1999 ANNUAL MEETING OF STOCKHOLDERS
OF
RJR NABISCO HOLDINGS CORP.
-------------------
PROXY STATEMENT
OF
HIGH RIVER LIMITED PARTNERSHIP
-------------------
To Our Fellow RJR Nabisco Stockholders:
This Proxy Statement and the accompanying GOLD proxy card are
being furnished to stockholders ("Stockholders") of RJR Nabisco Holdings Corp.
("RJR Nabisco" or the "Company") in connection with the solicitation of proxies
by High River Limited Partnership ("High River"), a Delaware limited partnership
controlled by Carl C. Icahn, to be used at the 1999 Annual Meeting (the "Annual
Meeting"), of Stockholders of RJR Nabisco which is scheduled to be held at 9:00
a.m. local time on Wednesday, May 12, 1999 at The M.C. Benton, Jr. Convention &
Civic Center, 301 West Fifth Street, Winston-Salem, North Carolina 27102, and at
any adjournments, postponements or reschedules thereof. This Proxy Statement and
the GOLD proxy card are first being furnished to Stockholders on or about April
26, 1999.
At the Annual Meeting, High River will seek to elect to the
Board of Directors of RJR Nabisco, Mr. Icahn and a slate of eight (8) other
nominees named below under "Election of Directors". Each of the nominees (each a
"Nominee" and, collectively, the "Nominees") have been selected by Mr. Icahn.
As you are probably aware, on March 9, 1999, RJR Nabisco
announced that it was selling its international tobacco business and that it
planned to spin off its domestic tobacco business. We believe that it is in the
best interest of all of the Stockholders for RJR Nabisco to immediately spinoff
to Stockholders the remaining 80.5% of Nabisco Holdings Corp. ("Nabisco) held by
RJR Nabisco as promptly as possible, rather than spinoff the domestic tobacco
business. Moreover, we have received a report from the law firm of Stroock &
Stroock & Lavan advising us that they believe that, based upon the current
status of the law, what RJR Nabisco has disclosed in its litigation papers and
filings with the Securities and Exchange Commission, and the other information
reviewed by Stroock, as described in the report, the proposed spinoff of Nabisco
would not constitute a fraudulent conveyance by RJR Nabisco with regard to any
plaintiffs in the tobacco litigations or any other creditors of RJR Nabisco, and
that current plaintiffs in the tobacco litigations in which RJR Nabisco is
involved would not be able to make the showings required for injunctive relief
to block the spinoff of Nabisco (see "Background of Solicitation -- Report of
Stroock & Stroock & Lavan LLP"). Stroock & Stroock & Lavan has further advised
Mr. Icahn and High River that, based upon their report, they are prepared to
provide RJR Nabisco and its current or future Board of Directors with a legal
opinion, as of the date of the report, subject to the qualifications and the
assumptions contained in such report, that a spinoff of Nabisco would not
constitute a fraudulent conveyance by
RJR Nabisco. ACCORDINGLY, WE ARE SOLICITING PROXIES IN FAVOR OF ELECTING A
SLATE OF DIRECTORS COMMITTED TO EFFECTUATING THE PROMPT SPINOFF OF NABISCO TO
STOCKHOLDERS.
If elected, the Nominees are committed to effectuating the
prompt spinoff of Nabisco to Stockholders. Upon their election, the Nominees
will exercise their fiduciary duty under the Delaware General Corporation Law to
the Stockholders and only take actions which they believe to be in the
Stockholders' best interest. In this regard, it should be noted that it is
possible that, upon their election as directors, the Nominees could gain access
to and receive additional information which could cause them, in the exercise of
their fiduciary duty, to change their current view on the spinoff of Nabisco. At
this time, however, the Nominees are not aware of, and RJR Nabisco has not
released, any such information. Accordingly, the Nominees have no reason to
believe that there is currently any impediment to a prompt spinoff of Nabisco.
Like RJR Nabisco's current proposal to spin off the domestic
tobacco business, the proposal to spin off Nabisco does not require, and the
Nominees do not intend to seek a prior vote by the Stockholders. Since RJR
Nabisco's current proposal to spin off the domestic tobacco business is not
expected to be subject to a prior vote by Stockholders, a vote for the Nominees
may provide you with your last opportunity to vote your desire to have your
company spinoff Nabisco.
Mr. Icahn, High River and the other participants in this proxy
solicitation have no interest in RJR Nabisco other than as stockholders. In
calling for a spinoff of Nabisco, they have the same interests as other
Stockholders, to increase the value of their investment in RJR Nabisco.
The Nominees believe that, among other things, the spinoff of
Nabisco would make Nabisco a far more attractive company. In addition to their
commitment to effectuate the spinoff of Nabisco to Stockholders promptly, once
elected, the Nominees' stated objective for RJR Nabisco is to in consultation
with representatives of the executive branch of government, plaintiffs' attorney
groups, members of Congress and representatives of the other tobacco companies,
seek to develop and implement an industry-wide legislative resolution of current
and future tobacco litigation claims. Also, Mr. Icahn and High River intend to
ask the Nominees upon their election to amend the bylaws of RJR Nabisco to add a
provision which will prevent the Board of RJR Nabisco from instituting a
shareholders rights plan with anti-takeover provisions or "poison pill" without
approval by a vote of the Stockholders. While not obligated to adopt such an
amendment, Mr. Icahn and High River believe that the Nominees will favorably
consider such a proposal, subject to the exercise of their fiduciary duty. The
Nominees have no current plans to change the existing management or operations
of Nabisco.
THE NOMINEES ARE COMMITTED TO ACTING IN THE BEST INTEREST OF
THE STOCKHOLDERS. WE BELIEVE THAT YOUR VOICE IN THE FUTURE OF RJR NABISCO CAN
BEST BE EXPRESSED THROUGH THE ELECTION OF THE NOMINEES. ACCORDINGLY, WE URGE YOU
TO VOTE YOUR GOLD PROXY CARD FOR THE NOMINEES WHO ARE COMMITTED TO THE PROMPT
SPINOFF OF NABISCO.
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IF YOUR SHARES ARE HELD IN THE NAME OF A BROKERAGE FIRM, BANK,
BANK NOMINEE OR OTHER INSTITUTION ON THE RECORD DATE, ONLY IT CAN VOTE SUCH
SHARES AND ONLY UPON RECEIPT OF YOUR SPECIFIC INSTRUCTIONS ACCORDINGLY, PLEASE
CONTACT THE PERSON RESPONSIBLE FOR YOUR ACCOUNT AND INSTRUCT THAT PERSON TO
EXECUTE ON YOUR BEHALF THE GOLD PROXY CARD AS SOON AS POSSIBLE.
IMPORTANT
The election of the Nominees requires the affirmative vote of
a plurality of the votes cast, assuming a quorum is present or otherwise
represented at the Annual Meeting. As a result, your vote is extremely important
in deciding the future of the Company. We urge you to mark, sign, date and
return the enclosed GOLD proxy card to vote FOR the election of the Nominees.
WE URGE YOU NOT TO SIGN ANY PROXY CARD SENT TO YOU BY RJR
NABISCO. IF YOU HAVE ALREADY DONE SO, YOU MAY REVOKE YOUR PROXY BY DELIVERING A
LATER-DATED GOLD PROXY CARD IN THE ENCLOSED POSTAGE- PREPAID ENVELOPE, OR BY
VOTING IN PERSON AT THE ANNUAL MEETING. SEE "VOTING PROCEDURES" AND "PROXY
PROCEDURES" BELOW.
Only holders of record of RJR Nabisco's voting securities as
of the close of business on March 22, 1999 (the "Record Date") are entitled to
notice of and to vote at the Annual Meeting and any adjournments or
postponements thereof. According to the proxy statement of RJR Nabisco filed
with the Securities and Exchange Commission ("RJR Nabisco's Proxy Statement"),
as of the Record Date, there were 325,287,748 shares of common stock, par value
$.01 per share (the "Common Stock"), and 12,573,098 shares of ESOP Convertible
Preferred Stock, par value $.01 per share and stated value of $16 per share
("ESOP Preferred Stock") outstanding . The Common Stock and the ESOP Preferred
Stock vote as a single class on all matters properly brought before the Annual
Meeting. Stockholders of record at the close of business on the Record Date will
be entitled to one vote at the Annual Meeting for each share of Common Stock,
and one-fifth (1/5) of a vote at the Annual Meeting for each share of ESOP
Preferred Stock, of RJR Nabisco, held on the Record Date.
As of the Record Date, High River and its affiliates
beneficially owned an aggregate of 25,725,700 shares of Common Stock,
representing approximately 7.9% of the outstanding shares of Common Stock. High
River and its affiliates intend to vote such shares FOR the election of the
Nominees.
VOTE FOR THE NOMINEES BY RETURNING YOUR COMPLETED GOLD
PROXY TODAY.
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BACKGROUND OF THE PROXY SOLICITATION
In opposition to the current board of directors of RJR
Nabisco, High River is seeking the proxies of Stockholders to be used to elect
the Nominees as Directors of RJR Nabisco at the 1999 Annual Meeting. The
Nominees, if elected, intend to effectuate a prompt spinoff of Nabisco from RJR
Nabisco. Although in preliminary proxy material previously filed by High River
with the Securities and Exchange Commission, it was stated that the Nominees
were also committed to having R.J. Reynolds Tobacco Company retain the proceeds
from the pending sale of the international tobacco business for general
corporate purposes and not to prepay existing debt not required to be prepaid,
RJR Nabisco has recently commenced a tender offer for much of its currently
outstanding indebtedness. Accordingly, by the time the Nominees are elected,
much of RJR Nabisco's indebtedness will already have been prepaid. Thus, the
Nominees have and will continue to focus their attention on the proposed spinoff
of Nabisco. The Nominees have no current plans to change the existing management
or operations of Nabisco. Each of the Nominees has consented, if so elected, to
serve as a director and are fully committed, if elected, to take such action as
they deem advisable and in the best interest of the Stockholders and which they
believe will maximize Stockholder values and improve RJR Nabisco's future
viability and growth.
Participants in Solicitation of Proxies
In addition to the Nominees: Messrs: Becker, First, Fleigel,
Glass, Hirsch, Icahn, Mitchell, Pardo and Wasserman, the participants (the
"Participants") in the solicitation of proxies are High River, Riverdale LLC
("Riverdale"), Barberry Corp. ("Barberry"), Meadow Walk Limited Partnership
("Meadow Walk"), American Real Estate Holdings, L.P. ("AREH"), American Real
Estate Partners, L.P. ("AREP"), American Property Investors ("API"), Beckton
Corp. ("Beckton"), and Icahn & Co., Inc. ("Icahn & Co."), all of which entities
are affiliates of Mr. Icahn.
High River is a Delaware limited partnership, principally
engaged in the business of investing in securities. High River's general partner
is Riverdale LLC, a New York limited liability company. Riverdale is primarily
engaged in the business of acting as a general partner of High River. Through
their direct or indirect ownership by Mr. Icahn, the following entities which
also own shares of Common Stock may also be deemed to be affiliates of High
River: (i) Meadow Walk, a Delaware limited partnership, which is primarily
engaged in the business of investing in securities; (ii) Barberry, a Delaware
corporation, which is primarily engaged in the business of investing in
securities and acting as general partner of Meadow Walk; (iii) AREP, a Delaware
limited partnership, which is primarily engaged in the business of acquiring and
managing real estate through AREH, a Delaware limited partnership, its operating
subsidiary; (iv) AREH, which is primarily engaged in the business of acquiring
and managing real estate; (v) API, a Delaware corporation, which is primarily
engaged in the business of acting as general partner of AREP, AREH and other
limited partnership(s); and (vi) Beckton, a Delaware corporation, which is
primarily engaged in the business of holding the outstanding securities of API.
The principal business address of each of High River, Riverdale, Meadow Walk,
Barberry, AREP, AREH, API and Beckton is 100 South Bedford Road, Mount Kisco,
New York 10549.
4
Mr. Icahn's present principal occupation is acting as a
Director of Starfire Holding Corporation, a Delaware corporation ("Starfire"),
and as the Chairman of the Board and Director of various of Starfire's
subsidiaries. Mr. Icahn's principal business address is c/o Icahn Associates
Corp., 767 Fifth Avenue, 47th Floor, New York, New York 10153. Through his
control of High River and its affiliates, Carl C. Icahn may be deemed to be the
largest individual holder of the Common Stock of RJR Nabisco. During the past
four years, Mr. Icahn has been a strong proponent of the prompt spinoff of
Nabisco from RJR Nabisco to its Stockholders. None of Mr. Icahn, High River or
their affiliates have any connection to the tobacco industry other than as
shareholders of RJR Nabisco.
High River is the direct beneficial owner of 18,020,800 shares
of Common Stock. Riverdale is the indirect beneficial owner of 18,020,800 shares
of Common Stock. Barberry is the indirect beneficial owner of 1,256,700 shares
of Common Stock. Meadow Walk is the direct beneficial owner 1,256,700 shares of
Common Stock. AREH is the direct beneficial owner of 6,448,200 shares of Common
Stock. Each of AREP, API and Beckton are indirect beneficial owners of 6,448,200
shares of Common Stock.
Riverdale, the general partner of High River, is over 99
percent owned by Mr. Icahn. Barberry, the sole general partner of Meadow Walk,
is wholly owned by Mr. Icahn. API, the general partner of both AREH and AREP, is
wholly owned by Beckton, which is wholly owned by Mr. Icahn. As such, Mr. Icahn
may be deemed to be the indirect beneficial owner of 25,725,700 shares of Common
Stock, which represents approximately 7.9% of outstanding shares of Common
Stock.
The purchase of the 25,725,700 shares of Common Stock was made
with working capital of High River, Mr. Icahn and their affiliates and pursuant
to margin accounts in the regular course of business. The amount of funds held
in margin accounts containing Common Stock, as of April 22, 1999, was
$143,101,778.
All transactions in the securities of RJR Nabisco effected
within the past 2 years by High River and its affiliates are contained in
Appendix I attached hereto.
Report of Stroock & Stroock & Lavan LLP
On April 9, 1999, High River received a report, which it had
commissioned, from the law firm of Stroock & Stroock & Lavan LLP entitled "The
Nabisco Spinoff: Civil Liability and the Tobacco Industry." A copy of this
report was filed with the Securities and Exchange Commission on April 12, 1999
and therefore is publicly available. Other than this report, neither High River
nor Mr. Icahn has obtained any other reports regarding the proposed spinoff of
Nabisco. Although High River has stated in a press release that what Stroock had
provided was a legal opinion, the report is a detailed legal and econometric
analysis and not a legal opinion, and Stroock has not provided a legal opinion
regarding these matters to High River. Stroock & Stroock & Lavan were retained
by High River to prepare the report in February 1999 and otherwise have not
represented High River, Mr. Icahn or any of their affiliates in connection with
any matters related to RJR Nabisco.
5
The report analyzed the possibility that creditors of R.J.
Reynolds Tobacco Company ("Reynolds"), a wholly-owned subsidiary of RJR Nabisco,
Inc., which is wholly owned by RJR Nabisco, could enjoin RJR Nabisco from
spinning off its interest in Nabisco. As part of this analysis, the report
examined a closely related issue, whether plaintiffs in tobacco litigations
could impose upon RJR Nabisco the tobacco liabilities of Reynolds. The report
was subject to certain assumptions and qualifications including, without
limitation, that Stroock did not examine the loan agreements, indentures, and
other debt instruments of RJR Nabisco to see if the spinoff of Nabisco would
violate any covenants in those agreements. Stockholders are recommended to
review such report which has been filed with the Securities and Exchange
Commission.
The report stated that in order to obtain an injunction to
prevent a spinoff of Nabisco, a plaintiff would have to demonstrate that there
would be "irreparable harm" to the plaintiff if Nabisco were spun off. In order
to prove irreparable harm, the plaintiff would have to prove that RJR Nabisco
would be rendered insolvent by the spinoff of Nabisco. The report concludes that
even if industry-wide claims brought over the next 25 years succeed at the high
end of the liability estimates (for purposes of the report it was assumed that
Reynolds had approximately 25% market share of industry revenues and a
corresponding 25% of potential tort liabilities), there would still be over $200
billion in profit industry-wide to satisfy individual claims, and that thus, any
allegation of insolvency and thereby "irreparable harm" should fail. As with any
estimate, no assurances can be given that these estimated values in the
foregoing sentence will be the actual values. The report further states that
even if tobacco plaintiffs could convince a court of the insolvency argument,
they still must prove that the spinoff of Nabisco is a fraudulent conveyance.
The report states that spinning off Nabisco would not constitute a fraudulent
conveyance because: (i) RJR Nabisco is not likely to be found liable as a
tobacco tortfeasor for tobacco-related claims; (ii) there is not likely to be a
basis to pierce the corporate veil between Reynolds and RJR Nabisco; and (iii)
there is no evidence Reynolds had ever been insolvent in the past when it
up-streamed capital. Thus, the report concluded that an injunction preventing
the spinoff of Nabisco should not be granted. The report further stated that
even if an individual plaintiff were to succeed in getting an injunction
granted, it would be very difficult for such a plaintiff to post the huge bond
necessary to see the injunction carried through, as such a bond would have to be
commensurate with the financial magnitude of the spinoff of Nabisco (estimated
at approximately $9 billion).
Of course, there can be no assurances that, despite the view
expressed in the Stroock report, tobacco plaintiffs would not be successful in
obtaining an injunction against the spinoff of Nabisco or that such a spinoff
would not be deemed to constitute a fraudulent conveyance or that a plaintiff
would not be able to post the bond necessary if an injunction were granted.
However, Stroock & Stroock & Lavan has advised Mr. Icahn and High River that it
is prepared to provide RJR Nabisco and its current or future Board with a legal
opinion, as of the date of the report, to the effect of the conclusions
contained in the report. Such opinion would be based upon the report in its
entirety, including the qualification and assumptions contained therein. In the
event that the Nominees are elected, RJR Nabisco would be expected to bear to
cost of the preparation of such opinion. High River intends to request to be
reimbursed for the costs and expenses previously incurred by it (approximately
$650,000) in connection with the preparation of Stroock's report in the
6
event that the Nominees are elected or if Stroock & Stroock & Lavan otherwise
provides the opinion to RJR Nabisco's Board.
Analysis of Nabisco Spinoff
Neither High River nor Mr. Icahn has prepared or engaged
anyone to prepare a pro forma financial analysis of RJR Nabisco providing for
the spinoff of Nabisco. Rather, High River and Mr. Icahn have relied on (i)
their perception that removing the taint of the tobacco litigation from Nabisco
will unlock the value of Nabisco, and (ii) the mathematical calculations set
forth below, as the sole analyses, other than the Stroock report, done by Mr.
Icahn and High River in connection with their analysis of a spinoff of Nabisco.
Of course, there can be no assurances that such perception is correct or how
Nabisco will be valued upon being spun off.
High River and Mr. Icahn have calculated the RJR Nabisco share
of Nabisco's market capitalization at approximately $28 per Share by multiplying
the market capitalization for Nabisco (approximately $11.3 billion) by RJR
Nabisco's interest (80.5%) and dividing that number (approximately 9.1 billion)
by the number of outstanding shares of RJR (325,018,348 as listed on RJR
Nabisco's Form 10-K for the year ended 12/31/98). High River believes its
perception regarding the taint of the tobacco litigation is correct, since
shares of Common Stock are currently trading at approximately $26 per share, and
the $28 per share value stated above only refers to the value of Nabisco and
does not include the value of the domestic tobacco business.
In addition to the foregoing value of Nabisco, Mr. Icahn and
High River believe that despite the problems facing the tobacco business there
is some value in the domestic tobacco business itself. In this regard, Mr. Icahn
and High River have considered that the domestic tobacco business is generating
cash flow of over $1 billion per year, and in the opinion of Mr. Icahn and High
River could continue to generate a dividend of $1.60 or possibly higher in 1999.
Furthermore, Salomon Smith Barney, RJR Nabisco's own financial advisor, has
stated their belief that the domestic tobacco business on its own, is worth, in
Salomon Smith Barney's opinion1, a minimum of $14 per share, after the sale of
international tobacco. Assuming that Nabisco is worth $28 per RJR Nabisco share
and the domestic tobacco business is worth $14 per share, the total value of the
two together would be $42. Currently, the RJR Nabisco stock is only worth
approximately $26 per share. While there can be no assurances that these assumed
values will be the actual values, this analysis demonstrates Mr. Icahn and High
River's views regarding the value of a spinoff of Nabisco.
Past Involvement in Solicitations
In December, 1995, the Brooke Group, Ltd., a Delaware
corporation ("Brooke"), commenced a solicitation of written consents to adopt
advisory, non-binding resolutions, without a stockholders' meeting, to (i)
spinoff Nabisco, and (ii) to amend the bylaws of RJR Nabisco to restore
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1 Salomon Smith Barney Report dated April 12, 1999. Used without permission.
7
certain provisions of the bylaws which had previously been amended. In October,
1995, High River (which owned 8,013,000 shares of Common Stock at the time)
entered into an agreement ("Brooke Agreement") with Brooke pursuant to which
High River agreed to grant a written consent with regard to such proposals, and
a proxy with respect to all of its shares in the event that the Brooke sought to
replace the incumbent board at the 1996 annual meeting of shareholders with a
slate committed to effecting a spinoff of Nabisco. Both resolutions were
approved by the stockholders of RJR Nabisco but neither was implemented by RJR
Nabisco.
In March, 1996, Brooke commenced a proxy solicitation in order
to elect a slate of its nominees to the board of directors of RJR Nabisco who
were committed to the spinoff of Nabisco. In accordance with the Brooke
Agreement, High River and its affiliates had agreed to vote all shares held by
them for the Brooke's nominees. Brooke's nominees were not elected.
In November 1996, as was required by the bylaws of RJR Nabisco
which were in effect at that time, Icahn & Co., which is an affiliate of Mr.
Icahn and High River, delivered a letter to RJR Nabisco stating that it intended
to appear at the 1997 annual meeting for the purpose of proposing a slate of
nominees for election as directors of RJR Nabisco. In later proxy soliciting
materials, Mr. Icahn stated that the nominees' platform would advocate (i) the
prompt spinoff of Nabisco, (ii) working toward a global settlement of tobacco
litigation claims, and (iii) raising the annual dividend to $2.00 and
maintaining such dividend even after Nabisco was spun off. While the Nominees,
as stated above, intend to pursue a global settlement of tobacco litigation
claims, they have not taken a position with regard to the payment of dividends,
as they intend to make a determination with regard to such matter upon being
elected.
In February, 1997, Mr. Icahn and High River filed Amendment
No. 4 to their Schedule 13D announcing that they were not going to engage in a
proxy solicitation and that they had sold all shares of Common Stock held by
them due to their dissatisfaction with the management of RJR Nabisco.
In December, 1998, Mr. Icahn and High River filed a Schedule
13D disclosing that they had purchased 18,043,300 shares of Common Stock. In
such Schedule 13D, Mr. Icahn and High River stated that they acquired such
shares because they believed that they were underpriced compared to their
intrinsic value. Furthermore, Mr. Icahn and High River stated that they believed
that such additional value would be reflected in the marketplace following the
spinoff of Nabisco. Subsequently, Mr. Icahn and High River filed amendments to
their Schedule 13D reflecting the purchase of 7,682,400 additional shares of
Common Stock.
8
ELECTION OF DIRECTORS
According to RJR Nabisco's proxy statement in connection with
the 1999 Annual Meeting, RJR Nabisco currently has nine (9) Directors, all of
whose terms will expire at the Annual Meeting. High River proposes that RJR
Nabisco Stockholders elect the Nominees, to be nominated by Icahn & Co., an
affiliate of High River, as the Directors of RJR Nabisco at the Annual Meeting.
Each Nominee, if elected, would hold office until the 2000 Annual Meeting of
Stockholders and until a successor has been elected and qualified. Although High
River does not anticipate that any of the persons named below will be unable or
unwilling to stand for election, in the event of such occurrence, proxies may be
voted for a substitute designated by High River.
Background information about the Nominees is set forth below.
The Nominees are not receiving any compensation from Mr. Icahn, High River or
any of their affiliates in connection with this proxy solicitation. See Appendix
I for additional information about the Nominees, including their ownership,
purchase and sale of securities issued by RJR Nabisco.
JEROME M. BECKER, age 63, has been self employed as an attorney since 1995.
Prior to 1995, Mr. Becker was employed as an attorney by the law firm of
Davidoff & Malito, where he was of counsel from 1981 through 1995.
HAROLD FIRST, age 62, has been self employed for the past five years as a
Financial Consultant. Mr. First currently serves as a Director of Cadus
Pharmaceutical Corporation, Philip Services Corporation, PANACO Inc. and
Tel-Save.com, Inc.
SEYMOUR FLIEGEL, age 67, has been employed since January 1989 at the Manhattan
Institute, Center for Educational Innovation, where he has served as Senior
Fellow since January 1989 and President since January 1999. Since July 1989, Mr.
Fliegel has been the President of Sy Fliegel Associates, an educational
consulting business. Mr. Fliegel has had extensive experience in the educational
sector, where he has served as an Adjunct Professor at Hunter College as well as
a teacher, assistant principal, principal, deputy superintendent and
superintendent in the New York City public school system.
RUSSELL D. GLASS, age 36, has served as President and Chief Investment Officer
of Icahn Associates Corp., a diversified investment company, since April 1998.
Mr. Glass has served as Vice Chairman and Director of Lowestfare.com since
August 1998 and Vice Chairman of Global Discount Travel since May 1998.
Previously, Mr. Glass had been a Partner in Relational Investors LLC, from 1996
to 1998, and in Premier Partners Inc., from 1988 to 1996, firms engaged in
investment research and management. Mr. Glass currently serves as a Director of
Automated Travel Systems, Inc., a software development firm; Cadus
Pharmaceutical Corporation, a genetic pharmaceutical research company; National
Energy Group, Inc., an oil & gas exploration and production company; Delicious
Brands, Inc., a food products company; and the A.G. Spanos Corporation, a
national real estate developer and owner of the NFL San Diego Chargers Football
Club. Mr. Glass earned a B.A. degree in Economics from Princeton University and
an M.B.A. from the Stanford University Graduate School of Business.
9
MARTIN HIRSCH, age 43, has been Vice President of American Real Estate Partners,
L.P., since 1991. Mr. Hirsch currently serves as Director of National Energy
Group, Inc., an oil & gas exploration and production company and Stratosphere
Corporation.
CARL C. ICAHN, age 63, has served as Chairman of the Board and a Director of
Starfire Holding Corporation (formerly Icahn Holding Corporation), a
privately-held holding company, and Chairman of the Board and a Director of
various of Starfire's subsidiaries, including ACF Industries, Incorporated, a
privately-held railroad freight and tank car leasing, sales and manufacturing
company, since 1984 and ACF Industries Holdings Corp., a privately-held holding
company for ACF, since August 1993. He has also been Chairman of the Board and
President of Icahn & Co., Inc., a registered broker-dealer and a member of the
National Association of Securities Dealers, since 1968. Since November 1990, Mr.
Icahn has been Chairman of the Board of American Property Investors, Inc., the
general partner of American Real Estate Partners, L.P., a public limited
partnership that invests in real estate. In 1979, Mr. Icahn acquired control and
presently serves as Chairman of the Board of Bayswater Realty & Capital Corp., a
real estate investment and development company. Mr. Icahn has served as Chairman
of the Board and Director of Lowestfare.com since August 1998. Mr. Icahn has
served as a Director of Global Travel Marketing, Inc., Lowestfare.com's
wholly-owned marketing subsidiary, since June 1995. Mr. Icahn has been a
Director of Cadus Pharmaceutical Corporation, a public company involved in
genetic pharmaceutical research, since July 1993 and was Co-Chairman of the
Board from May 1995 to May 1996. Mr. Icahn has been the Chairman of the Board
and a Director of Stratosphere Corp., a public company which operates a hotel
and casino in Las Vegas, Nevada, since October 1998. He has also served as a
Director of Automated Travel Systems, Inc., a software development firm, since
January 1999. Mr. Icahn also has substantial equity interests in and controls
various entities which invest in publicly traded securities. Mr. Icahn holds a
B.A. degree in Philosophy from Princeton University.
ROBERT J. MITCHELL, age 52, has been Senior Vice President-Finance of ACF
Industries, Incorporated since March 1995 and was Treasurer of ACF Industries,
Incorporated from December 1984 until March 1995. Mr. Mitchell has also served
as President and Treasurer of ACF Industries Holdings Corp. since August 1993
and as Vice President, Liaison Officer of Icahn & Co., Inc. since November 1984.
From 1987 until January 1993, Mr. Mitchell served as Treasurer of Trans World
Airlines, Inc. Mr. Mitchell currently serves as a Director of Cadus
Pharmaceutical Corporation, Stratosphere Corporation and National Energy Group,
Inc., an oil & gas exploration and production company. He received his B.S.
degree in Business Administration from St. Francis College.
FELIX PARDO, age 61, has been Chairman of Dyckerhoff Inc. since July 1998. Mr.
Pardo served as President of Philip Services Corporation from March 1998 until
November 1998. In addition, Mr Pardo served as President of Ruhr-American Coal
Corp. from May 1992 until March 1998 and as Chairman of the Newalta Corporation
from 1992 until March 1998. Mr. Pardo currently serves as a Director of
Innovative Valve Technologies, Inc., Newalta Corporation, PANACO, Inc. and
Philip Services Corporation.
10
JACK G. WASSERMAN, age 62, has worked as an attorney for the law firm of
Wasserman Schneider and Babb, where he has served as a Senior Partner since
1996. Mr. Wasserman currently serves as a Director of Cadus Pharmaceutical
Corporation, National Energy Group, Inc., an oil & gas exploration and
production company and American Property Investors, Inc., the general partner of
American Real Estate Partners, L.P.
WE STRONGLY URGE YOU TO VOTE FOR THE ELECTION OF THE NOMINEES
BY SIGNING, DATING AND RETURNING THE ENCLOSED GOLD PROXY IN THE POSTAGE PAID
ENVELOPE PROVIDED TO YOU WITH THIS PROXY STATEMENT. IF YOU HAVE SIGNED THE GOLD
PROXY CARD AND NO MARKING IS MADE, YOU WILL BE DEEMED TO HAVE GIVEN A DIRECTION
TO VOTE THE SHARES REPRESENTED BY THE GOLD PROXY CARD FOR THE ELECTION OF ALL
THE NOMINEES.
All transactions in securities of RJR Nabisco engaged in by
any Nominee during the past two years, as well as current ownership of any such
securities by any Nominee, are listed on Appendix I attached hereto. No Nominee
owns any securities of RJR Nabisco of record but not beneficially. No Nominee
owns beneficially any securities of any parent or subsidiary of RJR Nabisco. In
addition, and except as stated herein, no Nominee or any of their associates has
any agreement or understanding with respect to future employment by RJR Nabisco
and no such person has any agreement or understanding with respect to any future
transactions to which RJR Nabisco will or may be a party.
Except as described herein, no Nominee nor any of their
associates (i) has engaged in or had a direct or indirect interest in any
transaction or series of transactions since the beginning of RJR Nabisco's last
fiscal year or in any currently proposed transaction, to which RJR Nabisco or
any of its subsidiaries is a party, where the amount involved was in excess of
$60,000, (ii) owns beneficially or of record any securities of RJR Nabisco,
(iii) borrowed any funds for the purpose of acquiring or holding any securities
of RJR Nabisco or is presently, or has been within the past year, a party to any
contract, arrangement or understanding, with any person with respect to
securities of RJR Nabisco.
AGREEMENTS WITH NOMINEES
High River has entered into a letter agreement (the "Nominee
Agreements") with each of the Nominees with respect to their service as
nominees, to stand for election as Directors of RJR Nabisco at the Annual
Meeting. The Nominee Agreements each provide, among other things, as follows:
* The nominee has acknowledged that he has agreed to become a member of
the slate of nominees to stand for election as directors of the RJR
Nabisco in connection with a proxy
11
contest with management of the RJR Nabisco in respect of the election of
directors of RJR Nabisco at the Annual Meeting.
* High River has agreed to pay the costs of the proxy contest.
* The nominee has acknowledged that the Nominees will run for election on
a platform which advocates the prompt spinoff of Nabisco to
Stockholders of RJR Nabisco and that the Proxy Statement regarding the
election of the Nominees will disclose such. The Nominee has
acknowledged that he is in agreement with the platform and presently
intends to take such action, acknowledging that he is not, and cannot
be, bound to do so.
* High River has agreed to indemnify each nominee from and against any
losses incurred by the nominee arising from any action relating to such
nominee's role as a nominee, absent gross negligence or willful
misconduct.
OTHER MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
According to RJR Nabisco's Proxy Statement, RJR Nabisco is
soliciting proxies with respect to three (3) proposals other than election of
directors. Please refer to RJR Nabisco's Proxy Statement for a detailed
discussion of these proposals, including various arguments in favor of and
against such proposals. These proposals are discussed below.
Item 2 -- Ratification of Appointment of Independent Auditors
At the Annual Meeting, the Stockholders will be asked to
ratify the appointment of Deloitte & Touche LLP as RJR Nabisco's independent
auditors for the year ending December 31, 1999. High River recommends a vote FOR
this proposal.
Item 3 -- Stockholder Proposal on Tobacco Advertising and Youth
At the Annual Meeting, the Stockholders will be asked to vote
on the following stockholder proposal: "RESOLVED, that shareholders request the
Board to implement the following policy for our Company: that, before any
promotional, marketing, and/or advertising campaign presently running continues
or its inaugurated in the future, it must be submitted to independent and
certifiable testing to insure that it is not equally or more appealing to the
14-to-18 age group then groups over 18." High River is not making any
recommendation on this proposal.
Item 4 -- Stockholder Proposal on Smuggling
At the Annual Meeting, the Stockholders will be asked to vote
on the following stockholder proposal: "RESOLVED: the shareholders request the
Board to establish a committee of independent directors to investigate and
determine the extent of our Company's involvement directly
12
or indirectly in smuggling its cigarettes throughout the world and to make
appropriate recommendations to ensure that our Company is not involved in any
way in selling its cigarettes in ways that assist smuggling. The committee shall
report its findings and recommendations to the shareholders prior to the 2000
annual meeting." High River is not making any recommendation on this proposal.
Other Proposals
Except as set forth above, we are not aware of any proposals
to be brought before the Annual Meeting. Should other proposals be brought
before the Annual Meeting, the persons named on the GOLD proxy card will abstain
from voting on such proposals unless such proposals adversely affect the
interests of High River and/or the Nominees as determined by High River in its
sole discretion, in which event such persons will vote on such proposals at
their discretion.
Voting on Other Matters in Items 2-4
The accompanying GOLD proxy card will be voted in accordance
with your instruction on such card. You may vote for or vote against, or abstain
from voting on, each of Items 2-4 described above by marking the proper box on
the GOLD proxy card. IF YOU HAVE SIGNED THE PROXY CARD AND NO MARKING IS MADE,
YOU WILL BE DEEMED TO HAVE GIVEN A DIRECTION TO VOTE THE SHARES REPRESENTED BY
THE GOLD PROXY CARD FOR ITEM 2, AND TO ABSTAIN FROM VOTING WITH RESPECT TO ITEMS
3 AND 4.
VOTING PROCEDURES
The presence of the holders of record of a majority of the
outstanding shares of Common Stock and ESOP Preferred Stock, represented at the
Annual Meeting in person or by proxy, will constitute a quorum. Shares
represented by proxies that are marked "abstain" will be counted as shares
present for purposes of determining the presence of a quorum on all matters.
Proxies relating to "street name" shares that are voted by brokers on some but
not all of the matters will be treated as shares present for purposes of
determining the presence of a quorum on all matters, but will not be treated as
shares entitled to vote at the Annual Meeting on those matters as to which
authority to vote is withheld by the broker ("Broker Non-Votes"). The nine
nominees receiving the highest vote total will be elected as Directors of the
Company. Accordingly, abstentions and Broker Non-Votes will not affect the
outcome of the election. All other matters to be voted on will be decided by a
majority vote of the shares represented at the Annual Meeting and entitled to
vote. On any such matter, an abstention will have the same effect as a negative
vote but, because shares held by brokers will not be considered entitled to vote
on matters as to which the brokers withhold authority, a Broker Non-Vote will
have no effect on the vote.
13
PROXY PROCEDURES
IN ORDER FOR YOUR VIEWS TO BE REPRESENTED AT THE ANNUAL
MEETING, PLEASE MARK, SIGN, DATE AND RETURN THE ENCLOSED GOLD PROXY CARD IN THE
ENCLOSED POSTAGE-PREPAID ENVELOPE.
The accompanying GOLD proxy card will be voted at the Annual
Meeting in accordance with your instructions on such card.
Revocation of Proxies
Any proxy may be revoked at any time prior to the time a vote
is taken by delivering to the secretary of RJR Nabisco a notice of revocation
bearing a later date, by a duly executed proxy bearing a later date or by
attending the Annual Meeting and voting in person.
Only holders of record as of the close of business on the
Record Date will be entitled to vote. If you were a Stockholder of record on the
Record Date, you will retain your voting rights of the Annual Meeting even if
you sell such shares after the Record Date. Accordingly, it is important that
you vote the shares held by you on the Record Date, or grant a proxy to vote
such shares on the GOLD proxy card, even if you sell such shares after the
Record Date.
SOLICITATION OF PROXIES
Solicitation of proxies shall be made by Mr. Icahn. No other
director, officer or employee of High River or its affiliates will be soliciting
proxies.
High River has retained Innisfree M&A Incorporated
("Innisfree") to conduct the solicitation, for which Innisfree is to receive a
fee of approximately $250,000, plus reimbursement for its reasonable
out-of-pocket expenses. High River has agreed to indemnify Innisfree against
certain liabilities and expenses, including certain liabilities under the
federal securities laws. Insofar as indemnification for liabilities arising
under the federal securities laws may be permitted to Innisfree pursuant to the
foregoing provisions, we have been informed that in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy and is therefore unenforceable. Proxies may be solicited by mail, courier
services, Internet, advertising, telephone or telecopier or in person. It is
anticipated that Innisfree will employ approximately 100 persons to solicit
proxies from Stockholders for the Annual Meeting. Costs related to the
solicitation of proxies, including expenditures for attorneys, accountants,
public relations and financial advisers, proxy solicitors, advertising,
printing, transportation and related expenses, will be borne by High River and
Mr. Icahn. To date, such costs (exclusive of the preparation of the Stroock &
Stroock & Lavan report) are approximately $450,000
14
and are expected to be approximately $1,250,000 in total. High River and Mr.
Icahn intend to seek reimbursement for the costs and expenses associated with
the proxy solicitation in the event that the Nominees are elected to the Board
of Directors of RJR Nabisco, but do not intend to submit the issue of
reimbursement to a vote of security holders.
CERTAIN INFORMATION REGARDING
ARRANGEMENTS/UNDERSTANDINGS WITH
RESPECT TO SECURITIES OF RJR NABISCO
Mr. Icahn, High River, Riverdale, Barberry, Meadow Walk, AREP,
API, AREH and Beckton may be deemed to have an understanding with respect to
securities of RJR Nabisco as they may be deemed to constitute a "group" for the
purposes of Section 13(d) of the Act. As a consequence of being deemed a
"group", such parties are required to and have made any required Schedule 13D
filings as a group. Such Schedule 13D filings are publicly available.
ADDITIONAL INFORMATION
Certain information regarding the securities of RJR Nabisco
held by RJR Nabisco's Directors, nominees, management and 5% Stockholders is
contained in RJR Nabisco's Proxy Statement and is incorporated herein by
reference. Information concerning the date by which proposals of security
holders intended to be presented at the next annual meeting of Stockholders of
RJR Nabisco must be received by RJR Nabisco for inclusion in RJR Nabisco's proxy
statement and form of proxy for that meeting is also contained in RJR Nabisco's
proxy statement and is incorporated herein by reference.
High River assumes no responsibility for the accuracy or
completeness of any information contained herein which is based on, or
incorporated by reference to, RJR Nabisco's proxy statement.
HIGH RIVER LIMITED PARTNERSHIP
Date: April 23, 1999
15
APPENDIX I
SUPPLEMENTAL NOMINEE AND OTHER INFORMATION
Set forth below is (a) the name and business address of each
of the participants and their associates in the solicitation made pursuant to
this Proxy Statement, and (b) the dates, types and amounts of each participant's
purchases and sales of the Company's debt and equity securities within the past
two years. Except for High River and its affiliates, the only participants are
the Nominees.
NAME AND DATE NUMBER OF
BUSINESS OF SECURITIES CURRENT
ADDRESS TRANSACTION PURCHASED OWNERSHIP
Jerome Becker
c/o Stein, Davidoff
& Malito NONE
605 Third Avenue
34th Floor
New York, NY 10158
Harold First 07/21/98 500 (1) 500 (1)
345 Park Avenue
35th Floor
New York, NY 10154
Seymour Fliegel NONE
Center for Educational
Innovation
28 West 44th Street
New York, NY 10036
Russell Glass NONE
Icahn Associates Corp.
767 Fifth Avenue
47th Floor
New York, NY 10153
Marty Hirsch 04/12/96 100 (1) 100 (1)
American Real Estate
Partners, L.P.
767 Fifth Avenue
47th Floor
New York, NY 10153
16
Carl Icahn (see transactions of High River and Affiliates listed below)
c/o Icahn Associates Corp.
767 Fifth Avenue
47th Floor
New York, NY 10153
Robert Mitchell NONE
Icahn Associates Corp.
767 Fifth Avenue
47th Floor
New York, NY 10153
Felix Pardo NONE
Dyckerhoff Inc.
313 Warren Street
Glen Falls, NY 12801
Jack Wasserman 12/04/98 1,300 (1)
Wasserman, Schneider & Babb 02/23/99 300 (1) 1,600 (1)
111 Broadway
New York, NY 10006
- --------------------
1 Common Stock
17
Transactions Within the Past Two Years
in RJR Nabisco Voting
Securities by High River and Affiliates(1)
Name Date Purchased No. of Shares
High River Limited
Partnership 12/9/98 140,000
12/10/98 763,500
12/11/98 415,000
12/14/98 585,400
12/15/98 10,000
1/20/99 591,500
1/20/99 600,000
1/21/99 200,000
1/21/99 883,500
1/21/99 700,000
1/22/99 183,800
1/22/99 183,800
1/25/99 12,500
1/25/99 12,500
1/26/99 125,000
1/26/99 125,000
- --------
1 All transactions represent purchases of Common Stock.
18
1/27/99 50,000
1/27/99 700,000
2/3/99 125,000
2/8/99 325,000
2/9/99 60,000
2/10/99 500,000
2/11/99 430,200
2/11/99 191,400
2/12/99 185,400
2/26/99 219,000
American Real Estate
Holdings, L.P. 10/12/98 195,700
10/13/98 235,000
10/14/98 210,000
10/15/98 40,000
10/16/98 200,000
10/18/98 35,000
10/20/98 200,000
10/21/98 50,000
10/22/98 100,000
10/23/98 55,500
10/26/98 44,500
19
10/27/98 100,000
10/28/98 75,000
12/1/98 148,400
12/2/98 148,800
12/3/98 350,000
12/4/98 270,100
12/7/98 245,000
12/8/98 495,100
12/16/98 637,000
12/17/98 470,000
12/18/98 500,000
12/21/98 450,000
12/22/98 40,000
1/19/99 22,100
Meadow Walk Limited
Partnership 1/27/99 650,000
2/9/99 100,000
3/1/99 206,700
3/2/99 300,000
20
IMPORTANT
1. If your shares are held in your own name, please mark, date and mail
the enclosed GOLD proxy card to our Proxy Solicitor, Innisfree M&A Incorporated,
in the postage-paid envelope provided.
2. If your shares are held in the name of a brokerage firm, bank
nominee or other institution, only it can vote such shares and only upon receipt
of your specific instructions. Accordingly, you should contact the person
responsible for your account and give instructions for a GOLD proxy card to be
signed representing your shares.
3. If you have already submitted a proxy to RJR Nabisco for the Annual
Meeting, you may change your vote to a vote FOR the election of the Nominees by
marking, signing, dating and returning the enclosed GOLD proxy card for the
Annual Meeting, which must be dated after any proxy you may have submitted to
RJR Nabisco. ONLY YOUR LATEST DATED PROXY FOR THE ANNUAL MEETING WILL COUNT AT
THE ANNUAL MEETING.
21
PROXY CARD
RJR NABISCO HOLDINGS CORP.
1999 ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED BY HIGH
RIVER LIMITED PARTNERSHIP
The undersigned hereby, with respect to all shares of stock of
RJR Nabisco Holdings Corp. (the "Company") which the undersigned may be entitled
to vote, constitutes and appoint each of Carl C. Icahn, Russell Glass and Robert
Mitchell as his true and lawful agent and proxy, with full power of substitution
in each, to represent the undersigned, in each case at the 1999 Annual Meeting
of Stockholders of the Company to be held at The M.C. Benton, Jr. Convention and
Civic Center, 301 West Fifth Street, Winston-Salem, North Carolina, on
Wednesday, May 12, 1999 at 9:00 a.m., and at any adjournments or postponements
thereof, to vote such stock on all matters coming before said meeting as set
forth below:
Election of directors. Nominees:
Jerome Becker, Harold First, Seymour Fliegal, Russell Glass,
Martin Hirsch, Carl Icahn, Robert Mitchell, Felix Pardo and Jack
Wasserman
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER MARKED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS GIVEN WITH RESPECT TO
ANY PROPOSAL, THIS PROXY WILL BE VOTED FOR ALL NOMINEES IN PROPOSAL 1, FOR
PROPOSAL 2 AND TO ABSTAIN FROM VOTING ON PROPOSALS 3 AND 4. PLEASE MARK THIS
PROXY CARD, FILL IN THE DATE, SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY IN
THE ACCOMPANYING ENVELOPE. NO POSTAGE IS NECESSARY IF MAILED IN THE UNITED
STATES
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE.)
HIGH RIVER RECOMMENDS A VOTE FOR ITS NOMINEES AND FOR PROPOSAL 2
1. Election of Directors (see reverse) For, except withheld from the
following nominees:
---------------------------------------------------------- FOR / / WITHHELD / /
2. Ratify the appointment of Deloitte and Touche LLP as independent
auditors. FOR / / AGAINST / / ABSTAIN/ /
3. Stockholder proposal on tobacco advertising and youth. FOR / / AGAINST / / ABSTAIN/ /
4. Stockholder proposal on smuggling. FOR / / AGAINST / / ABSTAIN / /
When shares are held by joint tenants, both should sign. When signing
as attorney-in-fact, executor, administrator, trustee, guardian,
corporate officer or partner, please give full title as such. If a
corporation, please sign in corporate name of President or other
authorized officer. If a partnership, please sign a partnership name by
authorized person.
---------------------------------------------------------
Signature(s) of Stockholder(s) Date
---------------------------------------------------------
Title, if any