<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): JANUARY 31, 1997
NEW VALLEY CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
1-2493 13-5482050
(Commission File Number) (I.R.S. Employer Identification No.)
100 S.E. SECOND STREET, MIAMI, FLORIDA 33131
(Address of principal executive offices) (Zip Code)
(305) 579-8000
(Registrant's telephone number, including area code)
(NOT APPLICABLE)
(Former name or former address, if changed since last report)
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On January 31, 1997, New Valley Corporation (the "Company") entered into a
stock purchase agreement (the "Purchase Agreement") with Brooke (Overseas) Ltd.
(the "Seller"), pursuant to which the Company acquired 10,483 shares of the
common stock of BrookeMil Ltd. ("BML") from the Seller, comprising 99.1% of the
outstanding shares of BML (the "Shares").
The Company paid to the Seller for the Shares a purchase price of $55
million, consisting of $21.5 million in cash and a $33.5 million 9% promissory
note of the Company (the "Note"). The Company utilized general working capital
to fund the cash portion of the purchase price. The Note is secured by the
Shares and is payable $21.5 million on June 30, 1997 and $12 million on December
31, 1997. The transaction was approved by the independent members of the Board
of Directors of the Company. The Company retained independent legal counsel and
financial advisors in connection with the evaluation and negotiation of the
transaction.
The Seller is a wholly-owned subsidiary of BGLS Inc. ("BGLS"), which is
wholly-owned by Brooke Group Ltd. ("Brooke"). Brooke indirectly controls the
Company through its indirect ownership of an approximate 42% voting interest
therein. Bennett S. LeBow, Chairman of the Board and Chief Executive Officer of
the Company, serves as Chairman of the Board, President and Chief Executive
Officer of Brooke and of BGLS, and is the controlling stockholder of Brooke.
Howard M. Lorber, a director, President and Chief Operating Officer of the
Company, serves as a consultant to Brooke and BGLS and is a stockholder of
Brooke. Richard J. Lampen, a director and Executive Vice President of the
Company, serves as Executive Vice President of Brooke and BGLS. Richard S.
Ressler, a director of the Company, is a greater than 5% stockholder of Brooke
and has served as a consultant to Brooke and its subsidiaries.
The foregoing summary of the acquisition is qualified in its entirety by
reference to the text of the Purchase Agreement and the Company's Press Release
dated January 31, 1997, which are attached hereto as Exhibit 2.1 and Exhibit
99.1, respectively, and are incorporated herein by reference.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits.
The following Exhibits are provided in accordance with the provisions of
Item 601 of Regulation S-K and are filed herewith unless otherwise noted.
EXHIBIT INDEX
2.1 Stock Purchase Agreement dated as of January 31, 1997 among BrookeMil
Ltd. ("BML"), Brooke (Overseas) Ltd. ("BOL"), BGLS Inc. and New Valley
Corporation ("New Valley").
10.1 Promissory Note of New Valley dated January 31, 1997 in favor of BOL.
10.2 Pledge Agreement dated as of January 31, 1997 entered into by and between
BOL and New Valley.
10.3 Use Agreement dated as of January 31, 1997, entered into by and between BML
and Liggett-Ducat Joint Stock Company.
99.1 Press Release of New Valley dated January 31, 1997.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NEW VALLEY CORPORATION
By: /s/ Robert M. Lundgren
------------------------------
Robert M. Lundgren
Vice President and Chief Financial Officer
Date: January 31, 1997
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Exhibit
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<S> <C>
2.1 Stock Purchase Agreement dated as of January 31, 1997
among BrookeMil Ltd. ("BML"), Brooke (Overseas)
Ltd. ("BOL"), BGLS Inc. and New Valley Corporation
("New Valley").
10.1 Promissory Note of New Valley dated January 31, 1997 in favor of
BOL.
10.2 Pledge Agreement dated as of January 31, 1997 entered into by and
between BOL and New Valley.
10.3 Use Agreement dated as of January 31, 1997, entered into by and
between BML and Liggett-Ducat Joint Stock Company.
99.1 Press Release of New Valley dated January 31, 1997.
</TABLE>
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EXHIBIT 2.1
FOR INCLUSION IN NEW VALLEY CORPORATION'S
CURRENT REPORT ON FORM 8-K DATED JANUARY 31, 1997
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================================================================================
STOCK PURCHASE AGREEMENT
Dated as of January 31, 1997
among
BROOKEMIL LTD.,
BROOKE (OVERSEAS) LTD.,
BGLS INC.
and
NEW VALLEY CORPORATION
================================================================================
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Article Page No.
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<S> <C> <C>
1. Purchase of Stock 1
1.1 Purchase of Stock 1
1.2 Purchase Price 2
1.3 Closing Date 2
2. Representations and Warranties 2
2.1 Representations and Warranties by the Company 2
(A) Organization of the Company 3
(B) Authorization by the Company 3
(C) Necessary Authority 3
(D) Non-Contravention 3
(E) Capital Stock 4
(F) Assets 4
(G) Liabilities 4
(H) No Violation of Law 5
(I) Tax Matters 5
(J) Employee Matters 5
(K) Real Estate and Other Matters 5
2.2 Representations and Warranties by Brooke and BGLS 5
(A) Organization 5
(B) Authorization 6
(C) Necessary Authority 6
(D) Non-Contravention 6
(E) Good Title to Shares 6
(F) Litigation 6
2.3 Representations and Warranties by NVC 7
(A) Organization of NVC 7
(B) Authorization by NVC 7
(C) Necessary Authority 7
(D) Non-Contravention 7
(E) Litigation 8
</TABLE>
(i)
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<TABLE>
<S> <C>
3. Conditions to the Closing 8
3.1 Conditions to Obligations of NVC 8
(A) Regulatory Authorizations 8
(B) Representations, Warranties and Covenants 8
(C) No Proceeding or Litigation 9
(D) Fairness Opinion 9
3.2 Conditions to Obligations of Brooke 9
(A) Regulatory Authorizations 9
(B) Representations, Warranties and Covenants 9
(C) No Proceeding or Litigation 9
4. Put Option on Factory Site; Termination of Use Agreement;
Non-Compete 10
4.1 Right to Put Factory Site 10
4.2 Exercise of the Put Option 10
4.3 Put Option Closing 10
4.4 Termination Notice 10
4.5 Non-Compete 11
5. Indemnification 11
5.1 Survival of Representations and Warranties 11
5.2 Indemnification 11
5.3 Exclusive Remedy 13
6. Termination and Waiver 14
6.1 Termination 14
6.2 Effect of Termination 14
6.3 Waiver 15
7. Miscellaneous 15
7.1 Expenses; Transfer Taxes, etc. 15
7.2 Notices 15
7.3 Brokers and Financial Advisors 16
7.4 Press Releases and Confidentiality 16
7.5 Amendment 16
</TABLE>
(ii)
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<TABLE>
<S> <C>
7.6 Assignment 16
7.7 No Third Party Beneficiaries 16
7.8 Further Actions 16
7.9 Severability 17
7.10 Governing Law 17
7.11 Submission to Jurisdiction 17
7.12 Counterparts 17
7.13 Headings 17
7.14 Entire Agreement 17
SCHEDULES
2.1(G) Other Payables and Liabilities
2.1(K) Real Estate and Other Matters
ANNEXES
A Form of Promissory Note
B Form of Pledge Agreement
C Form of Use Agreement
</TABLE>
(iii)
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of January 31, 1997,
among BrookeMil Ltd., a Cayman Islands company (the "Company"), Brooke
(Overseas) Ltd., a Delaware corporation ("Brooke"), BGLS Inc., a Delaware
corporation ("BGLS"), and New Valley Corporation, a Delaware corporation
("NVC").
WITNESSETH
WHEREAS, NVC desires to purchase from Brooke, and Brooke desires to sell to
NVC, 10,483 shares of the Common Stock of the Company, comprising 99.1% of the
shares of Common Stock of the Company issued and outstanding on the date hereof
(the "Shares"), on the terms and conditions set forth herein; and
WHEREAS, contemporaneously with the purchase and sale of the Shares
pursuant to this Agreement, and as an inducement for Brooke to sell the Shares
to NVC, NVC desires that the Company enter into a use agreement with
Liggett-Ducat Joint Stock Company ("LDJSC"), a Russian closed joint stock
company and a majority-owned subsidiary of Brooke, pursuant to which LDJSC may
use the land and buildings at the Factory Site (as hereinafter defined) on the
terms and for the periods provided therein (the "Use Agreement");
WHEREAS, Brooke is a wholly-owned subsidiary of BGLS and, as a result, BGLS
will derive direct and indirect benefits from the transactions contemplated by
this Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
Purchase of Stock
1.1 Purchase of Stock. Subject to the terms and conditions herein set forth
and on the basis of the representations, warranties and agreements of the
Company, Brooke and BGLS herein contained, NVC agrees to purchase from Brooke,
and Brooke agrees to sell to NVC, the Shares for the Purchase Price (as defined
below and subject to adjustment as described in Section 1.2 below) as
hereinafter set forth. Brooke shall deliver certificates for the Shares to be
sold hereunder duly endorsed in blank, or accompanied by executed stock powers,
to NVC at the offices of NVC located at 590 Madison Avenue, New York, New York
(the "Closing"), at 9:00 A.M. on January 31, 1997, or at such other place, time
and date as NVC and Brooke may agree upon in writing, the actual time and date
on which the Closing hereunder shall occur being herein called the "Closing
Date".
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1.2 Purchase Price. The aggregate purchase price for the Shares
to be purchased by NVC from Brooke shall be $55,000,000 (the "Purchase Price"),
payable as follows:
(i) $21,500,000 by wire transfer to an account designated by
Brooke to NVC at least two business days prior to the
Closing Date; and
(ii) $33,500,000 by delivery of a promissory note of NVC (the
"Note") issued by NVC to Brooke, in the form of Annex A
hereto, which shall be secured by the pledge by NVC of
the Shares purchased hereunder pursuant to a pledge
agreement (the "Pledge Agreement"), in the form of Annex
B hereto.
1.3 Closing Date. On the Closing Date:
(A) Brooke shall deliver certificates representing the Shares
to NVC as set forth in Section 1.1 hereof.
(B) NVC shall (i) pay the portion of the Purchase Price due on
the Closing Date pursuant to Section 1.2(i) above and (ii) deliver
to Brooke the Note evidencing the portion of the Purchase Price set
forth in Section 1.2(ii) above.
(C) NVC and Brooke shall enter into and deliver the Pledge
Agreement, in the form of Annex B hereto.
(D) The Company and LDJSC shall enter into and deliver the Use
Agreement, in the form of Annex C hereto.
(E) Each of Brooke, BGLS, the Company and NVC shall deliver to
the other certified copies of resolutions of its Board of Directors
authorizing this Agreement and the other agreements and transactions
contemplated hereby.
ARTICLE II
Representations and Warranties
2.1 Representations and Warranties by the Company. The Company
represents and warrants to, and agrees with, NVC as follows:
(A) Organization of the Company. The Company has been duly
organized, and is validly existing as a corporation in good standing
under the laws of the Cayman Islands, with corporate power and
authority to own its current properties and conduct its current
business. The Company has provided
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to NVC complete and correct copies of its Memorandum of
Association, Articles of Association and any other organizational
documents required under the laws of the Cayman Islands.
(B) Authorization by the Company. This Agreement and the
agreements contemplated hereby have been duly authorized, executed
and delivered by the Company and constitute the valid and legally
binding agreements of the Company enforceable in accordance with
their terms except as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws
relating to or affecting the enforcement of creditors' rights or
equitable principles.
(C) Necessary Authority. All consents, approvals,
authorizations, licenses and orders, corporate or otherwise,
necessary for the execution and delivery by the Company of this
Agreement and the agreements contemplated hereby and the
consummation of the transactions contemplated hereby have been
obtained, and the Company has the full right, power and authority to
enter into this Agreement and such other agreements and to perform
its obligations hereunder and thereunder.
(D) Non-Contravention. The execution, delivery and performance
of this Agreement and the consummation of the transactions herein
contemplated by the Company do not and will not (i) violate,
conflict with or result in the breach of any provision of the
Memorandum of Association or Articles of Association of the Company,
(ii) conflict with or violate any statute, law, ordinance,
regulation, rule, code, order or other requirement or rule of law
("Laws") or any governmental order applicable to the Company or any
of its assets, properties or businesses, or (iii) conflict with,
result in any breach of, constitute a default (or event which with
the giving of notice or lapse of time, or both, would become a
default) under, require any consent under, or give to others any
rights of termination, amendment, acceleration, suspension,
revocation or cancellation of, or result in the creation of any
security interest, pledge, mortgage, lien, charge or other
encumbrance ("Encumbrance") on any of the Shares or any property or
assets of the Company pursuant to, any contract, agreement or other
instrument or arrangement to which the Company is a party or by
which the Company or its property is bound or affected.
(E) Capital Stock. The authorized capital stock of the Company
consists solely of 900,000 shares of Common Stock, $1.00 par value,
of which 10,583 shares are validly issued, fully paid and
nonassessable, and outstanding. Prior to giving effect to the
transactions contemplated by this Agreement, all of the outstanding
shares of Common Stock of the Company are owned of record as
follows: 10,483 shares by Brooke and 100 shares by LDJSC. There are
no existing options, calls or commitments of any character relating
to the authorized and unissued capital stock of the Company or any
of its subsidiaries
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(the "Subsidiaries") or to any securities or obligations
convertible into or exchangeable for, or giving any person any right
to subscribe for or acquire from the Company or any of its
Subsidiaries, any shares of capital stock of the Company, or any of
its Subsidiaries, and no such convertible or exchangeable securities
or obligations are outstanding. The only Subsidiaries of the Company
are Gasheka Property Management LP, Kyle Construction LP and DGC
Construction LP.
(F) Assets. On the Closing Date, the assets owned or leased by
the Company (the "Assets") shall include (i) interests in land and
buildings in Moscow, Russia at the following locations: 8, 10
Gasheka Street (Ducat Place I); 7 Gasheka Street (Ducat Place II);
and 6 Gasheka Street (the "Factory Site"); (ii) cash in an amount
equal to the amount, if any, by which prepayments of rent and
other related payments on or before the Closing Date by tenants at 7
Gasheka Street (Ducat Place II) exceed $13,200,000 and by tenants at
8,10 Gasheka Street (Ducat Place I) exceed $7,200,000; and (iii) all
of the Company's and Brooke's interests in the development of an
office building in Kiev, Ukraine. The Assets are free and clear of
all liens other than the Assumed Liabilities (as hereinafter
defined).
(G) Liabilities. On the Closing Date, the liabilities of the
Company (the "Assumed Liabilities") shall consist solely of (i)
obligations under the Loan Agreement, dated as of October 26, 1995,
as amended and supplemented, between Vneshtorgbank and the Company
and LDJSC, as co-borrowers; (ii) obligations (not to exceed
$3,200,000) under the Construction Contract, dated October, 1995, as
amended, between Kyle Construction LP and Codest Engineering
relating to 7 Gasheka Street (Ducat Place II); (iii) unearned
revenue relating to prepayments of rent and other related payments
by tenants at 8,10 Gasheka Street (Ducat Place I) and at 7 Gasheka
Street (Ducat Place II); and (iv) other payables and liabilities set
forth on Schedule 2.1(G) hereto. The Company has no material
liabilities, fixed or contingent, known or unknown, liquidated or
accrued, by agreement or by operation of law, other than the
liabilities listed in the foregoing clauses (i) through (iv). The
Company has identified to NVC and has provided to NVC complete and
correct copies of all material contracts of the Company, and the
Company is not in breach or default of any of such contracts, except
for breaches or defaults which, if not cured, would not have a
material adverse effect on the Company.
(H) No Violation of Law. The business of the Company is not
being conducted in violation of any Law or any governmental order
applicable to the Company or any of its assets or properties, except
for possible violations which individually or in the aggregate would
not have a material adverse effect on the Company. To the Company's
knowledge, the Company is in compliance with all applicable
environmental Laws and the Company has not received any
communication from any governmental authority that alleges that the
Company
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is not in compliance with applicable environmental Laws where
such non-compliance would have a material adverse effect on the
Company.
(I) Tax Matters. All material tax returns and reports required
to be filed by the Company prior to the Closing Date or with respect
to taxable periods ending prior to the Closing Date have been or
will be filed with the appropriate governmental authorities prior to
the Closing Date or by the due date thereof including extensions.
Such tax returns and reports correctly reflect (and as to returns
not filed as of the date hereof, will correctly reflect) all
material tax liabilities of the Company required to be shown
thereon.
(J) Employee Matters. The Company has identified to NVC and
has provided to NVC complete and correct copies of all material
employment agreements or employee benefit plans covering present
and former employees of the Company or their beneficiaries.
(K) Real Estate and Other Matters. The Company represents
and warrants as set forth in Schedule 2.1(K) hereto.
2.2 Representations and Warranties by Brooke and BGLS. Brooke and BGLS
represent and warrant to, and agree with, NVC as follows:
(A) Organization. Brooke and BGLS have been duly incorporated
and are validly existing as corporations in good standing under the
laws of the State of Delaware, with corporate power and authority to
own their current properties and conduct their current businesses.
Brooke and BGLS are duly qualified or licensed to do business as
foreign corporations and are in good standing in all jurisdictions
that require such qualification or licensing. Brooke and BGLS have
provided to NVC complete and correct copies of their Certificates of
Incorporation and By-Laws.
(B) Authorization. This Agreement and the agreements
contemplated hereby have been duly authorized, executed and
delivered by Brooke and BGLS and constitute the valid and legally
binding agreements of Brooke and BGLS enforceable in accordance with
their terms except as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws
relating to or affecting the enforcement of creditors' rights or
equitable principles.
(C) Necessary Authority. All consents, approvals,
authorizations, licenses and orders, corporate or otherwise,
necessary for the execution and delivery by Brooke and BGLS of this
Agreement and the agreements contemplated hereby and the
consummation of the transactions contemplated hereby have been
obtained, and Brooke and BGLS have the full right, power
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and authority to enter into this Agreement and such other
agreements and to perform their obligations hereunder and
thereunder.
(D) Non-Contravention. The execution, delivery and performance
of this Agreement and the consummation of the transactions herein
contemplated by Brooke and BGLS do not and will not (i) violate,
conflict with or result in the breach of any provision of the
Certificate of Incorporation or By-Laws of Brooke or BGLS, (ii)
conflict with or violate any Law or any governmental order
applicable to Brooke or BGLS, or any of their respective assets,
properties or businesses, or (iii) conflict with, result in any
breach of, constitute a default (or event which with the giving of
notice or lapse of time, or both, would become a default) under,
require any consent under, or give to others any rights of
termination, amendment, acceleration, suspension, revocation or
cancellation of, or result in the creation of any Encumbrance on any
of the Shares or any property or assets of Brooke or BGLS pursuant
to, any contract, agreement or other instrument or arrangement to
which Brooke or BGLS is a party or by which Brooke, BGLS or any of
their respective properties or the Shares are bound or affected.
(E) Good Title to Shares. Brooke has, and immediately prior to
the Closing Date, Brooke will have, good and valid title to the
Shares to be sold by Brooke hereunder, free and clear of all
Encumbrances; and upon delivery of the Shares and payment therefor
pursuant hereto, good and valid title to the Shares, free and clear
of all Encumbrances, will pass to NVC on the Closing Date.
(F) Litigation. There is no litigation pending or, to the best
of Brooke's or BGLS' knowledge, threatened in writing (or any basis
therefor) against Brooke or BGLS that might detrimentally affect the
ability of Brooke or BGLS to perform their obligations under this
Agreement. There are no valid, effective and enforceable orders,
injunctions, or decrees of any court or arbitral body with respect
to Brooke or BGLS that might detrimentally affect the ability of
Brooke or BGLS to perform their obligations under this Agreement.
Brooke and BGLS have neither filed, nor been the subject of any
filing of, a petition under bankruptcy laws, insolvency laws, laws
for the composition of indebtedness, or laws for the reorganization
of debtors.
2.3 Representations and Warranties by NVC. NVC represents and
warrants to, and agrees with, Brooke and BGLS as follows:
(A) Organization of NVC. NVC has been duly incorporated and is
validly existing as a corporation in good standing under the laws of
the State of Delaware, with corporate power and authority to own its
current properties and conduct its current business. NVC is duly
qualified or licensed to do business as a foreign corporation and is
in good standing in all jurisdictions that require
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such qualification and licensing. NVC has provided to Brooke
complete and correct copies of its Restated Certificate of
Incorporation and By-Laws.
(B) Authorization by NVC. This Agreement, the Note and the
Pledge Agreement has been, in the case of this Agreement, and, prior
to the Closing Date, will be, in the case of the other documents,
duly authorized, executed and delivered by NVC and constitutes, in
the case of this Agreement, and, when executed, will constitute, in
the case of the other documents, valid and legally binding
obligations of NVC enforceable in accordance with their terms except
as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or
affecting the enforcement of creditors' rights or equitable
principles.
(C) Necessary Authority. All consents, approvals,
authorizations, licenses and orders, corporate or otherwise,
necessary for the execution and delivery by NVC of this Agreement
and the agreements contemplated hereby and the consummation of the
transactions contemplated hereby have been obtained, and NVC has the
full right, power and authority to enter into this Agreement and
such other agreements and to perform its obligations hereunder and
thereunder.
(D) Non-Contravention. The execution, delivery and performance
of this Agreement and the consummation of the transactions herein
contemplated by NVC do not and will not (i) violate, conflict with
or result in the breach of any provision of the Restated Certificate
of Incorporation or By-Laws of NVC, (ii) conflict with or violate
any Law or any governmental order applicable to NVC or any of its
assets, properties or businesses, or (iii) conflict with, result in
any breach of, constitute a default (or event which with the giving
of notice or lapse of time, or both, would become a default) under,
require any consent under, or give to others any rights of
termination, amendment, acceleration, suspension, revocation or
cancellation of any contract, agreement or other instrument or
arrangement to which NVC is a party or by which NVC or any of its
properties is bound or affected.
(E) Litigation. There is no litigation pending or, to the best
of NVC's knowledge, threatened in writing (or any basis therefor)
against NVC that might detrimentally affect the ability of NVC to
perform its obligations under this Agreement. There are no valid,
effective and enforceable orders, injunctions, or decrees of any
court or arbitral body with respect to NVC that might detrimentally
affect the ability of NVC to perform its obligations under this
Agreement.
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ARTICLE III
Conditions to the Closing
3.1 Conditions to Obligations of NVC. The obligations of NVC to consummate
the purchase of the Shares provided for herein are subject to the proper tender
by Brooke to NVC of the Shares, and the fulfillment, prior to or on the Closing
Date, of each of the following conditions:
(A) Regulatory Authorizations. All authorizations, consents,
orders and approvals of regulatory authorities necessary for the
performance by the Company, Brooke, BGLS or NVC of this Agreement
and the consummation of the purchase and sale of the Shares
hereunder shall have been obtained.
(B) Representations, Warranties and Covenants. The
representations and warranties of the Company, Brooke and BGLS
contained in this Agreement shall be true and correct in all
material respects at the date hereof and at and as of the Closing
Date, with the same force and effect as if made at and as of the
Closing Date (except that representations and warranties that by
their terms speak as of the Closing Date shall be true and correct
as of such date); and the Company, Brooke and BGLS shall have
performed or complied in all material respects with all agreements
and covenants required by this Agreement to be performed or complied
with by them on or prior to the Closing Date, including the delivery
of such documents and performance of such acts as are required by
Section 1.3 hereof.
(C) No Proceeding or Litigation. No action shall have been
commenced in a court of competent jurisdiction or by or before any
governmental authority against either the Company, Brooke, BGLS or
NVC seeking to restrain or materially and adversely alter the
transactions contemplated by this Agreement which, in the
reasonable, good faith determination of NVC, is likely to prevent
NVC from consummating or make it unlawful for NVC to consummate such
transactions.
(D) Fairness Opinion. NVC shall have received an opinion of
Oppenheimer & Co. Inc., in form and substance satisfactory to NVC,
that the purchase of the Shares provided for herein is fair from a
financial point of view to NVC.
3.2 Conditions to Obligations of Brooke. The obligations of Brooke to
consummate the sale of the Shares to be sold hereunder are subject to the
payment by NVC of the Purchase Price in accordance with Section 1.2 hereof, and
the fulfillment, prior to or on the Closing Date, of each of the following
conditions:
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(A) Regulatory Authorizations. All authorizations, consents,
orders and approvals of regulatory authorities or any third parties
necessary for the performance by the Company, Brooke, BGLS or NVC of
this Agreement and the consummation of the purchase and sale of the
Shares hereunder shall have been obtained.
(B) Representations, Warranties and Covenants. The
representations and warranties of NVC contained in this Agreement
shall be true and correct in all material respects at the date
hereof and at and as of the Closing Date, with the same force and
effect as if made at and as of the Closing Date (except that
representations and warranties that by their terms speak as of the
Closing Date shall be true and correct as of such date); and NVC
shall have performed or complied in all material respects with all
agreements and covenants required by this Agreement to be performed
or complied with by it on or prior to the Closing Date, including
the delivery of such documents and performance of such acts as are
required by Section 1.3 hereof.
(C) No Proceeding or Litigation. No action shall have been
commenced in a court of competent jurisdiction or by or before any
governmental authority against either the Company, Brooke, BGLS or
NVC seeking to restrain or materially and adversely alter the
transactions contemplated by this Agreement which, in the
reasonable, good faith determination of Brooke, is likely to prevent
Brooke or BGLS from consummating or make it unlawful for Brooke or
BGLS to consummate such transactions.
ARTICLE IV
Put Option on Factory Site; Termination of Use Agreement; Non-Compete
4.1 Right to Put Factory Site. Brooke hereby grants NVC the option,
exercisable at any time during the period commencing on June 30, 1997 and ending
at 5:00 P.M. local New York time on the later of December 31, 1997 or the date
LDJSC ceases to operate a tobacco factory on the Factory Site or such other time
and date as NVC and Brooke shall mutually agree (the "Put Option Period"), to
cause Brooke or Brooke's designee to purchase all of NVC's interests in the land
and buildings at the Factory Site (the "Put Option"). The purchase price (the
"Put Price") for the Put Option shall be equal to the greater of $13,600,000 or
the fair market value of such property on the date of delivery of the Exercise
Notice (as hereinafter defined), as determined by the firm which prepared the
appraisal referred to in Section 7.1 hereof or such other firm mutually
agreeable to NVC and Brooke (the "Appraisal Firm").
- 9 -
<PAGE> 15
4.2 Exercise of the Put Option. To exercise the Put Option, NVC shall
deliver to Brooke, during the Put Option Period, a notice (the "Exercise
Notice") of its intention to exercise the Put Option.
4.3 Put Option Closing. The closing of the purchase pursuant to the
exercise of the Put Option (the "Option Closing") shall occur on the tenth
business day following the delivery of the Exercise Notice by NVC, and shall be
held at the offices of NVC at 100 S.E. Second Street, Miami, Florida, at 10:00
A.M. local time on such day, or at such other place, time and date as NVC and
Brooke shall mutually agree. At the Option Closing, NVC shall deliver to Brooke
an assignment, to the extent practicable, of all of its right and interest in
the land and buildings at the Factory Site, against payment by Brooke of the Put
Price by crediting against the Put Price the unpaid amount of the Note then
outstanding and, if the Put Price exceeds such unpaid amount, by payment by
Brooke of such excess amount in cash, by certified check or by wire transfer to
an account designated by NVC to Brooke at least two business days prior to the
Option Closing. Following the Option Closing, NVC shall from time to time, at
Brooke's reasonable request and at Brooke's expense, execute and deliver to
Brooke such instruments of assignment and shall take such other actions as
Brooke may reasonably require in order to put Brooke more fully in possession of
NVC's right and interest in the land and buildings at the Factory Site.
4.4 Termination Notice. During the period commencing on the date 270 days
after the Company gives LDJSC a written termination notice pursuant to Section
1(e) of the Use Agreement and ending on the date LDJSC vacates the Factory Site,
Brooke shall pay or shall cause LDJSC to pay NVC each month, for LDJSC's
continued use of the Factory Site, rent on a fair market basis, as determined by
the Appraisal Firm.
4.5 Non-Compete. Except with the prior written consent of NVC (which
consent shall have been approved by a majority of the independent directors of
NVC) (the "NVC Consent"), Brooke and BGLS agree that, during the period of five
years after the Closing Date, BGLS, its direct or indirect subsidiaries and
other entities controlled directly or indirectly by BGLS (other than NVC, its
subsidiaries and other entities controlled directly or indirectly by NVC) (the
"BGLS Group") will not engage in any manner in the business of managing or
developing real estate in Russia and Ukraine except with respect to the
construction of new cigarette factories and related facilities. During the
period of five years after the Closing Date, (i) the BGLS Group will not,
without the NVC Consent, hire any employees of the Company or NVC involved in
the development and management of the Assets and the real estate projects in
Russia and Ukraine currently contemplated by the Company, and (ii) the BGLS
Group shall make available to NVC and the Company at cost, on a basis consistent
with their other business commitments, such of its employees or consultants,
including, without limitation, Eduard Nakhamkin and Ronald J. Bernstein, as NVC
may from time to time reasonably request, in order to assist the Company and NVC
in the development and management of the Assets and the real estate projects in
Russia and Ukraine currently contemplated by the Company.
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<PAGE> 16
ARTICLE V
Indemnification
5.1 Survival of Representations and Warranties. The representations and
warranties contained in this Agreement shall survive the Closing until the
second anniversary of the Closing Date; provided, however, that the
representations and warranties of the Company and Brooke contained in Sections
2.1(E) and 2.2(E) hereof shall survive the Closing indefinitely. Neither the
period of survival nor the liability of the parties hereto with respect to their
respective representations and warranties shall be reduced by any investigation
made at any time by or on behalf of any other party hereto. If written notice of
a claim has been given prior to the expiration of the applicable representations
and warranties, then the relevant representations and warranties shall survive
as to such claim until the claim has been finally resolved.
5.2 Indemnification. (A) NVC and its affiliates and their respective
successors and assigns, and the officers, directors, employees and agents of
NVC, their affiliates and their respective successors and assigns, shall be
indemnified and held harmless by Brooke and BGLS, jointly and severally, for any
and all liabilities, losses, damages, claims, costs and expenses, interest,
awards, judgments and penalties (including, without limitation, attorneys' and
consultants' fees and expenses) actually suffered or incurred by them
(including, without limitation, any action brought or otherwise initiated by any
of them) (hereinafter a "Loss"), arising out of or resulting from:
(i) the breach of any representation or warranty made by the
Company, Brooke or BGLS contained in this Agreement;
(ii) the breach of any covenant or agreement by the Company,
Brooke or BGLS contained in this Agreement, including,
but not limited to, the obligation to pay the Put Price
and the obligations set forth in Section 4.4 hereof; or
(iii) any claim by a third party with respect to any of the
Company's liabilities that is not an Assumed Liability.
(B) Brooke and BGLS and their affiliates and their respective successors
and assigns, and the officers, directors, employees and agents of Brooke and
BGLS, their affiliates and their respective successors and assigns, shall be
indemnified and held harmless by NVC for any and all Losses actually suffered or
incurred by them arising out of or resulting from:
(i) the breach of any representation or warranty made by
NVC contained in this Agreement; or
(ii) the breach of any covenant or agreement by NVC
contained in this Agreement; or
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<PAGE> 17
(iii) any obligation or liability relating to the Assumed
Liabilities.
(C) To the extent that a party's undertakings set forth in this Section
5.2 may be unenforceable, such party shall contribute the maximum amount that it
is permitted to contribute under applicable law to the payment and satisfaction
of all Losses incurred by the Indemnified Parties.
(D) A party seeking indemnification hereunder (an "Indemnified Party")
shall give the party from whom indemnification may be sought hereunder (an
"Indemnifying Party") notice of any matter which an Indemnified Party has
determined has given or could give rise to a right of indemnification under this
Agreement, within 60 days of such determination, stating the amount of the Loss,
if known, and method of computation thereof, and containing a reference to the
provisions of this Agreement in respect of which such right of indemnification
is claimed or arises. The obligations and liabilities of an Indemnifying Party
under this Article V with respect to Losses arising from claims of any third
party which are subject to the indemnification provided for in this Article V
("Third Party Claims") shall be governed by and contingent upon the following
additional terms and conditions: if an Indemnified Party shall receive notice of
any Third Party Claim, the Indemnified Party shall give the Indemnifying Party
written notice of such Third Party Claim within 30 days of the receipt by the
Indemnified Party of such notice; provided, however, that the failure to provide
such written notice shall not release any Indemnifying Party from any of its
obligations under this Article V except to the extent such Indemnifying Party is
materially prejudiced by such failure. If any Indemnifying Party acknowledges in
writing its obligation to indemnify the Indemnified Party hereunder against any
Losses that may result from such Third Party Claim, then such Indemnifying Party
shall be entitled to assume and control the defense of such Third Party Claim at
its expense and through counsel of its choice if it gives notice of its
intention to do so to the Indemnified Party within five days of the receipt of
such written notice from the Indemnified Party; provided, however, that if there
exists or is reasonably likely to exist a conflict of interest that would make
it inappropriate in the judgment of the Indemnified Party in its sole and
absolute discretion, for the same counsel to represent both the Indemnified
Party and the Indemnifying Party, then the Indemnified Party shall be entitled
to retain its own counsel, in each jurisdiction for which the Indemnified Party
determines counsel is required, at the expense of the Indemnifying Party. In the
event an Indemnifying Party exercises the right to undertake any such defense
against any such Third Party Claim as provided above, the Indemnified Party
shall cooperate with such Indemnifying Party in such defense and make available
to such Indemnifying Party, at such Indemnifying Party's expense, all witnesses,
pertinent records, materials and information in the Indemnified Party's
possession or under the Indemnified Party's control relating thereto as is
reasonably required by such Indemnifying Party. Similarly, in the event an
Indemnified Party is, directly or indirectly, conducting the defense against any
such Third Party Claim, the Indemnifying Party shall cooperate with the
Indemnified Party in such defense and make available to the Indemnified Party,
at the Indemnifying Party's expense, all such witnesses, records, materials and
information in the Indemnifying Party's possession or under the Indemnifying
Party's control relating thereto as is reasonably required by the Indemnified
Party. No such Third Party Claim may be settled
- 12 -
<PAGE> 18
by an Indemnifying Party without the prior written consent of the Indemnified
Party, nor may any such Third Party Claim be settled by an Indemnified Party
without the prior written consent of the Indemnifying Party, which consent shall
not be unreasonably withheld.
5.3 Exclusive Remedy. The indemnification provided for in this Article V
shall be the sole and exclusive remedy available to the parties hereto for
Losses arising out of or resulting from the causes enumerated in Sections 5.2(A)
and (B) hereof.
ARTICLE VI
Termination and Waiver
6.1 Termination. This Agreement may be terminated at any time prior to
the Closing:
(A) by NVC if, between the date hereof and the time scheduled for the
Closing: (i) any representation or warranty of either the Company, Brooke or
BGLS contained in this Agreement shall not have been true and correct in all
material respects when made or shall not be true and correct in all material
respects at any time prior to the Closing Date; or (ii) either the Company,
Brooke or BGLS shall not have complied in all material respects with any
covenant or agreement to be complied with by it and contained in this Agreement;
or
(B) by Brooke if, between the date hereof and the time scheduled for the
Closing: (i) any representation or warranty of NVC contained in this Agreement
shall not have been true and correct in all material respects when made or shall
not be true and correct in all material respects at any time prior to the
Closing Date; or (ii) NVC shall not have complied in all material respects with
any covenant or agreement to be complied with by it and contained in this
Agreement; or
(C) by either Brooke or NVC if the Closing shall not have occurred by
January 31, 1997; provided, however, that the right to terminate this Agreement
under this Section 6.1(C) hereof shall not be available to any party whose
failure to fulfill any obligation under this Agreement shall have been the cause
of, or shall have resulted in, the failure of the Closing to occur on or prior
to such date; or
(D) by either Brooke or NVC in the event that an action shall have been
commenced in a court of competent jurisdiction or any governmental authority
shall have issued an order, decree or ruling or taken any other action seeking
to restrain, enjoin or otherwise prohibit the transactions contemplated by this
Agreement; or
(E) by the mutual written consent of Brooke and NVC.
- 13 -
<PAGE> 19
6.2 Effect of Termination. In the event of termination of this Agreement as
provided in Section 6.1 hereof, this Agreement shall forthwith become void and
there shall be no liability on the part of either party hereto except (a) as set
forth in Section 7.1 hereof and (b) that nothing herein shall relieve either
party from liability for any breach of this Agreement that occurred prior to the
termination of this Agreement.
6.3 Waiver. Any party to this Agreement may (a) extend the time for the
performance of any of the obligations or other acts of another party, (b) waive
any inaccuracies in the representations and warranties of another party
contained herein, or (c) waive compliance with any of the agreements or
conditions of another party contained herein. Any such extension or waiver shall
be valid only if set forth in an instrument in writing signed by the party to be
bound thereby. Any waiver of any term or condition shall not be construed as a
waiver of any subsequent breach or a subsequent waiver of the same term or
condition, or a waiver of any other term or condition, of this Agreement. The
failure of any party to exercise, or the delay by any party in exercising, any
right or remedy hereunder shall not constitute a waiver of any such right or
remedy.
ARTICLE VII
Miscellaneous
7.1 Expenses; Transfer Taxes, etc. Whether or not the transactions
contemplated by this Agreement shall be consummated, each party hereto agrees
that all fees and expenses incurred by it in connection with this Agreement
shall be borne by it, except that NVC will pay all transfer taxes which may be
payable in connection with the transactions contemplated by this Agreement and
NVC and Brooke will each pay one-half of the fees and expenses of the appraisal
of 7 Gasheka Street (Ducat Place II) and the Factory Site.
7.2 Notices. Any notices or other communications required or permitted
hereunder shall be in writing and shall be deemed to have been duly given or
made as of the date of receipt and shall be delivered personally or mailed by
registered or certified mail (postage prepaid, return receipt requested), sent
by overnight courier or sent by telecopy, to the parties at the following
addresses or telecopy numbers (or at such other address or telecopy number for
a party as shall be specified by like notice): (a) if to the Company, to
BrookeMil Ltd., P.O. Box 219, Fifth Floor, Butterfield House, Georgetown, Grand
Cayman Island, British West Indies, Attention: David Geovanis, President,
Telecopy No. 809-949-4590; (b) if to Brooke, to Brooke (Overseas) Ltd., 100
S.E. Second Street, Miami, Florida 33131, Attention: Ronald J. Bernstein,
President, Telecopy No. 305-579-8037, with a copy to: Coudert Brothers, 1114
Avenue of the Americas, New York, New York 10036, Attention: Clyde E. Rankin,
III, Esq., Telecopy No. 212-626-4120; (c) if to BGLS, to BGLS Inc., 100 S.E.
Second Street, Miami, Florida 33131, Attention: Joselynn D. Van Siclen, Vice
President and Chief Financial Officer, Telecopy No. 305-579-8037, with a copy
to Coudert Brothers, 1114 Avenue of the Americas, New York, New York 10036,
Attention: Clyde E. Rankin, III, Esq., Telecopy No. 212-626-4120; and (d) if to
NVC, to New Valley Corporation, 100 S.E.
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<PAGE> 20
Second Street, Miami, Florida 33131, Attention: Robert M. Lundgren, Vice
President and Chief Financial Officer, Telecopy No. 305-579-8009, with a copy
to: Fischbein Badillo Wagner Harding, 909 Third Avenue, New York, New York
10022, Attention: Gerald N. Schrager, P.C., Telecopy No. 212-644-7485; or to
such other address as shall be furnished in writing by any party to the others
prior to the giving of any applicable notice or communication, and such notice
or communication shall be deemed to have been given as of the date upon which
such notice or communication is first sent by telex, telecopier or other means
of instantaneous communication, and simultaneously confirmed by mail.
7.3 Brokers and Financial Advisors. Brooke and BGLS represent and warrant
to NVC, and NVC represents and warrants to Brooke and BGLS, that no broker,
finder or investment bank is entitled to any brokerage, finder's, investment
banking or other fee or commission from Brooke, BGLS or NVC, as the case may
be, based on agreements, arrangements or undertakings made by Brooke, BGLS or
NVC or in connection with the transactions contemplated hereby, other than
Oppenheimer & Co. Inc. which has been engaged by NVC as its financial advisor.
7.4 Press Releases and Confidentiality. Except as required by Law or stock
exchange requirements, each of the parties to this Agreement hereby agrees with
each other party that (a) no press release or similar public announcement or
communication will be made or caused to be made, and (b) no information will be
divulged, furnished or made accessible to any third party, in each case,
concerning the execution or performance of this Agreement or the transactions
contemplated hereby, unless specifically approved in advance by the other
parties hereto.
7.5 Amendment. This Agreement may not be amended or modified except (a) by
an instrument in writing signed by, or on behalf of, the Company, Brooke, BGLS
and NVC or (b) by a waiver in accordance with Section 6.3 hereof.
7.6 Assignment. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, but neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto without the prior written consent of the other parties, except by
operation of Law and except that NVC may assign its rights and obligations under
this Agreement to any of its affiliates.
7.7 No Third Party Beneficiaries. Except for the provisions of Article V
relating to Indemnified Parties, this Agreement shall be binding upon and inure
solely to the benefit of the parties hereto and their permitted assigns and
nothing herein, express or implied, is intended to or shall confer upon any
other person or entity any legal or equitable right, benefit or remedy of any
nature whatsoever under or by reason of this Agreement.
7.8 Further Actions. Each of the parties hereto agrees that, subject to its
legal obligations, it will use its best efforts to fulfill all conditions
precedent specified herein, and to do all things reasonably necessary to
consummate the transactions contemplated hereby.
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<PAGE> 21
7.9 Severability. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
7.10 Governing Law. This Agreement shall be governed by the laws of the
State of New York without regard to conflicts of law principles.
7.11 Submission to Jurisdiction. Each party hereby consents to the
jurisdiction of the United States District Court for the Southern District of
New York and any of the courts of the State of New York in New York County in
connection with any dispute arising under this Agreement.
7.12 Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.13 Headings. The headings of the Sections and Articles of this Agreement
are inserted for convenience only and shall not constitute a part hereof or
affect in any way the meaning or interpretation of this Agreement.
7.14 Entire Agreement. This Agreement, including the Annexes and Schedules
hereto and the other documents and certificates delivered pursuant to the terms
hereof, sets forth the entire agreement and understanding of the parties hereto
in respect of the subject matter contained herein, and supersedes all prior
agreements, promises, covenants, arrangements, communications, representations
or warranties, whether oral or written, by any officer, employee or
representative of any party hereto.
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<PAGE> 22
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
BROOKEMIL LTD.
By: /s/ David Geovanis
----------------------------------
Name: David Geovanis
Title: President
BROOKE (OVERSEAS) LTD.
By: /s/ Ronald J. Bernstein
----------------------------------
Name: Ronald J. Bernstein
Title: President
BGLS INC.
By: /s/ Joselynn D. Van Siclen
-----------------------------------
Name: Joselynn D. Van Siclen
Title: Vice President and Chief
Financial Officer
NEW VALLEY CORPORATION
By: /s/ Robert M. Lundgren
------------------------------------
Name: Robert M. Lundgren
Title: Vice President and Chief
Financial Officer
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<PAGE> 23
Schedule 2.1(G)
BROOKEMIL LTD.
OTHER PAYABLES AND LIABILITIES
1. Notes payable to York Financial Corporation, Ltd. with a principal amount
of approximately $1,525,000 at January 15, 1997, plus accrued interest.
2. Payables to Hines International for leasing commissions of approximately
$150,000 at January 15, 1997.
3. Professional fees payable of approximately $150,000 at January 15, 1997.
4. Other construction costs of approximately $970,000 relating to 7 Gasheka
Street (Ducat Place II) at January 15, 1997.
<PAGE> 24
Schedule 2.1 (K)
BROOKEMIL LTD.
REAL ESTATE AND OTHER MATTERS
1. The Company is the current holder of all of the right, title and interest
of the tenant under the following leases:
(A) Land Lease Agreement dated February 3, 1992, between The Government
of the City of Moscow, as landlord, and the Company, as Tenant,
demising the land known as 8/10 Gasheka Street ("Ducat Place I") and
6 Gasheka Street ("Ducat Place III"), as amended to date;
(B) Land Lease Agreement dated December 30, 1996, between The Government
of the City of Moscow, as landlord, and the Company, as Tenant,
demising the land at Ducat Place I;
(C) Land Lease Agreement dated February 3, 1992, between The Government
of the City of Moscow, as landlord, and the Company, as Tenant,
demising the land known as 7 Gasheka Street ("Ducat Place II"), as
amended to date; and
(D) Lease Agreement dated August 23, 1993, between The Property
Management Committee of Moscow, as landlord, and the Company, as
Tenant, originally demising the buildings and other improvements
located at Ducat Place I, II and III, as amended to date,
free and clear of any Encumbrances other than, with respect to the
Company's right, title and interest in Ducat Place I only, a pledge or
other security interest in favor of Vneshtorgbank in connection with a
loan from Vneshtorgbank to the Company and LDJSC, as co-borrowers (the
"Vneshtorgbank Loan"). Each of the foregoing leases is in full force and
effect without default by either the landlord or the tenant thereunder.
The Company is current in the payment of all rent due under the foregoing
leases through the date hereof. The City of Moscow has separated the Land
Lease Agreement for Ducat Place I and III, so that separate and
independent land leases for Ducat Place I and Ducat Place III exist. The
Company has provided to NVC and Oppenheimer & Co. Inc. ("Oppenheimer")
access to complete and correct copies of the foregoing leases and all
amendments, protocols and other documents and agreements relating thereto.
2. The Company owns the buildings and other improvements constructed at Ducat
Place I and II free and clear of any Encumbrances other than, with respect
to the
<PAGE> 25
buildings and other improvements constructed at Ducat Place I only, the
Vneshtorgbank Loan.
3. During the entire period from and including October 3, 1993 to and
including December 18, 1996, the Company was a wholly-owned subsidiary of
LDJSC.
4. The unpaid principal balance of the Vneshtorgbank Loan, as of January 26,
1997, is $20,417,949. All interest with respect to the Vneshtorgbank Loan
has been paid through January 26, 1997. Interest is accruing with respect
to the Vneshtorgbank Loan at a per diem rate of $8,915. The maturity date
of the Vneshtorgbank Loan is October 27, 1997. Interim amortization
payments are as follows: $6,125,385 due on April 25, 1997; $4,083,589 due
on July 25, 1997; and the final payment of $10,208,975 is due on October
27, 1997. The Company has not received any notice of default under any
document or agreement relating to the Vneshtorgbank Loan. The Company has
provided to NVC and Oppenheimer access to complete and correct copies of
all documents and agreements relating to the Vneshtorgbank Loan.
5. There is no litigation pending or, to the best of the Company's
knowledge, threatened in writing (or any basis therefor) against the
Company that might detrimentally affect the value, use or operation of the
Assets for their intended purposes and/or the ability of the Company to
perform its obligations under this Agreement. There are no valid,
effective and enforceable orders, injunctions or decrees of any court or
arbitral body with respect to the Company and/or the Assets that might
detrimentally affect the value, use or operation of the Assets for their
intended purposes and/or the ability of the Company to perform its
obligations under this Agreement. The Company has neither filed, nor been
the subject of any filing of, a petition under bankruptcy laws, insolvency
laws, laws for the composition of indebtedness, or laws for the
reorganization of debtors.
6. There are no material physical or mechanical defects with respect to the
land, the buildings and/or the other improvements comprising the Assets
(including, but not limited to, the structural and load-bearing
components, the roofs and the plumbing, heating, ventilation, air
conditioning, electrical and life safety systems of the improvements), and
all of such items (to the extent installed or constructed on the date
hereof, with respect to the building under construction at Ducat Place II)
are in good operating condition and repair and in compliance in all
material respects with all applicable Laws. The Company has not received,
and has no knowledge of, any notice or request from Vneshtorgbank or any
governmental agency requesting or requiring the performance of any work or
alteration in respect of the land, the buildings and/or the other
improvements comprising the Assets.
7. The use and operation of the Assets are in compliance in all material
respects with all applicable Laws (including, but not limited to,
environmental Laws). All licenses, certificates, permits, variances,
approvals, authorizations, easements,
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<PAGE> 26
rights of way and the like required from all governmental authorities
having jurisdiction over the Assets, or from private parties, for the
construction, use, operation and occupancy of the Assets have been
obtained (excluding, however, any such licenses, certificates, permits,
and the like with respect to the use, operation and occupancy of the
building under construction at Ducat Place II, to the extent that the same
are unavailable until completion of construction). The Company neither has
received any notice nor has any knowledge that any of the foregoing
licenses, certificates, permits and the like has been suspended or revoked
or, if the same is for a term or other period of time, will not be
renewed.
8. Neither the Company nor, to the best of the Company's knowledge, any
other person or entity (including, but not limited to, LDJSC has used,
manufactured, generated, treated, stored, disposed of, or released any
hazardous materials on, under, or about the land, buildings and/or other
improvements comprising Ducat Place I, II and/or III, or transported any
hazardous materials over such land, buildings and/or other improvements,
except in compliance with any and all environmental Laws then in effect.
To the best of the Company's knowledge, none of such land, buildings
and/or other improvements contains or consists of any materials that
constitute or contain hazardous materials. All oil burners, incinerators,
compactors and other fuel burning devices located in or servicing such
buildings and/or other improvements comply with any and all applicable air
pollution control Laws, and operating certificates, to the extent that
same are required, have been issued therefor and are in full force and
effect.
9. The lease between the Company and Citibank with respect to Ducat Place I
is in full force and effect, and Citibank is in possession of all of the
premises demised to it under such lease. Other than as part of the
Assumed Liabilities, there are no free rent allowances, prepaid rents,
other prepaid charges, operating expense abatements, incomplete tenant
improvements, rebates, allowances, or other unexpired concessions or any
termination, extension, cancellation, or expansion rights under such
lease. Such lease is bona-fide in all respects, and was executed and
delivered by the Company and Citibank on an arms-length basis and in the
ordinary course of business. There is no default by the Company under the
terms of such lease (including, but not limited to, any such default that
has or might give rise to any offset, defense, claim, or counterclaim to
the payment of the rents and/or other charges payable by Citibank
thereunder), nor, to the best of the Company's knowledge, are there any
material defaults by Citibank thereunder. Neither such lease nor the
rents payable thereunder has been assigned or pledged except in connection
with the Vneshtorgbank Loan.
10. The Schedule of Leases with respect to Ducat Place II furnished to NVC by
the Company is complete and correct in all respects. All of the leases
referred to in such schedule are in full force and effect, pending,
however, completion of the work to be performed by the Company thereunder
and the delivery of possession of the premises demised thereunder to the
respective tenants. Other than as part of
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<PAGE> 27
the Assumed Liabilities, there are no free rent allowances, prepaid
rents, other prepaid charges, operating expense abatements, incomplete
tenant improvements, rebates, allowances, or other unexpired concessions
or any termination, extension, cancellation, or expansion rights under
such leases. Such leases are bona-fide in all respects, and were executed
and delivered by the Company and the respective tenants thereunder on an
arms-length basis and in the ordinary course of business. There is no
default by the Company under the terms of any such lease (including, but
not limited to, any such default that has or might give rise to any
offset, defense, claim, or counterclaim to the payment of the rents and/or
other charges payable by the tenant thereunder), nor, to the best of the
Company's knowledge, are there any material defaults by the tenant
thereunder. Neither such leases nor the rents payable thereunder have been
assigned or pledged.
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<PAGE> 1
EXHIBIT 10.1
FOR INCLUSION IN NEW VALLEY CORPORATION'S
CURRENT REPORT ON FORM 8-K DATED JANUARY 31, 1997
<PAGE> 2
PROMISSORY NOTE
$33,500,000 January 31, 1997
FOR VALUE RECEIVED, New Valley Corporation, a Delaware corporation
("Maker"), promises to pay to Brooke (Overseas) Ltd., a Delaware corporation
("Payee"), in lawful money of the United States of America, the principal sum of
Thirty-Three Million Five Hundred Thousand Dollars ($33,500,000), together with
interest in arrears on the unpaid principal balance at an annual rate equal to
9%, in the manner provided below. Interest shall be calculated on the basis of a
year of 365 or 366 days, as applicable, and charged for the actual number of
days elapsed.
This Note has been executed and delivered pursuant to and in accordance
with the terms and conditions of the Stock Purchase Agreement, dated as of
January 31, 1997, among Maker, Payee, BGLS Inc., and BrookeMil Ltd. (the
"Agreement"), and is subject to the terms and conditions of the Agreement, which
are, by this reference, incorporated herein and made a part hereof. Capitalized
terms used in this Note without definition shall have the respective meanings
set forth in the Agreement.
1. PAYMENTS
1.1 Principal and Interest
The principal amount of this Note shall be due and payable in two
installments of $21,500,000 on June 30, 1997 and $12,000,000 on December 31,
1997. In the event any default under the Loan Agreement referred to in Section
2.1(G)(i) of the Agreement occurs which results in BrookeMil Ltd. or Maker being
required to prepay all or any part of the amounts due thereunder prior to June
30, 1997, Maker shall have the right, at its sole election by notice to Payee on
or before such date, to defer payment on June 30, 1997 to December 31, 1997 of
up to $10,000,000 of the principal amount of the Note. Interest on the unpaid
principal balance of this Note shall be due and payable quarterly, on the last
day of each calendar quarter.
1.2 Manner of Payment
All payments of principal and interest on this Note shall be made by wire
transfer of immediately available funds to an account designated by Payee in
writing. If any payment of principal or interest on this Note is due on a day
which is not a Business Day, such payment shall be due on the next succeeding
Business Day, and such extension of time shall be taken into account in
calculating the amount of interest payable under this Note. "Business Day" means
any day other than a Saturday, Sunday or legal holiday in the State of New York.
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1.3 Prepayment
Maker may, without premium or penalty, at any time and from time to time,
prepay all or any portion of the outstanding principal balance due under this
Note, provided that each such prepayment is accompanied by accrued interest on
the amount of principal prepaid calculated to the date of such prepayment. Any
partial prepayments shall be applied to installments of principal in order of
their maturity.
1.4 Right of Set-Off
Maker shall have the right to withhold and set-off against any amount due
hereunder the amount of any claim for indemnification or payment of damages to
which Maker may be entitled under the Agreement, as provided in Section 5.2(A)
thereof, and any amounts due to Maker upon Maker's exercise of the Put Option as
provided in Article IV of the Agreement.
2. DEFAULTS
2.1 Events of Default
The occurrence of any one or more of the following events with respect to
Maker shall constitute an event of default hereunder ("Event of Default"):
(a) If Maker shall fail to pay when due any payment of principal or
interest on this Note and such failure continues for 15 days after Payee
notifies Maker in writing; provided, however, that the exercise by Maker in good
faith of its right of set-off pursuant to Section 1.4 above, whether or not
ultimately determined to be justified, shall not constitute an Event of Default.
(b) If, pursuant to or within the meaning of the United States Bankruptcy
Code or any other federal or state law relating to insolvency or relief of
debtors (a "Bankruptcy Law"), Maker shall (i) commence a voluntary case or
proceeding; (ii) consent to the entry of an order for relief against it in an
involuntary case; (iii) consent to the appointment of a trustee, receiver,
assignee, liquidator or similar official; (iv) make an assignment for the
benefit of its creditors; or (v) admit in writing its inability to pay its debts
as they become due.
(c) If a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that (i) is for relief against Maker in an involuntary case;
(ii) appoints a trustee, receiver, assignee, liquidator or similar official for
Maker or substantially all of Maker's properties; or (iii) orders the
liquidation of Maker, and in each case the order or decree is not dismissed
within 120 days.
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2.2 Notice by Maker
Maker shall notify Payee in writing within five days after the occurrence
of any Event of Default of which Maker acquires knowledge.
2.3 Remedies
Upon the occurrence of an Event of Default hereunder (unless all Events of
Default have been cured or waived by Payee), Payee may, at its option, (i) by
written notice to Maker, declare the entire unpaid principal balance of this
Note, together with all accrued interest thereon, immediately due and payable
regardless of any prior forbearance, and (ii) exercise any and all rights and
remedies available to it under applicable law, including, without limitation,
the right to collect from Maker all sums due under this Note. Maker shall pay
all reasonable costs and expenses incurred by or on behalf of Payee in
connection with Payee's exercise of any or all of its rights and remedies under
this Note, including, without limitation, reasonable attorneys' fees.
3. MISCELLANEOUS
3.1 Waiver
The rights and remedies of Payee under this Note shall be cumulative and
not alternative. No waiver by Payee of any right or remedy under this Note shall
be effective unless in a writing signed by Payee. Neither the failure nor any
delay in exercising any right, power or privilege under this Note will operate
as a waiver of such right, power or privilege and no single or partial exercise
of any such right, power or privilege by Payee will preclude any other or
further exercise of such right, power or privilege or the exercise of any other
right, power or privilege. To the maximum extent permitted by applicable law,
(a) no claim or right of Payee arising out of this Note can be discharged by
Payee, in whole or in part, by a waiver or renunciation of the claim or right
unless in a writing, signed by Payee; (b) no waiver that may be given by Payee
will be applicable except in the specific instance for which it is given; and
(c) no notice to or demand on Maker will be deemed to be a waiver of any
obligation of Maker or of the right of Payee to take further action without
notice or demand as provided in this Note. Maker hereby waives presentment,
demand, protest and notice of dishonor and protest.
3.2 Notices
Any notice required or permitted to be given hereunder shall be given in
accordance with Section 7.2 of the Agreement.
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3.3 Severability
If any provision in this Note is held invalid or unenforceable by any court
of competent jurisdiction, the other provisions of this Note will remain in full
force and effect. Any provision of this Note held invalid or unenforceable only
in part or degree will remain in full force and effect to the extent not held
invalid or unenforceable.
3.4 Governing Law
This Note will be governed by the laws of the State of New York without
regard to conflicts of laws principles.
3.5 Non-Negotiability; Parties in Interest
This Note shall bind Maker and its successors and assigns. This Note is
non-negotiable and shall not be assigned or transferred by Payee without the
express prior written consent of Maker, except by operation of law.
3.6 Section Headings; Construction
The headings of Sections in this Note are provided for convenience only and
will not affect its construction or interpretation. All references to "Section"
or "Sections" refer to the corresponding Section or Sections of this Note unless
otherwise specified.
All words used in this Note will be construed to be of such gender or
number as the circumstances require. Unless otherwise expressly provided, the
words "hereof" and "hereunder" and similar references refer to this Note in its
entirety and not to any specific section or subsection hereof.
IN WITNESS WHEREOF, Maker has executed and delivered this Note as of the
date first stated above.
NEW VALLEY CORPORATION
By: /s/ Richard J. Lampen
----------------------------------
Name: Richard J. Lampen
Title: Executive Vice President
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EXHIBIT 10.2
FOR INCLUSION IN NEW VALLEY CORPORATION'S
CURRENT REPORT ON FORM 8-K DATED JANUARY 31, 1997
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PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT, dated as of January 31, 1997, is entered into by and
between BROOKE (OVERSEAS) LTD., a corporation duly organized and validly
existing under the laws of Delaware ("Brooke"), and NEW VALLEY CORPORATION, a
corporation duly organized and validly existing under the laws of Delaware
("NVC").
WITNESSETH
WHEREAS, on the date hereof (i) NVC has purchased from Brooke 10,483 shares
of Common Stock (the "Shares") of BrookeMil Ltd., a Cayman Islands company (the
"Company"), and (ii) NVC has issued to Brooke a note (the "Note") to evidence
its obligation to pay a portion of the purchase price for the Shares, all
pursuant to a Stock Purchase Agreement, dated as of January 31, 1997, among the
Company, Brooke, BGLS, Inc., and NVC;
WHEREAS, to secure the payment obligations of NVC under the Note, Brooke
has requested that NVC pledge to it the Shares owned by NVC;
NOW, THEREFORE, in consideration of the mutual agreements set forth herein
and for other good and valuable consideration, the parties hereto hereby agree
as follows:
1. SECURITY AGREEMENT
1.1 Security Interest in the Collateral
(a) In order to secure the due and punctual payment (whether at maturity or
by acceleration) of any amount that NVC is obligated to pay under the Note, NVC
hereby pledges, assigns, transfers, sets over and delivers to Brooke and grants
for the benefit of Brooke a security interest in and to all of the following in
which NVC may now or hereafter have any right, title or interest:
(i) the Shares;
(ii) all certificates and instruments representing the Shares; and
(iii) all cash, securities, distributions and other property at any
time and from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the
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foregoing except dividends and distributions paid upon the
Shares prior to the occurrence and continuance of an Event of
Default (as defined below), as provided in Section 1.2(a)(ii) hereof
(all of the property described in the foregoing clauses (i)-(iii) is
hereinafter referred to as the "Collateral").
(b) The Shares and all certificates and instruments representing such
Shares shall be deposited on the date hereof with Clyde E. Rankin, III, of
Coudert Brothers, 1114 Avenue of the Americas, New York, New York 10036, as
representative of the parties hereunder (the "Representative"). All securities
and other certificated property at any time and from time to time received,
receivable or otherwise distributed in respect of or in exchange for the Shares
(collectively with the Shares, the "Property"), shall also be deposited with the
Representative when received. In the event of any ambiguity or uncertainty
hereunder or in any notice, instruction or other communications received by the
Representative, or any dispute or conflicting claims among the parties hereto
with respect to the Property held by the Representative hereunder, the
Representative may, in his sole discretion, refrain from taking any action other
than to retain possession of such Property, unless the Representative receives
written instructions signed by all parties hereto, which eliminate such
ambiguity or uncertainty or resolve such dispute or conflicting claim. All costs
and expenses incurred by the Representative in connection with his activities
hereunder shall be the joint and several obligation of the parties hereto.
(c) The parties hereto agree that, on the date on which NVC makes payment
of any and all amounts due and payable under the Note to Brooke, the Collateral
shall be released from the pledge of this Agreement and returned to the
possession of NVC and no longer constitute Collateral under this Agreement.
1.2 Voting Rights; Distributions; Etc.
(a) So long as no Event of Default (as defined below) shall have occurred
and be continuing:
(i) Except as set forth in paragraph (b) below, NVC shall be solely
and exclusively entitled to exercise any and all voting,
consensual and other rights and powers relating or pertaining
to the Collateral or any part thereof that NVC may now or
hereafter have as the owner of the Shares for any purpose not
inconsistent with the terms of this Agreement; and
(ii) NVC shall be solely and exclusively entitled to receive and
retain dividends and other distributions payable upon the
Shares.
(b) Upon the occurrence and during the continuance of an Event of Default,
all rights of NVC to exercise the voting, consensual and other rights and powers
which
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NVC is entitled to exercise pursuant to subparagraph (i) of paragraph (a) above
and to receive the dividends and other distributions which NVC is authorized to
receive and retain pursuant to subparagraph (ii) of paragraph (a) above shall
cease and Brooke shall have the sole and exclusive right and authority to
exercise such voting, consensual and other rights and powers and to receive such
dividends and other distributions, and any such dividends and other
distributions received by NVC shall immediately be paid over to Brooke. Any and
all money and other property paid over to or received by Brooke pursuant to the
provisions of this paragraph (b) shall be retained by Brooke as part of the
Collateral and be applied in accordance with the provisions hereof.
2. REPRESENTATIONS, WARRANTIES AND COVENANTS
2.1 Title to Shares
NVC hereby represents and warrants that it owns good and marketable title
to the Shares, free and clear of any liens, charges, encumbrances or security
interests of any kind whatsoever, and that the Shares are not subject to any
restriction on alienation or transfer, in each case, other than this Agreement.
NVC covenants to defend the right, title and interest of NVC in and to the
Shares against the claims and demands of all persons whatsoever. NVC hereby
represents, warrants and covenants that NVC is currently, or shall be, the only
owner of the Shares and that NVC does not, and will not have, outstanding
rights, options, warrants, conversion rights or other commitments or agreements
for the purchase or acquisition of the Shares.
2.2 No Transfer
NVC covenants not to sell, assign, transfer or otherwise dispose of, or
grant any option with respect to, or pledge or otherwise encumber (other than
the lien created hereby), any of the Shares, other Collateral or any interest
therein, unless (i) it obtains the prior written consent of Brooke, or (ii) all
obligations of NVC under the Note have been paid in full.
2.3 Corporate Organization and Authority
NVC represents and warrants that:
(a) it is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, has full corporate power and
authority to own its assets and to transact its business as now conducted, and
is in good standing under the laws of those jurisdictions in which the business
conducted or the assets owned or leased by it makes qualification to do business
as a foreign corporation necessary;
(b) this Agreement has been duly executed and delivered by NVC and
constitutes a legal, valid and binding obligation of NVC, enforceable in
accordance
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with its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by general principles of equity;
(c) the execution, delivery and performance by NVC of this Agreement (i)
will not violate any provision of any law applicable to NVC or to any of its
assets, (ii) will not violate any provisions of the Restated Certificate of
Incorporation or By-laws of NVC, and (iii) will not violate any provisions of,
or constitute a default under, or result in the creation or imposition of any
lien (other than the lien created hereby) on any of the properties, revenues or
assets of NVC pursuant to the provisions of any applicable law, contract,
agreement or other undertaking to which NVC is a party or which purports to be
binding upon NVC or upon any of its assets; and
(d) no consent or authorization of, or other act by or in respect of, any
governmental authority, and no consent of any person is required in connection
with the execution, delivery, performance, validity or enforceability of this
Agreement.
3. EVENT OF DEFAULT
For purposes of this Agreement an "Event of Default" shall exist hereunder
upon the occurrence of a payment default under Section 2.1(a) of the Note
(whether any such event shall be voluntary or involuntary or come about or be
effected by operation of law or pursuant to or in compliance with any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body or otherwise).
4. REMEDIES UPON DEFAULT
4.1 Rights under the Uniform Commercial Code
If any Event of Default shall have occurred and be continuing, Brooke shall
have the right to exercise any and all rights and remedies of a secured party
upon default under the Uniform Commercial Code then in effect in the State of
New York, United States of America.
4.2 Sale of the Collateral
(a) In addition to the aforesaid rights and remedies under the Uniform
Commercial Code, upon the occurrence and during the continuance of an Event of
Default, Brooke may, to the extent permitted by law, sell the Collateral, or any
part thereof, at any public or private sale or at any broker's board or on any
securities exchange, for cash, upon credit or for future delivery, as Brooke
shall deem appropriate. Brooke shall be authorized at any such sale (to the
extent it deems it
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advisable to do so, in its sole discretion) to restrict the prospective bidders
or purchasers to persons who will represent and agree that they are purchasing
the Collateral then being sold for their own account for investment and not with
a view to the distribution or resale thereof, and upon consummation of any such
sale Brooke shall have the right to assign, transfer and deliver to the
purchaser or purchasers thereof the Collateral so sold. Each such purchaser at
any such sale shall hold the property sold absolutely and free from any claim or
right on the part of NVC. At any such sale Brooke may bid for or purchase, free
from any right of redemption on the part of NVC (all said rights being also
hereby waived and released), all or any part of the Collateral offered for sale,
and Brooke may, upon compliance with the terms of the sale, hold, retain and
dispose of such property without further accountability therefor.
(b) Brooke shall give NVC at least ten (10) days' written notice of the
intention of Brooke to make any such public or private sale or sale at any
broker's board or on any securities exchange. Such notice, in case of public
sale, shall state the time and place fixed for such sale and, in the case of
sale at a broker's board or on a securities exchange, shall state the board or
exchange at which such sale is to be made and the day on which the Collateral,
or portion thereof, will first be offered for sale at such board or exchange.
(c) Any such public sale shall be held at such time or times within
ordinary business hours and at such place or places as Brooke may fix in the
notice of such sale.
(d) At any such public or private sale, the Collateral or part thereof to
be sold may be sold in one lot as an entirety or in separate parcels, as Brooke
may in its sole discretion determine.
(e) Brooke shall not be obligated to make any sale of Collateral if it
shall determine not to do so, regardless of the fact that notice of sale of
Collateral may have been given. Brooke may, without notice or publication,
adjourn any public or private sale or cause the same to be adjourned from time
to time by announcement at the time and place fixed for sale, and such sale may
without further notice be made at the time and place to which the same shall
have been so adjourned.
(f) As an alternative to exercising its rights under the Uniform Commercial
Code or the power of sale herein conferred upon it, Brooke may proceed by a suit
or suits at law or in equity to foreclose on and to sell the Collateral or any
portion thereof pursuant to a judgment decree of a court or courts of competent
jurisdiction.
4.3 Application of Proceeds of Sale and Other Cash Received
The proceeds of sale of Collateral sold pursuant to Section 4.2 and cash
constituting Collateral received under Section 1.2(b) shall be applied by Brooke
as follows:
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FIRST: to the payment of the costs and expenses of such sale, including the
out-of-pocket expenses of Brooke and the fees and out-of-pocket expenses of
legal advisers employed by Brooke in connection therewith, and to the payment of
all advances made by Brooke hereunder and the payment of all reasonable costs
and expenses incurred by Brooke in connection with the administration and
enforcement of this Agreement;
SECOND: to the payment in full of the Note;
THIRD: the balance (if any) of such proceeds to NVC, the successors or
assigns of NVC, or as a court of competent jurisdiction may direct.
5. OTHER PROVISIONS
5.1 Termination
The security interest created by this Agreement shall terminate on or after
the date when any and all amounts due and payable by NVC under the Note shall be
paid in full, at which time Brooke shall reassign and redeliver, or cause to be
reassigned or redelivered, without recourse to or warranty by Brooke and at the
expense of NVC and together with appropriate instruments of reassignment and
release, to NVC, against receipt, such of the Collateral (if any) as shall not
have been sold or otherwise applied by Brooke pursuant to the terms hereof and
not theretofore reassigned and redelivered to NVC or such person or persons as
NVC may have designated, which Collateral (if any) shall not have been
encumbered by Brooke.
5.2 Further Assurances
NVC agrees to do such further acts and things, and to execute and deliver
such additional conveyances, assignments, agreements and instruments as Brooke
may at any time reasonably request in connection with the administration or
enforcement of this Agreement or related to the Collateral or any part thereof
or in order better to assure and confirm onto Brooke its rights, powers and
remedies hereunder.
5.3 Certain Waivers, etc.
(a) No delay on the part of Brooke in exercising any power of sale, lien,
option or other right hereunder, and no notice or demand which may be given to
or made upon NVC with respect to any power of sale, lien, option or other right
hereunder, shall constitute a waiver thereof, or limit or impair the right of
Brooke to take any action or to exercise any power of sale, lien, option or any
other right under this Agreement or otherwise, nor shall any single or partial
exercise thereof, or the exercise of any power, lien, option or any other right
under this Agreement, or
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otherwise, preclude any other or further exercise thereof all without notice or
demand, nor shall any of the same prejudice Brooke's rights against NVC in any
respect.
(b) Each and every remedy of Brooke shall, to the extent permitted by law,
be cumulative and shall be in addition to any other remedy given hereunder or
now or hereafter existing at law or in equity or by statute.
(c) Brooke shall have no duty or obligation to satisfy the indebtedness
secured hereby out of any other property, or pursuant to any other pledge,
undertaking or security relating to such indebtedness and may realize on the
Collateral and/or any other security available to it in such order or
concurrently as it may see fit and Brooke will not be required to take any
recourse against NVC or any other person or persons before realizing on the
Collateral.
5.4 Expenses
NVC shall pay Brooke on a full indemnity basis all reasonable costs and
expenses (a) incurred by Brooke in realizing upon any of the Collateral and (b)
paid or incurred by Brooke in enforcing or attempting to enforce its rights
hereunder, which costs and expenses shall include the fees and expenses of legal
advisers and counsel to Brooke. The obligation of NVC hereunder to make such
payments to Brooke shall constitute obligations secured by the Collateral.
5.5 Entire Agreement; Amendment
This Agreement, the Note, the Stock Purchase Agreement and the documents
referred to herein and therein constitute the entire agreement of the parties
with respect to the subject matter hereof and shall supersede any prior
expressions of intent or understanding with respect to this transaction. In the
event of any conflict or inconsistency between this Agreement and any other
agreement governing or otherwise relating to the Shares, the terms of this
Agreement shall control. This Agreement may be amended but only by an instrument
in writing signed by the party or parties to be bound or burdened by such
amendment.
5.6 Assignment, Successors and Assigns
No assignment of this Agreement or any right or obligation hereunder
whatsoever shall be made by Brooke or NVC.
5.7 Applicable Law
The provisions of this Agreement and all rights and obligations hereunder
shall be governed by and construed in accordance with the laws of the State of
New York, United States of America, without reference to its conflict of laws
rules.
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5.8 Jurisdiction
Brooke and NVC agree that any legal action or proceedings arising out of or
in connection with this Agreement may be brought in any court of the State of
New York located in New York County or the United States District Court for the
Southern District of New York, and, by execution and delivery of this Agreement,
Brooke and NVC hereby submit to and accept with regard to any such action or
proceeding, each for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts and waive any
objection which such party may now or hereafter have to any such court as the
venue for any such proceeding on the ground that it may constitute any forum
non-conveniens. The agreement set forth in this Section 5.8 is given solely for
the benefit of the parties hereto and such agreement is not intended to and
shall not inure to the benefit of any other person.
5.9 Notices
Any notice, communication or demand to be given or made by or to NVC or
Brooke pursuant to this Agreement shall be in writing and shall be deemed to
have been duly given or made as of the date of receipt and shall be delivered
personally or mailed by registered or certified mail (postage prepaid, return
receipt requested), sent by overnight courier or sent by telecopy, to NVC or
Brooke at the following addresses or telecopy numbers (or at such other address
or telecopy number for NVC or Brooke as shall be specified by like notice):
(a) if to Brooke:
Brooke (Overseas) Ltd.
100 S.E. Second Street
Miami, Florida 33131
Telecopy: 305/579-8037
Attention: Ronald J. Bernstein
President
(b) if to NVC:
New Valley Corporation
100 S.E. Second Street
Miami, Florida 33131
Telecopy: 305/579-8009
Attention: Robert Lundgren
Vice President and
Chief Financial Officer
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5.10 Invalidity
Any provision hereof prohibited by or unlawful or unenforceable under any
applicable law of any jurisdiction shall as to such jurisdiction be ineffective
without affecting or impairing the remaining provisions of this Agreement which
shall remain in full force and effect. In the event that any provision of this
Agreement or of any document executed pursuant hereto shall be deemed to be
invalid or become invalid, the parties hereto shall substitute for such invalid
provision a new provision which serves the purpose of the invalid provision to
the best possible extent.
5.11 Headings and Counterparts
The headings of this Agreement are for the purpose of reference only, and
shall not limit or otherwise affect any of the terms hereof. This Agreement may
be executed in counterparts and any single counterpart or set of counterparts
signed, in either case, by all the parties thereto shall be deemed to be an
original, and all such counterparts when taken together shall constitute one and
the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first written above.
BROOKE (OVERSEAS) LTD. NEW VALLEY CORPORATION
By: /s/ Ronald J. Bernstein By: /s/ Robert M. Lundgren
---------------------------- ----------------------------------
Name: Ronald J. Bernstein Name: Robert M. Lundgren
Title: President Title: Vice President and Chief
Financial Officer
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EXHIBIT 10.3
FOR INCLUSION IN NEW VALLEY CORPORATION'S
CURRENT REPORT ON FORM 8-K DATED JANUARY 31, 1997
<PAGE> 2
USE AGREEMENT
THIS USE AGREEMENT, dated as of January 31, 1997, is entered into by and
between BrookeMil Ltd., a Cayman Islands company ("BML"), and Liggett-Ducat
Joint Stock Company, a Russian closed joint stock company ("LDJSC").
STATEMENT OF FACTS
BML has leased the land and buildings located at 6 Gasheka Street,
Moscow, where the tobacco factory operated by LDJSC is currently located
(the "Factory Site"), pursuant to:
(a) a Land Lease Agreement dated February 3, 1992 (as amended
to date), by and between The Government of the City of Moscow, as
landlord, and BML, as tenant, relating to the land at the Factory
Site (the "Land Lease); and
(b) a Lease Agreement dated August 23, 1993 (as amended to
date), by and between The Property Management Committee of Moscow,
as landlord, and BML, as tenant, relating to the buildings at the
Factory Site (the "Buildings Lease" and, together with the Land
Lease, the "Leases").
On the date hereof, New Valley Corporation, a Delaware corporation
("NVC"), has purchased from Brooke (Overseas) Ltd., a Delaware corporation
("Brooke"), 10,483 shares of the common stock of BML pursuant to a Stock
Purchase Agreement dated as of January 31, 1997, among BML, Brooke and
NVC. As contemplated in such agreement, LDJSC desires the right to use the
Factory Site in connection with the operation of its business, and BML
desires to permit it to do so, all on the terms and conditions hereinafter
set forth.
NOW, THEREFORE, in consideration of the mutual promises herein contained,
the parties hereto agree as follows:
1. BML hereby grants to LDJSC the exclusive right to use and occupy the
Factory Site for the sole purpose of the operation therein of its business
(which is the manufacture of cigarettes and other tobacco products), as well as
activities incidental and/or related thereto, during the period (the "Use
Period") commencing on the date hereof and expiring on the earliest to occur of:
(a) five (5) years after the date hereof, subject to extension by
written agreement of the parties;
<PAGE> 3
(b) the termination, for whatever cause, of either or both of
the Leases;
(c) ninety (90) days after LDJSC gives written notice to BML of its
election to terminate this Use Agreement, which LDJSC may do in its sole
discretion (regardless of whether with or without cause);
(d) ninety (90) days after BML gives written notice to LDJSC that
either:
(i) any irreparable damage to the Factory Site has been caused
through LDJSC's fault (if the same shall be confirmed by a competent
independent body); or
(ii) LDJSC has failed to perform any of its material
obligations hereunder,
unless LDJSC cures such condition or default within sixty (60) days after its
receipt of such notice;
(e) two hundred seventy (270) days after BML gives written notice to
LDJSC of its election to terminate this Use Agreement, which BML may do in
its sole discretion (regardless of whether with or without cause); and
(f) the mutual written consent of the parties.
2. During the Use Period, LDJSC shall:
(a) observe and perform all of the non-monetary terms, covenants,
conditions and obligations that are imposed upon BML with respect to the
Factory Site pursuant to the Leases (including, without limitation, those
obligations imposed upon BML pursuant to Paragraph 8 of the Buildings
Lease, Articles 6.2.3, 6.2.4, 6.2.6, 6.2.7 of the Land Lease and Paragraph
2 of Annex 6 to the Land Lease); and
(b) reimburse BML for all payments made by BML in satisfaction of its
monetary obligations with respect to the Factory Site pursuant to the
Leases (including, without limitation, all rent, taxes, duties and other
charges).
LDJSC shall indemnify and hold BML harmless from and against any and all claims,
liability, cost and expenses (including, without limitation, reasonable
attorneys' fees and disbursements) incurred by BML as a consequence of any
breach of LDJSC's obligations under subparagraph (a) above.
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<PAGE> 4
3. During the Use Period, BML shall:
(a) afford to LDJSC all of the rights and privileges relating to its
use and occupancy of the Factory Site that are afforded to BML with
respect thereto pursuant to the Leases, excluding, however, those rights
and/or privileges of BML pursuant to the fourth subparagraph of Paragraph
7 (relating to subletting) of the Buildings Lease, Paragraph 18 of the
Buildings Lease and Articles 6.3, 6.4.6, 6.4.7, 13, 14 and 15 of the Land
Lease;
(b) make all payments required under the Leases and all taxes related
thereto, provided that it shall be reimbursed for such payments for each
preceding year by LDJSC in accordance with paragraph 2(b) hereof;
(c) not interfere with the use of the Factory Site by LDJSC;
(d) use its best efforts to maintain the Leases in full force and
effect, and not accept any changes to the Leases which would materially
and adversely affect LDJSC's rights hereunder without the prior written
consent of LDJSC;
(e) in the event of any claims related to the Factory Site, use its
best efforts to protect the rights of LDJSC arising out of, or based on
the provisions of this Use Agreement, and reimburse LDJSC for any costs
incurred to protect LDJSC's rights to use the Factory Site; and
(f) perform all the other obligations of the landlord pursuant to the
Leases, except as indicated otherwise herein.
4. BML hereby confirms that it shall have no rights in regard to LDJSC's
business, any profit from such business, or any other activities of LDJSC
(whether related or unrelated to the operation of the Factory Site) pursuant to,
or by reason of, this Use Agreement.
5. The following provisions of the Leases are hereby incorporated into
this Use Agreement by this reference, and shall be binding between the parties
hereto as if set forth herein at length:
(a) Paragraphs 11, 19 (except that Paragraph 19 shall not apply to
the disclosure by LDJSC where such disclosure of any terms of this Use
Agreement or information relating to it is necessary or practicable for
LDJSC in order to justify to third parties, including any
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<PAGE> 5
authorities, its right to use the Factory Site) and 21 of the Buildings
Lease; and
(b) Articles 11, 17.2, 17.4, 17.5 and 17.8 of the Land Lease.
In the event of a conflict between an explicit provision of this Use
Agreement and a provision or a part thereof of any of the Leases incorporated
therein by reference, the explicit provision of this Use Agreement shall apply.
6. All correspondence between the parties hereto related to, or in
connection with, this Use Agreement, shall be in writing and shall be sent or
delivered by hand to the address of each party as follows:
if to BML, at: BrookeMil Ltd.
PO Box 219
Fifth Floor, Butterfield House
George Town, Grand Cayman Island
British West Indies
Attention: David Geovanis, President
if to LDJSC, at: Liggett-Ducat Joint Stock Company
8-10 (Ducat Place) Gasheka Street
Moscow, Russia 125047
Attention: Ronald J. Bernstein, President
7. This Agreement shall be binding upon the successors and assigns of the
parties hereto.
8. LDJSC shall have the right at any time in its discretion to require that
BML execute, register, and/or use its best efforts to cause the Government of
Moscow or the appropriate agency thereof to execute and/or register an agreement
or agreements which would allow LDJSC to use the Factory Site under terms in all
material respects similar to the terms of this Use Agreement, if, in LDJSC's
sole discretion, such actions will ensure to a greater extent the validity and
enforceability of LDJSC's rights hereunder; provided, however, that in the event
the execution and/or registration of such agreement or agreements by BML shall,
in its reasonable judgment, constitute or result in a default of any of the
provisions of the Leases (including, but not limited to, Article 7 of the Land
Lease and Article 6.3.2 of the Building Lease), BML shall use its best efforts
to cause the Government of Moscow or the appropriate agency thereof to take all
action necessary to permit the execution and registration of such agreement or
agreements, and shall not be required to execute and/or register such agreement
or agreements until the Government of Moscow or such appropriate agency thereof
takes such necessary action. BML agrees to cooperate and take all other related
actions in order to achieve the above-referenced purpose.
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<PAGE> 6
9. The parties shall use endeavor to settle amicably any disputes or claims
arising out of or in connection with this Use Agreement or its breach,
termination, or invalidity.
All such disputes or claims which cannot be settled amicably within thirty
(30) days after the notice from one party to the other of their occurrence and
can be referred to arbitration for settlement shall be submitted to an arbitral
tribunal formed and proceeding in accordance with the UNCITRAL Rules. The
arbitral tribunal shall consist of three arbitrators who may be Russian
nationals or nationals of other countries. The chairman of the arbitral tribunal
shall not be a national of any one of the countries of the parties hereto. The
proceedings of the tribunal shall be conducted in the English language in
Moscow.
The parties shall waive any immunity to which they may be entitled in
respect of the jurisdiction of the arbitral tribunal or the execution of any
award by the tribunal and shall recognize such award as final and binding.
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<PAGE> 7
IN WITNESS WHEREOF, the parties have caused this Use Agreement to be duly
executed as of the day and year first above written.
For BML: For LDJSC:
BROOKEMIL LTD. LIGGETT-DUCAT JOINT STOCK
COMPANY
By: /s/ David Geovanis By: /s/ Ronald J. Bernstein
------------------------- ------------------------------
David Geovanis, President Ronald J. Bernstein, President
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<PAGE> 1
EXHIBIT 99.1
FOR INCLUSION IN NEW VALLEY CORPORATION'S
CURRENT REPORT ON FORM 8-K DATED JANUARY 31, 1997
<PAGE> 2
CONTACT: GEORGE SARD/ANNA CORDASCO/PAUL CAMINITI
SARD VERBINNEN & CO.
212/687-8080
NEW VALLEY PURCHASES RUSSIAN REAL ESTATE DEVELOPMENT COMPANY
ALSO NEGOTIATING JOINT VENTURE WITH CITY OF MOSCOW FOR
$175 MILLION RENOVATION OF THE HISTORIC MOSKVA HOTEL
- --------------------------------------------------------------------------------
MIAMI, FL, JANUARY 31, 1997 -- New Valley Corporation (OTC: NVYL)
announced today that it has acquired BrookeMil Ltd., a real estate development
company in Russia that owns a major Moscow office project, from Brooke Group
Ltd. (NYSE:BGL) for $55 million.
BrookeMil is developing a three-phase complex on 2.2 acres of land in
downtown Moscow, for which it has a 98-year lease. In 1993, the first phase of
the project, Ducat Place I, a 46,500 sq. ft. Class-A office building, was
successfully built and leased. Tenants include Citicorp, the G-7 Group of
Nations and the European Bank for Reconstruction and Development. In 1995,
BrookeMil began construction of Ducat Place II, a premier 150,000 sq. ft.
office building. Ducat Place II has already been pre-leased to a number of
leading international companies including Motorola, Lukoil-Arco and Morgan
Stanley. The third phase, Ducat Place III, is planned as a 400,000 sq. ft.
mixed-use complex, with construction set to begin in 1998.
New Valley paid $21.5 million in cash and $33.5 million in a 9% promissory
note for BrookeMil, due within one year. The transaction was approved by the
independent members of the Board of Directors of New Valley, which retained
independent legal counsel and financial advisors.
"This is a logical acquisition for New Valley that expands its real estate
business to Russia, where BrookeMil is very well positioned," said Bennett S.
LeBow, Chairman and CEO of New Valley. "Ducat Place is already the leading
western-style commercial complex in Moscow with a host of blue-chip foreign
tenants. We believe Ducat Place III has even greater potential."
New Valley also announced that it is currently negotiating a joint venture
with the City of Moscow and Donald Trump for a $175 million renovation of the
Moskva Hotel, across from the Kremlin in the heart of Moscow. The venture
expects to create the premier hotel in Russia, including 600 guest rooms, 200
private condominiums, a convention center, banquet halls, retail shops and
extensive public space. The renovation is expected to be completed within
18-24 months.
-more-
<PAGE> 3
New Valley and its partners would have majority ownership of the Moskva
Hotel, with the City of Moscow receiving a minority of the equity. The New
Valley investor group would finance the project through equity contributions
and debt financing.
"In partnership with the City of Moscow, we will transform one of Russia's
landmarks into an elegant international hotel and residence," added LeBow. "We
will be able to capitalize on BrookeMil's experience in leading construction
projects in Moscow to expedite the revitalization of the Moskva Hotel."
New Valley, which is approximately 42% owned by Brooke Group, is
principally engaged in commercial real estate through its New Valley Realty
division and in investment banking and brokerage through Ladenburg, Thalmann &
Co. Inc.
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