EXHIBIT 4.2
REGISTRATION RIGHTS
AGREEMENT
REGISTRATION RIGHTS AGREEMENT
(this “ Agreement ”), dated as of April 13,
2005, by and between Vector Group Ltd., a Delaware corporation,
with headquarters located at 100 S.E. Second Street, Miami, FL
33131 (the “ Company ”), and Jefferies &
Company, Inc., with an office at 11100 Santa Monica Boulevard, 10th
Floor, Los Angeles, CA 90025 (the “ Initial Purchaser
”).
WHEREAS:
A. The Company has authorized
the issuance of up to $30,000,000 principal amount of its 5.0%
Variable Interest Senior Convertible Notes due 2011 to be issued
pursuant to an Indenture, dated as of the date hereof, between the
Company and Wells Fargo Bank, N.A., as Trustee (as the same may be
amended from time to time, the “ Indenture ”),
which will, among other things, be convertible into shares of the
Company’s common stock, par value $0.10 per share (as
converted, the “ Conversion Shares ”), in
accordance with the terms of the Notes and the Indenture.
B. In connection with the
Purchase Agreement, dated as of March 30, 2005, by and between
the Company and the Initial Purchaser (the “ Purchase
Agreement ”), the Company (i) agreed to issue and
sell to the Initial Purchaser an aggregate of $25,000,000 principal
amount of its 5.0% Variable Interest Senior Convertible Notes due
2011 (the “ Firm Notes ”) and (ii) granted
the Initial Purchaser an option to purchase up to an additional
$5,000,000 principal amount of its 5.0% Variable Interest Senior
Convertible Notes due 2011 (the “ Option Notes , and
together with the Firm Notes, the “ Notes ”), in
each case, upon the terms and subject to the conditions set forth
in the Purchase Agreement.
C. Pursuant to a letter dated
March 31, 2005, the Initial Purchaser notified the Company of
its election to exercise the option to purchase the Option Notes in
full.
D. To induce the Initial
Purchaser to execute and deliver the Purchase Agreement, the
Company has agreed to provide certain registration rights under the
Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute (collectively, the
“ 1933 Act ”), and applicable state securities
laws.
NOW, THEREFORE, in
consideration of the premises and the mutual covenants contained
herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company agrees
with the Initial Purchaser, (i) for the benefit of the Initial
Purchaser and (ii) for the benefit of each Holder, as
follows:
1. Definitions .
Capitalized terms used herein and not
otherwise defined herein shall have the respective meanings set
forth in the Purchase Agreement. As used in this Agreement, the
following terms shall have the following meanings:
“1934 Act” means
the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the SEC promulgated thereunder.
“Affiliate” of
any specified Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this
definition, “control” (including, with correlative
meanings, the terms “controlling,” “controlled
by” and “under common control with”), as used
with respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the
management or policies of such Person whether through the ownership
of voting securities or by agreement or otherwise.
" Business Day” means
any day other than Saturday, Sunday or any other day on which
commercial banks in The City of New York are authorized or required
by law to remain closed.
“Closing Date”
means the date of the closing of the sale of the Notes as
contemplated by the Purchase Agreement.
“Common Stock”
means the common stock, par value $0.10 per share, of the Company,
as it exists on the date of this Agreement and any other shares of
capital stock or other securities of the Company into which such
Common Stock may be reclassified or changed, together with any and
all other securities which may from time to time be issuable upon
conversion of Notes.
“Company” has the
meaning set forth in the preamble of this Agreement.
“Conversion
Shares” has the meaning set forth in the recitals
hereto.
“Effective Date”
means the date the Registration Statement has been declared
effective by the SEC.
“Firm Notes” has
the meaning set forth in the recitals hereto.
“Holder” means a
Person (including the Initial Purchaser) who is a holder or
beneficial owner from time to time of any Notes or Conversion
Shares; provided , that, unless otherwise expressly stated
herein, only registered holders of Notes or Conversion Shares shall
be counted for purposes of calculating any proportion of holders
entitled to take any action or give notice pursuant to this
Agreement.
“Holder
Information,” with respect to any Holder, means
information with respect to such Holder required to be included in
any Shelf Registration Statement or the related Prospectus pursuant
to the 1933 Act and which information is included therein in
reliance upon and in conformity with information furnished to the
Company in writing by such Holder specifically for inclusion
therein.
“Indenture” has
the meaning set forth in the recitals hereto.
“Initial
Purchaser” has the meaning set forth in the preamble of
this Agreement.
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“Legal Counsel”
means one firm or counsel designated by the Company (and reasonably
acceptable to the Initial Purchaser acting on behalf of the
Holders) to act as counsel for the Holders in connection therewith,
which firm shall be Latham & Watkins LLP.
“Losses” has the
meaning set forth in Section 5(d) hereof.
“Majority
Holders” means the Holders of a majority of the then
outstanding aggregate principal amount of Notes being registered
under a Shelf Registration Statement; provided , that
Holders of the shares of Common Stock issued upon conversion of
Notes shall be deemed to be Holders of the aggregate principal
amount of Notes from which such Common Stock was converted; and
provided , further , that Notes or shares of Common
Stock which have been sold or otherwise transferred pursuant to the
Shelf Registration Statement shall not be included in the
calculation of Majority Holders.
“NASD” means the
NASD, Inc.
“Notes” has the
meaning set forth in the recitals hereto.
“Notice and
Questionnaire” means a written notice delivered to the
Company containing substantially the information called for by the
Selling Securityholder Notice and Questionnaire attached as Annex B
to the Final Offering Circular of the Company dated March 30,
2005 relating to the Notes.
“Notice Holder”
means any Holder of Transfer Restricted Securities that has
delivered a properly completed and signed Notice and Questionnaire
to the Company in accordance with Section 2(b) hereof.
“Option Notes”
has the meaning set forth in the recitals hereto.
“Person” has the
meaning set forth in the Indenture.
“Post-Effective
Amendment” has the meaning set forth in
Section 2(b)(ii) of this Agreement.
“Prospectus”
means the prospectus included in any Shelf Registration Statement
(including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of
an effective registration statement in reliance upon Rule 430A
under the 1933 Act), as amended or supplemented by any prospectus
supplement, with respect to the terms of the offering of any
portion of the Notes or the Conversion Shares covered by such Shelf
Registration Statement, and all amendments and supplements to such
prospectus, including all documents incorporated or deemed to be
incorporated by reference in such prospectus.
“Purchase
Agreement” has the meaning set forth in the recitals
hereto.
“Questionnaire
Deadline” has the meaning set forth in Section 2(b)
hereof.
“Record Holder”
means, with respect to a Registration Default Payments Payment
Date, each Person who is registered on the books of the registrar
as the holder of Notes
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at the close of business
on the February 1, May 1, August 1 and November 1,
as applicable, immediately preceding such Registration Default
Payments Payment Date.
“Registration
Default” has the meaning set forth in Section 2(e)
hereof.
“Registration Default
Payments” has the meaning set forth in Section 2(e)
hereof.
“Registration Default
Payments Payment Date” means each February 15,
May 15, August 15 and November 15.
“Rule 144”
means Rule 144 under the 1933 Act (or any successor provision
promulgated by the SEC).
“Rule 144A”
means Rule 144A under the 1933 Act (or any successor provision
promulgated by the SEC).
“Rule 144(k)” means Rule 144(k) under the
1933 Act (or any successor provision promulgated by the SEC).
“Rule 415”
means Rule 415 under the 1933 Act (or any successor provision
promulgated by the SEC).
“SEC” means the
Securities and Exchange Commission.
“Shelf
Registration” means a registration effected pursuant to
Section 2 hereof.
“Shelf Registration
Period” has the meaning set forth in Section 2(c)
hereof.
“Shelf Registration
Statement” means any “shelf” registration
statement of the Company filed pursuant to the provisions of
Section 2 hereof which covers the Transfer Restricted
Securities on Form S-3 or on another appropriate form (as
determined by the Company) for an offering to be made on a delayed
or continuous basis pursuant to Rule 415 and all amendments
and supplements to such registration statement, including
post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all documents
incorporated or deemed to be incorporated by reference therein.
“Suspension
Period” has the meaning set forth in Section 2(d)
hereof.
“Transfer Restricted
Securities” means each Note and each Conversion Share
issuable upon conversion thereof (and any security issued with
respect thereto upon any stock dividend, split or similar event)
until the earliest of the date on which such Note or Conversion
Share, or any security issued with respect thereto upon any stock
dividend, split or similar event, as the case may be: (i) has
been transferred pursuant to a Shelf Registration Statement or
another registration statement covering such Note or Conversion
Share which has been filed with the SEC pursuant to the 1933 Act,
in either case after such registration statement has become
effective and while such registration statement is effective under
the 1933 Act; (ii) has been transferred pursuant to
Rule 144; (iii) may be sold or transferred pursuant to
Rule 144(k); or
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(iv) ceases to be outstanding. Notwithstanding the foregoing,
each Note and each Conversion Share issuable upon conversion
thereof (and any security issued with respect thereto upon any
stock dividend, split or similar event) that has not previously
ceased to be a Transfer Restricted Security pursuant to the
previous sentence shall cease to be a Transfer Restricted Security
on the date that is two (2) years after the later of the Closing
Date.
“Trustee” means
the trustee with respect to the Notes under the Indenture.
All references in this Agreement to
financial statements and schedules and other information which is
“contained,” “included,” or
“stated” in the Shelf Registration Statement, any
preliminary Prospectus or Prospectus (and all other references of
like import) shall be deemed to mean and include all such financial
statements and schedules and other information incorporated or
deemed to be incorporated by reference in such Shelf Registration
Statement, preliminary Prospectus or Prospectus, as the case may
be; and all references in this Agreement to amendments or
supplements to the Shelf Registration Statement, any preliminary
Prospectus or Prospectus shall be deemed to mean and include any
document filed with the SEC under the 1934 Act, after the date of
such Shelf Registration Statement, preliminary Prospectus or
Prospectus, as the case may be, which is incorporated or deemed to
be incorporated by reference therein.
2. Shelf Registration
Statement .
a. The
Company shall, at its expense, prepare and file with the SEC within
60 days following the Closing Date a Shelf Registration
Statement with respect to resales of the Transfer Restricted
Securities by the Holders from time to time on a delayed or
continuous basis pursuant to Rule 415 and in accordance with
the methods of distribution set forth in such Shelf Registration
Statement, and thereafter shall use its reasonable best efforts to
cause such Shelf Registration Statement to be declared effective
under the 1933 Act within 180 days after the Closing Date. The
Company shall supplement or amend the Shelf Registration Statement
if required by the rules, regulations or instructions applicable to
the registration form used by the Company for the Shelf
Registration Statement, or by the 1933 Act, the 1934 Act or the
SEC.
b. (i) The
Company shall name each Holder that delivers a properly completed
and signed Notice and Questionnaire to the Company as a selling
Note holder in the Shelf Registration Statement. A Holder of
Transfer Restricted Securities may include such securities in the
Shelf Registration Statement only if the Holder sends by
first-class registered mail or by courier with delivery
confirmation, a properly completed Notice and Questionnaire to the
Company. The Company shall deliver the Notice and Questionnaire to
the Initial Purchaser within five (5) Business Days of the
Closing Date. In order to be included in the Shelf Registration
Statement at the time of its effectiveness, the Notice and
Questionnaire must be sent on or prior to the 10th Business Day
after the date the Notice and Questionnaire is deemed to have been
given in accordance with Section 6(c) hereof (or, in the case of a
Holder that is a transferee of Transfer Restricted Securities, on
or prior to the earlier of (x) the 20th Business Day after the
completion of the transfer of Transfer Restricted Securities to the
transferee and (y) 9:00 a.m., New York time, on the fifth
Business Day prior to initial effectiveness of the Shelf
Registration Statement) (in any case, the “ Questionnaire
Deadline ”). The Company agrees and undertakes that it
shall distribute a Notice and Questionnaire (A) no later than
30 Business Days
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prior to the expected effectiveness of the Shelf Registration
Statement to each Holder in accordance with Section 6(c) hereof,
and (B) in the case of a Holder that is a transferee of
Transfer Restricted Securities, upon the request of such transferee
Holder given in accordance with Section 6(c) hereof, to such Holder
at the address set forth in such request.
(ii) Following
the effectiveness of the Shelf Registration Statement, upon receipt
of a completed Notice and Questionnaire from a Holder, the Company
will, as promptly as practicable, but in any event within ten
(10) Business Days after its receipt thereof, file any
supplements to the related Prospectus or file any post-effective
amendment to the Shelf Registration Statement that is required by
applicable law to cause a Holder to be named as a selling
securityholder in the Shelf Registration Statement and permit such
Holder to deliver the Prospectus to purchasers of Transfer
Restricted Securities (a “ Post-Effective Amendment
”) (subject to the right of the Company to suspend the use of
the Prospectus as described in Section 2(d) hereof);
provided , however , that (x) if a supplement to the
related Prospectus is required to permit the Holder (or other
Holders not included in the Shelf Registration Statement upon
effectiveness) to deliver the Prospectus to purchasers of Transfer
Restricted Securities, the Company shall not be required to file
more than one (1) such supplement during any twenty
(20) day period and (y) if a Post-Effective Amendment to
the Shelf Registration Statement is required to permit the Holder
(or other Holders not included in the Shelf Registration Statement
upon effectiveness) to deliver the Prospectus to purchasers of
Transfer Restricted Securities, the Company shall not be required
to file more than one (1) Post-Effective Amendment to the Shelf
Registration Statement in any sixty (60) day period. The
Company shall use its reasonable best efforts to cause any such
Post-Effective Amendment to become effective under the 1933 Act as
promptly as is practicable; provided , that if a Notice and
Questionnaire is delivered to the Company during a Suspension
Period, the Company shall not be obligated to amend the Shelf
Registration Statement or supplement the Prospectus until the
termination of such Suspension Period.
(iii) Each
Holder as to which the Shelf Registration Statement is being
effected shall furnish promptly to the Company (x) such other
information as the Company may reasonably request for use in
connection with the Shelf Registration Statement or Prospectus or
in any application to be filed with or under state securities laws
and (y) all information required to be disclosed in order to
make the information previously furnished to the Company by such
Holder not misleading.
c. The
Company shall use its reasonable best efforts to keep the Shelf
Registration Statement continuously effective, supplemented and
amended under the 1933 Act in order to permit the Prospectus
forming a part thereof to be usable, subject to Section 2(d)
hereof, by all Notice Holders until the earliest to occur of:
(i) the last date on which, in the opinion of counsel to the
Company, the holding period applicable to sales of all Transfer
Restricted Securities under Rule 144(k) has expired; (ii) the
date as of which all Transfer Restricted Securities have been
transferred under Rule 144 under circumstances in which any
legend borne by such Notes or Conversion Shares relating to
restrictions on transferability thereof, under the 1933 Act or
otherwise, is removed; and (iii) such date as of which all
Transfer Restricted Securities have been sold pursuant to the Shelf
Registration Statement after such registration statement has been
become effective and while such registration statement is effective
under the 1933 Act (in any such case, such period being called the
“ Shelf Registration Period ”). The
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Company will, in order to fulfill its obligations and this
Section 2(c): (x) subject to Section 2(b)(ii) and
2(d), use its reasonable best efforts to prepare and file with the
SEC such amendments and Post-Effective Amendments to the Shelf
Registration Statement as may be necessary to keep the Shelf
Registration Statement continuously effective for the Shelf
Registration Period; (y) subject to Section 2(b)(ii) and
2(d), cause the related Prospectus to be supplemented by any
required supplement, and as so supplemented to be filed pursuant to
Rule 424 (or any similar provisions then in force) under the
1933 Act; and (z) comply in all material respects with the
provisions of the 1933 Act with respect to the disposition of all
Transfer Restricted Securities covered by the Shelf Registration
Statement during the Shelf Registration Period.
d. The
Company may suspend the availability of any Shelf Registration
Statement and the use of any Prospectus (the period during which
the availability of any Shelf Registration Statement and any
Prospectus may be suspended herein referred to as the “
Suspension Period ”), without incurring any obligation
to pay Registration Default Payments pursuant to Section 2(e),
for a period not to exceed: (i) 30 consecutive days at any one
time; (ii) 45 days in the aggregate in any three-month
period; or (iii) 90 days in the aggregate during any
12-month period, in each case, only for valid business reasons, to
be determined in good faith by the Company in its reasonable
judgment (which shall not include the avoidance of the
Company’s obligations hereunder), including, without
limitation, the acquisition or divestiture of assets, pending
corporate developments, events listed in Section 3(c), public
filings with the SEC and similar events; provided , that the
Company promptly thereafter complies with the requirements of
Section 3(j) hereof, if applicable, and provided ,
further , that, if a Post-Effective Amendment is required by
applicable law to cause a Holder to be named as a selling
securityholder in the Shelf Registration Statement, the period of
time between the filing and the effectiveness of any Post-Effective
Amendment shall be not deemed to be a Suspension Period hereunder.
The first day of any Suspension Period must be at least two
(2) trading days after the last day of any prior Suspension
Period.
e. The
Company and the Initial Purchaser agree that the Holders of
Transfer Restricted Securities will suffer damages, and it would
not be feasible to ascertain the extent of such damages with
precision, if the Company fails to fulfill its obligations under
Section 2 hereof. Accordingly, if: (i) the Shelf
Registration Statement is not filed with the SEC on or within 60
days after the Closing Date; (ii) the Shelf Registration
Statement has not been declared effective by the SEC within
180 days after the Closing Date; or (iii) the Shelf
Registration Statement is filed and declared effective but shall
thereafter cease to be effective (without being succeeded within
three (3) Business Days by a replacement Shelf Registration
Statement filed and declared effective) or usable (including as a
result of a Suspension Period) for the offer and sale of Transfer
Restricted Securities for a period of time (including any
Suspension Period) which exceeds: (x) 30 consecutive days at
any time; (y) 45 days in the aggregate in any three-month
period; or (z) 90 days in the aggregate in any 12-month
period (each such event referred to in clauses (i) through
(iii), a “ Registration Default ”),
provided , that any suspension of the Shelf Registration
Statement as a result of the time required by the SEC to declare
effective a Post-Effective Amendment to the Shelf Registration
Statement in connection with the Company’s obligation to file
such an amendment pursuant to Section 2(b)(ii) hereof shall
not be included in the calculation of a Registration Default; the
Company shall pay to each Notice Holder (who is also a Record
Holder), as liquidated damages and not as a penalty, during
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any period in which a Registration Default has occurred or is
continuing, as partial relief (which remedy shall not be exclusive
of any other remedies available at law or in equity), in an amount
(the “ Registration Default Payments ”) equal
to: (i) one-half of one percent (50 basis points) per annum
per $1,000 principal amount of Notes constituting Transfer
Restricted Securities for the period up to and including the 90th
day during which such Registration Default has occurred and is
continuing; and (ii) one percent (100 basis points) per annum
per $1,000 principal amount of Notes constituting Transfer
Restricted Securities for the period including and subsequent to
the 91 st day during
which such Registration Default has occurred and is continuing, it
being understood that all calculations pursuant to this and the
preceding sentence shall be carried out to five decimal places.
Following the cure of all Registration Defaults, Registration
Default Payments will cease to accrue with respect to such
Registration Defaults. All accrued Registration Default Payments
shall be paid by the Company on each Registration Default Payments
Payment Date in cash to the date of such cure and Registration
Default Payments will be calculated on the basis of a 360-day year
consisting of twelve 30-day months. The rate of accrual of the
Registration Default Payments with respect to any period shall not
exceed the rate provided for in this paragraph notwithstanding the
occurrence of multiple concurrent Registration Defaults. The
parties hereto agree that the Registration Default Payments
provided in this Section 2(e) constitute a reasonable estimate of
the damages that may be incurred by Holders by reason of a
Registration Default and that such Registration Default Payments
are the only monetary damages available to Holders in the event of
a Registration Default. Notwithstanding anything in the Agreement
to the contrary, Registration Default Payments shall only be
payable to Notice Holders.
f. All
of the Company’s obligations (including, without limitation,
the obligation to pay Registration Default Payments) set forth in
the preceding paragraph which are outstanding or exist with respect
to any Transfer Restricted Security at the time such security
ceases to be a Transfer Restricted Security shall survive until
such time as all such obligations with respect to such security
shall have been satisfied in full. Notwithstanding the foregoing,
no Registration Default Payments shall accrue as to any Transfer
Restricted Security from and after the earlier of: (i) the
date such security is no longer a Transfer Restricted Security; and
(ii) the expiration of the Shelf Registration Period.
g. Immediately
upon the occurrence or the termination of a Registration Default,
the Company shall give the Trustee, so long as the Notes that are
Transfer Restricted Securities remain outstanding, notice of such
commencement or termination of the obligation to pay Registration
Default Payments with regard to such Notes, and the amount thereof
and of the nature of the default giving rise to such commencement
or the event giving rise to such termination, as the case may be
(such notice to be contained in an Officer’s Certificate (as
such term is defined in the Indenture)), and prior to receipt of
such Officer’s Certificate the Trustee and the transfer and
paying agent shall be entitled to assume that no such commencement
or termination has occurred, as the case may be.
3. Registration
Procedures .
In connection with any Shelf
Registration Statement, the following provisions shall apply:
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a. The
Company shall: (i) furnish to the Initial Purchaser within a
reasonable period of time, but in any event within four
(4) Business Days prior to the filing thereof with the SEC to
afford the Initial Purchaser a reasonable opportunity for review, a
copy of each Shelf Registration Statement, and each amendment
thereof, and a copy of each Prospectus, and each amendment or
supplement thereto (excluding amendments caused by the filing of a
report under the 1934 Act), and shall reflect in each such
document, when so filed with the SEC, such comments as the Initial
Purchaser, any Notice Holder and/or the Legal Counsel may
reasonably propose therein; and (ii) include information regarding
the Notice Holders and the methods of distribution they have
elected for their Transfer Restricted Securities provided to the
Company in Notice and Questionnaires as necessary to permit such
distribution by the methods specified therein.
b. Subject
to Section 2(d), the Company shall ensure that: (i) any
Shelf Registration Statement and any amendment thereto and any
Prospectus forming a part thereof and any amendment or supplement
thereto comply as to form in all material respects with the 1933
Act and the rules and regulations thereunder; (ii) any Shelf
Registration Statement and any amendment thereto does not, when it
becomes effective, contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein
or
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