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EXHIBIT 10(b)
AGREEMENT
This AGREEMENT among Brooke Group Ltd., a Delaware corporation
("BGL"), BGLS Inc., a Delaware corporation and a direct wholly owned
subsidiary of BGL ("BGLS"), and High River Limited Partnership, a
Delaware limited partnership ("High River"), dated October 17, 1995
W I T N E S S E T H:
WHEREAS, High River, directly or indirectly, and BGL and BGLS,
indirectly through their ownership of stock of New Valley Corporation,
a New York corporation ("New Valley"), are stockholders of RJR Nabisco
Holdings Corp., a Delaware corporation ("RJRN");
WHEREAS, the parties hereto believe that the value of RJRN
stockholders' investment can be substantially increased through a
spinoff (the "Spinoff") of all or substantially all of RJRN's remaining
investment in Nabisco Holding Corp., a Delaware corporation ("Nabisco");
WHEREAS, BGL and BGLS desire to obtain the assistance and advice
of High River with respect to measures designed to effectuate the
Spinoff at the earliest possible date;
WHEREAS, High River is willing to give such assistance and advice
to BGL and BGLS in consideration of the agreements by BGL and BGLS set
forth herein;
NOW, THEREFORE, in consideration of the foregoing and of the
mutual promises set forth herein, the parties hereto, intending to
be legally bound, agree as follows:
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Section 1. Solicitation of Other Investors and RJRN Stockholders.
(a) Each of the parties hereto intends to use its best efforts to
encourage other investors to acquire shares of common stock, par value
$.01 per share ("Shares"), of RJRN and to persuade such investors and
other major stockholders of RJRN to cooperate with the parties hereto in
order to cause RJRN to effectuate the Spinoff. The parties hereto
anticipate that, as an inducement to such investors and stockholders,
the parties hereto may enter into binding contractual arrangements with
such investors and stockholders on terms which may but need not be
similar to the terms of this Agreement, and that this Agreement may be
amended or supplemented from time to time to reflect such arrangements.
The parties hereto agree that, in the event any party hereto proposes to
enter into any such contractual arrangement or so to amend or supplement
this Agreement, the parties hereto shall attempt in good faith to reach
mutually acceptable terms with respect to any such proposed arrangement,
amendment or supplement.
(b) BGL and BGLS intend to seek RJRN stockholder approval, either
at RJRN's 1996 annual meeting of stockholders (the "1996 Annual
Meeting") or at a special meeting of RJRN stockholders (a "Special
Meeting") or through action by written consent of the RJRN stockholders
without a meeting, of any or all of the following proposals (the
"Proposals"): (i) a proposal to recommend that the Board of Directors of
RJRN (the "RJRN Board") cause RJRN to effectuate the Spinoff (the
"Spinoff Proposal"), (ii) a proposal to remove the entire RJRN Board and
to elect as directors of RJRN a slate of nominees who shall be selected
by BGL (the "BGL Nominees") and who shall pledge to carry out the
Spinoff as promptly as practicable following their election (the
"Election Proposal"), (iii) a proposal for the combination, incident to
the Spinoff, of the tobacco business of Liggett Group Inc., a Delaware
corporation ("Liggett"), with the tobacco business of RJRN and (iv) a
proposal to amend the by-laws of RJRN in any manner that may be
necessary in order to ensure that RJRN stockholders are permitted to
call a Special Meeting and to vote freely at such Special Meeting or at
the 1996 Annual Meeting on any or all of the Proposals, or in any other
way necessary to facilitate the Proposals (the "By-Law Amendment
Proposal"). In
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connection with the foregoing, BGL and BGLS may seek written demands or
requests from RJRN stockholders ("Stockholder Demands") that a Special
Meeting be held for the purpose of voting on any or all of the Proposals.
BGL and BGLS may also seek written consents from RJRN stockholders
("Written Consents") to adopt any or all of the Proposals.
(c) Prior to the 1996 Annual Meeting, BGL or BGLS shall solicit
Written Consents in favor of the Spinoff Proposal and the By-Law
Amendment Proposal. BGL or BGLS may also, in its sole discretion,
conduct solicitations, in addition to the solicitation described in the
preceding sentence, of Stockholder Demands or Written Consents in favor of
the other Proposals, or of proxies to be voted in favor of one or more
of the Proposals at the 1996 Annual Meeting or a Special Meeting
("Proxies"). In respect of any such solicitation of Stockholder Demands,
Written Consents or Proxies:
(i) BGL or BGLS shall prepare and file with the
Securities and Exchange Commission (the "SEC") and mail to
RJRN stockholders, a solicitation statement under Regulation 14A of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
relating to such solicitation (the "Solicitation Statement");
(ii) the Solicitation Statement relating to any solicitation of
Written Consents or Proxies seeking RJRN stockholder approval of the
Election Proposal, or of Stockholder Demands for a Special Meeting at
which RJRN stockholder approval of the Election Proposal will be
sought, shall contain a pledge (the "BGL Pledge") by BGL and BGLS
stating, in substance, that (A) BGL, BGLS and their affiliates (the
"BGL Group") will not engage in any Business Combination (as defined
below in Section 3(a)) other than a Permitted Business Combination
(as defined below in Section 3(b)) at any time (I) prior to the
earlier of (x) the 1996 Annual Meeting and (y) the occurrence of a
Termination Event (as defined below in Section 3(c)) described in
Section 3(c)(iii) (in the case of a solicitation of Stockholder
Demands), Section 3(c)(iv) (in the case of a solicitation of
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Written Consents) or Section 3(c)(v) (in the case of a solicitation
of Proxies), or (II) when BGL Nominees constitute a majority of the
RJRN Board, (B) the BGL Group will not exercise any management
control over Nabisco prior to the consummation of the Spinoff and (C)
the BGL Group will halt its solicitation of Stockholder Demands,
Written Consents or Proxies, as the case may be, if the RJRN Board
takes any action described in Section 3(c)(vi); and
(iii) if BGL and BGLS take the actions described in clause (ii)
with respect to any solicitation described in clause (i), then (A)
promptly upon the request of BGL or BGLS, High River shall (and shall
cause each of its affiliates to) execute and deliver to BGL or BGLS a
valid Stockholder Demand, Written Consent or Proxy, as the case may
be (and not withdraw such Stockholder Demand, Written Consent or
Proxy), with respect to all of the Shares and all of the depositary
shares representing Series C Conversion Preferred Stock, par value
$.01 per share ("Series C Depositary Shares"), of RJRN beneficially
owned by it and (B) each of BGL and BGLS shall (and shall cause each of
its affiliates to) vote in favor of such Proposal all Shares and
all Series C Depositary Shares beneficially owned by it.
Section 2. Termination. (a) This Agreement shall automatically
terminate upon the earlier of (i) the first anniversary of the date
hereof and (ii) the termination of the Agreement dated as of October 17,
1995 among New Valley, ALKI Corp., a Delaware corporation ("NV Sub"),
and High River (the "New Valley Agreement") by High River, and any
party hereto may terminate this Agreement sooner at any time in its
sole discretion by written notice to the other parties hereto, provided,
however, that if New Valley or NV Sub terminates the New Valley
Agreement, then BGL and BGLS shall be deemed to have simultaneously
terminated this Agreement.
(b) If this Agreement is terminated pursuant to this Section 2,
this Agreement shall forthwith become null and void, and there shall be
no liability or obligation on the part of any party hereto, except for
the obligations of the parties hereto
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pursuant to Section 4, Section 5 and Section 8, which shall remain
in full force and effect for the periods set forth therein.
Section 3. Certain Definitions. For purposes of this
Agreement, the following terms shall have the meanings indicated below:
(a) "Business Combination," with respect to any party
hereto, means:
(i) Any material sale of capital stock or other equity
interests of RJRN beneficially owned by such party or any of such
party's affiliates to RJRN or any of RJRN's affiliates, other than a
sale effected on a registered securities exchange or through the
NASDAQ system that satisfies the following conditions: (A) such sale
is not pursuant to any agreement, understanding or arrangement with
RJRN or any of its affiliates, agents or representatives, (B) either
(I) such party and its affiliates do not know that RJRN or one of its
affiliates is the buyer or (II) such sale is pursuant to a market
repurchase program which has previously been publicly announced by RJRN
or one of its affiliates and (C) such party has given notice to the
other parties at least one day prior to such sale of its intention to
sell such Shares (which notice shall the approximate number of Shares
to be sold and the approximate time period in which such sales will
be made, but need not specify the exact number of Shares to be sold
or the exact timing of such sales);
(ii) Any material sale of capital stock or other equity
interests of such party or any of such party's affiliates to RJRN or
any of RJRN's affiliates, other than pursuant to a sale effected on a
registered securities exchange or through the NASDAQ system which is
not pursuant to any agreement, understanding or arrangement with RJRN
or any of its affiliates, agents or representatives and such party
and its affiliates do not know that RJRN or one of its affiliates is
the buyer;
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(iii) Any merger, consolidation or combination of such party or
any of such party's material affiliates with RJRN or any of RJRN's
affiliates;
(iv) Any material borrowings by such party or any of such
party's affiliates from RJRN or any of RJRN's affiliates, or by RJRN
or any of RJRN's affiliates from such party or any of such party's
affiliates, other than credit in the ordinary course of business
substantially in accordance with industry practice or past practice;
(v) Any sale or other disposition of any material assets or
properties of such party or any of such party's affiliates to RJRN or
any of RJRN's affiliates, or of any material assets or properties of
RJRN or any of RJRN's affiliates to such party or any of such party's
affiliates, other than in the ordinary course of business substantially
in accordance with industry practice or past practice; or
(vi) Any receipt by such party or any of such party's
affiliates of any material benefit, including any material payment in
cash or in kind from RJRN, other than benefits or payments in the
ordinary course of business substantially in accordance with industry
practice or past practice;
except, in each case, for a transaction that is made available to all
other holders of Shares substantially at the same time on substantially
equivalent terms.
(b) "Permitted Business Combination" means any Business
Combination which is either (i) consummated substantially simultaneously
with or subsequently to (A) a dividend or other distribution to RJRN's
stockholders of all or substantially all of RJRN's remaining equity
interest in Nabisco or (B) another transaction with respect to RJRN's
investment in Nabisco which would provide substantially equivalent value
to RJRN's stockholders or (ii) approved by the holders of a majority of
the outstanding Shares not then beneficially owned by the BGL
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Group or by New Valley and its affiliates (the "New Valley Group").
(c) "Termination Event" means any of the following
events:
(i) Any judgment, ruling, order or decree of any court or any
other governmental agency or authority prohibiting, enjoining or
restraining, or which has the effect of prohibiting, enjoining or
restraining, any party to this Agreement or the New Valley Agreement
from fulfilling its material obligations under this Agreement or the
New Valley Agreement, or which would otherwise render unlawful, the
fulfillment of any party's material obligations under this Agreement
or the New Valley Agreement, except any judgment, ruling, order or
decree (A) arising out of a breach of any representation contained in
Section 7 of this Agreement or in Section 8 of the New Valley
Agreement or (B) prohibiting, enjoining or restraining, or which has
the effect of prohibiting, enjoining or restraining, or otherwise
rendering unlawful any Business Combination other than a Permitted
Business Combination (an "Order") is in effect and such party has not
appealed such Order by appropriate proceedings prior to or on the
tenth day after such Order is entered, or any Order has been in
effect for at least 30 days and has not been vacated or reversed, or
any governmental agency or authority has indicated to any party,
orally or in writing, its intention to issue or to seek to obtain an
Order (an "Order Threat"); provided, however, that any such event
shall be a Termination Event only if (x) in the case of any party
which is (or a member of whose Group is) the subject of an Order or
Order Threat, such party gives prompt notice thereof to the other
party and thereafter terminates this Agreement or the New Valley
Agreement prior to or on the tenth day after such event occurs and
(y) in the case of a party which is not (and all of the members of
whose Group are not) the subject of such an Order or Order Threat,
such party thereafter terminates this Agreement or the New Valley
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Agreement prior to or on the tenth day following the time such party
receives notice thereof from the subject party;
(ii) The Federal Trade Commission (the "FTC") or the Antitrust
Division of the Department of Justice (the "Antitrust Division") has
instituted any action or proceeding seeking to prohibit, enjoin or
restrain any party to this Agreement or the New Valley Agreement from
fulfilling its material obligations under this Agreement or the New
Valley Agreement or to require any such party or any of its
affiliates to make any material divestitures as a condition to the
fulfillment of such obligations, or otherwise to impose any
conditions or restrictions which could have a material adverse effect
on any party hereto or on the transactions contemplated by this
Agreement or the New Valley Agreement, or the FTC or the Antitrust
Division has indicated to any such party, orally or in writing, its
intention to institute any such action or proceeding, in each case
other than any action, proceeding, requirement, condition or
restriction with respect to any Business Combination except a
Permitted Business Combination; provided, however, that any such
event shall be a Termination Event only if the party which is the
subject of such action, proceeding, requirement, condition or
restriction thereafter terminates this Agreement or the New Valley
Agreement prior to or on the tenth day after such event occurs;
(iii) BGL or BGLS has commenced a solicitation of Stockholder
Demands and has failed to receive within 120 days after the date of
commencement the number of validly executed and unwithdrawn
Stockholder Demands necessary to require RJRN to hold a Special
Meeting, unless (A) the Special Meeting has otherwise been called or
held or (B) on or prior to such 120th day, BGL and BGLS have taken
all actions necessary to cause one or more of the Proposals to be
brought before the 1996 Annual Meeting;
(iv) BGL or BGLS has commenced a solicitation of Written
Consents with respect to one or more Proposals and
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has failed to receive within 120 days after the date of commencement
the number of validly executed and unwithdrawn Written Consents
necessary to approve at least one such Proposal, unless (A) at least
one such Proposal has been otherwise approved at the 1996 Annual
Meeting or a Special Meeting or (B) on or prior to such 120th day,
BGL and BGLS have taken all actions necessary to cause at least one
such Proposal to be submitted for a stockholder vote at the 1996
Annual Meeting or a Special Meeting;
(v) A Special Meeting or the 1996 Annual Meeting has been
held, and one or more of the Proposals has been voted upon thereat,
the BGL Nominees have not been elected to constitute a majority of the
RJRN directors then in office and either (A) BGL and BGLS have
determined not to pursue any further judicial review of the results of
the vote at the Special Meeting or the 1996 Annual Meeting, as the
case may be, or (B) no such further judicial review is available;
(vi) The RJRN Board has irrevocably declared a dividend or
other distribution to RJRN's stockholders of all or substantially all
of RJRN's remaining equity interest in Nabisco or has made any other
legally binding commitment to engage in a transaction with respect to
RJRN's investment in Nabisco which would provide substantially
equivalent economic benefits to RJRN's stockholders;
(vii) Any event has occurred, or RJRN has taken any action,
which is reasonably likely to have a material adverse effect on the
business, operations or financial condition of RJRN and its
subsidiaries, taken as a whole;
(viii) BGL or BGLS determines, reasonably and in good faith,
that any event has occurred as a result of which no solicitation of
Stockholder Demands, Written Consents or Proxies with respect to the
Proposals would have a reasonable chance of success; provided,
however, that any such event shall be a Termination Event only if BGL
or BGLS notifies High River of such determination (which notice
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shall specify in reasonable detail the nature of the event which has
occurred and the reasons for such determination) at least five
business days prior to terminating this Agreement or the New Valley
Agreement and thereafter BGL or BGLS terminates this Agreement, and
New Valley or NV Sub terminates the New Valley Agreement, on such fifth
business day; and provided that in any challenge by High River of a
termination under this subpart (viii), High River shall bear the
burden, in order to prevail, of establishing that BGL's or BGLS's
determination as first set forth in this subpart (viii) was
unreasonable or was made in bad faith;
(ix) BGL and BGLS (A) fail to nominate the BGL Nominees prior
to November 20, 1995, or such later date as may be designated by RJRN
as the final date for such nominations to be made, for election to
the RJRN Board at the 1996 Annual Meeting in accordance with the
procedures set forth in the most recent version of the by-laws of
RJRN filed with the SEC prior to such date, (B) fail to mail to RJRN
stockholders a Solicitation Statement relating to a solicitation of
Written Consents with respect to the Spinoff Proposal and/or the
By-Law Amendment Proposal prior to December 15, 1995, (C) fail to
file the Solicitation Statement relating to the Annual Meeting
preliminarily with the SEC prior to the earlier of (I) February 15,
1996 and (II) the date on which a Solicitation Statement described in
clause (B) of this Section 3(c)(ix) is first mailed to RJRN
stockholders, (D) fail to make the BGL Pledge in any Solicitation
Statement relating to any solicitation of Written Consents or Proxies
seeking RJRN stockholder approval of the Election Proposal, or of
Stockholder Demands for a Special Meeting at which RJRN stockholder
approval of the Election Proposal will be sought, or (E) take any
action in violation of the BGL Pledge after it is made; provided,
however, that any such event shall be a Termination Event only if
High River thereafter terminates this Agreement or the New Valley
Agreement prior to or on the tenth day after the first date that High
River becomes aware that such event has occurred, but in no event
shall the failure to terminate this Agreement after the occurrence of
any such event
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prohibit the termination of this Agreement upon the subsequent
occurrence of any other such event; or
(x) Either Group sells any Shares under the circumstances
described in clause (x) of the first proviso to the first sentence of
Section 1(d)(i) of the New Valley Agreement, or is required to offer
any Shares to another party pursuant to the first sentence of Section
1(d)(ii) of the New Valley Agreement; provided, however, that any
such event shall be a Termination Event only if a party to the New
Valley Agreement which is not a member of such Group thereafter
terminates the New Valley Agreement prior to or on the tenth day
after the first date that such party becomes aware that such event has
occurred.
Section 4. Certain Fees and Percentage Payments. (a) BGLS shall
pay or cause to be paid to High River the sum of $50 million promptly
upon:
(i) any termination of this Agreement by BGL or BGLS at a time
when (A) no Termination Event has occurred and (B) High River is not
in material breach of its obligations (the "High River Obligations")
under Section 1(c)(iii) or Section 8 of this Agreement or Section
1(a), the fourth sentence of Section 1(c)(v), the ninth sentence of
Section 1(c)(v) or Section 1(d)(i) of the New Valley Agreement;
(ii) any termination of this Agreement by High River at a time
when (A) no Termination Event has occurred, (B) BGL or BGLS is in
material breach of its obligations (the "BGL Obligations") under
Section 1(c)(iii) of this Agreement and (C) High River is not in
material breach of the High River Obligations; or
(iii) the consummation of any Business Combination (including
any Permitted Business Combination) with respect to the BGL Group, if:
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(A) such Business Combination is consummated prior to the
later of (I) the date of RJRN's annual meeting of stockholders for
1997 and (II) the first anniversary of the date of termination of
this Agreement (the later of such dates being referred to herein
as the "Reference Date");
(B) a legally binding agreement to enter into such Business
Combination or any other Business Combination is entered into
prior to the Reference Date and such Business Combination is
consummated prior to the second anniversary of the date of such
agreement; or
(C) the BGL Nominees are elected to constitute a majority of
the RJRN Board prior to the Reference Date and such Business
Combination is consummated prior to the fifth anniversary of the
date of such election;
provided, however, that (x) High River shall not be entitled to more
than one fee under this Section 4(a), (y) High River shall not be
entitled to any fee under this Section 4(a) if BGL shall have
previously or shall concurrently become entitled to the fee described in
Section 4(b) of this Agreement or if New Valley shall have previously
become entitled to the fee described in Section 5(b) of the New Valley
Agreement and (z) the amount of any fee to which High River may be
entitled at any time pursuant to this Section 4(a) shall be reduced by
the amount of any fee (the "New Valley Fee") which High River shall
theretofore have been paid pursuant to Section 5(a) of the New Valley
Agreement and by any percentage payment (the "New Valley Percentage
Payment") which High River shall theretofore have been paid pursuant to
Section 5(d) of the New Valley Agreement, in either of which events BGL or
BGLS shall promptly upon request by New Valley reimburse New Valley for
all or any part of the New Valley Fee or the New Valley Percentage
Payment paid by or on behalf of New Valley.
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(b) High River shall pay or cause to be paid to BGL the sum of
$50 million promptly upon:
(i) any termination of this Agreement by High River at a time
when (A) no Termination Event has occurred, (B) BGL and BGLS are not
in material breach of any of the BGL Obligations and (C) New Valley
and NV Sub are not in material breach of any of their obligations
(the "New Valley Obligations") under Section 1(a), the fourth
sentence of Section 1(c)(v), the ninth sentence of Section 1(c)(v),
Section 1(d)(i) or Section 2 of the New Valley Agreement;
(ii) any termination of this Agreement by BGL or BGLS at a time
when (A) no Termination Event has occurred, (B) High River is in
material breach of its obligations under Section 1(c)(iii) or Section
8 of this Agreement, (C) BGL and BGLS are not in material breach of
the BGL Obligations and (D) New Valley and NV Sub are not in material
breach of the New Valley Obligations;
provided, however, that (x) BGL shall not be entitled to more than one
fee under this Section 4(b), (y) BGL shall not be entitled to any fee
under this Section 4(b) if High River shall have previously or shall
concurrently become entitled to the fee described in Section 4(a) of
this Agreement or the fee described in Section 5(a) of the New Valley
Agreement and (z) the amount of any fee to which BGL may be entitled at
any time pursuant to this Section 4(b) shall be reduced by the amount of
any fee which New Valley shall theretofore have been paid pursuant to
Section 5(b) of the New Valley Agreement.
(c) Notwithstanding anything in this Agreement or the New Valley
Agreement to the contrary,
(i) if the New Valley Group (as such term is defined in the New
Valley Agreement) or the BGL Group sells any Shares or any Other
Securities (as such term is defined in the New Valley Agreement) of
any class or series prior to the Reference Date, then BGLS shall pay
or cause to be paid to High River promptly upon the consummation of
such sale a
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percentage payment equal to the product of (A) the Net Profit
Override (as such term is defined in the New Valley Agreement)
realized in such sale, multiplied by (B) a fraction (the "Sale
Fraction," which shall be calculated separately for the Shares and
for each class or series of Other Securities), the numerator of which
is the number of Shares or such Other Securities (as the case may be)
held as of the date hereof, or hereafter acquired prior to such sale,
by the BGL Group and the denominator of which is the number of Shares
or such Other Securities (as the case may be) held as of the date
hereof, or hereafter acquired prior to such sale, by the BGL Group
and the New Valley Group; and
(ii) if the New Valley Group or the BGL Group holds any Shares
or any Other Securities of any class or series on the Reference Date,
then New Valley shall pay or cause to be paid to High River promptly
upon the Reference Date a percentage payment equal to the product of
(A) the Net Profit Override existing on the Reference Date in respect
of such Shares or such Other Securities, multiplied by (B) a fraction
(the "Holdings Fraction," which shall be calculated separately for
the Shares and for each class or series of Other Securities), the
numerator of which is the number of Shares or such Other Securities
(as the case may be) held as of the date hereof, or hereafter
acquired prior to the Reference Date, by the BGL Group and the
denominator of which is the number of Shares or such Other Securities
(as the case may be) held as of the date hereof, or hereafter
acquired prior to the Reference Date, by the BGL Group and the New
Valley Group;
provided, however, that (x) the amount of any percentage payment to
which High River is entitled at any time under this Section 4(c) shall
be reduced by the product of (1) the amount of any fee which High River
shall have theretofore been paid by or on behalf of New Valley under
Section 5(a) of the New Valley Agreement or by BGLS under Section 4(a)
of this Agreement, multiplied by (2) the Sale Fraction or the Holdings
Fraction, as the case may be, (y) High River shall not be entitled
to any percentage payment under this Section 4(c) if BGL shall have
previously become
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entitled to the fee described in Section 4(b) of this Agreement or
if New Valley shall have previously become entitled to the fee described
in Section 5(b) of the New Valley Agreement and (z) in the event that
the New Valley Group or the BGL Group realizes a Net Loss (as defined in
the New Valley Agreement) on any sale of any Shares or any Other
Securities of any class or series, or that any Net Loss exists on the
Reference Date in respect of any Shares or any Other Securities of any
class or series held by the New Valley Group or the BGL Group on the
Reference Date, then in each such event High River shall repay or cause
to be repaid to BGLS promptly upon receipt of notice from BGLS an amount
equal to the product of (1) the excess, if any, of (X) 20% of such Net
Loss over (Y) the aggregate amount of such percentage payments
theretofore received by High River, multiplied by (2) a fraction, the
numerator of which is the aggregate amount of such percentage payments
theretofore paid by or on behalf of BGLS and the denominator of which is
the aggregate amount of such percentage theretofore paid by or on behalf
of New Valley and BGLS. BGL and BGLS shall use their reasonable best
efforts to provide to High River (x) once each calendar week, commencing
from the date of this Agreement, a report containing a reasonably detailed
calculation of the number of Shares and the amount of Other Securities
then held by the BGL Group and the Weighted-Average Cost (as defined in
the New Valley Agreement) of such Shares and Other Securities and (y)
promptly after the close of business on each business day on which any
Shares are sold by the BGL Group, a report setting forth the number of
Shares or Other Securities sold since the close of business on the
previous business day, the aggregate price realized in such sales and
the aggregate commissions paid in such sales; provided, however, that
BGL and BGLS shall not incur any liability or suffer any prejudice as a
result of its provision of any such estimate.
(d) The parties hereto hereby acknowledge and agree that the
arrangements in Section 4(c) with respect to percentage payments
constitute a partnership for Federal income tax purposes and that
the parties hereto shall file income tax returns in a consistent manner.
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(e) Each of BGL and High River shall give notice to the other
promptly upon becoming aware that a Termination Event has occurred or
that any event has occurred that would be a Termination Event but for
the giving of notice or the termination of this Agreement.
Section 5. Costs and Expenses. (a) Except as set forth in Section
5(b), the BGL Group shall be responsible for all out-of-pocket costs and
expenses of soliciting Stockholder Demands, Written Consents and Proxies
from the stockholders of RJRN, including without limitation, to the
extent related thereto, (i) all registration and filing fees under the
Exchange Act or the Securities Act of 1933, as amended (the "Securities
Act"), (ii) all printing, messenger, telephone and delivery expenses,
(iii) all fees and disbursements of counsel and (iv) all fees and
disbursements of public relations firms, proxy solicitation firms,
investment bankers and other financial advisors.
(b) Notwithstanding the provisions of Section 5(a), each party
hereto shall be solely responsible for (i) all costs and expenses
relating to the acquisition of the Shares beneficially owned or
hereafter acquired by such party and its affiliates, (ii) its internal
expenses (including, without limitation, all salaries and expenses of
its officers and employees performing duties relating to the
transactions contemplated by this Agreement) and (iii) all other
expenses incurred by it, other than expenses described in Section
5(a), all of which shall be the sole responsibility of the BGL Group.
Section 6. Required Filings; Publicity. (a) Each of the parties
hereto shall (and shall cause each of its affiliates to) (i) take all
actions necessary to comply promptly with all legal requirements which
may be imposed on such party (or its affiliates) as a result of this
Agreement or any of the transactions contemplated hereby, and (ii)
without limiting the foregoing, make all required filings pursuant to
the Securities Act and the Exchange Act.
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(b) To the extent reasonably practicable, the parties hereto
shall consult with each other prior to all public statements or
filings to be issued or made by any of them or their affiliates
with respect to this Agreement and the transactions contemplated
hereby.
Section 7. Representations and Warranties. (a) Each of the
parties hereto hereby represents and warrants to the other parties
hereto as follows:
(i) Such party is a corporation or partnership duly organized,
validly existing and in good standing under the laws of the state of
its incorporation or organization, and has full corporate or
partnership power and authority to execute and deliver this Agreement
and to perform its obligations hereunder and to consummate the
transactions contemplated hereby.
(ii) The execution and delivery by such party of this
Agreement and the performance by such party of its obligations
hereunder have been duly and validly authorized by all necessary
corporate or partnership action. This Agreement has been duly and
validly executed and delivered by such party and constitutes a legal,
valid and binding obligation of such party enforceable against such
party in accordance with its terms.
(iii) The execution and delivery by such party of this
Agreement do not, and the performance by such party of its
obligations under this Agreement will not, conflict with or result in
a violation or breach of any of the provisions of the certificate of
incorporation, bylaws or other organizational documents of such
party, any law or order applicable to such party or any of such
party's contractual obligations to other persons, in each case, in
any manner that would prevent or materially impede such party from
fulfilling its obligations hereunder.
(b) BGL and BGLS hereby represent and warrant to High River that
as of the date hereof the BGL Group owns beneficially
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and of record 200 Shares, free and clear of all liens and encumbrances
whatsoever, which Shares were purchased by the BGL Group at an aggregate
cost (including all brokerage fees and commissions incurred in the
acquisition of such Shares) of $5,675, and in respect of which the BGL
Group has not received any dividends, except dividends of $75 received
on July 3, 1995 and dividends of $75 received on October 2, 1995.
(c) High River represents and warrants to BGL and BGLS that High
River has as of the date hereof, and will have on each prior to the
termination of this Agreement, net partners' equity of at least $22
million.
Section 8. Certain Actions. High River shall not (and shall cause
its affiliates not to) engage in, agree to engage in or propose (either
publicly or to RJRN or any of its affiliates) to engage in, individually
or in combination with any other person, any Business Combination at any
time prior to the earliest of (a) the Reference Date, (b) any
termination of this Agreement that occurs at or after the time when a
Termination Event has occurred and (c) any termination of this Agreement
by BGL or BGLS, or of the New Valley Agreement by New Valley or NV Sub,
at a time when High River is not in material breach of the High River
Obligations.
Section 9. Miscellaneous. (a) For purposes of this Agreement, (i)
the terms "affiliate" and "associate" have the meanings assigned to them
in Rule 12b-2 promulgated under the Exchange Act, provided, however,
that New Valley and NV Sub shall not be deemed to be "affiliates" or
"associates" of the BGL Group for any purpose of this Agreement, (ii)
Liggett shall be deemed to be a material affiliate of BGL and BGLS,
(iii) the term "shall" is used herein to refer to actions which are
compulsory and thus to create binding obligations among the parties
hereto, (iv) the terms "will," "expect," "expectation," "intend" and
"intention," and other terms of similar import, are used herein solely
to refer to the aspirations and objectives of the parties hereto and
thus are not used herein to create binding obligations among the parties
hereto and (v) the term "may" is used herein to refer solely to conduct
which is optional and not compulsory and
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thus is not used herein to create binding obligations among the parties
hereto.
(b) The parties hereto shall have no rights, power or duties
except as specified herein, and no such rights, powers or duties shall
be implied. Nothing herein shall give any party hereto the power to bind
any other party hereto to any contract, agreement or obligation to any
third party.
(c) All notices and other communications hereunder shall be in
writing and shall be deemed given when received by the parties hereto at
the following addresses (or at such other address for any party hereto
as shall be specified by like notice):
If to BGL or BGLS:
100 S.E. Second Street
Miami, Florida 33131
Attention: Bennett S. LeBow
Telecopy: (305) 579-8001
With a copy to:
Michael L. Hirschfeld, Esq.
Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, NY 10005-1413
Telecopy: (212) 530-5219
If to High River:
c/o Icahn Associates Corp.
114 West 47th Street
19th Floor
New York, New York 10036
Attention: Carl C. Icahn
Telecopy: (212) 921-3359
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With a copy to:
Marc Weitzen, Esq.
Gordon Altman Butowsky Weitzen
Shalov & Wein
114 West 47th Street
20th Floor
New York, NY 10036
Telecopy: (212) 626-0799
(d) This Agreement may be executed in two or more counterparts,
all of which shall be considered one and the same agreement.
(e) This Agreement constitutes the entire agreement among the
parties hereto and supersedes all prior agreements and understandings
among the parties hereto with respect to the subject matter hereof.
(f) This Agreement shall be governed and construed in accordance
with the laws of the state of New York applicable to a contract executed
and performed in such State, without giving effect to the conflicts of
laws principles thereof.
(g) Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto
(whether by operation of law or otherwise) without the prior written
consent of the other parties hereto; provided, however, that High River
may assign any of its rights and interests hereunder to (i) any
corporation incorporated in any state of the United States or in the
District of Columbia if at least 98.5% of the shares of each class of
capital stock of such corporation are by Carl C. Icahn (a "wholly-owned
Icahn subsidiary"), either directly or through one or more wholly-owned
Icahn subsidiaries or (ii) any partnership whose partners are all
wholly-owned Icahn subsidiaries; and provided further that no such
assignment shall relieve High River of any of its obligations hereunder.
Subject to the preceding sentence, this Agreement shall be binding upon,
inure to the benefit of and
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be enforceable by the parties hereto and their respective successors and
assigns.
(h) This Agreement may be amended, supplemented or modified only
by a written instrument duly executed by or on behalf of each party
hereto. No waiver of any term or condition in this Agreement shall be
effective unless set forth in writing and signed by or on behalf of the
waiving party. No waiver by any party hereto of any term or condition of
this Agreement shall be deemed to be or construed as a waiver of the
same or any other term or condition of this Agreement on any future
occasion.
(i) The terms and provisions of this Agreement are intended solely
for the benefit of the parties hereto and their successors and permitted
assigns and are not intended to confer upon any other person any rights
or remedies hereunder, except that the provisions of clause (z) of the
proviso to Section 4(a), as they relate to the reimbursement obligations
of BGL and BGLS, are expressly for the benefit of New Valley and shall
be enforceable by New Valley against BGL and BGLS (but not against
High River) by appropriate proceedings in any court of competent
jurisdiction.
(j) In the event that any party hereto prevails in any or
proceeding alleging a breach of this Agreement, such party shall be
entitled to recover all reasonable attorney's fees and other costs of
prosecuting such action or proceeding and, in addition, shall be
entitled to receive simple interest on any damages awarded in such
action or proceeding at the rate of 10% per annum from the date of
such breach.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be signed by their representatives thereunto duly authorized, all as
of the date first above written.
BROOKE GROUP LTD.
By:
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BGLS INC.
By:
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HIGH RIVER LIMITED PARTNERSHIP
By:
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[Signature page to Agreement among Brooke Group Ltd., BGLS Inc. and
High River Limited Partnership dated October 17, 1995]
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