Exhibit 4.8
GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT, dated as of June __, 1995, is executed
and delivered by RJR Nabisco Holdings Corp., a Delaware corporation (the
"Guarantor"), and The Bank of New York as the initial Guarantee Trustee (as
defined herein) for the benefit of the Holders (as defined herein) from time
to time of the Preferred Securities (as defined herein) of RJR Nabisco
Holdings Capital Trust I, a Delaware statutory business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust
(the "Declaration"), dated as of ________, 1995 among the trustees of the
Issuer named therein, RJR Nabisco Holdings Corp., as Sponsor, and the Holders
from time to time of undivided beneficial interests in the assets of the
Issuer, the Issuer is issuing as of the date hereof in accordance with the
Offer (as defined herein) $_______ aggregate liquidation amount of its ___%
Trust Originated Preferred Securities (the "Preferred Securities")
representing undivided beneficial interests in the assets of the Issuer and
having the terms set forth in Exhibit B to the Declaration;
WHEREAS, the Preferred Securities will be issued by the Issuer upon
deposit of the Guarantor's Debentures (as defined herein) with the Issuer as
trust assets; and
WHEREAS, as incentive for the Holders to exchange Series B
Depositary Shares ("Depositary Shares") representing 1/1000 of a share of
Guarantor's Series B Preferred Stock (as defined herein) for Preferred
Securities pursuant to the Offer, the Guarantor desires to irrevocably and
unconditionally agree, to the extent set forth herein, to pay to the Holders
of the Preferred Securities the Guarantee Payments (as defined herein) and to
make certain other payments on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the exchange of Depositary
Shares for Preferred Securities, which exchange the Guarantor hereby agrees
shall benefit the Guarantor, the Guarantor executes and delivers this
Guarantee Agreement for the benefit of the Holders from time to time of the
Preferred Securities.
ARTICLE I
SECTION 1.1 Definitions.
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(a) Capitalized terms used in this Guarantee Agreement but not
defined in the preamble above have the respective meanings assigned to them
in this Section 1.1;
(b) a term defined anywhere in this Guarantee Agreement has the
same meaning throughout;
(c) all references to "the Guarantee Agreement" or "this Guarantee
Agreement" are to this Guarantee Agreement as modified, supplemented or
amended from time to time;
(d) all references in this Guarantee Agreement to Articles and
Sections are to Articles and Sections of this Guarantee Agreement unless
otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Guarantee Agreement unless otherwise defined in this
Guarantee Agreement or unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice
versa.
"Affiliate" has the same meaning as given to that term in Rule 405
of the Securities Act of 1933, as amended, or any successor rule thereunder.
"Commission" means the Securities and Exchange Commission.
"Common Securities" means the securities representing undivided
beneficial interests in the assets of the Issuer, having the terms set forth
in Exhibit C to the Declaration.
"Covered Person" means any Holder of Preferred Securities.
"Debentures" means the series of Junior Subordinated Debentures
issued by the Guarantor under the Indenture and entitled the "___% Junior
Subordinated Debentures due 2044".
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"Distributions" means the periodic distributions and other payments
payable to Holders of Preferred Securities in accordance with the terms of
the Preferred Securities set forth in Exhibit B to the Declaration.
"ESOP Convertible Preferred Stock" means the ESOP Convertible
Preferred Stock of the Guarantor
"Event of Default" means a default by the Guarantor on any of its
payment or other obligations under this Guarantee Agreement.
"Guarantee Payments" shall mean the following payments or
distributions, without duplication, with respect to the Preferred Securities,
to the extent not paid or made by the Issuer: (i) any accrued and unpaid
Distributions and the redemption price, including all accrued and unpaid
Distributions to the date of redemption (the "Redemption Price"), with
respect to the Preferred Securities called for redemption by the Issuer but
if and only to the extent that in each case the Guarantor has made a payment
to the Trust of interest or principal on the Debentures and (ii) upon a
voluntary or involuntary dissolution, winding-up or termination of the Issuer
(other than in connection with the distribution of Debentures to Holders or
the redemption of all the Preferred Securities upon the maturity or
redemption of the Debentures as provided in the Declaration), the lesser of
(a) the aggregate of the liquidation amount and all accrued and unpaid
Distributions on the Preferred Securities to the date of payment, to the
extent the Issuer has funds available therefor, and (b) the amount of assets
of the Issuer remaining available for distribution to Holders in liquidation
of the Issuer (in either case, the "Liquidation Distribution").
"Guarantee Trustee" means The Bank of New York until a Successor
Guarantee Trustee has been appointed and accepted such appointment pursuant
to the terms of this Guarantee Agreement and thereafter means each such
Successor Guarantee Trustee.
"Holder" shall mean any holder, as registered on the books and
records of the Issuer, of any Preferred Securities; provided, however, that
in determining whether the holders of the requisite percentage of Preferred
Securities have given any request, notice, consent or waiver hereunder,
"Holder" shall not include the Guarantor or any entity directly or indirectly
controlling or controlled by or under direct or indirect common control with
the Guarantor.
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"Indemnified Person" means the Guarantee Trustee, any Affiliate of
the Guarantee Trustee, and any officers, directors, shareholders, members,
partners, employees, representatives or agents of the Guarantee Trustee.
"Indenture" means the Indenture dated as of ______ __, 1995 between
the Guarantor and The Bank of New York, as trustee, and the First
Supplemental Indenture thereto dated such date, pursuant to which the
Debentures are to be issued.
"Majority in liquidation amount of the Preferred Securities" means,
except as otherwise required by the Trust Indenture Act, Holder(s) of
outstanding Preferred Securities voting together as a single class, who are
the record owners of Preferred Securities whose liquidation amount (including
the stated amount that would be paid on redemption, liquidation or otherwise,
plus accrued and unpaid Distributions to the date upon which the voting
percentages are determined) represents more than 50% of the liquidation
amount of all outstanding Preferred Securities.
"Offer" means the offer by the Issuer to exchange Preferred
Securities for outstanding Depositary Shares in consideration for the deposit
by the Guarantor of Debentures as trust assets of the Issuer, all as
described in a Prospectus dated June __, 1995.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other
entity of whatever nature.
"Preferred Securities" has the meaning set forth in the first
WHEREAS clause above.
"Redemption Price" means the amount payable on redemption of the
Preferred Securities in accordance with the terms of the Preferred
Securities.
"Responsible Officer" means, with respect to the Guarantee Trustee,
the chairman of the board of directors, the president, any vice-president,
any assistant vice-president, the secretary, any assistant secretary, the
treasurer, any assistant treasurer, any trust officer or assistant trust
officer or any other officer of the Guarantee Trustee customarily performing
functions similar to those performed by any of the above designated officers
and also means, with respect to a particular corporate trust
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matter, any other officer to whom such matter is referred because of that
officer's knowledge of and familiarity with the particular subject.
"Series B Preferred Stock" means the Series B Cumulative Preferred
Stock of the Guarantor.
"Series C Preferred Stock" means the Series C Conversion Preferred
Stock of the Guarantor.
"Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as a Guarantee Trustee under Section
4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.
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(a) This Guarantee Agreement is subject to the provisions of the
Trust Indenture Act that are required to be part of this Guarantee Agreement
and shall, to the extent applicable, be governed by such provisions;
(b) if and to the extent that any provision of this Guarantee
Agreement limits, qualifies or conflicts with the duties imposed by Sec.
Sec. 310 to 317, inclusive, of the Trust Indenture Act, such imposed
duties shall control; and
(c) the application of the Trust Indenture Act to this Guarantee
Agreement shall not affect the nature of the Preferred Securities as equity
securities representing undivided beneficial interests in the assets of the
Issuer.
SECTION 2.2 Lists of Holders of Preferred Securities.
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(a) The Guarantor shall provide the Guarantee Trustee with such
information as is required under Sec. 312(a) of the Trust Indenture Act at
the times and in the manner provided in Sec. 312(a); and
(b) the Guarantee Trustee shall comply with its obligations under
Sec.Sec. 310(b), 311 and 312(b) of the Trust Indenture Act.
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SECTION 2.3 Reports by the Guarantee Trustee.
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Within 60 days after May 15 of each year, the Guarantee Trustee
shall provide to the Holders of the Preferred Securities such reports as are
required by Sec. 313 of the Trust Indenture Act, if any, in the form, in the
manner and at the times provided by Sec. 313 of the Trust Indenture Act. The
Guarantee Trustee shall also comply with the requirements of Sec. 313(d) of
the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Guarantee Trustee.
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The Guarantor shall provide to the Guarantee Trustee, the
Commission and the Holders of the Preferred Securities, as applicable, such
documents, reports and information as required by Sec. 314(a)(1)-(3) (if any)
of the Trust Indenture Act and the compliance certificates required by
Sec. 314(a)(4) and (c) of the Trust Indenture Act, any such certificates to be
provided in the form, in the manner and at the times required by Sec. 314(a)(4)
and (c) of the Trust Indenture Act (provided that any certificate to be
provided pursuant to Sec. 314(a)(4) of the Trust Indenture Act shall be provided
within 120 days of the end of each fiscal year of the Issuer).
SECTION 2.5 Evidence of Compliance with
Conditions Precedent.
---------------------------
The Guarantor shall provide to the Guarantee Trustee such evidence
of compliance with any conditions precedent, if any, provided for in this
Guarantee Agreement which relate to any of the matters set forth in Sec. 314(c)
of the Trust Indenture Act. Any certificate or opinion required to be given
pursuant to Sec. 314(c) shall comply with Sec. 314(e) of the Trust Indenture
Act.
SECTION 2.6 Events of Default; Waiver.
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(a) Subject to Section 2.6(b), Holders of Preferred Securities may
by vote of at least a Majority in liquidation amount of the Preferred
Securities, (A) direct the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee, or exercising
any trust or power conferred upon by the Guarantee Trustee or (B) on behalf
of the Holders of all Preferred Securities waive any past Event of Default
and its consequences. Upon such waiver, any such default shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have
been cured, for every purpose of this Guarantee Agreement, but no such waiver
shall extend to any subsequent or other
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default or Event of Default or impair any right consequent thereon.
(b) The right of any Holder of Preferred Securities to receive
payment of the Guarantee Payments in accordance with this Guarantee
Agreement, or to institute suit for the enforcement of any such payment,
shall not be impaired without the consent of each such Holder.
SECTION 2.7 Disclosure of Information.
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The disclosure of information as to the names and addresses of the
Holders of the Preferred Securities in accordance with Sec. 312 of the Trust
Indenture Act, regardless of the source from which such information was
derived, shall not be deemed to be a violation of any existing law, or any
law hereafter enacted which does not specifically refer to Sec. 312 of the Trust
Indenture Act, nor shall the Guarantee Trustee be held accountable by reason
of mailing any material pursuant to a request made under Sec. 312(b) of the
Trust Indenture Act.
SECTION 2.8 Conflicting Interest.
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The Declaration shall be deemed to be specifically described in
this Guarantee Agreement for the purposes of clause (i) of the first proviso
contained in Section 310(b) of the Trust Indenture Act.
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ARTICLE III
POWERS, DUTIES AND RIGHTS OF GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Guarantee Trustee.
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(a) This Guarantee Agreement shall be held by the Guarantee
Trustee in trust for the benefit of the Holders of the Preferred Securities.
The Guarantee Trustee shall not transfer its right, title and interest in the
Guarantee Agreement to any Person except a Successor Guarantee Trustee on
acceptance by such Successor Guarantee Trustee of its appointment to act as
Guarantee Trustee or to a Holder of Preferred Securities exercising his or
her rights pursuant to Section 5.4. The right, title and interest of the
Guarantee Trustee to the Guarantee Agreement shall vest automatically in each
Person who may hereafter be appointed as Guarantee Trustee in accordance with
Article IV. Such vesting and cessation of title shall be effective whether
or not conveyancing documents have been executed and delivered.
(b) If an Event of Default occurs and is continuing, the Guarantee
Trustee shall enforce this Guarantee Agreement for the benefit of the Holders
of the Preferred Securities.
(c) This Guarantee Agreement and all moneys received by the Trust
hereunder in respect of the Guarantee Payments will not be subject to any
right, charge, security interest, lien or claim of any kind in favor of, or
for the benefit of that Guarantee Trustee or its agents or their creditors.
(d) The Guarantee Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the holders of the Preferred Securities, as their names and
addresses appear upon the register, notice of all Events of Default known to
the Guarantee Trustee, unless such defaults shall have been cured before the
giving of such notice; provided, that, the Guarantee Trustee shall be
protected in withholding such notice if and so long as the board of
directors, the executive committee, or a trust committee of directors and/or
Responsible Officers, of the Guarantee Trustee in good faith determine that
the withholding of such notice is in the interests of the Holders of the
Preferred Securities. The Guarantee Trustee shall not be deemed to have
knowledge of any default except any default as to which the Guarantee Trustee
shall have received written notice or a Responsible Officer charged with the
administration of this Guarantee Agreement shall have obtained written
notice.
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(e) The Guarantee Trustee shall not resign as a Trustee unless a
Successor Guarantee Trustee has been appointed and accepted that appointment
in accordance with Article IV.
SECTION 3.2 Certain Rights and Duties of the
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Guarantee Trustee.
-----------------
(a) The Guarantee Trustee, before the occurrence of an Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Guarantee Agreement, and no implied covenants shall be read into this
Guarantee Agreement against the Guarantee Trustee. In case an Event of
Default has occurred (that has not been cured or waived pursuant to Section
2.6(a)), the Guarantee Trustee shall exercise such of the rights and powers
vested in it by this Guarantee Agreement, and use the same degree of care and
skill in their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(b) No provision of this Guarantee Agreement shall be construed to
relieve the Guarantee Trustee from liability for its own negligent action,
its own negligent failure to act or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Guarantee Trustee shall be
determined solely by the express provisions of this Guarantee
Agreement, and the Guarantee Trustee shall not be liable
except for the performance of such duties and obligations as
are specifically set forth in this Guarantee Agreement, and no
implied covenants or obligations shall be read into this
Guarantee Agreement against the Guarantee Trustee; and
(B) in the absence of bad faith on the part of the Guarantee
Trustee, the Guarantee Trustee may conclusively rely, as to
the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions
furnished to the Guarantee Trustee and conforming to the
requirements of this Guarantee Agreement; but in the case of
any such certificates or
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opinions that by any provision hereof are specifically
required to be furnished to the Guarantee Trustee, the
Guarantee Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements of
this Guarantee Agreement;
(ii) the Guarantee Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Guarantee
Trustee, unless it shall be proved that the Guarantee Trustee was
negligent in ascertaining the pertinent facts;
(iii) the Guarantee Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance
with the direction of the Holders of Preferred Securities as provided
herein relating to the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee, or
exercising any trust or power conferred upon the Guarantee Trustee under
this Guarantee Agreement; and
(iv) no provision of this Guarantee Agreement shall require the
Guarantee Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or
in the exercise of any of its rights or powers, if it shall have
reasonable ground for believing that the repayment of such funds or
liability is not reasonably assured to it under the terms of this
Guarantee Agreement or adequate indemnity against such risk or liability
is not reasonably assured to it.
(c) Subject to the provisions of Section 3.2(a) and (b):
(i) Whenever in the administration of this Guarantee Agreement,
the Guarantee Trustee shall deem it desirable that a matter be proved or
established prior to taking, suffering or omitting any action hereunder,
the Guarantee Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part, request and
rely upon a certificate, which shall comply with the provisions of
Sec. 314(e) of the Trust Indenture Act, signed by any authorized officer of
the Guarantor;
(ii) The Guarantor Trustee (A) may consult with counsel (which may
be counsel to the Guarantor or any of its Affiliates and may include any
of its employees)
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selected by it in good faith and with due care and the written advice or
opinion of such counsel with respect to legal matters shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance
thereon and in accordance with such advice and opinion and (B) shall
have the right at any time to seek instructions concerning the
administration of this Guarantee Agreement from any court of competent
jurisdiction;
(iii) The Guarantee Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Guarantee Trustee shall not be
responsible for any misconduct or negligence on the part of any agent or
attorney appointed by it in good faith and with due care;
(iv) The Guarantee Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Guarantee Agreement at
the request or direction of any Holders of Preferred Securities, unless
such Holders shall have offered to the Guarantee Trustee reasonable
security and indemnity against the costs, expenses (including attorneys'
fees and expenses) and liabilities that might be incurred by it in
complying with such request or direction; provided that nothing
contained in this clause (iv) shall relieve the Guarantee Trustee of the
obligation, upon the occurrence of an Event of Default (which has not
been cured or waived) to exercise such of the rights and powers vested
in it by this Guarantee Agreement, and to use the same degree of care
and skill in this exercise, as a prudent person would exercise or use
under the circumstances in the conduct of his or her own affairs; and
(v) Any action taken by the Guarantee Trustee or its agents
hereunder shall bind the Holders of the Preferred Securities and the
signature of the Guarantee Trustee or its agents alone shall be
sufficient and effective to perform any such action; and no third party
shall be required to inquire as to the authority of the Guarantee
Trustee to so act, or as to its compliance with any of the terms and
provisions of this Guarantee Agreement, both of which shall be
conclusively evidenced by the Guarantee Trustee's or its agent's taking
such action.
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SECTION 3.3 Not Responsible for Recitals or Issuance of Guarantee.
-----------------------------------------------------
The recitals contained in this Guarantee shall be taken as the
statements of the Guarantor and the Guarantee Trustee does not assume any
responsibility for their correctness. The Guarantee Trustee makes no
representations as to the validity or sufficiency of this Guarantee
Agreement.
ARTICLE IV
GUARANTEE TRUSTEE
SECTION 4.1 Qualifications.
--------------
(a) There shall at all times be a Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the laws
of the United States of America or any State or Territory thereof or of
the District of Columbia, or a corporation or Person permitted by the
Commission to act as an institutional trustee under the Trust Indenture
Act, authorized under such laws to exercise corporate trust powers,
having a combined capital and surplus of at least $50,000,000, and
subject to supervision or examination by Federal, State, Territorial or
District of Columbia authority. If such corporation publishes reports
of condition at least annually, pursuant to law or to the requirements
of the supervising or examining authority referred to above, then for
the purposes of this Section 4.1(a)(ii), the combined capital and
surplus of such corporation shall be deemed to be its combined capital
and surplus as set forth in its most recent report of condition so
published.
If at any time the Guarantee Trustee shall cease to satisfy the
requirements of clauses (i)-(ii) above, the Guarantee Trustee shall
immediately resign in the manner and with the effect set out in Section 4.2.
If the Guarantee Trustee has or shall acquire any "conflicting interest"
within the meaning of Sec. 310(b) of the Trust Indenture Act, the Guarantee
Trustee and the Guarantor shall in all respects comply with the provisions of
Sec. 310(b) of the Trust Indenture Act.
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SECTION 4.2 Appointment, Removal and Resignation of
---------------------------------------
Guarantee Trustee.
-----------------
(a) Subject to Section 4.2(b), the Guarantee Trustee may be appointed or
removed without cause at any time by the Guarantor.
(b) The Guarantee Trustee shall not be removed in accordance with Section
4.2(a) until a Successor Guarantee Trustee possessing the qualifications
to act as Guarantee Trustee under Section 4.1(a) has been appointed and
has accepted such appointment by written instrument executed by such
Successor Guarantee Trustee and delivered to the Guarantor and the
Guarantee Trustee being removed.
(c) The Guarantee Trustee appointed to office shall hold office until his
successor shall have been appointed or until its removal or resignation.
(d) The Guarantee Trustee may resign from office (without need for prior or
subsequent accounting) by an instrument (a "Resignation Request") in
writing signed by the Guarantee Trustee and delivered to the Guarantor,
which resignation shall take effect upon such delivery or upon such
later date as is specified therein; provided, however, that no such
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resignation of the Guarantee Trustee shall be effective until a
Successor Guarantee Trustee possessing the qualifications to act as
Guarantee Trustee under Section 4.1(a) has been appointed and has
accepted such appointment by instrument executed by such Successor
Guarantee Trustee and delivered to Guarantor and the resigning Guarantee
Trustee.
(e) If no Successor Guarantee Trustee shall have been appointed and accepted
appointment as provided in this Section 4.2 within 60 days after
delivery to the Guarantor of a Resignation Request, the resigning
Guarantee Trustee may petition any court of competent jurisdiction for
appointment of a Successor Guarantee Trustee. Such court may thereupon
after such notice, if any, as it may deem proper and prescribe, appoint
a Successor Guarantee Trustee.
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ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee.
---------
The Guarantor irrevocably and unconditionally agrees to pay in full
to the Holders the Guarantee Payments (without duplication of amounts
theretofore paid by the Issuer) regardless of any defense, right of set-off
or counterclaim which the Issuer may have or assert. The Guarantor's
obligation to make a Guarantee Payment may be satisfied by direct payment of
the required amounts by the Guarantor to the Holders or by causing the Issuer
to pay such amounts to the Holders.
SECTION 5.2 Waiver of Notice.
----------------
The Guarantor hereby waives notice of acceptance of this Guarantee
Agreement and of any liability to which it applies or may apply, presentment,
demand for payment, any right to require a proceeding first against the
Issuer or any other Person before proceeding against the Guarantor, protest,
notice of nonpayment, notice of dishonor, notice of redemption and all other
notices and demands.
SECTION 5.3 Obligations Not Affected.
------------------------
The obligations, covenants, agreements and duties of the Guarantor
under this Guarantee Agreement shall in no way be affected or impaired by
reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of
the performance or observance by the Issuer of any express or implied
agreement, covenant, term or condition relating to the Preferred
Securities to be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or
any portion of the Distributions (other than an extension of time for
payment of Distributions that results from the extension of any interest
payment period on the Debentures), Redemption Price, Liquidation
Distribution or any other sums payable under the terms of the Preferred
Securities or the extension of time for the performance of any other
obligation under, arising out of, or in connection with, the Preferred
Securities;
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(c) any failure, omission, delay or lack of diligence on the part
of the Holders to enforce, assert or exercise any right, privilege,
power or remedy conferred on the Holders pursuant to the terms of the
Preferred Securities, or any action on the part of the Issuer granting
indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the
Issuer or any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the Preferred
Securities;
(f) the settlement or compromise of any obligation guaranteed
hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it
being the intent of this Section 5.3 that the obligations of the
Guarantor hereunder shall be absolute and unconditional under any and
all circumstances.
There shall be no obligation of the Holders to give notice to, or obtain
consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.4 Enforcement of Guarantee.
------------------------
The Guarantor and the Guarantee Trustee expressly acknowledge that
(i) this Guarantee Agreement will be deposited with the Guarantee Trustee to
be held for the benefit of the Holders; (ii) the Guarantee Trustee has the
right to enforce this Guarantee Agreement on behalf of the Holders; (iii)
Holders representing not less than a Majority in liquidation amount of the
Preferred Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available in respect of this
Guarantee Agreement including the giving of directions to the Guarantee
Trustee, or exercising any trust or other power conferred upon the Guarantee
Trustee under this Guarantee Agreement, and (iv) if the Guarantee Trustee
fails to enforce this Guarantee Agreement, any Holder of Preferred Securities
may, after a period of 90 days has elapsed from such Holder's written request
to the Guarantee Trustee to enforce this Guarantee Agreement, institute a
legal
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proceeding directly against the Guarantor to enforce its rights under this
Guarantee Agreement, without first instituting a legal proceeding against the
Issuer, the Guarantee Trustee, or any other Person.
SECTION 5.5 Guarantee of Payment.
--------------------
This Guarantee Agreement creates a guarantee of payment and not
merely of collection. This Guarantee Agreement will not be discharged except
by payment of the Guarantee Payments in full (without duplication of amounts
theretofore paid by the Issuer).
SECTION 5.6 Subrogation.
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The Guarantor shall be subrogated to all (if any) rights of the
Holders against the Issuer in respect of any amounts paid to the Holders by
the Guarantor under this Guarantee Agreement; provided, however, that the
Guarantor shall not (except to the extent required by mandatory provisions of
law) be entitled to enforce or exercise any rights which it may acquire by
way of subrogation or any indemnity, reimbursement or other agreement, in all
cases as a result of payment under this Guarantee Agreement, if, at the time
of any such payment, any amounts are due and unpaid under this Guarantee
Agreement. If any amount shall be paid to the Guarantor in violation of the
preceding sentence, the Guarantor agrees to hold such amount in trust for the
Holders and to pay over such amount to the Holders.
SECTION 5.7 Independent Obligations.
-----------------------
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Preferred
Securities and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Guarantee
Agreement notwithstanding the occurrence of any event referred to in
subsections (a) through (g), inclusive, of Section 5.3 hereof.
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ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions.
--------------------------
So long as any Preferred Securities remain outstanding, the
Guarantor will not declare or pay any dividend on, or redeem, purchase,
acquire or make a distribution or liquidation payment with respect to, any of
its common stock or preferred stock, or make any guarantee payments with
respect thereto, if at such time (i) the Guarantor shall be in default with
respect to its Guarantee Payments or other payment obligations hereunder,
(ii) there shall have occurred any event of default under the Indenture or
(iii) the Guarantor shall have given notice of its selection of an Extension
Period (as defined in the Indenture) and such period, or any extension
thereof, is continuing; provided that the Guarantor will be permitted to pay
accrued dividends (and cash in lieu of fractional shares) upon the mandatory
conversion of any of its preferred stock, including its Series C Preferred
Stock and ESOP Convertible Preferred Stock, in accordance with the terms of
such stock. In addition, so long as any Preferred Securities remain
outstanding, the Guarantor (i) will remain the sole direct or indirect owner
of all of the outstanding Common Securities and shall not cause or permit the
Common Securities to be transferred except to the extent such transfer is
permitted under Section 9.1(c) of the Declaration; provided that any
permitted successor of the Guarantor under the Indenture may succeed to the
Guarantor's ownership of the Common Securities and (ii) will not take any
action which would cause the Issuer to cease to be treated as a grantor trust
for United States federal income tax purposes except in connection with a
distribution of Debentures as provided in the Declaration.
SECTION 6.2 Subordination.
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This Guarantee Agreement will constitute an unsecured obligation of
the Guarantor and will rank (i) subordinate and junior in right of payment to
all other liabilities of the Guarantor, including the Debentures, except
those made pari passu or subordinate by their terms, and (ii) senior to all
capital stock now or hereafter issued by the Guarantor and to any guarantee
now or hereafter entered into by the Guarantor in respect of any of its
capital stock.
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ARTICLE VII
TERMINATION
SECTION 7.1 Termination.
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This Guarantee Agreement shall terminate and be of no further force
and effect upon full payment of the Redemption Price of all Preferred
Securities, upon the distribution of Debentures to Holders of Preferred
Securities and Common Securities in exchange for all of the Preferred
Securities and Common Securities or upon full payment of the amounts payable
in accordance with the Declaration upon liquidation of the Issuer.
Notwithstanding the foregoing, this Guarantee Agreement will continue to be
effective or will be reinstated, as the case may be, if at any time any
Holder must restore payment of any sums paid with respect to the Preferred
Securities or this Guarantee Agreement.
ARTICLE VIII
LIMITATION OF LIABILITY; INDEMNIFICATION
SECTION 8.1 Exculpation.
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(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered Person
for any loss, damage or claim incurred by reason of any act or omission
performed or omitted by such Indemnified Person in good faith and in a manner
such Indemnified Person reasonably believed to be within the scope of the
authority conferred on such Indemnified Person by this Guarantee Agreement or
by law, except that an Indemnified Person shall be liable for any such loss,
damage or claim incurred by reason of such Indemnified Person's negligence or
willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Guarantor and upon such information,
opinions, reports or statements presented to the Guarantor by any Person as
to matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Guarantor, including information,
opinions, reports or statements as to the value and amount of the assets,
liabilities, profits, losses, or any other facts pertinent to the existence
and amount of assets from which
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Distributions to Holders of Preferred Securities might properly be paid.
SECTION 8.2 Indemnification.
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(a) To the fullest extent permitted by applicable law, the
Guarantor shall indemnify and hold harmless each Indemnified Person from and
against any loss, damage or claim incurred by such Indemnified Person by
reason of any act or omission performed or omitted by such Indemnified Person
in good faith and in a manner such Indemnified Person reasonably believed to
be within the scope of authority conferred on such Indemnified Person by this
Guarantee Agreement, except that no Indemnified Person shall be entitled to
be indemnified in respect of any loss, damage or claim incurred by such
Indemnified Person by reason of negligence or willful misconduct with respect
to such acts or omissions.
(b) To the fullest extent permitted by applicable law, expenses
(including legal fees) incurred by an Indemnified Person in defending any
claim, demand, action, suit or proceeding shall, from time to time, be
advanced by the Guarantor prior to the final disposition of such claim,
demand, action, suit or proceeding upon receipt by the Guarantor of an
undertaking by or on behalf of the Indemnified Person to repay such amount if
it shall be determined that the Indemnified Person is not entitled to be
indemnified as authorized in Section 8.2(a).
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns.
----------------------
All guarantees and agreements contained in this Guarantee Agreement
shall bind the successors, assigns, receivers, trustees and representatives
of the Guarantor and shall inure to the benefit of the Holders of the
Preferred Securities then outstanding. Except in connection with a
consolidation, merger or sale involving the Guarantor that is permitted under
Article Ten of the Indenture, the Guarantor shall not assign its obligations
hereunder.
SECTION 9.2 Amendments.
----------
Except with respect to any changes which do not adversely affect
the rights of Holders (in which case no consent of Holders will be required),
this Guarantee
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Agreement may only be amended with the prior approval of the Holders of not
less than a Majority in liquidation amount of the Preferred Securities. The
provisions of Section 12.2 of the Declaration concerning meetings of Holders
shall apply to the giving of such approval.
SECTION 9.3 Notices.
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Any notice, request or other communication required or permitted to
be given hereunder shall be in writing, duly signed by the party giving such
notice, and delivered, telecopied or mailed by first class mail as follows:
(a) if given to the Guarantor, to the address set forth below or
such other address as the Guarantor may give notice of to the Holders:
RJR Nabisco Holdings Corp.
1301 Avenue of the Americas
New York, New York 10019
Facsimile No.: (212) 969-9173
Attention: Treasurer
(b) if given to the Guarantee Trustee, to the address set forth
below or such other address as the Guarantee Trustee may give notice to the
Holders:
The Bank of New York:
101 Barclay Street
New York, New York 10286
Facsimile No.:
Attention: Corporate Trust
(c) if given to any Holder of Preferred Securities, at the address
set forth on the books and records of the Issuer.
All notices hereunder shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first
class mail, postage prepaid except that if a notice or other document is
refused delivery or cannot be delivered because of a changed address of which
no notice was given, such notice or other document shall be deemed to have
been delivered on the date of such refusal or inability to deliver.
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SECTION 9.4 Genders.
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The masculine, feminine and neuter genders used herein shall
include the masculine, feminine and neuter genders.
SECTION 9.5 Benefit.
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This Guarantee Agreement is solely for the benefit of the Holders
and subject to Section 3.1(a) is not separately transferable from the
Preferred Securities.
SECTION 9.6 Governing Law.
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THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 9.7 Counterparts
------------
This Guarantee Agreement may be executed in counterparts, each of
which shall be an original; but such counterparts shall together constitute
one and the same instrument.
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THIS GUARANTEE AGREEMENT is executed as of the day and year first
above written.
RJR NABISCO HOLDINGS CORP.
By:____________________________
Name:
Title:
THE BANK OF NEW YORK,
as Guarantee Trustee
By:________________________
Name:
Title:
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