EX-1.1
EXHIBIT 1.1
EXECUTION VERSION
$9,000,000,000
REYNOLDS AMERICAN INC.
$1,250,000,000 2.300% Senior Notes due 2018
$1,250,000,000 3.250% Senior Notes due 2020
$1,000,000,000 4.000% Senior Notes due 2022
$2,500,000,000 4.450% Senior Notes due 2025
$750,000,000 5.700% Senior Notes due 2035
$2,250,000,000 5.850% Senior Notes due 2045
guaranteed by
the Guarantors
listed on Schedule 1 hereto
UNDERWRITING AGREEMENT
Underwriting Agreement
June 9, 2015
Citigroup Global Markets Inc.
388 Greenwich Street
New York, New York 10013
J.P. Morgan Securities LLC
383 Madison Avenue
New York, New York 10079
As Representatives of the several
Underwriters listed in Schedule 2 hereto
Ladies and Gentlemen:
Reynolds American Inc., a North Carolina corporation (the “Company”), proposes to issue and sell to the several Underwriters
listed in Schedule 2 hereto (the “Underwriters”), for whom you are acting as representatives (the “Representatives”), $1,250,000,000 principal amount of its 2.300% Senior Notes due 2018 (the
“2018 Notes”), $1,250,000,000 principal amount of its 3.250% Senior Notes due 2020 (the “2020 Notes”), $1,000,000,000 principal amount of its 4.000% Senior Notes due 2022 (the “2022 Notes”),
$2,500,000,000 principal amount of its 4.450% Senior Notes due 2025 (the “2025 Notes”), $750,000,000 principal amount of its 5.700% Senior Notes due 2035 (the “2035 Notes”) and $2,250,000,000 principal amount of its
5.850% Senior Notes due 2045 (the “2045 Notes” and, together with the 2018 Notes, the 2020 Notes, the 2022 Notes, the 2025 Notes and the 2035 Notes, the “Securities”). The Securities will be issued pursuant to an
Indenture dated as of May 31, 2006 (the “Base Indenture”) among the Company, the guarantors listed in Schedule 1 hereto (collectively, the “Guarantors”), and The Bank of New York Mellon Trust Company,
N.A. (formerly The Bank of New York Trust Company, N.A.), as trustee (the “Trustee”), as supplemented as of the date hereof by the First Supplemental Indenture, dated as of September 30, 2006 (the “First Supplemental
Indenture”), the Second Supplemental Indenture, dated as of February 6, 2009 (the “Second Supplemental Indenture”) and the Third Supplemental Indenture, dated as of September 17, 2013 (the “Third
Supplemental Indenture” and, collectively with the First Supplemental Indenture and the Second Supplemental Indenture, the “Supplemental Indentures” and, together with the Base Indenture, the “Indenture”).
The Company’s obligations under the Indenture are, and under the Securities will be, unconditionally guaranteed (collectively, the
“Guarantees”) by each of the Guarantors in accordance with the terms of the Indenture.
Pursuant to an Agreement and Plan
of Merger dated as of July 15, 2014 (the “Merger Agreement”), by and among the Company, Lantern Acquisition Co., a wholly-owned subsidiary of the Company, and Lorillard Inc. (“Lorillard”), among other things,
Lantern Acquisition Co. will merge, on or before July 15, 2015 (subject to extension as provided in the Merger Agreement), with and into Lorillard, with Lorillard continuing as the surviving corporation and a wholly-owned subsidiary of the
Company, in accordance with the terms and conditions of the Merger Agreement (the “Lorillard Merger”).
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Each of the Company and the Guarantors hereby confirm their agreement with the several
Underwriters concerning the purchase and sale of the Securities, as follows:
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Registration Statement |
The Company has prepared and filed with the Securities and
Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended, and the rules and regulations of the Commission thereunder (collectively, the “Securities Act”), a registration statement on Form
S-3 (File No. 333-188791), including a prospectus, relating to the offer and sale of certain securities, including the Securities. Such registration statement, as amended at the time it became effective, including the information, if any,
deemed pursuant to Rule 430A, 430B or 430C under the Securities Act to be part of the registration statement at the time of its effectiveness (“Rule 430 Information”), is referred to herein as the “Registration
Statement”; and as used herein, the term “Preliminary Prospectus” means each prospectus included in such registration statement (and any amendments thereto) before it becomes effective, if applicable, any prospectus filed
with the Commission pursuant to Rule 424(a) under the Securities Act and the prospectus included in the Registration Statement at the time of its effectiveness that omits Rule 430 Information, and the term “Prospectus” means
the prospectus in the form first used (or made available upon request of purchasers pursuant to Rule 173 under the Securities Act) in connection with confirmation of sales of the Securities. If the Company has filed an abbreviated registration
statement pursuant to Rule 462(b) under the Securities Act (the “Rule 462 Registration Statement”), then any reference herein to the term “Registration Statement” shall be deemed to include such Rule 462
Registration Statement. Any reference in this Agreement to the Registration Statement, any Preliminary Prospectus or the Prospectus shall be deemed to refer to and include the documents incorporated by reference therein pursuant to Item 12 of
Form S-3 under the Securities Act, as of the most recent effective date of the Registration Statement or the date of such Preliminary Prospectus or the Prospectus, as the case may be and any reference to “amend,” “amendment” or
“supplement” with respect to the Registration Statement, any Preliminary Prospectus or the Prospectus shall be deemed to refer to and include any documents filed after such date under the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission thereunder (collectively, the “Exchange Act”) that are deemed to be incorporated by reference therein. Capitalized terms used but not defined herein shall have the meanings given to such
terms in the Registration Statement and the Prospectus.
At or prior to the time when sales of the Securities were first made (the
“Time of Sale”), the Company had prepared the following information (collectively, the “Time of Sale Information”): a Preliminary Prospectus dated June 9, 2015, and each “free-writing prospectus” (as
defined pursuant to Rule 405 under the Securities Act) listed on Annex A hereto as constituting part of the Time of Sale Information.
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Purchase of the Securities by the Underwriters |
(a) The Company agrees to issue and sell
the Securities to the several Underwriters as provided in this Agreement and the Guarantors agree to guarantee the Securities pursuant to the terms of the Indenture, and each Underwriter, on the basis of the representations, warranties and
agreements set forth herein and subject to the conditions set forth herein, agrees, severally and not jointly, to purchase from the Company the respective principal amount of the 2018 Notes, the 2020 Notes, the 2022 Notes, the 2025 Notes, the 2035
Notes and the 2045 Notes set forth opposite such Underwriter’s name in Schedule 2 hereto at a price equal to 99.633% of the principal amount of the 2018 Notes, 99.382% of the principal amount of the 2020 Notes, 99.236% of the
principal amount of the 2022 Notes, 99.047% of the principal amount of the 2025 Notes, 98.683% of the principal amount of the 2035 Notes and 98.601% of the principal amount of the 2045 Notes, in each case, plus accrued interest, if any, from
June 12, 2015 to the Closing Date (as defined below). The Company will not be obligated to deliver any of the Securities except upon payment for all the Securities to be purchased as provided herein.
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(b) The Company and each Guarantor understand that the Underwriters intend to make a public
offering of the Securities as soon after the effectiveness of this Agreement as in the judgment of the Representatives is advisable, and initially to offer the Securities on the terms and conditions set forth in the Prospectus. The Company and each
Guarantor acknowledges and agrees that the Underwriters may offer and sell Securities to or through any affiliate of an Underwriter and that any such affiliate may offer and sell Securities purchased by it to or through any Underwriter.
(c) Payment for and delivery of the Securities will be made at the offices of McGuireWoods LLP, 201 North Tryon Street, Suite 3000, Charlotte,
North Carolina 28202, at 10:00 a.m., Eastern Time, on June 12, 2015, or at such other time or place on the same or such other date, not later than the fifth business day thereafter, as the Representatives and the Company may agree upon in
writing. The time and date of such payment and delivery is referred to herein as the “Closing Date.”
(d) Payment for the
Securities shall be made by wire transfer in immediately available funds to the account(s) specified by the Company to the Representatives against delivery to the nominee of The Depository Trust Company ( “DTC”), for the account of
the Underwriters, of one or more global notes representing the Securities (collectively, the “Global Note”), with any transfer taxes payable in connection with the sale of the Securities duly paid by the Company. The Global Note
will be made available for inspection by the Representatives not later than 1:00 P.M., New York City time, on the business day prior to the Closing Date.
(e) The Company and each Guarantor acknowledge and agree that the Underwriters are acting solely in the capacity of an arm’s length
contractual counterparty to the Company with respect to the offering of Securities contemplated hereby (including in connection with determining the terms of the offering) and not as a financial advisor or a fiduciary to, or an agent of, the
Company, any Guarantor or any other person. Additionally, neither the Representatives nor any other Underwriter is advising the Company, any Guarantor or any other person as to any legal, tax, investment, accounting or regulatory matters in any
jurisdiction. The Company and the Guarantors shall consult with their own advisors concerning such matters and shall be responsible for making their own independent investigation and appraisal of the transactions contemplated hereby, and the
Underwriters shall have no responsibility or liability to the Company and the Guarantors with respect thereto. Any review by the Underwriters of the Company, any Guarantor, the transactions contemplated hereby or other matters relating to such
transactions will be performed solely for the benefit of the Underwriters and shall not be on behalf of the Company, any Guarantor or any other person.
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Representations and Warranties of the Company and the Guarantors |
The Company and each
Guarantor, jointly and severally, represent and warrant to each Underwriter that:
(a) Preliminary Prospectus. No order preventing
or suspending the use of any Preliminary Prospectus has been issued by the Commission, and each Preliminary Prospectus, at the time of filing thereof, complied in all material respects with the Securities Act and did not contain any untrue statement
of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that the Company
and each of the Guarantors makes no representation and warranty with respect to (i) that part of the Preliminary Prospectus that constitutes the Statement of Eligibility and Qualification (Form T-1) of the Trustee under the Trust Indenture Act
of 1939, as amended, and the rules and
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regulations of the Commission thereunder (collectively, the “Trust Indenture Act”) or (ii) any statements or omissions made in reliance upon and in conformity with
information relating to any Underwriter furnished to the Company and the Guarantors in writing by such Underwriter through the Representatives expressly for use in any Preliminary Prospectus.
(b) Time of Sale Information. The Time of Sale Information, at the Time of Sale did not, and at the Closing Date will not, contain any
untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that the Company and each of the
Guarantors make no representation and warranty with respect to any statements or omissions made in reliance upon and in conformity with information relating to any Underwriter furnished to the Company and the Guarantors in writing by such
Underwriter through the Representatives expressly for use in such Time of Sale Information. No statement of material fact included in the Prospectus has been omitted from the Time of Sale Information and no statement of material fact included in the
Time of Sale Information that is required to be included in the Prospectus has been omitted therefrom.
(c) Issuer Free Writing
Prospectus. The Company and each Guarantor (including their agents and representatives, other than the Underwriters in their capacity as such) has not prepared, made, used, authorized, approved or referred to and will not prepare, make, use,
authorize, approve or refer to any “written communication” (as defined in Rule 405 under the Securities Act) that constitutes an offer to sell or solicitation of an offer to buy the Securities (each such communication by the Company
or any Guarantor or its agents and representatives (other than a communication referred to in clauses (i) (ii) and (iii) below) an “Issuer Free Writing Prospectus”) other than (i) any document not constituting a
prospectus pursuant to Section 2(a)(10)(a) of the Securities Act or Rule 134 under the Securities Act, (ii) the Preliminary Prospectus, (iii) the Prospectus, (iv) the documents listed on Annex A hereto as constituting
the Time of Sale Information and (v) any electronic road show or other written communications, in each case approved in writing in advance by the Representatives. As used in this Agreement, the term “Issuer Free Writing Prospectus”
includes each electronic road show presented on June 5, 2015 and June 8, 2015, whether or not an “issuer free writing prospectus” as defined in Rule 433 under the Securities Act. Each such Issuer Free Writing Prospectus complied
in all material respects with the Securities Act, has been or will be (within the time period specified in Rule 433) filed in accordance with the Securities Act (to the extent required thereby) and, when taken together with the Preliminary
Prospectus, such Issuer Free Writing Prospectus, did not, and at the Closing Date will not, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that the Company makes no representation and warranty with respect to any statements or omissions made in each such Issuer Free Writing Prospectus in reliance upon and in
conformity with information relating to any Underwriter furnished to the Company in writing by such Underwriter through the Representatives expressly for use in any Issuer Free Writing Prospectus.
(d) Registration Statement and Prospectus. The Registration Statement is an “automatic shelf registration statement” as
defined under Rule 405 of the Securities Act that has been filed with the Commission not earlier than three years prior to the date hereof; and no notice of objection of the Commission to the use of such registration statement or any
post-effective amendment thereto pursuant to Rule 401(g)(2) under the Securities Act has been received by the Company. No order suspending the effectiveness of the Registration Statement has been issued by the Commission and no proceeding for
that purpose or pursuant to Section 8A of the Securities Act against the Company or related to the offering has been initiated or threatened by the Commission; as of the applicable effective date of the Registration Statement and any amendment
thereto, the Registration Statement complied and will comply in all material respects with the Securities Act and the Trust Indenture Act, and did not and will not contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or
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necessary in order to make the statements therein not misleading; and as of the date of the Prospectus and any amendment or supplement thereto and as of the Closing Date, the Prospectus will 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 the light of the circumstances under which they were made, not misleading;
provided that the Company and the Guarantors make no representation and warranty with respect to (i) that part of the Registration Statement that constitutes the Statement of Eligibility and Qualification (Form T-1) of the Trustee under
the Trust Indenture Act or (ii) any statements or omissions made in reliance upon and in conformity with information relating to any Underwriter furnished to the Company in writing by such Underwriter through the Representatives expressly for
use in the Registration Statement and the Prospectus and any amendment or supplement thereto.
(e) Incorporated Documents. The
documents incorporated by reference in the Registration Statement, the Prospectus and the Time of Sale Information, when they were filed with the Commission, conformed in all material respects to the requirements of the Exchange Act and none of such
documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading;
and any further documents so filed and incorporated by reference in the Registration Statement, the Prospectus or the Time of Sale Information, when such documents become effective or are filed with the Commission, as the case may be, will conform
in all material respects to the requirements of the Securities Act or the Exchange Act, as applicable, and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they were made, not misleading.
(f) Financial Statements.
The financial statements and the related notes thereto of the Company and its subsidiaries included or incorporated by reference in each of the Registration Statement, the Prospectus and the Time of Sale Information comply in all material respects
with the applicable requirements of the Securities Act and the Exchange Act, as applicable, and present fairly, in all material respects, the financial position of the Company and its subsidiaries as of the dates indicated, and the results of
operations and the changes in cash flows of the Company and its subsidiaries for the periods specified; and such financial statements have been prepared in conformity with generally accepted accounting principles in the United States (“U.S.
GAAP”) applied on a consistent basis throughout the periods covered thereby (except as set forth therein). The statements regarding anticipated synergies and cost-savings related to the Lorillard Merger, included in the Time of Sale
Information, each Issuer Free Writing Prospectus and the Prospectus (taken together with any related qualifications, limitations and disclaimers contained in the Time of Sale Information each Issuer Free Writing Prospectus and the Prospectus), are
based on assumptions that the Company believes to be reasonable and represent the Company’s good faith estimates that are made on the basis of such assumptions (taking into account the inherent forward-looking nature of such statements). To the
knowledge of the Company, the financial statements and the related notes thereto of Lorillard and its subsidiaries included or incorporated by reference in each of the Registration Statement, the Prospectus and the Time of Sale Information comply in
all material respects with the applicable requirements of the Securities Act and the Exchange Act, as applicable. To the knowledge of the Company, such financial statements and the related notes thereto present fairly, in all material respects, the
financial position of Lorillard and its subsidiaries as of the dates indicated, and the results of operations and the changes in cash flows of Lorillard and its subsidiaries for the periods specified; and, to the Company’s knowledge, such
financial statements have been prepared in conformity with U.S. GAAP applied on a consistent basis throughout the periods covered thereby (except as set forth therein). To the knowledge of the Company, the supporting schedule of Lorillard and its
subsidiaries included or incorporated by reference in each of the Registration Statement, the Prospectus and the Time of Sale Information, when read in conjunction with the related financial statements, present
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fairly in all material respects the information required to be stated therein. The other financial information of the Company and its subsidiaries included or incorporated by reference in each of
the Registration Statement, the Prospectus and the Time of Sale Information has been derived from the accounting records of the Company and its subsidiaries and presents fairly in all material respects, on the basis stated therein, the information
shown thereby. The pro forma financial information and the related notes thereto included or incorporated by reference in each of the Registration Statement, the Prospectus and the Time of Sale Information have been prepared in all material respects
in accordance with the Commission’s guidelines and the applicable requirements of the Securities Act and the Exchange Act and the rules and regulations thereunder, as applicable, with respect to pro forma financial information and have been
properly presented on the basis described therein, and the assumptions underlying such pro forma financial information are reasonable and, to the extent material, are set forth in each of the Registration Statement, the Prospectus and the Time of
Sale Information. The interactive data in eXtensbile Business Reporting Language included or incorporated by reference in the Registration Statement, the Prospectus and the Time of Sale Information fairly presents the information called for in all
material respects and is prepared in accordance with the Commission’s rules and guidelines applicable thereto.
(g) No Material
Adverse Change. Since the date of the most recent financial statements of the Company included or incorporated by reference in the Registration Statement, the Time of Sale Information and the Prospectus, (i) there has not been any material
adverse change, or any development reasonably likely to involve a prospective material adverse change, in or affecting the business, properties, management, financial position, results of operations of the Company and its subsidiaries taken as a
whole; and (ii) neither the Company nor any of its subsidiaries has entered into any transaction or agreement that is material to the Company and its subsidiaries taken as a whole or incurred any liability or obligation, direct or contingent,
that is material to the Company and its subsidiaries taken as a whole, except in each case as otherwise disclosed in the Registration Statement, the Time of Sale Information and the Prospectus.
(h) Organization and Good Standing. The Company and each Guarantor have been duly organized, are validly existing and in good standing
under the laws of their respective jurisdictions of organization, have the necessary power and authority to own property and to conduct their respective businesses as described in each of the Registration Statement, the Prospectus and the Time of
Sale Information and are duly qualified to transact business and are in good standing in each jurisdiction in which the conduct of their respective businesses or their respective ownership or leasing of property requires such qualification, except
to the extent that the failure to be so qualified or be in good standing would not, individually or in the aggregate, have a material adverse effect on the business, properties, management, financial position, results of operations or prospects of
the Company and its subsidiaries, taken as a whole or on the performance by the Company and the Guarantors of their obligations under the Securities and the Guarantees (a “Material Adverse Effect”). The subsidiaries listed in
Exhibit 21.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 include the only significant subsidiaries of the Company.
(i) Capitalization. The Company has an authorized capitalization as set forth in the Registration Statement, the Prospectus and the
Time of Sale Information under the heading “Capitalization;” and all the outstanding shares of capital stock or other equity interests of the Company and each subsidiary of the Company have been duly and validly authorized and issued, are
fully paid and non-assessable (except, in the case of any foreign subsidiary, for directors’ qualifying shares and except as otherwise described in the Registration Statement, the Prospectus and the Time of Sale Information) and, with respect
to each subsidiary of the Company, are owned directly or indirectly by the Company, free and clear of any lien, charge, encumbrance, security interest, restriction on voting or transfer or any other claim of any third party, except for such
restrictions on transfer pursuant to Section 6.03 of the
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Bridge Credit Agreement, dated as of September 23, 2014, among the Company, the agents and other parties named therein, and the lending institutions listed on a schedule thereto, and
Section 6.03 of the Credit Agreement, dated as of December 18, 2014, among the Company, the agents and other parties named therein, and the lending institutions listed from time to time on an annex thereto.
(j) Due Authorization. The Company and each Guarantor have the full right, power and authority to execute and deliver this Agreement
and the Securities (including each related Guarantee) (collectively, the “Transaction Documents”) and to perform its obligations hereunder and thereunder; and all action required to be taken for the due and proper authorization,
execution and delivery of each of the Transaction Documents by the Company and each Guarantor and the consummation of the transactions contemplated hereby and thereby has been duly and validly taken.
(k) The Indenture. The Base Indenture and each Supplemental Indenture have been duly authorized by the Company and each Guarantor, as
applicable; each of the Base Indenture and each Supplemental Indenture constitutes the valid and legally binding agreement of the Company and each Guarantor, enforceable against the Company and each Guarantor in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally or by equitable principles relating to enforceability (collectively, the “Enforceability
Exceptions”); and on the date of this Agreement and on the Closing Date, the Indenture will conform in all material respects to the requirements of the Trust Indenture Act.
(l) The Securities and the Guarantees. The Securities have been duly authorized by the Company and, when duly executed, authenticated,
issued and delivered as provided in the Indenture and paid for as provided herein, will be duly and validly issued and outstanding and will constitute valid and legally binding obligations of the Company enforceable against the Company in accordance
with their terms, subject to the Enforceability Exceptions, and will be entitled to the benefits of the Indenture; the Guarantee of each Guarantor pursuant to the Indenture has been duly authorized by the applicable Guarantor and when the Securities
underlying such Guarantee have been duly executed, authenticated, issued and delivered as provided in the Indenture and paid for in accordance with this Agreement, will constitute the valid and legally binding obligation of the applicable Guarantor
enforceable against such Guarantor in accordance with its terms, subject to the Enforceability Exceptions, and entitled to the benefits of the Indenture.
(m) Underwriting Agreement. This Agreement has been duly authorized, executed and delivered by the Company and each Guarantor and
constitutes a valid and legally binding agreement of the Company and each Guarantor.
(n) Descriptions of the Transaction Documents.
Each Transaction Document conforms in all material respects to the description thereof contained in the Registration Statement, the Prospectus and the Time of Sale Information.
(o) No Violation or Default. Neither the Company nor any of its subsidiaries is (i) in violation of its charter, by-laws or
similar organizational documents; (ii) in default, and no event has occurred that, with notice or lapse of time or both, would constitute such a default, in the due performance or observance of any term, covenant or condition contained in any
indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of
the Company or any of its subsidiaries is subject; or (iii) in violation of any law or statute or any judgment, order, rule or regulation of any court or arbitrator or governmental or regulatory authority, except, in the case of clauses
(ii) and (iii) above, for any such default or violation that would not, individually or in the aggregate, have a Material Adverse Effect.
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(p) No Conflicts. The execution, delivery and performance by the Company and the
Guarantors of each of the Transaction Documents, the issuance and sale of the Securities (including the Guarantees) and compliance by the Company and the Guarantors with the terms thereof and the consummation of the transactions contemplated by the
Transaction Documents will not (i) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of its subsidiaries pursuant to, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or
any of its subsidiaries is bound or to which any of the property or assets of the Company or any of its subsidiaries is subject, (ii) result in any violation of the provisions of the charter, by-laws or similar organizational documents of the
Company or any of its subsidiaries or (iii) result in the violation of any law or statute or any judgment, order, rule or regulation of any court or arbitrator or governmental or regulatory authority, except, in the case of clauses (i) and
(iii) above, for any such conflict, breach, violation or default that would not, individually or in the aggregate, have a Material Adverse Effect.
(q) No Consents Required. Assuming the accuracy of the Underwriters’ representations and warranties contained herein and their
compliance with the agreements herein, no consent, approval, authorization, order, registration or qualification of or with any court or arbitrator or governmental or regulatory authority is required for the execution, delivery and performance by
the Company and the Guarantors of each of the Transaction Documents, the issuance and sale of the Securities (including the Guarantees) and compliance by the Company and each of its subsidiaries with the terms thereof and the consummation of the
transactions contemplated by the Transaction Documents, except for such consents, approvals, authorizations, orders and registrations or qualifications as may be required under applicable state securities laws in connection with the purchase and
distribution of the Securities by the Underwriters.
(r) Legal Proceedings. There are no legal, governmental or regulatory
proceedings pending or, to the Company’s knowledge, threatened to which the Company or any of its subsidiaries is or may be a party or to which any of their properties is subject other than proceedings accurately described in all material
respects in, or incorporated by reference into, each of the Registration Statement, the Prospectus and the Time of Sale Information and proceedings that would not have a Material Adverse Effect on the power or ability of the Company or any Guarantor
to perform its obligations under the Transaction Documents or the Indenture or to consummate any of the transactions contemplated thereby or hereby or by each of the Registration Statement, the Prospectus and the Time of Sale Information.
(s) Environmental Laws. The Company and each of its subsidiaries (i) are in compliance with any and all applicable federal, state
and local laws and regulations relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants (“Environmental Laws”), (ii) have received all
permits, licenses or other approvals required of it under applicable Environmental Laws to conduct its respective business and (iii) are in compliance with all terms and conditions of any such permit, license or approval, except as described in
each of the Registration Statement, the Prospectus and the Time of Sale Information or except where such noncompliance with Environmental Laws, failure to receive required permits, licenses or other approvals or failure to comply with the terms and
conditions of such permits, licenses or approvals would not, singly or in the aggregate, have a Material Adverse Effect. There are no costs or liabilities associated with Environmental Laws (including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or compliance with Environmental Laws or any permit, license or approval, any related constraints on operating activities and any potential liabilities to third parties) which would, singly
or in the aggregate, have a Material Adverse Effect, except as described in each of the Registration Statement, the Prospectus and the Time of Sale Information.
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(t) Independent Accountants. KPMG LLP, who has certified certain financial statements of
the Company and its subsidiaries is, to the knowledge of the Company and the Guarantors, an independent registered public accounting firm with respect to the Company and its subsidiaries within the applicable rules and regulations adopted by the
Commission and the Public Company Accounting Oversight Board, and as required by the Securities Act. Deloitte & Touche LLP, who has certified certain financial statements of Lorillard and its subsidiaries is, to the knowledge of the Company
and the Guarantors, an independent registered public accounting firm with respect to Lorillard and its subsidiaries within the applicable rules and regulations adopted by the Commission and the Public Company Accounting Oversight Board, and as
required by the Securities Act.
(u) Investment Company Act. None of the Company or any of its subsidiaries is, and after giving
effect to the offering and sale of the Securities and the application of the proceeds thereof as described in the Registration Statement, the Prospectus and the Time of Sale Information, will be, an “investment company” or an entity
“controlled” by an “investment company” within the meaning of the Investment Company Act of 1940, as amended, and the rules and regulations of the Commission thereunder (collectively, “Investment Company Act”).
(v) Licenses and Permits. The Company and its subsidiaries possess all licenses, certificates, permits and other authorizations
issued by, and have made all declarations and filings with, the appropriate federal, state, local or foreign governmental or regulatory authorities that are necessary for the ownership or lease of their respective properties or the conduct of their
respective businesses as described in the Registration Statement, the Prospectus and Time of Sale Information, except where the failure to possess or make the same would not, individually or in the aggregate, have a Material Adverse Effect; and
except as described in the Registration Statement, the Prospectus and Time of Sale Information, neither the Company nor any of its subsidiaries has received notice of any revocation or modification of any such license, certificate, permit or
authorization or has any reason to believe that any such license, certificate, permit or authorization will not be renewed in the ordinary course, except where such nonrenewal would not, individually or in the aggregate, have a Material Adverse
Effect.
(w) Controls and Procedures. The Company maintains, with respect to itself and its subsidiaries: (i) systems of
internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) and (ii) disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the Exchange Act) that, in each case,
comply with the requirements of the Exchange Act. The Company has carried out evaluations of the effectiveness of such disclosure controls and procedures as required by Rule 13a-15 of the Exchange Act and such disclosure controls and procedures are
effective as of the end of the most recent period for which the evaluation thereof was required under Rule 13a-15(b) under the Exchange Act. As of the date of the Company’s last evaluation of such internal control over financial reporting,
there were no material weaknesses in the Company’s internal control over financial reporting and the Company does not believe that there are any material weaknesses as of the date hereof. Since December 31, 2014, there has been no change
in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
(x) No Unlawful Payments. Neither the Company nor any of its subsidiaries nor, to the knowledge of the Company, any director, officer,
agent, employee, affiliate or other person acting on behalf of the Company or any of its subsidiaries is in violation of the Foreign Corrupt Practices Act of 1977 or the U.K. Bribery Act 2010, each as may be amended, or similar law of any other
relevant jurisdiction, or the rules or regulations thereunder; and the Company and its subsidiaries have instituted and maintain policies and procedures designed to provide reasonable assurance that such laws, rules and regulations are complied
with. No part of the proceeds of the offering will be used, by the Company or its subsidiaries, directly or indirectly, in violation of the Foreign Corrupt Practices Act of 1977 or the U.K. Bribery Act 2010, each as may be amended, or similar law of
any other relevant jurisdiction, or the rules or regulations thereunder.
9
(y) Compliance with Money Laundering Laws. The operations of the Company and its
subsidiaries are and have been conducted at all times in compliance in all material respects with applicable financial recordkeeping and reporting requirements and the money laundering statutes and the rules and regulations thereunder and any
related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “Money Laundering Laws”) and, except as disclosed in the Registration Statement, the Time of Sale
Information and the Prospectus, no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its subsidiaries with respect to the Money Laundering Laws is pending
or, to the best knowledge of the Company, threatened.
(z) Sanctions. Neither the Company nor any of its subsidiaries nor, to the
knowledge of the Company, any director, officer, agent, employee or affiliate of the Company or any of its subsidiaries (i) is, or is controlled or 50% or more owned by or is acting on behalf of, an individual or entity that is currently the
subject of any sanctions administered or enforced by the United States (including any administered or enforced by the Office of Foreign Assets Control of the U.S. Department of the Treasury, the U.S. Department of State or the Bureau of Industry and
Security of the U.S. Department of Commerce), the United Nations Security Council, the European Union, the United Kingdom (including sanctions administered or enforced by Her Majesty’s Treasury) or other relevant sanctions authority
(collectively, “Sanctions”), or (ii) is located, organized or resident in a country or territory that is, or whose government is, the subject of Sanctions that broadly prohibit dealings with that country or territory. Neither
the Company nor its subsidiaries will, directly or indirectly, use the proceeds of the offering in any manner that would result in a violation of any Sanctions by, or could result in the imposition of Sanctions against, any individual or entity
(including any individual or entity participating in the offering, whether as underwriter, advisor, investor or otherwise).
(aa) No
Broker’s Fees. None of the Company or any of its subsidiaries is a party to any contract, agreement or understanding with any person (other than this Agreement) that would give rise to a valid claim against any of them or any Underwriter
for a brokerage commission, finder’s fee or like payment in connection with the offering and sale of the Securities.
(bb) No
Stabilization. None of the Company, any Guarantor nor any of its or their affiliates has taken, directly or indirectly, any action designed to or that could reasonably be expected to cause or result in any stabilization or manipulation of the
price of the Securities.
(cc) Forward-Looking Statements. No forward-looking statement (within the meaning of Section 27A of
the Securities Act and Section 21E of the Exchange Act) contained or incorporated by reference in the Registration Statement, the Prospectus and the Time of Sale Information has been made or reaffirmed without a reasonable basis or has been
disclosed other than in good faith.
(dd) Statistical and Market Data. Nothing has come to the attention of the Company that has
caused the Company to believe that the statistical and market-related data as disclosed in the Registration Statement, the Prospectus and Time of Sale Information is not based on or derived from sources that are reliable and accurate in all material
respects.
(ee) Sarbanes-Oxley Act. There is and has been no failure on the part of the Company or any of the Company’s
directors or officers, in their capacities as such, to comply in any material respect with any provision of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection therewith, including Section 402 related to loans
and Sections 302 and 906 related to certifications.
10
(ff) Status under the Securities Act. The Company is not an ineligible issuer and is a
well-known seasoned issuer, in each case as defined under the Securities Act, in each case at the times specified in the Securities Act in connection with the offering of the Securities.
(gg) Merger Agreement Representations. To the knowledge of the Company, Lorillard is not in breach of any of its representations or
warranties contained in the Merger Agreement, except for such breaches that would not, individually or in the aggregate, reasonably be expected to permit the Company to terminate the Merger Agreement.
| 4. |
Further Agreements of the Company and the Guarantors |
The Company and each Guarantor
jointly and severally covenants and agrees with each Underwriter that:
(a) Required Filings. The Company will file the final
Prospectus with the Commission within the time periods specified by Rule 424(b) and Rule 430A, 430B or 430C under the Securities Act, will file any Issuer Free Writing Prospectus (including the Term Sheet in the form of Annex B hereto)
to the extent required by Rule 433 under the Securities Act; and will file promptly all reports and any definitive proxy or information statements required to be filed by the Company with the Commission pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of the Prospectus and for so long as the delivery of a prospectus is required in connection with the offering or sale of the Securities; and the Company will pay the registration fees for this
offering within the time period required by Rule 456(b)(1)(i) under the Securities Act (without giving effect to the proviso therein) and in any event prior to the Closing Date.
(b) Delivery of Copies. The Company and the Guarantors will deliver to the Underwriters as many copies of the Registration Statement,
the Prospectus and the Time of Sale Information (including all amendments and supplements thereto) as the Representatives may reasonably request.
(c) Amendments or Supplements. Before finalizing the Prospectus or making, distributing or filing any amendment or supplement to any of
the Registration Statement, the Preliminary Prospectus or the Prospectus or filing with the Commission any document that will be incorporated by reference therein, the Company and the Guarantors will furnish to the Representatives and counsel for
the Underwriters a copy of the proposed Prospectus, amendment, supplement or document, and will not distribute any such proposed Prospectus, amendment or supplement or file any such document with the Commission (unless so required by law) to which
the Representatives reasonably object.
(d) Issuer Free Writing Prospectuses. Before preparing, using, authorizing, approving,
filing or referring to any Issuer Free Writing Prospectus that constitutes an offer to sell or a solicitation of an offer to buy the Securities (other than written communications that are listed on Annex A hereto and the Prospectus), the
Company and the Guarantors will furnish to the Representatives and counsel for the Underwriters a copy of such proposed Issuer Free Writing Prospectus for review and will not use, authorize, approve or refer to any such Issuer Free Writing
Prospectus to which the Representatives reasonably object.
(e) Notice to the Representatives. The Company and the Guarantors will
advise the Representatives promptly, and confirm such advice in writing, (i) of the issuance by any governmental or regulatory authority of any order suspending the effectiveness of the Registration Statement or preventing or suspending the use
of the Preliminary Prospectus or the Prospectus or the initiation or threatening of any proceeding for that purpose; (ii) of the occurrence of any event at any time prior to the completion of the initial offering of the Securities as a result
of which any of the Prospectus, the Time of Sale
11
Information or any Issuer Free Writing Prospectus as then amended or supplemented would include any untrue statement of a material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances existing when such Prospectus, Time of Sale Information or Issuer Free Writing Prospectus is delivered to a purchaser, not misleading; and (iii) of the receipt by the Company or the
Guarantors of any notice with respect to any suspension of the qualification of the Securities for offer and sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and the Company and the Guarantors will use
their reasonable best efforts to prevent the issuance of any such order suspending the effectiveness of the Registration Statement, preventing or suspending the use of the Preliminary Prospectus or the Prospectus or suspending any such qualification
of the Securities and, if any such order is issued, will use their reasonable best efforts to obtain as soon as possible the withdrawal thereof.
(f) Ongoing Compliance. (1) If at any time prior to the completion of the initial offering of the Securities (i) any event
shall occur or condition shall exist as a result of which the Prospectus as then amended or supplemented would include any untrue statement of a material fact or omit to state any material fact required to be stated therein necessary in order to
make the statements therein, in the light of the circumstances existing when the Prospectus is delivered to a purchaser, not misleading or (ii) it is necessary to amend or supplement the Prospectus to comply with law, the Company and the
Guarantors will immediately notify the Underwriters thereof and forthwith prepare and, subject to paragraph (c) in this Section 4, file with the Commission and furnish to the Underwriters, and to such dealers as the Representatives may
designate, such amendments or supplements to the Prospectus, or such documents to be filed with the Commission and incorporated by reference in the Prospectus, as may be necessary so that the statements in the Prospectus, as so amended or
supplemented will not, in the light of the circumstances existing when the Prospectus is delivered to a purchaser, be misleading or so that the Prospectus will comply with law, and (2) if at any time prior to the Closing Date (i) any event
shall occur or condition shall exist as a result of which any of the Time of Sale Information as then amended or supplemented would include any untrue statement of a material fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were made, not misleading or (ii) it is necessary to amend or supplement any of the Time of Sale Information so that any of the Time of Sale Information will not include any
untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, the Company and the Guarantors will immediately
notify the Underwriters thereof and forthwith prepare and, subject to paragraph (c) in this Section 4, furnish to the Underwriters such amendments or supplements to any of the Time of Sale Information (or any document to be filed with the
Commission and incorporated by reference therein) as may be necessary so that the statements in any of the Time of Sale Information as so amended or supplemented will not, in the light of the circumstances under which they were made, be misleading.
(g) Blue Sky Compliance. The Company and the Guarantors will qualify the Securities for offer and sale under the securities or
Blue Sky laws of such jurisdictions as the Representatives shall reasonably request and will continue such qualifications in effect so long as required for the distribution of the Securities; provided that neither the Company nor any
Guarantor shall be required to (i) qualify as a foreign corporation or other entity or as a dealer in securities in any such jurisdiction where it would not otherwise be required to so qualify, (ii) file any general consent to service of
process in any such jurisdiction or (iii) subject itself to taxation in any such jurisdiction if it is not otherwise so subject.
(h)
Clear Market. During the period from the date hereof through the Closing Date, neither the Company nor any Guarantor will, without the prior written consent of the Representatives, offer, sell, contract to sell or otherwise dispose of,
directly or indirectly, or announce the offering of, any debt securities substantially similar to the Securities or securities convertible into such debt securities issued or guaranteed by the Company or the Guarantors, other than in connection with
an offer by the Company to issue debt securities in exchange for debt securities of Lorillard’s subsidiary, Lorillard Tobacco Company.
12
(i) Use of Proceeds. The Company will apply the net proceeds from the sale of the
Securities as described in the Registration Statement, Prospectus and the Time of Sale Information under the heading “Use of Proceeds.”
(j) DTC. The Company and the Guarantors will assist the Underwriters in arranging for the Securities to be eligible for clearance and
settlement through DTC.
(k) No Stabilization. Neither the Company nor any Guarantor will take, directly or indirectly, any action
designed to or that could reasonably be expected to cause or result in any stabilization or manipulation of the price of the Securities.
(l) Filing of Exchange Act Documents. The Company will file promptly all reports and any definitive proxy or information statements
required to be filed by the Company with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act.
| 5. |
Certain Agreements and Representations of the Underwriters |
Each Underwriter hereby
represents and agrees that it has not and will not use, authorize use of, refer to, or participate in the planning for use of, any “free writing prospectus,” as defined in Rule 405 under the Securities Act (which term includes use of any
written information furnished to the Commission by the Company and not incorporated by reference into the Registration Statement and any press release issued by the Company) other than (i) a free writing prospectus that, solely as a result of
use by such Underwriter, would not trigger an obligation of the Company or any Underwriter to file such free writing prospectus with the Commission pursuant to Rule 433, (ii) any Issuer Free Writing Prospectus listed on Annex A or
prepared pursuant to Section 3(c) or Section 4(c) above (including any electronic road show), or (iii) any free writing prospectus prepared by such Underwriter and approved by the Company in advance in writing (each such free writing
prospectus referred to in clauses (i) or (iii), an “Underwriter Free Writing Prospectus”). Notwithstanding the foregoing, the Underwriters may use a term sheet substantially in the form of Annex B hereto without the
consent of the Company; provided, however, that in the case of a term sheet conveying final pricing terms, such term sheet shall contain no “issuer information” (as defined in Rule 433) that is not included in Annex B or was
not included in the Prospectus or a previously filed Issuer Free Writing Prospectus (other than ratings assigned to the Securities by credit rating agencies).
| 6. |
Conditions of Underwriters’ Obligations |
The obligation of each Underwriter to
purchase Securities on the Closing Date as provided herein is subject to the performance by the Company and the Guarantors of their respective covenants and other obligations hereunder and to the following additional conditions:
(a) Registration Compliance; No Stop Order. No order suspending the effectiveness of the Registration Statement shall be in effect, and
no proceeding for such purpose, pursuant to Rule 401(g)(2) or pursuant to Section 8A under the Securities Act shall be pending before or threatened by the Commission; the Prospectus and each Issuer Free Writing Prospectus shall have been timely
filed with the Commission under the Securities Act (in the case of an Issuer Free Writing Prospectus, to the extent required by Rule 433 under the Securities Act) and in accordance with Section 4(a) hereof; and all requests by the Commission
for additional information shall have been complied with to the reasonable satisfaction of the Representatives.
13
(b) Representations and Warranties. The representations and warranties of the Company and
the Guarantors contained herein shall be true and correct on the date hereof and on and as of the Closing Date; and the statements of the Company, the Guarantors and their respective officers made in any certificates delivered pursuant to this
Agreement shall be true and correct on and as of the Closing Date.
(c) No Downgrade. Subsequent to the earlier of (A) the
Time of Sale and (B) the execution and delivery of this Agreement, (i) no downgrading shall have occurred in the rating accorded the Securities or any other debt securities or preferred stock issued or guaranteed by the Company or any of
its subsidiaries by any “nationally recognized statistical rating organization,” as such term is defined by the Commission for purposes of Section 3(a)(62) of the Exchange Act; and (ii) no such organization shall have publicly
announced that it has under surveillance or review, or has changed its outlook with respect to, its rating of the Securities or of any other debt securities or preferred stock issued or guaranteed by the Company or any of its subsidiaries (other
than an announcement with positive implications of a possible upgrading).
(d) No Material Adverse Change. Subsequent to the
execution and delivery of this Agreement, no event or condition of a type described in Section 3(g) hereof shall have occurred or shall exist, which event or condition is not described in the Time of Sale Information (excluding any amendment or
supplement thereto) and the Prospectus (excluding any amendment or supplement thereto or any document filed with the Commission after the date hereof and incorporated by reference therein) and the effect of which in the reasonable judgment of the
Representatives makes it impracticable or inadvisable to proceed with the offering, sale or delivery of the Securities on the terms and in the manner contemplated by this Agreement, the Registration Statement, the Prospectus and the Time of Sale
Information.
(e) Officer’s Certificate. The Representatives shall have received on and as of the Closing Date a certificate
of an executive officer of the Company and of the President, the Secretary, the Treasurer, any Senior Vice President, any Vice President, any Assistant Treasurer or any Assistant Secretary of each of the Guarantors who has specific knowledge of the
Company’s or such Guarantor’s financial matters and is satisfactory to the Representatives (i) confirming that such officer has carefully reviewed the Registration Statement, the Prospectus and the Time of Sale Information and, to the
knowledge of such officer, the representations set forth in Section 3(b) or 3(d) hereof are true and correct, (ii) confirming that the other representations and warranties of the Company in this Agreement are true and correct and that the
Company have complied with all agreements and satisfied all conditions on their part to be performed or satisfied hereunder at or prior to the Closing Date and (iii) to the effect set forth in paragraphs (a), (c) and (d) above (such
officer need not certify as to the judgment of the Representatives with respect to paragraph (c) above); provided that such certification shall be made solely in such officer’s capacity as an officer of the Company and not as an
individual.
(f) Comfort Letters. On the date of this Agreement and on the Closing Date, each of KPMG LLP and Deloitte &
Touche LLP shall have furnished to the Representatives, at the request of the Company and the Guarantors and Lorillard, respectively, letters, dated the respective dates of delivery thereof and addressed to the Underwriters, in form and substance
reasonably satisfactory to the Representatives, containing statements and information of the type customarily included in accountants’ “comfort letters” to underwriters with respect to the financial statements and certain financial
information of the Company and its subsidiaries contained or incorporated by reference in the Registration Statement, the Prospectus and the Time of Sale Information; provided that each such letter delivered on the Closing Date shall use a
“cut-off” date no more than three business days prior to the Closing Date.
14
(g) Opinion and 10b-5 Statement of Counsel for the Company and the Guarantors. Kilpatrick
Townsend & Stockton LLP, counsel for the Company and the Guarantors, shall have furnished to the Representatives, at the request of the Company and the Guarantors, their written opinion and 10b-5 statement, dated the Closing Date and
addressed to the Underwriters, in form and substance reasonably satisfactory to the Representatives, to the effect set forth in Annex C hereto.
(h) Opinion of McDara P. Folan, III. McDara P. Folan, III, Senior Vice President, Deputy General Counsel and Secretary of the Company,
shall have furnished to the Representatives, at the request of the Company and the Guarantors, his written opinion, dated the Closing Date and addressed to the Underwriters, in form and substance reasonably satisfactory to the Representatives, to
the effect set forth in Annex D hereto.
(i) Opinion of Special New Mexico Counsel. Betzer, Roybal & Eisenberg
P.C., special counsel for the Santa Fe Natural Tobacco Company, Inc., shall have furnished to the Representatives, at the request of the Company and the Guarantors, their written opinion, dated the Closing Date and addressed to the Underwriters, in
form and substance reasonably satisfactory to the Representatives, to the effect set forth in Annex E hereto.
(j) Opinion of
Counsel for the Underwriters. The Representatives shall have received on and as of the Closing Date an opinion of McGuireWoods LLP, counsel for the Underwriters, with respect to such matters as the Representatives may reasonably request, and
such counsel shall have received such documents and information as they may reasonably request to enable them to pass upon such matters.
(k) No Legal Impediment to Issuance. No action shall have been taken and no statute, rule, regulation or order shall have been enacted,
adopted or issued by any federal, state or foreign governmental or regulatory authority that would, as of the Closing Date, prevent the issuance or sale of the Securities or the issuance of the Guarantees; and no injunction or order of any federal,
state or foreign court shall have been issued that would, as of the Closing Date, prevent the issuance or sale of the Securities or the issuance of the Guarantees.
(l) Good Standing. The Representatives shall have received on and as of the Closing Date satisfactory evidence of the good standing of
the Company and each of the Guarantors in their respective jurisdictions of organization and their good standing in such other jurisdictions as the Representatives may reasonably request, in each case in writing or any standard form of
telecommunication, from the appropriate governmental authorities of such jurisdictions.
(m) DTC. The Securities shall be eligible
for clearance and settlement through DTC.
(n) Additional Documents. On or prior to the Closing Date, the Company and the
Guarantors shall have furnished to the Representatives such further certificates and documents as the Representatives may reasonably request.
All opinions, letters, certificates and evidence mentioned above or elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory to counsel for the Underwriters.
| 7. |
Indemnification and Contribution |
(a) Indemnification of the Underwriters. The
Company and the Guarantors jointly and severally agree to indemnify and hold harmless each Underwriter, its affiliates, directors and officers and each person, if any, who controls such Underwriter within the meaning of Section 15 of the
Securities Act
15
or Section 20 of the Exchange Act, from and against any and all reasonable losses, claims, damages and liabilities (including, without limitation, reasonable legal fees and other expenses
incurred in connection with any suit, action or proceeding or any claim asserted, as such fees and expenses are incurred), joint or several, that arise out of, or are based upon, (i) any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein not misleading, or (ii) any
untrue statement or alleged untrue statement of a material fact contained in the Prospectus (or any amendment or supplement thereto), any Issuer Free Writing Prospectus or any Time of Sale Information, or caused by any omission or alleged omission
to state therein a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, in each case, except insofar as such losses, claims, damages or liabilities arise out of,
or are based upon, any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with any information relating to any Underwriter furnished to the Company and the Guarantors in writing by such
Underwriter through the Representatives expressly for use therein.
(b) Indemnification of the Company. Each Underwriter agrees,
severally and not jointly, to indemnify and hold harmless the Company, each Guarantor, their respective directors, their respective officers and each person, if any, who controls the Company or any Guarantor within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act to the same extent as the indemnity set forth in paragraph (a) above, but only with respect to any losses, claims, damages or liabilities that arise out of, or are based upon, any untrue
statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with any information relating to such Underwriter furnished to the Company in writing by such Underwriter through the Representatives expressly for
use in any of the Registration Statement, the Prospectus (or any amendment or supplement thereto) any Issuer Free Writing Prospectus or any Time of Sale Information; it being understood that the only such information consists of the following
information in the Prospectus: (i) the list of Underwriters immediately after the first paragraph under the heading “Underwriting”, (ii) the last sentence in the fourth paragraph under the heading “Underwriting”,
(iii) the first paragraph under the sub-heading “Underwriting—Discounts”, (iv) the third sentence under the sub-heading “Underwriting—New Issue of Notes”, and (v) the first paragraph, second paragraph and
(except to the extent any statement is with respect to the Company) the third paragraph under the sub-heading “Underwriting—Short Positions”.
(c) Notice and Procedures. If any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand
shall be brought or asserted against any person in respect of which indemnification may be sought pursuant to either paragraph (a) or (b) above, such person (the “Indemnified Person”) shall promptly notify the person
against whom such indemnification may be sought (the “Indemnifying Person”) in writing; provided that the failure to notify the Indemnifying Person shall not relieve such Indemnifying Person from any liability that it may
have under this Section 7 except to the extent that it has been materially prejudiced (through the forfeiture of substantive rights or defenses) by such failure; and provided, further, that the failure to notify the Indemnifying Person
shall not relieve it from any liability that it may have to an Indemnified Person otherwise than under this Section 7. If any such proceeding shall be brought or asserted against an Indemnified Person and it shall have notified the Indemnifying
Person thereof, the Indemnifying Person shall retain counsel reasonably satisfactory to the Indemnified Person (who shall not, without the consent of the Indemnified Person, be counsel to the Indemnifying Person) to represent the Indemnified Person
and any others entitled to indemnification pursuant to this Section 7 that the Indemnifying Person may designate in such proceeding and shall pay the reasonable fees and expenses of such counsel related to such proceeding, as incurred upon the
receipt by the Indemnifying Person of an invoice therefor. In any such proceeding, any Indemnified Person shall have the right to retain its own counsel, but the reasonable fees and expenses of such counsel shall be at the expense of such
Indemnified Person unless (i) the Indemnifying Person and
16
the Indemnified Person shall have mutually agreed to the contrary; (ii) the Indemnifying Person has failed within a reasonable time to retain counsel reasonably satisfactory to the
Indemnified Person; (iii) the Indemnified Person shall have reasonably concluded that there may be legal defenses available to it that are different from or in addition to those available to the Indemnifying Person; or (iv) the named
parties in any such proceeding (including any impleaded parties) include both the Indemnifying Person and the Indemnified Person and representation of both parties by the same counsel would be inappropriate due to actual or potential differing
interests between them. It is understood and agreed that the Indemnifying Person shall not, in connection with any proceeding or related proceeding in the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in
addition to any local counsel) for all Indemnified Persons, and that all such reasonable fees and expenses shall be reimbursed as they are incurred upon the receipt by the Indemnifying Person of an invoice therefor. Any such separate firm for any
Underwriter, its affiliates, directors and officers and any control persons of such Underwriter shall be designated in writing by the Representatives and any such separate firm for the Company, the Guarantors, their respective directors, their
respective officers and any control persons of the Company and the Guarantors shall be designated in writing by the Company and the Guarantors. The Indemnifying Person shall not be liable for any settlement of any proceeding effected without its
written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the Indemnifying Person agrees to indemnify each Indemnified Person from and against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an Indemnified Person shall have requested that an Indemnifying Person reimburse the Indemnified Person for fees and expenses of counsel as contemplated by this paragraph, the Indemnifying
Person shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 60 days after receipt by the Indemnifying Person of such request, (ii) the Indemnifying
Person shall have received notice of the terms of such settlement at least 10 days prior to such settlement being entered into and (iii) the Indemnifying Person shall not have reimbursed the Indemnified Person in accordance with such
request prior to the date of such settlement. No Indemnifying Person shall, without the written consent of the Indemnified Person, effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Person is or could
have been a party and indemnification could have been sought hereunder by such Indemnified Person, unless such settlement (x) includes an unconditional release of such Indemnified Person, in form and substance reasonably satisfactory to such
Indemnified Person, from all liability on claims that are the subject matter of such proceeding and (y) does not include any statement as to or any admission of fault, culpability or a failure to act by or on behalf of any Indemnified Person.
(d) Contribution. If the indemnification provided for in paragraphs (a) and (b) above is unavailable to an Indemnified
Person or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then each Indemnifying Person under such paragraph, in lieu of indemnifying such Indemnified Person thereunder, shall contribute to the amount paid
or payable by such Indemnified Person as a result of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Guarantors on the one hand and the
Underwriters on the other from the offering of the Securities or (ii) if the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to
in clause (i) but also the relative fault of the Company and the Guarantors on the one hand and the Underwriters on the other in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative benefits received by the Company and the Guarantors on the one hand and the Underwriters on the other shall be deemed to be in the same respective proportions as the net proceeds (before
deducting expenses) received by the Company from the sale of the Securities and the total discounts and commissions received by the Underwriters in connection therewith, in each case as set forth in the table on the cover of the Prospectus, bear to
the aggregate offering price of the Securities. The relative fault of the Company and the Guarantors on the one hand and the Underwriters on the other shall be determined
17
by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied
by the Company and the Guarantors or by the Underwriters and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.
(e) Limitation on Liability. The Company and the Guarantors and the Underwriters agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable
considerations referred to in paragraph (d) above. The amount paid or payable by an Indemnified Person as a result of the losses, claims, damages and liabilities referred to in paragraph (d) above shall be deemed to include, subject to the
limitations set forth above, any reasonable legal or other expenses incurred by such Indemnified Person in connection with any such action or claim subject to the receipt by the Indemnifying Person of an invoice therefor. Notwithstanding the
provisions of this Section 7, in no event shall an Underwriter be required to contribute any amount in excess of the amount by which the total discounts and commissions received by such Underwriter with respect to the offering of the Securities
exceeds the amount of any damages that such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters’ obligations to contribute pursuant to this Section 7 are several in
proportion to their respective purchase obligations hereunder and not joint.
(f) Non-Exclusive Remedies. The remedies provided for
in this Section 7 are not exclusive and shall not limit any rights or remedies that may otherwise be available to any Indemnified Person at law or in equity.
| 8. |
Effectiveness of Agreement |
This Agreement shall become effective upon the execution and
delivery hereof by the parties hereto.
This Agreement may be terminated in the absolute discretion of the
Representatives, by notice to the Company and the Guarantors, if after the execution and delivery of this Agreement and prior to the Closing Date (i) trading generally shall have been suspended or materially limited on the New York Stock
Exchange or the over-the-counter market; (ii) trading of any securities issued or guaranteed by the Company or the Guarantors shall have been suspended on any exchange or in any over-the-counter market; (iii) a general moratorium on
commercial banking activities shall have been declared by federal or New York State authorities; (iv) a material disruption in securities settlement, payment or clearance services in the United States shall have occurred; or (v) there
shall have occurred any outbreak or escalation of hostilities or any change in financial markets or any calamity or crisis, either within or outside the United States, that, in the judgment of the Representatives, is material and adverse and makes
it impracticable or inadvisable to proceed with the offering, sale or delivery of the Securities on the terms and in the manner contemplated by this Agreement, the Registration Statement, the Prospectus and the Time of Sale Information (exclusive of
any amendment or supplement thereto).
| 10. |
Defaulting Underwriter |
(a) If, on the Closing Date, any Underwriter defaults on its
obligation to purchase the Securities that it has agreed to purchase hereunder, the non-defaulting Underwriters may in their
18
discretion arrange for the purchase of such Securities by other persons satisfactory to the Company on the terms contained in this Agreement. If, within 36 hours after any such default by any
Underwriter, the non-defaulting Underwriters do not arrange for the purchase of such Securities, then the Company shall be entitled to a further period of 36 hours within which to procure other persons satisfactory to the non-defaulting Underwriters
to purchase such Securities on such terms. If other persons become obligated or agree to purchase the Securities of a defaulting Underwriter, either the non-defaulting Underwriters or the Company may postpone the Closing Date for up to five full
business days in order to effect any changes that in the opinion of counsel for the Company or counsel for the Underwriters may be necessary in the Registration Statement, the Prospectus and Time of Sale Information or in any other document or
arrangement, and the Company agrees to promptly prepare any amendment or supplement to the Registration Statement, the Prospectus and the Time of Sale Information that effects any such changes. As used in this Agreement, the term
“Underwriter” includes, for all purposes of this Agreement unless the context otherwise requires, any person not listed in Schedule 2 hereto that, pursuant to this Section 10, purchases Securities that a defaulting Underwriter
agreed but failed to purchase.
(b) If, after giving effect to any arrangements for the purchase of the Securities of a defaulting
Underwriter or Underwriters by the non-defaulting Underwriters and the Company as provided in paragraph (a) above, the aggregate principal amount of such Securities that remains unpurchased does not exceed one-eleventh of the aggregate
principal amount of all the Securities, then the Company shall have the right to require each non-defaulting Underwriter to purchase the principal amount of Securities that such Underwriter agreed to purchase hereunder plus such Underwriter’s
pro rata share (based on the principal amount of Securities that such Underwriter agreed to purchase hereunder) of the Securities of such defaulting Underwriter or Underwriters for which such arrangements have not been made.
(c) If, after giving effect to any arrangements for the purchase of the Securities of a defaulting Underwriter or Underwriters by the
non-defaulting Underwriters and the Company as provided in paragraph (a) above, the aggregate principal amount of such Securities that remains unpurchased exceeds one-eleventh of the aggregate principal amount of all the Securities, or if the
Company shall not exercise the right described in paragraph (b) above, then this Agreement shall terminate without liability on the part of the non-defaulting Underwriters. Any termination of this Agreement pursuant to this Section 10
shall be without liability on the part of the Company or the Guarantors.
(d) Nothing contained herein shall relieve a defaulting
Underwriter of any liability it may have to the Company, the Guarantors or any non-defaulting Underwriter for damages caused by its default.
(a) Whether or not the transactions contemplated by this Agreement
are consummated or this Agreement is terminated, the Company and the Guarantors jointly and severally agree to pay or cause to be paid all costs and expenses incident to the performance of their obligations hereunder, including without limitation,
(i) the costs incident to the authorization, issuance, sale, preparation and delivery of the Securities and any taxes payable in that connection; (ii) the costs incident to the preparation, printing of and filing under the Securities Act
of the Registration Statement, the Preliminary Prospectus, any Issuer Free Writing Prospectus, any Time of Sale Information and the Prospectus (including any amendment or supplement thereto) and the distribution thereof; (iii) the costs of
reproducing and distributing each of the Transaction Documents; (iv) the fees and expenses of the Company’s and the Guarantors’ counsel and independent accountants; (v) the fees and expenses incurred in connection with the
registration or qualification and determination of eligibility for investment of the Securities under the laws of such jurisdictions as the Representatives may designate and the preparation, printing and distribution of a Blue Sky Memorandum
(including the related fees and expenses of counsel for the
19
Underwriters); (vi) any fees charged by rating agencies for rating the Securities; (vii) the fees and expenses of the Trustee and any paying agent (including related fees and expenses
of any counsel to such parties); (viii) all expenses and application fees incurred in connection with any filing with, and clearance of the offering by, the Financial Industry Regulatory Authority; and (ix) all expenses incurred by the
Company and the Guarantors in connection with any “road show” presentation to potential investors.
(b) If (i) this
Agreement is terminated pursuant to Section 9, (ii) the Company for any reason fails to tender the Securities for delivery to the Underwriters or (iii) the Underwriters decline to purchase the Securities for any reason permitted under
this Agreement other than Section 10, the Company and the Guarantors jointly and severally agree to reimburse the Underwriters for all out-of-pocket costs and expenses (including the reasonable fees and expenses of their counsel upon the
receipt by the Company of an invoice therefor) reasonably incurred by the Underwriters in connection with this Agreement and the offering contemplated hereby.
| 12. |
Persons Entitled to Benefit of Agreement |
This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective successors and the officers and directors and any controlling persons referred to herein, and the affiliates of each Underwriter referred to in Section 7 hereof. Nothing in this
Agreement is intended or shall be construed to give any other person any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision contained herein. No purchaser of Securities from any Underwriter shall be
deemed to be a successor merely by reason of such purchase.
The respective indemnities, rights of contribution, representations,
warranties and agreements of the Company, the Guarantors and the Underwriters contained in this Agreement or made by or on behalf of the Company, the Guarantors or the Underwriters pursuant to this Agreement or any certificate delivered pursuant
hereto shall survive the delivery of and payment for the Securities and shall remain in full force and effect, regardless of any termination of this Agreement or any investigation made by or on behalf of the Company, the Guarantors or the
Underwriters.
| 14. |
Certain Defined Terms |
For purposes of this Agreement, (a) except where otherwise
expressly provided, the term “affiliate” has the meaning set forth in Rule 405 under the Securities Act; (b) the term “business day” means any day other than a day on which banks are permitted or required
to be closed in New York City; (c) the term “subsidiary” has the meaning set forth in Rule 405 under the Securities Act; and (d) the term “significant subsidiary” has the meaning set forth in
Rule 1-02 of Regulation S-X under the Exchange Act.
(a) Authority of the Representatives. Any action by the
Underwriters hereunder may be taken by Citigroup Global Markets Inc. or J.P. Morgan Securities LLC on behalf of the Underwriters, and any such action taken by Citigroup Global Markets Inc. or J.P. Morgan Securities LLC shall be binding upon the
Underwriters.
(b) Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been
duly given if mailed or transmitted and confirmed by any standard form of telecommunication. Notices to the Underwriters shall be given to the Representatives c/o Citigroup
20
Global Markets Inc., 388 Greenwich Street, New York, New York 10013 (Fax No.: 646-291-1469), Attention: General Counsel and c/o J.P. Morgan Securities LLC, 383 Madison Avenue, New York, New York
10179 (Fax No.: 212-834-6081), Attention: High Grade Syndicate Desk. Notices to the Company and the Guarantors shall be given to them at Reynolds American Inc., 401 North Main Street, Winston-Salem, North Carolina 27101 (Fax No.: 336-741-2998),
Attention: General Counsel.
(c) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of
the State of New York.
(d) Counterparts. This Agreement may be signed in counterparts (which may include counterparts delivered by
any standard form of telecommunication), each of which shall be an original and all of which together shall constitute one and the same instrument.
(e) Amendments or Waivers. No amendment or waiver of any provision of this Agreement, nor any consent or approval to any departure
therefrom, shall in any event be effective unless the same shall be in writing and signed by the parties hereto.
(f) Headings. The
headings herein are included for convenience of reference only and are not intended to be part of, or to affect the meaning or interpretation of, this Agreement
(g) Waiver of Jury Trial. The Company and the Guarantors on the one hand and the Underwriters on the other hereby irrevocably waive, to
the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.
[signature pages to follow]
21
If the foregoing is in accordance with your understanding, please indicate your acceptance of
this Agreement by signing in the space provided below.
|
|
|
| Very truly yours, |
|
| REYNOLDS AMERICAN INC. |
|
|
| By: |
|
/s/ Daniel A. Fawley |
| Name: |
|
Daniel A. Fawley |
| Title: |
|
Senior Vice President and Treasurer |
|
| SANTA FE NATURAL TOBACCO COMPANY, INC.,
as Guarantor |
|
|
| By: |
|
/s/ Daniel A. Fawley |
| Name: |
|
Daniel A. Fawley |
| Title: |
|
Vice President and Treasurer |
|
| R. J. REYNOLDS TOBACCO COMPANY,
as Guarantor |
|
|
| By: |
|
/s/ Daniel A. Fawley |
| Name: |
|
Daniel A. Fawley |
| Title: |
|
Treasurer |
|
| R. J. REYNOLDS TOBACCO CO.,
as Guarantor |
|
|
| By: |
|
/s/ Daniel A. Fawley |
| Name: |
|
Daniel A. Fawley |
| Title: |
|
Vice President and Treasurer |
|
| REYNOLDS FINANCE COMPANY, as
Guarantor |
|
|
| By: |
|
/s/ Caroline M. Price |
| Name: |
|
Caroline M. Price |
| Title: |
|
President |
[SIGNATURE PAGE TO UNDERWRITING AGREEMENT]
|
|
|
| REYNOLDS INNOVATIONS INC., |
| as Guarantor |
|
|
| By: |
|
/s/ Daniel A. Fawley |
| Name: |
|
Daniel A. Fawley |
| Title: |
|
Treasurer |
|
| CONWOOD HOLDINGS, INC., as
Guarantor |
|
|
| By: |
|
/s/ Daniel A. Fawley |
| Name: |
|
Daniel A. Fawley |
| Title: |
|
Vice President and Treasurer |
|
| AMERICAN SNUFF COMPANY, LLC,
as Guarantor |
|
|
| By: |
|
/s/ Daniel A. Fawley |
| Name: |
|
Daniel A. Fawley |
| Title: |
|
Vice President and Treasurer |
|
| ROSSWIL LLC, as
Guarantor |
|
|
| By: |
|
/s/ Daniel A. Fawley |
| Name: |
|
Daniel A. Fawley |
| Title: |
|
Vice President and Treasurer |
|
| R.J. REYNOLDS TOBACCO HOLDINGS, INC.,
as Guarantor |
|
|
| By: |
|
/s/ Daniel A. Fawley |
| Name: |
|
Daniel A. Fawley |
| Title: |
|
Senior Vice President and Treasurer |
[SIGNATURE PAGE TO UNDERWRITING AGREEMENT]
|
|
|
| R. J. REYNOLDS GLOBAL PRODUCTS, INC., |
| as Guarantor |
|
|
| By: |
|
/s/ Daniel A. Fawley |
| Name: |
|
Daniel A. Fawley |
| Title: |
|
Vice President and Treasurer |
|
| RAI SERVICES COMPANY,
as Guarantor |
|
|
| By: |
|
/s/ Daniel A. Fawley |
| Name: |
|
Daniel A. Fawley |
| Title: |
|
Senior Vice President and Treasurer |
[SIGNATURE PAGE TO UNDERWRITING AGREEMENT]
|
|
|
| Accepted as of the date first above written: |
|
| CITIGROUP GLOBAL MARKETS INC. |
|
|
| By: |
|
/s/ Adam D. Bordner |
| Name: |
|
Adam D. Bordner |
| Title: |
|
Vice President |
|
| J.P. MORGAN SECURITIES LLC |
|
|
| By: |
|
/s/ Som Bhattacharyya |
| Name: |
|
Som Bhattacharyya |
| Title: |
|
Vice President |
| For themselves and on behalf of the several Underwriters
listed in Schedule 2 hereto. |
[SIGNATURE PAGE TO UNDERWRITING
AGREEMENT]
SCHEDULE 1
GUARANTORS
|
|
|
| Name |
|
Jurisdiction of Formation |
| Santa Fe Natural Tobacco Company, Inc. |
|
New Mexico |
| R. J. Reynolds Tobacco Company |
|
North Carolina |
| R. J. Reynolds Tobacco Co. |
|
Delaware |
| R. J. Reynolds Global Products, Inc. |
|
Delaware |
| Reynolds Finance Company |
|
Delaware |
| Reynolds Innovations Inc. |
|
North Carolina |
| Conwood Holdings, Inc. |
|
Delaware |
| American Snuff Company, LLC |
|
Delaware |
| Rosswil LLC |
|
Delaware |
| R.J. Reynolds Tobacco Holdings, Inc. |
|
Delaware |
| RAI Services Company |
|
North Carolina |
SCHEDULE 2
UNDERWRITERS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Underwriters |
|
Principal
Amount of
2018 Notes |
|
|
Principal
Amount of
2020 Notes |
|
|
Principal
Amount of
2022 Notes |
|
|
Principal
Amount of
2025 Notes |
|
|
Principal
Amount of
2035 Notes |
|
|
Principal
Amount of
2045 Notes |
|
| Citigroup Global Markets Inc. |
|
$ |
306,250,000 |
|
|
$ |
306,250,000 |
|
|
$ |
245,000,000 |
|
|
$ |
612,500,000 |
|
|
$ |
183,750,000 |
|
|
$ |
551,250,000 |
|
| J.P. Morgan Securities LLC |
|
|
306,250,000 |
|
|
|
306,250,000 |
|
|
|
245,000,000 |
|
|
|
612,500,000 |
|
|
|
183,750,000 |
|
|
|
551,250,000 |
|
| Credit Suisse Securities (USA) LLC |
|
|
100,000,000 |
|
|
|
100,000,000 |
|
|
|
80,000,000 |
|
|
|
200,000,000 |
|
|
|
60,000,000 |
|
|
|
180,000,000 |
|
| Goldman, Sachs & Co. |
|
|
100,000,000 |
|
|
|
100,000,000 |
|
|
|
80,000,000 |
|
|
|
200,000,000 |
|
|
|
60,000,000 |
|
|
|
180,000,000 |
|
| Mizuho Securities USA Inc. |
|
|
100,000,000 |
|
|
|
100,000,000 |
|
|
|
80,000,000 |
|
|
|
200,000,000 |
|
|
|
60,000,000 |
|
|
|
180,000,000 |
|
| RBC Capital Markets, LLC |
|
|
100,000,000 |
|
|
|
100,000,000 |
|
|
|
80,000,000 |
|
|
|
200,000,000 |
|
|
|
60,000,000 |
|
|
|
180,000,000 |
|
| Scotia Capital (USA) Inc. |
|
|
100,000,000 |
|
|
|
100,000,000 |
|
|
|
80,000,000 |
|
|
|
200,000,000 |
|
|
|
60,000,000 |
|
|
|
180,000,000 |
|
| Fifth Third Securities, Inc. |
|
|
40,625,000 |
|
|
|
40,625,000 |
|
|
|
32,500,000 |
|
|
|
81,250,000 |
|
|
|
24,375,000 |
|
|
|
73,125,000 |
|
| Wells Fargo Securities, LLC |
|
|
35,000,000 |
|
|
|
35,000,000 |
|
|
|
28,000,000 |
|
|
|
70,000,000 |
|
|
|
21,000,000 |
|
|
|
63,000,000 |
|
| PNC Capital Markets LLC |
|
|
27,500,000 |
|
|
|
27,500,000 |
|
|
|
22,000,000 |
|
|
|
55,000,000 |
|
|
|
16,500,000 |
|
|
|
49,500,000 |
|
| BNY Mellon Capital Markets, LLC |
|
|
25,000,000 |
|
|
|
25,000,000 |
|
|
|
20,000,000 |
|
|
|
50,000,000 |
|
|
|
15,000,000 |
|
|
|
45,000,000 |
|
| The Williams Capital Group, L.P. |
|
|
9,375,000 |
|
|
|
9,375,000 |
|
|
|
7,500,000 |
|
|
|
18,750,000 |
|
|
|
5,625,000 |
|
|
|
16,875,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
$ |
1,250,000,000 |
|
|
$ |
1,250,000,000 |
|
|
$ |
1,000,000,000 |
|
|
$ |
2,500,000,000 |
|
|
$ |
750,000,000 |
|
|
$ |
2,250,000,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ANNEX A
Time of Sale Information
1.
Preliminary Prospectus Supplement dated June 9, 2015.
2. Term Sheet containing the terms of the Securities, substantially in the form of Annex B.
A-1
ANNEX B
REYNOLDS AMERICAN INC.
$9,000,000,000
2.300%
Senior Notes due 2018 (the “2018 Notes”)
3.250% Senior Notes due 2020 (the “2020 Notes”)
4.000% Senior Notes due 2022 (the “2022 Notes”)
4.450% Senior Notes due 2025 (the “2025 Notes”)
5.700% Senior Notes due 2035 (the “2035 Notes”)
5.850% Senior Notes due 2045 (the “2045 Notes”)
(collectively, the “Notes”)
Pricing Term Sheet
Unless otherwise indicated, terms used but not defined herein have the meanings assigned to such terms in the preliminary prospectus
supplement, dated June 9, 2015 (the “Preliminary Prospectus Supplement”).
|
|
|
| Issuer: |
|
Reynolds American Inc. |
|
|
| Guarantors: |
|
Santa Fe Natural Tobacco Company, Inc. R. J.
Reynolds Tobacco Company R. J. Reynolds Tobacco Co. R. J.
Reynolds Global Products, Inc. Reynolds Finance Company
Reynolds Innovations Inc. Conwood Holdings, Inc.
American Snuff Company, LLC Rosswil LLC
R.J. Reynolds Tobacco Holdings, Inc. RAI Services
Company |
|
|
| Security: |
|
Senior Notes |
|
|
| Principal Amount: |
|
2018 Notes: $1,250,000,000 2020 Notes:
$1,250,000,000 2022 Notes: $1,000,000,000 2025 Notes:
$2,500,000,000 2035 Notes: $750,000,000 2045 Notes:
$2,250,000,000 |
|
|
| Maturity: |
|
2018 Notes: June 12, 2018 2020 Notes: June 12,
2020 2022 Notes: June 12, 2022 2025 Notes: June 12, 2025
2035 Notes: August 15, 2035 2045 Notes: August 15,
2045 |
B-1
|
|
|
|
|
| Coupon: |
|
2018 Notes: 2.300% 2020 Notes: 3.250%
2022 Notes: 4.000% 2025 Notes: 4.450%
2035 Notes: 5.700% 2045 Notes: 5.850% |
|
|
| Issue Price: |
|
2018 Notes: 99.983% 2020 Notes: 99.982%
2022 Notes: 99.861% 2025 Notes: 99.697%
2035 Notes: 99.558% 2045 Notes: 99.476% |
|
|
| Yield to Maturity: |
|
2018 Notes: 2.306% 2020 Notes: 3.254%
2022 Notes: 4.023% 2025 Notes: 4.488%
2035 Notes: 5.738% 2045 Notes: 5.888% |
|
|
| Spread to Benchmark Treasury: |
|
2018 Notes: +120 basis points 2020 Notes: +150
basis points 2022 Notes: +185 basis points 2025 Notes: +205
basis points 2035 Notes: +255 basis points 2045 Notes: +270
basis points |
|
|
| Benchmark Treasury: |
|
2018 Notes: 1.000% due May 15, 2018 2020 Notes:
1.500% due May 31, 2020 2022 Notes: 1.875% due May 31, 2022
2025 Notes: 2.125% due May 15, 2025 2035 Notes: 2.500% due
February 15, 2045 2045 Notes: 2.500% due February 15, 2045 |
|
|
| Benchmark Treasury Price and Yield: |
|
2018 Notes: 99-22 1⁄4 / 1.106%
2020 Notes: 98-25+ / 1.754% 2022 Notes: 98-02+ / 2.173%
2025 Notes: 97-08 / 2.438% 2035 Notes: 86-27+ / 3.188%
2045 Notes: 86-27+ / 3.188% |
|
|
| Interest Payment Dates: |
|
2018 Notes: June 12 and December 12, commencing December 12, 2015
2020 Notes: June 12 and December 12, commencing December 12, 2015
2022 Notes: June 12 and December 12, commencing December 12, 2015
2025 Notes: June 12 and December 12, commencing December 12, 2015
2035 Notes: February 15 and August 15, commencing August 15, 2015 (short first coupon) 2045 Notes: February 15 and August 15, commencing
August 15, 2015 (short first coupon) |
B-2
|
|
|
|
|
| Optional Redemption: |
|
2018 Notes: In whole or in part, at any time prior to the maturity date, at the Issuer’s option, at the greater of (i) 100% of the
principal amount or (ii) discounted present value at the Treasury Rate plus 20 basis points.
2020 Notes: In whole or in part, at any time prior to the maturity date, at the Issuer’s option, at the greater of (i) 100% of the principal amount or
(ii) discounted present value at the Treasury Rate plus 25 basis points. 2022 Notes:
In whole or in part, at any time prior to the maturity date, at the Issuer’s option, at the greater of (i) 100% of the principal amount or (ii) discounted present value at the Treasury Rate plus 30 basis points.
2025 Notes: In whole or in part, at any time prior to March 12, 2025, at the Issuer’s
option, at the greater of (i) 100% of the principal amount or (ii) discounted present value at the Treasury Rate plus 30 basis points. On or after March 12, 2025 (the date that is three months prior to the maturity date), at an amount equal to the
principal amount of the notes redeemed, plus accrued and unpaid interest to the redemption date.
2035 Notes: In whole or in part, at any time prior to February 15, 2035, at the Issuer’s option, at the greater of (i) 100% of the principal amount or
(ii) discounted present value at the Treasury Rate plus 40 basis points. On or after February 15, 2035 (the date that is six months prior to the maturity date), at an amount equal to the principal amount of the notes redeemed, plus accrued and
unpaid interest to the redemption date. 2045 Notes: In whole or in part, at any time
prior to February 15, 2045, at the Issuer’s option, at the greater of (i) 100% of the principal amount or (ii) discounted present value at the Treasury Rate plus 45 basis points. On or after February 15, 2045 (the date that is six months prior
to the maturity date), at an amount equal to the principal amount of the notes redeemed, plus accrued and unpaid interest to the redemption date. |
|
|
| Special Mandatory Redemption: |
|
If the Lorillard merger is not completed on or prior to January 15, 2016, or, if on or prior to such date, the merger agreement is terminated, each series of Notes will be redeemed at a special mandatory redemption price equal to
101% of the aggregate principal amount of the applicable series of Notes, plus accrued and unpaid interest to the special mandatory redemption date. |
B-3
|
|
|
|
|
| Change of Control: |
|
If a change of control repurchase event occurs, unless the Issuer has exercised its right to redeem the Notes as described under “Optional Redemption” or has redeemed the Notes as described under “Special Mandatory
Redemption,” the Issuer will be required to offer to purchase the Notes at a purchase price of 101% of the principal amount thereof, plus accrued and unpaid interest to the date of repurchase. |
|
|
| Trade Date: |
|
June 9, 2015 |
|
|
| Settlement Date: |
|
June 12, 2015 (T+3) |
|
|
| CUSIP/ISIN: |
|
2018 Notes: 761713 BC9 / US761713BC91 2020
Notes: 761713 BE5 / US761713BE57 2022 Notes: 761713 BF2 / US761713BF23
2025 Notes: 761713 BG0 / US761713BG06 2035 Notes: 761713 BA3 /
US761713BA36 2045 Notes: 761713 BB1 / US761713BB19 |
|
|
| Expected Ratings*: |
|
[Ratings Omitted] |
|
|
| Joint Book-Running Managers: |
|
Citigroup Global Markets Inc. J.P. Morgan
Securities LLC Credit Suisse Securities (USA) LLC Goldman,
Sachs & Co. Mizuho Securities USA Inc. RBC Capital
Markets, LLC Scotia Capital (USA) Inc. Fifth Third
Securities, Inc. |
|
|
| Co-Managers: |
|
Wells Fargo Securities, LLC PNC Capital Markets
LLC BNY Mellon Capital Markets, LLC The Williams Capital
Group, L.P. |
| * |
Note: A securities rating is not a recommendation to buy, sell or hold securities and may be subject to revision, suspension or withdrawal at any time. |
The issuer has filed a registration statement (including a prospectus) with the SEC for the offering to which this communication relates. Before you
invest, you should read the prospectus in that registration statement and other documents the issuer has filed with the SEC for more complete information about the issuer and this offering. You may get these documents for free by visiting EDGAR on
the SEC Web site at www.sec.gov. Alternatively, the issuer, any underwriter or any dealer participating in the offering will arrange to send you the prospectus if you request it by calling Citigroup Global Markets Inc. toll-free at 1 (800)
831-9146 or J.P. Morgan Securities LLC collect at 1 (212) 834-4533.
Any disclaimers or other notices that may appear below are not applicable
to this communication and should be disregarded. Such disclaimers or other notices were automatically generated as a result of this communication being sent via Bloomberg or another email system.
B-4
ANNEX C
Form of Opinion and 10b-5 Statement of Kilpatrick Townsend and Stockton LLP,
Counsel for the Company and the Guarantors
(1) The Registration Statement is effective under the Securities Act. The Preliminary Prospectus and the Prospectus were filed with the
Commission pursuant to Rule 424 under the Securities Act within the time periods specified for such filings. To our knowledge, no order suspending the effectiveness of the Registration Statement has been issued, no notice of objection of the
Commission to the use of such Registration Statement or any post-effective amendment thereto pursuant to Rule 401(g)(2) under the Securities Act has been received by the Company or any other registrant and no proceeding for that purpose or pursuant
to Section 8A of the Securities Act against the Company or in connection with the offering is pending or threatened by the Commission.
(2) The Registration Statement and the Prospectus (other than the financial statements and other financial data included or incorporated by
reference therein, as to which such counsel need express no opinion) appear on their face to comply as to form in all material respects with the requirements of the Securities Act.
(3) The Base Indenture and each Supplemental Indenture have been duly authorized, executed and delivered by the Company and each Guarantor
and, assuming due execution and delivery thereof by the Trustee, the Indenture constitutes the valid and legally binding agreement of the Company and each Guarantor enforceable against the Company and each Guarantor in accordance with its terms,
subject to the Enforceability Exceptions; and the Indenture appears on its face to comply in all material respects with the requirements of the Trust Indenture Act and the rules and regulations of the Commission applicable to an indenture that is
qualified thereunder.
(4) The Securities, substantially in the form approved by the pricing committee, as authorized by the Audit and
Finance Committee of the Board of Directors of the Company pursuant to authority delegated by the Board of Directors of the Company, have been duly authorized and executed by the Company and, when duly authenticated and delivered as provided in the
Indenture and paid for as provided in the Underwriting Agreement, will constitute valid and legally binding obligations of the Company enforceable against the Company in accordance with their terms, subject to the Enforceability Exceptions, and will
be entitled to the benefits of the Indenture. Each Guarantee (other than the Guarantee of Santa Fe Natural Tobacco Company, Inc.) has been duly authorized and executed by the applicable Guarantor, and, assuming the due authorization, execution and
delivery of the Guarantee of Santa Fe Natural Tobacco Company, Inc. and the due authentication, issuance and delivery of the Securities underlying the Guarantees as provided in the Indenture upon payment therefor in accordance with the Underwriting
Agreement, each Guarantee (including the Guarantee of Santa Fe Natural Tobacco Company, Inc.) will constitute the valid and legally binding obligation of the applicable Guarantor enforceable against such Guarantor in accordance with its terms,
subject to the Enforceability Exceptions, and entitled to the benefits of the Indenture.
(5) The Underwriting Agreement has been duly
authorized, executed and delivered by the Company and the Guarantors.
(6) The statements made in the Time of Sale Information and the
Prospectus under the captions “Description of the Notes” and “Description of the Debt Securities,” insofar as they purport to constitute summaries of certain terms of the Transaction Documents, fairly summarize such terms in all
material respects.
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(7) The statements in each of the Time of Sale Information and the Prospectus under the heading
“Material United States Federal Income Tax Consequences,” to the extent they constitute summaries of law or regulation or legal conclusions, fairly summarize the matters described therein in all material respects.
(8) The documents incorporated by reference in the Registration Statement, the Time of Sale Information and the Prospectus (other than the
financial statements and other financial information contained therein, as to which such counsel need express no opinion), when filed with the Commission, appear on their face to comply in all material respects with the requirements of the Exchange
Act and the rules and regulations of the Commission thereunder.
(9) None of the Company or any Guarantor is, and after giving effect to
the offering and sale of the Securities and the application of the proceeds thereof as described in the Registration Statement, the Time of Sale Information and the Prospectus will be, an “investment company” or an entity
“controlled” by an “investment company” within the meaning of the Investment Company Act.
(10) The execution,
delivery and performance by the Company and the Guarantors of the Transaction Documents, the issuance and sale of the Securities and the Guarantees and compliance by the Company and the Guarantors with the terms of the Securities and the Guarantees
and the consummation of the transactions contemplated by the Transaction Documents will not result in the violation of any law or statute of the State of New York that, in such counsel’s experience, is customarily applicable to transactions
such as those contemplated by the Transaction Documents.
(11) No consent, approval, authorization, order, registration or qualification
of or with any New York State governmental or regulatory authority, or to our knowledge, any New York State court, is required for the execution, delivery and performance by the Company and the Guarantors of each of the Transaction Documents, the
issuance and sale of the Securities and the Guarantees and compliance by the Company and the Guarantors with the terms thereof and the consummation of the transactions contemplated by the Transaction Documents, except for such consents, approvals,
authorizations, orders and registrations or qualifications as have been obtained under the Securities Act and the Trust Indenture Act and such as may be required under applicable state securities laws in connection with the purchase and distribution
of the Securities by the Underwriters.
(12) The descriptions in the Time of Sale Information and the Prospectus appearing under the
caption “Underwriting” of statutes, and of legal, governmental and regulatory proceedings fairly summarize in all material respects such statutes, legal, governmental and regulatory proceedings.
Such counsel shall also state that they have participated in conferences with representatives of the Company and the Guarantors and with
representatives of their independent accountants and counsel at which conferences the contents of the Registration Statement, the Time of Sale Information and the Prospectus and any amendment and supplement thereto and related matters were discussed
and, although such counsel assumes no responsibility for the accuracy, completeness or fairness of the Registration Statement, the Time of Sale Information, the Prospectus and any amendment or supplement thereto (except as expressly provided above)
and have made no independent check or verification thereof, subject to the foregoing, nothing has come to the attention of such counsel to cause such counsel to believe that the Registration Statement, at the time of its effective date (including
the information, if any, deemed pursuant to Rule 430A, 430B or 430C to be part of the Registration Statement at the time of effectiveness), contained any untrue statement of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, nothing has come to the attention of such counsel to cause such counsel to believe that as of the Time of Sale, that the Time of Sale Information contained any untrue statement of a
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material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not
misleading or that the Prospectus or any amendment or supplement thereto as of its date and the Closing Date contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading (other than, in each case, the Statement of Eligibility and Qualification under the Trust Indenture Act on Form T-1 filed as an exhibit to the Registration Statement, the financial
statements and other financial information contained or incorporated by reference therein, as to which such counsel need express no belief).
In rendering such opinion, such counsel may rely as to matters of fact on certificates of responsible officers of the Company and the
Guarantors, and certificates of public officials that are furnished to the Underwriters.
The opinion of Kilpatrick Townsend and Stockton
LLP shall be rendered to the Underwriters at the request of the Company and the Guarantors and shall so state therein.
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ANNEX D
Form of Opinion of McDara P. Folan III
(1) The Company and each of the Guarantors (other than Santa Fe Natural Tobacco Company, Inc.) have been duly incorporated or formed, as the
case may be, are validly existing and in good standing under the laws of their respective jurisdictions of organization, have the corporate or limited liability company power and authority, as the case may be, to own property and conduct their
respective businesses as described in the Registration Statement, the Time of Sale Information and the Prospectus. The Company and each Guarantor are duly qualified to transact business and are in good standing in each jurisdiction in which the
conduct of their respective businesses or their respective ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing would not, individually or in the aggregate,
have a Material Adverse Effect.
(2) The Company and each of the Guarantors (other than Santa Fe Natural Tobacco Company, Inc.) have full
right, power and authority to execute and deliver each of the Transaction Documents and to perform their respective obligations thereunder; and all action required to be taken for the due and proper authorization, execution and delivery of each of
the Transaction Documents and the consummation of the transactions contemplated thereby has been duly and validly taken.
(3) The
execution, delivery and performance by the Company and the Guarantors of the Transaction Documents, the issuance and sale of the Securities and the Guarantees and compliance by the Company and the Guarantors with the terms of the Securities and the
Guarantees and the consummation of the transactions contemplated by the Transaction Documents will not (a) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of its subsidiaries pursuant to, any indenture, mortgage, deed of trust, loan agreement or other material agreement or instrument to which
the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company or any of its subsidiaries is subject, (b) result in any violation of the
provisions of the charter or by-laws or similar organizational documents of the Company or any of its subsidiaries or (c) result in the violation of any law or statute or, to the best of such counsel’s knowledge, any judgment, order, rule
or regulation of any court or arbitrator or governmental or regulatory authority, except, in the case of clauses (a) and (c) above, for any such conflict, breach, violation or default that would not, individually or in the aggregate, have
a Material Adverse Effect.
(4) To the best of such counsel’s knowledge, no consent, approval, authorization, order, registration or
qualification of or with any court or arbitrator or governmental or regulatory authority is required for the execution, delivery and performance by the Company and the Guarantors of each of the Transaction Documents, the issuance and sale of the
Securities and the Guarantees and compliance by the Company and the Guarantors with the terms thereof and the consummation of the transactions contemplated by the Transaction Documents, except for such consents, approvals, authorizations, orders and
registrations or qualifications as have been obtained under the Securities Act and the Trust Indenture Act and such as may be required under applicable state securities laws in connection with the purchase and distribution of the Securities by the
Underwriters.
(5) After due inquiry, such counsel does not know of legal, governmental or regulatory proceedings, pending or threatened
to which the Company or any of its subsidiaries is or may be a party or to which any of their properties is or may be subject other than proceedings fairly summarized in all material respects in, or incorporated by reference into, the Registration
Statement, Time of Sale
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Information or Prospectus, exclusive of any proceedings that such counsel believes would not have a Material Adverse Effect on the power or ability of the Company or any Guarantor to perform its
obligations under the Transaction Documents or to consummate the transactions contemplated by the Time of Sale Information and the Prospectus.
(6) The descriptions in the Time of Sale Information and the Prospectus of statutes, legal, governmental and regulatory proceedings and
contracts and other documents fairly summarize in all material respects such statutes, legal, governmental and regulatory proceedings and contracts and other documents, other than statutes referenced under the headings “Underwriting” and
“Material U.S. Federal Income Tax Consequences” in the Prospectus.
In rendering such opinion, such counsel may rely as to
matters of fact on certificates of responsible officers of the Company and the Guarantors and certificates of public officials that are furnished to the Underwriters.
The opinion of McDara P. Folan, III, described above shall be rendered to the Underwriters at the request of the Company and the Guarantors
and shall so state therein.
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ANNEX E
Form of Opinion of Special New Mexico Counsel
(1) SFNTC is duly incorporated, validly existing and in good standing under the laws of the State of New Mexico and has full corporate power
and authority to own property and to conduct its business as described in the Registration Statement, the Time of Sale Information and the Prospectus.
(2) SFNTC has the full right, power and authority to execute and deliver the Transaction Documents to which it is a party and to perform its
obligations thereunder; and all action required to be taken for the due and proper authorization, execution and delivery of each of the Transaction Documents to which it is a party and the consummation of the transactions contemplated thereby, has
been duly and validly taken.
(3) The Transaction Documents to which it is a party, including the Guarantee of SFNTC, have been duly
authorized and executed by SFNTC.
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