchaser becomes obligated to purchase pursuant to the Offer. Notwithstanding
anything to the contrary contained herein, if the members of the Board of
Directors of the Company determine in the exercise of their fiduciary duties to
withdraw, modify or amend the recommendation referred to in clause (ii) of
Section 1.2(a) hereof, such withdrawal, modification or amendment shall not
constitute a breach of this Agreement.
(d) In connection with the Offer, the Company shall promptly furnish
or cause to be furnished to the Purchaser mailing labels, security position
listings and any available listing or computer file containing the names and
addresses of the record holders of the Shares as of a recent date, and shall
furnish the Purchaser with such information and assistance as the Purchaser or
its agents may reasonably request in communicating the Offer to the stockholders
of the Company. Except for such steps as are necessary to disseminate the Offer
Documents and subject to the requirements of applicable law, Parent and the
Purchaser shall hold in confidence the information contained in any of such
labels and lists and the additional information referred to in the preceding
sentence, shall use such information only in connection with the Offer and
Merger, and, if this Agreement is terminated, shall upon request of the Company
deliver or cause to be delivered to the Company all copies of such information
then in its possession or the possession of its agents or representatives.
Section 1.3 Directors.
---------
(a) Promptly upon the purchase of and payment for Shares by Parent or
any of its subsidiaries which represent at least a majority of the outstanding
shares of Company Common Stock (on a fully diluted basis), Parent shall be
entitled to designate such number of directors, rounded up to the next whole
number, on the Board of Directors of the Company as is equal to the product of
the total number of directors on such Board (giving effect to the directors
designated by Parent pursuant to this sentence) multiplied by the percentage
that the aggregate number of Shares beneficially owned by
7
<PAGE>
the Purchaser, Parent and any of their affiliates bears to the total number of
shares of Company Common Stock then outstanding. The Company shall, upon request
of the Purchaser, use all reasonable efforts promptly either to increase the
size of its Board of Directors (which, pursuant to the Company's Restated
Certificate of Incorporation, as amended (the "Certificate of Incorporation"),
has no maximum number of directors) or, at the Purchaser's election, secure the
resignations of such number of its incumbent directors as is necessary to enable
Parent's designees to be so elected to the Company's Board, and shall cause
Parent's designees to be so elected. Notwithstanding the foregoing, until the
Effective Time (as defined in Section 1.5 hereof), the Company shall retain as
members of its Board of Directors at least two directors who are directors of
the Company on the date hereof; provided, that subsequent to the purchase of and
-------- ----
payment for Shares pursuant to the Offer, Parent shall always have its designees
represent at least a majority of the entire Board of Directors. The Company's
obligations under this Section 1.3(a) shall be subject to Section 14(f) of the
Exchange Act and Rule 14f-1 promulgated thereunder. Parent or the Purchaser
shall supply the Company any information with respect to either of them and
their nominees, officers, directors and affiliates required by Section 14(f) and
Rule 14f-1. Upon receipt of such information from Parent or the Purchaser, the
Company shall include in the Schedule 14D-9 (as an annex or otherwise) the
information required by Section 14(f) and Rule 14f-1 as is necessary to enable
Parent's designees to be elected to the Company's Board of Directors.
(b) From and after the time, if any, that Parent's designees
constitute a majority of the Company's Board of Directors, any amendment of this
Agreement, any termination of this Agreement by the Company, any extension of
time for performance of any of the obligations of Parent or the Purchaser
hereunder, any waiver of any condition or any of the Company's rights hereunder
or other action by the Company hereunder may be effected only by unanimous vote
of the entire Board of Directors of the Company.
8
<PAGE>
Section 1.4 The Merger. Subject to the terms and conditions of this
----------
Agreement and the provisions of the DGCL, at the Effective Time, the Company and
the Purchaser shall consummate a merger (the "Merger") pursuant to which (a) the
Purchaser shall be merged with and into the Company and the separate corporate
existence of the Purchaser shall thereupon cease, (b) the Company shall be the
successor or surviving corporation in the Merger (the "Surviving Corporation")
under the name "Consolidated Cigar Holdings Inc." and shall continue to be
governed by the laws of the State of Delaware, and (c) the separate corporate
existence of the Company with all its rights, privileges, immunities, powers and
franchises shall continue unaffected by the Merger. Pursuant to the Merger, (x)
the Certificate of Incorporation of the Purchaser, as in effect immediately
prior to the Effective Time, shall be the Certificate of Incorporation of the
Surviving Corporation until thereafter amended as provided by law and such
Certificate of Incorporation, and (y) the By-laws of the Purchaser, as in effect
immediately prior to the Effective Time, shall be the By-laws of the Surviving
Corporation until thereafter amended as provided by law, the Certificate of
Incorporation and such By-laws; provided, that Section 1 of the Certificate of
--------
Incorporation of the Surviving Corporation shall be amended to read in its
entirety as follows: "The name of the Corporation is Consolidated Cigar
Holdings Inc." The Merger shall have the effects set forth in the DGCL.
Section 1.5 Effective Time. Parent, the Purchaser and the Company
--------------
shall cause an appropriate Certificate of Merger (the "Certificate of Merger")
to be executed and filed on the date of the Closing (as defined in Section 1.6)
(or on such other date as Parent and the Company may agree) with the Department
of State of the State of Delaware (the "Department of State") as provided in the
DGCL. The Merger shall become effective on the date on which the Certificate of
Merger has been duly filed with the Department of State or such time as is
agreed upon by the parties and specified in the Certificate of Merger, and such
time is hereinafter referred to as the "Effective Time."
9
<PAGE>
Section 1.6 Closing. The closing of the Merger (the "Closing") shall
-------
take place at 10:00 a.m., on a date to be specified by the parties, which shall
be as soon as practicable, but in no event later than the third business day,
after satisfaction or waiver of all of the conditions set forth in Article VI
hereof (the "Closing Date"), at the New York offices of Proskauer Rose LLP,
unless another date or place is agreed to in writing by the parties hereto.
Section 1.7 Directors and Officers of the Surviving Corporation. The
---------------------------------------------------
directors of the Purchaser and the officers of the Company immediately prior to
the Effective Time shall, from and after the Effective Time, be the directors
and officers, respectively, of the Surviving Corporation until their successors
shall have been duly elected or appointed or qualified or until their earlier
death, resignation or removal in accordance with the Surviving Corporation's
Certificate of Incorporation and By-laws.
Section 1.8 Stockholders' Meeting.
---------------------
(a) If required by applicable law in order to consummate the Merger,
the Company, acting through its Board of Directors, shall, in accordance with
applicable law:
(i) duly call, give notice of, convene and hold a special
meeting of its stockholders (the "Special Meeting") as soon as practicable
following the acceptance for payment and purchase of Shares by the
Purchaser pursuant to the Offer for the purpose of considering and taking
action upon this Agreement;
(ii) prepare and file with the SEC a preliminary proxy or
information statement relating to the Merger and this Agreement and use its
reasonable efforts (x) to obtain and furnish the information required to be
included by the SEC in the Proxy Statement (as hereinafter defined) and,
after consultation with Parent, to respond promptly to any comments made by
the SEC with respect to the
10
<PAGE>
preliminary proxy or information statement and cause a definitive proxy
or information statement (the "Proxy Statement") to be mailed to its
stockholders and (y) to obtain the necessary approvals of the Merger and
this Agreement by its stockholders; and
(iii) subject to the fiduciary obligations of the Board under
applicable law as advised by independent counsel, include in the Proxy
Statement the recommendation of the Board that stockholders of the Company
vote in favor of the approval of the Merger and the adoption of this
Agreement.
(b) Parent shall provide the Company with the information concerning
Parent and Purchaser required to be included in the Proxy Statement. Parent
shall vote, or cause to be voted, all of the Shares then owned by it, the
Purchaser or any of its other subsidiaries and affiliates in favor of the
approval of the Merger and the approval and adoption of this Agreement.
Section 1.9 Merger Without Meeting of Stockholders. Notwithstanding
--------------------------------------
Section 1.8 hereof, in the event that Parent, the Purchaser or any other
Subsidiary of Parent, shall acquire at least 90 percent of the outstanding
shares of Company Common Stock pursuant to the Offer or otherwise, each of the
parties hereto shall take all necessary and appropriate action to cause the
Merger to become effective as soon as practicable after such acquisition,
without a meeting of stockholders of the Company, in accordance with Section 253
of the DGCL.
11
<PAGE>
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 Conversion of Capital Stock. As of the Effective Time,
---------------------------
by virtue of the Merger and without any action on the part of the holders of any
shares of Company Common Stock or common stock, par value $.01 per share, of the
Purchaser (the "Purchaser Common Stock"):
(a) Purchaser Common Stock. Each issued and outstanding share of the
----------------------
Purchaser Common Stock shall be converted into and become one validly issued,
fully paid and nonassessable share of common stock, $.01 par value per share, of
the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock. All
-----------------------------------------------------
shares of Company Common Stock that are owned by the Company as treasury stock,
all shares of Company Common Stock owned by any Subsidiary (as defined in
Section 3.1) of the Company and any shares of Company Common Stock owned by
Parent, the Purchaser or any other wholly owned Subsidiary of Parent shall be
cancelled and retired and shall cease to exist and no consideration shall be
delivered in exchange therefor.
(c) Conversion of Shares. Each issued and outstanding share of
--------------------
Company Common Stock (other than Shares to be cancelled in accordance with
Section 2.1(b) hereof and any Dissenting Shares (as defined in Section 2.3
hereof)), shall be converted into the right to receive the Offer Price payable
to the holder thereof, without interest (the "Merger Consideration"), upon
surrender of the certificate formerly representing such share of Company Common
Stock in the manner provided in Section 2.2 hereof. All such shares of Company
Common Stock, when so converted, shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist, and each holder
of a certificate representing any such shares shall cease to have any rights
with respect thereto, except the right to receive the Merger Consideration
therefor upon the surrender of
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<PAGE>
such certificate in accordance with Section 2.2 hereof, without interest.
Section 2.2 Exchange of Certificates.
------------------------
(a) Paying Agent. Parent shall designate a bank or trust company
------------
(the "Paying Agent") reasonably acceptable to the Company to make the payments
of the funds to which holders of shares of Company Common Stock shall become
entitled pursuant to Section 2.1(c) hereof. Prior to the Effective Time, Parent
shall take all steps necessary to deposit or cause to be deposited with the
Paying Agent such funds for timely payment thereunder. Such funds shall be
invested by the Paying Agent as directed by Parent or the Surviving Corporation.
(b) Exchange Procedures. As soon as practicable after the Effective
-------------------
Time but in no event more than three business days thereafter, Parent shall
cause the Paying Agent to mail to each holder of record of a certificate or
certificates, which immediately prior to the Effective Time represented
outstanding shares of Company Common Stock (the "Certificates"), whose shares
were converted pursuant to Section 2.1 hereto into the right to receive the
Merger Consideration, (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon delivery of the Certificates to the Paying Agent and shall be in
such form and have such other provisions as Parent and the Surviving Corporation
may reasonably specify) and (ii) instructions for use in effecting the surrender
of the Certificates in exchange for payment of the Merger Consideration. Upon
surrender of a Certificate for cancellation to the Paying Agent, together with
such letter of transmittal, duly executed, the holder of such Certificate shall
be entitled to receive in exchange therefor the Merger Consideration (subject to
subsection (e), below) for each share of Company Common Stock formerly
represented by such Certificate and the Certificate so surrendered shall
forthwith be cancelled. If payment of the Merger Consideration is to be made to
a person other than the person in whose name the surrendered Certificate is
registered, it shall be a
13
<PAGE>
condition of payment that the Certificate so surrendered shall be properly
endorsed or shall be otherwise in proper form for transfer and that the person
requesting such payment shall have paid any transfer and other taxes required by
reason of the payment of the Merger Consideration to a person other than the
registered holder of the Certificate surrendered or shall have established to
the satisfaction of the Surviving Corporation that such tax either has been paid
or is not applicable. Until surrendered as contemplated by this Section 2.2,
each Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive the Merger Consideration in cash as
contemplated by this Section 2.2.
(c) Transfer Books; No Further Ownership Rights in Company Common
-------------------------------------------------------------
Stock. At the Effective Time, the stock transfer books of the Company shall be
- -----
closed and thereafter there shall be no further registration of transfers of
shares of Company Common Stock on the records of the Company. From and after
the Effective Time, the holders of Certificates evidencing ownership of shares
of Company Common Stock outstanding immediately prior to the Effective Time
shall cease to have any rights with respect to such Shares, except as otherwise
provided for herein or by applicable law. If, after the Effective Time,
Certificates are presented to the Surviving Corporation for any reason, they
shall be cancelled and exchanged as provided in this Article II.
(d) Termination of Fund; No Liability. At any time following one year
---------------------------------
after the Effective Time, the Surviving Corporation shall be entitled to require
the Paying Agent to deliver to it any funds (including any interest received
with respect thereto) which had been made available to the Paying Agent and
which have not been disbursed to holders of Certificates, and thereafter such
holders shall be entitled to look only to the Surviving Corporation (subject to
abandoned property, escheat or other similar laws) as general creditors thereof
with respect to the payment of any Merger Consideration that may be payable upon
surrender of any Certificates such stockholder holds, as determined pursuant to
this Agreement, without any interest thereon.
14
<PAGE>
Notwithstanding the foregoing, neither the Surviving Corporation nor the Paying
Agent shall be liable to any holder of a Certificate for Merger Consideration
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law.
(e) Withholding Taxes. If so specified in the Offer Documents,
-----------------
Parent, the Purchaser, the Surviving Corporation and the Paying Agent shall be
entitled to deduct and withhold from the consideration otherwise payable to a
holder of Shares pursuant to the Offer or Merger such amounts as Parent, the
Purchaser, the Surviving Corporation or the Paying Agent is required to deduct
and withhold with respect to the making of such payment under the Internal
Revenue Code of 1986, as amended (the "Code") or any provision of state, local
or foreign tax law. To the extent amounts are so withheld by Parent, the
Purchaser, the Surviving Corporation or the Paying Agent, the withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
holder of the Shares in respect of which the deduction and withholding was made.
Section 2.3 Dissenting Shares. Notwithstanding any provision of this
-----------------
Agreement to the contrary, if and to the extent required by the DGCL, shares of
Company Common Stock which are issued and outstanding immediately prior to the
Effective Time and which are held by holders of such shares of Company Common
Stock who have properly exercised appraisal rights with respect thereto (the
"Dissenting Common Stock") in accordance with Section 262 of the DGCL, shall not
be exchangeable for the right to receive the Merger Consideration, and holders
of such shares of Dissenting Common Stock shall be entitled to receive payment
of the appraised value of such shares of Dissenting Common Stock in accordance
with the provisions of Section 262 of the DGCL unless and until such holders
fail to perfect or effectively withdraw or otherwise lose their rights to
appraisal and payment under the DGCL. If, after the Effective Time, any such
holder fails to perfect or effectively withdraws or loses such right, such
shares of Dissenting Common Stock shall thereupon be treated as if they had been
converted into and to have become
15
<PAGE>
exchangeable for, at the Effective Time, the right to receive the Merger
Consideration, without any interest thereon. Notwithstanding anything to the
contrary contained in this Section 2.3, if (i) the Merger is rescinded or
abandoned or (ii) the stockholders of the Company revoke the authority to effect
the Merger, then the right of any stockholder to be paid the fair value of such
stockholder's Dissenting Common Stock pursuant to Section 262 of the DGCL shall
cease. The Company shall give Parent prompt notice of any demands received by
the Company for appraisals of shares of Dissenting Common Stock. The Company
shall not, except with the prior written consent of Parent, make any payment
with respect to any demands for appraisals or offer to settle or settle any such
demands.
Section 2.4 Company Option Plans. Parent and the Company shall take
--------------------
all actions necessary to provide that, effective as of the Effective Time, (i)
each outstanding employee stock option to purchase Shares ("Option") granted
under the Company's 1996 Stock Option Plan (the "1996 Plan"), whether or not
then exercisable or vested, shall be cancelled and (ii) in consideration of such
cancellation, the Company (or, at Parent's option, the Purchaser) shall pay to
such holders of Options an amount in respect thereof equal to the product of (A)
the excess, if any, of the Offer Price over the exercise price of each such
Option and (B) the number of Shares subject thereto (such payment, if any, to be
net of applicable withholding taxes). As of the Effective Time, the 1996 Plan
shall terminate and all rights under any provision of any other plan, program or
arrangement providing for the issuance or grant of any other interest in respect
of the capital stock of the Company or any Subsidiary of the Company shall be
cancelled. The Company shall take all action necessary to ensure that, after
the Effective Time, no person shall have any right under the 1996 Plan or any
other plan, program or arrangement with respect to equity securities of the
Company, or any direct or indirect Subsidiary of the Company.
ARTICLE III
16
<PAGE>
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and the Purchaser as
follows:
Section 3.1 Organization. Each of the Company and its Subsidiaries
------------
(as defined in this Section 3.1) is a corporation or other entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization and has all requisite
corporate or other power and authority to own, lease and operate its properties
and to carry on its business as it is now being conducted, except where the
failure to be so organized, existing and in good standing or to have such power
or authority would not have a material adverse effect on the Company and its
Subsidiaries taken as a whole. As used in this Agreement, the word "Subsidiary"
means, with respect to any party, any corporation or other organization, whether
incorporated or unincorporated, of which (i) such party or any other Subsidiary
of such party is a general partner (excluding such partnerships where such party
or any Subsidiary of such party do not have a majority of the voting interest in
such partnership) or (ii) at least a majority of the securities or other
interests having by their terms ordinary voting power to elect a majority of the
Board of Directors or others performing similar functions with respect to such
corporation or other organization is directly or indirectly owned or controlled
by such party or by any one or more of its Subsidiaries, or by such party and
one or more of its Subsidiaries. It is understood that, for purposes of this
Agreement, Cuban Cigar Brands, N.V. shall be deemed to be a Subsidiary of the
Company. As used in this Agreement, any reference to any event, change or effect
being material or having a material adverse effect on or with respect to any
entity (or group of entities taken as a whole) means such event, change or
effect is materially adverse to the consolidated financial condition, businesses
or results of operations of such entity (or, if used with respect thereto, of
such group of entities taken as a whole). The Company and each of its
Subsidiaries is duly qualified or licensed to do business and in good standing
in each jurisdiction in which the
17
<PAGE>
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification or licensing necessary, except where the failure
to be so duly qualified or licensed and in good standing would not in the
aggregate have a material adverse effect on the Company and its Subsidiaries
taken as a whole.
Section 3.2 Capitalization. (a) The authorized capital stock of the
--------------
Company consists of (i) 300,000,000 shares of Class A Common Stock, (ii)
250,000,000 Class B Common Stock, and (iii) 20,000,000 shares of Preferred
Stock, par value $.01 per share (the "Preferred Stock"). As of the date hereof,
(x) 10,168,116 shares of Class A Common Stock are issued and outstanding, (y)
19,600,000 shares of Class B Common Stock are issued and outstanding ,(iii)
1,840,835 shares of Class A Common Stock are reserved for issuance upon exercise
of outstanding Options granted under the 1996 Plan, (iv) 19,600,000 shares of
Class A Common Stock are reserved for issuance upon the conversion of Class B
Common Stock, (v) no shares of Preferred Stock are issued and outstanding and
(vi) 925,216 Shares are held in the Company's treasury. All the outstanding
shares of the Company Common Stock are, and all shares which may be issued
pursuant to the exercise of outstanding Options when issued in accordance with
the respective terms thereof shall be, duly authorized, validly issued, fully
paid and non-assessable. There are no bonds, debentures, notes or other
indebtedness having general voting rights (or convertible into securities having
such rights) ("Voting Debt") of the Company or any of its Subsidiaries issued
and outstanding. Except (a) as set forth above, and (b) for the transactions
contemplated by this Agreement, as of the date hereof, (i) there are no shares
of capital stock of the Company authorized, issued or outstanding, (ii) there
are no existing options, warrants, calls, pre-emptive rights, subscriptions or
other rights, agreements, arrangements or commitments of any character, relating
to the issued or unissued capital stock of the Company or any of its
Subsidiaries, obligating the Company or any of its Subsidiaries to issue,
transfer or sell or cause to be issued, transferred or sold any shares of
capital stock or Voting Debt of, or other equity interest in, the Company or any
18
<PAGE>
of its Subsidiaries or securities convertible into or exchangeable for such
shares or equity interests, or obligating the Company or any of its Subsidiaries
to grant, extend or enter into any such option, warrant, call, subscription or
other right, agreement, arrangement or commitment, and (iii) there are no
outstanding contractual obligations of the Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any Shares, or capital stock of the
Company or any Subsidiary or affiliate of the Company. The table of Options and
Exercise Prices set forth in Schedule 3.2 is a true and complete list of all
Options to purchase Shares that have been granted by the Company and the
exercise prices thereof.
(b) Except as set forth on Schedule 3.2 hereof, all of the
outstanding shares of capital stock of each of the Subsidiaries are owned by the
Company, directly or indirectly, free and clear of any security interest, lien,
claim, pledge, agreement, limitation on voting rights or other encumbrance of
any nature whatsoever, and all such shares have been validly issued and are
fully paid and nonassessable.
(c) There are no voting trusts or other agreements or understandings
to which the Company or any of its Subsidiaries is a party with respect to the
voting of the capital stock of the Company or any of the Subsidiaries. None of
the Company or its Subsidiaries is required to redeem, repurchase or otherwise
acquire shares of capital stock of the Company, or any of its Subsidiaries,
respectively, as a result of the transactions contemplated by this Agreement.
Section 3.3 Authorization; Validity of Agreement; Company Action.
----------------------------------------------------
(a) The Company has full corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby, subject
to obtaining the approval of holders of a majority of the Shares prior to the
consummation of the Merger in accordance with section 251 of the DGCL, if so
required. The execution, delivery and performance by the Company of this
Agreement, and the consummation by it of the transactions contemplated hereby,
have been duly
19
<PAGE>
authorized by its Board of Directors and, except for obtaining the approval of
its stockholders as contemplated by Section 1.8 hereof, no other corporate
action on the part of the Company is necessary to authorize the execution and
delivery by the Company of this Agreement and the consummation by it of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Company and, assuming due and valid authorization, execution
and delivery hereof by the other parties thereto, is a valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms, except that (i) such enforcement may be subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws, now or hereafter
in effect, affecting creditors' rights generally, and (ii) the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
(b) The Board of Directors of the Company has approved and taken all
corporate action required to be taken by the Board of Directors for the
consummation of the transactions contemplated by this Agreement.
Section 3.4 Consents and Approvals; No Violations. Except as set
-------------------------------------
forth on Schedule 3.4 hereof and except for filings, permits, authorizations,
consents and approvals as may be required under, and other applicable
requirements of, the Exchange Act, the Hart-Scott-Rodino Antitrust Improvements
Act of 1976 (the "HSR Act"), the Bureau of Alcohol, Tobacco and Firearms (the
"ATF"), the United States Customs Service, state or foreign laws relating to
takeovers, state securities or blue sky laws, foreign antitrust laws and the
DGCL, neither the execution, delivery or performance of this Agreement by the
Company nor the consummation by the Company of the transactions contemplated
hereby nor compliance by the Company with any of the provisions hereof shall (i)
conflict with or result in any breach of any provision of the certificate of
incorporation or by-laws or similar organizational documents of the Company or
of any of its Subsidiaries, (ii) require on the part
20
<PAGE>
of the Company any filing with, or permit, authorization, consent or approval
of, any court, arbitral tribunal, administrative agency or commission or other
governmental or other regulatory authority or agency (a "Governmental Entity"),
(iii) result in a material violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration) under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, lease, license,
contract, agreement or other instrument or obligation to which the Company or
any of its Subsidiaries is a party or by which any of them or any of their
properties or assets may be bound and (x) the loss of which would have a
material adverse effect on the Company and its Subsidiaries taken as a whole,
(y) pursuant to which the Company or any Subsidiary expects to or is scheduled
to receive (assuming full performance pursuant to the terms thereof) revenue of
$1.5 million or more during the 12-month period following the date of this
Agreement, or (z) which has been or, as of the date of this Agreement, would be
required to be, filed as an exhibit to the Company SEC Documents (as defined in
Section 3.5) (collectively, the "Material Agreements") or (iv) violate any
order, writ, injunction, decree, statute, rule or regulation applicable to the
Company, any of its Subsidiaries or any of their properties or assets, excluding
from the foregoing clauses (ii) or (iv) where the failure to obtain such
permits, authorizations, consents or approvals or to make such filings, or the
existence of such violations, breaches or defaults, would not, individually or
in the aggregate, have a material adverse effect on the Company and its
Subsidiaries taken as a whole, and which shall not materially impair the ability
of the Company to consummate the transactions contemplated hereby.
Section 3.5 SEC Reports and Financial Statements. The Company has
------------------------------------
filed with the SEC all forms, reports, schedules, statements and other documents
required to be filed by it since August 21, 1996 under the Exchange Act (as such
documents have been amended since the time of their filing, collectively, the
"Company SEC Documents"). As of their respective dates
21
<PAGE>
and, if amended, as of the date of the last such amendment, the Company SEC
Documents, including, without limitation, any financial statements or schedules
included therein 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. None of the Subsidiaries is required to file any forms,
reports or other documents with the SEC pursuant to Section 12 or 15 of the
Exchange Act. The financial statements of the Company (the "1998 Financial
Statements") included in the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1997 (including the related notes thereto) (the "1997
Form 10-K") and in the quarterly reports on Form 10-Q for the three fiscal
quarters occurring since the 1997 Form 10-K, have been prepared from, and are in
accordance with, the books and records of the Company and its consolidated
subsidiaries, comply in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with United States generally
accepted accounting principles ("GAAP") applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto and subject,
in the case of unaudited interim financial statements, to normal year-end
adjustments) and fairly present the consolidated financial position and the
consolidated results of operations and cash flows of the Company and its
consolidated subsidiaries as at the dates thereof or for the periods presented
therein.
Section 3.6 No Undisclosed Liabilities. Except (a) as disclosed in
--------------------------
the Company SEC Documents or on Schedule 3.6 hereto, (b) for liabilities and
obligations incurred in the ordinary course of business and (c) for liabilities
and obligations incurred in connection with the consummation of the transactions
contemplated hereby, since October 3, 1998, neither the Company nor any of its
Subsidiaries has incurred any liabilities which would be reasonably expected to
have a material adverse effect on the Company and its Subsidiaries taken as a
whole.
22
<PAGE>
Section 3.7 Absence of Certain Changes. Except as disclosed in the
--------------------------
Company SEC Documents or on Schedule 3.7 hereto, since October 3, 1998, the
Company and its Subsidiaries have conducted their respective businesses in the
ordinary course of business consistent with past practice and there has not been
(i) as of the date hereof, any change in the consolidated financial condition,
business or results of operations of the Company or the amount, character or
ownership interests of the Company's assets that resulted in or would be
reasonably expected to result in a material adverse effect on the Company and
its Subsidiaries, taken as a whole; (ii) any declaration, setting aside or
payment of any dividend or other distribution (whether in cash, stock or
property) with respect to the equity interests of the Company or of any of its
Subsidiaries; (iii) any change by the Company or any of its Subsidiaries in
accounting principles or methods, except insofar as may be required by a change
in GAAP; (iv) any split, combination or reclassification of shares of the
Company's capital stock; (v) any entry into any written employment agreement
with, or any increase in the rate or terms of compensation payable or to become
payable by the Company or any of its Subsidiaries to, any of their respective
directors, officers or key employees; (vi) any increase in the rate or terms
(including, without limitation, any acceleration of the right to receive
payment) of any bonus, insurance, pension or other employee benefit plan,
payment or arrangement made to, for or with any such directors, officers or key
employees, except increases occurring in the ordinary course of business or as
required by law; or (vii) any action of the Company that, if taken after the
date of this Agreement, would constitute a breach of Section 5.1(a)(ii),
(b)(iv), (c), (d), (e)(ii) or (g).
Section 3.8 Employee Benefit Plans; ERISA.
-----------------------------
(a) Schedule 3.8(a) contains a true and complete list of each
material deferred compensation, bonus, profit sharing, stock option, pension,
incentive compensation, and equity compensation plan; "welfare" plan, fund or
program (within the meaning of section 3(1) of the Employee Retirement Income
Security Act of 1974,
23
<PAGE>
as amended ("ERISA")); "pension" plan, fund or program (within the meaning of
section 3(2) of ERISA); each employment, consulting, change in control,
termination or severance agreement; and each fringe benefit, insurance, welfare,
post-retirement, health, life, tuition refund, scholarship, relocation,
disability, accident, sick, vacation, commission, payroll practices, retention,
noncompetition, or any other material employee benefit plan, fund, program,
agreement or arrangement (whether written or unwritten, insured or self-insured,
domestic or foreign), in each case, that is or, within the preceding six years
with regard to any plan subject to Title IV of ERISA, was sponsored, maintained
or contributed to or required to be contributed to by the Company, by any
Subsidiary or by any trade or business, whether or not incorporated (an "ERISA
Affiliate"), that together with the Company would be deemed a "single employer"
within the meaning of section 4001(b) of ERISA or Section 414(b), (c), (m) or
(o) of the Code, or to which the Company, any Subsidiary or an ERISA Affiliate
is a party, for the benefit of any employee, director or shareholder of the
Company or any Subsidiary (whether current, former or retired) or their
beneficiaries (the "Benefit Plans").
(b) With respect to each Benefit Plan, the Company has made or, in
the case of stock option agreements and Foreign Employee Plans (as defined in
subparagraph (k) below), will make available to the Purchaser and Parent true
and complete copies of the Benefit Plan and any amendments thereto (or if the
Benefit Plan is not a written Benefit Plan, a description thereof), any related
trust or other funding vehicle, any reports, financial statements or summaries
required under ERISA or the Code, the most recent determination letter received
from the Internal Revenue Service (the "IRS") with respect to each Benefit Plan
intended to qualify under section 401 of the Code and any material communication
received by or furnished to the Company, any Subsidiary or any ERISA Affiliate
from the IRS or any other governmental entity.
(c) No liability under Title IV or section 302 of ERISA has been
incurred by the Company,
24
<PAGE>
any Subsidiary or any ERISA Affiliate that has not been satisfied in full, and
no condition exists that presents a risk to the Company, any Subsidiary or any
ERISA Affiliate of incurring any such liability, other than liability for
premiums due the Pension Benefit Guaranty Corporation (the "PBGC") (which
premiums have been paid when due).
(d) Except as disclosed on Schedule 3.8(d), no Benefit Plan is a
"multiemployer pension plan," as defined in section 3(37) or 4001(a)(3) of
ERISA, or Section 414(f) of the Code (a "Multiemployer Plan") nor is any Benefit
Plan a plan described in section 4063(a) of ERISA. With respect to each Benefit
Plan that is or was a Multiemployer Plan set forth on Schedule 3.8(d): (i) none
of the Company, any Subsidiary or any ERISA Affiliate (or their predecessors)
has incurred or has any reason to believe it has incurred or will incur any
withdrawal liability; no event has occurred which with the giving of notice
could reasonably be expected to result in any liability under section 4201 of
ERISA as a result of a complete withdrawal (within the meaning of section 4203
of ERISA) or a partial withdrawal (within the meaning of section 4205 of ERISA);
(ii) none of the Company, any Subsidiary or any ERISA Affiliate (or their
predecessors) has received any notice or has any reason to believe that such
Multiemployer Plan is in "reorganization" (within the meaning of section 4241 of
ERISA), that increased contributions may be required to avoid a reduction in
plan benefits or the imposition of an excise tax, or that the Multiemployer Plan
is or may become "insolvent" (within the meaning of section 4241 of ERISA);
(iii) no Multiemployer Plan is a party to any pending merger or asset or
liability transfer under Part 2 of Subtitle E of Title IV of ERISA; (iv) the
PBGC has not instituted proceedings against the Multiemployer Plan; (v) there is
no contingent liability for withdrawal liability by reason of a sale of assets
pursuant to section 4204 of ERISA; and (vi) if the Company, any Subsidiary or
any ERISA Affiliate were to have a complete or partial withdrawal as of the
Effective Time, no obligation to pay withdrawal liability would exist on the
part of the Company, Subsidiary or ERISA Affiliate with respect to any
Multiemployer Plan.
25
<PAGE>
(e) Except as disclosed on Schedule 3.8 hereto, each Benefit Plan
intended to be "qualified" within the meaning of section 401(a) of the Code (or
similar provision for tax-registered or tax-favored plans of foreign
jurisdictions) is so qualified and has received a determination letter from the
Internal Revenue Service (or, if applicable, similar approvals of foreign
governmental authorities) and, to the knowledge of the Company, nothing has
occurred or is reasonably expected to occur through the Effective Time that
caused or could cause the loss of such qualification or exemption or the
imposition of any material penalty or material tax liability.
(f) Except as disclosed on Schedule 3.8(f), no Benefit Plan provides
medical, surgical, hospitalization, death or similar benefits (whether or not
insured) for employees or former employees of the Company or any Subsidiary for
periods extending beyond their retirement or other termination of service, other
than (i) coverage mandated by applicable law, (ii) death benefits under any
"pension plan" or (iii) benefits the full cost of which is borne by current or
former employees (or their beneficiaries).
(g) There are no pending or, to the knowledge of the Company,
threatened or anticipated claims by or on behalf of any Benefit Plan, by any
employee or beneficiary covered under any such Benefit Plan, or otherwise
involving any such Benefit Plan (other than routine claims for benefits).
(h) No "reportable event" within the meaning of section 4043(c) of
ERISA has occurred or is reasonably expected to occur, and the consummation of
the transactions contemplated by this Agreement will not result in a reportable
event.
(i) Except as disclosed on Schedule 3.8(i), with respect to each of
the Benefit Plans on Schedule 3.8(a): (i) all material payments required by any
Benefit Plan, any collective bargaining agreement or other agreement, or by law
(including, without limitation, all contributions, insurance premiums, or
26
<PAGE>
intercompany charges) with respect to all periods through the date of the
Effective Time shall have been made prior to the Effective Time (on a pro rata
basis where such payments are otherwise discretionary at year end) or provided
for by the Company as applicable, by full accruals (as if all targets required
by such Benefit Plan had been or will be met at maximum levels) on its financial
statements; (ii) no "accumulated funding deficiency" (within the meaning of
section 302 of ERISA and section 412 of the Code) has been or could be
reasonably expected to be incurred, whether or not waived, and no excise or
other taxes have been or could be reasonably expected to be incurred or are due
and owing with respect to the Benefit Plan because of any failure to comply with
the minimum funding standards of ERISA and the Code; (iii) the Benefit Plan
complies and has been maintained and operated in all material respects in
accordance with its terms and applicable law, including, without limitation,
ERISA and the Code; (iv) no "prohibited transaction", within the meaning of
section 4975 of the Code and section 406 of ERISA, has occurred or is reasonably
expected to occur with respect to the Benefit Plan; (v) no Benefit Plan is or is
reasonably expected to be under audit or investigation by the IRS, U.S.
Department of Labor, or any other government authority and no such completed
audit, if any, has resulted in the imposition of any tax or penalty; (vi) the
present value of all "benefit liabilities" (whether or not vested) (within the
meaning of section 4001(a)(16) of ERISA) based on the actuarial assumptions (x)
used for funding purposes as set forth in the most recent actuarial report and
(y) as set forth in Financial Accounting Standards Board SFAS No. 87 ("FASB 87")
using the methodology under FASB 87 to calculate the projected benefit
obligation, did not exceed as of the most recent Benefit Plan actuarial
valuation date the then current fair market value of the assets of such Benefit
Plan, and no amendment or other modification to such Benefit Plan or its
actuarial assumptions was adopted since the date of such Benefit Plan's most
recent actuarial report; and (vii) with respect to each Benefit Plan that is
funded mostly or partially through an insurance policy, neither the Company nor
any Subsidiary has any liability in the nature of retroactive rate adjustment,
loss sharing
27
<PAGE>
arrangement or other actual or contingent liability arising wholly or partially
out of events occurring on or before the Effective Time.
(j) The consummation of the transactions contemplated by this
Agreement will not give rise to any liability for severance pay, unemployment
compensation, termination pay, or withdrawal liability, or accelerate the time
of payment or vesting or increase the amount of compensation or benefits due to
any employee or director of the Company or any Subsidiary (whether current,
former, or retired) or their beneficiaries solely by reason of such
transactions. No amounts payable under any Benefit Plan will fail to be
deductible for federal income tax purposes by virtue of section 280G or 162(m)
of the Code. To the knowledge of the Company, neither the Company, any
Subsidiary or any officer or employee thereof, has made any promise or
commitment, whether legally binding or not, to create any additional plan,
agreement, or arrangement, or to modify or change any existing Benefit Plan. No
event, condition, or circumstance exists that would prevent the amendment or
termination of any Benefit Plan in accordance with its terms and applicable law.
Except as set forth on Schedule 3.8(j), none of the Company, any Subsidiary or
any ERISA Affiliate has any unfunded liabilities pursuant to any Benefit Plan
that is intended to be an "employee pension benefit plan" within the meaning of
Section 3(2) of ERISA and that is not intended to be qualified under Section
401(a) of the Code.
(k) Except as set forth on Schedule 3.8(k), with respect to each
scheme or arrangement mandated by a government other than the United States and
with respect to each Benefit Plan that is not subject to United States law and
which is maintained or contributed to by any Subsidiary (a "Foreign Employee
Plan"), the fair market value of the assets of each funded Foreign Employee
Plan, the liability of each insurer for any Foreign Employee Plan funded through
insurance or the book reserve established for any Foreign Employee Plan,
together with any accrued contributions, is, to the knowledge of the Company,
sufficient to procure or provide for the accrued benefit obligations with
respect
28
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to all current and former participants in such Foreign Employee Plan according
to the actuarial assumptions and valuations most recently used to determine
employer contributions to such Foreign Employee Plan, and no transaction
contemplated by this Agreement shall cause such assets or insurance obligations
to be less than such benefit obligations.
Section 3.9 Litigation. Except as disclosed in the Company SEC
----------
Documents or on Schedule 3.9 hereto, there is no suit, action or proceeding
pending or, to the knowledge of the Company, threatened against the Company or
any of its Subsidiaries which is reasonably likely to have a material adverse
effect on the Company and its Subsidiaries, taken as a whole, or which, as of
the date hereof, has had or is reasonably likely to have a material adverse
effect on the ability of the Company to consummate the transactions contemplated
by this Agreement. If any suit, action, or proceeding seeking monetary,
equitable, or injunctive relief arising out of the manufacture, sale,
distribution, advertising, promotion, marketing, packaging, labeling, or use of
tobacco or any tobacco product is threatened or commenced by or on behalf of any
State or any of its officers acting in their official capacities (including but
not limited to its Attorney General), departments, subdivisions, or agencies
(collectively "State Tobacco Litigation"), then for purposes of this Agreement
such State Tobacco Litigation shall be deemed not to have a material adverse
effect on the Company or its Subsidiaries. Except as disclosed in Schedule 3.9,
the Company has no knowledge of any State Tobacco Litigation pending or
threatened against the Company or any of its Subsidiaries.
Section 3.10 No Default; Compliance with Applicable Laws. Except as
-------------------------------------------
set forth on Schedule 3.10 hereto, the business of the Company and each of its
Subsidiaries is not in default or violation of any term, condition or provision
of (i) its respective articles of incorporation or by-laws or similar
organizational documents, (ii) any Material Agreement or (iii) any federal,
state, local or foreign statute, law, ordinance, rule, regulation, judgment,
decree, order, concession,
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grant, franchise, permit or license or other governmental authorization or
approval applicable to the Company or any of its Subsidiaries, excluding from
the foregoing clauses (ii) and (iii), defaults or violations which would not,
individually or in the aggregate, have a material adverse effect on the Company
and its Subsidiaries, taken as a whole.
Section 3.11 Taxes. (a) The Company and its Tax Subsidiaries have
-----
(i) duly filed (or there has been filed on their behalf) with the appropriate
governmental authorities all Tax Returns (as defined in Section 3.11(h))
required to be filed by them on or prior to the date hereof, other than those
Tax Returns the failure of which to file would not have a material adverse
effect on the Company and its Tax Subsidiaries, taken as a whole, and such Tax
Returns are true, correct and complete in all material respects, and (ii) duly
paid in full or made provision in accordance with generally accepted accounting
principles (or there has been paid or provision has been made on their behalf)
for the payment of all Taxes (as defined in Section 3.11(h)) shown to be due on
such Tax Returns.
(b) Except as set forth on Schedule 3.11(b) hereto, no federal, state
or local audits, actions, suits, proceedings, investigations, claims or
assessments are presently pending or proposed in writing with regard to any
Taxes or Tax Return of the Company or its Tax Subsidiaries.
(c) Except as set forth on Schedule 3.11(c) hereto, there are no
outstanding written consents to extend the statutory period of limitations
applicable to the assessment of any material Taxes or deficiencies against the
Company or any of its Tax Subsidiaries, and no power of attorney granted by
either the Company or any of its Tax Subsidiaries with respect to any Taxes is
currently in force.
(d) Except as set forth on Schedule 3.11(d), neither the Company nor
any of its Tax Subsidiaries (i) is a party to any agreement providing for the
allocation or sharing of Taxes or (ii) can have
30
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any liability or entitlement under any such agreement to which it previously was
a party, including without limitation the Amended and Restated Tax Sharing
Agreement dated as of June 15, 1995 with Mafco.
(e) Except as set forth in Schedule 3.11(e), complete copies of (i)
consolidated federal income Tax Returns for the Company and its Tax Subsidiaries
and (ii) state and local income Tax and other Tax Returns of the Company and its
Tax Subsidiaries for each of the years ended 1995, 1996 and 1997, have
heretofore been made available to Parent and the Purchaser.
(f) Except as set forth in Schedule 3.11(f), (i) all material amounts
required to be collected or withheld by the Company and each of its Tax
Subsidiaries with respect to Taxes have been duly collected or withheld and any
such amounts that are required to be remitted to any taxing authority have been
duly remitted, (ii) there are no Tax rulings, requests for rulings, closing
agreements or changes of accounting method relating to the Company or any of its
Tax Subsidiaries that could materially affect their liability for Taxes of the
Company or its Tax Subsidiaries due for any period after the Effective Time,
(iii) all material federal, state and local income Tax Returns of the Company
and each of its Tax Subsidiaries with respect to taxable periods beginning on
March 3, 1993 through the year ended 1997 have been examined and closed or are
Tax Returns with respect to which the applicable statute of limitations has
expired without extension or waiver, (iv) no excess loan account (as referred to
in Treasury Regulations Section 1.1502-19) exists with respect to any Tax
Subsidiary of the Company, (v) neither the Company nor any of its Tax
Subsidiaries has any deferred gain or loss (A) arising from deferred
intercompany transactions (as referred to in Treasury Regulations Section
1.1502-13), or (B) with respect to the stock or obligations of any other member
of the Company's affiliated group (as described in Treasury Regulations Section
1.1502-14), (vi) neither the Company nor any Tax Subsidiary has filed a consent
under Section 341(f) of the Code or any comparable provisions of state revenue
statues, and (vii)
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none of the Company or its Tax Subsidiaries will be required to include in a
taxable period ending after the Effective Time taxable income attributable to a
prior taxable period that was not recognized in that taxable period as a result
of the installment method of accounting, the completed contract method of
accounting, the long-term contract method of accounting, the cash method of
accounting or Section 481 of the Code or comparable provisions of state or local
or foreign tax law;
(g) The Company and its domestic Tax Subsidiaries were included in
Mafco's consolidated federal income Tax Returns for the period beginning March
3, 1993 and ending March 20, 1997;
(h) "Taxes" shall mean any and all taxes, charges, fees, levies,
customs, duties, imposts or other assessments, including, without limitation,
income, gross receipts, excise, real or personal property, sales, withholding,
social security, occupation, use, service, service use, license, net worth,
payroll, franchise, transfer and recording taxes, fees and charges, ad valorem,
value added, asset, license, transaction, capital, estimated, employment,
workers compensation, utility, severance, production, unemployment compensation,
premium, windfall profits and gains taxes imposed by the United States Internal
Revenue Service or any taxing authority (domestic or foreign), including,
without limitation, any state, county, local or foreign government or any
subdivision or taxing agency thereof (including a United States possession)),
whether computed on a separate, consolidated, unitary, combined or any other
basis; and such term shall include any interest, penalties or additional amounts
attributable to, or imposed upon, or with respect to, any such taxes, charges,
fees, levies or other assessments. "Tax Return" shall mean any report, return,
document, declaration or other information or filing required to be supplied to
any taxing authority or jurisdiction (domestic or foreign) with respect to
Taxes. The term "Tax Subsidiaries" shall include all "Subsidiaries" as defined
in Section 3.1 of this Agreement except for Encon Shade
32
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Company, LLC, Encon Shade Company II, LLC and Cigar Savor Enterprises, LLC.
Section 3.12 Real Property. The Company and the Subsidiaries, as the
-------------
case may be, have sufficient title or leaseholds to real property to conduct
their respective businesses as currently conducted with only such exceptions as
individually or in the aggregate would not have a material adverse effect on the
Company and the Subsidiaries, taken as a whole.
Section 3.13 Environmental Matters. (a) Except (i) as set forth in
---------------------
Schedule 3.13 hereto or (ii) as set forth in the Company SEC Documents:
(i) neither the Company nor any Subsidiary has received any
written communication from any person or entity (including any Governmental
Entity) stating or alleging that the Company or any Subsidiary is a
potentially responsible party or is otherwise liable under Environmental
Law (as defined in Section 3.13(b)) with respect to any actual or alleged
environmental contamination which remains unresolved or outstanding; none
of the Company, any Subsidiary or, to the Company's knowledge, any
Governmental Entity is conducting or has conducted any environmental
remediation or environmental investigation of the Company, any of its
Subsidiaries, the operations of the Company or of any of its Subsidiaries
or any presently or formerly owned, leased or operated property of the
Company or of any of its Subsidiaries (collectively and individually, "Real
Property"), which could reasonably be expected to result in liability for
the Company or any Subsidiary under any Environmental Law; and neither the
Company nor any Subsidiary has received any request for information from
any Governmental Entity or any other person or entity with respect to any
actual or alleged environmental contamination;
(ii) the current operations of the Company and its Subsidiaries,
including any operations at or from Real Property, comply with all
33
<PAGE>
applicable Environmental Laws. None of the Company, any of its
Subsidiaries or, to the knowledge of the Company, any other person or
entity, has engaged in, authorized, allowed or suffered any operations or
activities upon any of the Real Property for the purpose of or in any way
involving the handling, manufacturing, treatment, processing, storage, use,
generation, release, discharge, spilling, emission, dumping or disposal of
any Hazardous Substance at, on, under or from the Real Property, except in
compliance with all applicable Environmental Laws or where the failure to
be in compliance would not, individually or in the aggregate, have a
material adverse effect on the Company or any of its Subsidiaries;
(iii) to the knowledge of the Company, the Real Property contains
no Hazardous Substances in, on, over, at or under it, in concentrations
which would presently violate any applicable Environmental Law or would be
reasonably likely to result in the imposition of Environmental Liabilities
on the Company, any of its Subsidiaries or the Real property under any
applicable Environmental Law, including any liability or obligation for the
investigation, corrective action, remediation or monitoring of Hazardous
Substances in, on, over, under or at the Real Property;
(iv) there are no underground storage tanks or other Hazardous
Substances (other than Hazardous Substances for use in the ordinary course
of business of the Company and its Subsidiaries, which are stored and
maintained in material compliance with all applicable Environmental Laws)
in, on, over, under or at any Real Property;
(v) the Company and its Subsidiaries are in compliance with the
terms and conditions of all Environmental Permits which are required under
applicable Environmental Laws, except where the failure to be in compliance
would not, individually or in the aggregate, have a material adverse effect
34
<PAGE>
on the Company or any of its Subsidiaries and, to the best knowledge of the
Company, no reason exists why the Surviving Corporation would not be
capable of continued operation of the business in compliance with the
Environmental Permits and the applicable Environmental Laws, except where
the failure to be in compliance would not, individually or in the
aggregate, have a material adverse effect on the Company or any of its
Subsidiaries;
(vi) the Company has provided to Purchaser, all material
environmental reports, assessments, audits, studies, investigations, data,
Environmental Permits and other material written environmental information
in its custody, possession or control concerning the assets or businesses
of the Company and its Subsidiaries or the Real Property;
(vii) neither the Company nor any of its Subsidiaries has
contractually, by operation of law, by the Environmental Laws, by common
law or otherwise, assumed or succeeded to any material Environmental
Liabilities of any predecessor or any other person or entity; and
(viii) none of the items set forth on Schedule 3.13 individually
or in the aggregate has or is reasonably likely to have a material adverse
effect on the Company or any of its Subsidiaries.
(b) (i) For purposes of this Section 3.13, "Environmental Law" means
all applicable foreign, state, federal and local laws and the common law,
regulations and rules, ordinances, codes, policies, guidances, permits,
judgments, decrees and orders relating to health or safety or the pollution,
preservation or protection of the environment, including the release of
materials into the environment.
(ii) for the purposes of this Section 3.13, "Environmental
Permits" means the permits, licenses, authorizations and approvals
35
<PAGE>
required or issued under the Environmental Laws which are necessary for the
conduct of the Company's and its Subsidiaries' businesses and for the
operations on, in or at, the assets of the Company and of its Subsidiaries
and the Real Property;
(iii) for the purposes of this Section 3.13, "Environmental
Liabilities" means any claims, judgments, damages (including punitive
damages), losses, penalties, fines, liabilities, encumbrances, liens,
violations, costs and expenses (including attorneys' and consultants' fees)
of investigation, remediation, monitoring or defense of any matter, which
(A) are incurred as a result of (1) the existence of Hazardous Substances
in, on, under, at or emanating from any Real Property, (2) the offsite
transportation, treatment, storage or disposal of Hazardous Substances
generated by the Company or any of its subsidiaries, (3) the violation of
or non-compliance with any Environmental Laws or (B) arise under the
Environmental Laws; and
(iv) for the purposes of this Section 3.13, "Hazardous
Substances" means any petroleum products, petroleum-derived substances,
radioactive materials, hazardous wastes, polychlorinated biphenyls, lead-
based paint, radon, urea formaldehyde, asbestos or any materials containing
asbestos, pesticides, and any chemicals, materials or substances regulated
under any Environmental Law, or defined as or included in the definition of
"hazardous substances", "extremely hazardous substances", "hazardous
materials", "hazardous constituents", "toxic substances", "pollutants",
"contaminants", or any similar denomination intended to classify or
regulate such chemicals, materials or substances by reason of their
toxicity, carcinogenicity, ignitability, corrosivity or reactivity or other
characteristics under the Environmental Laws.
Section 3.1 Intellectual Property.
---------------------
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<PAGE>
(a) Either the Company or CCB is the exclusive owner of all right,
title and interest in and to, free and clear of all liens, pledges, security
interests, encumbrances and adverse claims, or the legitimate licensee of, each
of the following:
(i) all material U.S. trademarks, service marks and trade names
used in connection with the business of the Company, CCB or any other
Subsidiary of the Company (collectively the "Marks") and such Marks in
other countries in which the Company conducts commercially significant
business under the Marks. Schedule 3.14(a)(i)(1) is a list of all of the
marks that are currently being used or are contemplated for use by the
Company, CCB or any other Subsidiary of the Company in connection with its
business and the registrations of, and/or applications to register, such
marks in the jurisdictions that are listed and Schedule 3.14(a)(i)(2) is a
list of the aforesaid "Marks," i.e., the U.S. marks which are material to
the businesses of either the Company or CCB, of which the Company or CCB is
the exclusive owner or legitimate licensee in the U.S.;
(ii) all copyrights in and to any and all material copyrightable
works, including without limitation such material copyrightable works used
for: (x) the content, artwork and decorative designs on any products of
the Company, CCB or any other Subsidiary of the Company and on the
packaging and labeling used to hold and sell each such product and (y) the
content, artwork and decorative designs in or on any promotional materials
for any such product (collectively, the "Copyrights");
(iii) all know-how, show-how, methods, processes, inventions,
recipes, specifications, formulas and molds (including without limitation
the cigar molds) used in producing and manufacturing products of the
Company, CCB or any other Subsidiary of the Company, including without
limitation all patentable works and trade secrets, that are material to the
business
37
<PAGE>
of the Company and its Subsidiaries taken as a whole (collectively, the
"Know-How"). The Marks, Copyrights, and the Know-How are sometimes referred
to as the "Company Intellectual Property Rights".
(b) Schedule 3.14(b) sets forth a list of all license and similar
agreements between the Company, CCB, any other Subsidiary of the Company or any
of their respective affiliates, on the one hand, and third parties, on the other
hand, under which either the Company, CCB, any other Subsidiary of the Company
or any of their respective affiliates has been granted rights to the use,
reproduction, distribution, manufacture, sale or licensing of items embodying
the patent, copyright, trade secret, trademark or other proprietary rights of
such third parties, either as used in the business of the Company, CCB, or any
other Subsidiary of the Company or any of their respective affiliates or as
being developed or acquired for use or potential use in the business of the
Company, CCB, any other Subsidiary of the Company or any of their respective
affiliates (collectively, the "Company License Rights"). True, correct and
complete copies of all such agreements have been made available to the Purchaser
and Parent. Such agreements are in full force and effect and there is no
default or breach or alleged default or breach on the part of any party to such
agreements. None of the Company, CCB, any other Subsidiary of the Company or
any of their respective affiliates, is as a result of the execution and delivery
of this Agreement, or, as a result of the performance of the obligations
hereunder, will be in violation of or lose any right pursuant to any license or
similar agreement described in Schedule 3.14(b). Except as set forth in
Schedule 3.14(b), no third party is entitled to any royalty, fee, payment or
other consideration of whatever nature with respect to the Company License
Rights or Company Intellectual Property Rights. The Company License Rights and
the Company Intellectual Property Rights are sometimes collectively referred to
as the "Company Rights".
(c) With the exception of merchandising agreements, i.e., license
agreements permitting third parties to use the marks of the Company or CCB in
38
<PAGE>
connection with non-tobacco products, and inter-company agreements between the
Company, CCB, any other Subsidiary of the Company or any of their respective
affiliates, Schedule 3.14(c) sets forth a list of all agreements under which the
Company, CCB, any other Subsidiary of the Company or any of their respective
affiliates has granted any rights of whatever nature to third parties of, to or
under the Company Rights. All such rights granted have been and are non-
exclusive. True, correct and complete copies of all such agreements have been
made available to the Purchaser and Parent. Such agreements are in full force
and effect and there is no default or breach or alleged default or breach on the
part of any party to such agreements. None of the Company, CCB, any other
Subsidiary of the Company or any of their respective affiliates is, as a result
of the execution and delivery of this Agreement, or, as a result of the
performance of the obligations hereunder, will be in violation of such
agreements.
(d) No claim with respect to the Company Rights has been asserted
that remains unresolved or is threatened by any third party. Also, there are no
valid grounds for any bona fide claim with respect to the Company Rights by any
third party. Specifically, but not without limiting the generality of the
foregoing, neither the Company nor CCB has received from any third party any
claim of ownership or license rights, cease and desist letter, summons or
complaint, notice of opposition or cancellation petition with respect to any one
or more of the Company Intellectual Property Rights. Furthermore, as of the
date hereof, there has not been and there is not any infringement,
misappropriation or any other unauthorized use of any of the Company Rights by
any third party or individual, employee, consultant or former employee or
consultant of either the Company, CCB or any other Subsidiary of the Company
that will have a material adverse effect on their businesses.
(e) None of the Company, CCB or any other Subsidiary of the Company
has or has been alleged to have infringed upon, violated, misappropriated or
misused any intellectual property right or other property right (including,
without limitation, any patent right,
39
<PAGE>
copyright, trade name or trade secret) of any third party by reason of its or
any of its affiliates' use, license, sale or other distribution of the Company
Rights.
(f) No Company Rights are subject to any agreement, injunction,
and/or order restricting in any manner the use or licensing thereof by the
Company, CCB or any other Subsidiary of the Company. None of the Company, CCB,
any other Subsidiary of the Company or any of their respective affiliates has
entered into any agreement to indemnify and/or hold harmless any third party
from or against any cause of action, charge or other claim of infringement of
any other third party's intellectual property rights. With the exception of the
aforementioned merchandising agreements, none of the Company, CCB, any other
Subsidiary of the Company or any of their respective affiliates has entered into
any agreement granting any third party the right to bring infringement actions
or otherwise to enforce rights with respect to any Company Intellectual Property
Rights or, except as disclosed in Schedule 3.14(c), with respect to any Company
License Rights. The Company and CCB have the exclusive right to file, prosecute
and maintain all applications and registrations with respect to the Company
Intellectual Property Rights.
(g) The Company Intellectual Property Rights are valid, enforceable,
subsisting and are owned or legitimately licensed by, and currently registered
or applied for in the U.S., in the name of the Company or CCB, free and clear of
all liens, pledges, security interests, encumbrances and adverse claims. In
addition, the Company has taken all reasonable steps to protect and maintain the
Marks in other countries in which the Company conducts commercially significant
business under such Marks.
Section 3.15 Inventory. The inventory reflected on the Company's
---------
consolidated balance sheet as of October 3, 1998 is merchantable and fit for the
purpose for which it was procured or manufactured and legally qualified for
export and sale. Except as reserved for on such balance sheet, all such
inventory is in good and marketable condition, does not and will not
40
<PAGE>
include any items which are distressed, damaged or defective and is salable in
the normal course of the business of the Company and its Subsidiaries, as
currently conducted.
Section 3.16 Labor Matters. Except as set forth on Schedule 3.16,
-------------
there are no controversies pending or, to the knowledge of the Company,
threatened between the Company or any of its Subsidiaries and any of their
respective employees, which controversies are reasonably likely to have a
material adverse effect on the Company and its Subsidiaries taken as a whole.
Neither the Company nor any of its Subsidiaries is involved in or threatened
with any material labor dispute, grievance or litigation relating to labor,
safety or discrimination matters involving any person employed by the Company or
any of its Subsidiaries, including, without limitation, charges of unfair labor
practices or discrimination complaints. Neither the Company nor any of its
Subsidiaries has engaged in any unfair labor practices within the meaning of the
National Labor Relations Act or similar such legislation of foreign
jurisdictions in a manner that would be reasonably likely to have a material
adverse effect on the Company and its Subsidiaries taken as a whole. Except as
set forth in Schedule 3.16, neither the Company nor any of its Subsidiaries is
presently a party to, or bound by, any collective bargaining agreement or union
contract with respect to any persons employed by the Company or any of its
Subsidiaries, and no collective bargaining agreement is being negotiated by the
Company or any of its Subsidiaries. Neither the Company nor any of its
Subsidiaries has any knowledge of any strikes, slowdowns, work stoppages or
lockouts, or threats thereof, by or with respect to any employees of the Company
or any of its Subsidiaries, and there have been no such strikes, slowdowns, work
stoppages or lockouts within the past three years. The Company and each of its
Subsidiaries is in compliance in all material respects with all laws,
regulations and orders relating to workers' compensation and the Worker
Adjustment and Retraining Notification Act or similar such legislation of
foreign jurisdictions, except where the failure to be
41
<PAGE>
in compliance would not have a material adverse effect on the Company and its
Subsidiaries taken as a whole.
Section 3.17 Restrictions on Business Activities. There is no
-----------------------------------
material agreement, judgment, injunction, order or decree binding upon the
Company or any of its Subsidiaries which has the effect of prohibiting or
impairing any material business operations of the Company or any of its
Subsidiaries.
Section 3.18 Year 2000 Compliance. To the knowledge of the Company,
--------------------
the computer systems of the Company and its Subsidiaries are Year 2000 Compliant
or will be Year 2000 Compliant by December 31, 1999, except where the failure to
be Year 2000 Compliant would not have a material adverse effect on the Company
and its Subsidiaries taken as a whole. The computer systems of the Company and
its Subsidiaries have the ability to interface properly and will continue to
interface properly with internal and external applications and systems of third
parties with which the Company and its Subsidiaries exchange data electronically
whether or not they are Year 2000 Compliant, except where the failure to so
interface would not have a material adverse effect on the Company and its
Subsidiaries taken as a whole. The Company has taken affirmative steps to
assess, address and correct any and all potential problems and liabilities
relating to Year 2000 Compliance and its impact on any Benefit Plan and its
participants and beneficiaries.
The term "Year 2000 Compliant" as used herein means that the computer
systems (i) are capable of recognizing, processing, managing, representing,
interpreting and manipulating correctly date related data for dates earlier and
later than January 1, 2000, including calculating, comparing, sorting, storing,
tagging and sequencing, without resulting in or causing logical or mathematical
errors or inconsistencies in any user-interface functionalities or otherwise,
including data input and retrieval, data storage, data fields, calculations,
reports, processing or any other input or output; (ii) have the ability to
provide date recognition for any data element without limitation (including
date-
42
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related data represented without a century designation, date-related data
whose year is represented by only two digits and date fields assigned special
values); (iii) have the ability to function automatically into and beyond the
year 2000 without human intervention and without any change in operations
associated with the advent of the year 2000; (iv) have the ability to interpret
data, dates and time correctly into and beyond the year 2000; (v) have the
ability not to produce noncompliance in existing information, nor otherwise
corrupt such data into and beyond the year 2000; (vi) have the ability to
process correctly after January 1, 2000 data containing dates before that date;
and (vii) have the ability to recognize all "leap years," including February 29,
2000.
Section 3.19 Vote Required. The affirmative vote of the holders of
-------------
the number of Shares of Company Common Stock entitled to be cast, consisting of
a majority of the total voting power of all Shares of Company Common Stock
outstanding, approving this Agreement, is the only vote of the holders of any
series or class of common stock required to approve and adopt the plan of merger
in this Agreement and to approve the Merger of the outstanding shares of the
Company.
Section 3.20 Brokers. No agent, broker, finder, investment banker or
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financial advisor (other than Chase Securities, Inc.) or other firm or person is
or shall be entitled to any brokerage or finder's fee or any other commission or
similar fee in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Company or any of its
subsidiaries or affiliates.
Section 3.21 Opinion of Financial Advisor. Chase Securities, Inc.,
----------------------------
the Company's independent financial advisor, has advised the Company's Board of
Directors that, in its opinion, as of the date of such opinion, the
consideration to be received by the holders of the Class A Common Stock (other
than Parent and its affiliates) in the Offer and Merger, taken together, is
fair, from a financial point of view, to such stockholders.
43
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Section 3.22 Information in Proxy Statement; Schedule 14D-1. None of
----------------------------------------------
the information supplied by the Company for inclusion or incorporation by
reference in the Proxy Statement (if any) or the Schedule 14D-1 shall, at the
date mailed to stockholders and at the time of the meeting of stockholders (if
any) to be held in connection with the Merger, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER
Parent and the Purchaser jointly and severally represent and warrant
to the Company as follows:
Section 4.1 Organization. Each of Parent and the Purchaser is a
------------
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has all requisite corporate or
other power and authority to own, lease and operate its properties and to carry
on its business as now being conducted, except where the failure to be so
organized, existing and in good standing or to have such power or authority
would not have a material adverse effect on Parent and its Subsidiaries taken as
a whole. Parent and each of its Subsidiaries is duly qualified or licensed to do
business and in good standing in each jurisdiction in which the property owned,
leased or operated by it or the nature of the business conducted by it makes
such qualification or licensing necessary, except where the failure to be so
duly qualified or licensed and in good standing would not, in the aggregate,
have a material adverse effect on Parent and its Subsidiaries, taken as a whole.
Section 4.2 Authorization; Validity of Agreement; Necessary Action.
------------------------------------------------------
Each of Parent and the Purchaser has full corporate power and authority to
execute and deliver this Agreement and to consummate
44
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the transactions contemplated hereby. The execution, delivery and performance by
Parent and the Purchaser of this Agreement, and the consummation of the
transactions contemplated hereby, have been duly authorized by their Boards of
Directors and by Parent as the sole stockholder of Purchaser and no other
corporate action on the part of Parent and the Purchaser is necessary to
authorize the execution and delivery by Parent and the Purchaser of this
Agreement and the consummation by them of the transactions contemplated hereby.
This Agreement has been duly executed and delivered by Parent and the Purchaser,
as the case may be, and, assuming due and valid authorization, execution and
delivery hereof by the Company, is a valid and binding obligation of each of
Parent and the Purchaser, as the case may be, enforceable against them in
accordance with its respective terms, except that (i) such enforcement may be
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws, now or hereafter in effect, affecting creditors' rights
generally, and (ii) the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
Section 4.3 Consents and Approvals; No Violations. Except for
-------------------------------------
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Exchange Act, the HSR Act, the
ATF, the United States Customs Service, state or foreign laws relating to
takeovers, state securities or blue sky laws, the DGCL, foreign antitrust laws
or the laws of other states in which Parent or the Purchaser is qualified to do
or is doing business, neither the execution, delivery or performance of this
Agreement by Parent and the Purchaser nor the consummation by Parent and the
Purchaser of the transactions contemplated hereby nor compliance by Parent and
the Purchaser with any of the provisions hereof shall (i) conflict with or
result in any breach of any provision of the respective certificate of
incorporation or by-laws or similar organizational documents of Parent, any of
its subsidiaries or the Purchaser, (ii) require on the part of Parent or the
Purchaser any filing with, or
45
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permit, authorization, consent or approval of, any Governmental Entity,(iii)
result in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
cancellation or acceleration) under, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, lease, license, contract, agreement or
other instrument or obligation to which Parent, any of its Subsidiaries or the
Purchaser is a party or by which any of them or any of their properties or
assets may be bound, except for such violations, breaches and defaults (or
rights of termination, cancellation or acceleration) as to which requisite
waivers or consents have been obtained, or (iv) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Parent, any of its
Subsidiaries or the Purchaser or any of their properties or assets, excluding
from the foregoing clauses (ii), (iii) or (iv) where the failure to obtain such
permits, authorizations, consents or approvals or to make such filings, or the
existence of such violations, breaches or defaults, would not, individually or
in the aggregate, have a material adverse effect on Parent, its Subsidiaries and
the Purchaser taken as a whole and shall not materially impair the ability of
Parent or the Purchaser to consummate the transactions contemplated hereby.
Section 4.4 Information in Proxy Statement; Schedule 14D-9. None of
----------------------------------------------
the information supplied by Parent or the Purchaser for inclusion or
incorporation by reference in the Proxy Statement or the Schedule 14D-9 shall,
at the date mailed to stockholders and at the time of the meeting of
stockholders (if any) to be held in connection with the Merger, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading.
Section 4.5 Financing. Parent and the Purchaser have sufficient
---------
funds available (through cash on hand and existing credit arrangements or
otherwise) to purchase all of the Shares outstanding on a fully diluted basis,
to repay all amounts outstanding under the Credit
46
<PAGE>
Agreement, dated as of March 2, 1998, by and between the Consolidated Cigar
Corporation and Chase Manhattan Bank, as administrative agent, as amended by
Amendment No.1 thereto, dated as of April 27, 1998 (the "Credit Agreement"), to
pay the promissory note dated August 21, 1996 made by the Company to Mafco at
its face value and to pay all fees and expenses related to the transactions
contemplated by this Agreement.
Section 4.6 Share Ownership. None of Parent, Purchaser or any of
---------------
their respective "affiliates" or "associates" (as those terms are defined under
Rule 12b-2 under the Exchange Act) beneficially own any Shares.
Section 4.7 Purchaser's Operations. The Purchaser was formed solely
----------------------
for the purpose of engaging in the transactions contemplated hereby and has not
engaged in any business activities or conducted any operations other than in
connection with the transactions contemplated hereby.
Section 4.8 Brokers or Finders. Parent represents, as to itself, its
------------------
Subsidiaries and its affiliates, that no agent, broker, investment banker,
financial advisor or other firm or person is or shall be entitled to any
brokers' or finders' fee or any other commission or similar fee in connection
with any of the transactions contemplated by this Agreement, except Credit
Suisse First Boston, whose fees and expenses shall be paid by Parent in
accordance with the Parent's agreement with such firm.
ARTICLE V
COVENANTS
Section 5.1 Interim Operations of the Company. The Company covenants
---------------------------------
and agrees that, except (i) as contemplated by this Agreement, (ii) as disclosed
in Schedule 5.1, and (iii) as agreed in writing by Parent, after the date
hereof, and prior to the time the directors of the Purchaser have been elected
to, and shall constitute a majority of, the Board of Directors of
47
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the Company pursuant to Section 1.3 (the "Appointment Date"), the business of
the Company and its Subsidiaries shall be conducted only in the ordinary and
usual course of business consistent with past practices and without limiting the
generality of the foregoing:
(a) the Company shall not, directly or indirectly, (i) sell, transfer
or pledge or agree to sell, transfer or pledge any Company Common Stock or any
other securities of the Company or capital stock or any other securities of any
of its Subsidiaries beneficially owned by it, either directly or indirectly;
(ii) amend or cause to be amended its Certificate of Incorporation or By-laws or
similar organizational documents of any of its Subsidiaries; or (iii) split,
combine or reclassify the outstanding Company Common Stock or any outstanding
capital stock of any of the Subsidiaries of the Company;
(b) neither the Company nor any of its Subsidiaries shall: (i)
declare, set aside or pay any dividend or other distribution payable in cash,
stock or property with respect to its capital stock; (ii) issue, sell, pledge,
dispose of or encumber any additional shares of, or securities convertible into
or exchangeable for, or options, warrants, calls, commitments or rights of any
kind to acquire, any shares of capital stock of any class of the Company or its
Subsidiaries, other than shares of Company Common Stock reserved for issuances
pursuant to the exercise of Options outstanding on the date hereof; (iii)
transfer, lease, license, sell, mortgage, pledge, dispose of or encumber any
right to any trademark, service mark or trade name owned by it or over which it
has any right whatsoever; (iv) transfer, lease, license, sell, mortgage, pledge,
dispose of, or encumber any other material assets other than in the ordinary and
usual course of business and consistent with past practice; (v) incur or modify
any material indebtedness or other material liability, provided that the Company
-------------
may borrow money for use in the ordinary and usual course of business, provided
--------
further that, neither the Company nor any of its Subsidiaries shall make any
- ------------
borrowing or incur any indebtedness or other liability that would cause the
Company's consolidated net debt (including without limitation the indebtedness
currently outstanding
48
<PAGE>
under the promissory note issued by the Company to Mafco) to exceed $205
million; (vi) make any capital expenditures in excess of $2 million in the
aggregate; or (vii) redeem, purchase or otherwise acquire directly or indirectly
any of its capital stock;
(c) neither the Company nor any of its Subsidiaries shall modify,
amend or terminate any of its Material Agreements or waive, release or assign
any material rights or claims;
(d) neither the Company nor any of its Subsidiaries shall permit any
material insurance policy naming it as a beneficiary or a loss payable payee to
be cancelled or terminated without notice to Parent;
(e) neither the Company nor any of its Subsidiaries shall: (i)
assume, guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other person,
except in the ordinary course of business and consistent with past practice;
(ii) make any loans, advances or capital contributions to, or investments in, or
acquisitions of, any other person (other than to Subsidiaries of the Company),
other than in the ordinary course of business and consistent with past practice;
or (iii) enter into any commitment or transaction with respect to any of the
foregoing (including, but not limited to, any borrowing, capital expenditure or
purchase, sale or lease of assets);
(f) neither the Company nor any of its Subsidiaries shall change any
of the accounting methods used by it unless required by GAAP or applicable law;
(g) neither the Company nor any of its Subsidiaries shall adopt a
plan of complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of the Company or any of
its Subsidiaries (other than the Merger);
(h) neither the Company nor any of its Subsidiaries shall take, or
agree to commit to take, any
49
<PAGE>
action that would make any representation or warranty of the Company contained
herein inaccurate in any material respect at, or as of any time prior to, the
Effective Time (except for representations made as of a specific date);
(i) except as required under Section 2.4, the Company shall not amend
or change the period (or permit any acceleration, amendment or change) of
exercisability of Options granted under the 1996 Plan or authorize cash payments
in exchange for any Options;
(j) except for year-end bonuses and salary increases made in the
ordinary course of business consistent with past practice, which in the case of
year-end bonuses shall not exceed $2.2 million in the aggregate, neither the
Company nor any Subsidiary shall increase the compensation payable or to become
payable to its officers or directors;
(k) neither the Company nor any of its Subsidiaries shall grant any
severance or termination pay to, or enter into any employment or severance
agreement with, any director or officer of the Company or any Subsidiary or
establish, adopt, enter into or terminate or amend any Benefit Plan; and
(l) neither the Company nor any of its Subsidiaries shall authorize
or enter into an agreement to do any of the foregoing.
Section 5.2 Access to Information. Upon reasonable notice, the
---------------------
Company shall (and shall cause each of its Subsidiaries to) afford to the
officers, employees, accountants, counsel, financing sources and other
representatives of Parent, access, during normal business hours to all its
properties (including offices, plants, warehouses and other facilities),
employees, books, contracts, commitments and records (including tax returns),
and the Company shall (and shall cause each of its Subsidiaries to) furnish
promptly to the Parent (a) a copy of each report, schedule, registration
statement and other document filed or received by it during such period pursuant
to the requirements of federal securities laws
50
<PAGE>
and (b) all other information concerning its business, properties and personnel
as Parent may reasonably request. Unless otherwise required by law, Parent shall
hold any such information which is nonpublic in confidence in accordance with
the provisions of the Confidentiality Agreement between the Company and Parent,
dated October 20, 1998 (the "Confidentiality Agreement").
Section 5.3 Repayment of Borrowings Under Credit Agreement. At the
----------------------------------------------
consummation of the Offer, Parent shall cause the Company to repay all
outstanding borrowings under the Credit Agreement in accordance with the terms
thereof (through Parent's cash on hand, existing credit arrangements or
otherwise) such that no event of default shall exist as a result of the
consummation of the transactions contemplated hereby.
Section 5.4 Consents and Approvals. Each of the Company, Parent and
----------------------
the Purchaser shall take all actions necessary to comply promptly with all legal
requirements which may be imposed on it with respect to this Agreement and the
transactions contemplated hereby (which actions shall include, without
limitation, furnishing all information required under the HSR Act and in
connection with approvals of or filings with any other Governmental Entity) and
shall promptly cooperate with and furnish information to each other in
connection with any such requirements imposed upon any of them or any of their
Subsidiaries in connection with this Agreement and the transactions contemplated
hereby. Each of the Company, Parent and the Purchaser shall, and shall cause
its Subsidiaries to, take all actions necessary to obtain (and shall cooperate
with each other in obtaining) any consent, authorization, order or approval of,
or any exemption by, any Governmental Entity or other public or private third
party required to be obtained or made by Parent, the Purchaser, the Company or
any of their Subsidiaries in connection with the Merger or the taking of any
action contemplated thereby or by this Agreement.
51
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Section 5.5 Employee Benefits.
-----------------
(a) Parent and the Purchaser shall, as of the Effective Time,
continue the employment of all persons who, immediately prior to the Effective
Time, were employees of the Company or its Subsidiaries ("Retained Employees").
Parent and the Purchaser agree that, effective as of the Effective Time and for
a one-year period following the Effective Time, the Surviving Corporation and
its Subsidiaries and successors shall provide the Retained Employees with
employee plans and programs which are, in the aggregate, substantially
comparable to those provided to such Retained Employees immediately prior to the
date hereof (other than with regard to the 1996 Plan). With respect to such
benefits, service accrued by such Retained Employees during employment with the
Company and its Subsidiaries prior to the Effective Time shall be recognized for
all purposes, except to the extent necessary to prevent duplication of benefits.
Nothing in this Section 5.5(a) shall be deemed to require the employment of any
Retained Employee to be continued for any particular period of time after the
Effective Time or limit the right of Parent and the Purchaser to amend, modify,
suspend or terminate any employee plan or program in accordance with the terms
of such employee plan or program and applicable law.
(b) Parent and the Purchaser agree to honor, and cause the Surviving
Corporation to honor, without modification, all employment and severance
agreements and arrangements, as amended through the date hereof, with respect to
employees and former employees of the Company.
Section 5.6 No Solicitation.
---------------
(a) The Company and its Subsidiaries shall not, and shall use their
best efforts to cause their respective officers, directors, employees and
investment bankers, attorneys or other agents retained by or acting on behalf of
the Company or any of its Subsidiaries not to, (i) initiate, solicit or
encourage (including by way of furnishing non-public information), directly or
indirectly, any inquiries or the making of any proposal
52
<PAGE>
that constitutes or is reasonably likely to lead to any Acquisition Proposal (as
defined in Section 5.6(e) hereof), (ii) except as permitted below, engage in
negotiations or discussions with, or furnish any information or data to any
third party relating to an Acquisition Proposal, or (iii) enter into any
agreement with respect to any Acquisition Proposal or approve any Acquisition
Proposal. The Company will also promptly request each person that has heretofore
executed a confidentiality agreement in connection with its consideration of an
Acquisition Proposal to return all non-public information furnished to such
person by or on behalf of the Company or any of its Subsidiaries.
(b) Notwithstanding anything to the contrary contained in this
Agreement, the Company and its Board of Directors (i) may participate in
discussions or negotiations (including, as a part thereof, making any
counterproposal) with or furnish information to any third party making an
unsolicited Acquisition Proposal (a "Potential Acquiror") if the Board
determines in good faith, based upon advice of its outside legal counsel, that
the failure to participate in such discussions or negotiations or to furnish
such information would be inconsistent with the Board's fiduciary duties under
applicable law, and (ii) shall be permitted to take and disclose to the
Company's stockholders a position with respect to any tender or exchange offer
by a third party, or amend or withdraw such position, pursuant to Rules 14d-9
and 14e-2 of the Exchange Act.
(c) Any non-public information furnished to a Potential Acquiror
shall be pursuant to a confidentiality agreement substantially similar to the
confidentiality provisions of the confidentiality agreement entered into between
the Company and Parent. In the event that the Company shall determine to provide
any information as described above, or shall receive any Acquisition Proposal,
it shall promptly inform Parent in writing as to the fact that information is to
be provided and shall furnish to Parent the identity of the recipient of such
information or the Potential Acquiror and the terms of such Acquisition
Proposal, except to the extent that the Board determines in good faith, based
upon
53
<PAGE>
advice of its outside legal counsel, that any such action described in this
sentence would be inconsistent with the Board's fiduciary duties under
applicable law. The Company shall keep Parent reasonably informed of the status
of any such Acquisition Proposal except to the extent that the Board determines
in good faith, based upon advice of its outside legal counsel, that any such
action would be inconsistent with the Board's fiduciary duties under applicable
law.
(d) The Board of Directors of the Company shall not (i) withdraw or
modify or propose to withdraw or modify, in any manner adverse to Parent, the
approval or recommendation of such Board of Directors of this Agreement, the
Offer or the Merger or (ii) approve or recommend, or propose to approve or
recommend, any Acquisition Proposal; provided that, the Company's Board of
Directors may withdraw or modify or propose to withdraw or modify its
recommendation of this Agreement, the Offer or the Merger or recommend or
propose to recommend an Acquisition Proposal if, in each case, the Board
determines in good faith, after receiving advice from its financial advisor,
that such Acquisition Proposal is a Superior Proposal and determines in good
faith, based upon advice of its outside legal counsel, that it would be
inconsistent not to do so in order to comply with its fiduciary duties to the
Company's stockholders under applicable law. The Company shall provide
reasonable notice to Parent to the effect that it is taking such action. The
Board of Directors of the Company shall not authorize the Company to enter into
any agreement with respect to an Acquisition Proposal (even if it is a Superior
Proposal).
(e) For purposes of this Agreement, "Acquisition Proposal" shall mean
any offer or proposal, whether in writing or otherwise, made by a third party to
acquire beneficial ownership (as defined under Rule 13(d) of the Exchange Act)
of all or a material portion of the assets of, or any material equity interest
in, the Company or its material Subsidiaries pursuant to a merger, consolidation
or other business combination, recapitalization, sale of shares of capital
stock, sale of assets, tender offer or exchange offer or similar
54
<PAGE>
transaction involving the Company or its material Subsidiaries (other than the
transactions contemplated by this Agreement).
(f) The term "Superior Proposal" means any proposal to acquire,
directly or indirectly, for consideration consisting of cash or securities, more
than a majority of the Shares then outstanding or all or substantially all the
assets of the Company, and otherwise on terms which the Board of Directors of
the Company determines in good faith to be more favorable to the Company and its
stockholders than the Offer and the Merger (based on advice of the Company's
financial advisor that the value of the consideration provided for in such
proposal is superior to the value of the consideration provided for in the Offer
and the Merger), for which financing, to the extent required, is then committed.
Section 5.7 Publicity. The initial press release with respect to the
---------
execution of this Agreement shall be a joint press release reasonably acceptable
to Parent and the Company. Thereafter, so long as this Agreement is in effect,
neither the Company, Parent nor any of their respective affiliates shall issue
or cause the publication of any press release or other announcement with respect
to the Merger, this Agreement or the other transactions contemplated hereby
without the prior consultation of the other party, except as may be required by
law or by any listing agreement with a national securities exchange.
Section 5.8 Notification of Certain Matters. The Company shall give
-------------------------------
prompt notice to Parent and Parent shall give prompt notice to the Company, of
(i) the occurrence, or non-occurrence of any event the occurrence, or non-
occurrence of which would cause any representation or warranty contained in this
Agreement to be untrue or inaccurate in any material respect at or prior to the
Effective Time and (ii) any material failure of the Company or Parent, as the
case may be, to comply with or satisfy any covenant, condition or agreement to
be complied with or satisfied by it hereunder; provided, however, that the
-------- --------
delivery of any notice pursuant to this
55
<PAGE>
Section 5.8 shall not limit or otherwise affect the remedies available hereunder
to the party receiving such notice.
Section 5.9 Directors' and Officers' Insurance and Indemnification.
------------------------------------------------------
(a) From and after the consummation of the Offer, Parent shall cause the
Surviving Corporation to indemnify, defend and hold harmless any person who is
now, or has been at any time prior to the date hereof, or who becomes prior to
the Effective Time, an officer, director, employee and agent (the "Indemnified
Party") of the Company and its Subsidiaries against all losses, claims, damages,
liabilities, costs and expenses (including attorneys' fees and expenses),
judgments, fines, losses, and amounts paid in settlement in connection with any
actual or threatened action, suit, claim, proceeding or investigation (each a
"Claim") to the extent that any such Claim is based on, or arises out of, (i)
the fact that such person is or was a director, officer, employee or agent of
the Company or any Subsidiaries or is or was serving at the request of the
Company or any of its Subsidiaries as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise, or
(ii) this Agreement, or any of the transactions contemplated hereby, in each
case to the extent that any such Claim pertains to any matter or fact arising,
existing, or occurring prior to or at the Effective Time, regardless of whether
such Claim is asserted or claimed prior to, at or after the Effective Time, to
the full extent permitted under Delaware law or the Company's Certificate of
Incorporation, By-laws or indemnification agreements in effect at the date
hereof, including provisions relating to advancement of expenses incurred in the
defense of any action or suit. Without limiting the foregoing, in the event any
Indemnified Party becomes involved in any capacity in any Claim of the type
described above, then from and after consummation of the Offer, Parent shall
cause the Company (or the Surviving Corporation if after the Effective Time) to
periodically advance to such Indemnified Party its legal and other expenses
(including the cost of any investigation and preparation incurred in connection
therewith), subject to the provision by such Indemnified Party of an undertaking
56
<PAGE>
to reimburse the amounts so advanced in the event of a final non-appealable
determination by a court of competent jurisdiction that such Indemnified Party
is not entitled thereto.
(b) All rights to indemnification and all limitations of liability
existing in favor of the Indemnified Party as provided under Delaware law or the
Company's Certificate of Incorporation, By-laws or indemnification agreements in
effect at the date hereof shall survive the Merger and shall continue in full
force and effect, without any amendment thereto, for a period of six years from
the Effective Time; provided that, in the event any Claim or Claims are asserted
-------- ----
or made within such six year period, all rights to indemnification in respect of
any such Claim or Claims shall continue until disposition of any and all such
Claims; provided further, that any determination required to be made with
-------- -------
respect to whether an Indemnified Party's conduct complies with the standards
set forth under Delaware law, the Company's Certificate of Incorporation or By-
laws or such agreements, as the case may be, shall be made by independent legal
counsel selected by the Indemnified Party and reasonably acceptable to Parent
and; provided further, that nothing in this Section 5.9 shall impair any rights
-------- -------
or obligations of any present or former directors or officers of the Company.
(c) In the event Parent or the Purchaser or any of their successors or
assigns (i) consolidates with or merges into any other person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger, or (ii) transfers or conveys all or substantially all of its properties
and assets to any person, then, and in each such case, to the extent necessary
to effectuate the purposes of this Section 5.9, proper provision shall be made
so that the successors and assigns of Parent and the Purchaser assume the
obligations set forth in this Section 5.9.
(d) At the Effective Time, the Purchaser shall deliver a policy or
policies ("Run-off Policies") of directors and officers liability insurance
covering any person who is covered under the Company's existing
57
<PAGE>
officers' and directors' liability insurance policy. Such Run-off Policies shall
cover, for a period of not less than six years after the Effective Time, claims
for liability brought against such persons described above after the Effective
Time but alleging acts or omissions occurring before the Effective Time. Such
Run-off Policies shall be written in amounts and with terms and conditions no
less favorable than those policies currently covering such persons; provided,
that the Purchaser shall not be obligated to obtain any such insurance to the
extent that the premium for the Run-off policies exceed 300% of the annual
premiums paid as of the date of this Agreement by the Company and its
subsidiaries for directors and officers liability insurance. If the premiums for
the Run-off Policies exceed such amount, the Purchaser shall be obligated to
obtain Run-off Policies with the greatest coverage available for a cost not
exceeding such amount. The Company and its subsidiaries represent to the Parent
and the Purchaser that the annual premium paid for its directors and officers
liability policies as of the date of this Agreement is not more than $175,000.
The Purchaser shall keep, or cause the Surviving Corporation to keep, the Run-
off Policies in effect for the full six-year term.
Section 5.10 Further Assurances. Subject to the terms and conditions
------------------
herein provided, each of the parties hereto agrees to use their respective
reasonable best efforts to take, or cause to be taken, all action, and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement. If at any time after the Closing Date any
further action is necessary or desirable to carry out the purposes of this
Agreement, the parties hereto shall take or cause to be taken all such necessary
action, including, without limitation, the execution and delivery of such
further instruments and documents as may be reasonably requested by the other
party for such purposes or otherwise to consummate and make effective the
transactions contemplated hereby.
58
<PAGE>
Section 5.11 Fees and Expenses. All costs and expenses incurred in
-----------------
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such expenses. The Company agrees that all fees and
expenses that have been or will be incurred by it in connection with this
Agreement and the transactions contemplated hereby (including the $3 million fee
plus reasonable expenses payable to Chase Securities, Inc.) shall not, in the
aggregate, exceed $5,000,000.
Section 5.12 Mafco Note. Promptly upon the earlier of consummation
----------
of the Offer or purchase of Shares pursuant to the Tender Agreement, the Company
shall pay the promissory note dated August 21, 1996 made by the Company to Mafco
at its outstanding face value and Purchaser shall, to the extent the Company
does not have funds available to pay such note at such time, provide the Company
with such funds.
ARTICLE VI
CONDITIONS
Section 6.1 Conditions to Each Party's Obligation To Effect the
---------------------------------------------------
Merger. The respective obligation of each party to effect the Merger shall be
- ------
subject to the satisfaction on or prior to the Closing Date of each of the
following conditions:
(a) Stockholder Approval. This Agreement shall have been approved
--------------------
and adopted by the requisite vote of the holders of Company Common Stock, if
required by applicable law and the Certificate of Incorporation, in order to
consummate the Merger;
(b) HSR Act. Any waiting period applicable to the Merger under
-------
the HSR Act shall have expired or been terminated;
(c) Statutes; Consents. No statute, rule, order, decree or
------------------
regulation shall have been enacted or promulgated by any foreign or domestic
Governmental
59
<PAGE>
Entity or authority of competent jurisdiction which prohibits the
consummation of the Merger and all foreign or domestic governmental consents,
orders and approvals required for the consummation of the Merger and the
transactions contemplated hereby shall have been obtained and shall be in effect
at the Effective Time;
(d) Injunctions. There shall be no order or injunction of a foreign
-----------
or United States federal or state court or other governmental authority of
competent jurisdiction in effect precluding, restraining, enjoining or
prohibiting consummation of the Merger; and
(e) Purchase of Shares in Offer. Parent, the Purchaser or their
---------------------------
affiliates shall have purchased shares of Company Common Stock pursuant to the
Offer or the Tender Agreement, except that Parent and the Purchaser shall not be
entitled to rely on this condition if the Purchaser shall have failed to
purchase Shares pursuant to the Offer in breach of its obligations under this
Agreement.
ARTICLE VII
TERMINATION
Section 7.1 Termination. Anything herein or elsewhere to the contrary
-----------
notwithstanding, this Agreement may be terminated and the Merger contemplated
herein may be abandoned at any time prior to the Effective Time, whether before
or after stockholder approval thereof:
(a) By the mutual consent of the Board of Directors of Parent
and the Board of Directors of the Company.
(b) By either of the Board of Directors of the Company or the
Board of Directors of Parent:
(i) if any Governmental Entity shall have issued an order,
decree or ruling or taken any other action (which order, decree, ruling or other
action the parties hereto shall use their respective reasonable best
60
<PAGE>
efforts to lift), in each case permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement and such order,
decree, ruling or other action shall have become final and non-appealable;
provided that the party seeking to terminate this Agreement shall have used all
- --------
reasonable efforts to challenge such order, decree or ruling;
(ii) if the Offer shall have expired without any Shares
being purchased therein and the period in the Tender Agreement during which the
option granted therein is exercisable shall have expired without such option
having bee n exercised, provided, however, that the right to terminate this
-------- -------
Agreement under this Section 7.1(b) shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been the cause of, or
resulted in, the failure of the Purchaser to purchase Shares in the Offer; or
(iii) if the Effective Time shall not have occurred by
August 31, 1999, unless the Effective Time shall not have occurred because of a
material breach of this Agreement by the party seeking to terminate this
Agreement.
(c) By the Board of Directors of the Company if Parent, the Purchaser
or any of their affiliates shall have failed to commence the Offer on or prior
to five business days following the date of the initial public announcement of
the Offer; provided, that the Company may not terminate this Agreement pursuant
--------
to this Section 7.1(c) if the Company is in material breach of this Agreement.
(d) By the Board of Directors of Parent:
(i) if, due to an occurrence that if occurring after the
commencement of the Offer would result in a failure to satisfy any of the
conditions set forth in Annex A hereto, Parent, the Purchaser, or any of their
affiliates shall have failed to commence the Offer on or prior to five business
days following the date of the initial public announcement of the Offer;
provided, that Parent may not terminate this Agreement pursuant to
- --------
61
<PAGE>
this Section 7.1(d)(i) if Parent is in material breach of this Agreement; or
(ii) if, prior to the purchase of shares of Company Common Stock
pursuant to the Offer, the Board of Directors of the Company shall have
withdrawn, or modified or changed in a manner adverse to Parent or the Purchaser
its approval or recommendation of the Offer, this Agreement or the Merger or
shall have recommended a Superior Proposal or shall have resolved to do either
of the foregoing.
Section 7.2 Effect of Termination. In the event of the termination
---------------------
of this Agreement as provided in Section 7.1, written notice thereof shall
forthwith be given to the other party or parties specifying the provision hereof
pursuant to which such termination is made, and this Agreement shall forthwith
become null and void, and there shall be no liability on the part of the Parent
or the Company, except nothing in this Section 7.2 shall relieve any party of
liability for fraud or for breach of this Agreement (other than a breach of this
Agreement arising solely out of the inaccuracy of a representation or warranty
made by the Company that was accurate when made on the date hereof and which
inaccuracy was not caused by the intentional actions or omissions by the
Company).
ARTICLE VII
MISCELLANEOUS
Section 8.1 Amendment and Modification. Subject to applicable law,
--------------------------
this Agreement may be amended, modified and supplemented in any and all
respects, whether before or after any vote of the stockholders of the Company
contemplated hereby, by written agreement of the parties hereto (which in the
case of the Company shall require approval of its Board of Directors and include
approvals as contemplated in Section 1.3(b)), at any time prior to the Closing
Date with respect to any of the terms contained herein; provided, however, that
-------- -------
after the approval of this Agreement by the stockholders of the
62
<PAGE>
Company, no such amendment, modification or supplement shall reduce or change
the Merger Consideration.
Section 8.2 Nonsurvival of Representations and Warranties. None of
---------------------------------------------
the representations and warranties in this Agreement or in any schedule,
instrument or other document delivered pursuant to this Agreement shall survive
the Effective Time.
Section 8.3 Notices. All notices and other communications hereunder
-------
shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or sent by an overnight courier service, such as
Federal Express, to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to Parent or the Purchaser, to:
Societe Nationale des Exploitation
Industrielle des Tabacs et Allumettes
53, quai d'Orsay
75347 Paris Cedex 07, France
Attention: Charles Lebeau
Telephone No.: 33.1.45.56.63.89
Telecopy No.: 33.1.45.56.62.83
Attention: Jean-Philippe Carriere
Telephone No.: 33.1.45.56.62.17
Telecopy No.: 33.1.45.56.61.33
with a copy to:
Proskauer Rose LLP
1585 Broadway
New York, New York 10036
Attention: Ronald Papa, Esq.
Telephone No.: (212) 969-3352
Telecopy No.: (212) 969-2900
and
Proskauer Rose LLP
9, rue Le Tasse
63
<PAGE>
75116 Paris, France
Attention: Delia Spitzer, Esq.
Telephone No.: 33.1.44.30.25.30
Telecopy No.: 33.1.44.30.25.35
(b) if to the Company, to:
Barry F. Schwartz, Esq.
Consolidated Cigar Holdings Inc.
35 East 62/nd/ Street
New York, New York 10021
Telephone No.: (212) 572-8600
Telecopy No.: (212) 572-5056
and
Theo W. Folz
Consolidated Cigar Holdings Inc.
5900 North Andrews Avenue, 10/th/ Fl.
Fort Lauderdale, Florida 33309-2367
Telephone No.: (954) 938-7800
Telecopy No.: (954) 938-7812
with a copy to:
Skadden, Arps, Slate, Meagher
& Flom LLP
919 Third Avenue
New York, New York 10022
Telephone No.: (212) 735-3780
Telecopy No.: (212) 735-2000
Attention: Franklin M. Gittes, Esq.
and
Alan C. Myers, Esq.
Section 8.4 Counterparts. This Agreement may be executed in two or
------------
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when two or more counterparts have been signed by
each of the parties and delivered to the other parties, it being understood that
all parties need not sign the same counterpart.
64
<PAGE>
Section 8.5 Entire Agreement; Third Party Beneficiaries. This
-------------------------------------------
Agreement and the Confidentiality Agreement (including the documents and the
instruments referred to herein and therein): (a) constitutes the entire
agreement and supersedes all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter hereof, and (b)
except as provided in Sections 1.3, 2.4, 5.5, 5.9 and 5.12, are not intended to
confer upon any person other than the parties hereto any rights or remedies
hereunder.
Section 8.6 Severability. If any term, provision, covenant or
------------
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, unenforceable or against its regulatory
policy, the remainder of the terms, provisions, covenants and restrictions of
this Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
Section 8.7 Governing Law. This Agreement shall be governed and
-------------
construed in accordance with the laws of the State of Delaware without giving
effect to the principles of conflicts of law thereof or of any other
jurisdiction.
Section 8.8 Jurisdiction.
------------
(a) Any legal action or proceeding with respect to this Agreement or
any matters arising out of or in connection with this Agreement or otherwise,
and any action for enforcement of any judgment in respect thereof shall be
brought exclusively in the courts of the State of New York or of the United
States of America for the Southern District of New York, the Court of Chancery
of Delaware or the courts of the United States of America for the District of
Delaware and, by execution and delivery of this Agreement, the Company, Parent
and the Purchaser each hereby accepts for itself and in respect of its property,
generally and unconditionally, the exclusive jurisdiction of the aforesaid
courts and appellate courts thereof. The Company, Parent and the Purchaser
irrevocably consent to service of process out of any of the aforementioned
courts in any such action or
65
<PAGE>
proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, or by recognized international express carrier or delivery
service, to the Company, Parent or the Purchaser at their respective addresses
referred to in Section 8.3 hereof.
(b) Each of Parent and the Purchaser hereby designates CT Corporation
as its respective agent for service of process, and service upon Parent or the
Purchaser shall be deemed to be effective upon service of C T Corporation System
as aforesaid or of its successor designated in accordance with the following
sentence. Parent or the Purchaser may designate another corporate agent or law
firm reasonably acceptable to the Company and located in the Borough of
Manhattan, in the City of New York, as successor agent for service of process
upon 30-days prior written notice to the Company.
(c) The Company, Parent and the Purchaser each hereby irrevocably
waives any objection which it may now or hereafter have to the laying of venue
of any of the aforesaid actions or proceedings arising out of or in connection
with this Agreement or otherwise brought in the courts referred to above and
hereby further irrevocably waives and agrees, to the extent permitted by
applicable law, not to plead or claim in any such court that any such action or
proceeding brought in any such court has been brought in an inconvenient forum.
Nothing herein shall affect the right of any party hereto to serve process in
any other manner permitted by law.
Section 8.9 Assignment. Neither this Agreement nor any of the
----------
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties, except that the Purchaser may assign, in
its sole discretion, any or all of its rights, interests and obligations
hereunder to Parent or to any direct or indirect wholly owned Subsidiary of
Parent. Subject to the preceding sentence, this Agreement shall be binding
upon, inure to the benefit of and be enforceable by the parties and their
respective successors and assigns.
66
<PAGE>
Section 8.10 Headings. The descriptive headings used herein are
--------
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement. "Include,"
"includes," and "including" shall be deemed to be followed by "without
limitation" whether or not they are in fact followed by such words or words of
like import.
67
<PAGE>
IN WITNESS WHEREOF, Parent, the Purchaser and the Company have caused
this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
CONSOLIDATED CIGAR HOLDINGS INC.
By: /s/ Theo W. Folz
------------------------------
Name: Theo W. Folz
Title: Chairman, President and
Chief Executive Officer
SOCIETE NATIONALE D'EXPLOITATION
INDUSTRIELLE DES TABACS ET
ALLUMETTES, S.A.
By: /s/ Jean-Dominique Comolli
-----------------------------
Name: Jean-Dominique Comolli
Title: Chairman and Chief
Executive Officer
DORSAY ACQUISITION CORP.
By: /s/ Charles Lebeau
-----------------------------
Name: Charles Lebeau
Title: President
<PAGE>
ANNEX A
-------
CONDITIONS TO THE OFFER
-----------------------
Notwithstanding any other provision of the Offer (subject to the
provisions of the Merger Agreement), the Purchaser shall not be required to
accept for payment or, subject to any applicable rules and regulations of the
SEC, including Rule 14e-1(c) under the Exchange Act (relating to the Purchaser's
obligation to pay for or return tendered Shares promptly after termination or
withdrawal of the Offer), pay for, and may delay the acceptance for payment of
or, subject to the restriction referred to above, the payment for, any tendered
Shares, and may terminate the Offer and not accept for payment any tendered
shares if (i) there shall not have been validly tendered and not withdrawn prior
to the expiration of the Offer at least 19,600,000 shares of Class B Common
Stock (the "Minimum Condition"), (ii) any applicable waiting period under the
HSR Act has not expired or terminated prior to the expiration of the Offer, or
(iii) at any time on or after the date of the Merger Agreement, and before the
time of acceptance of Shares for payment pursuant to the Offer, any of the
following events shall occur and be continuing:
(a) there shall be any statute, rule, regulation, judgment, order or
injunction promulgated, entered, enforced, enacted, issued or applicable to the
Offer or the Merger by any domestic or foreign federal or state governmental
regulatory or administrative agency or authority or court or legislative body or
commission which (l) prohibits, or imposes any material limitations on, Parent's
or the Purchaser's ownership or operation of all or a material portion of the
Company's businesses or assets, (2) prohibits, or makes illegal the acceptance
for payment, payment for or purchase of Shares or the consummation of the Offer
or the Merger, (3) results in a material delay in or restricts the ability of
the Purchaser, or renders the Purchaser unable, to accept for payment, pay for
or purchase some or all of the Shares, or (4) imposes material limitations on
the ability of the Purchaser or Parent effectively to exercise full rights of
ownership of the Shares, including, without limitation, the right to vote the
Shares purchased by it on all matters properly presented to
A-1
<PAGE>
the Company's stockholders, provided that Parent shall have used all reasonable
--------
efforts to cause any such judgment, order or injunction to be vacated or lifted;
(b) there shall be any action or proceeding pending or instituted by
any domestic or foreign federal or state governmental regulatory or
administrative agency or authority which (1) seeks to prohibit, or impose any
material limitation on, Parent's or the Purchaser's ownership or operation of
all or a material portion of the Company's businesses or assets, (2) seeks to
prohibit or make illegal the acceptance for payment, payment for or purchase of
Shares or the consummation of the Offer or the Merger, (3) is reasonably likely
to result in a material delay in or seeks to restrict the ability of the
Purchaser, or render the Purchaser unable, to accept for payment, pay for or
purchase some or all of the Shares or (4) seeks to impose material limitations
on the ability of the Purchaser or Parent effectively to exercise full rights of
ownership of the Shares, including, without limitation, the right to vote the
Shares purchased by it on all matters properly presented to the Company's
stockholders; provided that the Parent shall have used all reasonable efforts to
cause any such action or proceeding to be dismissed;
(c) the representations and warranties of the Company set forth in
the Merger Agreement shall not be true and correct in any respect, disregarding
for this purpose any standard of materiality contained in any such
representation or warranty, as of the date of consummation of the Offer as
though made on or as of such date or the Company shall have breached or failed
in any material respect to perform or comply with any material obligation,
agreement or covenant required by the Merger Agreement to be performed or
complied with by it (including without limitation if the Company shall have
entered into any definitive agreement or any agreement in principle with any
person with respect to an Acquisition Proposal or similar business combination
with the Company), except, in the case of the failure of any representation or
warranty, (i) for changes specifically permitted by the Merger Agreement and
(ii) (A) those representations and warranties that address matters only as of a
particular date which are true and correct as of such date or (B) where the
failure of such
A-2
<PAGE>
representations and warranties to be true and correct, do not, individually or
in the aggregate, have a material adverse effect on the Company and its
Subsidiaries, taken as a whole;
(d) it shall have been publicly disclosed that any person, entity or
"group" (as defined in Section 13(d)(3) of the Exchange Act), shall have
acquired and has beneficial ownership (determined pursuant to Rule 13d-3
promulgated under the Exchange Act) of more than 15% of any class or series of
capital stock of the Company (including the Shares), through the acquisition of
stock, the formation of a group or otherwise, or shall have been granted an
option, right or warrant, conditional or otherwise, to acquire beneficial
ownership of more than 10% of any class or series of capital stock of the
Company (including the Shares), other than any person or group existing on the
date hereof which beneficially owns more than 9% of any class or series of
capital stock of the Company;
(e) (1) any general suspension of trading in securities on any
national securities exchange or in the over-the-counter market, (2) the
declaration of a banking moratorium or any suspension of payments in respect of
banks in the United States or France (whether or not mandatory), or (3) any
limitation (whether or not mandatory) by a United States or French governmental
authority or agency on the extension of credit by banks or other financial
institutions;
(f) the Company's Board of Directors shall have withdrawn, or
modified or changed in a manner adverse to Parent or the Purchaser (including by
amendment of the Schedule 14D-9) its recommendation of the Offer, the Merger
Agreement, or the Merger, or recommended another proposal or offer, or shall
have resolved to do any of the foregoing; or
(g) the Merger Agreement shall have been terminated in accordance
with its terms
which in the reasonable judgment of Parent or the Purchaser, in any such case,
and regardless of the circumstances giving rise to such condition, makes it
inadvisable to proceed with the Offer or with such acceptance for payment or
payments.
A-3
<PAGE>
The foregoing conditions are for the sole benefit of the Purchaser and
Parent and may be asserted by either of them or may be waived by Parent or the
Purchaser, in whole or in part at any time and from time to time in the sole
discretion of Parent or the Purchaser.
A-4
<PAGE>
Exhibit (c)(2)
TENDER AND VOTING AGREEMENT
THIS TENDER AND VOTING AGREEMENT dated as of December 16, 1998
(this "Agreement") is by and among SOCIETE NATIONALE D'EXPLOITATION INDUSTRIELLE
DES TABACS ET ALLUMETTES, a corporation organized under the laws of France ("
Parent"), DORSAY ACQUISITION CORP. , a Delaware corporation and a wholly owned
subsidiary of Parent(the " Purchaser"), and MAFCO CONSOLIDATED GROUP INC., a
Delaware corporation ("Mafco").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, simultaneously with the execution of this Agreement,
Parent, Purchaser and Consolidated Cigar Holdings Inc., a Delaware corporation
(the "Company"), have entered into an Agreement and Plan of Merger (as amended
from time to time, the "Merger Agreement"), pursuant to which Purchaser has
agreed, among other things, to commence a cash tender offer (as such tender
offer may hereafter be amended from time to time, the "Offer") to purchase any
and all shares of Class A common stock, $0.01 par value, of the Company and any
and all shares of Class B common stock, $0.01 par value, of the Company
(together, the "Company Common Stock");
WHEREAS, as an inducement and a condition to its entering into
the Merger Agreement and incurring the obligations set forth therein, including
the Offer and the Merger, Parent has required that Mafco enter into this
Agreement;
NOW, THEREFORE, in consideration of the foregoing and the
mutual promises, representations, warranties, covenants and agreements contained
herein and in the Merger Agreement, the parties hereto, intending to be legally
bound hereby, agree as follows:
1. Certain Definitions. Capitalized terms used and not defined
-------------------
herein have the respective meanings ascribed to them in the Merger Agreement. In
addition, for purposes of this Agreement:
"Affiliate" means, with respect to any specified Person, any
Person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the Person
specified. For purposes of this Agreement, with respect to Mafco, "Affiliate"
shall not include the Company and the Persons that directly, or indirectly
through one or more intermediaries, are controlled by the Company.
"Beneficially Own" or "Beneficial Ownership" with respect to
any securities means having "beneficial ownership" of such securities (as
determined pursuant to Rule 13d-3 under the Exchange Act ), including pursuant
to any agreement, arrangement or understanding, whether or not in writing.
Without duplicative counting of the same securities by the same
<PAGE>
holder, securities Beneficially Owned by a Person shall include securities
Beneficially Owned by all Affiliates of such Person and all other Persons with
whom such Person would constitute a "group" within the meaning of Section 13(d)
of the Exchange Act and the rules promulgated thereunder.
"Encumbrances" shall mean any and all liens, charges, security
interests, options, claims, mortgages, pledges, proxies, voting trusts or
agreements, obligations, understandings or arrangements or other restrictions of
any nature whatsoever.
"Owned Shares" means the 19,600,000 shares of Company Common
Stock owned by Mafco on the date hereof, together with any other shares of
Company Common Stock, or any other securities of the Company entitled, or which
may be entitled, to vote generally in the election of directors and any other
shares of Company Common Stock or other equity securities of the Company, any
securities convertible, exchangeable or exercisable for any equity securities of
the Company or any Voting Debt of the Company which may hereafter be owned by
Mafco.
"Person" means an individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity.
"Representative" means, with respect to any Person, such
Person's officers, directors, employees, agents and representatives (including
any investment banker, financial advisor, agent, representative or expert
retained by or acting on behalf of such Person or its subsidiaries).
"Transfer" means, with respect to a security, the sale,
transfer, pledge, hypothecation, encumbrance, assignment or disposition of such
security or the Beneficial Ownership thereof, the offer to make such a sale,
transfer or other disposition, and each option, agreement, arrangement or
understanding, whether or not in writing, to effect any of the foregoing. As a
verb, "Transfer" shall have a correlative meaning.
2. Representations and Warranties of Mafco. Mafco hereby
---------------------------------------
represents and warrants to Parent and Purchaser as follows:
(a) Upon the consummation of the Offer or exercise of the
Option (as defined in Section 6), Purchaser will acquire good and marketable
title to the Owned Shares, free and clear of all Encumbrances, except for any
Encumbrance arising under the Securities Act of 1933, as amended, or any
applicable state securities laws. The Owned Shares constitute all of the capital
stock of the Company Beneficially Owned by Mafco.
(b) Mafco is a corporation duly organized and validly existing
under the laws of its jurisdiction of incorporation, and is in good standing
under the laws of its jurisdiction of incorporation. Mafco has the corporate
power and authority to execute and deliver this Agreement and perform its
obligations hereunder. The execution, delivery and
2
<PAGE>
performance by Mafco of this Agreement and the consummation by Mafco of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of Mafco and no other corporate proceedings on the part of
Mafco are necessary to authorize the execution, delivery or performance of this
Agreement or the consummation of the transactions contemplated hereby.
(c) This Agreement has been duly and validly executed and delivered by
Mafco and constitutes a valid and binding agreement of Mafco, enforceable
against Mafco in accordance with its terms except (i) to the extent limited by
applicable bankruptcy, insolvency or similar laws affecting creditors rights and
(ii) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
(d) None of the execution and delivery of this Agreement by Mafco, the
consummation by Mafco of the transactions contemplated hereby or compliance by
Mafco with any of the provisions hereof shall (i) conflict with or result in a
breach of any provision of the certificate of incorporation, by-laws or similar
organizational document of Mafco, (ii) result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a default (or give
rise to any third party right of termination, cancellation, material
modification or acceleration) under any of the terms, conditions or provisions
of any note, loan agreement, bond, mortgage, indenture, license, contract,
commitment, arrangement, understanding, agreement or other instrument or
obligation of any kind to which Mafco is a party or by which Mafco or any of its
properties or assets (including the Owned Shares) may be bound, (iii) require on
the part of Mafco any filing with, or permit, authorization, consent or approval
of, any Governmental Entity, other than any filing required to be made under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), any foreign antitrust law or with the Bureau of Alcohol, Tobacco and
Firearms (the "ATF") or the United States Customs Service, or (iv) violate any
order, writ, injunction, decree, judgment, statute, rule or regulation
applicable to Mafco or any of its properties or assets, excluding from the
foregoing such violations, breaches, defaults or failure to make any filing or
to obtain any permit, authorization, consent or approval which would not,
individually or in the aggregate, have a material adverse effect on Mafco, and
which will not materially impair the ability of Mafco to consummate the
transactions contemplated hereby.
(e) Except as set forth on Schedule 2(e) to this Agreement, Mafco is the
record and Beneficial Owner, has sole voting power, sole power of disposition
and sole power to agree to all of the matters set forth in this Agreement, in
each case with respect to the Owned Shares, subject to applicable securities
laws and the terms of this Agreement.
3. Representations and Warranties of Parent and Purchaser. Parent and
------------------------------------------------------
Purchaser hereby represent and warrant to Mafco as follows:
(a) Each of Parent and Purchaser is a corporation duly organized and
validly existing under the laws of its jurisdiction of incorporation, and each
of them is in good
3
<PAGE>
standing under the laws of its jurisdiction of incorporation. Parent and
Purchaser have the corporate power and authority to execute and deliver this
Agreement and perform their respective obligations hereunder. The execution and
delivery by Parent and Purchaser of this Agreement and the performance by Parent
and Purchaser of their respective obligations hereunder have been duly and
validly authorized by the Board of Directors of each of Parent and Purchaser and
no other corporate proceedings on the part of Parent or Purchaser are necessary
to authorize the execution, delivery or performance of this Agreement or the
consummation of the transactions contemplated hereby.
(b) This Agreement has been duly and validly executed and delivered by
Parent and Purchaser and constitutes a valid and binding agreement of each of
Parent and Purchaser, enforceable against each of them in accordance with its
terms except (i) to the extent limited by applicable bankruptcy, insolvency or
similar laws affecting creditors rights and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(c) None of the execution and delivery of this Agreement by Parent or
Purchaser, the consummation by Parent or Purchaser of the transactions
contemplated hereby or compliance by Parent or Purchaser with any of the
provisions hereof shall (i) conflict with or result in any breach of the
certificate of incorporation or by-laws of Parent or Purchaser, or (ii) result
in a violation or breach of, or constitute (with or without notice or lapse of
time or both) a default (or give rise to any third party right of termination,
cancellation, material modification or acceleration) under any of the terms,
conditions or provisions of any note, loan agreement, bond, mortgage, indenture,
license, contract, commitment, arrangement, understanding, agreement or other
instrument or obligation of any kind to which Parent or Purchaser is a party or
by which Parent or Purchaser or any of their respective properties or assets may
be bound, (iii) require on the part of Parent or the Purchaser any filing with,
or permit, authorization, consent or approval of, any Governmental Entity, other
than any filing required to be made under the HSR Act, or any foreign antitrust
law or with the ATF or the United States Customs Service or (iv) violate any
order, writ, injunction, decree, judgment, statute, rule or regulation
applicable to Parent or Purchaser or any of their respective properties or
assets, excluding from the foregoing such violations, breaches, defaults or
failure to make any filing or to obtain any permit, authorization, consent or
approval which would not, individually or in the aggregate, have a material
adverse effect on Parent or the Purchaser, and which will not materially impair
the ability of Parent or the Purchaser to consummate the transactions
contemplated hereby.
4. Tender of Shares. Mafco shall tender or cause the record owner thereof
----------------
to tender, pursuant to and in accordance with the terms of the Offer, and shall
not withdraw, all Owned Shares.
5. Voting of Owned Shares; Proxy. (a) During the period commencing on the
-----------------------------
date hereof and continuing until the earlier of (x) the consummation of the
Offer and (y) the
4
<PAGE>
termination of this Agreement (such period being referred to as the "Voting
Period"), at any meeting (whether annual or special, and whether or not an
adjourned or postponed meeting) of the Company's stockholders, however called,
or in connection with any written consent of the Company's stockholders, subject
to the absence of a preliminary or permanent injunction or other requirement
under applicable law by any United States federal, state or foreign court
barring such action, Mafco shall vote (or cause to be voted) all Owned Shares:
(i) in favor of the Merger, the execution and delivery by the Company of the
Merger Agreement and the approval and adoption of the Merger and the terms
thereof and each of the other actions contemplated by the Merger Agreement and
this Agreement and any actions required in furtherance thereof and hereof; and
(ii) against any action or agreement that would impede, interfere with, or
prevent the Offer or the Merger. Mafco shall not enter into any agreement,
arrangement or understanding with any Person the effect of which would be
inconsistent or violative of the provisions and agreements contained in this
Section 5.
(b) By its execution hereof and in order to secure its obligations under
this Agreement, during the period commencing on the date hereof, Mafco
irrevocably grants to, and appoints, Parent and Charles Lebreau and Eric
Albrand, or either of them, in their respective capacities as employees of
Parent, and any individual who shall hereafter succeed to either of their
respective positions at Parent, and each of them individually, as its true and
lawful proxy and attorney-in-fact (with full power of substitution), for and in
the name, place and stead of it, to vote the Owned Shares or grant a consent or
approval in respect of the Owned Shares in favor of the various transactions
contemplated by the Merger Agreement and against any Acquisition Proposal
("Irrevocable Proxy").
(c) Mafco understands and acknowledges that Parent is entering into the
Merger Agreement in reliance upon its execution and delivery of this Irrevocable
Proxy. Mafco hereby affirms that this Irrevocable Proxy is given in connection
with the execution of this Agreement and the Merger Agreement, and further
affirms that this Irrevocable Proxy is coupled with an interest in this
Agreement for the term stated herein and may under no circumstances be revoked.
Mafco hereby ratifies and confirms all that this Irrevocable Proxy may lawfully
do or cause to be done by virtue hereof. This Irrevocable Proxy is executed and
intended to be irrevocable in accordance with the provisions of Section 212(e)
of the Delaware General Corporation Law.
6. Option. (a) Mafco hereby grants the Purchaser an irrevocable option (the
------
"Option") to purchase all Owned Shares at a price per share equal to the Offer
Price (the "Option Price"). The Option shall become exercisable, in whole but
not in part, in the event that the Offer is terminated without the Purchaser
purchasing Shares thereunder and such failure to purchase is not in
contravention of the Purchaser's or Parent's obligations under the Merger
Agreement or the Offer.
(b) In any such case, the Option shall remain exercisable until 60 days
after the occurrence of the event giving rise to the right to exercise the
Option (the "60 Day Period"), so long as: (i) all waiting periods under the HSR
Act required for the purchase of
5
<PAGE>
the Owned Shares upon such exercise shall have expired or been waived and (ii)
there shall not be in effect any preliminary injunction or other order issued by
any Governmental Entity prohibiting the exercise of the Option pursuant to this
Agreement; provided, that if (i) all HSR Act waiting periods shall not have
expired or been waived or (ii) there shall be in effect any such injunction or
order, in each case on the expiration of the 60 Day Period, the 60 Day Period
shall be extended until five business days after the later of (A) the date of
expiration or waiver of all HSR Act waiting periods and (B) the date of removal
or lifting of such injunction or order, but in no event shall the Option be
exercisable after July 23, 1999. If the Purchaser wishes to exercise the Option,
it or Parent shall send a written notice to Mafco specifying the place and date
(which shall not be fewer than two business days after the date of the notice)
for the closing of the purchase.
(c) It is understood that the Purchaser shall not be entitled to purchase
the Shares pursuant to the Option if the Purchaser shall have failed to purchase
Shares pursuant to the Offer in breach of its obligations under the Merger
Agreement. Upon the purchase of the Owned Shares pursuant to the Option, the
Purchaser shall, unless the Company shall have breached its obligations pursuant
to the last sentence of Section 5.6(d) of the Merger Agreement, subject to
applicable law, offer to purchase any and all remaining Shares of Company Common
Stock at the Option Price, by way of merger or otherwise.
7. Insured Claims. (a) In the event that, after the consummation of the
--------------
Offer, the Company or any of its subsidiaries shall suffer any loss, arising out
of a third party claim or otherwise, that the Parent in good faith notifies
Mafco would be covered by any insurance policy maintained by or for the benefit
of Mafco or any of its affiliates (an "Insured Claim"), Mafco shall present and
cooperate by all reasonable means (including providing access to documents and
witnesses and making witnesses available for testimony at the Company's sole
cost and expense) in the pursuit of claims for payment under such policy in
respect of such loss, but shall not be required to sue or otherwise litigate
with its insurers (in which case, Mafco shall assign to the Parent all such
rights to sue under the policies as are assignable under applicable law), and
pay to the Company the proceeds of such claim under such policy as reimbursement
in respect of the amount of such loss, subject to the provisions of this Section
7.
(b) Until the Effective Time, Mafco or the Company shall take all
reasonable steps necessary to ensure the continuation of all such insurance
policies in order to permit the Company to recover under such policies.
(b) Mafco shall not be obligated to present any claim under any such
insurance policy with respect to any Insured Claim unless (i) such Insured Claim
is based upon bodily injury, property damage, wrongful or other acts or another
condition or event that arose or occurred (all as determined under the
applicable insurance policy) prior to the consummation of the Offer and (ii) the
Company or the relevant affiliate of the Company cooperates fully at is expense
with Mafco's insurers in the investigation of such Insured Claim and (in the
case of any Insured Claim arising out of a third party claim) the defense
thereof.
6
<PAGE>
(c) The amount of proceeds of any such insurance claim to be paid over to
the Company shall be limited to the amount actually received by Mafco from its
insurers with respect to such claim (net of any self-insured retention amount,
deductible amount, or other amount that Mafco is required to reimburse its
insurers under its contractual agreements with them or to pay prior to the
insurer paying any funds, in each case with respect to such claim, its defense
or investigation), minus the aggregate amount of all reasonable out-of-pocket
expenses incurred by Mafco in presenting such claim (to the extent not paid or
reimbursed by its insurers). Mafco shall not be responsible for any such sums
which would be payable under insurance policies not paid as a result of insurer
bankruptcy, insurer schemes of arrangements, insurer reorganizations, insurer
liquidations, acts of governmental authorities and take overs of the
administration any insurer or other or like situations. Mafco shall not be
required to advance any funds for investigations, defense, or payment of any
judgement or settlement of any claim. In the event Mafco is forced to advance
any such funds because of failure of the Parent or the Purchaser to make prompt
payment of such sums, the Parent shall immediately pay Mafco such funds.
8. Restrictions on Transfer, Other Proxies; No Solicitation.
--------------------------------------------------------
(a) Except as provided in Sections 4, 5 or 6 hereof, Mafco shall not, until
the termination of this Agreement, directly or indirectly: (i) Transfer to any
Person any or all Owned Shares; or (ii) grant any proxies or powers of attorney,
deposit any Owned Shares into a voting trust or enter into a voting agreement,
understanding or arrangement with respect to such Owned Shares. Nothing
contained herein shall prevent Mafco from transferring any or all of the Owned
Shares to an Affiliate of Mafco which agrees to be bound by this Agreement;
provided that Mafco shall continue to remain liable for all its obligations
- --------
under this Agreement.
(b) Mafco hereby agrees, in its capacity as a stockholder of the Company,
that it and its subsidiaries or affiliates shall not, and Mafco shall cause its
officers, directors, partners, employees, representatives and agents, including,
but not limited to, investment bankers, attorneys and accountants, not to,
directly or indirectly, (i) initiate, solicit or encourage (including by way of
furnishing non-public information) any inquiries or the making of any proposal
that constitutes or is reasonably likely to lead to an Acquisition Proposal or
(ii) engage in any negotiations or discussions with, or furnish any information
or data, to, any third party relating to an Acquisition Proposal. Mafco will
immediately inform Parent of the terms of any proposal, discussion, negotiation
or inquiry (and will disclose any written materials received by Mafco in
connection with such proposal, discussion, negotiation or inquiry) and the
identity of the party making such proposal or inquiry which Mafco may receive in
respect of any Acquisition Proposal. Mafco will also promptly request each
Person that has heretofore received any non-public information in connection
with its consideration of an Acquisition Proposal to return all such non-public
information furnished to such person by or on behalf of Mafco, the Company or
any of the Company's Subsidiaries. Any action taken by the Company or any member
of the Board of Directors of the Company in his capacity as such in accordance
with the terms of the Merger Agreement shall be deemed not to violate this
Section 7(b).
7
<PAGE>
9. Stop Transfer. Mafco shall not request that the Company register the
-------------
transfer (book-entry or otherwise) of any certificate or uncertificated interest
representing any of the Owned Shares, unless such transfer is made in compliance
with this Agreement.
10. Further Assurances. From time to time, at the other party's request and
------------------
without further consideration, each party hereto shall execute and deliver such
additional documents and take all such further lawful action as may be necessary
or desirable to consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated by this Agreement.
11. Waiver of Appraisal Rights. Mafco hereby waives any rights of appraisal
--------------------------
or rights to dissent from the Merger that it may have.
12. Termination. This Agreement, and all rights and obligations of the
-----------
parties hereunder, shall terminate upon the earlier of (a) the date upon which
the Parent shall have purchased and paid for all of the Owned Shares of Mafco in
accordance with the terms of the Offer and (b) the date on which the Option has
expired.
13. Miscellaneous.
-------------
(a) This Agreement and the Indemnification Agreement, dated as of December
16, 1998, constitute the entire agreement between the parties with respect to
the subject matter hereof and supersede all other prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof.
(b) Mafco agrees that this Agreement and the respective rights and
obligations of Mafco hereunder shall attach to all Owned Shares.
(c) All costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid by the party incurring such
expenses.
(d) This Agreement and all of the provisions hereof shall be binding upon
and inure to the benefit of the parties and their respective successors,
personal or legal representatives, executors, administrators, heirs,
distributees, devisees, legatees and permitted assigns, but neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by either party (whether by operation of law or otherwise) without the
prior written consent of the other party; provided, that Parent and the
Purchaser may assign their rights and obligations hereunder to any assignee of
such parties' rights and obligations under the Merger Agreement or to any other
Subsidiary of Parent. Except for the last sentence of Section 6 hereof, which is
intended to benefit the Company's stockholders, nothing in this Agreement,
express or implied, is intended to or shall confer upon any other Person any
rights, benefits or remedies of any nature whatsoever under or by reason of this
Agreement.
8
<PAGE>
(e) This Agreement may not be amended, changed, supplemented, or otherwise
modified or terminated, except upon the execution and delivery of a written
agreement executed by each of the parties hereto. The parties may waive
compliance by the other parties hereto with any representation, agreement or
condition otherwise required to be complied with by such other party hereunder,
but any such waiver shall be effective only if in writing executed by the
waiving party.
(f) All notices and other communications hereunder shall be in writing and
shall be deemed given upon (i) transmitter's confirmation of a receipt of a
facsimile transmission, (ii) confirmed delivery by a standard overnight carrier
or when delivered by hand or (iii) the expiration of five business days after
the day when mailed by certified or registered mail, postage prepaid, addressed
at the following addresses (or at such other address for a party as shall be
specified by like notice):
If to Parent
or Purchaser Societe Nationale des Exploitation
Industrielle des Tabacs et Allumettes
53, quai d'Orsay
75347 Paris Cedex 07, France
Attention: Charles Lebeau
Telephone No.: 33.1.45.56.63.89
Telecopy No.: 33.1.45.56.62.83
Attention: Jean-Philippe Carriere
Telephone No.: 33.1.45.56.62.17
Telecopy No.: 33.1.45.56.61.33
with a copy to:
Proskauer Rose LLP
1585 Broadway
New York, New York 10036
Attention: Ronald Papa, Esq.
Telephone No.: (212) 969-3352
Telecopy No.: (212) 969-2900
and
Proskauer Rose LLP
9, rue Le Tasse
75116 Paris, France
Attention: Delia Spitzer, Esq.
Telephone No.: 33.1.44.30.25.30
Telecopy No.: 33.1.44.30.25.35
9
<PAGE>
If to Mafco: Mafco Consolidated Group Inc.
35 East 62nd Street
New York, New York 10021
Att: General Counsel
Telecopier Number: (212) 527-8600
Copy to: Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Att: Franklin M. Gittes, Esq. and
Alan C. Myers, Esq.
Telecopier Number: (212) 735-2000
or to such other address or facsimile number as the Person to whom notice is
given shall have previously furnished to the others in writing in the manner set
forth above.
(g) Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without affecting the validity or
enforceability of the remaining provisions hereof. Any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
(h) Each of the parties hereto acknowledges and agrees that in the event of
any breach of this Agreement, each non-breaching party would be irreparably and
immediately harmed and could not be made whole by monetary damages. It is
accordingly agreed that the parties hereto (a) will waive, in any action for
specific performance, the defense of adequacy of a remedy at law and (b) shall
be entitled, in addition to any other remedy to which they may be entitled at
law or in equity, to compel specific performance of this Agreement.
(i) All rights, powers and remedies provided under this Agreement or
otherwise available in respect hereof at law or in equity shall be cumulative
and not alternative, and the exercise of any thereof by any party shall not
preclude the simultaneous or later exercise of any other such right, power or
remedy by such party. The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof, shall not constitute a waiver by such party
of its right to exercise any such or other right, power or remedy or to demand
such compliance.
(j) Notwithstanding anything herein to the contrary, nothing set forth
herein shall in any way restrict any director in the exercise of his or her
fiduciary duties as a director of the Company.
10
<PAGE>
(k) This Agreement shall be governed and construed in accordance with the
laws of the State of Delaware without giving effect to the principles of
conflicts of law thereof.
(l) The descriptive headings used herein are inserted for convenience of
reference only and are not intended to be part of or to affect the meaning or
interpretation of this Agreement. "Include," "includes," and "including" shall
be deemed to be followed by "without limitation" whether or not they are in fact
followed by such words or words of like import.
(m) This Agreement may be executed in counterparts, each of which shall be
deemed to be an original, but all of which, taken together, shall constitute one
and the same instrument.
(n) Any legal action or proceeding with respect to this Agreement or any
matters arising out of or in connection with this Agreement or otherwise, and
any action for enforcement of any judgment in respect thereof shall be brought
exclusively in the courts of the State of New York or of the United States of
America for the Southern District of New York, the Court of Chancery of Delaware
or the courts of the United States of America for the District of Delaware and,
by execution and delivery of this Agreement, Mafco, Parent and the Purchaser
each hereby accepts for itself and in respect of its property, generally and
unconditionally, the exclusive jurisdiction of the aforesaid courts and
appellate courts thereof. Mafco, Parent and the Purchaser irrevocably consent to
service of process out of any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, or by recognized international express carrier or delivery
service, to Mafco, Parent or the Purchaser at their respective addresses
referred to in Section 12(f) hereof.
(o) Each of Parent and the Purchaser hereby designates CT Corporation as
its respective agent for service of process, and service upon Parent or the
Purchaser shall be deemed to be effective upon service of C T Corporation System
as aforesaid or of its successor designated in accordance with the following
sentence. Parent or the Purchaser may designate another corporate agent or law
firm reasonably acceptable to Mafco and located in the Borough of Manhattan, in
the City of New York, as successor agent for service of process upon 30-days
prior written notice to Mafco.
(p) Mafco, Parent and the Purchaser each hereby irrevocably waives any
objection which it may now or hereafter have to the laying of venue of any of
the aforesaid actions or proceedings arising out of or in connection with this
Agreement or otherwise brought in the courts referred to above and hereby
further irrevocably waives and agrees, to the extent permitted by applicable
law, not to plead or claim in any such court that any such action or proceeding
brought in any such court has been brought in an inconvenient forum. Nothing
herein shall affect the right of any party hereto to serve process in any other
manner permitted by law.
11
<PAGE>
IN WITNESS WHEREOF, Parent, Purchaser and Mafco have caused this Agreement
to be duly executed as of the day and year first above written.
SOCIETE NATIONALE D'EXPLOITATION
INDUSTRIELLE DES TABACS ET
ALLUMETTES, S.A.
By: /s/ Jean-Dominique Comolli
--------------------------------------------
Name: Jean-Dominique Comolli
Title: Chairman and Chief Executive
Officer
DORSAY ACQUISITION CORP.
By: /s/ Charles Lebeau
--------------------------------------------
Name: Charles Lebeau
Title: President
MAFCO CONSOLIDATED GROUP INC.
By: /s/ Glenn P. Dickes
--------------------------------------------
Name: Glenn P. Dickes
Title: Vice President
<PAGE>
Exhibit (c)(3)
INDEMNIFICATION AGREEMENT
December 16, 1998
-----------------
The parties to this agreement are Mafco Holdings, Inc. ("Mafco Holdings"),
Mafco Consolidated Group Inc. ("Mafco"), Societe Nationale d'Exploitation
Industrielle des Tabacs et Allumettes, a joint stock company registered in the
Commercial Register of Paris ("Parent"), Dorsay Acquisition Corp., a Delaware
corporation ("Purchaser") and Consolidated Cigar Holdings Inc., a Delaware
corporation ("Company").
Mafco, Parent and Purchaser are parties to a Tender and Voting Agreement
dated as of December 16, 1998, which was entered into in connection with the
Agreement and Plan of Merger dated as of December 16, 1998 among Parent,
Purchaser and the Company (the "Merger Agreement"). This Agreement is the
Indemnification Agreement referred to in the Tender and Voting Agreement.
The parties agree as follows:
1. Indemnification. Mafco Holdings and Mafco shall jointly and severally
---------------
indemnify, save harmless and defend Parent, Purchaser and the Company and each
of their stockholders, affiliates, directors, officers, agents and
representatives, from and against any and all losses, liabilities, fines,
judgments, claims, damages, penalties, obligations, payments, actions or causes
of action, liens, costs and expenses (including reasonable attorney's fees)
incurred by any of them by reason of, or arising out of, (a) any liability for
income and franchise taxes arising out of the inclusion of the Company and any
Subsidiaries in any consolidated federal income tax return, or any consolidated,
combined or unitary state or local tax return, of Mafco Holdings or Mafco,
except for any such liability as is directly attributable to the operations of
the Company and any Subsidiaries, and (b) any liability or obligation of an
entity, whether or not incorporated, which is or was part of a controlled group
or under common control with the Company or otherwise treated as a "single
employer" with the Company within the meaning of Section 414(b), (c), (m) or (o)
of the Internal Revenue Code of 1986, as amended (the "Code") or under Section
4001 of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") (other than the Company or any Subsidiary of the Company as defined in
Section 3.1 of the Merger Agreement), with respect to any "employee benefit
plan" (as defined in Section 3(3) of ERISA, but which is not a Benefit Plan as
defined in Section 3.8(a) of the Merger Agreement) established, maintained,
sponsored or contributed to by such entity, including, but not limited to (i)
liabilities for complete and partial withdrawals under any "multiemployer plan"
(as defined in Section 3(37) of ERISA) pursuant to Section 4203 or 4205 of
ERISA, respectively; (ii) liabilities to the Pension Benefit Guaranty
Corporation (including, without limitation, liabilities for premiums and
terminations); (iii) liabilities under Section 4980B of the Code or Part 6 of
<PAGE>
Subtitle B of Title I of ERISA; and (iv) liabilities arising under Section 412
of the Code or Section 302(a)(2) of ERISA.
2. Proceedings. If there is an audit, examination or administrative or
-----------
judicial proceeding (a "Tax Proceeding") relating to any liability for taxes as
to which the Company and any Subsidiaries were included in a consolidated
federal income tax return or a consolidated, combined or unitary state or local
tax return of Mafco Holdings or Mafco, Mafco Holdings and Mafco will control the
audit or other proceedings; provided, however, the Company shall be entitled to
-------- -------
participate in that portion of the Tax Proceeding, if any, relating solely to
items for which the Company is liable pursuant to Section 1 of this Agreement
("Company Items"). In the event that either Mafco Holdings or Mafco believes
that a position in the Tax Proceeding that the Company proposes to take with
respect to a Company Item is unreasonable, the parties will in good faith
attempt to negotiate a prompt settlement of the disagreement, and if the parties
are unable to negotiate a resolution of the disagreement within 15 days, the
dispute will be submitted to the New York office of a firm of independent
accountants of nationally recognized standing reasonably satisfactory to Mafco
and the Company (or, if Mafco and the Company do not agree on such a firm, then
a firm chosen by the Arbitration and Mediation Committee of the New York Society
of Certified Public Accountants) (the "Tax Dispute Accountants") for a
determination as to whether the position is unreasonable, and, if so, what is a
reasonable position. The decision of the Tax Dispute Accountants shall be
conclusive and binding on the parties, and the fees and expenses of the Tax
Dispute Accountants in resolving the dispute will be borne equally by Mafco
Holdings and Mafco on the one hand and the Company on the other.
3. Certain Payments. Notwithstanding anything to the contrary herein, in
----------------
the Amended and Restated Tax Sharing Agreement dated as of June 15, 1995 among
Mafco Holdings, Mafco, the Company (then named Consolidated Cigar (Parent)
Holdings Inc.) and Consolidated Cigar Corporation, or in any other agreement,
the Company and Subsidiaries shall have no obligation to make any payment with
respect to any liability for Taxes that duplicates any other payment by the
Company or any Subsidiary with respect to the same liability (whether either
such payment was to a taxing authority, to Mafco Holdings or to Mafco).
4. Miscellaneous.
-------------
a. This Agreement constitutes the entire agreement between the parties with
respect to the subject matter hereof and supersedes all other prior agreements
and understandings, both written and oral, between the parties with respect to
the subject matter hereof.
b. All costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid by the party incurring such
expenses.
c. This Agreement and all of the provisions hereof shall be binding upon
and inure to the benefit of the parties and their respective successors,
personal or legal representatives, executors, administrators, heirs,
distributees, devisees, legatees and permitted
-2-
<PAGE>
assigns, but neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by either party (whether by operation of
law or otherwise) without the prior written consent of the other party;
provided, that Parent and the Purchaser may assign their rights and obligations
- --------
hereunder to any assignee of such parties' rights and obligations under the
Merger Agreement or to any other Subsidiary of Parent.
d. This Agreement may not be amended, changed, supplemented, or
otherwise modified or terminated, except upon the execution and delivery of a
written agreement executed by each of the parties hereto. The parties may waive
compliance by the other parties hereto with any representation, agreement or
condition otherwise required to be complied with by such other party hereunder,
but any such waiver shall be effective only if in writing executed by the
waiving party.
e. All notices and other communications hereunder shall be in
writing and shall be deemed given upon (i) transmitter's confirmation of a
receipt of a facsimile transmission, (ii) confirmed delivery by a standard
overnight carrier or when delivered by hand or (iii) the expiration of five
business days after the day when mailed by certified or registered mail, postage
prepaid, addressed at the following addresses (or at such other address for a
party as shall be specified by like notice):
If to Parent or Purchaser: Societe Nationale d'Exploitation
Industrielle des Tabacs et Allumettes
53, quai d'Orsay
75347 Paris Cedex 07, France
Att: Charles Lebeau
Telecopier Number: (33-1) 45-56-62-83
Att: Jean-Philippe Carriere
Telecopier Number: (33-1) 45-56-61-33
Copy to: Proskauer Rose LLP
1585 Broadway
New York, New York 10036
Att: Ronald Papa, Esq.
Telecopier Number: (212) 969-2900
And copy to: Proskauer Rose
9, rue Le Tasse
75116 Paris, France
-3-
<PAGE>
Att: Delia Spitzer, Esq.
Telecopier Number: (33-1) 44-30-25-35
If to Mafco Holdings or Mafco: Mafco Consolidated Group Inc.
35 East 62nd Street
New York, New York 10021
Att: General Counsel
Telecopier Number: (212) 572-5056
Copy to: Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Att: Franklin M. Gittes, Esq. and
Alan C. Myers, Esq.
Telecopier Number: (212) 735-2000
or to such other address or facsimile number as the Person to whom notice is
given shall have previously furnished to the others in writing in the manner set
forth above.
f. Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without affecting the validity or
enforceability of the remaining provisions hereof. Any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
g. This Agreement shall be governed and construed in accordance with the
laws of the State of Delaware without giving effect to the principles of
conflicts of law thereof.
h. The descriptive headings used herein are inserted for convenience of
reference only and are not intended to be part of or to affect the meaning or
interpretation of this Agreement. "Include," "includes," and "including" shall
be deemed to be followed by "without limitation" whether or not they are in fact
followed by such words or words of like import.
i. This Agreement may be executed in counterparts, each of which shall be
deemed to be an original, but all of which, taken together, shall constitute one
and the same instrument.
-4-
<PAGE>
j. Any legal action or proceeding with respect to this Agreement or any
matters arising out of or in connection with this Agreement or otherwise, and
any action for enforcement of any judgment in respect thereof shall be brought
exclusively in the courts of the State of New York or of the United States of
America for the Southern District of New York, the Court of Chancery of Delaware
or the courts of the United States of America for the District of Delaware and,
by execution and delivery of this Agreement, Mafco Holdings, Mafco, Parent and
the Purchaser each hereby accepts for itself and in respect of its property,
generally and unconditionally, the exclusive jurisdiction of the aforesaid
courts and appellate courts thereof. Mafco Holdings, Mafco, Parent and the
Purchaser irrevocably consent to service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, or by recognized
international express carrier or delivery service, to Mafco Holdings, Mafco,
Parent or the Purchaser at their respective addresses referred to in Section
4(e) hereof.
k. Each of Parent and the Purchaser hereby designates C T Corporation as
its respective agent for service of process, and service upon Parent or the
Purchaser shall be deemed to be effective upon service of C T Corporation System
as aforesaid or of its successor designated in accordance with the following
sentence. Parent or the Purchaser may designate another corporate agent or law
firm reasonably acceptable to Mafco and located in the Borough of Manhattan, in
the City of New York, as successor agent for service of process upon 30-days
prior written notice to Mafco.
l. Mafco Holdings, Mafco, Parent and the Purchaser each hereby irrevocably
waives any objection which it may now or hereafter have to the laying of venue
of any of the aforesaid actions or proceedings arising out of or in connection
with this Agreement or otherwise brought in the courts referred to above and
hereby further irrevocably waives and agrees, to the extent permitted by
applicable law, not to plead or claim in any such court that any such action or
proceeding brought in any such court has been brought in an inconvenient forum.
Nothing herein shall affect the right of any party hereto to serve process in
any other manner permitted by law.
-5-
<PAGE>
IN WITNESS WHEREOF, Parent, Purchaser, Mafco Holdings and Mafco have caused
this Agreement to be duly executed as of the day and year first above written.
SOCIETE NATIONALE D'EXPLOITATION INDUSTRIELLE
DES TABACS ET ALLUMETTES, S.A.
By: /s/ Jean-Dominique Comolli
-----------------------------------------------------
Name: Jean-Dominique Comolli
Title: Chairman and Chief Executive Officer
DORSAY ACQUISITION CORP.
By: /s/ Charles Lebeau
-----------------------------------------------------
Name: Charles Lebeau
Title: President
MAFCO CONSOLIDATED GROUP INC.
By: /s/ Glenn Dickes
-----------------------------------------------------
Name: Glenn Dickes
Title: Vice President
MAFCO HOLDINGS INC.
By: /s/ Glenn Dickes
-----------------------------------------------------
Name: Glenn Dickes
Title: Senior Vice President
<PAGE>
CONSOLIDATED CIGAR HOLDINGS INC.
By: /s/ Theo W. Folz
-----------------------------------------------------
Name: Theo W. Folz
Title: Chairman, President and Chief
Executive Officer
