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EXHIBIT 2.1
AMENDED AND RESTATED
WESTERN REALTY DEVELOPMENT LLC
LIMITED LIABILITY COMPANY AGREEMENT
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AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT
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THIS AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT dated as of
February 20, 1998, by and among Western Realty Development LLC, a Delaware
limited liability company with offices at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Company"), Apollo Real Estate Investment
Fund III, L.P., a Delaware limited partnership with offices at 1301 Avenue of
the Americas, New York, New York ("Apollo"), New Valley Corporation, a Delaware
corporation with offices at ▇▇▇ ▇.▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇
("New Valley"), and BrookeMil Ltd., a Cayman Islands company with offices at
▇.▇. ▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ House, ▇▇▇▇▇▇ Town, Grand Cayman, B.W.I.
("BrookeMil") (New Valley and BrookeMil are sometimes hereinafter referred to
collectively as the "New Valley Parties," and Apollo and the New Valley Parties
are sometimes hereinafter referred to collectively as the "Members" and
individually as a "Member").
W I T N E S S E T H :
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WHEREAS, the Company has been formed to act as a holding company and to own
(i) 100% of the interests of Western Realty Investments LLC, a Delaware limited
liability company (the "Delaware LLC-2"), which in turn will own 99% of Western
Realty LLC, a Russian limited liability company (the "Russian LLC"), created to
hold the rights to, develop and manage properties in Moscow, Russia located at
▇▇. ▇▇▇▇▇▇▇ ▇ ("▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇") and 7 ("▇▇▇▇▇ Place II") and (ii) 30% (after
giving effect to the transactions described below) of the interests in Western
Tobacco Investments LLC, a Delaware limited liability company ("Joint
Venture-II");
WHEREAS, BrookeMil currently holds rights with respect to ▇▇▇▇▇ Place II
and ▇▇▇▇▇ Place III and will transfer such rights, together with associated
assets and liabilities, to the Russian LLC;
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WHEREAS, the parties hereto have agreed that a separate limited liability
company agreement (the "Joint Venture-II Agreement") shall be entered into among
the Company, Joint Venture-II and Brooke (Overseas) Ltd., a Delaware corporation
("Brooke (Overseas)"), substantially in the form annexed hereto as Exhibit 1;
WHEREAS, each Member has agreed to subscribe for and to purchase interests
in the Company in return for the contributions to the Company described below;
WHEREAS, the Members wish to set forth their respective rights and
obligations as Members of the Company and to confirm the principles that will
govern the management of the Company and its Affiliated Entities; and
WHEREAS, the Members hereby amend and restate the Western Realty
Development LLC Limited Liability Company Agreement among the Company, Apollo,
New Valley and BrookeMil dated as of February 20, 1998;
NOW, THEREFORE, in consideration of the mutual promises herein contained,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. DEFINED TERMS.
Capitalized terms not otherwise defined herein shall have the meanings set
forth on Schedule A.
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2. ORGANIZATION; INTERESTS.
2.1 CERTIFICATE OF FORMATION. The parties acknowledge that the Company was
formed on October 27, 1997 and that the Certificate of Formation of the Company
is currently in the form annexed hereto as Schedule 2.1. The parties hereby
agree that the rights and liabilities of the Members shall be as provided in the
Act, except as provided herein. The parties acknowledge that the original
Limited Liability Company Agreement of the Company dated November 4, 1997 has
been terminated and superseded by the present Agreement.
2.2 PURPOSE. The Company was formed for the purpose of investing,
developing and operating, through its interests in the Delaware LLC-2 and Joint
Venture-II, ▇▇▇▇▇ Place II, ▇▇▇▇▇ Place III and other real estate as provided in
the first, second and third "WHEREAS" clauses hereof. The purpose of the Company
can be modified as provided in Section 14.4 hereof or otherwise by agreement of
the Members.
2.3 PRINCIPAL OFFICE. The principal office of the Company shall be located
at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
2.4 SUBSCRIPTION FOR INTERESTS.
(a) Apollo hereby subscribes for interests (the "Class A Interests"),
to be issued by the Company for an aggregate subscription price of $40,000,000,
to be contributed in cash as provided below. New Valley hereby subscribes for
interests (the "Class B Interests"), to be issued by the Company for an
aggregate subscription price of $10,000,000, to be contributed in cash and
expenditures as set forth in Section 2.4(c). BrookeMil hereby subscribes for
interests (the "Class C Interests"), to be issued by the Company for an
aggregate subscription price of $61,966,507, to be contributed by transferring
to the Russian LLC its interests in ▇▇▇▇▇ II and ▇▇▇▇▇ III and to the Company
all of its interest in the Russian LLC, except for a 1% interest, as set forth
in Section 2.4(d). The Class A Interests, the Class B Interests and the Class C
Interests are hereinafter collectively referred to as the "Interests." The
subscriptions shall be made as follows:
APOLLO:
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Type of Interests Number of Interests Contribution Value of Contribution
Class A 10,000 Cash $ 40,000,000
Interests
Total: 10,000 $ 40,000,000
NEW VALLEY:
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Type of Interests Number of Interests Contribution Value of Contribution
Class B 1,400 Expenditures
Interests as set forth $ 10,000,000
in Section 2.4(c)
and Cash
Total: 1,400 $ 10,000,000
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BROOKEMIL:
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Type of Interests Number of Interests Contribution Value of Contribution
Class C 6,381 Interests $ 45,980,553
Interests in the Russian LLC
(for ▇▇▇▇▇ Place II)
2,219 Interests $ 15,985,954
in the Russian LLC
(for ▇▇▇▇▇ Place III)
Total: 8,600 $ 61,966,507
TOTAL FOR ALL
MEMBERS: 20,000 $111,966,507
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(b) At the Initial Closing (as defined in Section 12.1) the Company
shall issue (i) five (5) of its Class A Interests, at a price of $4,000 per
interest and (ii) five (5) of its Class B Interests at a price of $1,000 per
interest. The contributions of the Members to the Company and the amounts and
types of Interests issued to them at the Initial Closing shall be as follows:
APOLLO:
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Type of Interests Number of Interests Contribution Value of Contribution
Class A 5 Cash $20,000
Interests
NEW VALLEY:
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Type of Interests Number of Interests Contribution Value of Contribution
Class B 5 Expenditures $ 5,000
Interests
Total Interests Issued: 10 $25,000
At the Initial Closing, Apollo shall also make a loan of $11,000,000 to the
Company (the "Apollo Loan") which shall be represented by a promissory note in
favor of Apollo substantially in the form annexed hereto as Exhibit 2 (the
"Promissory Note") which Promissory Note shall be secured by the pledge of 99.1%
of the outstanding shares of the capital stock of BrookeMil. The Company shall
submit to Apollo wire instructions for the disbursement of the Apollo Loan no
later than the day preceding the Initial Closing Date. The entire amount of the
Apollo Loan shall be disbursed to the Company or to its order by wire transfer
in immediately available funds to the account specified in such wire
instructions on the Initial Closing Date. The entire amount of the Apollo Loan
(including the principal and any interest accrued thereon) shall be converted
into the Class A Interests at the Initial Subsequent Closing, to be credited as
a contribution by Apollo in the amount of $11,000,000 towards the aggregate
subscription amount set forth in Section 2.4(a), which contribution, upon such
conversion, shall be considered made for the purposes of this Agreement as of
the Initial Closing Date. For the avoidance of doubt, in the event of, and upon
the conversion of the Apollo Loan into the Class A Interests as set forth
herein, the Apollo Loan shall be terminated and no payment of principal or
interest shall be due thereon.
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(c) From time to time after the Initial Closing and on or before the
fifth anniversary of the Initial Closing Date, Apollo and New Valley shall
complete their subscribed contributions to the Company in accordance with the
Subsequent Closings described in Section 12.6 hereof, up to the subscription
amounts set forth in Section 2.4(a), in return for which additional Class A
Interests shall be issued to Apollo and additional Class B Interests shall be
issued to New Valley at the same price per Interest as set forth in Section
2.4(b) hereof. Upon ten (10) Business Days' notice by the Company to each of
Apollo and New Valley, such additional contributions shall be made by Apollo in
cash and by New Valley in expenditures incurred since March 1, 1997 including
those expenditures incurred through the date hereof and set forth in
Schedule 2.4(c), and, after such expenditures have been contributed and to the
extent they do not cover the subscribed amount, in cash, and such contributions
shall be made in such manner so as to maintain the ratio of $4.00 contributed by
Apollo for every $1.00 in value contributed by New Valley. New Valley shall be
deemed to have made contributions to the Company in the form of the expenditures
referred to in the preceding sentence only on the due date determined for
additional contributions to the Company at a Subsequent Closing (and then only
to the extent that such expenditures are actually made as of the date of such
Subsequent Closing) as provided in Section 12.6 hereof (and New Valley shall not
be entitled to any interest thereon from the date such expenditures were
incurred to the date of such Subsequent Closing) regardless of the date such
expenditures were incurred and any expenditures that are to be counted as New
Valley's contributions but that are not set forth in Schedule 2.4(c) or that do
not constitute items on the approved Budget shall be unanimously approved by the
Board of Managers.
(d) BrookeMil shall make its entire capital contribution hereunder by
means of transferring, as soon as practicable hereafter, (i) to the Russian LLC,
the assets and assumed liabilities listed in Schedule 2.4(d) (the "Assets" and
the "Assumed Liabilities," respectively) related to ▇▇▇▇▇ Place II, and to the
Company (or to another entity as the Company may designate), its entire interest
in the Russian LLC, less a 1% interest, in return for 6,381 Class C Interests,
and (ii) to the Russian LLC, the Assets and the Assumed Liabilities listed in
Schedule 2.4(d) related to ▇▇▇▇▇ Place III, and to the Company (or to another
entity as the Company may designate) its entire interest (as it has been
increased as a result of such transfer) in the Russian LLC, other than the 1%
interest referred to in Section 2.4(d)(i) above, in return for 2,219 Class C
Interests. Upon the completion of the transfers contemplated in clauses (i) and
(ii) of the preceding sentence, BrookeMil shall have no further liability for
capital contributions to the Company hereunder.
(e) In the event any Member shall fail to make any portion of its
contribution to the Company when due for any reason, other than an Event of
Force Majeure,
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then, beginning on the fourth Business Day after the due date for such
contribution, the Company shall charge such non-paying Member interest on the
unpaid amount of such contribution at the rate equal to the lesser of (i) 10%
over the base (prime) rate quoted by the Chase Manhattan Bank in New York, New
York (or its successor) at the close of business on the date on which such
payment was due, or (ii) the maximum rate as allowed by applicable law,
calculated from the date such contribution was due until the date of payment
compounded quarterly and based on a 360-day year ("Late Payment Interest"). Late
Payment Interest shall be distributed to the Members who made their
contributions in full on the due date therefor, pro rata in accordance with the
proportion that the aggregate contributions of each paying Member bear to the
aggregate contributions of all paying Members. In the event that such failure to
pay shall continue uncured for a period of one hundred and twenty (120) days
after notice thereof, such non-payment shall be deemed a payment default (a
"Payment Default"). Upon the occurrence and continuation of a Payment Default,
Late Payment Interest shall continue to accrue and Members who have made their
contributions in full on the due date therefor shall have the right to require
the sale of ▇▇▇▇▇ Place II and the New Factory as set forth in Section
2.10(a)(iv). Notwithstanding any other provisions of this Agreement to the
contrary, the portion of the proceeds from the sale of ▇▇▇▇▇ Place II and/or the
New Factory to which the non-paying Member or Members would otherwise be
entitled shall be subject to reduction for any portion of such unpaid
contribution and any Late Payment Interest thereon and such amounts shall be
paid to the non-defaulting Members in proportion to their Interests in the
Company.
2.5 PAYMENT OF CASH CONTRIBUTIONS BY MEMBERS. The Members shall effect
their cash contributions to the Company by wire transfer in immediately
available funds to such bank account of the Company as shall be specified in a
notice by the Company to the Members sent at least one Business Day prior to the
date of any Closing (as defined in Section 12 hereof).
2.6 RESTRICTIONS ON SUBSCRIPTIONS FOR INTERESTS. The Company shall not
issue any Interests other than to the Members who are a party hereto, unless the
Members unanimously agree otherwise.
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2.7 RIGHTS OF CLASS A INTERESTS.
(a) The Class A Interests shall be entitled to receive (i) 100% of any
amounts distributed by the Company (including liquidating distributions) until
such time as the aggregate amount of distributions made with respect to Class A
Interests equals the total consideration paid for such Class A Interests plus a
15% annual cumulative rate of return on such consideration compounded quarterly
(such aggregate amount of distributions is hereinafter referred to as the "Class
A Distribution Amount" and the period required to make such distributions with
respect to Class A Interests in full is hereinafter referred to as the "Class A
Distribution Period"); and (ii) after completion of the Class A Distribution
Period and the Class B Distribution Period (as hereinafter defined), further
distributions by the Company, if any, in an amount equal to 30% of the
distribution. The distribution rights of the Class A Interests are set forth in
more detail in Section A.11 of Schedule 4 annexed hereto.
(b) Upon the liquidation of the Company, the holders of the Class A
Interests shall be entitled to receive the Adjusted Realized Equity Value of
such Class A Interests (the "Class A Liquidation Preference") before any assets
of the Company may be distributed to the holders of the Class B Interests;
provided, however, that the Class A Interests shall be entitled to such Class A
Liquidation Preference only in the event such liquidation takes place before the
completion of the Class A Distribution Period and then only to the extent that
such Adjusted Realized Equity Value does not exceed the Class A Distribution
Amount. After the completion of the Class A Distribution Period and the Class B
Distribution Period and upon the liquidation of the Company, the holders of the
Class A Interests shall be entitled to receive distributions in accordance with
Section 2.7(a)(ii) hereof. Notwithstanding the foregoing provisions of this
Section 2.7(b), the rights of the Class A Interests to receive distributions in
liquidation of the Company are subject to the provisions of Section A.12 of
Schedule 4 annexed hereto.
(c) The holders of Class A Interests shall have one vote in the
aggregate.
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2.8 RIGHTS OF CLASS B AND CLASS C INTERESTS.
(a) Upon completion of the Class A Distribution Period, the Class B
Interests shall be entitled to receive 100% of any amounts distributed by the
Company (including liquidating distributions) until such time as the aggregate
amount of distributions made with respect to the Class B Interests equals the
total consideration paid for such Class B Interests pursuant to Section 2.4 plus
a 15% annual cumulative rate of return on such consideration paid for such Class
B Interests compounded quarterly (such aggregate amount of distributions is
hereinafter referred to as the "Class B Distribution Amount" and the period
required to make such distributions with respect to the Class B Interests in
full is hereinafter referred to as the "Class B Distribution Period").
(b) Upon the liquidation of the Company, the holders of the Class B
Interests shall be entitled to receive the Adjusted Realized Equity Value of
such Class B Interests (the "Class B Liquidation Preference") before any assets
of the Company may be distributed to the Members on a pro-rata basis; provided,
however, that the Class B Interests shall be entitled to such Class B
Liquidation Preference only in the event such liquidation takes place after the
completion of the Class A Distribution Period but before the completion of the
Class B Distribution Period and then only to the extent that such Adjusted
Realized Equity Value does not exceed the Class B Distribution Amount. After the
completion of the Class B Distribution Period and upon the liquidation of the
Company, the holders of the Class B Interests shall be entitled to receive
distributions in accordance with Section 2.8(c) hereof. Notwithstanding the
foregoing provisions of this Section 2.8(b), the rights of the Class B Interests
to receive distributions in liquidation of the Company are subject to the
provisions of Section A.12 of Schedule 4 annexed hereto.
(c) After completion of the Class A Distribution Period and the Class B
Distribution Period, the Class B Interests and the Class C Interests shall be
entitled to further distributions by the Company, if any, in an amount equal to
70% of the distribution. The distribution rights of the Class B Interests and
the Class C Interests are set forth in more detail in Section A.11 of Schedule 4
annexed hereto.
(d) The holders of the Class B Interests and the Class C Interests
shall have one vote in the aggregate.
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2.9 MANAGEMENT OF THE COMPANY. Except to the extent that the authority to
conduct day-to-day operations of the Company shall be delegated to the President
as provided herein, the management of the Company shall be vested in a managing
board (the "Board" or the "Board of Managers"), which shall consist of an even
number of managers, but not less than two (2) or more than six (6). An equal
number of managers shall be appointed to the Board (and subject to removal and
replacement) by Apollo on the one hand and by the New Valley Parties on the
other hand. Meetings of the Board shall be held periodically (but in no event
less frequently than annually) and upon the request of any manager. The Board
may also take action by unanimous written consent without a meeting. Except as
otherwise provided herein, the actions of the Board shall be by majority vote,
which majority shall include the vote of at least one (1) manager appointed by
each of Apollo and the New Valley Parties. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ or such other person
designated by the New Valley Parties (who shall count as one of the appointments
of the New Valley Parties) shall be the Chairman of the Board of Managers. The
parties agree that Apollo shall appoint the manager to the Board of Managers
under the Joint Venture-II Agreement to be appointed by the Company under the
terms thereof.
Notwithstanding the foregoing, the unanimous decision of the Board of
Managers of the Company shall be required in order for the Company itself, or in
its capacity as a direct or indirect shareholder, member or participant of any
Affiliated Entity (or, during the period that the Apollo Loan is outstanding,
with respect to subparagraph (c) below, for New Valley, in its capacity as a
majority shareholder of BrookeMil), to vote or otherwise approve a decision:
(a) to amend this Agreement or the constituent documents of the Company
and to adopt or amend the constituent documents of any Affiliated Entity,
including but not limited to the Joint Venture-II Agreement, or to waive any
provisions hereof or thereof;
(b) unless specified in the approved Budget (as hereinafter defined),
to sell, transfer, assign, grant a right to use, a right of first refusal, an
option or a similar right, or otherwise dispose of (i) any of the Properties, or
any rights thereto or interests therein (including but not limited to ownership
rights, leasehold interests (whether as landlord or tenant), rights to use or
easements) or (ii) any asset (or group of assets in a transaction or series of
transactions)
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the cost or fair market value (whichever is greater) of which exceeds $100,000
individually or $500,000 in the aggregate in any given year, except as permitted
by Section 2.10;
(c) unless specified in the approved Budget, to borrow, issue
guarantees or assume other contingent obligations to pay money in an amount
which exceeds $100,000 in the aggregate outstanding at any given time;
(d) unless specified in the approved Budget, to grant a security
interest or otherwise encumber (i) any of the Properties or any rights thereto
or interests therein (including but not limited to ownership rights, leasehold
interests (whether as landlord or tenant), rights to use or easements), or (ii)
any asset (or group of assets in a transaction or series of transactions) the
cost, fair market value or value assigned in such transaction(s) (whichever is
greater) of which exceeds $100,000 at any one time or $500,000 in the aggregate
in any given year;
(e) to take any actions regarding registration of the Interests in the
Company or any Affiliated Entity necessary for a public offering;
(f) to merge, reorganize or consolidate the Company or any Affiliated
Entity with any other corporation or entity unless the surviving entity shall be
the Company or such other Affiliated Entity, respectively, or the Company or
other Affiliated Entity is merged, reorganized or consolidated with an Affiliate
thereof;
(g) to dissolve voluntarily the Company or any Affiliated Entity or to
revoke voluntary dissolution proceedings or to terminate, liquidate or wind up
the Company or Affiliated Entity;
(h) to change materially the principal businesses conducted by the
Company or any Affiliated Entity or to make any expenditures with respect to
▇▇▇▇▇ Place III except as may be specified in the approved Budget;
(i) to approve the annual budget and business plan, including capital
expenditures, of the Company (collectively, the "Budget"), which Budget shall
incorporate the annual budgets and business plans of the Delaware LLC-2, the
Russian LLC and Joint Venture-II,
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as well as any contributions or resources to be made available by the Company to
any other Affiliated Entity;
(j) unless specified in the approved Budget, to make or incur, or to
enter into a contractual commitment to make or incur expenditures or financial
obligations which exceed $250,000 individually or $1,000,000 in the aggregate in
any calendar year;
(k) unless specified in the approved Budget, to purchase ownership
interests, leasehold interests, rights to use, easements or other rights to or
interests in the Properties or elsewhere for the price exceeding $100,000 in
each particular transaction or exceeding $500,000 in the aggregate in any given
year, including approval of agreements with respect to acquiring such rights, or
to waive any rights of first refusal, preemptive or similar rights relating to
the purchase of any such rights to or interest in such Properties or elsewhere;
(l) to enter into, modify, renew, terminate or grant any material
waiver relating to any significant leases and other material contracts other
than contracts in the ordinary course of business with trade counterparties or
customary real estate leases involving no more than 1,000 square meters as
approved by the President; provided that real estate lease agreements with
Members or any of their Affiliates exceeding 500 square meters shall be
considered significant for purposes of this clause;
(m) to enter into any transaction with a party that is related to any
Member or Affiliate, excluding transactions in the ordinary course of business
of the Company or an Affiliated Entity on an arm's-length basis involving
amounts which shall not exceed $250,000 per transaction or series of
transactions and excluding transactions in the ordinary course of business of
▇▇▇▇▇▇▇-▇▇▇▇▇ involving ▇▇▇▇▇▇▇ Group Inc. on an arm's-length basis; provided
that written notice of all such transactions or series of transactions involving
more than $100,000, together with a description of the material terms thereof,
shall be promptly furnished to Apollo;
(n) to commence or settle any litigation, arbitration or other dispute,
the result of which could have a material adverse effect on the business,
financial condition or prospects of the Company or any Affiliated Entity;
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(o) to resolve tax or other governmental proceedings or disputes
relating to the Company or any Affiliated Entity or to approve any action of New
Valley as tax matters partner of the Company;
(p) to establish, acquire, dispose of or transfer any subsidiary or any
interest in any subsidiary or other entity (whether or not incorporated) or make
any investment in any business venture or enterprise (whether or not
incorporated), other than as contemplated in the approved Budget;
(q) to change the outside accountants of the Company or any Affiliated
Entity;
(r) to issue, sell, transfer, assign or otherwise dispose of any
shares, capital stock, securities or interests of or owned by the Company or any
Affiliated Entity, or change the ownership structure of the Company or any
Affiliated Entity;
(s) to make a decision not to distribute all available cash (to the
extent such distributions are permitted by applicable law) of (i) the Company to
the Members, or (ii) an Affiliated Entity to its shareholders, members or
participants, as applicable;
(t) to retain any officer subject to mandatory dismissal as provided in
Section 5.1(c); and
(u) to waive any breach of covenants set forth in Section 11.4.
All figures set forth in this Section 2.9 shall be determined on a
consolidated basis in accordance with U.S. generally accepted accounting
principles, consistently applied. To the extent that any amounts or payments are
incurred in any currency other than U.S. dollars, such amounts or payments
shall, for purposes of such calculation, be converted into U.S. dollars on the
date of the conclusion of the transaction at the official exchange rate of such
country (which, for purposes of the ▇▇▇▇▇, shall be considered to be the MICEX
rate at the opening of business in Moscow on such date). The Parties hereby
agree that the Joint Venture-II Agreement shall include provisions requiring the
Company's approval (directly or indirectly) of the issues set forth in this
Section 2.9.
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2.10 SALE OF INTERESTS IN THE COMPANY AND ITS ASSETS.
(a) SALE OF ASSETS.
(i) At any time after at least 80% of the net leasable space of ▇▇▇▇▇
Place III has been leased to tenants, the New Valley Parties shall have the
right to sell, or cause to be sold, ▇▇▇▇▇ Place III without the consent of
Apollo, provided that (x) the cash price payable in one lump sum at the closing
of such sale shall be no less than $175,000,000; (y) ▇▇▇▇▇ Place III is sold to
one or more purchasers through an auction process conducted by an
internationally recognized investment bank or real estate brokerage firm; and
(z) construction of ▇▇▇▇▇ Place III has been completed.
(ii) The Joint Venture-II Agreement shall provide that at any time
after the completion of the construction of the New Factory, Brooke (Overseas)
shall have the right to sell, or cause to be sold, the New Factory without
Apollo's consent, provided that (x) the cash price payable in one lump sum at
the closing of such sale shall be no less than $175,000,000; and (y) the New
Factory is sold to one or more purchasers through an auction process conducted
by an internationally recognized investment bank or real estate brokerage firm.
(iii) At any time after February 20, 2005, Apollo shall have the right
to require the sale, without the consent of the New Valley Parties, of all of
the assets of the Company, directly and indirectly held, including but not
limited to ▇▇▇▇▇ Place II, ▇▇▇▇▇ Place III, the New Factory, Joint Venture-II,
Delaware LLC-2 and Russian LLC, provided that (x) the cash price payable for all
the assets in one lump sum at the closing of such sale shall be no less than
$430,000,000; and (y) all assets are sold to one or more purchasers through an
auction process conducted by an internationally recognized investment bank or
real estate brokerage firm.
(iv) In the event of (A) a Payment Default by a Member as set forth in
Section 2.4(e) or (B) a material breach by the New Valley Parties with respect
to the provisions of Section 2.9 hereof, which material breach remains uncured
60 days after receipt by the New Valley Parties of written notice from Apollo
setting forth in detail the alleged default, then, in each such instance, the
non-defaulting Members shall have the right to require the sale of ▇▇▇▇▇ Place
II, provided that (x) the cash price payable in one lump sum at the closing of
such sale shall
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be no less than $75,000,000, and (y) ▇▇▇▇▇ Place II is sold to one or more
purchasers through an auction process conducted by an internationally recognized
investment bank or real estate brokerage firm. In the event that such sale of
▇▇▇▇▇ Place II and the distribution of the proceeds therefrom to the
non-defaulting Members shall not exceed the Adjusted Realized Equity Value of
the Interests of such non-defaulting Members, such non-defaulting Members shall
have the right to require the sale of the New Factory, provided that (x) the
cash price payable in one lump sum at the closing of such sale shall be no less
than $165,000,000, and (y) the New Factory is sold to one or more purchasers
through an auction process conducted by an internationally recognized investment
bank or real estate brokerage firm.
(v) In the event of (A) the failure of Brooke (Overseas) to secure or
provide the Russian Bank Loan or to arrange other financing, each on terms that
shall not differ materially from those set forth on Schedule 2.10(v) by July 1,
1998 or (B) a payment default under the Russian Bank Loan which default results
in the acceleration of all amounts due thereunder or the commencement of
enforcement proceedings by the bank against ▇▇▇▇▇▇▇-▇▇▇▇▇ under the Russian Bank
Loan (a "Loan Default"), then, in each such instance, Apollo shall have the
right to require the sale, without the consent of the New Valley Parties, of all
of the assets of the Company, directly or indirectly held, including but not
limited to, ▇▇▇▇▇ Place II, ▇▇▇▇▇ Place III, the New Factory, Joint Venture-II,
Delaware LLC-2 and the Russian LLC, provided that (x) the sale shall be on
commercially reasonable terms and (y) prior to entering into a definitive
agreement with respect to any such sale, Brooke (Overseas) shall not have
secured or provided the Russian Bank Loan or arranged other financing on terms
that shall not differ materially from those set forth on Schedule 2.10(v), or
▇▇▇▇▇▇▇-▇▇▇▇▇ or ▇▇▇▇▇▇ (Overseas) shall not have cured the Loan Default,
whether by payment, purchase or refinancing of the Russian Bank Loan or
otherwise, provided the Loan Default can be cured at any time as long as after
it has been cured Joint Venture-II shall have the same rights with respect to
the New Factory as it had prior to the occurrence of the Loan Default,
respectively.
(vi) In the event (A) an Event of Default (as such term is defined in
the Pledge Agreement) has occurred with respect to the Apollo Loan or (B) Apollo
has terminated this Agreement in accordance with Section 14.2(a)(iii) and
neither the Company nor the New
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Valley Parties have paid to Apollo the principal, accrued interest and all
amounts due on the Apollo Loan as provided in Section 14(b), then, in each such
instance, Apollo shall have the right to require the sale, without the consent
of the New Valley Parties, of all of the assets of the Company, directly or
indirectly held, including but not limited to, ▇▇▇▇▇ Place II, ▇▇▇▇▇ Place III,
Delaware LLC-2 and the Russian LLC, but excluding any interests in Joint
Venture-II or the New Factory, provided that (x) the sale shall be on
commercially reasonable terms and (y) prior to entering into a definitive
agreement with respect to any such sale, the Company or the New Valley Parties
shall not have cured the Event of Default or the grounds for such termination by
Apollo under Section 14.2(a)(iii) shall not have been eliminated, respectively.
(vii) In the event Apollo has terminated this Agreement in accordance
with Section 14.2(a)(iv), then Apollo shall have the right to require the sale,
without the consent of the New Valley Parties, of all of the assets of the
Company, directly or indirectly held, including but not limited to, ▇▇▇▇▇ Place
II, ▇▇▇▇▇ Place III, Delaware LLC-2 and the Russian LLC, Joint Venture-II and
the New Factory, provided that (x) the sale shall be on commercially reasonable
terms and (y) prior to entering into a definitive agreement with respect to any
such sale, the grounds for such termination by Apollo under Section 14.2(a)(iv)
shall not have been eliminated.
(viii) The proceeds of the sales of any assets pursuant to this Section
2.10(a) shall be distributed in the following manner:
FIRST, to Apollo in respect of the Apollo Loan, to the extent any
amounts are due thereon and have not been converted into the Class A Interests,
and
SECOND, in accordance with the distribution provisions set forth in
Section 2.7 and Section 2.8 of this Agreement.
(b) SALE OF INTERESTS.
(i) SALE OF INTERESTS BY NEW VALLEY. Notwithstanding the provisions of
Section 9 hereof, at any time after at least 80% of the net leasable space of
▇▇▇▇▇ Place III has been leased to tenants and the construction of ▇▇▇▇▇ Place
III has been completed, the New
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Valley Parties shall have the right to sell all of their Interests in the
Company without the consent of Apollo, provided that (x) the cash price payable
in one lump sum at the closing of the sale of all the Interests in the Company
shall be no less than $430,000,000; and (y) the Interests of New Valley are sold
to one or more purchasers through an auction process conducted by an
internationally recognized investment bank or real estate brokerage firm. In the
event the New Valley Parties elect to exercise such right to sell all of their
Interests in the Company, they shall send to Apollo a written notice of such
election at least sixty (60) days prior to the closing of such sale, and Apollo
shall have the right and, at the request of the New Valley Parties, Apollo shall
be obligated, to sell all of its Interests within sixty (60) days of receipt of
such notice to the same purchaser or group of purchasers as the New Valley
Parties on the same terms and conditions as the New Valley Parties.
(ii) SALE OF INTERESTS BY APOLLO. At any time after February 20, 2005,
Apollo shall have the right to sell all of its Interests in the Company without
the consent of the New Valley Parties, provided that (x) the cash price payable
in one lump sum at the closing of the sale of all the Interests in the Company
shall be no less than $430,000,000; and (y) the Interests of Apollo are sold to
one or more purchasers through an auction process conducted by an
internationally recognized investment bank or real estate brokerage firm. In the
event Apollo elects to exercise such right to sell all of its Interests in the
Company, it shall send the New Valley Parties a written notice of such election
at least sixty (60) days prior to the closing of such sale, and the New Valley
Parties shall have the right and, at the request of Apollo, the New Valley
Parties shall be obligated, to sell all of their Interests within sixty (60)
days of receipt of such notice to the same purchaser or group of purchasers as
Apollo on the same terms and conditions as Apollo.
(c) Notwithstanding anything to the contrary in this Agreement, (i) a
partial sale of Interests by any Member shall not be permitted, (ii) all sales
of Interests or assets of the Company shall be on a cash basis in U.S. Dollars,
and (iii) no Member shall be entitled to pledge, create a lien against, mortgage
or otherwise encumber any Interests owned by it or any distributions that such
Member would be entitled to hereunder as a result of owning such Interests. Each
of the New Valley Parties and Apollo shall retain the right to approve any
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provisions of any agreement for the sale of Interests or any assets of the
Company with respect to indemnification or other post-closing contingent
liabilities or price adjustments. It shall be a condition to any transfer under
Section 2.10(b) that the transferee becomes a party to this Agreement.
(d) Notwithstanding any provision of this Section 2.10 to the contrary,
no sales of assets of the Company or Interests shall be permitted by any Member
to any of its Affiliates without the prior written consent of the other Members.
3. USE OF CONTRIBUTIONS, APOLLO LOAN AND FINANCING.
3.1 USE OF CONTRIBUTIONS.
(a) The contributions in cash and, in the case of New Valley,
expenditures as set forth in Section 2.4(c), received by the Company from the
Members shall be used as follows: (i) $30,000,000 will be used as specified in
the approved Budget for financing the construction, operation and development of
▇▇▇▇▇ Place II, ▇▇▇▇▇ Place III and such other projects as may be approved in
the Budget, and to reimburse the New Valley Parties for the expenditures in
excess of $10,000,000 as set forth in Section 12.8; and (ii) $20,000,000 will be
contributed to Joint Venture-II to finance the construction of the New Factory
and the acquisition of related equipment, and to reimburse Brooke (Overseas) for
expenditures incurred by Brooke in connection therewith since March 1, 1997, as
shall be specified in the Joint Venture-II Agreement.
(b) At the time of any capital call, the purpose for which funds are
being called shall be set forth in an approved Budget.
3.2 USE OF APOLLO LOAN. The Apollo Loan shall be used to make a
contribution to Joint Venture-II and shall be used by Joint Venture-II as shall
be specified in the Joint Venture-II Agreement.
3.3 FINANCING. The Company may obtain additional working capital or other
funds required for the business of the Company through borrowings on the basis
of its own credit rating from commercial banks or other institutional lenders,
subject to the Budget or the unanimous approval of the Board of Managers as set
forth in Section 2.9. Although the Members will not be required to guarantee any
such borrowings, the Members shall use good
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faith efforts to assist the Company in obtaining such funds on the most
favorable commercial terms.
4. ALLOCATIONS OF INCOME AND LOSS. The Company's net taxable income and loss
shall be allocated among the Members as set forth in Schedule 4 hereto.
5. OFFICERS, PRINCIPAL OFFICE AND INDEPENDENT ACCOUNTANTS.
5.1 CHAIRMAN AND CORPORATE OFFICERS.
(a) Except as otherwise provided herein, the officers of the Company
and the Russian LLC and the Chairman of the Board of Managers of the Company
shall be appointed and removed by New Valley. The initial Chairman of the Board
of Managers of the Company will be ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇. The initial officers of the
Company will be as follows:
President - ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Chief Financial Officer - ▇▇▇▇▇ ▇▇▇▇▇
Secretary - ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
The initial General Director of the Russian LLC shall be ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇.
The initial Chairman of the Board of Managers of Joint Venture-II shall be
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇.
The initial officers of Joint Venture-II shall be:
President - ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Chief Financial Officer - ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Secretary - ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
The initial General Director of ▇▇▇▇▇▇▇-▇▇▇▇▇ shall be ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇.
The initial General Director of LD Tobacco shall be ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇.
(b) Apollo shall have the right to approve (i) replacements of any of
the initial officers set forth in this Section 5.1; and (ii) the appointment of
any senior executive officer of an Affiliated Entity. Such approval shall not be
unreasonably withheld or delayed.
(c) Any officer of the Company or any Affiliated Entity shall be
subject to mandatory dismissal for fraud, bad faith, gross negligence, criminal
conviction or plea, and a final, non-appealable finding of or consent to
injunction with respect to violations of antifraud or antimanipulative
provisions of securities, commodities or banking laws by a court of competent
jurisdiction, unless retention is approved unanimously by the Board of Managers
as provided in Section 2.9.
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(d) Subject to Section 2.9(o) hereof, New Valley shall be the tax
matters partner for the Company.
5.2 RESPONSIBILITIES OF THE PRESIDENT. The President of the Company shall
execute the decisions of the Board of Managers and have all authority to conduct
the day-to-day operations of the Company except as otherwise provided herein.
5.3 SALARIES TO EMPLOYEES.
(a) The parties agree that neither the Company nor any Affiliated
Entity shall pay any salaries to emloyees of Apollo or New Valley, other than to
the employees involved in day-to-day business operations in Russia (the latter
category including, among others, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇).
(b) The salaries of the officers of the Company and each Affiliated
Entity shall be approved in the Budget or as determined from time to time by the
Board of Managers.
5.4 INDEPENDENT ACCOUNTANTS. The independent certified public accountants
of the Company and each Affiliated Entity shall be a firm of internationally
recognized accountants selected by unanimous vote of the Board of Managers as
set forth in Section 2.9, and initially shall be Coopers & ▇▇▇▇▇▇▇ LLP.
6. OPERATION AND MANAGEMENT OF THE COMPANY.
6.1 BOOKS AND RECORDS; AUDITED FINANCIAL STATEMENTS. Each of the
Members acknowledges and agrees that the Company and the Russian LLC shall each
be treated as a partnership of which the Members are partners for income tax
purposes, and further agrees to cooperate to achieve and maintain such
treatment. In this regard, an election will be filed with the U.S. Internal
Revenue Service under Treasury Regulations Section 301.7701-3 on behalf of the
Russian LLC to elect treatment of the Russian LLC as a partnership for U.S. tax
purposes, effective as of the date of its initial formation. The Company's books
of account shall be maintained on a basis consistent with such treatment and on
the same basis used in preparing the Company's United States federal income tax
return. The year-end balance sheet, statement of
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operations and statement of change in financial position shall be audited each
year by the independent certified public accountants of the Company, whose
written report shall be provided to each of the Members no later than 60 days
after the end of each fiscal year.
6.2 OTHER REPORTS. In addition to annual audited financial statements, each
fiscal quarter the President shall prepare and distribute to each Member of the
Company a report providing for each Member its allocable share of income, gain,
loss, deduction and credit and such other general reports as determined by the
Members, which shall include unaudited quarterly financial statements.
6.3 ACCESS. Each of the Members, together with their lawful agents,
attorneys and representatives, shall have access to the books and records and
facilities and senior management of the Company during all normal business
hours.
6.4 BUSINESS PLAN AND BUDGET. The Company shall provide to each of the
Members a proposed annual Budget, which shall include information with respect
to the operation of the business to be conducted by each Affiliated Entity for
each fiscal year, at least thirty (30) days before the beginning of such fiscal
year. Such Budget shall include estimates of anticipated capital calls. The
initial Budget of the Company, for the year 1998, is annexed hereto as Schedule
6.4. The Members of the Company shall approve the Budget as provided in Section
2.9 hereof. The day-to-day operations of the Company and each Affiliated Entity
shall be conducted by the officers of the Company within 10% variances from the
Budget agreed upon by the Members. The Budget shall be designed to ensure that
the Company shall at all times qualify as a "real estate operating company"
under the provisions of ERISA.
6.5 LIMITATIONS ON ACTIVITIES.
(a) Except as provided by the Board of Managers or as contemplated in
the approved Budget or the Joint Venture-II Agreement, (i) no part of ▇▇▇▇▇
Place II, ▇▇▇▇▇ Place III, the New Factory or any other Property shall be used
as collateral for the purpose of any development other than its own development
and (ii) no sale, refinancing or other capital proceeds from ▇▇▇▇▇ Place II,
▇▇▇▇▇ Place III, the New Factory or any other Property may be used other than
for budgeted capital expenditures involving the same property that generated
such proceeds.
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(b) For ERISA purposes only, the Company shall maintain its status as a
"real estate operating company" at all times. If Apollo or its counsel shall
reasonably determine at any time that the Company may not qualify for such
status, Apollo and the New Valley Parties shall reorganize the corporate
structure of the Company and its Affiliates or take such other necessary action
in order to permit the Company to so qualify, unless the reason that the Company
may not qualify as a "real estate operating company" is due to a breach by
Apollo of the provisions of this Agreement or actions of Apollo unrelated to the
assets or business of the Company or any of its Affiliates, in which case Apollo
and the New Valley Parties shall be required to use only reasonable efforts to
reorganize the corporate structure of the Company and its Affiliates or take
such other reasonably necessary action in order to permit the Company to so
qualify, giving due consideration to the relative economic and tax benefits
anticipated by the parties to this Agreement.
(c) The Members agree that the structure of the Affiliated Entities
contemplated under the Joint Venture-II Agreement will be modified as set forth
therein, and that such modification may involve, without limitation,
transactions in which (i) Brooke (Overseas) would transfer, directly or
indirectly, the underlying real property interests with respect to the New
Factory to Joint Venture-II (or a subsidiary thereof) and enter into a lease
agreement (the "Potential Lease") with Joint Venture-II (or its subsidiary) or
(ii) Joint Venture-II (or a subsidiary thereof) would extend a secured loan (the
"Potential Loan") to Brooke (Overseas) (or a subsidiary thereof) secured by the
underlying real property interests with respect to the New Factory; provided
that either the Potential Lease or the Potential Loan, as the case may be, would
carry a "participation" feature tied to the corresponding operating business
with appropriate guaranties and/or security interests supporting such Potential
Lease or Potential Loan, and in either case, reflecting the economic interests
of the parties hereto in Joint-Venture-II.
(d) The Members agree that, after the execution of this Agreement, a
new entity may be formed by Delaware LLC-2 and the Assets relating to ▇▇▇▇▇
Place III may be transferred thereto, provided, however, that BrookeMil shall
contribute the Assets relating to ▇▇▇▇▇ Place III to the Russian LLC as set
forth in Section 2.4(d)(ii) hereof, unless the Members
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agree that such new entity shall be formed prior to such transfer and that
BrookeMil should make its contribution directly to such new entity.
7. ESTABLISHMENT OF THE DELAWARE LLC-2 AND THE RUSSIAN LLC.
7.1 ESTABLISHMENT OF THE DELAWARE LLC-2.
(a) The parties acknowledge that the Delaware LLC-2 was formed on
October 27, 1997 and that the Certificate of Formation of Delaware LLC-2 is
currently in the form the English translation of which is annexed hereto as
Schedule 7.1(a).
(b) The Limited Liability Company Agreement with respect to Delaware
LLC-2 shall be substantially in the form annexed hereto as Schedule 7.1(b).
7.2 ESTABLISHMENT OF THE RUSSIAN LLC. The parties acknowledge that the
Russian LLC has been established on December 15, 1997, that the Certificate of
Registration of the Russian LLC is annexed hereto as Schedule 7.2, and that the
Russian LLC is currently owned 99.97% by BrookeMil and 0.03% by Delaware LLC-2.
The Members shall cause the Company to use all best efforts to obtain all
registrations, listings and filings and take all other actions required for its
operation under Russian law. Notwithstanding anything in this Agreement to the
contrary, no additional approval of the Board of Managers or any Member shall be
required for BrookeMil, the Russian LLC or the Company to complete the
transactions contemplated by Section 2.4(d), Sections 11.1 and 11.2 and this
Section 7.
8. OPERATION AND MANAGEMENT OF AFFILIATED ENTITIES.
8.1 MANAGEMENT OF AFFILIATED ENTITIES. In addition to management rights
with respect to the Company as set forth in this Agreement, Apollo shall have
the following management rights with respect to each Affiliated Entity:
(a) Apollo shall have the right to be kept informed, consult with and
advise management of each Affiliated Entity with regard to any material
developments in or affecting each Affiliated Entity's business; to discuss
business operations, properties and the financial or other condition of each
Affiliated Entity with its officers, employees and any relevant management
committee; to consult with and advise management on significant business issues;
and to meet regularly with management for such consultation and advice; and
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(b) Apollo shall have the right to appoint one (1) member of the
management committee or board of directors, as applicable, of each Affiliated
Entity and shall have the right to dismiss and replace such member at any time.
8.2 BOOKS AND RECORDS; AUDITED FINANCIAL STATEMENTS. The Company shall
cause each Affiliated Entity, in addition to maintaining its books and accounts
in accordance with the law of the applicable jurisdiction, to prepare its
financial statements in accordance with U.S. generally accepted accounting
principles, consistently applied. The year-end balance sheet, statement of
operations and statement of change in financial position shall be audited each
year by Coopers & ▇▇▇▇▇▇▇ LLP or another firm of independent certified public
accountants selected in accordance with Section 5.4 hereof, and the Company
shall provide the written report of such accountants to each of the Members. The
Company shall cause each Affiliated Entity to prepare all tax returns as soon as
practicable after the end of each fiscal year and, in any event, shall supply
the Members with reasonable estimates of the taxable income of each Affiliated
Entity within forty-five (45) days of the end of each fiscal year.
8.3 ACCESS. The Company shall ensure that each of the Members, at the cost
of such Member, together with their lawful agents, attorneys and
representatives, shall have access to the books and records, facilities and
senior management of each Affiliated Entity during all normal business hours.
Apollo shall have access in Moscow, Russia and Miami, Florida to the books and
records of each Affiliated Entity.
9. RESTRICTIONS ON TRANSFERS OF INTERESTS.
9.1 LIMITATIONS ON MEMBERS' RIGHT TO SELL INTERESTS. Except as contemplated
by Section 2.10, Section 9.2 and Section 9.4, each of the Members agrees not to
transfer all or any of its Interests in the Company, and each Member shall hold
its Interests and, by accepting the same upon original issue, upon distributions
or upon subsequent transfer, agrees for itself, its successors, legal
representatives and assigns that the Interests shall not be sold, transferred,
assigned, pledged, hypothecated or otherwise encumbered, whether voluntarily or
involuntarily, by operation of law, legal proceedings or otherwise, other than
as provided in this Section 9 or in Section 2.10. In the event an involuntary
lien or encumbrance is placed on the Interests, the
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affected Member shall not be in violation of this provision if it discharges or
causes to be discharged such lien or encumbrance within a period of sixty (60)
days from the placement or occurrence thereof.
9.2 TRANSFERS TO AFFILIATES. Any Member may transfer its Interests in the
Company to an Affiliate, except where prohibited by applicable laws or where in
the reasonable judgment of any other Member such transfer would have a material
adverse effect on the business of the Company or such other Member. Any Member
wishing to transfer its Interests to an Affiliate under this Section 9.2 shall
first notify the other Members in writing of such proposed transfer. Each such
other Member shall make its determination as to whether such transfer would have
a material adverse effect on the business of the Company or such other Member
within ten (10) days of receiving such notice and shall notify such first Member
in writing of its determination. It is a condition of any such transfer that the
transferee become a signatory to this Agreement and agree to perform all of the
obligations of the transferor hereunder.
9.3 CHANGE IN CONTROL. In the event of a change in control of a Member,
such Member thereupon shall cease to have any voting rights, and the remaining
Members shall have the right to purchase, or to cause the Company to purchase,
such first Member's Interests at a price equal to the Adjusted Realized Equity
Value of such Interests, which right may be exercised by the remaining Members
for a period of sixty (60) days after such event constituting a change in
control. For purposes of this Agreement, a change in control shall be deemed to
occur when a person or entity that was not, at the time of the Initial Closing,
an Affiliate of a Member becomes the beneficial owner, directly or indirectly,
of securities or ownership interests representing 40% or more of the combined
voting power of all outstanding securities or ownership interests of such
Member. A change of control shall not be deemed to occur due to a
reconfiguration of the ownership or changes of the ownership of the limited
partnership interests of Apollo or any of the New Valley Parties, as the case
may be, provided that Apollo Real Estate Management III, L.P. or its Affiliates
remain the owners, directly or indirectly, of the Interests previously owned by
Apollo, or Brooke Group Ltd., ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ or their Affiliates remain
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the owners, directly or indirectly, of the Interests previously owned by the New
Valley Parties, respectively.
9.4 DISSOLUTION OF A MEMBER. In the event of the bankruptcy,
reorganization, liquidation, winding-up or dissolution of a Member (the
"Dissolving Member"), the Dissolving Member shall notify the other Members in
writing within five (5) days of such event. The Interests owned by the
Dissolving Member shall first be offered for purchase by the other Members
within ninety (90) days of the date of such notice for the then existing
Adjusted Realized Equity Value of such Interests. In the event that such other
Members decline to purchase such additional Interests, such unpurchased
Interests may be offered by the Company to third parties for purchase on terms
and conditions to be determined by the Members, and the Dissolving Member shall
sell its Interests in accordance with the provisions of this Section 9.4.
9.5 TERMINATION OF THE PROVISIONS RESTRICTING THE SALE OF INTERESTS. The
provisions restricting the sale of Interests contained in this Section 9 shall
automatically terminate upon the happening of any of the following events:
(a) the adjudication of the Company as a bankrupt, the execution by the
Company of an assignment for the benefit of creditors, or the appointment of a
receiver for all or substantially all of its properties; or
(b) the voluntary or involuntary dissolution of the Company.
10. REPRESENTATIONS AND WARRANTIES.
10.1 THE COMPANY. The Company represents and warrants as follows:
(a) The Company is a limited liability company duly formed under the
laws of the State of Delaware, with full power and authority to enter into this
Agreement and to consummate the transactions contemplated herein.
(b) The execution and delivery by the Company of this Agreement and the
consummation by it of the transactions contemplated herein will not violate its
constituent documents, any law or any contract to which the Company is a party,
and no approval, authorization, consent, or order or filing with, any third
party, court, administrative agency or other governmental authority is required
for the execution and delivery by the Company of this Agreement or any other
agreements to be entered into by the parties hereto in accordance with
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this Agreement, including but not limited to the Joint Venture-II Agreement and
all agreements and documents relating to the asset transfers contemplated by
this Agreement, or the consummation by it of the transactions contemplated
herein.
(c) This Agreement is the legal, valid and binding obligation of the
Company enforceable in accordance with its terms, subject to bankruptcy,
insolvency, reorganization and similar laws of general application affecting the
rights and remedies of creditors.
(d) There exists no litigation pending or threatened in writing (or any
basis therefor) against the Company that (i) might adversely affect the
operations, business or business prospects of the Company, (ii) might impede,
delay or adversely affect the transactions contemplated by this Agreement, or
(iii) has not been disclosed to Apollo. There are no valid, effective and
enforceable orders, injunctions or decrees of any court or arbitral body with
respect to the Company that might adversely affect the operations, business or
business prospects of the Company.
10.2 MEMBERS. Each Member represents and warrants as follows:
(a) The Member is a corporation or a partnership, as the case may be,
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or establishment, as the case may be, with full
power and authority to enter into this Agreement and to consummate the
transactions contemplated herein.
(b) The execution and delivery by the Member of this Agreement and the
consummation by it of the transactions contemplated herein have been authorized
by the board of directors of the Member or other management authority of the
Member and will not violate its constituent documents, any law or any contract
to which the Member is a party, and no approval, authorization, consent or order
of, or filing with, any third party, court, administrative agency, or
governmental authority is required for the execution and delivery by the Member
of this Agreement or the consummation by it of the transactions contemplated
herein (except as may be required for BrookeMil to consummate the transactions
contemplated herein).
(c) This Agreement is the legal, valid and binding obligation of the
Member enforceable in accordance with its terms, subject to bankruptcy,
insolvency,
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reorganization and similar laws of general application affecting the
rights and remedies of creditors.
(d) The Member is acquiring the Interests of the Company for investment
purposes for its own account and not with a view to any distribution of the
same, and shall not dispose of any of the Interests except in compliance with
applicable securities laws and the terms of this Agreement. The Member
acknowledges that the Interests have not been registered under the securities
laws or regulations of any jurisdiction and that the Interests may not be sold
on a public market without proper registration. The Member is sophisticated in
making investments and represents that it has the knowledge and experience to
evaluate its investment in the Interests and is not relying on any
representation or warranty made by the Company or any of its representatives or
agents.
(e) The individual signing this Agreement on behalf of the Member is a
duly authorized officer or representative of the Member and is empowered to
execute this Agreement on behalf of the Member.
(f) No agent, broker, investment banker, person or firm acting on
behalf of the Member or under the authority of the Member is or will be entitled
to any broker's or finder's fee or any other commission or similar fee from any
of the parties hereto in connection with the transactions contemplated hereby.
10.3 ADDITIONAL REPRESENTATIONS BY THE NEW VALLEY PARTIES. In addition to
the representations made by the New Valley Parties in Section 10.2 above, each
of the New Valley Parties represents and warrants as follows:
(a) BrookeMil is the owner of the building and is the lessee of the
land plot located at ▇▇▇▇▇ Place II (to the extent it is has not completed the
process of transferring such building and land lease rights to the Russian LLC)
and is entitled to dispose of such rights at its own discretion, subject to
compliance with the terms of the Land Lease Agreement, dated July 1, 1997,
between the Government of the City of Moscow, as landlord, and BrookeMil, as
tenant, demising the land at ▇▇▇▇▇ Place II, as amended to date (the "▇▇▇▇▇ II
Land Lease"), and applicable law, and, to the knowledge of the New Valley
Parties, there are no encumbrances on, or rights of third parties to, ▇▇▇▇▇
Place II other than the Assumed Liabilities.
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(b) BrookeMil is the owner of the buildings and is the lessee of the
land plot located at ▇▇▇▇▇ Place III and, upon purchase of the land lease
rights, will be entitled to dispose of such rights at its own discretion,
subject to compliance with the terms of the Land Lease Agreement, dated October
30, 1992, between the Government of the City of Moscow, as landlord, and
BrookeMil, as tenant, demising the land at ▇▇▇▇▇ Place III, as amended to date
(the "▇▇▇▇▇ III Land Lease"), and applicable law, and there are no encumbrances
on, or rights of third parties to, ▇▇▇▇▇ Place III other than the Assumed
Liabilities. BrookeMil has received the permission of the District Commission on
Granting Land Plots and Regulation of Urban Construction in the Central
Administrative District of Moscow to purchase the land lease rights at ▇▇▇▇▇
Place III for the rouble sum equal to $1,100,000 (at the official rate of the
Russian Central Bank for foreign exchange transactions on the day preceding the
payment).
(c) LD Tobacco is the owner of the buildings and is the lessee of the
land plot located at the site of the New Factory and, upon purchase of the land
lease rights, will be entitled to dispose of such rights at its own discretion,
subject to compliance with the terms of the Land Lease Agreement, dated March
27, 1996, between the Government of the City of Moscow, as landlord, and LD
Tobacco, as tenant, demising the land at the site of the New Factory, as amended
to date (the "New Factory Land Lease") and applicable law, and there are no
encumbrances on, or rights of third parties to, the New Factory.
(d) BrookeMil is the current tenant under the following leases: the
▇▇▇▇▇ II Land Lease and the ▇▇▇▇▇ III Land Lease. LD Tobacco is the current
tenant under the New Factory Land Lease. (The ▇▇▇▇▇ II Land Lease, ▇▇▇▇▇ III
Land Lease and New Factory Land Lease, including all amendments, protocols and
other documents and agreements relating thereto, are herein occasionally
referred to collectively as the "Land Leases").
(e) (i) The New Valley Parties have provided to Apollo access to
complete and correct copies of all amendments, protocols and other documents and
agreements relating to the Land Leases; (ii) each of the Land Leases has been
duly authorized, executed and delivered by the tenant and is the legal, valid
and binding agreement of the tenant thereunder, and, to the knowledge of the New
Valley Parties, of the landlord thereunder, enforceable in
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accordance with its terms; (iii) each of the Land Leases is in full force and
effect without default by either the tenant or, to the knowledge of the New
Valley Parties, the landlord thereunder, and, to the knowledge of the New Valley
Parties, no condition exists and no event has occurred that would result in,
either after notice thereof or a lapse of time or both, a breach, termination or
default under any of the Land Leases; (iv) the tenant under each Land Lease is
current in the payment of all rent and other amounts due and has fulfilled all
other obligations under the terms of such leases as of the date hereof; (v)
except in connection with the Assumed Liabilities and the Use Agreement, dated
as of January 31, 1997, between BrookeMil and ▇▇▇▇▇▇▇-▇▇▇▇▇, neither BrookeMil
nor LD Tobacco has subleased, assigned or pledged any of its interests in the
Land Leases; and (vi) to the knowledge of the New Valley Parties, each of the
Land Leases covers the entire estate that it purports to cover, and upon
consummation of the transactions contemplated by this Agreement, the Russian LLC
will continue to be entitled to the use, occupancy and possession of the real
property as contemplated herein.
(f) Each of ▇▇▇▇▇▇▇-▇▇▇▇▇ and LD Tobacco was duly incorporated as a
closed joint stock company and is validly existing as a legal entity registered
under the laws of the Russian Federation as of August 5, 1993, and December 29,
1995, respectively; the Russian LLC has been duly incorporated as a limited
liability company and is validly existing as a legal entity registered under the
laws of the Russian Federation; and each of ▇▇▇▇▇▇▇-▇▇▇▇▇, ▇▇ Tobacco and the
Russian LLC has full power and authority required to carry on its business as it
is currently being conducted and/or as described in the business plans, and to
own, lease and operate its properties.
(g) All of the outstanding shares of capital stock of each of
▇▇▇▇▇▇▇-▇▇▇▇▇ and LD Tobacco (i) have been duly authorized and validly issued
and are fully paid; (ii) are not subject to any preemptive or similar rights
granted by ▇▇▇▇▇▇▇-▇▇▇▇▇ or LD Tobacco, respectively (except as may be
established in Russian law and/or set forth in the respective charters of
▇▇▇▇▇▇▇-▇▇▇▇▇ and LD Tobacco), and were properly registered with the appropriate
authorities competent for registration of the issuance of such shares and to the
extent owned by Brooke (Overseas) and ▇▇▇▇▇▇▇-▇▇▇▇▇, respectively, are free and
clear of any security interest, claim, lien, or encumbrance of any nature,
except with respect to those shares pledged by Brooke
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(Overseas) to Belgrave Limited and ▇▇▇▇▇▇▇▇ Tumentsev to secure the payment
obligations of Brooke (Overseas) for 8% of the outstanding shares of
▇▇▇▇▇▇▇-▇▇▇▇▇ and liens to be released prior to the Subsequent Closing under the
Joint Venture-II Agreement; (iii) Brooke (Overseas) owns 95.9% of the
outstanding shares of ▇▇▇▇▇▇▇-▇▇▇▇▇, other shareholders of ▇▇▇▇▇▇▇-▇▇▇▇▇ own
4.1% of the outstanding shares of ▇▇▇▇▇▇▇-▇▇▇▇▇, and ▇▇▇▇▇▇▇-▇▇▇▇▇ owns 100% of
the outstanding shares of LD Tobacco; and (iv) there is no existing option,
warrant, call, right, commitment or other agreement of any character to which
▇▇▇▇▇▇▇-▇▇▇▇▇ is a party requiring, and there are no securities of ▇▇▇▇▇▇▇-▇▇▇▇▇
outstanding which upon conversion, exercise or exchange would require, the
issuance, sale or transfer of any additional shares of capital stock or other
securities of ▇▇▇▇▇▇▇-▇▇▇▇▇ to its employees or any other person, except for
options to be terminated prior to the Subsequent Closing under the Joint
Venture-II Agreement.
(h) Neither ▇▇▇▇▇▇▇-▇▇▇▇▇ nor LD Tobacco is in violation of its
respective charter.
(i) (i) Each of BrookeMil and each Affiliated Entity has such licenses,
permits and approvals as are necessary to conduct its respective business as
described to Apollo, except where the failure to have such license, permit or
approval would not have a material adverse effect on such entity; (ii) each of
BrookeMil and each Affiliated Entity has fulfilled and performed all of its
obligations with respect to such licenses, permits and approvals except any
obligation which the failure to fulfill or perform would not have a material
adverse effect on such Affiliated Entity; and (iii) no event has occurred which
allows, or after notice or lapse of time would allow, revocation or termination
thereof or results, or after notice or lapse of time would result, in any other
material impairment of the rights of the holder of such license, permit or
approval.
(j) Subject to Schedule 10.3(l), there exists no litigation pending or,
to the knowledge of the New Valley Parties, threatened in writing (or any basis
therefor) against BrookeMil, the Affiliated Entities, any of their ventures,
Assets and/or Properties that might (i) detrimentally affect the ownership,
value, use or operation of the Assets and/or Properties for their intended
purposes; (ii) adversely affect the operations, business or business prospects
of
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BrookeMil or any Affiliated Entity; or (iii) impede, delay or adversely
affect the transactions contemplated by this Agreement. There are no valid,
effective and enforceable orders, injunctions or decrees of any court or
arbitral body with respect to BrookeMil, the Affiliated Entities, any of their
ventures, Assets and/or Properties that might (x) detrimentally affect the
value, use, ownership or operation of the Assets and/or Properties for their
intended purposes; (y) adversely affect the operations, business or business
prospects of BrookeMil or any Affiliated Entity; or (z) impede, delay or
adversely affect the transactions contemplated by this Agreement. To the
knowledge of the New Valley Parties, there are no material impediments to
BrookeMil obtaining all necessary approvals for BrookeMil's planned development
of ▇▇▇▇▇ Place III. Neither BrookeMil nor any of the Affiliated Entities or
their ventures has 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.
(k) There are no material physical or mechanical defects with respect
to the buildings (other than the existing cigarette factory at Ul. Gasheka 6)
and/or the other improvements comprising the Assets and/or Properties
(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) or to the knowledge of the New Valley
Parties, the land, and all of such items (to the extent installed or constructed
on the date hereof, with respect to the building at ▇▇▇▇▇ Place II) are in good
operating condition and repair and in compliance in all material respects with
all applicable laws and zoning requirements. To the knowledge of the New Valley
Parties, ▇▇▇▇▇ Place II and ▇▇▇▇▇ Place III will have access, on the basis
generally provided to businesses in the City of Moscow, to available water,
sewer and power utilities. BrookeMil has not received, and has no knowledge of,
any notice or request from any governmental agency requesting or requiring the
performance of any work or alteration in respect of the land, the buildings
(other than the Old Factory) and/or the other improvements comprising the Assets
and/or Properties.
(l) The Schedule of Leases with respect to ▇▇▇▇▇ Place II annexed
hereto as Schedule 10.3(l) (the "▇▇▇▇▇ II Leases") is complete and correct in
all respects. The ▇▇▇▇▇ II Leases have been duly authorized, executed and
delivered by the landlord, are the legal,
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valid and binding agreements of the landlord thereunder enforceable in
accordance with their terms and are in full force and effect, subject to
Schedule 10.3(l). Other than as part of the Assumed Liabilities, there are no
free rent allowances, prepaid rents or other prepaid charges. The ▇▇▇▇▇ II
Leases are bona-fide in all respects, and were entered into by BrookeMil and the
respective tenants thereunder on an arm's-length basis and in the ordinary
course of BrookeMil's business. Subject to Schedule 10.3(l), there is no default
by BrookeMil under the terms of any of the ▇▇▇▇▇ II Leases (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 knowledge of the New Valley Parties, are
there any material defaults by the tenants thereunder; and, to the knowledge of
the New Valley Parties, no condition exists and no event has occurred that would
result in, either after notice thereof or a lapse of time or both, a breach,
termination or default under any of the ▇▇▇▇▇ II Leases. Subject to Schedule
10.3(l), none of the ▇▇▇▇▇ II Leases nor the rents payable thereunder have been
subleased, assigned or pledged. All tenants are current with their rent
obligations. Upon consummation of the transactions contemplated by this
Agreement, the Russian LLC will continue to be entitled to all of the rights and
privileges to which BrookeMil was previously entitled under such ▇▇▇▇▇ II
Leases.
(m) To the knowledge of the New Valley Parties, the business of
BrookeMil and the Affiliated Entities is not being, nor has it in the past been,
conducted in violation of any law or any governmental order applicable to
BrookeMil or any of its assets or properties, including, without limitation, the
Foreign Corrupt Practices Act of 1977, as amended, except for possible
violations which individually or in the aggregate would not have a material
adverse effect on BrookeMil, the Company or the Affiliated Entities. To the
knowledge of the New Valley Parties, BrookeMil, the Company and the Affiliated
Entities are in compliance with all applicable environmental laws and have not
received any communication from any governmental authority that alleges that
BrookeMil, the Company or the Affiliated Entities are not in compliance with
applicable environmental laws where such noncompliance would have a material
adverse effect on BrookeMil or the Affiliated Entities.
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(n) All material tax returns and reports required to be filed by
BrookeMil prior to the date hereof or with respect to taxable periods ending
prior to the date hereof have been or will be filed with the appropriate
governmental authorities prior to the date hereof 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 BrookeMil required to be shown thereon. To the knowledge of
the New Valley Parties, all material tax returns and reports required to be
filed by the Affiliated Entities prior to the date hereof or with respect to
taxable periods ending prior to the date hereof have been or will be filed with
the appropriate governmental authorities prior to the date hereof 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 respective Affiliated Entities
required to be shown thereon. To the knowledge of the New Valley Parties, there
are no pending tax investigations or outside audits of BrookeMil or of any
Affiliated Entity being conducted and, except as set forth in Schedule 10.3(n),
neither BrookeMil nor any Affiliated Entity has any outstanding tax penalties
against it. BrookeMil shall remain liable for the payment of profits taxes due
to the conduct of BrookeMil's business for the periods prior to the Initial
Closing Date.
(o) The New Valley Parties have identified to Apollo and have provided
to Apollo complete and correct copies of all material employment agreements or
employee benefit plans covering present and former employees of BrookeMil or
their beneficiaries.
(p) A schedule of the material contracts of BrookeMil and the status of
each is annexed hereto as Schedule 10.3(p) (the "Material Contracts"). (i) The
Material Contracts have been duly authorized, executed and delivered by the New
Valley Parties party thereto and are legal, valid and binding agreements of the
New Valley Parties party thereto enforceable against such New Valley Parties in
accordance with their respective terms; (ii) BrookeMil has fully performed all
obligations required to be performed under each of the Material Contracts
including but not limited to the payment of all amounts due and owing
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thereunder; (iii) neither BrookeMil nor, to the knowledge of the New Valley
Parties, any other party is in default under any of the Material Contracts; and
(iv) to the knowledge of the New Valley Parties, no condition exists and no
event has occurred that would result in, either after notice of or lapse of time
or both, in a breach, termination or default under any of the Material
Contracts. BrookeMil has not assigned any of its interests in the Material
Contracts, and upon consummation of the transactions contemplated herein, the
Russian LLC will continue to be entitled to the rights and privileges to which
BrookeMil was previously entitled.
(q) The unaudited financial statements of BrookeMil and the audited
financial statements of ▇▇▇▇▇▇▇-▇▇▇▇▇ Ltd. for the years ended December 31, 1995
and 1996 furnished to Apollo have been prepared in accordance with U.S.
generally accepted accounting principles consistently applied and fairly present
the matters set forth therein.
(r) A schedule of all material related party obligations relating to
the Company and its Affiliates that will be outstanding as of the date of the
Initial Closing is annexed hereto as Schedule 10.3(r).
(s) That certain Use Agreement, dated as of January 31, 1997, between
BrookeMil and ▇▇▇▇▇▇▇-▇▇▇▇▇, is in full force and effect.
(t) ▇▇▇▇▇▇▇-▇▇▇▇▇ has all necessary authority and approvals to operate
the Old Factory.
(u) The previously existing intercompany loan from Brooke (Overseas) to
▇▇▇▇▇▇▇-▇▇▇▇▇ has been cancelled.
10.4 ADDITIONAL REPRESENTATIONS BY APOLLO. In addition to the
representations made by Apollo in Section 10.2 above, Apollo represents and
warrants that the purchase of the Interests does not violate any provisions of
ERISA and that the contemplated purchase of the interests by the Company in
Joint Venture-II does not violate the provisions of ERISA.
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11. COVENANTS OF THE NEW VALLEY PARTIES.
11.1 CONTRIBUTION OF ▇▇▇▇▇ PLACE II TO THE RUSSIAN LLC. As soon as
practicable following the date hereof, BrookeMil shall contribute the Assets and
Assumed Liabilities related to ▇▇▇▇▇ Place II to the Russian LLC.
11.2 CONTRIBUTION OF ▇▇▇▇▇ PLACE III TO THE RUSSIAN LLC. As soon as
practicable following the purchase of all the buildings and land lease rights at
▇▇▇▇▇ Place III, BrookeMil shall contribute the Assets and Assumed Liabilities
related to ▇▇▇▇▇ Place III to the Russian LLC.
11.3 BENEFICIAL OWNERSHIP. Except for a one percent (1%) interest to be
retained indirectly by BrookeMil through BrookeMil's ownership in the Russian
LLC, as of the Initial Closing, and until the legal title to the Assets shall
have been transferred to the Russian LLC and a 99% interest in the Russian LLC
is owned by Delaware LLC-2, the Assets shall be beneficially owned by the
Company and, as such, the Company shall be entitled to participate in the
earnings, appreciation in value and management of the Assets, and BrookeMil
hereby designates the Company as attorney-in-fact and agent for BrookeMil, to
act, in the name of BrookeMil or otherwise, as may be deemed appropriate by the
Board of Managers of the Company, in order to obtain for the Company the
economic benefits derived from the ownership of such property, asset, contract,
lease or other instrument, document or agreement constituting the Assets, and,
as evidence thereof, BrookeMil shall execute a power of attorney in favor of the
Company substantially in the form annexed hereto as Exhibit 4. Notwithstanding
the foregoing, any property or asset of BrookeMil constituting an Asset and any
contract, lease or other instrument, document or agreement to be assigned or
otherwise transferred to the Russian LLC hereunder, the assignment or other
transfer, or the attempted assignment or other transfer of which would be
invalid or ineffective, unless the consent or approval of another person or
entity to such assignment or other transfer shall have first been obtained,
shall not be assigned or otherwise transferred under this Agreement, and the
provisions of this Agreement shall not constitute an attempt to assign or
transfer, unless and until such consents or approvals shall have been obtained.
11.4 RESTRICTIONS ON THE OPERATION OF ▇▇▇▇▇ PLACE II. From the date hereof
until BrookeMil shall have transferred to the Company all of the Assets and
Assumed Liabilities as
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provided for in Sections 11.1 and 11.2, BrookeMil shall, unless the unanimous
consent of the Board of Managers has been obtained:
(a) conduct the business and operations relating to ▇▇▇▇▇ Place II (the
"▇▇▇▇▇ II Operations") in the ordinary course consistent with past practice;
(b) use its best efforts to preserve the ▇▇▇▇▇ II Operations,
including, without limitation, relationships with tenants, employees, and other
persons who have business dealings with ▇▇▇▇▇ Place II;
(c) maintain (i) all of the assets and properties relating to the ▇▇▇▇▇
II Operations in their current condition, ordinary wear and tear excepted and
(ii) insurance on all of such assets and properties in such amounts and of such
kinds comparable to that in effect on the date of this Agreement (with insurers
of substantially the same or better financial condition); and
(d) use its best efforts to (i) maintain the books, accounts and
records of the ▇▇▇▇▇ II Operations in the ordinary course of business consistent
with past practice, (ii) continue to collect accounts receivable and pay
accounts payable utilizing normal business practices for the collection and
payment thereof, and (iii) continue to comply with all its contractual and other
obligations; and
(e) use the proceeds from any new financings in accordance with the
Budget.
12. CLOSINGS. Subject to the terms and conditions set forth in Section 2.4
hereof, the closings (each, a "Closing," the date of a Closing being referred to
herein as a "Closing Date") of the transactions contemplated herein shall occur
as follows:
12.1 DATE, TIME AND PLACE OF INITIAL CLOSING. The closing of the
transactions contemplated in Section 2.4(b) hereof (the "Initial Closing") shall
take place on February 26, 1998 at 10:00 a.m. at the offices of Coudert
Brothers, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, or on such other date
and time and at such other place as shall be mutually agreed by
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the parties hereto (the date and time of the Initial Closing being referred to
herein as the "Initial Closing Date").
12.2 CONDITIONS TO OBLIGATIONS OF THE NEW VALLEY PARTIES. The obligations
of the New Valley Parties hereunder are subject to the fulfillment, prior to or
at the Initial Closing or any Subsequent Closing, of each of the following
conditions:
(a) All authorizations, consents, orders and approvals of regulatory
authorities and third parties, if any, necessary for the performance by the
Company, Apollo and the New Valley Parties of this Agreement shall have been
obtained.
(b) The representations and warranties of Apollo contained in this
Agreement shall be true and correct in all material respects at the date hereof
and at and as of such Closing, with the same force and effect as if made at and
as of such Closing Date (except that representations and warranties that by
their terms speak as of such Closing Date shall be true and correct as of such
date); and Apollo 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 such Closing.
(c) No action shall have been commenced in a court of competent
jurisdiction or by or before any governmental authority against any of the
Company, Apollo or the New Valley Parties seeking to prohibit the transactions
contemplated by this Agreement.
12.3 CONDITIONS TO OBLIGATIONS OF APOLLO. The obligations of Apollo
hereunder are subject to the fulfillment, prior to or at the Initial Closing or
any Subsequent Closing, of each of the following conditions:
(a) Except as set forth in Section 10.2(b), all authorizations,
consents, orders and approvals of regulatory authorities and third parties, if
any, necessary for the performance by the Company and the New Valley Parties of
their obligations under this Agreement shall have been obtained.
(b) The representations and warranties of the New Valley Parties
contained in this Agreement shall be true and correct in all material respects
at the date hereof and at and as of such Closing, with the same force and effect
as if made at and as of such Closing Date (except that representations and
warranties that by their terms speak as of such Closing Date
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shall be true and correct as of such date); and the New Valley Parties 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 such Closing.
(c) No action shall have been commenced in a court of competent
jurisdiction or by or before any governmental authority against either the
Company, Apollo or any of the New Valley Parties seeking to prohibit the
transactions contemplated by this Agreement.
(d) There shall not have been any material adverse change in the
financial condition of the New Valley Parties since the date hereof.
(e) There shall not have occurred an event or events that has or have a
material adverse effect on the operations of ▇▇▇▇▇ Place II or the New Factory
or the ability of any Member to perform its obligations with respect to such
Closing.
(f) Expenditures for the New Factory and ▇▇▇▇▇ Place III are within a
10% variance from the Budget.
12.4 ADDITIONAL CONDITIONS TO OBLIGATIONS OF APOLLO AT INITIAL CLOSING.
(a) Apollo shall have received a legal opinion from Coudert Brothers,
special New York counsel to New Valley, in form and substance reasonably
satisfactory to it, with respect to the due organization and good standing of
New Valley, the due execution of this Agreement and the Pledge Agreement by New
Valley, the organization of the Company, and such other matters as may be
reasonably requested by it.
(b) Apollo's counsel shall have received a legal opinion from Coudert
Brothers, special New York counsel to New Valley, with respect to the beneficial
ownership of the Assets by the Company pending their transfer to the Russian
LLC.
(c) The Company shall have issued the Promissory Note.
(d) New Valley shall have pledged 99.1% of the outstanding shares of
BrookeMil to Apollo as security for the Apollo Loan under a pledge agreement
between Apollo and New Valley substantially in the form annexed hereto as
Exhibit 3 (the "Pledge Agreement").
(e) The Company, Joint Venture-II and Brooke (Overseas) shall have
entered into the Joint Venture-II Agreement contemplated by the third "WHEREAS"
clause
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hereof on terms unanimously approved by the Members, which approval shall not be
unreasonably withheld or delayed by any Member.
12.5 FUNDING AND ADVANCE OF APOLLO LOAN AT INITIAL CLOSING. Upon
satisfaction of all conditions to the Initial Closing, (i) each of Apollo and
the New Valley Parties shall fund their initial contributions to the Company as
set forth in Section 2.4(b) and (ii) Apollo shall advance the Apollo Loan to the
Company.
12.6 SUBSEQUENT CLOSINGS. Upon written notice by the Board of Managers to
each of Apollo and New Valley as set forth in Section 2.4(c) hereof, subsequent
closings (the "Subsequent Closings") shall be scheduled for purposes of funding
additional contributions by each of Apollo and New Valley to the Company. At
each of the Subsequent Closings, Apollo and New Valley shall fund additional
contributions to the Company as set forth in Section 2.4 on the dates and in the
amounts set forth in the written notice by the Board of Managers.
12.7 DATE, TIME AND PLACE OF INITIAL SUBSEQUENT CLOSING. The first
Subsequent Closing (the "Initial Subsequent Closing") shall take place as soon
as practicable after the conditions set forth in Section 12.9 have been
satisfied at the offices of Coudert Brothers, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇, or on such other date and time and at such other place as shall
be mutually agreed by the parties hereto (the date and time of the Initial
Closing being referred to herein as the "Initial Subsequent Closing Date").
12.8 TRANSACTIONS AT INITIAL SUBSEQUENT CLOSING. Upon the satisfaction
and/or waiver of the conditions to the Initial Subsequent Closing, (i) the
Apollo Loan shall be converted into Class A Interests; (ii) the Promissory Note
shall be cancelled; (iii) the Pledge Agreement shall be terminated; (iv) the
parties shall make additional capital contributions as set forth in Sections
2.4(c) and 2.4(d)(i); and (v) to the extent the sum of the amount of
expenditures of the New Valley Parties with respect to ▇▇▇▇▇ II and ▇▇▇▇▇ III
incurred since March 1, 1997 and set forth in Schedule 2.4(c) and of
expenditures incurred by them after the Initial Closing Date on items set forth
in the approved Budget exceeds $10,000,000, the New Valley Parties shall be
reimbursed for such expenditures in excess of $10,000,000 (to the extent the New
Valley Parties
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provide to Apollo proper documentation substantiating such expenditures).
Conditions to the obligations of Apollo at the Initial Subsequent Closing shall
be deemed waived if Apollo has not terminated this Agreement on or before June
10, 1998 in accordance with Section 14.2(a)(iii).
12.9 ADDITIONAL CONDITIONS TO OBLIGATIONS OF APOLLO AT INITIAL SUBSEQUENT
CLOSING.
(a) The Russian LLC shall have received a certificate of ownership of
▇▇▇▇▇ Place II building from the Moscow Property Management Committee (or the
state authorities that shall have assumed its functions with respect to issuing
such certificates or equivalent documents) and shall have entered into a land
lease agreement with the Moscow Land Committee (or the state authorities that
shall have assumed its functions with respect to entering into such land lease
agreements) with respect to land at ▇▇▇▇▇ Place II on essentially the same terms
as the ▇▇▇▇▇ II Land Lease.
(b) BrookeMil shall have entered into an agreement with the Company to
transfer to the Company or an entity designated by it all of BrookeMil's
interest in the Russian LLC, except for such part of its interest that shall be
redeemed by the Russian LLC in accordance with an agreement between the Russian
LLC and BrookeMil entered into before the Initial Subsequent Closing or
simultaneously with it, and less a 1% interest.
(c) The conditions set forth in Section 11.5(b) of the Joint Venture-II
Agreement, as in effect on the date hereof, have been satisfied, unless
otherwise agreed by the parties to the Joint Venture-II Agreement.
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13. NOTICES AND ACCOUNT INFORMATION FOR DISTRIBUTIONS.
13.1 NOTICES. All notices required to be given hereunder shall be in
writing and shall be deemed to have been properly given if sent by registered or
certified mail, postage prepaid, or by telecopy, addressed as follows:
(a) If to the Company:
Western Realty Development LLC
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
(b) If to Apollo:
Apollo Real Estate
Investment Fund III, L.P.
c/o Apollo Real Estate Management III, L.P.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Copy to:
Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(c) If to New Valley:
New Valley Corporation
▇▇▇ ▇.▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
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Copy to:
Coudert Brothers
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(d) If to BrookeMil:
BrookeMil Ltd.
P.O. Box 219
Fifth Floor
Butterfield House
▇▇▇▇▇▇ Town, Grand Cayman, B.W.I.
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Chairman
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Copy to:
Coudert Brothers
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Such notices shall be deemed to have been received five (5) days after deposit
in the mail or within twenty-four (24) hours after transmission by telecopy. Any
party may change the address to which notices shall be sent by notice in writing
to the other parties as provided herein.
13.2 ACCOUNT INFORMATION FOR DISTRIBUTIONS. All distributions to the
Members by the Company shall be made to the accounts of the Members as may be
specified from time to time in a notice from the Members to the Company in
accordance with Section 13.1.
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14. MISCELLANEOUS.
14.1 FURTHER ASSURANCES. The parties will, in a timely manner and as
required from time to time, take all such actions as may be necessary or
appropriate to cause their Affiliates, the Company and the Affiliated Entities
to implement the transactions contemplated by this Agreement and to ensure that
such entities take all such actions as may be necessary to give full effect to
the provisions of this Agreement and to refrain from taking any actions which
would contravene the intent or the provisions of this Agreement.
14.2 TERM OF AGREEMENT.
(a) This Agreement will continue in full force and effect until the
earlier of (i) termination by mutual consent of the parties hereto, (ii) the
dissolution of the Company, (iii) termination on or before June 10, 1998 by
Apollo, in its sole discretion, by providing written notice to the other
Members, if the Initial Subsequent Closing has not occurred by June 1, 1998,
provided that Apollo shall have complied, in all material respects, with the
terms of this Agreement and shall have cooperated, in good faith, with the New
Valley Parties, the Company and the Russian LLC in order to satisfy all
conditions precedent to the Initial Subsequent Closing and shall have not taken
any actions impeding or delaying the satisfaction of any conditions precedent to
the Initial Subsequent Closing, or (iv) termination on or before October 10,
1998 by Apollo, in its sole discretion, by providing written notice to the other
Members, if the amendments to the foundation documents of the Russian LLC shall
not have been registered with the State Registration Chamber of the Ministry of
Economy of the Russian Federation and the Moscow Registration Chamber, or the
state authorities that shall have assumed the registration functions currently
performed by the above Registration ▇▇▇▇▇▇▇▇, to reflect the ownership by
Delaware LLC-2 of 99% of the Russian LLC by September 30, 1998, provided that
Apollo shall have complied, in all material respects, with the terms of this
Agreement and shall have cooperated, in good faith, with the New Valley Parties,
the Company and the Russian LLC in order to complete such registrations and
shall have not taken any actions impeding or delaying such registrations.
(b) Notwithstanding any provision herein to the contrary, New Valley
shall not have the right to terminate this Agreement prior to the time when the
Apollo Loan is either repaid in full (including all principal, interest and
other amounts due thereon) or is
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converted into the Class A Interests as contemplated by Section 2.4(b). In the
event of termination of this Agreement under Section 14.2(a)(iii), the Company
or, at the election of the New Valley Parties, the New Valley Parties, shall,
within sixty (60) days thereafter, pay to Apollo the principal, accrued interest
and all other amounts due on the Apollo Loan. Upon payment in full of all the
amounts due under the Apollo Loan as provided in the preceding sentence, the
Pledge Agreement shall be terminated and all of Apollo's Interests in the
Company shall be transferred to New Valley in exchange for $20,000. In the event
of termination of this Agreement by Apollo, the provisions of Sections
2.10(a)(v), (vi) and (vii) (and of Sections 2.7 and 2.8 and 2.10(a)(viii) to the
extent necessary to implement such provisions) shall survive the termination of
this Agreement.
14.3 ASSIGNMENT. Except as provided in Section 9.2 hereof, this Agreement
shall not be assigned by any party hereto without the prior written consent of
the other parties hereto. This Agreement shall inure to the benefit of the
parties hereto and shall be binding upon the successors and assigns of the
parties hereto.
14.4 AMENDMENT, MODIFICATION AND WAIVER. This Agreement shall be amended to
include any person who acquires any Interests in the Company, provided that such
person acquires such Interest in accordance with Section 2.6 hereof. This
Agreement may be further modified, amended and supplemented only upon the
unanimous approval of the Board of Managers as provided in Section 2.9 and the
unanimous mutual written agreement of the parties hereto. Each party may waive
any term, provision or condition intended for its benefit, provided that such
waiver be in writing and be signed by the party so waiving.
14.5 SEVERABILITY. If any one or more of the provisions of this Agreement
shall be held invalid, illegal or unenforceable under applicable law, the
validity, legality and enforceability of the remaining provisions shall not be
affected or impaired thereby.
14.6 ENTIRE AGREEMENT; HEADINGS. This Agreement, including the schedules
hereto, constitutes the entire agreement of the parties with respect to the
subject matter hereof and may not be changed, terminated or discharged orally.
The headings appearing in this
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Agreement have been inserted solely for the convenience of the parties and shall
be of no force or effect in the construction of the provisions of this
Agreement.
14.7 INDEMNIFICATION. Each party to this Agreement agrees to indemnify,
defend and hold the other party free and harmless from and against, and to
reimburse the other party on a current basis for, all claims, damages, expenses
and liabilities of such other party arising from any breach of such indemnifying
party of the terms of this Agreement, including, without limitation, reasonable
legal expenses and attorneys' fees paid or incurred by the indemnified party in
defense of any proceedings brought against such indemnified party individually
or against such indemnified party and such indemnifying party (jointly or
severally) arising out of any of the foregoing. The provisions of this Section
14.7 shall survive the termination of this Agreement and the representations and
warranties given by the parties shall survive for the applicable statute of
limitations.
14.8 GOVERNING LAW. This Agreement shall be governed by Delaware law,
without regard to its conflict of laws principles, except with respect to the
provisions establishing beneficial ownership of the Assets in favor of the
Company, which shall be governed by New York law, without regard to its conflict
of laws principles.
14.9 ARBITRATION. Any dispute, controversy or claim arising out of or
relating to this Agreement or to the business and affairs of the Company or the
rights and obligations of any of the Members shall be finally settled by binding
arbitration to be conducted in New York, New York in accordance with the rules
then in force of the American Arbitration Association, including the rules
governing the appointment of arbitrators. Any final decision in any such
arbitration proceeding shall be final and non-appealable and shall be binding on
the parties thereto and enforceable in courts of competent jurisdiction without
a further review on the merits.
14.10 CONFIDENTIALITY. By executing this Agreement, each Member expressly
agrees, at all times during the term of this Agreement, to maintain the
confidentiality of, and not to disclose to any person not a party hereto, any
information relating to the business, financial structure, financial position or
financial results, clients or affairs of the Company, its Affiliates or
Affiliated Entities that shall not be generally known to the public, except as
otherwise required by applicable law or by any regulatory organization having
jurisdiction. Except as provided by
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47
law, no press releases, announcements or other public disclosures related to
this Agreement or the transactions contemplated herein will be issued or made,
without the joint approval of Apollo and New Valley. Nothing in this Section
shall be deemed to prohibit Apollo from making any disclosures regarding this
Agreement or the transactions contemplated herein to any of its partners.
14.11 COUNTERPARTS. This Agreement may be executed by the parties in one or
more counterparts, each of which shall be deemed an original but all of which
taken together shall constitute one and the same instrument.
14.12 FEES AND EXPENSES. All fees and expenses incurred in the negotiation,
preparation and execution of this Agreement, including all exhibits hereto and
all related documents shall be for the account of and payable by the party
incurring them.
14.13 FUTURE BUSINESS OPPORTUNITIES.
(a) If any Member or any of its Affiliates (an "Offering Party") has
the opportunity to engage in any other business in Russia or to purchase or
invest in any other business interests in Russia ("Russian Opportunities"), it
shall promptly notify the other Members of such opportunity and the Members
shall decide whether such opportunity shall be conducted by the Company or
through a separate entity owned by the Members on a commercially reasonable
basis substantially consistent with the terms of this Agreement, to be
negotiated in good faith. The New Valley Parties hereby agree that, except as
provided herein with respect to the Kremlin Sites (as defined below), with
respect to Russian Opportunities in which any of the New Valley Parties or their
respective Affiliates are the Offering Party, Apollo shall have the option to
participate in any such Russian Opportunities on a commercially reasonable basis
that is substantially consistent with this Agreement with respect to Apollo's
percentage ownership interests in any venture formed by the Offering Party to
invest in or develop such Russian Opportunity, to be negotiated in good faith.
The Offering Party shall provide from time to time all material information
relating to such Russian Opportunity (the "Information") that it has in its
possession to the other Members, provided that such Members enter into any
confidentiality arrangement as may be required by third parties. Each Member
receiving such notice shall have the right to participate in such Russian
Opportunity if it has
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48
responded within thirty (30) days of the receipt of the notice (the "Notice
Period"); provided, however, that in the event of a material change in the
Information, including, without limitation, with respect to the terms and/or
governmental approvals regarding such Russian Opportunity, the Notice Period
shall recommence with respect to such Russian Opportunity for an additional
thirty (30) day period as of the date of the event of such material change.
Apollo shall be considered an Offering Party only with respect to real estate
opportunities originated by Apollo or its Affiliates.
(b) The New Valley Parties hereby agree that with respect to
BrookeMil's investment in two adjoining plots at Repin Square (Bolotnaya),
Moscow (the "Kremlin Sites"), subject to the execution of mutually acceptable
documentation, Apollo will co-invest with BrookeMil or any Affiliates of the New
Valley Parties that may invest in and develop the Kremlin Sites (collectively,
"New Valley Entities") such that Apollo and the New Valley Entities will make an
investment on a 75% and 25% basis, respectively, up to an aggregate amount of
$25,000,000 in the venture or ventures that will be formed to invest in and
develop the Kremlin Sites, and with respect to any distributions form such
venture or ventures, Apollo and the New Valley Entities will agree to the
following order of priority: (i) Apollo shall be entitled to a return of its
capital invested plus a 20% rate of return on such capital compounded quarterly;
(ii) the New Valley Entities will be entitled to a return of their capital
invested plus a 20% rate of return on such capital compounded quarterly, and
(iii) remaining distribution will be made 50% to each of Apollo, on the one
hand, and the New Valley Entities, on the other.
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IN WITNESS WHEREOF, the parties hereto have duly executed or caused their
duly authorized officers to execute this Agreement as of the date and year first
above written.
APOLLO REAL ESTATE
INVESTMENT FUND III, L.P.
By: Apollo Real Estate Advisors III, L.P.,
its General Partner
By: Apollo Real Estate Capital Advisors
III, Inc., its General Partner
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
NEW VALLEY CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chairman of the Board and
Chief Executive Officer
BROOKEMIL LTD.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chairman of the Board
WESTERN REALTY
DEVELOPMENT LLC
By: New Valley Corporation,
its Manager
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chairman of the Board and
Chief Executive Officer
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SCHEDULE A
TO WESTERN REALTY DEVELOPMENT LLC
LIMITED LIABILITY COMPANY AGREEMENT
The following terms shall have the following definitions:
"Act" shall mean the Delaware Limited Liability Company Act, as in effect
on the date hereof, and as amended from time to time, or any successor law.
"Adjusted Realized Equity Value" shall mean, with respect to any Interest,
the capital contribution received by the Company for such Interest in cash or
expenditures (provided, however, that for the purposes of this definition (i)
all the expenditures set forth in Schedule 2.4(c) and (ii) any additional
expenditures incurred by the New Valley Parties after the Initial Closing Date
on items set forth in the approved Budget, to the extent the New Valley Parties
(x) provide to Apollo proper documentation substantiating such additional
expenditures and (y) have not been reimbursed for such expenditures in
accordance with Section 12.8(v), will be deemed to have been contributed by New
Valley to the Company at the time of the Initial Closing, irrespective of
whether they are considered actually contributed for any other purposes) plus a
15% annual cumulative rate of return on such contribution compounded on a
quarterly basis, less distributions or dividends in cash or the fair market
value of distributions of property or in-kind distributions received by the
Member in respect of such Interest as of the date such Adjusted Realized Equity
Value is calculated.
"Affiliate" shall mean, with respect to any person, a person or entity
which directly or indirectly controls, is controlled by, or is under common
control with, such person.
"Affiliated Entity" shall mean the Russian LLC, Delaware LLC-2, any other
direct or indirect wholly-owned subsidiary of the Company, Joint Venture-II,
▇▇▇▇▇▇▇-▇▇▇▇▇, ▇▇ Tobacco and any other entity (whether or not incorporated) in
which any of the foregoing entities or the Company has or hereafter acquires a
controlling interest.
"Apollo" shall have the meaning ascribed thereto in the introductory
paragraph hereof.
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"Apollo Loan" shall have the meaning ascribed thereto in Section 2.4(b)
hereof.
"Assets" shall have the meaning ascribed thereto in Section 2.4(d) hereof.
"Assumed Liabilities" shall have the meaning ascribed thereto in Section
2.4(d) hereof.
"Board" or "Board of Managers" shall have the meaning ascribed thereto in
Section 2.9 hereof.
"Brooke" shall mean Brooke (Overseas) Ltd. or any of its Affiliates.
"Brooke (Overseas)" shall have the meaning ascribed thereto in the third
"WHEREAS" clause hereof.
"BrookeMil" shall have the meaning ascribed thereto in the introductory
paragraph hereof.
"Budget" shall have the meaning ascribed thereto in Section 2.9(i) hereof.
"Business Day" shall mean any day except a Saturday, Sunday or other day on
which commercial banks are authorized by law to close in New York City or
Moscow.
"Class A Distribution Amount" shall have the meaning ascribed thereto in
Section 2.7(a) hereof.
"Class A Distribution Period" shall have the meaning ascribed thereto in
Section 2.7(a) hereof.
"Class A Interests" shall have the meaning ascribed thereto in Section
2.4(a) hereof.
"Class A Liquidation Preference" shall have the meaning ascribed thereto in
Section 2.7(b) hereof.
"Class B Distribution Amount" shall have the meaning ascribed thereto in
Section 2.8(a) hereof.
"Class B Distribution Period" shall have the meaning ascribed thereto in
Section 2.8(a) hereof.
"Class B Interests" shall have the meaning ascribed thereto in Section
2.4(a) hereof.
"Class B Liquidation Preference" shall have the meaning ascribed thereto in
Section 2.8(b) hereof.
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"Class C Interests" shall have the meaning ascribed thereto in Section
2.4(a) hereof.
"Closing" shall have the meaning ascribed thereto in Section 12 hereof.
"Closing Date" shall have the meaning ascribed thereto in Section 12
hereof.
"Company" shall have the meaning ascribed thereto in the introductory
paragraph hereof.
"Delaware LLC-2" shall have the meaning ascribed thereto in the first
"WHEREAS" clause hereof.
"Dissolving Member" shall have the meaning ascribed thereto in Section 9.4
hereof.
"▇▇▇▇▇ II Land Lease" shall have the meaning ascribed thereto in Section
10.3(a) hereof.
"▇▇▇▇▇ II Leases" shall have the meaning ascribed thereto in Section
10.3(l) hereof.
"▇▇▇▇▇ II Operations" shall have the meaning ascribed thereto in Section
11.4(a) hereof.
"▇▇▇▇▇ III Land Lease" shall have the meaning ascribed thereto in Section
10.3(b) hereof.
"▇▇▇▇▇ Place II" shall have the meaning ascribed thereto in the first
"WHEREAS" clause hereof.
"▇▇▇▇▇ Place III" shall have the meaning ascribed thereto in the first
"WHEREAS" clause hereof.
"ERISA" means the U.S. Employee Retirement Income Security Act of 1974, as
amended and as hereafter amended, or any successor law.
"Event of Force Majeure" means any unforeseeable event as a result of which
a Member shall be rendered unable in whole or in part to carry out any covenant,
agreement, obligation or undertaking hereunder to be kept or performed by such
party. The term "force majeure" shall include acts of God, governmental action
(whether in its sovereign or contractual capacity), fire, flood, or other
catastrophes, national emergencies (including political and economic
emergencies), insurrections, riots, wars, strikes, labor disputes or actions or
other similar causes, not within the control of the party claiming force majeure
and which by the commercially reasonable exercise of due diligence or the
commercially reasonable payment of money such party is unable to overcome.
"Initial Closing" shall have the meaning ascribed thereto in Section 12.1
hereof.
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"Initial Closing Date" shall have the meaning ascribed thereto in Section
12.1 hereof.
"Initial Subsequent Closing" shall have the meaning ascribed thereto in
Section 12.7 hereof.
"Initial Subsequent Closing Date" shall have the meaning ascribed thereto
in Section 12.7 hereof.
"Information" shall have the meaning ascribed thereto in Section 14.13(a)
hereof.
"Interests" shall have the meaning ascribed thereto in Section 2.4(a)
hereof.
"Joint Venture-II" shall have the meaning ascribed thereto in the first
"WHEREAS" clause hereof.
"Joint Venture-II Agreement" shall have the meaning ascribed thereto in the
third "WHEREAS" clause hereof.
"Kremlin Sites" shall have the meaning ascribed thereto in Section 14.13(b)
"Land Leases" shall have the meaning ascribed thereto in Section 10.3(d)
hereof.
"Late Payment Interest" shall have the meaning ascribed thereto in Section
2.4(e) hereof.
"LD Tobacco" shall mean ▇▇▇▇▇▇▇-▇▇▇▇▇ Tobacco Ltd., a Russian closed joint
stock company.
"▇▇▇▇▇▇▇-▇▇▇▇▇" shall mean ▇▇▇▇▇▇▇-▇▇▇▇▇ Ltd., a Russian joint stock
company.
"Loan Default" shall have the meaning ascribed thereto in Section 2.10(a)
hereof.
"Material Contracts" shall have the meaning ascribed thereto in Section
10.3(p) hereof.
"Member" shall have the meaning ascribed thereto in the introductory
paragraph hereof.
"New Factory" shall mean a new cigarette factory to be located at
Kashirskoye Shosse, Moscow, Russian Federation, to be constructed by LD Tobacco.
"New Factory Land Lease" shall have the meaning ascribed thereto in Section
10.3(c) hereof.
"New Valley" shall have the meaning ascribed thereto in the introductory
paragraph hereof.
"New Valley Entities" shall have the meaning ascribed thereto in Section
14.13(b) hereof.
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54
"New Valley Parties" shall have the meaning ascribed thereto in the
introductory paragraph hereof.
"Notice Period" shall have the meaning ascribed thereto in Section 14.13(a)
hereof.
"Offering Party" shall have the meaning ascribed thereto in Section
14.13(a) hereof.
"Old Factory" shall mean the existing cigarette factory located in Moscow
at Ul. Gasheka 6.
"Payment Default" shall have the meaning ascribed thereto in Section 2.4(e)
hereof.
"Pledge Agreement" shall have the meaning ascribed thereto in Section
12.4(d) hereof.
"Potential Lease" shall have the meaning ascribed thereto in Section 6.5(c)
hereof.
"Potential Loan" shall have the meaning ascribed thereto in Section 6.5(c)
hereof.
"Promissory Note" shall have the meaning ascribed thereto in Section 2.4(b)
hereof.
"Properties" shall mean ▇▇▇▇▇ Place II, ▇▇▇▇▇ Place III, the New Factory
and any other property to which the Company or any Affiliated Entity has or
hereafter acquires rights.
"Russian Bank Loan" shall mean a loan from a Russian bank for the
construction of the New Factory in the principal amount of $20,000,000, to be
secured by the shares and assets of ▇▇▇▇▇▇▇-▇▇▇▇▇ and LD Tobacco and guaranteed
by Brooke.
"Russian LLC" shall have the meaning ascribed thereto in the first
"WHEREAS" clause hereof.
"Russian Opportunities" shall have the meaning ascribed thereto in Section
14.13(a).
"Subsequent Closings" shall have the meaning ascribed thereto in
Section 12.6 hereof.
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