High River Limited Partnership
000 Xxxxx Xxxxxxx Xxxx
Xxxxx Xxxxx, Xxx Xxxx 00000
November 5, 1995
New Valley Corporation
ALKI Corp.
000 X.X. Xxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. XxXxx
Dear Xxxxxxx:
By executing this letter in the space provided below,
New Valley Corporation, a New York corporation ("New Valley"),
ALKI Corp., a Delaware corporation and a direct wholly-owned
subsidiary of New Valley ("NV Sub") 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 New Valley, NV Sub and High River,
dated October 17, 1995 (the "New Valley Agreement").
2. Section 1(b)(iii) of the New Valley Agreement is
hereby amended to add the following to the end of the subsection:
"; provided, however, that neither High River nor the New
Valley Group shall have any obligation to make a Second
Stage Investment unless and until the New Valley Group gives
notice ("Second Stage Notice") to High River of the New
Valley Group's intention to proceed with and make its Second
Stage Investment."
3. Notwithstanding the terms of Sections 1(c)(ii)-
(iv) of the New Valley Agreement and the letter agreement by and
among New Valley, NV Sub and High River, dated October 17, 1995
(the "Letter Agreement"), following the First Stage Completion
Date and prior to the earlier of (i) such time that New Valley,
NV Sub and any assignee of the foregoing ("New Valley Group")
beneficially own a number of shares of common stock, par value
$.01 per share, of RJR Nabisco Holdings Corp. ("Shares") equal to
or greater than the number of Shares beneficially owned by High
River and its affiliates ("High River Group") (the "Catch Up
Date") and (ii) both New Valley Group and High River Group have
made investments in Shares equal to at least the Second Stage
Investment (the "Second Stage Completion Date"), neither High
River Group nor New Valley Group shall be obligated to make or
cause to be made to the other party:
(i) such transfer of Shares and such payments as would have
been necessary so that, after giving effect to such
transfers and payments, New Valley Group and High River
Group would have acquired the same number of Qualifying
Shares;
(ii) such payments as would have been necessary so that,
after giving effect to such payments, New Valley Group and
High River Group would have invested the same amount in
Qualifying Shares (exclusive of brokerage fees and
commissions incurred in such acquisitions); or
(iii) such transfer of Non-Qualifying Shares or payment for
Non-Qualifying Shares in accordance with Section 1(c)(iii)
of the New Valley Agreement.
In the event that the Catch Up Date precedes the Second Stage
Completion Date and following the Catch Up Date (but prior to the
Second Stage Completion Date) New Valley Group purchases Shares,
then (x) the parties shall calculate the aggregate number and the
average price of all Qualifying Shares acquired after the Catch
Up Date by New Valley Group and High River Group, respectively,
on a periodic basis, with emphasis on doing so when the parties
own a similar number of Shares, and make payments to one another
in immediately available funds, so that after giving effect to
such payments, New Valley Group and High River Group will have
invested the same amount in Qualifying Shares acquired after the
Catch Up Date (exclusive of brokerage fees and commissions
incurred in such acquisitions); (y) New Valley Group may, in
accordance with Section 1(c)(iii) of the New Valley Agreement,
put to High River Non-Qualifying Shares at the Hurdle Price; and
(z) the parties shall follow the even up procedures set forth in
Section 1(c)(v) of the New Valley Agreement. In the event that
following the Catch Up Date, New Valley does not purchase Shares,
then clauses (i)-(iii) of this Paragraph 3 shall remain in
effect.
4. Section 1(d)(i) of the New Valley Agreement is
hereby amended to delete the first two lines in their entirety
and to substitute in lieu thereof the following:
"Except as provided in subpart (ii) of this subparagraph (d)
and except as provided in Section 9(g) of this Agreement,
until the termination of this Agreement,"
5. Notwithstanding Section 1(d) of the New Valley
Agreement, if at any time subsequent to the First Stage
Completion Date but prior to the Second Stage Completion Date,
High River Group beneficially owns more Shares than New Valley
Group, then High River Group may sell, transfer or otherwise
dispose of ("Transfer") Shares beneficially owned by it, provided
that following such Transfer, the number of Shares beneficially
owned by High River Group would not be less than the number of
Shares beneficially owned by New Valley Group, as reflected in
New Valley Group's last written notice to High River Group in
accordance with Section 1(c)(i) of the New Valley Agreement.
6. Section 3(b)(ii)(B) of the New Valley Agreement is
hereby amended to delete the subsection in its entirety and to
substitute in lieu thereof the following:
"(B) a party hereto which is not a member of such selling or
offering Group thereafter terminates this Agreement prior to
or on the tenth day after the first date that such party
becomes aware that such event has occurred,"
7. New Valley Group shall promptly make any payments
due under Section 5(d) of the New Valley Agreement and Section
4(c) of the Agreement among Brooke Group Ltd., BGLS Inc. and High
River dated October 17, 1995 (the "BGL Agreement"). In the event
that High River Group believes that New Valley Group has breached
any of its obligations under Section 5(d) of the New Valley
Agreement or 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 determines that (i) New Valley Group is required to
make a payment pursuant to Section 5(d) of the New Valley
Agreement and/or Section 4(c) of the BGL Agreement, New Valley
Group shall make or cause to be made such payment within twenty
(20) days after receiving the Arbitrator's notice of decision.
In the event that New Valley Group fails to make such payment
within twenty (20) days after receipt of the Arbitrator's notice
of decision, New Valley Group shall immediately pay or cause to
be paid to High River Group an additional sum in the amount of
$50 million.
8. The first sentence of Section 9(g) of the New
Valley Agreement is hereby amended to add the following to the
end of the sentence:
"; and provided, however, that the New Valley Group 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 100% of the shares of each
class of capital stock of such corporation are owned by New
Valley (a "wholly-owned New Valley subsidiary"), either
directly or through one or more wholly-owned New Valley
subsidiaries or (ii) any partnership, the partners of which
are all wholly-owned New Valley subsidiaries; and provided,
further, that no such assignment shall relieve the New
Valley Group of any of its obligations hereunder."
9. In the event that prior to February 1, 1996 (i)
New Valley Group provides High River Group with notice of
termination of the New Valley Agreement or BGL Group provides
High River with notice of termination of the BGL Agreement at a
time when a Termination Event (as defined in the BGL Agreement)
set forth in Section 3(c)(vii) or 3(c)(viii) of the BGL Agreement
has occurred or (ii) High River Group provides New Valley Group
with notice of termination of the New Valley Agreement or
provides BGL Group with notice of termination of the BGL
Agreement at a time when a Termination Event set forth in Section
3(c)(ix)(A) of the BGL Agreement has occurred, New Valley Group
shall not transfer any Shares beneficially owned by New Valley
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
beneficially owned by High River Group exceeds the aggregate
number of Shares beneficially owned by New Valley Group plus BGL
Group (collectively, the "Aggregate XxXxx Shares"), New Valley
Group shall not Transfer any Shares beneficially owned by New
Valley Group for fifteen (15) days following receipt by High
River Group of New Valley Group's or BGL 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, New Valley Group may Transfer any
Shares beneficially owned by New Valley Group.
10. In the event that High River Group provides New
Valley Group with notice of termination of the New Valley
Agreement or provides BGL Group with notice of termination of the
BGL Agreement at a time when a Termination Event under any of
Sections 3(c)(ix)(B) through (E) of the New Valley Agreement has
occurred and the aggregate number of shares beneficially owned by
High River Group exceeds the Aggregate XxXxx Shares, New Valley
Group shall not Transfer any Shares beneficially owned by New
Valley Group in consequence of or in reliance upon such notice of
termination until the earlier of (i) fifteen (15) days following
receipt by New Valley Group or BGL 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.
11. 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
New Valley Agreement, the BGL Agreement and 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:
Name:
Title:
Agreed to and Accepted:
NEW VALLEY CORPORATION
By:
Name:
Title:
ALKI CORP.
By:
Name:
Title:
[Signature page for letter agreement by and among New Valley
Corporation, ALKI Corp. and High River Limited Partnership, dated
November __, 1995]
