CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (the "Agreement"), is made and
entered into as of this 1st day of November, 1996 (the
"Effective Date"), by and between High River Limited
Partnership, a Delaware limited partnership with an address at
c/o Icahn Associates Corp., 000 Xxxxx Xxxxxxx Xx., Xxxxx Xxxxx,
XX 00000 ("Company"), Xxxx X. Icahn ("Icahn") and Xxxxxx
Xxxxxxxx, with an address at 0000 Xxxx xx Xxxxxx Xxxxx,
Xxxxxxxx Xxx, Xxxxxxx 00000 ("Xxxxxxxx").
W I T N E S S E T H :
WHEREAS, The Company and Icahn wish to retain Xxxxxxxx to
provide consulting services to them and their affiliates
("Icahn Shareholders") who beneficially own shares of common
stock ("Shares") of RJR Nabisco Holdings Corp. ("RJR") and
Xxxxxxxx desires to render such services to the Company and
Icahn Shareholders upon the terms and subject to the conditions
set forth herein.
NOW THEREFORE, in consideration of the mutual premises and
covenants herein contained, Company, Icahn and Xxxxxxxx hereby
agree as follows:
1. INDEPENDENT CONTRACTOR CONSULTING ARRANGEMENT
The Company and Icahn will retain Xxxxxxxx and Xxxxxxxx
will provide services to the Company and the Icahn Shareholders
as an independent contractor, and not as an employee, on the
terms and conditions hereinafter set forth.
2. TERM
This Agreement shall commence on the Effective Date and
shall expire immediately at the close of business on the
Meeting Date, as such term is defined below.
3. CONSULTING SERVICES
(a) Xxxxxxxx will provide consulting services to the
Company and the Icahn Shareholders in connection with a proxy
fight to be brought by the Icahn Shareholders and conducted by
Xxxxxxxx against the management of RJR in connection with the
1997 RJR Annual Meeting of Stockholders ("1997 Annual Meeting")
or, if requested by the Company at a special meeting of
stockholders of RJR called prior to the 1997 Annual Meeting,
for a purpose which includes the election of directors in order
to elect at least a majority of the Board of Directors of RJR.
(b) Prior to the 1997 Annual Meeting, Xxxxxxxx shall be
engaged in providing consulting services , including conducting
the proxy fight in support of the efforts of the Icahn
Shareholders to nominate Xxxxxxxx and others to be elected to
the Board of Directors of RJR at the 1997 Annual Meeting (the
"Xxxxxxxx Slate"), with the understanding that the Icahn
Shareholders will vote all of their Shares of RJR for the
election of the Xxxxxxxx Slate, and, if the Xxxxxxxx Slate is
successful, Xxxxxxxx will seek to (i) be elected as the new
Chief Executive Officer of RJR, (ii) over-see the proposed
spin-off of Nabisco Holdings Corp.("Nabisco") if approved by
the new Board of Directors of RJR and (iii) participate in
attempting to effect an overall legislative settlement of
tobacco litigation on an industry-wide basis. Members of the
Xxxxxxxx Slate will be selected by Xxxxxxxx. The number of the
nominees on the Xxxxxxxx Slate will equal or exceed the number
of directors of RJR. Should the Company desire, the Xxxxxxxx
Slate may be put forward for election at a special meeting of
stockholders of RJR, if called, in which case the references in
this document to the 1997 Annual Meeting will relate to the
special meeting in lieu of or in addition to the 1997 Annual
Meeting. All costs and expenses of the proxy contest shall be
borne by the Company or, failing that, by Icahn and Xxxxxxxx
shall have no liability or obligation with respect to such
expenses. In connection with the provision of services
hereunder, Xxxxxxxx shall have no authority, either implied or
explicit, to bind Icahn or the Company or any of his or its
affiliates in any way to any arrangement, understanding or
otherwise without Icahn's prior written approval. Xxxxxxxx
agrees that, in the event that the Xxxxxxxx Slate constitutes
a majority of the Board of Directors immediately following the
1997 Annual Meeting, Xxxxxxxx will not seek to have RJR issue
to him during the period from the date of the 1997 Annual
Meeting through the second anniversary thereof, a compensation
package which exceeds a base salary, with no bonuses permitted,
of $2 million per annum, the right to obtain no more than
300,000 performance stock units on the same basis as those
available to Xxxxxx Xxxxxxxxx, chief executive officer of RJR,
on the date hereof and options to purchase not in excess of
500,000 Shares at a price of not less than $30 per share, 50%
of which would be exercisable after one year from the Meeting
Date, as defined herein, and the other 50% of which options
would be exercisable after two years from the Meeting Date and
which vest in Xxxxxxxx coextensively with their exercisability.
Xxxxxxxx further agrees that the agreement contained in the
immediately previous sentence shall be disclosed in the proxy
material sent to RJR stockholders in connection with the proxy
contest for the 1997 Annual Meeting. The proxy material will
also disclose that the members of the Xxxxxxxx Slate will be
seeking, if they are elected as directors, the same salary and
benefit package presently available to non-employee directors
of RJR, except that, with respect to options, each successful
nominee will (i) seek to be awarded a one time option to
purchase 50,000 Shares at not less than $30 per Share, which
option will lapse at the end of two years and (ii) not be
eligible for annual grants of options prior to the second
anniversary of the grant of the 50,000 options. Such proxy
material shall also disclose that the Company and its
affiliates will seek reimbursement for costs and expenses of
conducting the proxy fight in the event that the Xxxxxxxx Slate
is successful. Xxxxxxxx intends that the proxy material in
support of the Xxxxxxxx Slate shall indicate that it is the
intention of the Xxxxxxxx Slate, if elected as directors, to
(A) appoint Xxxxxxxx the new Chief Executive Officer for
RJR,(B) seek to spin off Nabisco to stockholders of RJR (C)
raise the RJR dividend to $2.00 and maintain it even after the
spin-off, (D) seek to develop with representatives of the
executive branch of the government, plaintiffs attorneys,
members of Congress and representatives of other tobacco
companies, among others, an industry-wide legislative
settlement of current and future tobacco litigation claims and
(E) not adopt a shareholder rights plan, commonly known as a
poison pill, in RJR or any of its component companies,
including Nabisco.
(c) No Sale Agreement. The Company and Icahn agree that, from
and after the date hereof and through the date on which the
1997 Annual Meeting of RJR is held (on which the ballots for
the election of directors are cast) ("Meeting Date"), neither
the Icahn Shareholders nor the Company nor any of their or its
affiliates shall sell any Shares owned by them ("No Sale
Agreement"). The No Sale Agreement shall terminate and be of
no further force and effect in the event that Xxxxxxxx abandons
his direction of the proxy contest or his services are
terminated as set forth in Section 5 of this Agreement.
Xxxxxxxx agrees that, should he own or acquire any shares of
RJR stock or options to acquire such Shares, he will not
dispose of any such Shares or options prior to the Meeting
Date.
(d) Provision of Consulting Services. Xxxxxxxx agrees
that he will devote his full time and attention to the
consulting services to be rendered by Xxxxxxxx hereunder during
normal working days and on weekends and evenings when
reasonably required by the proxy contest. Xxxxxxxx'x services
shall be rendered in a manner consistent with the manner in
which such services are customarily rendered by similarly
situated consultants. It is recognized and agreed that
Xxxxxxxx shall provide such consulting services principally
from his residence in Florida, but he recognizes that he may be
required, in order to effect the goals of the proxy contest, to
travel frequently outside the State of Florida in connection
with providing the services hereunder.
(e) Other Activities. It shall not be a violation of
this Agreement for Xxxxxxxx to (a) serve on corporate, civic or
charitable boards or committees of not-for-profit
organizations, provided, however, that the time devoted to such
service and to attention to his personal commitments shall not
require more than an average of 2 business days per month or
(b) manage his personal investments, so long as such investment
activities do not significantly interfere with the performance
of Xxxxxxxx'x duties in accordance with this Agreement.
4. COMPENSATION AND RELATED MATTERS
(a) Base Consulting Fee. During the term hereof,
Xxxxxxxx shall receive a base consulting fee of $333,333.33 per
calendar month (or any portion of a calendar month), payable in
advance, with the first such payment to be made on the
Effective Date and each subsequent month commencing with the
first day of the calendar month next following the Effective
Date; provided, however, that if, for any reason, this
Agreement shall be terminated (other than as stated in Section
5(d) hereof) prior to Xxxxxxxx having received payments of base
consulting fees aggregating less than $2,000,000, Xxxxxxxx
shall receive, upon termination of this Agreement, an
additional payment equal to the positive difference obtained by
subtracting from $2,000,000,the aggregate amount of base
consulting fees received by Xxxxxxxx under the Agreement prior
to its termination; provided further, however, that if Xxxxxxxx
shall have received base consulting fees in respect of the
first six months from and after the Effective Date, he shall,
if this Agreement or his provision of services hereunder shall
not have been terminated, continue to render his consulting
services until the 1997 Annual Meeting and shall not be
compensated for the seventh month after the Effective Date but
shall, commencing with the first day of the eighth month after
the Effective Date and until the date of the 1997 Annual
Meeting, receive a base consulting fee of $285,714.29 per
calendar month or pro rata for any portion thereof if the
Annual Meeting is scheduled to be finally held other than at
the end of a calendar month. In no event shall Xxxxxxxx be
required to render services hereunder nor shall the Company and
Icahn be required to continue to retain Xxxxxxxx to render such
services, in each case, beyond April 30, 1998.
(b) Other Payments. In the event that the Company or
any of Icahn Shareholders or any of its or their affiliates
violates the No Sale Agreement, then Xxxxxxxx shall be paid by
the Company, or ,if not paid on demand when due, by Icahn, in
lieu of any other damages as a result of such violation and as
the sole remedy therefor, promptly after such violation, (i)
the excess, if any, of $2,000,000 over the aggregate amount of
base consulting fees received by Xxxxxxxx pursuant to
subsection 4(a) hereof prior to such violation, and (ii) the
Xxxxxxxx Profits, as such term is hereinafter defined, with
respect to the Shares which are sold in violation of the No
Sale Agreement. In addition to the foregoing, whether or not
there occurs a violation of the No Sale Agreement, Xxxxxxxx
shall be entitled to be paid by the Company, or ,if not paid on
demand when due, by Icahn, the Xxxxxxxx Profits with respect to
any Shares which are sold by the Company, any of the Icahn
Shareholders or any of its or their affiliates during the
period commencing on the day following the Meeting Date through
the date which is same day of the month as the Meeting Date but
is (A) if the Xxxxxxxx Slate is not elected to be the majority
of the Board of Directors of RJR, in the sixth month following
the month of the Meeting Date or (B) if the Xxxxxxxx Slate is
elected to be the majority of the Board of Directors of RJR, in
the twelfth month following the month of the Meeting Date
("Final Date"). Such payment shall be made promptly after such
Shares are sold. In addition, Xxxxxxxx shall be entitled to be
paid, promptly after the Final Date, Xxxxxxxx Profits with
respect to Shares held by the Company and the Icahn
Shareholders and any of its or their affiliates on the Final
Date. The Xxxxxxxx Profits shall be determined by subtracting
from the actual aggregate sales proceeds ("Proceeds Realized")
(after deducting commissions and other selling charges, if any)
of the Shares sold or deemed to be sold, the product of (i) the
Average Per Share Cost, as hereinafter defined, and (ii)the
number of Shares sold or deemed to be sold and dividing the
remainder by twenty (20). The Average Per Share Cost shall be
determined by taking the aggregate purchase price, including
commissions, of all Shares owned by the Company and the Icahn
Shareholders on the date hereof, which the Company and Icahn
represent and warrant for the purposes of making the
determination of the Xxxxxxxx Profits, is 19,929,800 ("Held
Shares") and adding thereto the aggregate purchase price,
including commissions, of any Shares purchased between the date
hereof and the Meeting Date ("Purchased Shares") dividing the
sum by the sum of the number of Held Shares plus the number of
Purchased Shares and to the quotient adding an amount (computed
on the date of any sale of Shares which requires the
computation of Xxxxxxxx Profits) equal to the quotient obtained
by dividing the costs theretofore incurred by the Company and
any of its affiliates, including Xxxxxxxx'x base consulting
fees, in conducting the proxy contest, whether or not such
costs have been paid for, by the sum of the number of Held
Shares plus the number of Purchased Shares theretofore
purchased. The Company and Icahn hereby represent and warrant
that, for purposes of determining Xxxxxxxx Profits, as of the
date hereof the average purchase price of each Held Share,
including commissions, is $30.04. Any Shares held on the Final
Date shall be deemed to be sold on the Final Date and the per
share Proceeds Realized with respect to Shares deemed to be
sold on the Final Date shall be deemed to be the average
closing price on the consolidated tape as reported for the last
20 business days prior to the Final Date (less commissions
which would have been paid had the shares been sold assuming
commissions at the same average rate as the commissions paid
with respect to the purchase of the Held Shares).
Notwithstanding the foregoing, no compensation shall be paid to
or due to Xxxxxxxx under this Subsection 4(b), whether or not
the Company or any of its affiliates breaches the No Sale
Agreement, if Xxxxxxxx abandoned his direction of the proxy
contest or if his services have been terminated under the
circumstances set forth in Section 5(c) hereof, or if his
services have been terminated as a result of his death or
disability (as defined in Section 5 hereof) prior to three
months from the Effective Date, in the case of death, and if
the Disability Commencement Date, as defined in Section 5(b),
occurs prior to the expiration of three months from the
Effective Date, in the case of disability. If Xxxxxxxx'x
services are terminated as a result of his death or disability
(as defined in Section 5 hereof) on or after the date which is
three months after the Effective Date, in the event of death,
or, in the event of termination for disability, the Disability
Commencement Date occurs after three months from the Effective
Date, then Xxxxxxxx shall be entitled to Xxxxxxxx Profits as
determined under this subsection 4(b), provided, however, that
if Xxxxxxxx'x termination as a result of death or disability
occurs such that he is entitled to Xxxxxxxx Profits but occurs
prior to the Meeting Date, then all Held Shares and Purchased
Shares not previously sold and then held by the Company, the
Icahn Shareholders and their respective affiliates shall be
deemed to be sold on the date of Xxxxxxxx'x death or the date
of his termination for disability and the aggregate Proceeds
Realized with respect to Shares sold or deemed sold by the
Company or the Icahn Shareholders or their affiliates as of the
date of Xxxxxxxx'x termination as a result of death or
disability shall be the lesser of (i) the Price Realized as
determined under this subsection 4(b) without regard to this
sentence, or (ii) the average closing price of such shares on
the consolidated tape as reported for the last 15 business days
prior to the date of Xxxxxxxx'x death or the date on which his
termination for disability is first publicly announced and the
first 15 business days following the date of Xxxxxxxx'x death
or the date on which his termination for disability is first
publicly announced.
(c) Expenses. Xxxxxxxx shall be entitled to receive from
Company or ,if not paid on demand when due, from Icahn prompt
reimbursement following Xxxxxxxx'x written accounting to the
Company therefor of all reasonable expenses incurred by
Xxxxxxxx in performing his services hereunder, provided,
however, that incurrence of expenses that exceed an aggregate
of $20,000 in any calendar month shall require the prior
written consent of Icahn.
(d) Legal Expenses. Xxxxxxxx shall be entitled to
receive prompt reimbursement from the Company or, if not paid
on demand when due, Icahn for all reasonable expenses,
including reasonable attorney's fees at their usual hourly
rates, incurred in connection with the negotiation,
preparation, interpretation, and enforcement of this Agreement,
including any expenses reasonably incurred in enforcing the
obligations of the Company or Icahn hereunder whether through
litigation or otherwise.
5. TERMINATION
(a) Death. Xxxxxxxx'x services hereunder shall terminate
upon his death. If Xxxxxxxx'x services are terminated as a
result of his death on or after the date which is three months
from the Effective Date, then Xxxxxxxx shall be entitled to
Xxxxxxxx Profits as determined under subsection 4(b).
(b) Disability. If Xxxxxxxx becomes physically or
mentally disabled or incapacitated during his employment
hereunder to such an extent that he shall be unable to perform
any and all of his duties reasonably expected to be performed
hereunder (the date of the commencement of the disability or
incapacity being the "Disability Commencement Date") and such
disability or incapacity shall have continued for a period of
at least four (4) consecutive weeks, then, notwithstanding the
provisions of Section 2 of this Agreement, Company may, at any
time after the end of such period of four (4) consecutive
weeks, and during the continuance of such disability or
incapacity terminate Xxxxxxxx'x services hereunder. During the
period of disability and prior to termination for disability
Xxxxxxxx shall continue to be paid his consulting fee in
accordance with this Agreement. If Xxxxxxxx'x services are
terminated as a result of his disability and the Disability
Commencement Date is more than three months from the Effective
Date hereof, then Xxxxxxxx shall be entitled to Xxxxxxxx
Profits as determined under subsection 4(b). If there is any
dispute between the parties as to Xxxxxxxx'x ability to perform
his duties hereunder due to physical or mental impairment, the
date of the determination of disability hereunder shall not be
earlier than the date on which Xxxxxxxx is certified as having
a disability (within the meaning of this subsection 5(b)) by an
independent physician selected by Xxxxxxxx (or, if Xxxxxxxx is
unable to make such selection, by any adult member of
Xxxxxxxx'x immediate family) with the agreement of the Company
but if they cannot agree, then by an independent physician
selected by the physician selected by Xxxxxxxx and by the
physician selected by the Company.
(c) Cause. Company may terminate Xxxxxxxx'x services
hereunder at any time for cause ("Cause"). For purposes of
this agreement, the sole Causes upon which Xxxxxxxx'x services
may be terminated shall be his habitual neglect (neglect to be
determined based on the failure of Xxxxxxxx to meet the
standards of performance set forth in Section 3(d) and 3(e)
hereof) in connection with his consulting duties hereunder,
including the conduct of the proxy contest, the termination of
the No Sale Agreement by reason of Xxxxxxxx'x abandonment of
his direction of the proxy contest or any indictment by a
governmental authority charging that Xxxxxxxx has committed a
felony or other act involving moral turpitude.
(d) Effect of Termination. If Xxxxxxxx'x services are
terminated by the Company as a result of Death, Disability or
for Cause, in accordance with the provisions of this Section 5,
then Xxxxxxxx shall thereafter receive no further compensation
pursuant to Section 4(a) or any Other Payments of any kind
pursuant to Section 4(b) hereof, except with respect to the
specific payments pursuant to Section 4(b) hereof in the event
of termination as a result of death or disability which
termination takes place following the expiration of in excess
of three months from the Effective Date in the case of death
or, in the case of termination for disability in the event the
Disability Commencement Date occurs after the expiration of
three months from the Effective Date.
(e) Termination for Good Reason. Xxxxxxxx may at any
time cease providing services hereunder for good reason ("Good
Reason"). For purposes hereof, Good Reason shall mean (i) any
failure by the Company or Icahn to comply with any of their
material obligations to Xxxxxxxx under this Agreement, other
than any failures not occurring in bad faith which are remedied
reasonably promptly after receipt of written notice thereof
from Xxxxxxxx, (ii) any termination by the Company of
Xxxxxxxx'x services hereunder, other than as permitted pursuant
to Section 4 hereof, prior to the expiration of the term of
this Agreement, or (iii) any action taken or the failure to
take action required by the Agreement to be taken, by the
Company or Icahn which substantially impairs Xxxxxxxx'x ability
to perform the services contemplated by this Agreement which
action taken or failed to be taken is not cured by the Company
or Icahn reasonably promptly after receipt of written notice
thereof from Xxxxxxxx. Any written notice given by Xxxxxxxx
intended to comply with the provisions of this Section 5(e)
shall be required to contain a statement by Xxxxxxxx that the
failure to act reasonably promptly to cure the deficiency cited
therein will be a basis for Xxxxxxxx to exercise his right
under this Section 5(e) to cease providing service hereunder
for Good Reason. If Xxxxxxxx ceases to provide services
hereunder for Good Reason, then Xxxxxxxx shall receive (i) the
excess, if any, of $2,000,000 over the aggregate amount of base
consulting fees theretofore received by Xxxxxxxx pursuant to
subsection 4(a) hereof, and (ii) Xxxxxxxx Profits with respect
to all Purchased Shares as determined pursuant to subsection
4(b) hereof. Xxxxxxxx shall have no liability hereunder upon
ceasing to provide services for Good Reason.
6. CONFIDENTIALITY, ETC
(a) Restrictions. Unless otherwise required by law or
judicial process, and except as may be relevant to the subject
matter of and reasonably necessary to disclose in connection
with litigation brought by Xxxxxxxx to enforce the obligations
of the Company or Icahn under this Agreement, Xxxxxxxx shall
retain in confidence during the Term of this Agreement and
after termination of Xxxxxxxx'x services hereunder or after he
determines to cease providing service hereunder, whether or not
permitted pursuant to this Agreement, all information known to
Xxxxxxxx concerning Company, Icahn and its and his affiliates,
and its and his and their respective affiliates' respective
businesses unless he reasonably believes that such information
is not confidential or until such information is publicly
disclosed by Company or Icahn or otherwise becomes publicly
disclosed other than through Xxxxxxxx'x actions. Prior to any
intended disclosure by Xxxxxxxx of such information, whether or
not in the event that Xxxxxxxx is required by judicial process
to disclose any such information, Xxxxxxxx shall promptly give
the Company notice thereof in order to afford the Company the
opportunity to contest the validity of such intended
disclosure.
(b) No Adequate Remedy at Law. The parties acknowledge
that: (i) the provisions of this Section 6 are essential to
protect the business and goodwill of the Company and Icahn; and
(ii) the foregoing restrictions are under all of the
circumstances reasonable and necessary for the protection of
the Company and its business and Icahn and his businesses. In
the event that Xxxxxxxx shall commit a breach of any of the
provisions of this Section 6, or in the event that any such
breach is threatened by Xxxxxxxx, and such breach does, or such
threatened breach would, cause irreparable harm to the Company
or Icahn, in addition to and without limiting or waiving any
other remedies available to the Company and Icahn at law or in
equity, the Company and Icahn shall be entitled to immediate
injunctive relief in any court, domestic or foreign, having the
capacity to grant such relief, to restrain such breach or
threatened breach and to enforce the provisions of this Section
6. Xxxxxxxx acknowledges that it is impossible to measure in
money the damages that will accrue to the Company and Icahn in
the event that Xxxxxxxx breaches or threatens to breach any of
the provisions of this Section 6 and thereby causes irreparable
harm to the Company or Icahn, and in the event that the Company
or Icahn shall institute any action or proceeding to enforce
those provisions by seeking injunctive relief, Xxxxxxxx hereby
waives and agrees not to assert and shall not use as a defense
thereto the claim or defense that the Company or Icahn has an
adequate remedy at law. The foregoing shall not prejudice the
Company's right to require Xxxxxxxx to account for and pay
over to the Company and Icahn the amount of any actual damages
incurred by the Company as a result of any such breach.
7. ASSIGNMENT
This Agreement is a personal contract and, except as
specifically set forth herein, the rights and interest of
Xxxxxxxx herein may not be sold, transferred, assigned, pledged
or hypothecated, provided however that Xxxxxxxx may assign his
rights to payment hereunder. The rights and obligations of the
Company and Icahn hereunder will be binding upon and run in
favor of the successors and assigns of the Company and Icahn.
8. NOTICE
For further purpose of this Agreement, notices, demands
and all other communications provided in the Agreement shall be
in writing and shall be deemed to have been duly given when
received by the recipient thereof whether hand delivered, by
telecopy, sent by overnight mail of the United States Post
Office or overnight courier, if mailed by United States
registered mail, return receipt requested, postage prepaid or
otherwise, and shall be addressed as follows:
If to Xxxxxxxx:
Xxxxxx Xxxxxxxx
X.X. Xxx 0000
Xxxxxxxx Xxx, Xxxxxxx 00000
FAX:
(Or if by overnight courier)
Apt. A108, Players Club
0000 Xxxx xx Xxxxxx Xxxxx
Xxxxxxxx Xxx, Xxxxxxx 00000
with a copy to:
X. Xxxx Xxxxxxx, Esquire
Xxxxxxxxxxxx Xxxx & Xxxxxxxxx
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
FAX: 000-000-0000
If to Company:
c/o Icahn Associates Corp.
000 Xxxx 00xx Xxxxxx, 00xx xxxxx
Xxx Xxxx, Xxx Xxxx 00000
FAX 000-000-0000
If to Xxxx X. Icahn :
c/o Icahn Associates Corp.
000 Xxxx 00xx Xxxxxx-00xx Xxxxx
Xxx Xxxx, X.X. 00000
FAX 000-000-0000
in each case with a copy to:
Xxxx Xxxxxxx, Esq.
Xxxxxx Xxxxxx Butowsky Xxxxxxx Xxxxxx & Xxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
FAX 000-000-0000
or to such other address as any party may have furnished to the
other in writing in accordance herewith, except that notices of
change of address shall be effective only upon receipt.
9. SURVIVORSHIP
The respective rights and obligations of the parties
hereunder, including without limitation the rights and
obligations set forth in Section 12 hereof, shall survive any
termination of this Agreement to the extent necessary for the
intended preservation of such rights and obligations.
10. REPRESENTATIONS AND WARRANTIES
(a) Xxxxxxxx represents and warrants that (i) his
execution of this Agreement and his performance of his duties
and responsibilities under this Agreement shall not violate or
result in a breach of the terms of any material agreement to
which he is a party or by which he is bound, (ii) he has not
entered into any other agreement or understanding which would
in any way affect the optimal performance of his duties
hereunder and (iii)he in good faith believes himself to be in
excellent health as of the date hereof and knows of nothing
which would tend to indicate otherwise.
(b) The Company and Icahn represent and warrant that the
Company (i) is a limited partnership duly organized, validly
existing and in good standing under the laws of its state of
formation; (ii) is duly qualified to do business and is in good
standing under the laws of each jurisdiction where its
ownership or lease of property or the conduct of its business
requires such qualification (except for jurisdictions in which
such failure to so qualify would not have a material adverse
effect on the business, assets, operations, prospects or
financial or other condition of the corporation or on the
corporation's ability to perform its obligations under this
Agreement ("Material Adverse Effect")); (iii) has the requisite
corporate power and authority to conduct its business as now,
heretofore and proposed to be conducted; (iv) is in compliance
with its agreement of limited partnership.
(c) The Company and Icahn represent and warrant that the
performance of this Agreement is within the powers of the
Company, has been duly authorized by all necessary partnership
action is not in conflict with the terms of any partnership
agreement, certificate of partnership of the Company, and does
not result in a breach of or constitute a default under any
material contract, obligation, indenture or other instrument to
which the Company is party or by which the Company is bound and
when this Agreement is executed and delivered by the parties
hereto it will constitute a binding obligation of the Company
enforceable against the Company in accordance with its terms.
11. REMEDIES
(a) Costs of Litigation. The losing party will pay
all expenses incurred by the winning party, including but not
limited to reasonable attorneys' fees and court costs, arising
from litigation between the parties over this Agreement.
(b) Prejudgment Interest. If the Company or, failing
same, Icahn shall fail to pay Xxxxxxxx the consulting fees or
any other amounts to which Xxxxxxxx is entitled under this
Agreement at the time when such amounts are due, in addition to
any other remedies available to Xxxxxxxx with respect to such
failure to pay such amounts, the Company and Icahn shall be
obligated to pay Xxxxxxxx interest on such unpaid amounts until
paid at the rate of 10% per annum or, if lower, the maximum
rate permitted by applicable law.
(d) Joint and Several Liability. The obligations under
this Agreement ("Obligations") of the Company and Icahn (the
Company and Icahn referred to as a "Liable Person" for purposes
of this subsection) shall be the joint and several obligations
of each Liable Person. Xxxxxxxx may bring a separate action or
actions on each, any, or all of the Obligations against any
Liable Person, whether action is brought against the other
Liable Persons or whether the other Liable Persons are joined
in such action. In the event that the Company fails to make
any payment of any Obligations on or before the due date
thereof, Icahn immediately shall cause such payment to be made
or each of such Obligations to be performed, kept, observed, or
fulfilled.
12. INDEMNIFICATION OF XXXXXXXX
(a) Right to Indemnification. If Xxxxxxxx is made a
party or is threatened to made a party to or is involved in or
called as a witness in any Proceeding (as hereinafter defined)
he shall be indemnified and held harmless by the Company or if
not paid on demand when due, by Icahn for all expenses incurred
by Xxxxxxxx (including, but not limited to, judgments, fines,
excise taxes or penalties and amounts paid or to be paid in
settlement) incurred by Xxxxxxxx in connection therewith. For
purposes of this Section 12, a "Proceeding" is an action, suit
or proceeding, whether civil, criminal, administrative or
investigative, and any appeal therefrom which relates to or
results from the provision of services hereunder by Xxxxxxxx or
relates to the conduct of the proxy contest by the Company,
Icahn, or its or his affiliates, or by Xxxxxxxx with respect to
the nomination of the Xxxxxxxx Slate at the 1997 Annual
Meeting.
(b) Expenses. Expenses, including reasonable
attorneys' fees, incurred by Xxxxxxxx in defending or otherwise
being involved in a Proceeding shall be paid by the Company or,
if not paid on demand when due, by Icahn in advance of the
final disposition provided that Xxxxxxxx shall undertake in
writing to the Company (the "Undertaking") to repay such amount
if it shall ultimately be determined that he is not entitled to
be indemnified by the Company or Icahn. Xxxxxxxx shall not be
obligated to repay pursuant to the Undertaking until the final
determination of any pending Proceedings in a court of
competent jurisdiction concerning the right of Xxxxxxxx to be
indemnified or the obligation of Xxxxxxxx to repay pursuant to
the Undertaking.
(c) Protection of Rights. If a claim by Xxxxxxxx
under subsection 12(a) is not promptly paid in full by the
Company or by Icahn after a written claim has been received by
the Company or Icahn, or if expenses pursuant to subsection
12(b) have not been promptly advanced after a written request
by Xxxxxxxx for such advancement accompanied by the Undertaking
has been received by the Company or Icahn, Xxxxxxxx may at any
time thereafter bring suit against the Company or Icahn to
recover the unpaid amount of the claim or the advancement of
expenses. If successful, in whole or in part, in such suit,
Xxxxxxxx shall also be entitled to be paid the reasonable
expense thereof (including without limitation attorneys' fees).
(d) General Provisions. The provisions of this
Section 12 shall be applicable to all Proceedings commenced or
continuing after the date hereof, provided such Proceedings
arise out of events, acts or omissions which occurred after the
date hereof and prior to the close of business at the 1997
Annual Meeting (or if the term of this Xxxxxxxx'x consultancy
is extended in writing to a date subsequent to the Meeting
Date, then to such subsequent date) and shall inure to the
benefit of the heirs, executors and administrators of Xxxxxxxx.
The defense of Xxxxxxxx in any Proceeding shall be by counsel
chosen by the Company. Xxxxxxxx shall not be entitled to
indemnification for any settlement of any Proceeding unless
such settlement shall have been approved in writing by the
Company. The indemnifying parties shall not be entitled to
settle any Proceeding for which indemnification is sought
hereunder unless such settlement provides for a full and
complete release of Xxxxxxxx for any claim which is the subject
of such proceeding. Xxxxxxxx shall give the Company written
notice of the commencement or threatened commencement of any
proceeding for which he intends to seek indemnification
hereunder promptly after he knows or reasonably should know of
such commencement or threatened commencement. Nothing herein
shall be construed to provide Xxxxxxxx with the right to be
indemnified in respect of any Proceeding in the event he is
found in such proceeding to have engaged in a violation of any
provision of state or federal law in connection with his duties
hereunder unless he can demonstrate that his action was taken
in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the Company in regard
to seeking to cause the election of the Xxxxxxxx Slate to the
Board of Directors of RJR. In addition, nothing herein shall
be construed to provide Xxxxxxxx with the right to be
indemnified in respect of any Proceeding in the event his
participation in the Proceeding results from his gross
negligence or willful misconduct or from acts by him which have
or would given the Company grounds to terminate his services
for Cause, as provided in Section 5(c).
(e) Waiver of Jury Trial. THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVE ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT,
AND CONSENT TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF
AS IS DEEMED APPROPRIATE BY THE COURT.
13. MISCELLANEOUS
(a) Entire Agreement. The parties hereto agree that this
Agreement contains the entire understanding and agreement
between them, and that the provisions of this Agreement may not
be modified, waived, or discharged unless such waiver,
modification or discharge is agreed to in writing, signed by
the parties hereto. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject
matter hereof, have been made by either party that are not set
forth expressly in this Agreement.
(b) Prior Agreements. Upon effectiveness of this
Agreement, this Agreement shall supersede any other agreements
pursuant to which Xxxxxxxx was or might have been entitled to
receive payments or benefits from Company.
(c) Waiver. No waiver by either party hereto at any time
of any breach by the other party hereto of, or compliance with,
any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior
or subsequent time.
(d) Choice of Law. THE VALIDITY, INTERPRETATION,
CONSTRUCTION AND PERFORMANCE OF THIS AGREEMENT SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF. IN
ADDITION, THE FEDERAL COURTS IN THE STATE OF NEW YORK AND THE
COURTS OF THE STATE OF NEW YORK SHALL HAVE EXCLUSIVE
JURISDICTION TO RESOLVE ALL MATTERS ARISING OUT OF THIS
AGREEMENT, AND NO ACTION SEEKING TO DO SO SHALL BE BROUGHT IN
ANY OTHER FORUM. EACH PARTY HERETO SHALL NOT OBJECT TO THE
VENUE OF ANY SUCH COURTS RESIDING IN THE CITY OF NEW YORK.
14. VALIDITY
The invalidity or unenforceability of any provisions of
this Agreement shall not affect the validity or enforceability
of any other provision or provisions of this Agreement, which
shall remain in full force and effect provided that the
material benefits of this agreement remain in effect to each
party notwithstanding the invalidity or unenforceability of any
provision of this Agreement.
15. COUNTERPARTS
This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original
but all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, Company and each Icahn Shareholder
that is a corporation or partnership has caused its name to be
ascribed to this Agreement by its duly authorized
representative, and Icahn and Xxxxxxxx has each executed this
Agreement as of the date and the year first above written.
High River Limited Partnership
By Riverdale LLC, General Partner
By: _________________________
Authorized Signatory
________________________
Xxxx X. Icahn
________________________
Xxxxxx Xxxxxxxx
[signature page of Consulting Agreement between Xxxxxxxx, High
River Limited Partnership and Xxxx X. Icahn]
