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EXHIBIT 10(d)
AGREEMENT
This AGREEMENT among 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"), dated October 17, 1995
W I T N E S S E T H:
WHEREAS, each of the parties hereto,
directly or indirectly, is a stockholder 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, New Valley and NV Sub 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 New Valley and NV Sub (the
"New Valley Group") in consideration of the agreements by
the New Valley Group 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. Investment. (a) High River
hereby agrees to purchase from New Valley and NV Sub, and
New Valley and NV Sub hereby agree to sell, assign,
transfer and deliver to High River, at the Closing (as
defined below), 1,611,550 shares of common stock, par
value $.01 per share ("Shares"), of RJRN (the "Purchased
Shares"). The closing of the purchase and sale of the
Purchased Shares (the "Closing") shall occur at 10:00 a.m.
on October 23, 1995 (the "Closing Date") at the offices of
Milbank, Tweed, Xxxxxx & XxXxxx, One Xxxxx Manhattan
Plaza, New York, New York. At the Closing, High River
will pay to New Valley $50,976,921 (the "Purchase Price"),
by wire transfer of
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immediately available funds to an account designated by
New Valley, against delivery to High River of the
Purchased Shares in a commercially customary manner such
that, upon the payment of the Purchase Price for such
Purchased Shares, High River shall have acquired good and
marketable title to such Shares, free and clear of all
encumbrances and liens whatsoever.
(b) It is the intention of the New
Valley Group and High River to cooperate to invest a
minimum of at least $300 million ($150 million each) in
Shares, and they may further increase their investment to
a minimum of at least $500 million in Shares ($250 million
each), in accordance with the following plan:
(i) Each of the New Valley Group and
High River and its affiliates (the "High River
Group") is expected to make a minimum equity
investment in Shares of $75 million (the "First
Stage Equity Investments").
(ii) In addition to their respective
First Stage Equity Investments, each of the New
Valley Group and the High River Group is expected
to invest in Shares at least a minimum additional
amount (the "First Stage Margin Investments" and,
together with the First Stage Equity Investments,
the "First Stage Investments") equal to the
lesser of (A) $75 million and (B) the maximum
additional amount that such group would lawfully
have been able to invest in Shares if (I) the
Shares acquired pursuant to such group's First
Stage Equity Investment had been acquired with
funds not obtained from the proceeds of "purpose
credit" secured directly or indirectly by "margin
stock" (as such terms are defined in Regulation T
and Regulation U promulgated by the Board of
Governors of the Federal Reserve System (the
"Margin Rules")) ("Margin Loans") and (II) such
group had used its best efforts to borrow
additional funds by pledging the Shares so
acquired as collateral to secure Margin Loans to
the extent that such Margin Loans could have been
obtained lawfully and on reasonable commercial
terms and had used the proceeds of such Margin
Loans to acquire additional Shares, which had
been similarly pledged to secure additional
Margin Loans and to acquire further Shares, and
so forth until no further such Margin Loans had
been lawfully available.
(iii) Following the completion of the
First Stage Investments, each of the New Valley
Group and the High River Group may make a further
investment in Shares of up to the sum of (A) $50
million of equity (the "Second Stage Equity
Investment") plus (B) an additional amount (the
"Second Stage Margin Investments" and, together
with the Second
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Stage Equity Investments, the "Second Stage
Investments") equal to the lesser of (I) $50
million and (II) the maximum amount that such
group would lawfully have been able to invest in
Shares, in the manner described in Section
1(b)(ii)(B), using the Shares acquired through
the Second Stage Equity Investment as collateral.
(c) In order to effectuate the
objectives of the parties hereto described in Section
1(b), each of the New Valley Group and High River agrees
that it shall (or shall cause its affiliates to) make the
following investments in Shares:
(i) Promptly after the close of
business on each business day during the term of
this Agreement, each of New Valley and High River
shall notify the other of (A) the number of
Shares acquired or sold by the New Valley Group
and the High River Group, respectively, since the
last such notice, (B) the purchase price or sale
price of each Share so acquired or sold and (C)
the amount of brokerage fees or commissions
incurred in acquiring or selling each such Share.
(ii) On the last business day of each
second calendar week (commencing with the end of
the second full calendar week following the date
of this Agreement) prior to such time as the High
River Group has made an investment in Shares
equal to at least the Second Stage Investment
(the "Second Stage Completion Date"), promptly
after the exchange of notices described in
Section 1(c)(i), the parties hereto shall
calculate the aggregate number and the average
price of all Shares acquired during such two
calendar weeks by either the New Valley Group or
the High River Group at a price per Share equal
to the Hurdle Price (as defined below in this
paragraph (ii)) or less (exclusive of brokerage
fees and commissions incurred in such
acquisition) ("Qualifying Shares"). Thereupon,
each party shall make or cause to be made to the
other party (or the other party's designee) such
transfers of Shares and such payments in
immediately available funds (in each case in the
manner described in Section 1(c)(iv)) as would
have been necessary so that, after giving effect
to such transfers and payments, the New Valley
Group and the High River Group would have
acquired the same number of Qualifying Shares
during such two calendar weeks and the aggregate
investment (excluding brokerage fees and
commissions incurred in the acquisition of
Shares) of the New Valley Group and the High
River Group in Qualifying Shares during such week
would have been identical. For purposes of this
Agreement, "Hurdle Price" means (x) prior to the
time that both the New Valley Group
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and the High River Group have made investments in
Shares equal to at least the First Stage
Investment (the "First Stage Completion Date"),
$35.50 per Share and (y) at all times from and
after the First Stage Completion Date and prior
to the Second Stage Completion Date, $31.00 per
Share.
(iii) In addition to the obligations
of the parties hereto under Section 1(c)(ii), for
each business day prior to the Second Stage
Completion Date, New Valley may, in its sole
discretion, by notice to High River promptly
after the exchange of the notices with respect to
such business day described in Section 1(c)(i),
put to High River a number of Shares equal to or
less than one-half of the excess, if any, of (A)
the aggregate number of Shares other than
Qualifying Shares ("Non-Qualifying Shares")
acquired by the New Valley Group since the close
of business on the previous business day over (B)
the number of Non-Qualifying Shares acquired by
the High River Group since the close of business
on the previous business day. The put price per
Share shall be equal to the Hurdle Price.
Thereupon, the New Valley Group shall sell and
transfer or cause to be sold and transferred to
High River or another member of the High River
Group designated by High River the number of
Shares so put to High River, and High River shall
purchase or cause such designee to purchase such
Shares and shall pay or cause to be paid to New
Valley or New Valley's designee a purchase price
equal to the put price of such Shares, in each
case in the manner described in Section 1(c)(iv).
(iv) All payments required to be made
under Section 1(c)(ii) or Section 1(c)(iii) shall
be made in immediately available funds before the
opening of business on the fourth New York Stock
Exchange trading day after (A) in the case of
Section 1(c)(ii), the last business day of each
second calendar week in which the exchange of
notices referred to therein is made and (B) in
the case of Section 1(c)(iii), the last business
day of the calendar week in which New Valley
delivers the notice referred to therein. All
transfers of Shares required by Section 1(c)(ii)
and Section 1(c)(iii) shall be made
simultaneously with such payment in a
commercially customary manner such that upon the
payment of the purchase price for such Shares,
the transferee shall have acquired good and
marketable title to such Shares, free and clear
of all encumbrances and liens whatsoever.
(v) As promptly as practicable
following the close of business on November 27,
1995 (in the case of the First Stage Investments)
and January 11, 1996 (in the case
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of the Second Stage Investments), but in each
case prior to the close of business on the next
business day, each of New Valley and High River
shall notify the other of (A) the date of
purchase of any Shares acquired by the New Valley
Group and the High River Group, respectively,
since the date of this Agreement, (B) the number
of Shares purchased on each such date and (C) the
purchase price of each Share so acquired. If
prior to January 17, 1996, either New Valley or
High River believes that the other has breached
any of its obligations under Section 1(c)(ii) or
Section 1(c)(iii), such party (the "Notifying
Party") shall deliver to the other party (the
"Receiving Party") a notice setting forth in
reasonable detail the nature of the breach and
the reasons for such belief (the "Notice of
Breach"). The Notice of Breach shall
specifically describe the number of Shares that
the Receiving Party must transfer to the
Notifying Party, or that the Notifying Party must
transfer to the Receiving Party, and the amount
of the payments that the Receiving Party must
make to the Notifying Party, or that the
Notifying Party must make to the Receiving Party,
in order to cure such breach, and shall demand
performance of such transfers and payments. Prior
to the close of business on the third business
day after receiving the Notice of Breach, the
Receiving Party shall either (x) pay the amounts
and transfer the Shares described in the Notice
of Breach, against receipt of the amounts to be
paid and/or the Shares to be transferred by the
Notifying Party as described in the Notice of
Breach or (y) deliver to the Notifying Party a
notice stating that the Receiving Party disputes
the demand made in the Notice of Breach (the
"Notice of Dispute"). In the event that the
Receiving Party delivers a Notice of Dispute,
then prior to the close of business on the next
business day, the parties hereto shall by mutual
agreement choose an independent, nationally
recognized public accounting firm, which shall be
retained by the parties hereto to arbitrate the
dispute (the "Arbitrator"), or if they cannot
agree, each of New Valley and High River shall
choose one such accounting firm, and such firms
shall choose a third such accounting firm to
serve as Arbitrator. The fees and expenses of
the Arbitrator shall be shared equally by New
Valley and High River. The parties hereto shall
make available to the Arbitrator all information
which the Arbitrator may reasonably request for
the purpose of arbitrating the dispute. Prior to
the close of business on the fifth business day
after being retained, the Arbitrator shall make
its own independent calculations and shall notify
New Valley and High River in writing of its
decision, indicating the amounts to be paid and
the number of Shares to be transferred by each of
the parties hereto to cure any breach
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of Section 1(c)(ii) or 1(c)(iii), identified by
the Arbitrator as having occurred. Prior to the
close of business on the third business day after
receiving the notice of such decision, each party
hereto shall make payments and transfer Shares in
accordance with such decision. In each case
where a party is required to make any payment
pursuant to this Section 1(c)(v) by reason of any
breach by such party of Section 1(c)(ii) or
Section 1(c)(iii), the amount of such payment
shall be based on a purchase price per Share,
without interest, equal to the Hurdle Price in
effect at the time that the relevant transfer of
Shares would have originally occurred if not for
the relevant breach.
(d) (i) Except as provided in subpart
(ii) of this subparagraph (d), until the
termination of this Agreement, (i) the New Valley
Group shall not make or agree to make any sale,
transfer or other disposition (a "Transfer") of
Shares beneficially owned by it, if following
such Transfer the New Valley Group's total
investment in Shares would be less than the sum
of the First Stage Investment plus the Second
Stage Investment and (ii) High River shall not
(and shall cause the High River Group not to)
make or agree to make any Transfer of Shares
beneficially owned by it, if following such
Transfer the High River Group's total investment
in Shares would be less than the sum of the First
Stage Investment plus the Second Stage
Investment; provided, however, that (x) the New
Valley Group and the High River Group may sell
Shares to an unaffiliated third party on an
arms'-length basis if (1) such sale is made
solely in response to a demand for repayment or
additional collateral (other than Shares) of the
sort usually made by a lender extending Margin
Loans secured by such Shares, which demand
results from a decline in the market price of the
Shares so that the account with the lender falls
below the lender's pre-established maintenance
requirement for the New Valley Group or the High
River Group, as the case may be, (2) the proceeds
of such sale are used solely to repay Margin
Loans, (3) the total number of Shares sold does
not exceed the minimum number that must be sold
in order to satisfy such demand and (y) in the
event the New Valley Group or the High River
Group (each, a "Group") sells any Shares pursuant
to clause (x) of this proviso and following such
sale such first Group's investment in Shares is
less than the second Group's investment in
Shares, then the second Group may Transfer Shares
so long as following such Transfer the second
Group's investment in Shares is equal to or
greater than the first Group's investment in
Shares; and provided further that each member of
the New Valley Group and the High River Group may
Transfer Shares to any other member of
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the New Valley Group or the High River Group (but
only if, in the case of a Transfer to another
member of the High River Group, such member
agrees to be bound by the provisions of this
Agreement to the same extent as High River).
Following a sale by either the New Valley Group
or the High River Group pursuant to clause (x) of
the first proviso to the preceding sentence,
neither Group shall be obligated to purchase any
additional Shares pursuant to Section 1(c)(ii) or
Section 1(c)(iii), but the provisions of Section
1(c)(v) shall continue to be applicable with
respect to any purchases that were required to be
made prior to such sale pursuant to Section
1(c)(ii) or Section 1(c)(iii).
(ii) In addition, notwithstanding the
terms of subpart (i) of this subparagraph (d), in
the event that the lender extending Margin Loans
to a member of the New Valley Group or the High
River Group, as the case may be (the "Borrower"),
for any reason other than as set forth in clause
(x) of the first proviso to the first sentence of
subpart (i) of this subparagraph (d), terminates
or reduces the loan facility or otherwise
requires the sale of Shares by Borrower (such
Shares required as a result to be sold, together
with a number of Shares equal to the number of
Shares (if any) sold pursuant to such clause (x),
during the thirty consecutive calendar days
immediately following the date that the Borrower
is informed of such required sale, being
hereinafter referred to as the "Selloff Shares")
and after exercise of best efforts to replace
such loan facility Borrower is unable to do so,
then the Borrower shall irrevocably offer to the
other party hereto the right for a five business
day period, at the election of the other party,
either (A) to acquire the Selloff Shares at a
price equal to the lower (such lower price being
referred to herein as the "Selloff Price") of (I)
90% of the Weighted-Average Cost (calculated as
set forth in Section 4(h) but without giving
effect to the interest factor described in
Section 4(h)(i) or Section 4(h)(ii)(B)) of the
Selloff Shares, and (II) 90% of the then current
market price of the Selloff Shares, as measured
by the average closing sales price of Shares on
the New York Stock Exchange in the five business
days preceding said offer, or (B) to receive
payment from the Borrower in immediately
available funds in an amount equal to the excess
of the then current market price of the Selloff
Shares, as so measured, over the Selloff Price.
In the event the other party exercises its right
to acquire the Selloff Shares, the closing shall
take place prior to the close of business on the
third business day after such party exercises its
right to purchase the Selloff Shares, and the
party electing to exercise its right to purchase
shall be entitled to an order of specific
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performance in the event of a failure by the
Borrower to close as hereinabove provided. In
the event the other party does not exercise its
right to acquire the Selloff Shares within such
five business day period, or shall affirmatively
elect to receive payment from the Borrower, the
Borrower shall thereafter have the right to sell
the Selloff Shares to an unaffiliated third party
on an arms'-length basis. In the event the other
party exercises its right to receive payment from
the Borrower, such payment shall be made within
five business days of notice to the Borrower of
the other party's election to exercise its right
thereto.
(e) For purposes of this Section 1 and
Section 4(c), in calculating the amount of the investment
in Shares by the New Valley Group and the High River Group
at any time, (i) each Group's acquisition of Shares shall
be deemed to increase such Group's investment by the
actual cost, including all brokerage fees and commissions
incurred in the acquisition of such Shares, and (ii) each
Group's sale of Shares shall be deemed to decrease such
Group's investment by the actual price realized, net of
all brokerage fees and commissions incurred in such sale.
(f) In addition to the investments
required by Section 1(c), each of the parties hereto and
its affiliates may, in its sole discretion, invest
additional amounts from time to time to acquire additional
Shares. Notwithstanding any other provision of this
Agreement, the funds invested by any party hereto or its
affiliates in Shares, either pursuant to Section 1(c) or
to this Section 1(f), may be obtained through any lawful
method, including, without limitation, Margin Loans and
other loans or borrowings subject to the Margin Rules.
(g) Notwithstanding anything in this
Agreement to the contrary, (i) all Shares acquired by any
party hereto shall be held by it for its own account and
not for the account of any other party hereto, (ii) except
as set forth in Section 5(d), no party hereto shall have
any right or obligation to share in the profits or losses
of any other party hereto arising from the acquisition,
holding or disposition of Shares beneficially owned by
such other party or its affiliates and (iii) all transfers
of Shares pursuant to Section 1(c)(ii) or Section
1(c)(iii), and all payments in respect of such Shares
pursuant to Section 1(c)(ii) or Section 1(c)(iii), shall
be made simultaneously on the respective dates such
transfers and payments are required to be made pursuant to
Section 1(c)(iv), and no party hereto shall be deemed to
own or to have any rights of ownership in any such Shares
(including, without limitation, any right to vote such
Shares or to receive dividends paid in respect of such
Shares) until such transfer and payment are made.
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Section 2. Agreement to Vote. In the
event that Brooke Group Ltd. ("BGL") or BGLS Inc. ("BGLS")
determines to solicit Stockholder Demands, Written
Consents or Proxies (as such terms are defined in the
Agreement dated as of October 17, 1995 among BGL, BGLS and
High River (the "BGL Agreement")), the New Valley Group
shall 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, of
RJRN, that it beneficially owns or has the right to vote.
Section 3. 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 BGL Agreement by High River, and
any party hereto may terminate this Agreement sooner at
any time in its sole discretion by written notice to the
other parties hereto; provided, however, that if BGL or
BGLS terminates the BGL Agreement, then New Valley and NV
Sub shall be deemed to have simultaneously terminated this
Agreement.
(b) If this Agreement is terminated
pursuant to this Section 3, this Agreement shall forthwith
become null and void, and there shall be no liability or
obligation on the part of any party hereto, except that
(i) the obligations of the parties hereto pursuant to
Section 5 and Section 6 shall remain in full force and
effect following any termination of this Agreement for the
periods set forth therein and (ii) if (A) either the New
Valley Group or the BGL 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 this
Agreement, or is required to offer any Shares to another
party pursuant to the first sentence of Section 1(d)(ii)
of this Agreement, and (B) a party hereto which is not a
member of such 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,
then the obligations of any member of such Group pursuant
to Section 1(d)(ii) shall remain in full force and effect
following such termination until the later of (I) the end
of the 30-day period set forth in Section 1(d)(ii) or (II)
the time that the Selloff Shares are delivered at the
closing described in the second sentence of Section
1(d)(ii), or the time when payment is made pursuant to the
fourth sentence of Section 1(d)(ii), as the case may be.
Section 4. Certain Definitions. For
purposes of this Agreement, the following terms shall have
the meanings indicated below:
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(a) "Termination Event" shall have the
meaning assigned to it in the BGL Agreement.
(b) "Other Securities" means any
securities or assets (other than cash) received by the New
Valley Group from RJRN in respect of any Shares held by
the New Valley Group, whether by way of a dividend or
other distribution in respect of such Shares, in exchange
for such Shares, pursuant to a reclassification of such
Shares, or otherwise.
(c) The "Trading Profit" realized in any
sale of any Shares or any Other Securities of any class or
series by any member of the New Valley Group or by BGL,
BGLS or any of their affiliates (the "BGL Group") means
the excess, if any, of the actual price realized in such
sale, net of all brokerage fees and commissions incurred
in such sale, over the Weighted-Average Cost (as defined
below in Section 4(h) and Section 4(i)) of the Shares or
the Other Securities of such class or series sold. The
"Trading Profit" existing on the Reference Date (as
defined below in Section 5(a)) in respect of any Shares or
Other Securities of any class or series held by the New
Valley Group or the BGL Group as of such date means the
excess, if any, of the Market Value (as defined below in
Section 4(j) and Section 4(k)) as of the Reference Date of
the Shares or the Other Securities of such class or series
so held over the Weighted-Average Cost of such Shares or
such Other Securities. Notwithstanding the foregoing, if
the aggregate investment in Shares and Other Securities
made at any time, either before or after the date of
termination of this Agreement, by the New Valley Group,
before giving effect to any sales of Shares and Other
Securities held by the New Valley Group (the "Aggregate
New Valley Investment"), exceeds the greater of (x) the
sum of the First Stage Investment plus the Second Stage
Investment and (y) the aggregate investment of the High
River Group in Shares and Other Securities made prior to
the date of the termination of this Agreement (the greater
of such amounts being referred to herein as the "Target
Investment"), then the "Trading Profit" realized on any
sale of Shares or any Other Securities of any class or
series, or existing on the Reference Date in respect of
any Shares or any Other Securities of any class or series
held by the New Valley Group on the Reference Date, means
the product of (x) the "Trading Profit," calculated as set
forth in the previous two sentences, multiplied by (y) a
fraction, the numerator of which is the Target Investment
and the denominator of which is the Aggregate New Valley
Investment.
(d) The "New Valley Expenses" means the
out-of-pocket costs and expenses incurred by the New
Valley Group or the BGL Group in connection with the
preparation, negotiation and execution of this Agreement
and the BGL Agreement, the
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consummation of the transactions contemplated hereby or
thereby and the solicitation of Stockholder Demands,
Written Consents and Proxies from the stockholders of RJRN
(including without limitation, to the extent incurred in
connection therewith, (i) all registration and filing fees
under the Securities Exchange Act of 1934, as amended (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), plus an amount equivalent to simple interest on
each such cost and expense at the rate of 10% per annum
from the date of payment thereof; provided, however, that
"New Valley Expenses" shall exclude, without duplication,
(x) all costs and expenses relating to the acquisition of
the Shares beneficially owned or hereafter acquired by the
New Valley Group, (y) all internal costs and expenses
(including, without limitation, all salaries and expenses
of its officers and employees performing duties relating
to the transactions contemplated by this Agreement and the
BGL Agreement) and (z) all costs and expenses paid to the
New Valley Group, or the BGL Group, except as
reimbursement for out-of-pocket costs and expenses
incurred by the New Valley Group or the BGL Group to
unaffiliated third parties.
(e) The "Net Profit" realized on any
sale of Shares or any Other Securities of any class or
series, or existing 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, means the excess, if any, of (i) the
Trading Profit realized on such sale or existing on the
Reference Date with respect to such Shares or such class
or series of Other Securities, as the case may be,
together with the aggregate Trading Profit realized on all
previous or simultaneous sales (if any) of any Shares or
any Other Securities of such class or series, over (ii)
the sum of (A) the aggregate New Valley Expenses incurred
on or prior to such sale or the Reference Date, as the
case may be, and (B) five times the excess, if any of (I)
the aggregate percentage payments (if any) that High River
would have been entitled to receive under Section 5(d) of
this Agreement and Section 4(c) of the BGL Agreement with
respect to such previous or simultaneous sales if not for
the effect of clauses (x) and (y) of the provisos to such
Sections over (II) any repayment that New Valley or BGLS
would have been entitled to receive under clause (z) of
such provisos.
(f) The "Net Loss" realized on any sale
of Shares or any Other Securities of any class or series,
or existing 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
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Group on the Reference Date, means the excess, if any, of
(i) the sum of (A) the aggregate New Valley Expenses
incurred on or prior to such sale or the Reference Date,
as the case may be, and (B) five times the excess, if any
of (I) the aggregate percentage payments (if any) that
High River would have been entitled to receive under
Section 5(d) of this Agreement and Section 4(c) of the BGL
Agreement with respect to any previous or simultaneous
sale of Shares or any Other Securities of such class or
series if not for the effect of clauses (x) and (y) of the
provisos to such Sections over (II) any repayment that New
Valley or BGLS would have been entitled to receive under
clause (z) of such provisos over (ii) the Trading Profit
realized on such sale or existing on the Reference Date
with respect to such Shares or such class or series of
Other Securities, as the case may be, together with the
aggregate Trading Profit realized on all previous or
simultaneous sales (if any) of any Shares or any Other
Securities of such class or series, as the case may be.
(g) The "Net Profit Override" on any
sale of Shares or any Other Securities of any class or
series, or existing 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, means 20% of the Net Profit, if any, on
such sale or existing on such date.
(h) The "Weighted-Average Cost" of any
Shares means (i) the weighted-average cost of all Shares
owned by the New Valley Group and the BGL Group as of the
date hereof, or acquired by the New Valley Group and the
BGL Group hereafter prior to or at the time that the
aggregate investment of the New Valley Group in Shares
first exceeds the Target Investment (including in each
case all brokerage fees and commissions incurred in the
acquisition of such Shares and including an amount
equivalent to simple interest on the cost of any Shares at
the rate of 8-1/2% per annum from the date of payment for
such Shares, but excluding any other interest, fees,
premiums and other costs of any loans or borrowings
incurred or maintained to acquire or carry such Shares),
calculated in accordance with generally accepted
accounting principles, reduced by (ii) the sum of (A) the
amount of any cash dividends or distributions received in
respect of such Shares and the Market Value (as of the
date received) of any Other Securities received in respect
of such Shares by way of any dividend or distribution,
plus (B) an amount equivalent to simple interest on such
amount and such Market Value at the rate of 8-1/2% per
annum from such date received; provided, however, that any
exchange of Shares for Other Securities or
reclassification of Shares into Other Securities shall be
treated for purposes of calculating the Weighted-Average
Cost of the remaining Shares as a sale of the Shares so
exchanged or reclassified at a price equal to their
Weighted-Average Cost.
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(i) The "Weighted-Average Cost" of any
Other Securities received by the New Valley Group and the
BGL Group means (i) in the case of any Other Securities
received by way of any dividend or distribution, the
Market Value of such Other Securities as of the date
received, plus an amount equivalent to simple interest on
such Market Value at the rate of 8-1/2% per annum from the
date of receipt of such Other Securities, but excluding
any other interest, fees, premiums and other costs of any
loans or borrowings incurred or maintained to carry such
Other Securities and (ii) in the case of any Other
Securities received by the New Valley Group and the BGL
Group by way of any exchange of Shares for Other
Securities or reclassification of Shares into Other
Securities, an amount equal to the Weighted-Average Cost
of the Shares so exchanged or reclassified, plus an amount
equivalent to simple interest on such amount at the rate
of 8-1/2% per annum from the date of receipt of such Other
Securities, but excluding any other interest, fees,
premiums and other costs of any loans or borrowings
incurred or maintained to carry such Other Securities;
provided, however, that the Weighted-Average Cost of any
Other Securities shall be reduced by the sum of (A) the
amount of any cash dividends or distributions received by
the New Valley Group and the BGL Group in respect of such
Other Securities and the Market Value (as of the date
received) of any securities or assets (other than cash)
received by the New Valley Group and the BGL Group in
respect of such Other Securities by way of any dividend or
distribution plus (B) an amount equivalent to simple
interest on the amount of such cash or the Market Value of
such securities or other assets at the rate of 8-1/2% per
annum from the date received.
(j) The "Market Value" of any securities
as of any date means the product obtained by multiplying
(i) the number or amount of such securities by (ii) the
average of the daily closing prices per share or other
unit of such securities for the ten consecutive trading
days (or, if such securities have not traded for ten
consecutive trading days, such lesser number of trading
days as they have traded) on or prior to such date. For
this purpose, the "closing price" of any securities as of
any date means, the closing sale price, regular way, or,
in case no such sale takes place on such day, the average
of the closing bid and asked prices per share or other
unit for such securities, regular way, in either case as
reported in the principal consolidated transaction
reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if
such securities are not then listed or admitted to trading
on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with
respect to securities listed on the principal national
securities exchange on which such securities are listed or
admitted to trading or, if such securities are not then
listed or admitted to
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trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high
bid and low asked prices, per share or other unit for such
securities in the over-the-counter market, as reported by
the NASDAQ system or, if such system is not in use, any
other similar system then in use, or, if on any such date
such securities are not then quoted by any such system,
the average of the closing bid and asked prices per share
or other unit for such securities as furnished by a
professional market maker making a market in such
securities selected by mutual agreement of New Valley and
High River or, if no such person then makes a market in
such securities, the fair market value of such securities,
as determined by an independent, nationally recognized
investment banking or appraisal firm selected by mutual
agreement of New Valley and High River; provided, however,
that if any dividend or distribution shall have been
declared but not paid in respect of such securities as of
the date in question, and the ex-dividend date for the
determination of the holders of securities entitled to
receive such dividend or distribution shall occur prior to
the date of valuation, the "Market Value" of such
securities shall be appropriately increased by the value
of such dividend or distribution (as determined by mutual
agreement of New Valley and High River, or if they cannot
agree, by an independent, nationally recognized investment
banking or appraisal firm selected by mutual agreement of
New Valley and High River, or if they cannot agree,
selected by the American Arbitration Association).
(k) The "Market Value" of any assets
other than securities means the fair market value of such
assets, as determined by an independent, nationally
recognized investment banking or appraisal firm selected
by mutual agreement of New Valley and High River, or if
they cannot agree, selected by the American Arbitration
Association).
Section 5. Certain Fees and Percentage
Payments. (a) Subject to Section 5(c), New Valley shall
pay or cause to be paid to High River 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) New Valley or NV Sub is
in material breach of its 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 this Agreement and (C) High River is
not in material breach of its obligations (the
"High River Obligations") under 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
this
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Agreement or Section 1(c)(iii) or Section 8 of
the BGL Agreement;
(ii) any termination of this Agreement
by New Valley or NV Sub at a time when (A) no
Termination Event has occurred and (B) High River
is not in material breach of the High River
Obligations; or
(iii) the consummation of any Business
Combination (as defined in the BGL Agreement),
including any Permitted Business Combination (as
defined in the BGL Agreement), with respect to
the New Valley 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"), or (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 (C) the BGL
Nominees (as such term is defined in the BGL
Agreement) are elected to constitute a majority
of the Board of Directors of RJRN 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 5(a), (y)
High River shall not be entitled to any fee under this
Section 5(a) if New Valley shall have previously or shall
concurrently become entitled to the fee described in
Section 5(b) of this Agreement or if BGL shall have
previously become entitled to the fee described in Section
4(b) of the BGL Agreement and (z) the amount of any fee to
which High River may be entitled at any time pursuant to
this Agreement shall be reduced by the amount of any fee
which High River shall theretofore have been paid pursuant
to Section 4(a) of the BGL Agreement and by the amounts of
any percentage payments which High River shall theretofore
have been paid pursuant to Section 5(d) of this Agreement
or pursuant to Section 4(c) of the BGL Agreement.
(b) Subject to Section 5(c), High River
shall pay or cause to be paid to New Valley 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) New Valley and NV Sub are
not in material breach of the New Valley
Obligations and (C) BGL and BGLS are not in
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material breach of their obligations under
Section 1(c)(iii) of the BGL Agreement (the "BGL
Obligations"); or
(ii) any termination of this Agreement
by New Valley or NV Sub at a time when (A) no
Termination Event has occurred, (B) High River is
in material breach of its obligations under
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 this Agreement, (C) New Valley
and NV Sub are not in material breach of the New
Valley Obligations and (D) BGL and BGLS are not
in material breach of the BGL Obligations;
provided, however, that (x) New Valley shall not be
entitled to more than one fee under this Section 5(b), (y)
New Valley shall not be entitled to any fee under this
Section 5(b) if High River shall have previously or shall
concurrently become entitled to the fee described in
Section 5(a) of this Agreement or the fee described in
Section 4(a) of the BGL Agreement and (z) the amount of
any fee to which New Valley may be entitled at any time
pursuant to this Agreement shall be reduced by the amount
of any fee which BGL shall theretofore have been paid
pursuant to Section 4(b) of the BGL Agreement.
(c) Each of New Valley and High River
shall give notice to the other promptly upon becoming
aware that any 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. Such notice shall specify in reasonable detail
the facts giving rise to such Termination Event.
(d) Notwithstanding anything in this
Agreement or the BGL Agreement to the contrary,
(i) if the New Valley Group or the BGL
Group sells any Shares or any Other Securities of
any class or series prior to the Reference Date,
then New Valley 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 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 New
Valley 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,
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or hereafter acquired prior to such sale, by the
New Valley Group and the BGL 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 New Valley 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 New Valley
Group and the BGL Group;
provided, however, that (x) the amount of any percentage
payment to which High River is entitled at any time under
this Section 5(d) shall be reduced by the product of (1)
the amount of any fee which High River shall have
theretofore been paid by New Valley under Section 5(a) of
this Agreement or by BGLS under Section 4(a) of the BGL
Agreement, multiplied by (2) the Sale Fraction or the
Holdings Fraction, as the case may be, (y) in the event
that (1) the New Valley Group or the BGL Group realizes a
Net Loss on any sale of Shares or any Other Securities of
any class or series, or a 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, and (2) High River has
theretofore received any percentage payments from New
Valley pursuant to this Section 5(d) or from BGLS pursuant
to Section 4(c) of the BGL Agreement, then in each such
event High River shall repay or cause to be repaid to New
Valley promptly upon receipt of notice from New Valley 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 New Valley and the denominator of
which is the aggregate amount of such percentage payments
theretofore paid by New Valley and BGLS and (z) High River
shall not be entitled to any percentage payment under this
Section 5(d) if New Valley shall have previously become
entitled to the fee described in Section 5(b) of this
Agreement or if BGL shall have previously become entitled
to the fee described in Section 4(b) of the BGL Agreement.
New Valley and NV Sub shall use their
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reasonable best efforts to provide to High River (x) once
each calendar week, commencing with 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 New Valley Group and the
Weighted-Average Cost of such Shares and Other Securities,
as well as a reasonably detailed estimate prepared in good
faith of the New Valley Expenses incurred to that date and
(y) promptly after the close of business on each business
day on which any Shares are sold by the New Valley 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 New Valley and NV Sub shall
not incur any liability or suffer any prejudice as a
result of its provision of any such estimate.
(e) The parties hereto hereby
acknowledge and agree that the arrangements in Section
5(d) 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.
Section 6. Costs and Expenses. Each
party hereto shall be solely responsible for all of its
costs and expenses relating to this Agreement and the
transactions contemplated hereby.
Section 7. 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 8. 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, has full
corporate or partnership power and authority to
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execute and deliver this Agreement and to perform
its obligations hereunder and to consummate the
transactions contemplated hereby.
(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) New Valley and NV Sub hereby
represent and warrant to High River that as of the date
hereof the New Valley Group owns beneficially and of
record 4,278,700 Shares, free and clear of all liens and
encumbrances whatsoever, which Shares were purchased by
the New Valley Group at an aggregate cost (exclusive of
all brokerage fees and commissions incurred in the
acquisition of such Shares) of $129,572,796, and in
respect of which New Valley and NV Sub received dividends
of $37,500 on July 3, 1995 and dividends of $298,387.50 on
October 2, 1995. New Valley and NV Sub further represent
that, upon the consummation of the purchase and sale of
Purchased Shares contemplated by Section 1(a), High River
will acquire title to the Purchased Shares, free and clear
of all encumbrances and liens whatsoever.
(c) High River hereby represents and
warrants to New Valley and NV Sub that as of the date
hereof the High River Group owns beneficially and of
record 1,205,900 Shares, free and clear of all liens and
encumbrances whatsoever, which Shares were purchased by
the High River Group at an aggregate cost (including all
brokerage fees and commissions incurred in the acquisition
of such Shares) of $33,173,434.30, and in respect of which
High River received dividends of $452,212.50 on October 2,
1995. High River further represents and warrants that it
has as of the date hereof, and will have on each date
prior to the termination of this Agreement, net
stockholders' or partners' equity of at least $22 million.
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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 Exchange Act, provided that
the BGL Group shall not be deemed to be "affiliates" or
"associates" of the New Valley and NV Sub for any purpose
of this Agreement, (ii) the term "shall" is used herein to
refer to actions which are compulsory and thus to create
binding obligations among the parties hereto, (iii) 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
(iv) the term "may" is used herein solely to refer 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, powers 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 a party as shall
be specified by like notice):
If to New Valley or NV Sub:
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, Xxx Xxxx 00000-0000
Telecopy: (000) 000-0000
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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
With a copy to:
Xxxx Xxxxxxx, Esq.
Xxxxxx Xxxxxx Butowsky Xxxxxxx
Shalov & Xxxx
000 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 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, the partners of which 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.
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(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 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.
(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.
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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.
NEW VALLEY CORPORATION
By:_______________________________
ALKI CORP.
By:_______________________________
HIGH RIVER LIMITED PARTNERSHIP
By:_______________________________
[Signature page to Agreement among New Valley Corporation, ALKI
Corp. and High River Limited Partnership dated October 17, 1995]
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