AGREEMENT
This AGREEMENT among Brooke Group Ltd., a Delaware corporation ("BGL"),
BGLS Inc., a Delaware corporation and a direct wholly owned subsidiary of BGL
("BGLS"), and High River Limited Partnership, a Delaware limited partnership
("High River"), dated October 17, 0000
X X X X X X X X T H:
WHEREAS, High River, directly or indirectly, and BGL and BGLS, indirectly
through their ownership of stock of New Valley Corporation, a New York
corporation ("New Valley"), are stockholders of RJR Nabisco Holdings Corp., a
Delaware corporation ("RJRN");
WHEREAS, the parties hereto believe that the value of RJRN stockholders'
investment can be substantially increased through a spinoff (the "Spinoff") of
all or substantially all of RJRN's remaining investment in Nabisco Holding
Corp., a Delaware corporation ("Nabisco");
WHEREAS, BGL and BGLS desire to obtain the assistance and advice of High
River with respect to measures designed to effectuate the Spinoff at the
earliest possible date;
WHEREAS, High River is willing to give such assistance and advice to BGL
and BGLS in consideration of the agreements by BGL and BGLS set forth herein;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises set forth herein, the parties hereto, intending to be legally bound,
agree as follows:
Section 1. Solicitation of Other Investors and RJRN Stockholders. (a) Each
of the parties hereto intends to use its best efforts to encourage other
investors to acquire shares of common stock, par value $.01 per share
("Shares"), of RJRN and to persuade such investors and other major stockholders
of RJRN to cooperate with the parties hereto in order to cause RJRN to
effectuate the Spinoff. The parties hereto anticipate that, as an inducement to
such investors and stockholders, the parties hereto may enter into binding
contractual arrangements with such investors and stockholders on terms which
may but need not be
similar to the terms of this Agreement, and that this Agreement may be amended
amended or supplemented from time to time to reflect such arrangements. The
parties hereto agree that, in the event any party hereto proposes to enter into
any such contractual arrangement or so to amend or supplement this Agreement,
the parties hereto shall attempt in good faith to reach mutually acceptable
terms with respect to any such proposed arrangement, amendment or supplement.
(b) BGL and BGLS intend to seek RJRN stockholder approval, either at RJRN's
1996 annual meeting of stockholders (the "1996 Annual Meeting") or at a special
meeting of RJRN stockholders (a "Special Meeting") or through action by written
consent of the RJRN stockholders without a meeting, of any or all of the
following proposals (the "Proposals"): (i) a proposal to recommend that the
Board of Directors of RJRN (the "RJRN Board") cause RJRN to effectuate the
Spinoff (the "Spinoff Proposal"), (ii) a proposal to remove the entire RJRN
Board and to elect as directors of RJRN a slate of nominees who shall be
selected by BGL (the "BGL Nominees") and who shall pledge to carry out the
Spinoff as promptly as practicable following their election (the "Election
Proposal"), (iii) a proposal for the combination, incident to the Spinoff, of
the tobacco business of Xxxxxxx Group Inc., a Delaware corporation ("Xxxxxxx"),
with the tobacco business of RJRN and (iv) a proposal to amend the by-laws of
RJRN in any manner that may be necessary in order to ensure that RJRN
stockholders are permitted to call a Special Meeting and to vote freely at such
Special Meeting or at the 1996 Annual Meeting on any or all of the Proposals, or
in any other way necessary to facilitate the Proposals (the "By-Law Amendment
Proposal"). In connection with the foregoing, BGL and BGLS may seek written
demands or requests from RJRN stockholders ("Stockholder Demands") that a
Special Meeting be held for the purpose of voting on any or all of the
Proposals. BGL and BGLS may also seek written consents from RJRN stockholders
("Written Consents") to adopt any or all of the Proposals.
(c) Prior to the 1996 Annual Meeting, BGL or BGLS shall solicit Written
Consents in favor of the Spinoff Proposal and the By-Law Amendment Proposal. BGL
or BGLS may also, in its sole discretion, conduct solicitations, in addition to
the solicitation described in the preceding sentence, of Stockholder Demands or
Written Consents in favor of the other Proposals, or of proxies to be voted in
favor of one or more of the Proposals at the 1996 Annual Meeting or a Special
Meeting ("Proxies"). In respect of any such solicitation of Stockholder Demands,
Written Consents or Proxies:
(i) BGL or BGLS shall prepare and file with the Securities and
Exchange Commission (the "SEC") and mail to
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RJRN stockholders, a solicitation statement under Regulation 14A of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), relating
to such solicitation (the "Solicitation Statement");
(ii) the Solicitation Statement relating to any solicitation of
Written Consents or Proxies seeking RJRN stockholder approval of the
Election Proposal, or of Stockholder Demands for a Special Meeting at which
RJRN stockholder approval of the Election Proposal will be sought, shall
contain a pledge (the "BGL Pledge") by BGL and BGLS stating, in substance,
that (A) BGL, BGLS and their affiliates (the "BGL Group") will not engage
in any Business Combination (as defined below in Section 3(a)) other than a
Permitted Business Combination (as defined below in Section 3(b)) at any
time (I) prior to the earlier of (x) the 1996 Annual Meeting and (y) the
occurrence of a Termination Event (as defined below in Section 3(c))
described in Section 3(c)(iii) (in the case of a solicitation of
Stockholder Demands), Section 3(c)(iv) (in the case of a solicitation of
Written Consents) or Section 3(c)(v) (in the case of a solicitation of
Proxies), or (II) when BGL Nominees constitute a majority of the RJRN
Board, (B) the BGL Group will not exercise any management control over
Nabisco prior to the consummation of the Spinoff and (C) the BGL Group will
halt its solicitation of Stockholder Demands, Written Consents or Proxies,
as the case may be, if the RJRN Board takes any action described in Section
3(c)(vi); and
(iii) if BGL and BGLS take the actions described in clause (ii) with
respect to any solicitation described in clause (i), then (A) promptly upon
the request of BGL or BGLS, High River shall (and shall cause each of its
affiliates to) execute and deliver to BGL or BGLS a valid Stockholder
Demand, Written Consent or Proxy, as the case may be (and not withdraw such
Stockholder Demand, Written Consent or Proxy), with respect to all of the
Shares and all of the depositary shares representing Series C Conversion
Preferred Stock, par value $.01 per share ("Series C Depositary Shares"),
of RJRN beneficially owned by it and (B) each of BGL and BGLS shall (and
shall cause each of its affiliates to) vote in favor of such Proposal all
Shares and all Series C Depositary Shares beneficially owned by it.
Section 2. Termination. (a) This Agreement shall automatically terminate
upon the earlier of (i) the first anniversary of the date hereof and (ii) the
termination of the Agreement dated as of October 17, 1995 among New Valley, ALKI
Corp., a Delaware corporation ("NV Sub"), and High River (the "New Valley
Agreement") by High River, and any party hereto may
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terminate this Agreement sooner at any time in its sole discretion by written
notice to the other parties hereto, provided, however, that if New Valley or NV
Sub terminates the New Valley Agreement, then BGL and BGLS shall be deemed to
have simultaneously terminated this Agreement.
(b) If this Agreement is terminated pursuant to this Section 2, this
Agreement shall forthwith become null and void, and there shall be no liability
or obligation on the part of any party hereto, except for the obligations of the
parties hereto pursuant to Section 4, Section 5 and Section 8, which shall
remain in full force and effect for the periods set forth therein.
Section 3. Certain Definitions. For purposes of this Agreement, the
following terms shall have the meanings indicated below:
(a) "Business Combination," with respect to any party hereto, means:
(i) Any material sale of capital stock or other equity interests of
RJRN beneficially owned by such party or any of such party's affiliates to
RJRN or any of RJRN's affiliates, other than a sale effected on a
registered securities exchange or through the NASDAQ system that satisfies
the following conditions: (A) such sale is not pursuant to any agreement,
understanding or arrangement with RJRN or any of its affiliates, agents or
representatives, (B) either (I) such party and its affiliates do not know
that RJRN or one of its affiliates is the buyer or (II) such sale is
pursuant to a market repurchase program which has previously been publicly
announced by RJRN or one of its affiliates and (C) such party has given
notice to the other parties at least one day prior to such sale of its
intention to sell such Shares (which notice shall describe the approximate
number of Shares to be sold and the approximate time period in which such
sales will be made, but need not specify the exact number of Shares to be
sold or the exact timing of such sales);
(ii) Any material sale of capital stock or other equity interests of
such party or any of such party's affiliates to RJRN or any of RJRN's
affiliates, other than pursuant to a sale effected on a registered
securities exchange or through the NASDAQ system which is not pursuant to
any agreement, understanding or arrangement with RJRN or any of its
affiliates, agents or representatives and such party and its affiliates do
not know that RJRN or one of its affiliates is the buyer;
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(iii) Any merger, consolidation or combination of such party or any of
such party's material affiliates with RJRN or any of RJRN's affiliates;
(iv) Any material borrowings by such party or any of such party's
affiliates from RJRN or any of RJRN's affiliates, or by RJRN or any of
RJRN's affiliates from such party or any of such party's affiliates, other
than credit in the ordinary course of business substantially in accordance
with industry practice or past practice;
(v) Any sale or other disposition of any material assets or properties
of such party or any of such party's affiliates to RJRN or any of RJRN's
affiliates, or of any material assets or properties of RJRN or any of
RJRN's affiliates to such party or any of such party's affiliates, other
than in the ordinary course of business substantially in accordance with
industry practice or past practice; or
(vi) Any receipt by such party or any of such party's affiliates of
any material benefit, including any material payment in cash or in kind
from RJRN, other than benefits or payments in the ordinary course of
business substantially in accordance with industry practice or past
practice;
except, in each case, for a transaction that is made available to all other
holders of Shares substantially at the same time on substantially equivalent
terms.
(b) "Permitted Business Combination" means any Business Combination which
is either (i) consummated substantially simultaneously with or subsequently to
(A) a dividend or other distribution to RJRN's stockholders of all or
substantially all of RJRN's remaining equity interest in Nabisco or (B) another
transaction with respect to RJRN's investment in Nabisco which would provide
substantially equivalent value to RJRN's stockholders or (ii) approved by the
holders of a majority of the outstanding Shares not then beneficially owned by
the BGL Group or by New Valley and its affiliates (the "New Valley Group").
(c) "Termination Event" means any of the following events:
(i) Any judgment, ruling, order or decree of any court or any other
governmental agency or authority prohibiting, enjoining or restraining, or
which has the effect of prohibiting, enjoining or restraining, any party to
this Agreement or the New Valley Agreement from
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fulfilling its material obligations under this Agreement or the New Valley
Agreement, or which would otherwise render unlawful, the fulfillment of any
party's material obligations under this Agreement or the New Valley
Agreement, except any judgment, ruling, order or decree (A) arising out of
a breach of any representation contained in Section 7 of this Agreement or
in Section 8 of the New Valley Agreement or (B) prohibiting, enjoining or
restraining, or which has the effect of prohibiting, enjoining or
restraining, or otherwise rendering unlawful any Business Combination other
than a Permitted Business Combination (an "Order") is in effect and such
party has not appealed such Order by appropriate proceedings prior to or on
the tenth day after such Order is entered, or any Order has been in effect
for at least 30 days and has not been vacated or reversed, or any
governmental agency or authority has indicated to any party, orally or in
writing, its intention to issue or to seek to obtain an Order (an "Order
Threat"); provided, however, that any such event shall be a Termination
Event only if (x) in the case of any party which is (or a member of whose
Group is) the subject of an Order or Order Threat, such party gives prompt
notice thereof to the other party and thereafter terminates this Agreement
or the New Valley Agreement prior to or on the tenth day after such event
occurs and (y) in the case of a party which is not (and all of the members
of whose Group are not) the subject of such an Order or Order Threat, such
party thereafter terminates this Agreement or the New Valley Agreement
prior to or on the tenth day following the time such party receives notice
thereof from the subject party;
(ii) The Federal Trade Commission (the "FTC") or the Antitrust
Division of the Department of Justice (the "Antitrust Division") has
instituted any action or proceeding seeking to prohibit, enjoin or restrain
any party to this Agreement or the New Valley Agreement from fulfilling its
material obligations under this Agreement or the New Valley Agreement or to
require any such party or any of its affiliates to make any material
divestitures as a condition to the fulfillment of such obligations, or
otherwise to impose any conditions or restrictions which could have a
material adverse effect on any party hereto or on the transactions
contemplated by this Agreement or the New Valley Agreement, or the FTC or
the Antitrust Division has indicated to any such party, orally or in
writing, its intention to institute any such action or proceeding, in each
case other than any action, proceeding, requirement, condition or
restriction with respect to any Business Combination except a Permitted
Business Combination; provided, however, that any such event shall be a
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Termination Event only if the party which is the subject of such action,
proceeding, requirement, condition or restriction thereafter terminates
this Agreement or the New Valley Agreement prior to or on the tenth day
after such event occurs;
(iii) BGL or BGLS has commenced a solicitation of Stockholder Demands
and has failed to receive within 120 days after the date of commencement
the number of validly executed and unwithdrawn Stockholder Demands
necessary to require RJRN to hold a Special Meeting, unless (A) the Special
Meeting has otherwise been called or held or (B) on or prior to such 120th
day, BGL and BGLS have taken all actions necessary to cause one or more of
the Proposals to be brought before the 1996 Annual Meeting;
(iv) BGL or BGLS has commenced a solicitation of Written Consents with
respect to one or more Proposals and has failed to receive within 120 days
after the date of commencement the number of validly executed and
unwithdrawn Written Consents necessary to approve at least one such
Proposal, unless (A) at least one such Proposal has been otherwise approved
at the 1996 Annual Meeting or a Special Meeting or (B) on or prior to such
120th day, BGL and BGLS have taken all actions necessary to cause at least
one such Proposal to be submitted for a stockholder vote at the 1996 Annual
Meeting or a Special Meeting;
(v) A Special Meeting or the 1996 Annual Meeting has been held, and
one or more of the Proposals has been voted upon thereat, the BGL Nominees
have not been elected to constitute a majority of the RJRN directors then
in office and either (A) BGL and BGLS have determined not to pursue any
further judicial review of the results of the vote at the Special Meeting
or the 1996 Annual Meeting, as the case may be, or (B) no such further
judicial review is available;
(vi) The RJRN Board has irrevocably declared a dividend or other
distribution to RJRN's stockholders of all or substantially all of RJRN's
remaining equity interest in Nabisco or has made any other legally binding
commitment to engage in a transaction with respect to RJRN's investment in
Nabisco which would provide substantially equivalent economic benefits to
RJRN's stockholders;
(vii) Any event has occurred, or RJRN has taken any action, which is
reasonably likely to have a material adverse effect on the business,
operations or financial condition of RJRN and its subsidiaries, taken as a
whole;
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(viii) BGL or BGLS determines, reasonably and in good faith, that any
event has occurred as a result of which no solicitation of Stockholder
Demands, Written Consents or Proxies with respect to the Proposals would
have a reasonable chance of success; provided, however, that any such event
shall be a Termination Event only if BGL or BGLS notifies High River of
such determination (which notice shall specify in reasonable detail the
nature of the event which has occurred and the reasons for such
determination) at least five business days prior to terminating this
Agreement or the New Valley Agreement and thereafter BGL or BGLS terminates
this Agreement, and New Valley or NV Sub terminates the New Valley
Agreement, on such fifth business day; and provided that in any challenge
by High River of a termination under this subpart (viii), High River shall
bear the burden, in order to prevail, of establishing that BGL's or BGLS's
determination as first set forth in this subpart (viii) was unreasonable or
was made in bad faith;
(ix) BGL and BGLS (A) fail to nominate the BGL Nominees prior to
November 20, 1995, or such later date as may be designated by RJRN as the
final date for such nominations to be made, for election to the RJRN Board
at the 1996 Annual Meeting in accordance with the procedures set forth in
the most recent version of the by-laws of RJRN filed with the SEC prior to
such date, (B) fail to mail to RJRN stockholders a Solicitation Statement
relating to a solicitation of Written Consents with respect to the Spinoff
Proposal and/or the By-Law Amendment Proposal prior to December 15, 1995,
(C) fail to file the Solicitation Statement relating to the Annual Meeting
preliminarily with the SEC prior to the earlier of (I) February 15, 1996
and (II) the date on which a Solicitation Statement described in clause (B)
of this Section 3(c)(ix) is first mailed to RJRN stockholders, (D) fail to
make the BGL Pledge in any Solicitation Statement relating to any
solicitation of Written Consents or Proxies seeking RJRN stockholder
approval of the Election Proposal, or of Stockholder Demands for a Special
Meeting at which RJRN stockholder approval of the Election Proposal will be
sought, or (E) take any action in violation of the BGL Pledge after it is
made; provided, however, that any such event shall be a Termination Event
only if High River thereafter terminates this Agreement or the New Valley
Agreement prior to or on the tenth day after the first date that High River
becomes aware that such event has occurred, but in no event shall the
failure to terminate this Agreement after the occurrence of any such event
prohibit the termination of this Agreement upon the subsequent occurrence
of any other such event; or
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(x) Either Group sells any Shares under the circumstances described in
clause (x) of the first proviso to the first sentence of Section 1(d)(i) of
the New Valley Agreement, or is required to offer any Shares to another
party pursuant to the first sentence of Section 1(d)(ii) of the New Valley
Agreement; provided, however, that any such event shall be a Termination
Event only if a party to the New Valley Agreement which is not a member of
such Group thereafter terminates the New Valley Agreement prior to or on
the tenth day after the first date that such party becomes aware that such
event has occurred.
Section 4. Certain Fees and Percentage Payments. (a) BGLS shall pay or
cause to be paid to High River the sum of $50 million promptly upon:
(i) any termination of this Agreement by BGL or BGLS at a time when
(A) no Termination Event has occurred and (B) High River is not in material
breach of its obligations (the "High River Obligations") under Section
1(c)(iii) or Section 8 of this Agreement or Section 1(a), the fourth
sentence of Section 1(c)(v), the ninth sentence of Section 1(c)(v) or
Section 1(d)(i) of the New Valley Agreement;
(ii) any termination of this Agreement by High River at a time when
(A) no Termination Event has occurred, (B) BGL or BGLS is in material
breach of its obligations (the "BGL Obligations") under Section 1(c)(iii)
of this Agreement and (C) High River is not in material breach of the High
River Obligations; or
(iii) the consummation of any Business Combination (including any
Permitted Business Combination) with respect to the BGL Group, if:
(A) such Business Combination is consummated prior to the later
of (I) the date of RJRN's annual meeting of stockholders for 1997 and
(II) the first anniversary of the date of termination of this
Agreement (the later of such dates being referred to herein as the
"Reference Date");
(B) a legally binding agreement to enter into such Business
Combination or any other Business Combination is entered into prior to
the Reference Date and such Business Combination is consummated prior
to the second anniversary of the date of such agreement; or
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(C) the BGL Nominees are elected to constitute a majority of the
RJRN Board prior to the Reference Date and such Business Combination
is consummated prior to the fifth anniversary of the date of such
election;
provided, however, that (x) High River shall not be entitled to more than one
fee under this Section 4(a), (y) High River shall not be entitled to any fee
under this Section 4(a) if BGL shall have previously or shall concurrently
become entitled to the fee described in Section 4(b) of this Agreement or if New
Valley shall have previously become entitled to the fee described in Section
5(b) of the New Valley Agreement and (z) the amount of any fee to which High
River may be entitled at any time pursuant to this Section 4(a) shall be reduced
by the amount of any fee (the "New Valley Fee") which High River shall
theretofore have been paid pursuant to Section 5(a) of the New Valley Agreement
and by any percentage payment (the "New Valley Percentage Payment") which High
River shall theretofore have been paid pursuant to Section 5(d) of the New
Valley Agreement, in either of which events BGL or BGLS shall promptly upon
request by New Valley reimburse New Valley for all or any part of the New Valley
Fee or the New Valley Percentage Payment paid by or on behalf of New Valley.
(b) High River shall pay or cause to be paid to BGL the sum of $50 million
promptly upon:
(i) any termination of this Agreement by High River at a time when (A)
no Termination Event has occurred, (B) BGL and BGLS are not in material
breach of any of the BGL Obligations and (C) New Valley and NV Sub are not
in material breach of any of their obligations (the "New Valley
Obligations") under Section 1(a), the fourth sentence of Section 1(c)(v),
the ninth sentence of Section 1(c)(v), Section 1(d)(i) or Section 2 of the
New Valley Agreement;
(ii) any termination of this Agreement by BGL or BGLS at a time when
(A) no Termination Event has occurred, (B) High River is in material breach
of its obligations under Section 1(c)(iii) or Section 8 of this Agreement,
(C) BGL and BGLS are not in material breach of the BGL Obligations and (D)
New Valley and NV Sub are not in material breach of the New Valley
Obligations;
provided, however, that (x) BGL shall not be entitled to more than one fee under
this Section 4(b), (y) BGL shall not be entitled to any fee under this Section
4(b) if High River shall have previously or shall concurrently become entitled
to the fee described in Section 4(a) of this Agreement or the fee described
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in Section 5(a) of the New Valley Agreement and (z) the amount of any fee to
which BGL may be entitled at any time pursuant to this Section 4(b) shall be
reduced by the amount of any fee which New Valley shall theretofore have been
paid pursuant to Section 5(b) of the New Valley Agreement.
(c) Notwithstanding anything in this Agreement or the New Valley Agreement
to the contrary,
(i) if the New Valley Group (as such term is defined in the New Valley
Agreement) or the BGL Group sells any Shares or any Other Securities (as
such term is defined in the New Valley Agreement) of any class or series
prior to the Reference Date, then BGLS shall pay or cause to be paid to
High River promptly upon the consummation of such sale a percentage payment
equal to the product of (A) the Net Profit Override (as such term is
defined in the New Valley Agreement) realized in such sale, multiplied by
(B) a fraction (the "Sale Fraction," which shall be calculated separately
for the Shares and for each class or series of Other Securities), the
numerator of which is the number of Shares or such Other Securities (as the
case may be) held as of the date hereof, or hereafter acquired prior to
such sale, by the BGL Group and the denominator of which is the number of
Shares or such Other Securities (as the case may be) held as of the date
hereof, or hereafter acquired prior to such sale, by the BGL Group and the
New Valley Group; and
(ii) if the New Valley Group or the BGL Group holds any Shares or any
Other Securities of any class or series on the Reference Date, then New
Valley shall pay or cause to be paid to High River promptly upon the
Reference Date a percentage payment equal to the product of (A) the Net
Profit Override existing on the Reference Date in respect of such Shares or
such Other Securities, multiplied by (B) a fraction (the "Holdings
Fraction," which shall be calculated separately for the Shares and for each
class or series of Other Securities), the numerator of which is the number
of Shares or such Other Securities (as the case may be) held as of the date
hereof, or hereafter acquired prior to the Reference Date, by the BGL Group
and the denominator of which is the number of Shares or such Other
Securities (as the case may be) held as of the date hereof, or hereafter
acquired prior to the Reference Date, by the BGL Group and the New Valley
Group;
provided, however, that (x) the amount of any percentage payment to which High
River is entitled at any time under this Section 4(c) shall be reduced by the
product of (1) the amount of any fee which High River shall have theretofore
been paid by or on behalf
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of New Valley under Section 5(a) of the New Valley Agreement or by BGLS under
Section 4(a) of this Agreement, multiplied by (2) the Sale Fraction or the
Holdings Fraction, as the case may be, (y) High River shall not be entitled to
any percentage payment under this Section 4(c) if BGL shall have previously
become entitled to the fee described in Section 4(b) of this Agreement or if New
Valley shall have previously become entitled to the fee described in Section
5(b) of the New Valley Agreement and (z) in the event that the New Valley Group
or the BGL Group realizes a Net Loss (as defined in the New Valley Agreement) on
any sale of any Shares or any Other Securities of any class or series, or that
any Net Loss exists on the Reference Date in respect of any Shares or any Other
Securities of any class or series held by the New Valley Group or the BGL Group
on the Reference Date, then in each such event High River shall repay or cause
to be repaid to BGLS promptly upon receipt of notice from BGLS an amount equal
to the product of (1) the excess, if any, of (X) 20% of such Net Loss over (Y)
the aggregate amount of such percentage payments theretofore received by High
River, multiplied by (2) a fraction, the numerator of which is the aggregate
amount of such percentage payments theretofore paid by or on behalf of BGLS and
the denominator of which is the aggregate amount of such percentage payments
theretofore paid by or on behalf of New Valley and BGLS. BGL and BGLS shall use
their reasonable best efforts to provide to High River (x) once each calendar
week, commencing from the date of this Agreement, a report containing a
reasonably detailed calculation of the number of Shares and the amount of Other
Securities then held by the BGL Group and the Weighted-Average Cost (as defined
in the New Valley Agreement) of such Shares and Other Securities and (y)
promptly after the close of business on each business day on which any Shares
are sold by the BGL Group, a report setting forth the number of Shares or Other
Securities sold since the close of business on the previous business day, the
aggregate price realized in such sales and the aggregate commissions paid in
such sales; provided, however, that BGL and BGLS shall not incur any liability
or suffer any prejudice as a result of its provision of any such estimate.
(d) The parties hereto hereby acknowledge and agree that the arrangements
in Section 4(c) with respect to percentage payments constitute a partnership for
Federal income tax purposes and that the parties hereto shall file income tax
returns in a consistent manner.
(e) Each of BGL and High River shall give notice to the other promptly upon
becoming aware that a Termination Event has occurred or that any event has
occurred that would be a Termination Event but for the giving of notice or the
termination of this Agreement.
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Section 5. Costs and Expenses. (a) Except as set forth in Section 5(b), the
BGL Group shall be responsible for all out-of-pocket costs and expenses of
soliciting Stockholder Demands, Written Consents and Proxies from the
stockholders of RJRN, including without limitation, to the extent related
thereto, (i) all registration and filing fees under the Exchange Act or the
Securities Act of 1933, as amended (the "Securities Act"), (ii) all printing,
messenger, telephone and delivery expenses, (iii) all fees and disbursements of
counsel and (iv) all fees and disbursements of public relations firms, proxy
solicitation firms, investment bankers and other financial advisors.
(b) Notwithstanding the provisions of Section 5(a), each party hereto shall
be solely responsible for (i) all costs and expenses relating to the acquisition
of the Shares beneficially owned or hereafter acquired by such party and its
affiliates, (ii) its internal expenses (including, without limitation, all
salaries and expenses of its officers and employees performing duties relating
to the transactions contemplated by this Agreement) and (iii) all other expenses
incurred by it, other than expenses described in Section 5(a), all of which
shall be the sole responsibility of the BGL Group.
Section 6. Required Filings; Publicity. (a) Each of the parties hereto
shall (and shall cause each of its affiliates to) (i) take all actions necessary
to comply promptly with all legal requirements which may be imposed on such
party (or its affiliates) as a result of this Agreement or any of the
transactions contemplated hereby, and (ii) without limiting the foregoing, make
all required filings pursuant to the Securities Act and the Exchange Act.
(b) To the extent reasonably practicable, the parties hereto shall consult
with each other prior to all public statements or filings to be issued or made
by any of them or their affiliates with respect to this Agreement and the
transactions contemplated hereby.
Section 7. Representations and Warranties. (a) Each of the parties hereto
hereby represents and warrants to the other parties hereto as follows:
(i) Such party is a corporation or partnership duly organized, validly
existing and in good standing under the laws of the state of its
incorporation or organization, and has full corporate or partnership power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder and to consummate the transactions contemplated
hereby.
13
(ii) The execution and delivery by such party of this Agreement and
the performance by such party of its obligations hereunder have been duly
and validly authorized by all necessary corporate or partnership action.
This Agreement has been duly and validly executed and delivered by such
party and constitutes a legal, valid and binding obligation of such party
enforceable against such party in accordance with its terms.
(iii) The execution and delivery by such party of this Agreement do
not, and the performance by such party of its obligations under this
Agreement will not, conflict with or result in a violation or breach of any
of the provisions of the certificate of incorporation, bylaws or other
organizational documents of such party, any law or order applicable to such
party or any of such party's contractual obligations to other persons, in
each case, in any manner that would prevent or materially impede such party
from fulfilling its obligations hereunder.
(b) BGL and BGLS hereby represent and warrant to High River that as of the
date hereof the BGL Group owns beneficially and of record 200 Shares, free and
clear of all liens and encumbrances whatsoever, which Shares were purchased by
the BGL Group at an aggregate cost (including all brokerage fees and commissions
incurred in the acquisition of such Shares) of $5,675, and in respect of which
the BGL Group has not received any dividends, except dividends of $75 received
on July 3, 1995 and dividends of $75 received on October 2, 1995.
(c) High River represents and warrants to BGL and BGLS that High River has
as of the date hereof, and will have on each date prior to the termination of
this Agreement, net partners' equity of at least $22 million.
Section 8. Certain Actions. High River shall not (and shall cause its
affiliates not to) engage in, agree to engage in or propose (either publicly or
to RJRN or any of its affiliates) to engage in, individually or in combination
with any other person, any Business Combination at any time prior to the
earliest of (a) the Reference Date, (b) any termination of this Agreement that
occurs at or after the time when a Termination Event has occurred and (c) any
termination of this Agreement by BGL or BGLS, or of the New Valley Agreement by
New Valley or NV Sub, at a time when High River is not in material breach of the
High River Obligations.
Section 9. Miscellaneous. (a) For purposes of this Agreement, (i) the terms
"affiliate" and "associate" have the meanings assigned to them in Rule 12b-2
promulgated under the
14
Exchange Act, provided, however, that New Valley and NV Sub shall not be deemed
to be "affiliates" or "associates" of the BGL Group for any purpose of this
Agreement, (ii) Xxxxxxx shall be deemed to be a material affiliate of BGL and
BGLS, (iii) the term "shall" is used herein to refer to actions which are
compulsory and thus to create binding obligations among the parties hereto, (iv)
the terms "will," "expect," "expectation," "intend" and "intention," and other
terms of similar import, are used herein solely to refer to the aspirations and
objectives of the parties hereto and thus are not used herein to create binding
obligations among the parties hereto and (v) the term "may" is used herein to
refer solely to conduct which is optional and not compulsory and thus is not
used herein to create binding obligations among the parties hereto.
(b) The parties hereto shall have no rights, power or duties except as
specified herein, and no such rights, powers or duties shall be implied. Nothing
herein shall give any party hereto the power to bind any other party hereto to
any contract, agreement or obligation to any third party.
(c) All notices and other communications hereunder shall be in writing and
shall be deemed given when received by the parties hereto at the following
addresses (or at such other address for any party hereto as shall be specified
by like notice):
If to BGL or BGLS:
000 X.X. Xxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. XxXxx
Telecopy: (000) 000-0000
With a copy to:
Xxxxxxx X. Xxxxxxxxxx, Esq.
Milbank, Tweed, Xxxxxx & XxXxxx
0 Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000-0000
Telecopy: (000) 000-0000
If to High River:
c/o Icahn Associates Corp.
000 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Icahn
Telecopy: (000) 000-0000
15
With a copy to:
Xxxx Xxxxxxx, Esq.
Xxxxxx Xxxxxx Butowsky Xxxxxxx
Shalov & Xxxx
000 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
(d) This Agreement may be executed in two or more counterparts, all of
which shall be considered one and the same agreement.
(e) This Agreement constitutes the entire agreement among the parties
hereto and supersedes all prior agreements and understandings among the parties
hereto with respect to the subject matter hereof.
(f) This Agreement shall be governed and construed in accordance with the
laws of the state of New York applicable to a contract executed and performed in
such State, without giving effect to the conflicts of laws principles thereof.
(g) Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto (whether by operation
of law or otherwise) without the prior written consent of the other parties
hereto; provided, however, that High River may assign any of its rights and
interests hereunder to (i) any corporation incorporated in any state of the
United States or in the District of Columbia if at least 98.5% of the shares of
each class of capital stock of such corporation are owned by Xxxx X. Icahn (a
"wholly-owned Icahn subsidiary"), either directly or through one or more
wholly-owned Icahn subsidiaries or (ii) any partnership whose partners are all
wholly-owned Icahn subsidiaries; and provided further that no such assignment
shall relieve High River of any of its obligations hereunder. Subject to the
preceding sentence, this Agreement shall be binding upon, inure to the benefit
of and be enforceable by the parties hereto and their respective successors and
assigns.
(h) This Agreement may be amended, supplemented or modified only by a
written instrument duly executed by or on behalf of each party hereto. No waiver
of any term or condition in this Agreement shall be effective unless set forth
in writing and signed by or on behalf of the waiving party. No waiver by any
party hereto of any term or condition of this Agreement shall
16
be deemed to be or construed as a waiver of the same or any other term or
condition of this Agreement on any future occasion.
(i) The terms and provisions of this Agreement are intended solely for the
benefit of the parties hereto and their successors and permitted assigns and are
not intended to confer upon any other person any rights or remedies hereunder,
except that the provisions of clause (z) of the proviso to Section 4(a), as they
relate to the reimbursement obligations of BGL and BGLS, are expressly for the
benefit of New Valley and shall be enforceable by New Valley against BGL and
BGLS (but not against High River) by appropriate proceedings in any court of
competent jurisdiction.
(j) In the event that any party hereto prevails in any action or proceeding
alleging a breach of this Agreement, such party shall be entitled to recover all
reasonable attorney's fees and other costs of prosecuting such action or
proceeding and, in addition, shall be entitled to receive simple interest on any
damages awarded in such action or proceeding at the rate of 10% per annum from
the date of such breach.
17
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their representatives thereunto duly authorized, all as of the date
first above written.
BROOKE GROUP LTD.
By: /s/ XXXXXXX X. XXXXX
-------------------------------
Name: Xxxxxxx X. XxXxx
Title: Chairman, President and
Chief Executive Officer
BGLS INC.
By: /s/ XXXXXXX X. XXXXX
-------------------------------
Name: Xxxxxxx X. XxXxx
Title: Chairman, President and
Chief Executive Officer
HIGH RIVER LIMITED PARTNERSHIP
By: /s/ XXXXXX X. XXXXXXX
-------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President
[Signature page to Agreement among Brooke Group Ltd., BGLS Inc.
and High River Limited Partnership dated October 17, 1995]
18
High River Limited Partnership
000 Xxxxx Xxxxxxx Xxxx
Xxxxx Xxxxx, Xxx Xxxx 00000
November 5, 1995
Brooke Group Ltd.
BGLS Inc.
000 X.X. Xxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. XxXxx
Dear Xxxxxxx:
By executing this letter in the space provided below, Brooke Group Ltd., a
Delaware corporation ("BGL"), BGLS Inc., a Delaware corporation and a direct
wholly-owned subsidiary of BGL ("BGLS") and High River Limited Partnership, a
Delaware limited partnership ("High River"), each hereby agree as follows:
1. All capitalized terms used herein and not otherwise defined shall have
the meanings ascribed to such terms in the Agreement by and among BGL, BGLS and
High River, dated October 17, 1995 (the "BGL Agreement").
2. Section 1(a) of the BGL Agreement is deleted in its entirety and all
reference thereto in the BGL Agreement is likewise deleted.
3. Section 1(c)(ii)(B) of the BGL Agreement is hereby amended to delete the
subsection in its entirety and to
substitute in lieu thereof the following:
"(B) Prior to the consummation of the Spinoff, the BGL Group will (I)
not directly or indirectly exercise any management control over
Nabisco or Nabisco, Inc., a Delaware corporation ("Nabisco, Inc."),
(II) refrain from becoming involved in the ordinary course of business
of Nabisco or Nabisco, Inc. and (III) use its best efforts to ensure
that
a majority of the directors of Nabisco and Nabisco, Inc. consists of
individuals who are presently members of the board of directors of
Nabisco and Nabisco, Inc., respectively and"
4. Section 3(c)(ix)(C) of the BGL Agreement is hereby amended to delete the
subsection in its entirety and to substitute in lieu thereof the following:
"(C) fail to file the Solicitation Statement relating to the Annual
Meeting preliminarily with the SEC prior to the earlier of (I)
February 15, 1996 and (II) sixty (60) days following the record date
for the solicitation of Written Consents with respect to the Spinoff
Proposal and the By-Law Amendment Proposal,"
5. In the event that prior to February 1, 1996 (i) the BGL Group provides
High River Group with notice of termination of the BGL Agreement or New Valley
Group (as defined below) provides High River Group with notice of termination of
the Agreement by and among New Valley Corporation, ALKI Corp. and High River,
dated October 17, 1995 (the "New Valley Agreement") at a time when a Termination
Event set forth in Section 3(c)(vii) or 3(c)(viii) of the BGL Agreement has
occurred or (ii) High River Group provides BGL Group with notice of termination
of the BGL Agreement or provides New Valley Group with notice of termination of
the New Valley Agreement at a time when a Termination Event set forth in Section
3(c)(ix)(A) of the BGL Agreement has occurred, BGL Group shall not transfer any
Shares beneficially owned by BGL Group until February 1, 1996 in consequence of
or in reliance upon such notice of termination. If the notice of termination
specified in clause (i) of the preceding sentence is provided after January 16,
1996, and the aggregate number of shares of common stock, par value $.01 per
share, of RJR Nabisco Holdings Corp. ("Shares") beneficially owned by High River
Group exceeds the aggregate number of Shares beneficially owned by (A) New
Valley Corporation, ALKI Corp. and any assignee of the foregoing ("New Valley
Group") plus (B) BGL Group (collectively, the "Aggregate XxXxx Shares"), BGL
Group shall not Transfer any Shares beneficially owned by BGL Group for fifteen
(15) days following receipt by High River Group of BGL Group's or New Valley
Group's notice of termination; provided, however, that on such date not before
February 1, 1996 that the aggregate number of Shares beneficially owned by High
River Group is equal to or less than the Aggregate
XxXxx Shares, and thereafter, BGL Group may Transfer any Shares beneficially
owned by BGL Group.
2
6. In the event that High River Group provides BGL Group with notice of
termination of the BGL Agreement or provides New Valley Group with notice of
termination of the New Valley Agreement at a time when a Termination Event under
any of Sections 3(c)(ix)(B) through (E) of the BGL Agreement has occurred and
the aggregate number of shares beneficially owned by High River Group exceeds
the Aggregate XxXxx Shares, BGL Group shall not Transfer any Shares beneficially
owned by BGL Group in consequence of or in reliance upon such notice of
termination until the earlier of (i) fifteen (15) days following receipt by BGL
Group or New Valley Group of High River Group's notice of termination specified
in the preceding sentence and (ii) the date that the aggregate number of Shares
beneficially owned by High River Group is equal to or less than the Aggregate
XxXxx Shares.
7. BGLS shall promptly make any payments due under Section 4(c) of the BGL
Agreement. In the event that High River Group believes that BGLS has breached
any of its obligations under Section 4(c) of the BGL Agreement, the parties
shall promptly follow the procedures set forth in Section 1(c)(v) of the New
Valley Agreement in order to resolve the dispute. If the Arbitrator (as defined
in the New Valley Agreement) determines that BGLS is required to make a payment
pursuant to Section 4(c) of the BGL Agreement, BGLS shall make or cause to be
made to High River Group such payment within twenty (20) days after receiving
the Arbitrator's notice of decision. In the event that BGLS fails to make such
payment within twenty (20) days after receipt of the Arbitrator's notice of
decision, BGLS shall immediately pay or cause to be paid to High River Group an
additional sum in the amount of $50 million.
8. Section 9(k) shall be added to the BGL Agreement to read as follows:
"(k) Anything in this Agreement to the contrary notwithstanding, High
River shall have no obligation with respect to the selection of the BGL
Nominees or the solicitation of Written Consents or Proxies."
9. Nothing herein contained shall be construed to otherwise abrogate the
rights and obligations of the parties to this letter agreement with respect to
all other provisions of the
3
BGL Agreement, the New Valley Agreement and the letter agreement by and among
New Valley, ALKI Corp. and High River, dated October 17, 1995 (the "Letter
Agreement").
If the foregoing reflects your understanding, please sign this letter
below. Upon your execution hereof, this letter agreement will become a binding
contract between us.
Very truly yours,
HIGH RIVER LIMITED PARTNERSHIP
By: RIVERDALE INVESTORS CORP., INC.
Its: General Partner
By: /s/ XXXXXX X. XXXXXXX
---------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President
Agreed to and Accepted:
BROOKE GROUP LIMITED
By: /s/ XXXXXXX X. XXXXX
---------------------------------
Name: Xxxxxxx X. XxXxx
Title: Chairman, President and
Chief Executive Officer
BGLS INC.
By: /s/ XXXXXXX X. XXXXX
---------------------------------
Name: Xxxxxxx X. XxXxx
Title: Chairman, President and
Chief Executive Officer
[Signature page for letter agreement by and among Brooke Group
Limited, BGLS Inc. and High River Limited Partnership, dated
November 5, 1995]
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