6.75% Variable Interest Senior
Convertible Notes due 2014
Frost Nevada
Investments Trust
4400 Biscayne Blvd., 15th Floor
Miami, FL 33137
Attention: Dr. Phillip Frost, Trustee
Vector Group Ltd.,
a Delaware corporation (the “ Issuer ”), hereby
agrees with you as follows:
1.
Issuance of Notes . Subject to the terms and conditions
set forth in this Purchase Agreement (this “ Agreement
”), the Issuer agrees to issue and sell to Frost Nevada
Investments Trust (the “ Purchaser ”) its 6.75%
Variable Interest Senior Convertible Notes due 2014, substantially
in the form attached hereto as Exhibit A , in an
initial aggregate outstanding principal amount (the “
Initial Aggregate Principal Amount ”) of
$50.0 million (such notes, and all notes from time to time
replacing such notes from time to time outstanding, in an aggregate
outstanding principal amount not to exceed at any time the Initial
Aggregate Principal Amount, being the “ Notes ”;
and this Agreement and the Notes, being collectively, the “
Operative Documents ”), as the Initial Aggregate
Principal Amount may be reduced pursuant to the penultimate
sentence of this paragraph. The Notes will be convertible into
shares of the Issuer’s common stock, par value $0.10 per
share (the “ Common Stock ”; the Common Stock
into which the Notes may be so converted, the “ Conversion
Stock ”; and the Conversion Stock and the Notes being,
collectively, the “ Securities ”), in accordance
with the terms of the Notes. Upon each such conversion, the Initial
Aggregate Principal Amount shall be automatically reduced by the
principal amount of the Notes subject to such conversion.
Capitalized terms used but not defined herein shall have the
meanings ascribed thereto in the Notes.
The Notes will be
offered and sold to the Purchaser pursuant to an exemption from the
registration requirements under the Securities Act of 1933, as
amended (the “ Act ”). Upon original issuance
thereof, and so long as required under applicable requirements of
the Act, the Notes shall bear the legend regarding transfer
restrictions under the Act set forth in Section 6(l)
hereof.
2.
Agreement to Sell and Purchase . On the basis of the
representations, warranties and covenants contained in this
Agreement, and subject to its terms and conditions, the Issuer
agrees to issue and sell to the Purchaser, and the Purchaser agrees
to purchase from the Issuer, the Notes in the Initial Aggregate
Principal Amount of $50.0 million at a purchase price equal to
such Initial Aggregate Principal Amount (the “ Purchase
Price ”).
3.
Delivery and Payment .
(a) Delivery of,
and payment of the Purchase Price for, the Notes (the
“Closing”), shall be made at 10:00 a.m., Eastern
time, on May 11, 2009 or such other date as may be agreed upon
by the Purchaser and the Issuer (the “Closing Date”),
at the offices of McDermott Will & Emery LLP, 340 Madison
Avenue, New York, New York 10173, or such other time or place as
the Purchaser and the Issuer shall designate, all in accordance
with Section 3(b) hereof.
(b) At the
Closing, the Issuer shall deliver to the Purchaser (or to such
other designee(s) as the Purchaser shall direct at least one
business day prior to the Closing) one or more original Notes in an
aggregate principal amount of $50.0 million (in each case with
any transfer taxes thereon duly paid by the Issuer), against
payment by the Purchaser of the Purchase Price by, at the option of
the Purchaser, (i) wire transfer in same day funds to the
order of the Issuer ( provided , that the Issuer shall give
the Purchaser at least two business days’ prior written
notice of the information required to effect such wire transfer),
(ii) tendering and delivering to the Issuer an aggregate
principal amount of the Issuer’s 5.0% Variable Interest
Senior Convertible Notes Due 2011 (the “5.0% Notes”),
valued for payment of the Purchase Price at 107% of the aggregate
principal amount thereof, or (iii) a combination of the
methods set forth in clauses (i) and (ii).
4.
Agreements of the Issuer . THE ISSUER HEREBY AGREES WITH
THE PURCHASER AS FOLLOWS:
(a) So long
as the Notes are outstanding, (i) to deliver via overnight
courier and make generally available as soon as practicable but no
later than 60 days after the end of each fiscal year to the
record holders of the Notes an audited financial report of the
Issuer on a consolidated basis, all such financial reports to
include a consolidated balance sheet, a consolidated statement of
operations, a consolidated statement of cash flows and a
consolidated statement of shareholders’ equity as of the end
of and for such fiscal year, together with comparable information
as of the end of and for the preceding year, certified by the
Issuer’s independent public accountants and (ii) to
deliver via overnight courier and make generally available as soon
as practicable but no later than 40 days after the end of each
quarterly period (except for the last quarterly period of each
fiscal year) to such holders, a consolidated balance sheet, a
consolidated statement of operations and a consolidated statement
of cash flows (and similar financial reports of all unconsolidated
subsidiaries, if any) as of the end of and for such period, and for
the period from the beginning of such year to the close of such
quarterly period, together with comparable information for the
corresponding periods of the preceding year. Notwithstanding the
foregoing, the filing of information required herein with the
Securities and Exchange Commission (“ SEC ”) on
its EDGAR database system within the time periods prescribed by the
SEC (taking into account allowable extensions) shall satisfy the
requirements of this Section 4(a).
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(b) So long
as the Notes are outstanding, to furnish to the Purchaser as soon
as reasonably practicable, copies of all reports or other
communications (A) furnished by the Issuer to its security
holders, (B) furnished to or filed with the SEC or any
national securities exchange on which any class of securities of
the Issuer is listed or (C) delivered pursuant to the Notes
and such other publicly available information concerning the Issuer
as the Purchaser may reasonably request; provided ,
however , that any such report, communication or information
available on the SEC’s EDGAR database system need not be
furnished pursuant to this Section 4(b).
(c) So long
as the Notes remain outstanding and during any period in which the
Issuer is not subject to Section 13 or 15(d) of the Exchange
Act, to make available to any holder of Notes in connection with
any sale thereof and any prospective purchaser of such Notes from
such holder, the information (“ Rule 144A
Information ”) required by Rule 144A(d)(4) under the
Act.
(d) So long
as the Notes remain outstanding, to reserve and keep available at
all times, free of preemptive rights, a sufficient number of
authorized shares of its Common Stock for the purpose of enabling
the Issuer to satisfy its obligations to issue such Common Stock as
Conversion Stock upon conversion of the Notes.
(e) To use
commercially reasonable efforts to cause all shares of Conversion
Stock issuable upon conversion of the Notes to be listed on The New
York Stock Exchange or on such other national securities exchange
or automated quotation system on which the Issuer’s Common
Stock may then be traded or listed so long as such Conversion Stock
remains registered under the Exchange Act.
(f) To
continue to maintain a transfer agent and, if necessary under the
jurisdiction of incorporation of the Issuer, a registrar for the
Conversion Stock.
(g) Whether
or not the transactions contemplated by this Agreement are
consummated or this Agreement is terminated, to pay or cause to be
paid all expenses incident to the performance of the obligations of
the Issuer under this Agreement, including: (i) the fees,
disbursements and expenses of counsel to the Issuer and accountants
of the Issuer in connection with the sale and delivery of the Notes
to the Purchaser, (ii) all costs and expenses related to the
transfer and delivery of the Notes to the Purchaser, including any
transfer or other taxes payable thereon, (iii) all costs of
printing or producing this Agreement, the other Operative Documents
and any other agreements or documents in connection with the
offering, purchase, sale or delivery of the Notes, (iv) all
expenses in connection with the registration or qualification of
the Notes for offer and sale under the securities or Blue Sky laws
of the several states and all costs of printing or producing any
preliminary and supplemental Blue Sky memoranda in connection
therewith (including the filing fees and fees and disbursements of
counsel for the Purchaser in connection with such registration or
qualification and memoranda relating thereto), (v) the cost of
printing certificates representing the Notes, (vi) the listing
fee of The New York Stock Exchange or such other national
securities exchange or automated quotation system on which the
Issuer’s capital stock may be traded with respect to any
Conversion Stock issued upon conversion of the Notes, (vii) the
costs and charges of any transfer agent, registrar or depositary,
(viii) all costs and expenses of the Registration Statement,
as set forth in the Notes and (ix) all other costs and
expenses incident to the performance of the obligations of the
Issuer under this Agreement and the other Operative Documents for
which provision is not otherwise made in this
Section 4(g).
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(h)Not to, and to
ensure that no affiliate (as defined in Rule 501(b) under the Act)
of the Issuer will, sell, offer for sale or solicit offers to buy
or otherwise negotiate in respect of any “security” (as
defined in the Act) that would be integrated with the sale of the
Notes in a manner that would require the registration under the Act
of the sale of the Notes to the Purchaser.
(i) To the extent
permitted by applicable law, not to voluntarily claim, and to
actively resist any attempts to claim, the benefit of any usury
laws against the holders of any Notes.
(j) To validly
execute and deliver the Notes.
(k) Not to become,
at any time prior to the expiration of three years after the
Closing Date, an open-end investment company, unit investment
trust, closed-end investment company or face-amount certificate
company that is or is required to be registered under
Section 10 of the Investment Company Act of 1940, as
amended.
(l) To pay
all stamp, documentary and transfer taxes and other duties, if any,
which may be imposed by the United States or any political
subdivision thereof or taxing authority thereof or therein with
respect to the issuance of the Notes or the sale thereof to the
Purchaser.
(m) To
perform and comply with the covenants of the Issuer that are set
forth in the Notes.
5.
Representations and Warranties of the Issuer . As of the
date hereof and as of the Closing Date, the Issuer represents and
warrants to the Purchaser that:
(a)
Organization and Qualification . The Issuer and its “
Subsidiaries ” (which for purposes of this Agreement
means any entity in which the Issuer, directly or indirectly, owns
capital stock or holds an equity or similar interest that exceeds
50% of the aggregate outstanding equity or similar interests of
such entity) are entities duly organized and validly existing in
good standing under the laws of the jurisdiction in which they are
formed, and have the requisite power and authority to own their
material properties and to carry on their business as now being
conducted in all material respects. Each of the Issuer and its
Subsidiaries is duly qualified as a foreign entity to do business
and is in good standing in every jurisdiction in which its
ownership of property or the nature of the business conducted by it
makes such qualification necessary, except to the extent that the
failure to be so qualified or be in good standing would not
reasonably be expected to have a Material Adverse Effect. As used
in this Agreement, “ Material Adverse Effect ”
means any material adverse effect on the business, assets, results
of operations, or condition (financial or otherwise) of the Issuer
and its Subsidiaries, taken as a whole, or on the transactions
contemplated hereby and by the other Operative Documents taken as a
whole or by the agreements and instruments to be entered into in
connection herewith or therewith, or on the authority or ability of
the Issuer to perform its obligations under the Operative
Documents. The Issuer has no Subsidiaries except as set forth on
Schedule 5(a) .
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(b)
Authorization; Enforcement; Validity . The Issuer has the
requisite corporate power and authority to enter into and perform
its obligations under each of the Operative Documents and to issue
the Notes in accordance with the terms hereof. The execution and
delivery of this Agreement and the other Operative Documents by the
Issuer and the consummation by the Issuer of the transactions
contemplated hereby and thereby, including, without limitation, the
issuance of the Notes, the reservation for issuance, and the
issuance of the Conversion Stock issuable upon conversion of any
Notes, have been duly authorized by the Issuer’s Board of
Directors and (other than the filing with the SEC of one or more
Registration Statements as may be required by federal and state
securities laws with respect to the Issuer’s registration
obligations under the Notes and such filings as may be required by
and with the New York Stock Exchange LLC (the “ Principal
Market ”) with respect to the transactions contemplated
hereby), no further consent or authorization by the Issuer, its
Board of Directors or its stockholders is required. This Agreement
has been duly executed and delivered by the Issuer and is, and upon
execution and delivery of the other Operative Documents by the
Issuer, each of the Operative Documents will be, the legal, valid
and binding obligations of the Issuer, enforceable against the
Issuer in accordance with their respective terms, except as such
enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting
creditors’ rights and remedies generally.
(c)
Issuance of Notes . The Notes are duly authorized and upon
issuance, shall be free from all taxes, liens and charges with
respect to the issue thereof. As of the Closing Date, a number of
shares of Common Stock shall have been duly authorized and reserved
for issuance, free of pre-emptive rights, and sufficient for the
purpose of enabling the Issuer to satisfy all obligations to issue
the Conversion Stock upon conversion of all of the Notes. Upon
conversion of Notes into Conversion Stock in accordance with their
terms, the Conversion Stock will be validly issued, fully paid and
nonassessable and free from all preemptive or similar rights,
taxes, liens and charges with respect to the issue thereof, with
the holders thereof being entitled to all rights accorded to a
holder of Common Stock.
(d) No
Conflicts . The execution, delivery and performance of this
Agreement and the other Operative Documents by the Issuer and the
consummation by the Issuer of the transactions contemplated hereby
and thereby (including, without limitation, the issuance of the
Notes and reservation for issuance and issuance of the Conversion
Stock) will not (i) result in a violation of the
Issuer’s Certificate of Incorporation, as amended and as in
effect on the date hereof (the “ Certificate of
Incorporation ”), or the Issuer’s Bylaws, as
amended and as in effect on the date hereof (the “
Bylaws ”), (ii) conflict with, or constitute a
default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which the Issuer or any of
its Subsidiaries is a party, or (iii) (so long as the Issuer
obtains all consents, authorizations and orders and makes all
filings and registrations specified in Section 5(e) below) result
in a violation of any law, rule, regulation, order, judgment or
decree (including federal and state securities laws and regulations
and the rules and regulations of the Principal Market) applicable
to the Issuer or any of its Subsidiaries or by which any property
or asset of the Issuer or any of its Subsidiaries is bound or
affected, except, in the case of clauses (ii) and (iii), such
conflicts, defaults, rights, or violations that would not
reasonably be expected to have a Material Adverse
Effect.
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(e)
Consents . The Issuer is not required to obtain any consent,
authorization or order of, or make any filing or registration with,
any court, governmental agency or any regulatory or self-regulatory
agency or any other person in order for it to execute, deliver or
perform any of its obligations under or contemplated by this
Agreement or the other Operative Documents, in each case in
accordance with the terms hereof or thereof, other than as may be
required by federal and state securities laws and the rules and
regulations of the Principal Market with respect to the
Issuer’s registration obligations under the Notes. All
consents, authorizations, orders, filings and registrations which
the Issuer is required to obtain or make pursuant to the preceding
sentence have been (or will be) obtained or made on or prior to the
Closing Date.
(f) No
General Solicitation . Neither of the Issuer nor any of its
respective affiliates or other persons acting on behalf of the
Issuer have offered or sold the Notes by means of any general
solicitation or general advertising within the meaning of Rule
502(c) under the Act or, with respect to Notes sold outside the
United States to non-U.S. persons (as defined in Rule 902 under the
Act), by means of any directed selling efforts within the meaning
of Rule 902 under the Act, and the Issuer, any affiliate of
the Issuer and any person acting on behalf of the Issuer have
complied with and will implement the “offering
restrictions” within the meaning of such Rule 902;
provided that no representation is made in this subsection
with respect to the actions of the Purchaser.
(g) No
Broker’s Fees . The Issuer has not engaged any broker,
finder, commission agent or other person in connection with the
transactions contemplated in the Operative Documents, and the
Issuer is not under any obligation to pay any broker’s fee or
commission in connection with such transactions.
(h)
Application of Takeover Protections; Rights Agreement . The
Issuer has taken all necessary action in order to render
inapplicable any control share acquisition, business combination,
poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Certificate of
Incorporation or the laws of the State of Delaware which is or
could become applicable as a result of the transactions
contemplated by this Agreement, including, without limitation, the
Issuer’s issuance of the Notes and the Conversion Stock. The
Issuer has not adopted a stockholder rights plan or similar
arrangement relating to accumulations of beneficial ownership of
Common Stock or a change in control of the Issuer
.
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(i) SEC
Documents; Financial Statements . During the two (2) years
prior to the date hereof, the Issuer has filed all reports,
schedules, forms, statements and other documents required to be
filed by it with the SEC pursuant to the reporting requirements of
the Exchange Act (all of the foregoing filed prior to the date
hereof and all exhibits included therein and financial statements,
notes and schedules thereto and documents incorporated by reference
therein being hereinafter referred to as the “ SEC
Documents ”) and none of the SEC Documents, when filed by
the Issuer and as of the date such statements were made, contained
any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances
under which they were made, not misleading. As of their respective
dates, the SEC Documents, as they may have been subsequently
amended by filings made by the Issuer with the SEC prior to the
date hereof, complied in all material respects with the
requirements of the Exchange Act and the rules and regulations of
the SEC promulgated thereunder applicable to the SEC Documents. As
of their respective dates, the financial statements of the Issuer
included in the SEC Documents complied as to form in all material
respects with applicable accounting require
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