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
