1
EXHIBIT 4.2
AMENDMENT NO. 1 TO THE PLEDGE AND SECURITY AGREEMENT
THIS AMENDMENT NO. 1 TO THE PLEDGE AND SECURITY AGREEMENT DATED AS OF
JANUARY 1, 1996 (the "PLEDGE AGREEMENT") is entered into by and among BGLS
Holding Inc., a Delaware corporation ("BGLS HOLDING"), Brooke Group Holding
Inc., a Delaware corporation (formerly known as "Brooke Group Ltd.") ("BROOKE
HOLDING") and BGLS Inc., a Delaware corporation ("BGLS"), and State Street Bank
and Trust Company, as successor to Fleet National Bank of Massachusetts, as
successor trustee (the "TRUSTEE") under the Indenture dated as of January 1,
1996, pursuant to which BGLS has issued its 15.75% Series A Senior Secured Notes
due 2001 and its 15.75% Series B Senior Secured Notes due 2001 (each of which
series is equal to and ratable with the other series).
SECTION 1. AMENDMENTS. The parties hereto hereby amend the Pledge
Agreement as follows:
A. A new sentence is added immediately following the preamble to
read as follows:
As used herein the term "COMPANY" shall include (i) Brooke
Holding with respect to Collateral pledged by Brooke Holding and
(ii) BGLS Holding with respect to Collateral pledged by BGLS
Holding.
B. Section 1 of the Pledge Agreement is hereby amended by adding the
following defined terms in their appropriate alphabetical
locations:
"BGLS CONVERTIBLE SECURITIES" means any securities that are
convertible into or exchangeable for Equity Interests of BGLS.
"BGLS STOCK PURCHASE RIGHTS" means any options, warrants or
other rights to subscribe for or purchase or acquire any Equity
Interests of BGLS or any BGLS Convertible Securities.
"BROOKE HOLDING CONVERTIBLE SECURITIES" means any securities
that are convertible into or exchangeable for Equity Interests
of Brooke Holding.
"BROOKE HOLDING STOCK PURCHASE RIGHTS" means any options,
warrants or other rights to subscribe for or purchase or acquire
any Equity Interests of Brooke Holding or any Brooke Holding
Convertible Securities.
"INITIAL PLEDGED BGLS SHARES" means all Equity Interests of BGLS
represented by the certificates identified in Annex 1 hereto.
2
"INITIAL PLEDGED BROOKE HOLDING SHARES" means all Equity
Interests of Brooke Holding represented by the certificates
identified in Annex 1 hereto.
C. Section 2 of the Pledge Agreement is hereby further amended by
adding the following representations and warranties and
covenants:
As of September 30, 1999: (i) the Initial Pledged BGLS
Shares are the only issued and outstanding shares of capital
stock of BGLS and (ii) there are no issued and outstanding
BGLS Convertible Securities or BGLS Stock Purchase Rights,
and BGLS is not subject to any obligation, contingent or
otherwise, to issue in the future any additional shares of
its capital stock or any such BGLS Convertible Securities or
BGLS Stock Purchase Rights;
The Initial Pledged BGLS Shares are duly authorized, validly
issued, fully paid and nonassessable;
As of September 30, 1999: (i) the Initial Pledged Brooke
Holding Shares are the only issued and outstanding shares of
capital stock of Brooke Holding and (ii) there are no issued
and outstanding Brooke Holding Convertible Securities or
Brooke Holding Stock Purchase Rights, and Brooke Holding is
not subject to any obligation, contingent or otherwise, to
issue in the future any additional shares of its capital
stock or any such Brooke Holding Convertible Securities or
Brooke Holding Stock Purchase Rights;
The Initial Pledged Brooke Holding Shares are duly
authorized, validly issued, fully paid and nonassessable;
D. Each of Brooke Holding and BGLS Holding hereby makes the
representations and warranties and covenants in Section 2 of the
Pledge Agreement as of the date hereof to the extent relevant to
the Collateral pledged by it.
2
3
E. Annex I to the Pledge Agreement is hereby deleted in its entirety
and replaced with the following:
ANNEX 1
PLEDGED STOCK
-------------
ISSUER CERTIFICATE NOS. PLEDGOR NUMBER OF SHARES
------------ ---------------- ---------------- ----------------
New Valley NV 1710 BGLS Holding Inc. 1,974 shares of common stock, par
Corporation value $.01 per share
Xxx Xxxxxx XX 0000 BGLS Holding Inc. 83,628 shares of common stock, par
Corporation value $.01 per share
New Valley W 2096 BGLS Holding Inc. 5,924 Warrants to Purchase Common
Corporation Shares
New Valley W 2098 BGLS Holding Inc. 1,254,425 Warrants to Purchase
Corporation Common Shares
Xxxxxxx Group, 1 BGLS Inc. 1,000 shares of common stock, par
Inc. value $.10 per share
New Valley 1 BGLS Holding Inc 100 shares of common stock, par
Holdings, Inc. value $.01 per share
Brooke (Over- 2 BGLS Holding Inc. 10 shares of common stock, par value
seas) Ltd. $.01 per share
Old CPI, Inc. 2 BGLS Holding Inc. 100 shares of common stock, par
(formerly known value $.01 per share
as COM Products
Inc.)
Brooke Group 1 BGLS Holding Inc. 1,000 shares of common stock, par
Holding Inc. value $.10 per share
BGLS Inc. 2 Brooke Group Holding Inc. 100 shares of common stock, par
value $.01 per share
3
4
SECTION 2. REFERENCES TO PLEDGE AGREEMENT. Except as herein provided,
the Pledge Agreement shall remain unchanged and in full force and effect, and
each direct reference to the Pledge Agreement and indirect references such as
"hereunder", "hereby", "hereto", "herein" and "hereof" shall be deemed
references to the Pledge Agreement as amended hereby.
SECTION 3. COUNTERPARTS. This Amendment No. 1 to the Pledge Agreement
may be executed in any number of counterparts, each of which shall be identical
and all of which, when taken together, shall constitute one and the same
instrument, and any of the parties hereto may execute this Amendment No. 1 to
the Pledge Agreement by signing any such counterpart.
4
5
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment No. 1 to the Pledge Agreement to be duly executed and delivered as of
September 30, 1999.
BGLS HOLDING INC.
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Executive Vice President
BROOKE GROUP HOLDING INC.
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Executive Vice President
BGLS INC.
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Executive Vice President
STATE STREET BANK AND
TRUST COMPANY, as Trustee
By: /s/ Xxxxxx Xxxxxxxxxx
----------------------------------
Name: Xxxxxx XxxxxXxxxx
Title: Assistant Vice President
5
