<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
JOINT 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 16, 1998
BROOKE GROUP LTD. BGLS INC.
(Exact name of registrant as (Exact name of registrant as
specified in its charter) specified in its charter)
1-5759 33-93576
(Commission File Number) (Commission File Number)
51-0255124 13-3593483
(I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.)
DELAWARE DELAWARE
(State or other jurisdiction (State or other jurisdiction
of incorporation or organization) of incorporation or organization)
100 S.E. SECOND STREET 100 S.E. SECOND STREET
MIAMI, FLORIDA 33131 MIAMI, FLORIDA 33131
(Address of principal executive offices (Address of principal executive offices
including Zip Code) including Zip Code)
305/579-8000 305/579-8000
(Registrant's telephone number, (Registrant's telephone number,
including area code) including area code)
(NOT APPLICABLE) (NOT APPLICABLE)
(Former name or former address, (Former name or former address,
if changed since last report) if changed since last report)
<PAGE> 2
ITEM 5. OTHER EVENTS.
On January 16, 1998, BGLS Inc. entered into a further
amendment to the previously reported Standstill Agreement and Consent with the
principal holders of BGLS Inc.'s 15.75% Senior Secured Notes due 2001 which
extended the termination date of such agreement to January 21, 1998.
On January 16, 1998, Brooke Group Ltd. ("BGL") entered into a
Stock Purchase Agreement, a copy of which is attached hereto as Exhibit 99.1 and
incorporated herein by reference, whereby High River Limited Partnership has
agreed to purchase 1,500,000 shares of BGL common stock for $9,000,000.
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
99.1 Stock Purchase Agreement, dated as of January 16, 1998, by and between
Brooke Group Ltd. and High River Limited Partnership.
Page 2 of 3
<PAGE> 3
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.
BROOKE GROUP LTD.
By: /s/ Joselynn D. Van Siclen
------------------------------------------
Joselynn D. Van Siclen
Vice President and Chief Financial Officer
BGLS INC.
By: /s/ JOSELYNN D. VAN SICLEN
------------------------------------------
Joselynn D. Van Siclen
Vice President and Chief Financial Officer
Date: January 19, 1998
Page 3 of 3
<PAGE> 1
Exhibit 99.1
STOCK PURCHASE AGREEMENT
dated as of January 16, 1998
by and between
BROOKE GROUP LTD.
and
HIGH RIVER LIMITED PARTNERSHIP
with respect to 1,500,000 shares of
common stock of
BROOKE GROUP LTD.
<PAGE> 2
TABLE OF CONTENTS
This Table of Contents is not part of the Agreement to which
it is attached but is inserted for convenience only.
<TABLE>
<CAPTION>
Page
No.
----
ARTICLE I
SALE OF SHARES AND CLOSING
<S> <C>
1.01 Purchase and Sale..................................................................... 1
1.02 Purchase Price........................................................................ 1
1.03 Closing............................................................................... 1
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
2.01 Corporate Existence of the Company.................................................... 2
2.02 Authority............................................................................. 2
2.03 Capital Stock......................................................................... 2
2.04 No Conflicts.......................................................................... 2
2.05 Governmental Approvals and Filings.................................................... 3
2.06 SEC Reports and Financial Statements.................................................. 3
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
3.01 Organization of Purchaser............................................................. 3
3.02 Authority............................................................................. 4
3.03 No Conflicts.......................................................................... 4
3.04 Governmental Approvals and Filings.................................................... 4
3.05 Purchase for Investment............................................................... 5
</TABLE>
- i -
<PAGE> 3
<TABLE>
<CAPTION>
Page
No.
----
ARTICLE IV
CONDITIONS
<S> <C>
4.01 Conditions to Obligation of Each Party to Effect the Closing.......................... 5
ARTICLE V
COVENANTS OF THE COMPANY
5.01 Shelf Registration Statement.......................................................... 6
5.02 Liquidated Damages.................................................................... 6
5.03 Registration Expenses................................................................. 7
5.04 Indemnification....................................................................... 7
5.05 Valuation............................................................................. 9
ARTICLE VI
DEFINITIONS
6.01 Definitions........................................................................... 10
ARTICLE VII
MISCELLANEOUS
7.01 Entire Agreement...................................................................... 12
7.02 Expenses.............................................................................. 12
7.03 Waiver................................................................................ 12
7.04 Amendment............................................................................. 13
7.05 No Third Party Beneficiary............................................................ 13
7.06 No Assignment; Binding Effect......................................................... 13
7.07 Headings.............................................................................. 13
7.08 Invalid Provisions.................................................................... 13
7.09 Governing Law......................................................................... 13
7.10 Counterparts.......................................................................... 13
7.11 Termination........................................................................... 13
</TABLE>
- ii -
<PAGE> 4
This STOCK PURCHASE AGREEMENT dated as of January 16, 1998 is
made and entered into by and between High River Limited Partnership, a Delaware
limited partnership ("PURCHASER"), and Brooke Group Ltd., a Delaware corporation
(the "COMPANY"). Capitalized terms not otherwise defined herein have the
meanings set forth in SECTION 6.01.
WHEREAS, Purchaser desires to purchase from the Company
1,500,000 shares (the "SHARES") of common stock, par value $.10 per share, of
the Company, on the terms and subject to the conditions set forth in this
Agreement;
WHEREAS, the Company will use the net proceeds from the sale
of the Shares to make a contribution to the capital of its indirect wholly-owned
subsidiary Brooke (Overseas) Ltd., a corporation engaged in the manufacture and
sale of cigarettes in Russia through Liggett-Ducat, a Russian joint stock
company;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
SALE OF SHARES AND CLOSING
1.01 PURCHASE AND SALE. The Company agrees to sell to
Purchaser, and Purchaser agrees to purchase from the Company, the Shares at the
Closing on the terms and subject to the conditions set forth in this Agreement.
1.02 PURCHASE PRICE. The aggregate purchase price for the
Shares is $9,000,000 (the "PURCHASE PRICE"), payable in immediately available
United States funds at the Closing in the manner provided in SECTION 1.03.
1.03 CLOSING. The Closing will take place at the offices of
Milbank, Tweed, Hadley & McCloy, One Chase Manhattan Plaza, New York, NY 10005
on the Closing Date. At the Closing: (i) Purchaser will pay the Purchase Price
by wire transfer of immediately available funds to such account as the Company
has reasonably directed, and (ii) the Company will sell to Purchaser the Shares
by delivering to Purchaser a certificate or certificates representing the
Shares. The Shares will bear an appropriate securities law legend.
<PAGE> 5
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Purchaser as
follows:
2.01 CORPORATE EXISTENCE OF THE COMPANY. The Company is a
corporation duly incorporated, validly existing and in good standing under the
Laws of the State of Delaware. The Company has full corporate power and
authority to execute and deliver this Agreement and to perform the Company's
obligations hereunder and to consummate the transactions contemplated hereby,
including without limitation to sell and transfer (pursuant to this Agreement)
the Shares.
2.02 AUTHORITY. The execution and delivery by the Company of
this Agreement, and the performance by such party of its obligations hereunder,
have been duly and validly authorized by the Board of Directors of the Company,
no other corporate action on the part of the Company or its stockholders being
necessary. This Agreement has been duly and validly executed and delivered by
the Company and constitutes a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms.
2.03 CAPITAL STOCK. The Shares are duly authorized, validly
issued, fully paid and nonassessable. The delivery of a certificate or
certificates at the Closing representing the Shares in the manner provided in
SECTION 1.03 will transfer to Purchaser good and valid title to the Shares, free
and clear of all Liens other than Liens created or suffered to exist by
Purchaser.
2.04 NO CONFLICTS. The execution and delivery by the Company
of this Agreement do not, the performance by the Company of its obligations
under this Agreement and the consummation of the transactions contemplated
hereby will not:
(a) conflict with or result in a violation or breach of any of
the terms, conditions or provisions of the certificate of incorporation or
by-laws (or other comparable corporate charter documents) of the Company;
(b) conflict with or result in a violation or breach of any
term or provision of any Law or Order applicable to the Company or any of its
Assets and Properties (other than such conflicts, violations or breaches (i)
which will not in the aggregate adversely affect the validity or enforceability
of this Agreement or have a material adverse effect on the Business or Condition
of the Company or (ii) as would occur solely as a result of the identity or the
legal or regulatory status of Purchaser or any of its Affiliates); or
(c) except as will not, individually or in the aggregate, be
materially adverse to the Business or Condition of the Company or adversely
affect the ability of the Company to
- 2 -
<PAGE> 6
consummate the transactions contemplated hereby or to perform its obligations
hereunder, (i) conflict with or result in a violation or breach of, (ii)
constitute (with or without notice or lapse of time or both) a default under,
(iii) require the Company to obtain any consent, approval or action of, make any
filing with or give any notice to any Person as a result or under the terms of,
(iv) result in or give to any Person any right of termination, cancellation,
acceleration or modification in or with respect to, or (v) result in the
creation or imposition of any Lien upon the Company or any of its Assets and
Properties under, any Contract or License to which the Company is a party or by
which any of its Assets and Properties is bound.
2.05 GOVERNMENTAL APPROVALS AND FILINGS. Except for the
listing by the Company of the Shares on notice of issuance on The New York Stock
Exchange and as required under SECTION 5.01, no other consent, approval or
action of, filing with or notice to any Governmental or Regulatory Authority by
the Company is required as a precondition to the execution, delivery and
performance of this Agreement or the consummation of the transactions
contemplated hereby except (i) where the failure to obtain any such consent,
approval or action, to make any such filing or to give any such notice will not
adversely affect the ability of the Company to consummate the transactions
contemplated by this Agreement or to perform its obligations hereunder or have a
material adverse effect on the Business or Condition of the Company, and (ii)
those as would be required solely as a result of the identity or the legal or
regulatory status of the Purchaser or any of its Affiliates.
2.06 SEC REPORTS AND FINANCIAL STATEMENTS. As of their
respective dates, the Company SEC Reports did not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Since the respective
dates of such filings, and except as disclosed therein, there has not been any
change, event or development having, or that is reasonably expected to have,
individually or in the aggregate, a material adverse effect on the Company.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to the Company as
follows:
3.01 ORGANIZATION OF PURCHASER. Purchaser is a limited
partnership duly organized, validly existing and in good standing under the Laws
of the State of Delaware. Purchaser is duly authorized to execute and deliver
this Agreement and to perform Purchaser's obligations hereunder and to
consummate the transactions contemplated hereby, including without limitation to
buy (pursuant to this Agreement) the Shares.
- 3 -
<PAGE> 7
3.02 AUTHORITY. The execution and delivery by Purchaser of
this Agreement, and the performance by Purchaser of its obligations hereunder,
have been duly and validly authorized, no other action on the part of Purchaser
being necessary. This Agreement has been duly and validly executed and delivered
by Purchaser and constitutes a legal, valid and binding obligation of Purchaser
enforceable against Purchaser in accordance with its terms.
3.03 NO CONFLICTS. The execution and delivery by Purchaser of
this Agreement do not, the performance by Purchaser of its obligations under
this Agreement and the consummation of the transactions contemplated hereby will
not:
(a) conflict with or result in a violation or breach of any of
the terms, conditions or provisions of its partnership agreement (or other
comparable organizational documents) of Purchaser;
(b) conflict with or result in a violation or breach of any
term or provision of any Law or Order applicable to Purchaser or any of its
Assets and Properties (other than such conflicts, violations or breaches (i)
which will not in the aggregate adversely affect the validity or enforceability
of this Agreement or have a material adverse effect on the Business or Condition
of Purchaser or (ii) as would occur solely as a result of the identity or the
legal or regulatory status of the Company or any of its Affiliates); or
(c) except as will not, individually or in the aggregate, be
materially adverse to the Business or Condition of Purchaser or adversely affect
the ability of Purchaser to consummate the transactions contemplated hereby or
to perform its obligations hereunder, (i) conflict with or result in a violation
or breach of, (ii) constitute (with or without notice or lapse of time or both)
a default under, (iii) require Purchaser to obtain any consent, approval or
action of, make any filing with or give any notice to any Person as a result or
under the terms of, (iv) result in or give to any Person any right of
termination, cancellation, acceleration or modification in or with respect to,
or (v) result in the creation or imposition of any Lien upon Purchaser or any of
its Assets and Properties under, any Contract or License to which Purchaser is a
party or by which any of its Assets and Properties is bound.
3.04 GOVERNMENTAL APPROVALS AND FILINGS. No consent, approval
or action of, filing with or notice to any Governmental or Regulatory Authority
by Purchaser is required as a precondition to the execution, delivery and
performance of this Agreement or the consummation of the transactions
contemplated hereby except (i) where the failure to obtain any such consent,
approval or action, to make any such filing or to give any such notice will not
adversely affect the ability of Purchaser to consummate the transactions
contemplated by this Agreement or to perform its obligations hereunder or have a
material adverse effect on the Business or Condition of Purchaser, and (ii)
those as would be required solely as a result of the identity or the legal or
regulatory status of the Company or any of its Affiliates.
- 4 -
<PAGE> 8
3.05 PURCHASE FOR INVESTMENT. (a) The Shares will be acquired
by Purchaser for its own account for the purpose of investment, it being
understood that the right to dispose of such Shares shall be entirely within the
discretion of Purchaser. Purchaser will refrain from transferring or otherwise
disposing of any of the Shares, or any interest therein, in such manner as to
cause the Company to be in violation of the registration requirements of the
Securities Act or any applicable state securities or blue sky laws.
(b) Purchaser acknowledges that it is an "accredited investor"
as defined in Rule 501 of Regulation D under the Securities Act.
ARTICLE IV
CONDITIONS
4.01 CONDITIONS TO OBLIGATION OF EACH PARTY TO EFFECT THE
CLOSING. The respective obligations of each party hereunder to effect the
Closing are subject to the fulfillment or waiver, at the Closing, of the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties made by the other party in this
Agreement shall be true and correct in all material respects on and as
of the Closing Date.
(b) ORDERS AND LAWS. There shall not be pending or in effect
on the Closing Date any Order or Law restraining, enjoining or
otherwise prohibiting or making illegal the consummation of any of the
transactions contemplated by this Agreement or which could reasonably
be expected to otherwise result in a material diminution of the
benefits of the transactions contemplated by this Agreement to such
party, and there shall not be pending on the Closing Date any Action or
Proceeding in, before or by any Governmental or Regulatory Authority
which could reasonably be expected to result in the issuance of any
such Order or the enactment, promulgation or deemed applicability to
either party or the transactions contemplated by this Agreement of any
such Law.
(c) REGULATORY CONSENTS AND APPROVALS. All consents, approvals
and actions of, filings with and notices to any Governmental or
Regulatory Authority necessary to permit each party to perform its
respective obligations under this Agreement and to consummate the
transactions contemplated hereby (a) shall have been duly obtained,
made or given, (b) shall be in form and substance reasonably
satisfactory to each party, (c) shall not be subject to the
satisfaction of any condition that has not been satisfied or waived and
(d) shall be in full force and effect, and all terminations or
expirations of waiting periods imposed by any Governmental or
Regulatory Authority necessary for the consummation of the transactions
contemplated by this Agreement shall have occurred, and the Shares
- 5 -
<PAGE> 9
shall have been accepted for listing on notice of issuance by The New
York Stock Exchange.
ARTICLE V
COVENANTS OF THE COMPANY
The Company covenants and agrees with Purchaser that the
Company will comply with the covenants and provisions of this ARTICLE V, except
to the extent Purchaser may otherwise consent in writing:
5.01 SHELF REGISTRATION STATEMENT.
(a) The Company shall use best efforts to file with the
Securities and Exchange Commission (the "COMMISSION") by the Filing
Date a Shelf Registration Statement pursuant to Rule 415 under the
Securities Act (the "SHELF REGISTRATION STATEMENT") on Form S-3 (or any
successor form thereto) to register resales by Purchaser of the Shares.
The Company shall use best efforts to cause such Shelf Registration
Statement to be declared effective by the Commission by the
Effectiveness Date. The Company shall use best efforts to keep such
Shelf Registration Statement continuously effective and usable until
the date on which all of the Shares are sold or such earlier date as
the Shares may be resold by Purchaser without registration under Rule
144(k) under the Securities Act (the "FINAL DATE"). The Company shall
deliver copies of the Prospectus to The New York Stock Exchange
pursuant to Rule 153 under the Securities Act and to Purchaser on
reasonable request.
(b) Upon the occurrence of any event that would cause the
Shelf Registration Statement (i) to contain a material misstatement or
to omit a material fact required to be stated therein or necessary to
make the statements made not misleading or (ii) not to be effective and
usable for resale of the Shares until the Final Date, the Company shall
notify Purchaser as soon as reasonably practicable thereafter and,
within two Business Days of the occurrence of such event, file a
supplement to the Prospectus included in (if a supplement is
appropriate for such purpose) or, within four Business Days of the
occurrence of such event, file an amendment to the Shelf Registration
Statement, in the case of clause (i) immediately above correcting any
such misstatement or omission, and in the case of either clause (i) or
(ii) immediately above use best efforts to cause such amendment to be
declared effective and such Shelf Registration Statement to become
usable as soon as reasonably practicable thereafter.
5.02 LIQUIDATED DAMAGES. (a) The Company and Purchaser agree
that Purchaser will suffer damages if the Company fails to fulfill its
obligations under SECTION 5.01(A) of this
- 6 -
<PAGE> 10
Agreement and that it would not be feasible to ascertain the extent of such
damages with precision. Accordingly, (a) if the Company fails to file the Shelf
Registration statement on or prior to the Filing Date or (b) if the Shelf
Registration Statement has not been declared effective on or prior to the
Effectiveness Date, then Liquidated Damages on the Shares shall accrue at a rate
of $0.016667 per Share per day for the first 60-day period, and thereafter at a
rate per Share per day of $.033334, until both of the foregoing breaches have
been cured, PROVIDED, HOWEVER, that the aggregate Liquidated Damages payable on
the Shares may not exceed $9,000,000.
(b) Notwithstanding the foregoing, the Company shall not be
required to pay such Liquidated Damages with respect to the Shares if the
applicable default arises from the failure of the Company to file or cause to
become effective within the time periods specified in SECTION 5.01 primarily by
reason of the failure of the Purchaser to provide such information concerning
Purchaser as (i) is required pursuant to the Securities Act and the regulations
promulgated thereunder for inclusion in the Shelf Registration Statement or any
Prospectus included therein or (ii) the SEC may request in connection with such
Shelf Registration.
5.03 REGISTRATION EXPENSES. All fees and expenses incidental
to the performance of or compliance with this Article V by the Company shall be
borne by the Company whether or not the Shelf Registration is filed or becomes
effective, other than underwriting discounts and commissions and transfer taxes,
if any, in respect of the Shares, which shall be payable by Purchaser.
5.04 INDEMNIFICATION.
(a) INDEMNIFICATION BY THE COMPANY. The Company shall, to the
full extent permitted by law, indemnify and hold harmless Purchaser, its
directors and each Person, if any, who controls Purchaser within the meaning of
the Securities Act against any Losses, claims, damages, expenses or liabilities,
joint or several (together, "LOSSES"), to which it or any such controlling
Person may become subject under the Securities Act or otherwise, insofar as such
Losses (or actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Shelf Registration Statement or
the Prospectus, or any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
(in the case of the Prospectus, in the light of the circumstances under which
they were made) not misleading, and the Company will reimburse Purchaser and
each such controlling Person for any legal or any other expenses reasonably
incurred by them in connection with investigating or defending any such Loss (or
action or proceeding in respect thereof); PROVIDED that the Company shall not be
liable in any such case to the extent that any such Loss (or action or
proceeding in respect thereof) arises out of or is based upon (x) an untrue
statement or alleged untrue statement or omission or alleged omission made in
any such registration statement, preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement in reliance upon and in conformity
with written information furnished to the
- 7 -
<PAGE> 11
Company through an instrument duly executed by Purchaser specifically stating
that it is for use in the preparation thereof or (y) Purchaser's failure to send
or give a copy of the final Prospectus to the Persons asserting an untrue
statement or alleged untrue statement or omission or alleged omission at or
prior to the written confirmation of the sale of Shares to such Person if such
statement or omission was corrected in such final Prospectus. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of Purchaser or any such controlling Person, and shall survive the
transfer of Shares by Purchaser.
(b) INDEMNIFICATION BY PURCHASER. Purchaser shall, to the full
extent permitted by law, indemnify and hold harmless the Company, its directors
and officers, and each other Person, if any, who controls the Company within the
meaning of the Securities Act, against any Losses to which the Company or any
such director or officer or controlling Person may become subject under the
Securities Act or otherwise, insofar as such Losses (or actions or proceedings,
whether commenced or threatened, in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in the Shelf Registration Statement or the Prospectus, or any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein (in the case of a
Prospectus, in the light of the circumstances under which they were made) not
misleading, if such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information furnished to the Company through an instrument duly executed by
Purchaser specifically stating that it is for use in the preparation of the
Shelf Registration Statement or the Prospectus. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of
the Company or any such director, officer or controlling Person and shall
survive the transfer of the Shares by Purchaser.
(c) NOTICES OF CLAIMS, ETC. Promptly after receipt by an
Indemnified Party of notice of the commencement of any action or proceeding
involving a claim referred to in the preceding PARAGRAPH (A) OR (B) of this
SECTION 5.04, such Indemnified Party will, if a claim in respect thereof is to
be made against an Indemnifying Party pursuant to such paragraphs, give written
notice to the latter of the commencement of such action, PROVIDED that the
failure of any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations under the preceding paragraphs
of this SECTION 5.04, except to the extent that the Indemnifying Party is
actually prejudiced by such failure to give notice. In case any such action is
brought against an Indemnified Party, the Indemnifying Party shall be entitled
to participate in and to assume the defense thereof, with counsel reasonably
satisfactory to such Indemnified Party, and after notice from the Indemnifying
Party to such Indemnified Party of its election so to assume the defense
thereof, the Indemnifying Party shall not be liable to such Indemnified Party
for any legal or other expenses subsequently incurred by the latter in
connection with the defense thereof other than reasonable costs of
investigation; PROVIDED that the Indemnified Party or Indemnified Parties shall
have the right to employ one counsel to represent it or them if, in the
reasonable judgment of the Indemnified Party or Indemnified Parties, it is
advisable for it or them to be represented by separate counsel by reason of
having legal defenses which are different
- 8-
<PAGE> 12
from or in addition to those available to the Indemnifying Party, and in that
event the reasonable fees and expenses of such one counsel shall be paid by the
Indemnifying Party. If the Indemnifying Party is not entitled to, or elects not
to, assume the defense of a claim, it will not be obligated to pay the fees and
expenses of more than one counsel for the Indemnified Parties with respect to
such claim, unless in the reasonable judgment of the Indemnified Party a
conflict of interest may exist between such Indemnified Party and any other
Indemnified Parties with respect to such claim, in which event the Indemnifying
Party shall be obligated to pay the fees and expenses of such additional counsel
for the Indemnified Parties or counsels. No Indemnifying Party shall consent to
entry of any judgment or enter into any settlement without the consent of the
Indemnified Party which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a release from
all liability in respect to such claim or litigation. No Indemnifying Party
shall be subject to any liability for any settlement made without its consent,
which consent shall not be unreasonably withheld.
(d) CONTRIBUTION. If the indemnity and reimbursement
obligation provided for in any paragraph of this SECTION 5.04 is unavailable or
insufficient to hold harmless an Indemnified Party in respect of any Losses (or
actions or proceedings in respect thereof) referred to therein, then the
Indemnifying Party shall contribute to the amount paid or payable by the
Indemnified Party as a result of such Losses (or actions or proceedings in
respect thereof) in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party on the one hand and the Indemnified Party on the
other hand in connection with statements or omissions which resulted in such
Losses. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Indemnifying Party or the Indemnified Party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The parties hereto agree that it
would not be just and equitable if contributions pursuant to this paragraph were
to be determined by PRO RATA allocation or by any other method of allocation
which does not take account of the equitable considerations referred to in the
first sentence of this paragraph. The amount paid by an Indemnified Party as a
result of the Losses referred to in the first sentence of this paragraph shall
be deemed to include any legal and other expenses reasonably incurred by such
Indemnified Party in connection with investigating or defending any Loss which
is the subject of this paragraph. No Indemnified Party guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from the Indemnifying Party if the
Indemnifying Party was not guilty of such fraudulent misrepresentation.
5.05 VALUATION. The Company shall use reasonable efforts to
obtain, within 30 days of the Closing Date, from an independent valuation firm,
a valuation of the Shares as of the date hereof reasonably acceptable to and
addressed to the Company and Purchaser (the "VALUATION"); PROVIDED, HOWEVER,
that if the Company fails to obtain such Valuation within such 30-day period,
Purchaser may obtain a Valuation acceptable to it at the Company's reasonable
expense.
- 9 -
<PAGE> 13
ARTICLE VI
DEFINITIONS
6.01 DEFINITIONS. (a) DEFINED TERMS. As used in this
Agreement, the following defined terms have the meanings indicated below:
"ACTIONS OR PROCEEDINGS" means any action, suit, proceeding,
arbitration or Governmental or Regulatory Authority investigation.
"AFFILIATE" means any Person that directly, or indirectly
through one of more intermediaries, controls or is controlled by or is under
common control with the Person specified. For purposes of this definition,
control of a Person means the power, direct or indirect, to direct or cause the
direction of the management and policies of such Person whether by Contract or
otherwise.
"AGREEMENT" means this Stock Purchase Agreement and the
Disclosure Schedule, as the same shall be amended from time to time.
"ASSETS AND PROPERTIES" of any Person means all assets and
properties of every kind, nature, character and description (whether real,
personal or mixed, whether tangible or intangible, and wherever situated),
including the goodwill related thereto, operated, owned or leased by such
Person.
"BUSINESS DAY" means any day other than a Saturday, a Sunday
or any other day on which banking institutions are not authorized or required to
close in New York City or Miami, Florida.
"BUSINESS OR CONDITION OF THE COMPANY" means the business,
financial condition or results of operations of the Company and the Subsidiaries
taken as a whole.
"CLOSING" means the closing of the transactions contemplated
by SECTION 1.03.
"CLOSING DATE" means the third Business Day after the Shares
have been accepted for listing on notice of issuance on The New York Stock
Exchange.
"COMMISSION" has the meaning ascribed to it in SECTION 5.01.
"COMPANY" has the meaning ascribed to it in the forepart of
this Agreement.
"COMPANY SEC REPORTS" means each form, report, schedule,
registration statement, definitive proxy statement and other document (together
with all amendments thereof and supplements thereto) filed by the Company with
the SEC since December 31, 1996.
- 10 -
<PAGE> 14
"CONTRACT" means any agreement, lease, license, evidence of
indebtedness, mortgage, indenture, security agreement or other contract.
"DISCLOSURE SCHEDULE" means the record delivered to Purchaser
by the Company herewith and dated as of the date hereof, containing all lists,
descriptions, exceptions and other information and materials as are required to
be included therein by the Company pursuant to this Agreement.
"EFFECTIVENESS DATE" means May 15, 1998.
"FILING DATE" means February 2, 1998.
"GOVERNMENTAL OR REGULATORY AUTHORITY" means any court,
tribunal, arbitrator, authority, agency, commission, official or other
instrumentality of the United States or any state, county, city or other
political subdivision.
"INDEMNIFIED PARTY" means a party entitled to indemnity in
accordance with SECTION 5.04.
"INDEMNIFYING PARTY" means a party obligated to provide
indemnity in accordance with SECTION 5.04.
"LAWS" means all laws, statutes, rules, regulations,
ordinances and other pronouncements having the effect of law of the United
States or any state, county, city or other political subdivision or of any
Governmental or Regulatory Authority.
"LICENSE" means all licenses, permits, certificates of
authority, authorizations, approvals, registrations, franchises and similar
consents granted or issued by any Governmental or Regulatory Authority.
"LIENS" means any mortgage, pledge, assessment, security
interest, lease, lien, adverse claim, levy, charge or other encumbrance of any
kind, or any conditional sale Contract, title retention Contract or other
Contract to give any of the foregoing.
"ORDER" means any writ, judgment, decree, injunction or
similar order of any Governmental or Regulatory Authority (in each such case
whether preliminary or final).
"PERSON" means any natural person, corporation, limited
liability company, general partnership, limited partnership, proprietorship,
other business organization, trust, union, association or Governmental or
Regulatory Authority.
"PROSPECTUS" shall mean the prospectus included in the Shelf
Registration Statement, as amended or supplemented by any prospectus supplement,
with respect to the terms of the offering of any portion of the securities
covered by such Shelf Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments,
- 11-
<PAGE> 15
and all material incorporated by reference or deemed to be incorporated by
reference in such Prospectus.
"PURCHASE PRICE" has the meaning ascribed to it in SECTION
1.02.
"PURCHASER" has the meaning ascribed to it in the forepart of
this Agreement.
"SECURITIES ACT" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"SEC" means Securities and Exchange Commission.
"SHARES" has the meaning ascribed to it in the forepart of
this Agreement.
"SHELF REGISTRATION STATEMENT" has the meaning ascribed to it
in SECTION 5.01.
"SUBSIDIARY" means any Person in which the Company, directly
or indirectly through Subsidiaries or otherwise, beneficially owns more than 50%
of either the equity interests in, or the voting control of, such Person.
"VALUATION" has the meaning ascribed to it in SECTION 5.05.
ARTICLE VII
MISCELLANEOUS
7.01 ENTIRE AGREEMENT. This Agreement supersedes all prior
discussions and agreements between the parties with respect to the subject
matter hereof and contains the sole and entire agreement between the parties
hereto with respect to the subject matter hereof.
7.02 EXPENSES. Except as otherwise expressly provided in this
Agreement, whether or not the transactions contemplated hereby are consummated,
each party will pay its own costs and expenses incurred in connection with the
negotiation, execution and closing of this Agreement and the transactions
contemplated hereby, PROVIDED, HOWEVER, that the Company will pay the reasonable
fees and expenses of Purchaser's counsel in connection therewith.
7.03 WAIVER. Any term or condition of this Agreement may be
waived at any time by the party that is entitled to the benefit thereof, but no
such waiver shall be effective unless set forth in a written instrument duly
executed by or on behalf of the party waiving such term or condition. No waiver
by any party of any term or condition of this Agreement, in any one or more
instances, shall be deemed to be or construed as a waiver of the same or any
other term or condition of this Agreement on any future occasion. All remedies,
either under this Agreement or by Law or otherwise afforded, will be cumulative
and not alternative.
- 12 -
<PAGE> 16
7.04 AMENDMENT. This Agreement may be amended, supplemented or
modified only by a written instrument duly executed by or on behalf of each
party hereto.
7.05 NO THIRD PARTY BENEFICIARY. The terms and provisions of
this Agreement are intended solely for the benefit of each party hereto and
their respective successors or permitted assigns, and it is not the intention of
the parties to confer third-party beneficiary rights upon any other Person.
7.06 NO ASSIGNMENT; BINDING EFFECT. Neither this Agreement nor
any right, interest or obligation hereunder may be assigned by any party hereto
without the prior written consent of the other party hereto and any attempt to
do so will be void, except for assignments and transfers by operation of Law.
Subject to the preceding sentence, this Agreement is binding upon, inures to the
benefit of and is enforceable by the parties hereto and their respective
successors and assigns.
7.07 HEADINGS. The headings used in this Agreement have been
inserted for convenience of reference only and do not define or limit the
provisions hereof.
7.08 INVALID PROVISIONS. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under any present or future Law,
and if the rights or obligations of any party hereto under this Agreement will
not be materially and adversely affected thereby, (a) such provision will be
fully severable, (b) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof,
and (c) the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom.
7.09 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the Laws of the State of New York applicable to a
Contract executed and performed in such State, without giving effect to the
conflicts of laws principles thereof.
7.10 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
7.11 TERMINATION. This Agreement may be terminated, and the
transactions contemplated hereby may be abandoned, at any time after February 2,
1998 by either party upon notification of the non-terminating party by the
terminating party if the Closing shall not have occurred on or before such date
and such failure to consummate is not caused by a breach of this Agreement by
the terminating party.
- 13 -
<PAGE> 17
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officer of each party hereto as of the date
first above written.
HIGH RIVER LIMITED PARTNERSHIP
By: Riverdale LLC, general partner
By: /s/ Robert J. Mitchell
------------------------------------
Name: Robert J. Mitchell
Title: Manager
BROOKE GROUP LTD.
By: /s/ Richard J. Lampen
------------------------------------
Name: Richard J. Lampen
Title: Executive Vice President
- 14 -
