EXHIBIT 10.1
SECOND AMENDMENT TO NOTE PURCHASE AGREEMENT
AND NEW NOTE PURCHASE AGREEMENT
This Second Amendment to Note Purchase Agreement and New Note
Purchase Agreement is dated as of April 30, 2002 (this "Amendment and Purchase
Agreement") and amends the Note Purchase Agreement, dated as of May 14, 2001
and amended as of November 6, 2001 (the "Note Purchase Agreement"), by and
among (i) VGR Holding Inc. (formerly known as BGLS Inc.), a Delaware
corporation (the "Company"), (ii) the signatories hereto who collectively are
the Majority Holders as defined in the Note Purchase Agreement without giving
effect to this Amendment and Purchase Agreement and (iii) the signatories
listed on Schedule A hereto (the "New Purchasers"). Capitalized terms used in
this Amendment and Purchase Agreement and not defined in this Amendment and
Purchase Agreement shall have the meanings ascribed thereto in the Note
Purchase Agreement as amended by this Amendment and Purchase Agreement.
WHEREAS, the New Purchasers wish to purchase $30,000,000 of
Notes (the "New Notes"), and the Company is willing to issue the New Notes to
the New Purchasers pursuant to the terms and conditions hereof; and
WHEREAS, the Company and the Majority Holders desire to amend
the Note Purchase Agreement as set forth herein.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. AMENDMENTS TO NOTE PURCHASE AGREEMENT.
a. Section 1. Section 1 of the Note Purchase Agreement
is hereby amended by deleting the first sentence thereof and inserting in lieu
thereof the following:
"The Company will authorize the issue and sale of $90,000,000
aggregate principal amount of its 10% Senior Secured Notes Due March
31, 2006 (the "NOTES", such term to include any such Notes issued in
substitution therefore pursuant to Section 14 of this Agreement)."
b. Section 3. Section 3 of the Note Purchase Agreement
is hereby amended by deleting the first sentence thereof in its entirety and
inserting in lieu thereof the following:
"The sale and purchase of $60,000,000 in aggregate principal
amount of the Notes shall occur at the offices of Milbank, Tweed,
▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, at 9:00 a.m., Los Angeles time, at a
closing (the "CLOSING") on May 14, 2001."
c. Section 5.2. Section 5.2 of the Note Purchase
Agreement is hereby amended by deleting Section 5.2 in its entirety and
inserting in lieu thereof the following:
"5.2 Authorization, etc.
Each Note Document has been duly authorized by all necessary
corporate action on the part of each Document Party party thereto, and
each Note Document (other than each Note), and upon execution and
delivery thereof each Note will constitute, a legal, valid and binding
obligation of each Document Party party thereto enforceable against
such Document Party in accordance with its terms, except as such
enforceability may be limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
the enforcement of creditors' rights generally and (ii) general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law)."
d. Section 7.2. Section 7.2 of the Note Purchase
Agreement is hereby amended by deleting Section 7.2 in its entirety and
inserting in lieu thereof the following:
"7.2 OPTIONAL PREPAYMENTS.
(a) Before May 14, 2003, the Company may on any one or
more occasions redeem up to 35% of the $90,000,000 of aggregate
principal amount of Notes issued under this Agreement in amounts equal
to $1,000,000 or integral multiples thereof at a redemption price of
100% of the aggregate principal amount thereof, plus accrued and
unpaid interest to the redemption date, with the net cash proceeds of
one or more (x) Equity Offerings or (y) Vector Equity Offerings of an
amount not less than $5,000,000; provided that:
(i) at least 65% of the aggregate principal
amount of Notes issued under this Agreement remains
outstanding immediately after the occurrence of such
redemption (excluding Notes held by the Company and its
Subsidiaries); and
(ii) the redemption must occur within forty-five
(45) days of the date of the closing of the Equity Offering
or Vector Equity Offering, as the case may be.
(b) From and after May 14, 2003, the Company may, at its
option, upon notice as provided below, prepay at any time all, or part
of, the Notes, in an amount not less than, in the case of a partial
prepayment, the lesser of (x) $5,000,000 and (y) the aggregate
principal amount of the Notes then outstanding, at a prepayment price
of 100% of the aggregate principal amount thereof, plus accrued and
unpaid interest thereon, if any, to the applicable prepayment date.
The Company will give each Holder written notice of each prepayment
under this Section 7.2 not less than thirty (30) days and not more
than sixty (60) days prior to the date fixed for such prepayment. Each
such notice shall specify such date, the aggregate principal amount
and applicable Prepayment Premium of the Notes to be prepaid on such
date, the principal amount and applicable Prepayment Premium of each
Note held by such Holder to be prepaid and the interest to be paid on
the prepayment date with respect to such principal amount being
prepaid. Two Business Days prior to such prepayment, the Company shall
deliver to each Holder whose Notes are to be redeemed an Officers'
2
Certificate specifying the calculation of the interest to be paid to
such Holder as of the specified prepayment date."
e. Section 7.4. Section 7.4 of the Note Purchase
Agreement is hereby amended by deleting Section 7.4 in its entirety and
inserting in lieu thereof the following:
"7.4 MATURITY; SURRENDER, ETC.
In the case of each prepayment of Notes pursuant to this
Section 7, Section 8.24 or Section 8.25, the principal amount and the
applicable Prepayment Premium, if any, of each Note to be prepaid
shall mature and become due and payable on the date fixed for such
prepayment, together with interest on the related principal amount
accrued to such date. From and after such date, unless the Company
shall fail to pay such principal amount or Prepayment Premium, if any,
when so due and payable, together with the interest, if any, as
aforesaid, interest on the related principal amount shall cease to
accrue. Any Note paid or prepaid in full shall be surrendered to the
Company and cancelled and shall not be reissued, and no Note shall be
issued in lieu of any prepaid principal amount of any Note."
f. Section 7.6. Each Holder party to this Amendment and
Purchase Agreement agrees that with respect to it and its successors Section
7.6 of the Note Purchase Agreement is hereby amended by deleting Section 7.6 in
its entirety.
g. Section 8.3. Section 8.3 of the Note Purchase
Agreement is hereby amended by deleting such section in its entirety and
inserting the following in lieu thereof:
8.3 LIMITATIONS ON RESTRICTED PAYMENTS.
At any time that the Company does not hold the Required Cash
Holdings on the BGLS Balance Sheet, the Company shall not, and shall
not permit any of its Restricted Subsidiaries or Designated
Subsidiaries to, directly or indirectly: (i) declare or pay any
dividend or make any distribution on account of the Company's or any
of its Subsidiaries' Equity Interests (including, without limitation,
any payment in connection with any merger or consolidation involving
the Company) (other than dividends or distributions payable in Equity
Interests (other than Disqualified Equity Interests) of the Company or
dividends or distributions payable to the Company, any Restricted
Subsidiary or any Designated Subsidiary); (ii) purchase, redeem or
otherwise acquire or retire for value any Equity Interests of the
Company or any direct or indirect parent of the Company or other
Affiliate or Subsidiary of the Company (other than any such Equity
Interests owned by the Company or any Restricted Subsidiary of the
Company); (iii) make any payment (other than regularly scheduled
interest payments) on or purchase, redeem, defease or otherwise
acquire or retire for value any Indebtedness (including, without
limitation, pay any amount owed under any guarantee of the obligations
of another Person) (other than the Notes) that is subordinated to or
pari passu with the Notes (unless, in the case of pari passu
Indebtedness only, such purchase, redemption, defeasance, acquisition,
or retirement is made, or offered (if applicable), pro rata with the
Notes), except for any scheduled repayment or at the final maturity
thereof;
3
(iv) make any Restricted Investment, (v) pay any Expected
Postretirement Benefit Obligations in excess of $1,000,000 in any
Purchase Agreement Year or (vi) make any payment (including, without
limitation, the payment of any Shadow Dividends), transfer any assets
or provide any services in an Affiliated Transaction with Vector or
any Affiliate of Vector (including, without limitation, any
Unrestricted Subsidiary, but excluding the Company, a Restricted
Subsidiary or, to the extent set forth in Section 22.11(d) a
Designated Subsidiary) or any Affiliated Senior Manager other than
Permitted Vector Expenses in any Purchase Agreement Year in excess of
the sum of (x) $9,500,000 and (y) the amount of Excess Interest Income
received during such Purchase Agreement Year (all such payments and
other actions set forth in clauses (i) through (vi) above being
collectively referred to as "RESTRICTED PAYMENTS"), unless, at the
time of and after giving effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred
and be continuing or would occur as a consequence thereof;
(b) the Leverage Ratio, after giving pro forma effect to
such Restricted Payment, is less than (i) 2.25 to 1.00, if such
Restricted Payment is to be made on or prior to June 30, 2002 and (ii)
2.00 to 1.00, if such Restricted Payment is to be made after June 30,
2002; and
(c) either, at the election of the Company, (i) such
Restricted Payment, together with the aggregate of all other
Restricted Payments made by the Company and its Restricted
Subsidiaries and its Designated Subsidiaries beginning on the first
day of the most recent fiscal quarter commencing after the most recent
Drop-Below Date (excluding Restricted Payments permitted below), is
less than the sum of (x) 50% of the Consolidated Net Income (adjusted
to exclude any amounts that are otherwise included in this clause
(c)(i) to the extent there would be, and to avoid, any duplication in
the crediting of any such amounts) of the Company for the period
(taken as one accounting period) from the beginning of the first
fiscal quarter commencing after the most recent Drop-Below Date to the
end of the Company's most recently ended fiscal quarter thereafter for
which internal financial statements are available at the time of such
Restricted Payment (or, if such Consolidated Net Income for such
period is a deficit, less 100% of such deficit), plus (y) to the
extent that any Restricted Investment that was made after the most
recent Drop-Below Date is sold for cash or otherwise liquidated or
repaid for cash, the amount of net proceeds received by the Company or
a Restricted Subsidiary with respect to such Restricted Investment; or
(ii) such Restricted Payment, together with the
aggregate of all other Restricted Payments made by the Company and its
Restricted Subsidiaries and its Designated Subsidiaries, beginning on
the first day of the Drop-Below Quarter (excluding Restricted Payments
permitted below), is less than the sum of (x) 50% of the Consolidated
Net Income (adjusted to exclude any amounts that are otherwise
included in this clause (c)(ii) to the extent there would be, and to
avoid, any duplication in the crediting of any such amounts) of the
Company for the period (taken as one accounting period) from the
beginning of the Drop-Below Quarter to the end of the Company's most
recently ended fiscal quarter thereafter for which internal financial
statements are
4
available at the time of such Restricted Payment (or, if such
Consolidated Net Income for such period is a deficit, less 100% of
such deficit), plus (y) to the extent that any Restricted Investment
that was made after the most recent Drop-Below Date is sold for cash
or otherwise liquidated or repaid for cash, the amount of net proceeds
received by the Company or a Restricted Subsidiary with respect to
such Restricted Investment;
provided, however, that when calculating the amount of the Restricted
Payments that may be made subsequent to any Drop-Below Date, the
Company shall elect whether to use clause (c)(i) or clause (c)(ii)
prior to or on the date that financial statements for the Drop-Below
Quarter are delivered to the Holders pursuant to Section 8.9 and so
indicate such election in an Officer's Certificate delivered to the
Holders with such financial statements, and the Company shall use
clause (c)(i) or clause (c)(ii) to calculate the amount of permissible
Restricted Payments as so elected until the next succeeding date on
which the Company maintains the Required Cash Holdings on the BGLS
Balance Sheet.
The Company, its Restricted Subsidiaries and its Designated
Subsidiaries shall be prohibited from making any Restricted Payments
during any Black-Out Period. Within fifteen (15) days of the end of
any fiscal quarter of the Company during which a Drop-Below Date
occurs and Company does not have Required Cash Holdings on the BGLS
Balance Sheet on the last day of such fiscal quarter, the Company
shall deliver to each Holder an Officer's Certificate (i)
acknowledging that the Company, its Restricted Subsidiaries and its
Designated Subsidiaries may not make Restricted Payments except in
compliance with the preceding paragraph until it once again maintains
the Required Cash Holdings on the BGLS Balance Sheet and (ii)
warranting that no Restricted Payments were made during any Black-Out
Period during such most-recently ended fiscal quarter.
The foregoing provisions shall not prohibit the following:
(i) Permitted Payments,
(ii) payments permitted pursuant to Section
9.3(a), and
(iii) the distribution of the proceeds of the New
Notes, net of attorneys' fees, investment
banking fees, accountants' fees and other
fees and expenses incurred in connection
with the issuance of the New Notes, to
Vector.
The amount of all Restricted Payments (other than cash) shall
be the fair market value (evidenced by a resolution of the Board of
Directors set forth in an Officers' Certificate delivered to the
Holders) on the date of the Restricted Payment of the asset(s)
proposed to be transferred or services proposed to be provided by the
Company, a Restricted Subsidiary or a Designated Subsidiary, as the
case may be, pursuant to the Restricted Payment. If the Company does
not have the Required Cash Holdings on the BGLS Balance Sheet at the
time of making any Restricted Payment, not later than the date of
making any Restricted Payment, the Company shall deliver to the
Holders an Officers' Certificate stating that such Restricted Payment
is permitted and setting forth
5
the basis upon which the calculations required by this Section 8.3
were computed, which calculations may be based upon the Company's
latest available financial statements.
h. Section 8.4. Section 8.4(a) of the Note Purchase
Agreement is hereby amended by deleting Section 8.4(a) in its entirety and
inserting in lieu thereof the following:
(a) The Company shall not, and shall not permit any
Restricted Subsidiary to, incur Indebtedness other than Indebtedness
owed to the Company or any Restricted Subsidiary, unless on the date
of the incurrence of such Indebtedness:
(1) the Leverage Ratio is less than
2.50 to 1 after giving pro forma effect to the incurrence of
such Indebtedness; provided, however, that for purposes of
calculating Leverage Ratio compliance for this Section
8.4(a)(1) only (i) Permitted Brands Restructuring Charges
shall be added to Consolidated EBITDA for any Reference
Period during which such Permitted Brands Restructuring
Charges are actually incurred and (ii) the term "Restricted
Subsidiaries" shall be deemed not to include "Designated
Subsidiaries" except that any Indebtedness of a Designated
Subsidiary other than Indebtedness incurred in accordance
with Section 22.11(e) shall be included in the numerator of
the Leverage Ratio for the purposes of the calculation
thereof pursuant to this Section 8.4(a)(1); and
(2) no Default or Event of Default
shall have occurred or be continuing or would occur as a
consequence thereof.
i. Section 8.4 Section 8.4 of the Note Purchase
Agreement is hereby amended by adding the following paragraph (f) thereto:
(f) During the period commencing on April 1, 2002 and
ending on March 31, 2003, Section 8.4(a) shall not prohibit the
Company and its Restricted Subsidiaries from incurring Indebtedness in
an aggregate amount not exceeding $75,000,000 at any one time
outstanding (in addition to Indebtedness otherwise permitted to be
incurred under this Agreement); provided, however, that on April 1,
2003 either (i) the Leverage Ratio shall be less than 2.50 to 1 or
(ii) Indebtedness equal to the amount incurred pursuant to this
Section 8.4(f) shall have been repaid, extinguished or otherwise
retired.
j. Section 8.5. Section 8.5 is hereby amended by
deleting Section 8.5 in its entirety and inserting in lieu thereof the
following:
8.5 LIMITATION ON TRANSACTIONS WITH AFFILIATES AND INVESTMENTS.
(a) The Company shall not, and shall not permit any of
its Restricted Subsidiaries or Designated Subsidiaries to engage,
directly or indirectly, in any Affiliated Transaction with an
Affiliate of the Company except (i) any direct payment to or
reimbursement of Vector or any Affiliated Senior Manager by the
Company or any of its Restricted Subsidiaries or Designated
Subsidiaries of Permitted Vector Expenses not exceeding in the
aggregate in any Purchase Agreement Year the sum of (x) $9,500,000 and
(y) the amount of Excess Interest Income received during such Purchase
Agreement
6
Year, (ii) as contemplated in Section 8.5(b) or (c), (iii) any
transaction between any Restricted Subsidiaries, (iv) any transaction
between any Designated Subsidiaries, (v) any transaction between the
Company and any Restricted Subsidiary and (vi) any transaction between
the Company or any Restricted Subsidiary and any Designated Subsidiary
permitted pursuant to Section 22.11(d); provided, however, that the
Company, its Restricted Subsidiaries and its Designated Subsidiaries
may enter into Affiliated Transactions with Unrestricted Subsidiaries
so long as (I) the Company, such Restricted Subsidiary or such
Designated Subsidiary would be permitted to do so pursuant to Section
8.3, (II) such Affiliated Transaction is fair to the Company, such
Restricted Subsidiary or such Designated Subsidiary from a financial
point of view as evidenced by a resolution of the Board of Directors
of the Company, such Restricted Subsidiary or such Designated
Subsidiary and (III) in the event the amount of such Affiliated
Transaction is in excess of $3,000,000, the Company, such Restricted
Subsidiary or such Designated Subsidiary shall have received an
opinion of a Designated Investment Bank that such Affiliated
Transaction is fair to the Company, such Restricted Subsidiary or such
Designated Subsidiary from a financial point of view. The Company
shall not permit any of its Unrestricted Subsidiaries to engage,
directly or indirectly, in any Affiliated Transaction with a person
controlled by the Company (other than (i) any Unrestricted Subsidiary
or (ii) the Company, any Restricted Subsidiary or any Designated
Subsidiary to the extent permitted by the preceding sentence) unless
the terms of such Affiliated Transaction are no less favorable to such
Unrestricted Subsidiary than would have been obtainable in an
arms-length transaction with unrelated persons. The Company shall not,
and shall not permit any Restricted Subsidiary to, engage, directly or
indirectly, in any Affiliated Transaction with a person controlled by
the Company (other than (i) another Restricted Subsidiary or the
Company, (ii) an Unrestricted Subsidiary to extent permitted by the
first sentence of this Section 8.5(a) or (iii) a Designated Subsidiary
pursuant to Section 22.11(d)). The Company shall not permit any
Designated Subsidiary to engage, directly or indirectly, in any
Affiliated Transaction with a Person controlled by the Company (other
than (i) another Designated Subsidiary, (ii) a Restricted Subsidiary
in accordance with Section 22.11(d) or (iii) an Unrestricted
Subsidiary to the extent permitted by the first sentence of this
Section 8.5(a)). The Company shall not, and shall not permit any
Restricted Subsidiary to make, directly or indirectly, an Investment
in an Affiliate of the Company (other than the Company or another
Restricted Subsidiary); provided, however, that the Company and its
Restricted Subsidiaries may make Investments in Unrestricted
Subsidiaries to the extent permitted by Section 8.3. The Company shall
not permit any Designated Subsidiary to make, directly or indirectly,
an Investment in an Affiliate of the Company (other than another
Designated Subsidiary).
(b) So long as any Notes remain outstanding, the Company
shall not, and shall not permit any of its Restricted Subsidiaries or
Designated Subsidiaries to, directly or indirectly, enter into any
Affiliated Transaction with an Affiliated Senior Manager for
consideration in excess of $100,000 in any Purchase Agreement Year
(except as permitted by paragraph (a) above if such Affiliated Senior
Manager had been an Affiliate of the Company or paragraph (c) below).
(c) The foregoing paragraphs (a) and (b) shall not
prevent (i) the Company from making Restricted Payments in accordance
with Section 8.3; (ii) the
7
Company and any of its Subsidiaries or Affiliates from entering into
securities brokerage and securities underwriting transactions with
subsidiaries of Ladenburg ▇▇▇▇▇▇▇▇ Financial Services Inc. ("LTFS") at
such subsidiary's usual and customary rates and on usual and customary
terms, so long as such rates and terms are in accordance with
securities industry practice for comparable brokerage firms; (iii) any
Disposition of Assets effected in compliance with Section 10.1; (iv)
payments of the type permitted pursuant to Section 9.3(a); (v)
guarantees of Indebtedness of Subsidiaries of the Company by Vector;
(vi) Vector from making capital contributions to the Company, (vii)
the incurrence of Indebtedness by the Company and any Restricted
Subsidiary owing to any Unrestricted Subsidiary so long as such
Indebtedness is incurred in accordance with Section 8.4 and the total
cost of capital to the Company or such Restricted Subsidiary of such
Indebtedness is less than 12% per annum; provided, however, that the
limitation contained in the foregoing clause (vii) on cost of capital
to the Company or any Restricted Subsidiary shall be deemed not to
include any Equity Interests in Vector or warrants for Equity
Interests in Vector issued to an Unrestricted Subsidiary in connection
with and as additional consideration for such Unrestricted Subsidiary
extending such Indebtedness and (viii) the incurrence of Indebtedness
by any Designated Subsidiary owing to Vector so long as such
Indebtedness is incurred in accordance with Section 22.11 and the
total cost of capital to such Designated Subsidiary of such
Indebtedness is less than 12% per annum.
(d) Nothing in this Section 8.5 or anywhere else in this
Agreement shall be deemed to prohibit the payment of dividends, tax
sharing payments or management fees from ▇▇▇▇▇▇▇ to Brooke Holding or
from Brooke Holding to the Company.
(e) The Company shall not, and shall not permit any
Restricted Subsidiary or any Designated Subsidiary to, incur any
Indebtedness owing to any Group Executive.
(f) In the event that any aircraft owned by the Company,
any Restricted Subsidiary or any Designated Subsidiary is used by
Vector or any Affiliate of Vector other than the Company, a Restricted
Subsidiary or a Designated Subsidiary, Vector or such Affiliate of
Vector shall compensate the Company, such Restricted Subsidiary or
such Designated Subsidiary, as the case may be, for such use in an
amount equal to the cost of such use.
(g) Nothing in this Agreement shall be deemed to
prohibit a merger between New Valley or a wholly owned Subsidiary of
New Valley and Vector or a wholly owned Subsidiary of Vector;
provided, however, that such wholly owned subsidiary shall not be the
Company or any successor to the Company pursuant to Section 10.1.
(h) Nothing in this Agreement shall be deemed to
prohibit any guarantee of the obligations of any Document Party under
any Note Document by Vector, the Company or any Subsidiary of the
Company, including, without limitation, the ▇▇▇▇▇▇▇ Guarantee and the
guarantee contained in the Vector Pledge Agreement.
8
k. Section 8.10. Section 8.10 of the Note Purchase
Agreement is hereby amended by deleting Section 8.10 in its entirety and
inserting in lieu thereof the following:
"8.10 WAIVER OF STAY, EXTENSION OR USURY LAWS.
The Company covenants (to the extent that it may lawfully do
so) that it will not at any time insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of any stay or
extension law or any usury law or other law which would prohibit or
forgive the Company from paying all or any portion of the principal of
or interest and Prepayment Premium (if any) on the Notes as
contemplated herein, wherever enacted, now or at any time hereafter in
force, or which may affect the covenants or the performance of this
Agreement; and (to the extent that it may lawfully do so) the Company
hereby expressly waives all benefit or advantage of any such law, and
covenants that it will not hinder, delay or impede the execution of
any power herein granted to the Holders, but will suffer and permit
the execution of every such power as though no such law had been
enacted.
l. Section 8.24. Section 8.24 of the Note Purchase
Agreement is hereby amended by deleting the first paragraph thereof in its
entirety and inserting in thereof the following:
"Within thirty (30) days following the consummation of a
Triggering Asset Sale, a Restricted Subsidiary Asset Sale if required
by Section 8.29 or a Vector Equity Offering pursuant to Section 8.25,
(the "AVAILABLE PROCEEDS OFFER DATE"), the Company shall make an offer
to all Holders (an "AVAILABLE PROCEEDS OFFER") to apply the applicable
Available Proceeds Offer Purchase Amount to the acquisition of Notes
at a purchase price (the "AVAILABLE PROCEEDS OFFER PURCHASE PRICE")
equal to 100% of the principal amount of the Notes to be purchased
plus accrued interest to the Available Proceeds Purchase Date."
m. Section 8.25. Section 8.25 of the Note Purchase
Agreement is hereby amended by deleting the first sentence of the first
paragraph thereof and inserting in lieu thereof the following:
"In the event of a Change of Control, each Holder shall have
the option to cause the Company to purchase the Notes held by such
Holder in whole but not in part, at a price (the "CHANGE OF CONTROL
PURCHASE PRICE") equal to 101% of the principal amount thereof, plus
accrued interest to the date of purchase (which date shall be no less
than twenty-five (25) Business Days and no more than fifty (50)
Business Days following the delivery of notice to the Holders of such
Change of Control) (the "CHANGE OF CONTROL PURCHASE DATE")."
n. Section 8.28. Section 8.28 of the Agreement is
hereby amended by deleting Section 8.28 in its entirety and inserting the
following in lieu thereof:
9
8.28 LIMITATION ON RELATED BUSINESS.
The Company shall not permit any Restricted Subsidiary or
Designated Subsidiary to engage in any business other than a Related
Business, and the Company shall not permit any of its Subsidiaries to
engage in any Related Business unless such Subsidiary is a Restricted
Subsidiary or a Designated Subsidiary.
o. Section 9.2. Section 9.2 of the Agreement is hereby
amended by deleting Section 9.2 in its entirety and inserting the following in
lieu thereof:
9.2 RELATED BUSINESS ACTIVITIES.
Vector shall not, and shall not permit any of its Affiliates
or any Vector Expanded Affiliate, to engage in any Related Business
except pursuant to Section 8.28.
p. Section 11. Section 11 of the Agreement is hereby
amended by (i) deleting clause (2) in its entirety and inserting in lieu
thereof the following: "(2) the Company defaults in the payment of the
principal or Prepayment Premium on any Notes when the same becomes due and
payable at maturity, upon acceleration, upon redemption, pursuant to Sections
7.2, 8.24 and 8.25 hereof or otherwise;"; (ii) deleting the word "or" at the
end of clause (8), (ii) deleting the period at the end of clause (9) and
inserting "; or" in lieu thereof and (iii) adding a new clause (10) to read as
follows:
"(10) either or both (i) the guarantee contained in the
Vector Pledge Agreement and/or (ii) the ▇▇▇▇▇▇▇ Guarantee shall cease
for any reason, to be in full force and effect, or any Document Party
or any Affiliate of a Document Party shall so assert.";
and (iv) by deleting the final paragraph thereof and inserting in lieu thereof
the following:
A Default under clause (3), (4) or (8) above (other than any
Defaults under Sections 8.3, 8.4, 8.5, 8.6, 8.7, 8.8, the second
paragraph of 8.16(a), 10.1 and 22.11 of this Agreement, which Defaults
shall be Events of Default without the notice or passage of time
specified in this paragraph) is not an Event of Default until the
Majority Holders notify the Company, or, in the case of a Default
under said clause (4), any Group Executive or Vector (as applicable)
and the Company, of the Default, and the Company does not cure the
Default within thirty (30) days after receipt of the notice. The
notice must specify the Default, demand that it be remedied and state
that the notice is a "Notice of Default."
q. Section 12.1 of the Note Purchase Agreement is
hereby amended by deleting Section 12.1 in its entirety and inserting in lieu
thereof the following:
"12.1 ACCELERATION.
If an Event of Default (other than an Event of Default
specified in Section 11(6) or (7) as a result of a case or proceeding
in which the Company is the subject debtor) occurs and is continuing,
the Holders of at least 25% in aggregate principal amount of the Notes
then outstanding may, by notice to the Company declare the principal
amount and
10
accrued interest to the date of acceleration on the Notes then
outstanding (if not then due and payable) to be and become due and
payable and, upon any such declaration, the same shall be and become
due and payable. If an Event of Default specified in Section 11(6) or
(7) as a result of a case or proceeding in which the Company is the
subject debtor occurs, the principal amount and accrued interest on
the Notes then outstanding shall ipso facto become and be immediately
due and payable without any declaration or other act on the part of
any Holder. Except as otherwise provided in this Agreement, upon
payment of the principal amount of and interest, together with any
default interest, on the Notes all of the Company's obligations under
the Notes and this Agreement shall terminate. The Majority Holders may
rescind an acceleration and its consequences if (i) all existing
Events of Default, other than the non-payment of the principal of, or
the Prepayment Premium, if any, on, the Notes which has become due
solely by such declaration of acceleration, have been cured or waived,
(ii) to the extent the payment of such interest is lawful, interest on
overdue installments of interest and overdue principal or Prepayment
Premium, which has become due otherwise than by such declaration of
acceleration, has been paid and (iii) the rescission would not
conflict with any judgment or decree of a court of competent
jurisdiction. No rescission of an acceleration under the preceding
sentence shall extend to or affect any subsequent Event of Default or
Default or impair any right consequent thereon.
r. Section 15.1. Section 15.1 of the Note Purchase
Agreement is hereby amended by deleting the first sentence of Section 15.1 in
its entirety and inserting in lieu thereof the following:
"Subject to Section 15.2, payments of principal and
interest and Prepayment Premium (if any) on the Notes
becoming due and payable on the Notes shall be made in New
York, New York at the principal office of The Bank of New
York in such jurisdiction."
s. Section 15.2. Section 15.2 of the Note Purchase
Agreement is hereby amended by deleting the first sentence of Section 15.2 in
its entirety and inserting in lieu thereof the following:
"So long as you or your nominee shall be the Holder of any
Note, and notwithstanding anything contained in Section 15.1 or in
such Note to the contrary, the Company shall pay all sums becoming due
on such Note for principal of and interest and Prepayment Premium (if
any) on the Notes by the method and at the address specified for such
purpose below your name in Schedule A, or by such other method or at
such other address as you shall have from time to time specified to
the Company in writing for such purpose, without the presentation or
surrender of such Note or the making of any notation thereon, except
that upon written request of the Company made concurrently with or
reasonably promptly after payment or prepayment in full of any Note,
you shall surrender such Note for cancellation, reasonably promptly
after any such request, to the Company at its principal executive
office or at the place of payment most recently designated by the
Company pursuant to Section 15.1."
11
t. Section 18.1. Section 18.1 of the Note Purchase Agreement
is hereby amended by deleting the first and second sentences thereof
and inserting in lieu thereof the following:
Subject to Section 18.4 and the consent of the Collateral
Agent or any depositary bank if required under any Note Document, with the
consent of the Majority Holders by written act of said holders delivered to the
Company, the Company and the Majority Holders may amend or supplement any Note
Document for the purpose of adding any provisions to or changing in any manner
or eliminating any of the provisions of any Note Document or of modifying in
any manner the rights of the Holders under such Note Document, including,
without limitation, subordinating (i) any Lien on Collateral held by or for the
benefit of the Holders and (ii) any right to payment under any Note Document.
Subject to Section 18.4 and the consent of the Collateral Agent or any
depositary bank if required under any Security Agreement, the Majority Holders
may waive compliance by the Company with any provision of any Note Document.
u. Section 18.1. Each Holder party to this Amendment
and Purchase Agreement agrees that with respect to it and its successors
Section 18.1 of the Note Purchase Agreement is hereby amended by deleting
clauses (v) and (viii) of the third sentence thereof and inserting in lieu
thereof the following:
"(v) waive a Default in the payment of the principal of
or interest on Prepayment Premium, if any, with respect to any Note;
(viii) make the principal of or interest or Prepayment
Premium, if any, on any Note payable with anything other than U.S.
Legal Tender."
v. Section 18.4. Each Holder party to this Amendment
and Purchase Agreement agrees that with respect to it and its
successors Section 18.4 of the Note Purchase Agreement is hereby
amended by deleting Section 18.4 in its entirety and inserting in lieu
thereof the following:
"18.4 RIGHTS OF HOLDERS TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Agreement, the
right of any Holder to receive payment of principal or interest and
Prepayment Premium, if any, on the Notes or after the respective due
dates expressed in this Agreement and in the Notes or to bring suit
for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such
Holder.
w. Section 22.5. Section 22.5 of the Note Purchase
Agreement is hereby amended by deleting Section 22.5 in its entirety and
inserting in lieu thereof the following:
"22.5 PAYMENTS DUE ON NON-BUSINESS DAYS.
Anything in this Agreement or the Notes to the contrary
notwithstanding, any payment of principal of and interest and Prepayment
Premium (if any) on the Notes that is due on a date other than a Business Day
shall be made on the next succeeding Business Day without
12
including the additional days elapsed in the computation of the interest
payable on such next succeeding Business Day.
x. Section 22.11. Section 22.11 is hereby added to the
Note Purchase Agreement as follows:
"22.11 DESIGNATED SUBSIDIARIES.
(a) At any time after March 1, 2003, the Company may
designate any Restricted Subsidiary other than (i) Brooke Holding,
(ii) ▇▇▇▇▇▇▇ or any Subsidiary of ▇▇▇▇▇▇▇ or (iii) Brands or any
Subsidiary of Brands as a Designated Subsidiary so long as:
(1) such Designated Subsidiary has
earned negative EBITDA for the most recently ended
Reference Period for which financial statements are
available with "EBITDA" to be calculated with
respect to such Designated Subsidiary and its
Subsidiaries as "Consolidated EBITDA" is calculated
for the Company and its Restricted Subsidiaries; and
(2) neither such Designated Subsidiary
nor any of its Subsidiaries owns, either on the date
of designation or at any time thereafter, any
Capital Stock or Indebtedness of or have any
Investment in, or own or hold any Lien on any
property of, the Company or any other Subsidiary of
the Company which is not a Subsidiary of such
Designated Subsidiary or otherwise an Unrestricted
Subsidiary or Designated Subsidiary.
(b) Prior to the effectiveness of any Restricted
Subsidiary's designation as a Designated Subsidiary, the Company shall
deliver an Officer's Certificate to the Majority Holders certifying
that the conditions set forth in Section 22.11(a) to be satisfied as
of the date of designation have been satisfied. Such Officers'
Certificate shall include calculations with respect to the condition
set forth in Section 22.11(a)(1) in form and substance reasonably
satisfactory to the Majority Holders.
(c) Upon any Designated Subsidiary's designation as
such, all Subsidiaries of such Designated Subsidiary shall be deemed
Designated Subsidiaries.
(d) If a Designated Subsidiary is a party to the Master
Settlement Agreement and has an MSA Market Share Exemption greater
than zero, then such Designated Subsidiary must engage in a Related
Business and use commercially reasonable efforts to achieve and
maintain a Market Share equal to or in excess of its MSA Market Share
Exemption. The Company and any Restricted Subsidiary may make
payments, transfer assets and provide services to such Designated
Subsidiary to the extent necessary to enable such Designated
Subsidiary to comply with the foregoing sentence so long as the amount
of consideration received by the Company or such Restricted Subsidiary
is equal to the amount of payments made to such Designated Subsidiary
or the actual cost of assets transferred or services provided to such
Designated Subsidiary. True and complete copies of all contracts,
agreements and arrangements or invoices evidencing any
13
transaction in excess of $500,000 between such Designated Subsidiary
and the Company or a Restricted Subsidiary shall be delivered to the
Majority Holders.
(e) At all times after designation of a Designated
Subsidiary, the Company shall not permit such Designated Subsidiary or
any of its Subsidiaries to incur any Indebtedness other than
Indebtedness owed to Vector as to which in each case:
(1) neither the Company nor any Restricted
Subsidiary (a) provides any guarantee or credit support of any
kind (including any undertaking, guarantee, indemnity,
agreement or instrument that would constitute Indebtedness) or
(b) is directly or indirectly liable (as a guarantor or
otherwise);
(2) no default with respect to which would
permit (upon notice, lapse of time or both) any holder of any
other Indebtedness of the Company (other than the Notes) or
any Restricted Subsidiary to declare a default under such
other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its stated maturity;
(3) the terms of which result in there being no
recourse against any of the assets of the Company or its
Restricted Subsidiaries; and
(4) is contractually subordinated in form and
substance reasonably satisfactory to the Majority Holders to
any Indebtedness owed by such Designated Subsidiary to the
Company or any Restricted Subsidiary.
(f) All Designated Subsidiaries shall be deemed
Restricted Subsidiaries for purposes of (i) subject to Section
8.4(a)(1), calculation of Consolidated Net Income, Consolidated
EBITDA, Consolidated Income Taxes, Consolidated Interest Expense and
Leverage Ratio and (ii) Sections 8.16, 8.18, 8.20, 8.26, 8.29, 8.30,
11 and 13.11.
y. Schedule A. Schedule A of the Note Purchase
Agreement is hereby amended by adding Schedule A to this Amendment and Purchase
Agreement.
z. Schedule B. Schedule B of the Note Purchase
Agreement is hereby amended by
i. with respect to each Holder party to this
Amendment and Purchase Agreement and its
successors, deleting the definitions of
"Accreted Value" and "Accreted Value
Premium" in their entirety;
ii. amending the following definitions in their
entirety to read as follows:
"'ACCOUNT NOTICE EVENT' means (i) the Company
defaults in payment of interest on any Notes when the same becomes due
and payable and the default continues for a period of thirty (30)
days, (ii) the Company defaults in the payment of the principal of, or
Prepayment Premium, if any, on, any Notes when the same becomes due
and payable at maturity or upon redemption, pursuant to Sections 7.2,
8.24 or 8.25, (iii) a Non-Grace Period Covenant Acceleration Default
shall have occurred and be continuing,
14
(iv) an Other Obligation Payment Default or an Other Obligation
Acceleration Default shall have occurred and be continuing, provided,
however, that an Other Obligation Payment Default or Other Obligation
Acceleration Default shall not constitute an Account Notice Event
unless one or more Other Obligation Payment Defaults and Other
Obligation Acceleration Defaults shall have occurred and be continuing
with respect to Other BGLS Group Debt the outstanding principal amount
of which exceeds in the aggregate $5,000,000, or (v) any Person (other
than the Collateral Agent) shall have commenced the enforcement or
foreclosure of any Lien of such Person on the Securities Account.
'CONSOLIDATED EBITDA' means, with respect to the
Company for any period, without duplication, Consolidated Net Income
of the Company for such period plus, without duplication and to the
extent reflected as a charge in the statement of such Consolidated Net
Income for such period, the sum of (a) Consolidated Income Taxes, (b)
Consolidated Interest Expense, (c) consolidated depreciation expense
of the Company and its Restricted Subsidiaries, (d) consolidated
amortization of intangibles (including, but not limited to, goodwill)
of the Company and its Restricted Subsidiaries and (e) any other
non-cash charges reducing Consolidated Net Income (excluding any such
non-cash charge to the extent it represents an accrual of or reserve
for cash charges in any future period or amortization of a prepaid
cash expense that was paid in a prior period not included in the
calculation); and minus, to the extent included in the statement of
such Consolidated Net Income for such period, the sum of (x) interest
income; provided, however, that in the event the Company holds on the
BGLS Balance Sheet an Average Weekly Cash Balance in excess of
$75,000,000 for such period, the Company shall not be required to
exclude Excess Interest Income, (y) any extraordinary, unusual or
non-recurring income or gains (including, whether or not otherwise
includable as a separate item in the statement of such Consolidated
Net Income for such periods, gains on the sales of assets outside of
the ordinary course of business) and (z) any other non-cash income
except the amount of any non-cash charge to Consolidated Net Income
for a Tobacco Litigation Expense which non-cash charge is later
reversed, all as determined on a consolidated basis for the Company
and its Restricted Subsidiaries. For the purposes of calculating
Consolidated EBITDA for any Reference Period (i) if at any time since
the commencement of such Reference Period the Company or one of its
Restricted Subsidiaries shall have made any Material Disposition, the
Consolidated EBITDA for such Reference Period shall be reduced by an
amount equal to the Consolidated EBITDA (if positive) attributable to
the property that is the subject of such Material Disposition for such
Reference Period or increased by an amount equal to the Consolidated
EBITDA (if negative) attributable thereto for such Reference Period
and (ii) if at any time since the commencement of such Reference
Period, the Company or one of its Restricted Subsidiaries shall have
made a Material Acquisition, Consolidated EBITDA for such Reference
Period shall be calculated after giving pro forma effect thereto as if
such Material Acquisition occurred on the first day of such Reference
Period provided, however, that, notwithstanding the foregoing, the pro
forma effect of the acquisition of The Medallion Company Inc. shall be
measured by adding to Consolidated EBITDA (i) $18,000,000 for any
Reference Period ending between April 1, 2002 and June 30, 2002, (ii)
$13,500,000 for any Reference Period ending between July 1, 2002 and
September 30, 2002, (iii) $9,000,000 for any Reference Period ending
between October
15
1, 2002 and December 31, 2002 and (iv) $4,500,000 for any Reference
Period ending between January 1, 2003 and March 31, 2003. As used in
this definition, "Material Acquisition" means any acquisition of
property or series of related acquisitions of property that (a)
constitutes assets comprising all or substantially all of an operating
unit of a business or constitutes all or substantially all of the
voting Equity Interests of a Person and (b) involves the payment of
consideration by the Company and its Restricted Subsidiaries in excess
of $1,000,000; and "Material Disposition" means any disposition of
property or series of related dispositions of property (whether by
lease, assignment, sale or otherwise) that yields gross proceeds to
the Company or any of its Restricted Subsidiaries in excess of
$1,000,000.
'DOCUMENT PARTY' means the Company, Brooke Holding,
NV Holdings, Vector and ▇▇▇▇▇▇▇.
'EXCESS INTEREST INCOME' means the product of (i) a
fraction the (x) numerator of which is the difference (if positive)
between (A) the Average Weekly Cash Balance for a Reference Period and
(B) $75,000,000 and (y) the denominator of which is the Average Weekly
Cash Balance for such Reference Period and (ii) the amount of interest
income earned by the Company on Cash and cash equivalents that it
holds during such Reference Period.
'NON-GRACE PERIOD COVENANT ACCELERATION DEFAULT'
means the Company has defaulted on the payment of the principal of,
any Notes when the same becomes due and payable as a result of an
acceleration due to non-compliance with Sections 8.3, 8.4, 8.5, 8.6,
8.7, 8.8, the second paragraph of 8.16(a), 10.1 and 22.11 of this
Agreement.
'NON-RECOURSE INDEBTEDNESS' means Indebtedness:
(1) as to which neither the Company nor any
Restricted Subsidiary nor any Designated Subsidiary (a)
provides any guarantee or credit support of any kind
(including any undertaking, guarantee, indemnity, agreement
or instrument that would constitute Indebtedness) or (b) is
directly or indirectly liable (as a guarantor or otherwise);
(2) no default with respect to which (including
any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would
permit (upon notice, lapse of time or both) any holder of any
other Indebtedness of the Company (other than the Notes), any
Restricted Subsidiary or any Designated Subsidiary to declare
a default under such other Indebtedness or cause the payment
thereof to be accelerated or payable prior to its stated
maturity; and
(3) the terms of which result in there being no
recourse against any of the assets of the Company, its
Restricted Subsidiaries or its Designated Subsidiaries.
16
'NOTE DOCUMENTS' means this Agreement, the Security
Agreements, the ▇▇▇▇▇▇▇ Guarantee, the New Note Purchase Agreement,
the ▇▇▇▇▇▇▇ Subordination Agreement, the Notes and any other credit
support documents not included in the foregoing that are entered into
in connection with the Notes, including any subordination agreements
or arrangements and other documentation required to be executed in
connection therewith.
"OTHER BGLS GROUP DEBT" means any bond, debenture,
note or other evidence of Indebtedness or any mortgage, indenture or
other instrument under which there may be issued or by which there may
be secured or evidenced any Indebtedness of the Company, any
Restricted Subsidiary or any Designated Subsidiary other than the Note
Documents.
"OTHER OBLIGATION ACCELERATION DEFAULT" means the
Company, or any Restricted Subsidiary, defaults on any Other BGLS
Group Debt, and as a result of such default, such Indebtedness of the
Company, such Restricted Subsidiary or such Designated Subsidiary,
becomes due prior to its stated maturity, whether or not subordinated.
"OTHER OBLIGATION PAYMENT DEFAULT" means the
Company, any Restricted Subsidiary or any Designated Subsidiary,
defaults in the payment of any principal of or interest on any Other
BGLS Group Debt, and such default extends beyond any period of grace
provided with respect thereto.
'REQUIRED CASH HOLDINGS' means at least $75,000,000
in Cash or cash equivalents.
'RESTRICTED SUBSIDIARY' means, subject to Section
22.11, (i) Brooke Holding, (ii) any ▇▇▇▇▇▇▇ Subsidiary, (iii) VTUSA
and any Subsidiary of VTUSA, (iv) Research and any Subsidiary of
Research, (v) Brands and any Subsidiary of Brands and (vi) any
Subsidiary of the Company that is acquired or formed after the date of
this Agreement other than any Subsidiary of New Valley or Brooke
Overseas.
'RELATED BUSINESS' means any business which is the
same as or ancillary to the tobacco businesses of any Restricted
Subsidiary as of April 29, 2002, including, without limitation, any
New Tobacco Business.
"RESTRICTED SUBSIDIARY ASSET SALE" means any sale,
lease, transfer or other disposition (or series of related sales,
leases, transfers or dispositions) of Equity Interests of a Restricted
Subsidiary or a Designated Subsidiary, property or other assets,
including by way of a sale/leaseback transaction (each referred to for
the purposes of this definition as a "disposition"), by any Restricted
Subsidiary or Designated Subsidiary (including any disposition by
means of merger, consolidation or similar transaction) other than (i)
a disposition to any Restricted Subsidiary or the Company, (ii) a
disposition of Property or assets in the ordinary course of business,
(iii) dispositions of inventory in the ordinary course of business,
(iv) a conveyance, sale, transfer, assignment or other
17
disposition covered by the definition of "Company Asset Sale" and (v)
sales of obsolete or worn-out equipment.
'RETIREMENT OF RESTRICTED SUBSIDIARY INDEBTEDNESS'
means the prepayment, repayment or purchase of Indebtedness of the
Restricted Subsidiaries or Designated Subsidiaries, as the case may
be, and in connection with any such prepayment, repayment or purchase
of Indebtedness of Restricted Subsidiaries or Designated Subsidiaries,
the retirement of such Indebtedness and the permanent reduction of the
related loan commitment (if any) in the principal amount of the
Indebtedness so prepaid, repaid or repurchased.
'UNRESTRICTED SUBSIDIARY' means any Subsidiary of
the Company other than a Restricted Subsidiary or a Designated
Subsidiary.
'VECTOR PLEDGE AGREEMENT' means the Amended and
Restated Guarantee, Acknowledgment and Pledge Agreement, dated as of
April 29, 2002, by and among Vector, the Collateral Agent and the
Purchasers, as amended, modified and supplemented from time to time.
'VTUSA' means Vector Tobacco Inc., a Virginia
corporation, and any successor thereto."
iii. adding the following definitions:
"'BRANDS' means ▇▇▇▇▇▇▇ Vector Brands Inc., a
Delaware corporation, and any successor thereto.
'DESIGNATED SUBSIDIARY' means any Subsidiary of the
Company designated as such pursuant to Section 22.11.
'▇▇▇▇▇▇▇ GUARANTEE' means the Guarantee, dated as of
April 29, 2002 made by ▇▇▇▇▇▇▇ in favor of the Purchasers.
'▇▇▇▇▇▇▇ SUBORDINATION AGREEMENT' means the
Subordination Agreement, dated as of April 29, 2002 by and among
Congress Financial Corporation, the Collateral Agent and ▇▇▇▇▇▇▇, as
such agreement, may be amended, modified and supplemented from time to
time.
'MARKET SHARE' shall have the meaning ascribed
thereto in the Master Settlement Agreement.
'MEDALLION MERGER AGREEMENT' means the [Vector
Tobacco/Medallion/VGR Acquisition Merger Agreement], as amended,
modified and supplemented from time to time.
'MEDALLION PURCHASE AGREEMENT' means the Purchase
and Sale Agreement, dated as of February 15, 2002, between VGR
Acquisition Inc., The Medallion Company, Inc. and ▇▇▇▇ ▇. ▇▇▇▇.
18
"MSA MARKET SHARE EXEMPTION' means with respect to
any Subsequent Participating Manufacturer (as defined in the Master
Settlement Agreement), the amount of Market Share above which such
Subsequent Participating Manufacturer is required to make payments
pursuant to Section IX(i) of the Master Settlement Agreement.
'NEW NOTE PURCHASE AGREEMENT' means the Second
Amendment to Note Purchase Agreement and New Note Purchase Agreement,
dated as of April 29, 2002, by and among the Company, the Majority
Holders and the New Purchasers (as defined therein).
'NEW NOTES' means the $30,000,000 in aggregate
principal amount of Notes issued on April 29, 2002.
'NEW TOBACCO BUSINESS' means the development,
promotion, production, transportation, distribution, marketing and
sale of carcinogen-reduced or nicotine-reduced tobacco products.
'PERMITTED BRANDS RESTRUCTURING CHARGE' means the
amounts actually incurred between January 1, 2002 and December 31,
2002 by the Company and the Restricted Subsidiaries in the
capitalization, formation and organization of Brands for each of the
actions set forth on Schedule D hereto in an amount not to exceed for
any action the amount set forth opposite such action.
'PREPAYMENT PREMIUM' means the difference between
(i) the percentage of principal amount at which a Note is to be
purchased by the Company pursuant to Section 8.25 and (ii) 100%.
aa. Disclosure Schedules. Schedule 5.4, Schedule 5.5,
Schedule 5.8, Schedule 5.15 and Schedule 5.23 to the Note Purchase Agreement
are hereby amended as set forth on Schedule C attached to this Amendment and
Purchase Agreement.
bb. Exhibit A. The form of Note attached to the Note
Purchase Agreement as Exhibit A (an "Old Note Form"), is hereby amended by
deleting such form of Note its in entirety and inserting in lieu thereof
Exhibit A to this Purchase and Amendment Agreement (a "New Note Form"). Upon
the request of any Holder holding a Note which is in the form of an Old Form
Note, the Company shall execute and deliver a Note in the form of a New Form
Note and shall cause Vector and ▇▇▇▇▇▇▇ to execute the guarantees contained in
the New Form Note.
cc. Schedule D. Schedule D to this Amendment and
Purchase Agreement is hereby added to the Note Purchase Agreement as Schedule D
thereto.
2. SALE AND PURCHASE OF NEW NOTES. Subject to the terms
and conditions of the Note Purchase Agreement as amended by this Amendment and
Purchase Agreement, the Company shall issue and sell to the New Purchasers, and
the New Purchasers shall purchase from the Company, at the Second Closing (as
defined below) provided for in Section 3, New Notes in the principal amount
specified opposite each New Purchaser's name in Schedule A at the purchase
price of 85.3748% of the principal amount thereof. The obligations of each New
Purchaser hereunder are several and not joint obligations.
19
3. SECOND CLOSING. The sale and purchase of the New
Notes shall occur at the offices of Milbank, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, at 9:00 a.m.,
Los Angeles time, at a closing (the "SECOND CLOSING") on April 29, 2002 or on
such other Business Day thereafter on or prior to April 30, 2002 as may be
agreed upon by the Company and the New Purchasers. At the Second Closing, the
Company will deliver to each New Purchaser the New Notes to be purchased by
such New Purchaser in the form of a single Note (or such greater number of
Notes in denominations of at least $100,000 as such New Purchaser may request)
dated the date of the Second Closing and registered in name of such New
Purchaser (or in the name of its nominee), against delivery by such New
Purchaser of immediately available funds in the amount of the purchase price
therefor by wire transfer. If at the Second Closing the Company shall fail to
tender such New Notes to each New Purchaser as provided above in this Section
3, or any of the conditions specified in Section 4 shall not have been
fulfilled to the satisfaction of the New Purchasers, the New Purchasers shall,
at their election, be relieved of all further obligations under this Amendment
and Purchase Agreement.
4. CONDITIONS TO EFFECTIVENESS. This Amendment and
Purchase Agreement shall become effective and the New Purchasers shall be
obligated to purchase the New Notes upon the satisfaction of each of the
following conditions:
4.1 Representations and Warranties.
The representations and warranties of the Company in this
Amendment and Purchase Agreement shall be correct in all material respects when
made and at the time of the Second Closing (except to the extent that such
representations and warranties speak as of an earlier date).
4.2 Performance; No Default.
Each Document Party shall have performed and complied with
all agreements and conditions contained in the Note Documents required to be
performed or complied with by it prior to or at the Second Closing, and on the
date of the Second Closing after giving effect to the issue and sale of the New
Notes, no Default or Event of Default shall have occurred and be continuing. As
of the date of such Second Closing, none of Vector, the Company nor any of the
Subsidiaries shall have entered into any transaction since September 30, 2001
in excess of $1,000,000, that would have been prohibited by Section 8.3, 8.4,
8.5 or 8.7 of the Note Purchase Agreement had such Section applied since such
date.
4.3 Compliance Certificates.
(a) Officers' Certificate. The Company shall have
delivered to the New Purchasers, the Majority Holders and the Collateral Agent
an Officers' Certificate, dated the date of the Second Closing and
substantially in the form of Exhibit 4.3(a) attached hereto, certifying that
the conditions specified in this Section 4 have been fulfilled.
(b) Secretary's Certificate. Each Document Party shall
have delivered to the New Purchasers, the Majority Holders and the Collateral
Agent a certificate, dated the date of the
20
Second Closing and substantially in the form of Exhibit 4.3(b) attached hereto,
certifying as to the organization documents, resolutions and good standing
certificates attached thereto and other corporate proceedings relating to the
authorization, execution and delivery of each Note Document to which it is a
party.
4.4 Opinions of Counsel.
The New Purchasers, the Majority Holders and the Collateral
Agent shall have received opinions in form and substance reasonably
satisfactory to the New Purchasers, the Majority Holders and to the Collateral
Agent, each dated the date of the Second Closing, from ▇▇▇▇▇▇▇▇▇, Will & ▇▇▇▇▇,
counsel for the Company, and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Executive Vice President and
Special Counsel of the Company, covering the matters set forth in Exhibit 4.4.
4.5 Purchase Permitted By Applicable Law, Consents of
Third Parties, etc.
On the date of the Second Closing, the purchase of New Notes
shall (i) be permitted by the laws and regulations of each jurisdiction to
which each New Purchaser or Majority Holder is subject, (ii) not violate any
applicable law or regulation (including, without limitation, Regulation T, U or
X of the Board of Governors of the Federal Reserve System) and (iii) not
subject any New Purchaser to any tax, penalty or liability under or pursuant to
any applicable law or regulation, which law or regulation was not in effect on
the date hereof. If requested by any New Purchaser or Majority Holder, such New
Purchaser or Majority Holder, as the case may be, shall have received an
Officers' Certificate from any Document Party certifying as to such matters of
fact as it may reasonably specify to enable it to determine whether such
purchase is so permitted. All consents of third parties, including without
limitation, the consent of Congress Financial Corporation, necessary to
consummate the transactions contemplated in the Note Documents shall have been
obtained.
4.6 Payment of Certain Fees and Expenses.
Without limiting the provisions of Section 16.1 of the Note
Purchase Agreement, the Company shall have paid on or before the Second Closing
(i) a funding fee of $1,748,000 to the New Purchasers or their respective
designees, pro rata, in proportion to the amount of New Notes to be purchased
by each New Purchaser and (ii) the reasonable fees, charges and disbursements
of Milbank, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, to the extent reflected in a statement
of such counsel rendered to the Company prior to the Second Closing.
4.7 Changes in Corporate Structure.
No Document Party has changed its jurisdiction of
incorporation or been a party to any merger or consolidation and shall have
succeeded to all or any substantial part of the liabilities of any other
entity, at any time following September 30, 2001.
4.8 Proceedings and Documents.
All corporate and other proceedings in connection with the
transactions contemplated by the Note Documents and all documents and
instruments incident to such transactions shall be reasonably satisfactory to
the New Purchasers and the Majority Holders, and
21
the New Purchasers and the Majority Holders shall have received all such
counterpart originals or certified or other copies of such documents as the New
Purchasers or the Majority Holders, as the case may be, may reasonably request.
4.9 Rating Letters.
The delivery to the New Purchasers and the Majority Holders
of an Officers' Certificate of the Company to the effect that attached thereto
is a true and correct copy of (i) a letter signed by ▇▇▇▇▇'▇ Investors Service,
Inc. confirming that the Notes have been rated at least B1 by ▇▇▇▇▇'▇ Investors
Service, Inc. and that such rating is in full force and effect on the date of
Second Closing; and (ii) a letter signed by Standard & Poor's Ratings Services
confirming that the Notes have been rated at least B by Standard & Poor's
Ratings Services and that such ratings are in full force and effect on the date
of Second Closing.
4.10 Credit Support Documents.
The Vector Pledge Agreement, the ▇▇▇▇▇▇▇ Guarantee and
amendments to each of the BGLS Pledge Agreement, NV Holdings Pledge Agreement,
Brooke Holding Pledge Agreement and the Collateral Agency Agreement, in form
and substance satisfactory to the New Purchasers and the Majority Holders,
shall have been duly executed and delivered by each Document Party party
thereto.
4.11 Lien Searches.
The Purchasers shall have received the results of a recent
Uniform Commercial Code lien search in each of the jurisdictions where each of
the Document Parties is located within the meaning of Article 9 of the Uniform
Commercial Code or where reasonably requested by any New Purchaser, and such
search shall have revealed no Liens on any assets of a Document Party other
than Permitted Liens on Collateral other than Pledged Stock and Cash and cash
equivalents.
4.12 Financing Documents.
A true and complete copy of each Material financing document
of Vector, the Company and the Restricted Subsidiaries shall have been
delivered to the New Purchasers, and the Majority Holders accompanied by an
Officer's Certificate to the effect that all such documents are true and
complete copies of all Material financing documents, as amended, modified and
supplemented through the date of the Second Closing, of Vector, the Company and
the Restricted Subsidiaries.
4.13 Medallion Acquisition.
(a) True and complete copies of (i) the Medallion
Purchase Agreement, (ii) the Two-Year Promissory Notes and Five-Year Promissory
Notes (as each is defined in the Medallion Purchase Agreement), (iii) the
guarantees issued by ▇▇▇▇▇▇▇ and Vector in favor of the payees of the Two-Year
Promissory Notes and Five-Year Promissory Notes (the "Medallion Financing
Guarantees") and (iv) the Medallion Merger Agreement shall have delivered to
the New Purchasers and the Majority Holders, accompanied by an Officer's
Certificate to the effect
22
that such agreement or note is a true and complete copy thereof, as amended,
modified and supplemented through the date hereof.
(b) The Company shall have delivered to the New
Purchasers and the Majority Holders an Officer's Certificate setting forth in
reasonable detail the calculations necessary to demonstrate, as of the date of
the Second Closing, that after giving pro forma effect to the transactions
contemplated in this Amendment and Purchase Agreement, the Medallion Purchase
Agreement and the Medallion Merger Agreement, the Leverage Ratio is less than
2.50 to 1.
(c) The Company shall have delivered true and complete
copies of all notices required under the Worker Adjustment and Retraining
Notification Act of 1988, as amended from time to time, and the regulations
promulgated thereunder ("WARN"), to be given in connection with the termination
of the operations engaged in by The Medallion Company, Inc. immediately prior
to its acquisition on April 1, 2002.
4.14 Pledged Stock.
The Collateral Agent shall have received certificates
representing all issued and outstanding shares of capital stock of Brands and
VTUSA, together with an undated stock power for each such certificate executed
in blank by a duly authorized of the Company in form and substance satisfactory
to the Collateral Agent.
5. REPRESENTATIONS AND WARRANTIES. To induce the
Majority Holders and the New Purchasers to enter into this Amendment and
Purchase Agreement, the Company hereby represents and warrants to each other
signatory hereto that as of the date of the Second Closing:
A. Continuation of Representations and
Warranties in Note Purchase Agreement. The representations
and warranties made by it in the Note Purchase Agreement are
true and correct in all material respects after giving effect
to the transactions contemplated in this Amendment and
Purchase Agreement (it being understood and agreed that any
representation or warranty which by its terms is made as of a
specified date shall be required to be true and correct in
all material respects only as of such specified date).
B. Leverage Ratio. After giving effect to the
transactions contemplated in this Amendment and Purchase
Agreement, the Medallion Purchase Agreement and the Medallion
Merger Agreement, the Leverage Ratio shall be less than 2.50
to 1.
C. No Material Adverse Effect. During the
period from September 30, 2001 through the date of the Second
Closing, there will have been no development or event which
could reasonably be expected to have a Material Adverse
Effect.
D. Legal, Valid and Binding Obligation. This
Amendment and Purchase Agreement constitutes the legal, valid
and binding obligation of the Company, enforceable against it
in accordance with its terms, except as such
23
enforcement may be limited by bankruptcy, insolvency,
fraudulent conveyances, reorganization, moratorium or similar
laws affecting creditor's rights.
E. No Default. No Default or Event of Default
shall have occurred and be continuing on such date or after
giving effect to the transactions contemplated in this
Amendment and Purchase Agreement.
F. WARN. VTUSA has timely taken or performed
all actions required by WARN or any applicable similar state
law with respect to the termination of employees of The
Medallion Company, Inc. (including, without limitation, the
providing of the notice to employees as required by WARN,
within the time frame established under such law or the
provision for compensation to each employee required by WARN
if such WARN notice were not timely made.)
6. REPRESENTATIONS OF NEW PURCHASERS.
Each New Purchaser hereby, severally and not jointly,
represents and warrants to, and agrees with, the Company that:
(a) such New Purchaser understands and acknowledges that
the New Notes have not been registered under the Securities Act based in part,
on reliance that the issuance of the New Notes is exempt from registration
under Section 4(2) of the Securities Act and, therefore, the New Notes may not
be offered or sold except pursuant to an effective registration statement
under, or an exemption from the registration requirements of, Securities Act;
(b) such New Purchaser (i) has not and, absent an
effective registration statement permitting resale of such New Notes by such
New Purchaser, will not solicit offers for, or offer to sell, the New Notes by
any form of general solicitation or general advertising (as those terms are
used in Regulation D under the Securities Act) or in any manner involving a
public offering within the meaning of Section 4(2) of the Securities Act, (ii)
is acquiring one or more New Notes hereunder for its own account, for
investment purposes only and not with a view to any distribution thereof that
would violate the Securities Act or the securities laws of any state of the
United States or any applicable jurisdiction and (iii) absent an effective
registration statement permitting resale of such New Notes by such New
Purchaser, will not offer, sell, assign, transfer, pledge, encumber or
otherwise dispose of the New Notes except pursuant to an available exemption
from the registration requirements of the Securities Act and in compliance with
applicable state securities laws; furthermore, upon the request of the Company,
such New Purchaser shall deliver, or cause to be delivered, an opinion of
counsel, certifications and/or other information requested by the Company and a
certificate of transfer in the form appearing on the New Note having been
completed and delivered by the transferor to the Company prior to any such
disposition; and
(c) such New Purchaser is an "accredited investor" as
such term is defined in Rule 501(a) promulgated under Regulation D of the
Securities Act and such Purchaser has the knowledge and experience in financial
and business matters as are necessary in order to evaluate the merits and risks
of an investment in the New Notes; such New Purchaser is relying on its own
diligence in connection with its investment hereunder; and such New Purchaser
is not relying on any other New Purchaser to provide such Purchaser with any
information with respect to the offer and sale of the New Notes or the Company
generally and is not
24
relying on the completeness or accuracy of any information provided by any
other New Purchaser; and such New Purchaser has been given access to all books,
records and other information of the Company which such New Purchaser has
desired to review and given the opportunity to ask questions of and receive
answers from the Company in connection with the sale and purchase of the New
Notes hereunder.
Each New Purchaser understands that the Company, and, with
respect to any legal opinion delivered pursuant to Section 4 of this Amendment
and Purchase Agreement, counsel to the Company will rely upon the accuracy and
truth of the foregoing representations, warranties and agreements with respect
to making a determination that an exemption from the registration requirement
of the Securities Act is available pursuant to Section 4(2) thereof in
connection with the issuance of the New Notes hereunder, and the New Purchasers
hereby consent to such reliance.
7. REFERENCE TO THE NOTE PURCHASE AGREEMENT. Each
reference in the Note Purchase Agreement to "this Agreement," "hereunder,"
"hereof," "herein," or words of like import referring to the Note Purchase
Agreement, shall mean and be a reference to such Note Purchase Agreement as
amended by this Amendment and Purchase Agreement.
8. LIMITED EFFECT. Except as expressly amended and
modified by this Amendment and Purchase Agreement, the Note Purchase Agreement
shall continue to be, and shall remain, in full force and effect in accordance
with its terms.
9. SUCCESSORS. All agreements of the parties to this
Amendment and Purchase Agreement shall bind their respective successors.
10. COUNTERPARTS. This Amendment and Purchase Agreement
may be executed in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument. Delivery of an executed counterpart of a signature page of this
Amendment and Purchase Agreement by facsimile or electronic mail transmission
shall be effective as delivery of a manually executed counterpart of this
Amendment and Purchase Agreement.
11. GOVERNING LAW. THIS AMENDMENT AND PURCHASE AGREEMENT
AND ALL ISSUES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE INTERNAL LAWS OF THE STATE OF NEW YORK.
12. SEVERABILITY. In case any one or more of the
provisions in this Amendment and Purchase Agreement shall be held invalid,
illegal or unenforceable, in any respect for any reason, the validity, legality
and enforceability of any such provision in every other respect and of the
remaining provisions shall not in any way be affected or impaired thereby, it
being intended that all of the provisions hereof shall be enforceable to the
full extent permitted by law.
13. HEADINGS. The headings of the Sections of this
Amendment and Purchase Agreement have been inserted for convenience of
reference only, are not to be considered a part of this Amendment and Purchase
Agreement and shall in no way modify or restrict any of the term or provisions
of this Amendment and Purchase Agreement.
[SIGNATURE PAGES FOLLOW]
25
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment and Purchase Agreement to be duly executed and delivered by their
respective proper and duly authorized officers as of the day and year first
above written.
VGR HOLDING INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Executive Vice President
TCW HIGH INCOME PARTNERS, LTD.
By: TCW Asset Management Company,
its Investment Advisor
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Managing Director
TCW HIGH INCOME PARTNERS II, LTD.
By: TCW Asset Management Company,
its Investment Advisor
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Managing Director
PIONEER HIGH YIELD CAYMAN UNIT TRUST
By: TCW Asset Management Company,
its Investment Advisor
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Managing Director
TCW SHARED OPPORTUNITY FUND III, L.P.
By: TCW Asset Management Company,
its Investment Advisor
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Managing Director
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Senior Vice President
TCW LEVERAGED INCOME TRUST IV, L.P.
By: TCW Asset Management Company,
as its Investment Advisor
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Senior Vice President
AND
By: TCW Asset Management Company,
as its Managing Member of TCW
(▇▇▇▇ ▇▇) L.L.C., the General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Managing Director
TCW LEVERAGED INCOME TRUST, L.P.
By: TCW Advisers (Bermuda), Ltd.,
as its General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Managing Director
By: TCW Investment Management Company,
as Investment Adviser
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Senior Vice President
TCW LEVERAGED INCOME TRUST II, L.P.
By: TCW (▇▇▇▇ ▇▇), L.P.,
as its General Partner
By: TCW Advisers (Bermuda), Ltd.,
its General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Managing Director
By: TCW Investment Management Company,
as Investment Adviser
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Senior Vice President
TCW LINC III CBO LTD.
By: TCW Investment Management Company,
as Collateral Manager
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Managing Director
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Senior Vice President
AIMCO CDO, SERIES 2000-A
By: Allstate Investment Management Company,
its Collateral Manager
By: TCW Asset Management Company,
its Investment Advisor
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Managing Director
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Senior Vice President
POWRs 1997-2 (Participating Obligations
with Residuals 1997-2)
By: Citibank Global Asset Management,
its Investment Advisor
By: TCW Asset Management Company,
its Portfolio Manager
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Managing Director
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Senior Vice President
CAPTIVA II FINANCE LTD.
By: TCW Advisors, Inc.,
its Financial Manager
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Managing Director
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Senior Vice President
EXHIBIT A
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR
ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
SUCH REGISTRATION UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
SUCH REGISTRATION AND ANY APPLICABLE STATE SECURITIES LAWS HAVE BEEN COMPLIED
WITH.
THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE HEREOF AGREES NOT TO OFFER, SELL,
ASSIGN, TRANSFER OR OTHERWISE DISPOSE OF THIS NOTE, PRIOR TO THE DATE THAT IS
TWO (2) YEARS (OR SUCH SHORTER PERIOD THAT MAY HEREAFTER BE PROVIDED UNDER RULE
144(K) UNDER THE SECURITIES ACT AS PERMITTING RESALES BY NON-AFFILIATES OF
RESTRICTED SECURITIES WITHOUT RESTRICTION) AFTER THE LATER OF THE ORIGINAL
ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF
THE COMPANY WAS THE OWNER OF THIS NOTE (OR ANY PREDECESSOR OF SUCH SECURITY)
EXCEPT (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS
BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THIS NOTE
IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A) THAT PURCHASES FOR
ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM
NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D)
IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 UNDER
THE SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE
MEANING OF RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS
PURCHASING THIS NOTE FOR ITS OWN ACCOUNT FOR INVESTMENT PURPOSES AND NOT WITH A
VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION
OF THE SECURITIES ACT OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND
THE TRANSFER AGENT'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT
TO CLAUSE (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO THE COMPANY AND THE
REGISTRAR, AND IN EACH OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE
FORM APPEARING ON THIS NOTE IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE
TRANSFER AGENT.
10% SENIOR SECURED NOTE DUE MARCH 31, 2006
No. [___] January 15, 2002
$__________ CUSIP NUMBER: 055432 AD 0
FOR PURPOSES OF SECTION 1273 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
(THE "CODE"), THIS NOTE HAS ORIGINAL ISSUE DISCOUNT. FOR PURPOSES OF SECTION
1273 OF THE CODE, THE ISSUE PRICE IS $__________ AND THE AMOUNT OF ORIGINAL
ISSUE DISCOUNT IS $__________. FOR PURPOSES OF SECTION 1275 OF THE CODE, THE
ISSUE DATE OF THIS NOTE IS JANUARY 15, 2002. FOR PURPOSES OF SECTION 1272 OF
THE CODE, THE YIELD TO MATURITY (COMPOUNDED SEMI-ANNUALLY) IS _____%.
FOR VALUE RECEIVED, the undersigned, VGR HOLDING INC., a
Delaware corporation (the "COMPANY"), hereby promises to pay to TCW HIGH INCOME
PARTNERS, LTD., or its registered assigns, the principal sum of ONE MILLION
DOLLARS (or so much thereof as shall not have been prepaid) on March 31, 2006,
with interest (computed on the basis of a 360-day year of twelve 30-day months)
(a) on the unpaid balance thereof at the rate of 10% per annum from the date
hereof, payable (i) semiannually, on the 15th day of January and July in each
year, commencing with the July 15 next succeeding the date hereof, until the
principal hereof shall have become due and payable and (ii) on the date the
principal hereof shall have become due and payable, and (b) to the extent
permitted by law, on any overdue payment (including any overdue prepayment) of
the principal of or interest and Prepayment Premium (if any) on the Notes (as
defined in the Note Purchase Agreement referred to below), payable semiannually
as aforesaid (or, at the option of the registered Holder hereof, on demand), at
a rate per annum from time to time equal to the rate borne by the Notes plus
2%.
Payments of principal of and interest and Prepayment Premium
(if any) on the Notes are to be made in lawful money of the United States of
America by the method and at the address specified with respect to such Holder
in Schedule A to the Note Purchase Agreement.
This Note is one of a series of 10% Senior Secured Notes Due
March 31, 2006 (herein called the "NOTES") issued pursuant to a Note Purchase
Agreement, dated as of May 14, 2001, as it may be amended, modified or
supplemented from time to time (the "NOTE PURCHASE AGREEMENT"), between the
Company and the Purchasers named therein and is entitled to the benefits
thereof. Each Holder of this Note will be deemed, by its acceptance hereof, to
have agreed to the confidentiality provisions set forth in Section 21 of the
Note Purchase Agreement.
This Note is secured and guaranteed as provided in the Note
Documents. Reference is hereby made to the Note Documents for a description of
the properties and assets in which a security interest has been granted, the
nature and extent of the security and the guarantees, the terms and conditions
upon which the security interests were granted and the rights of the Holder of
this Note in respect of such security and guarantees.
This Note is registered as to both principal and stated
interest with the Company pursuant to United States Treasury Regulation Section
5f.103-1 and may be transferred only by the surrender of a Note by the
transferor and the issuance by the Company of a new Note to the transferee. As
provided in the Note Purchase Agreement, upon surrender of this Note for
registration of transfer, duly endorsed, or accompanied by a written instrument
of transfer duly executed, by the registered holder hereof or such holder's
attorney duly authorized in writing, a new Note of this series for a like
principal amount will be issued to, and registered in the name of, the
transferee. Prior to due presentment for registration of transfer, the Company
may treat the person in whose name this Note is registered as the owner hereof
for the purpose of receiving payment and for all other purposes, and the
Company will not be affected by any notice to the contrary.
The Company will make required prepayments of principal on
the dates and in the amounts specified in the Note Purchase Agreement. This
Note is also subject to optional prepayment, in whole or from time to time in
part, at the times and on the terms specified in the Note Purchase Agreement,
but not otherwise.
If an Event of Default, as defined in the Note Purchase
Agreement, occurs and is continuing, the principal of or interest and
Prepayment Premium (if any) on this Note may be declared or otherwise become
due and payable in the manner, at the price (including any applicable
Prepayment Premium) and with the effect provided in the Note Purchase
Agreement.
NEITHER ANY GROUP EXECUTIVE (AS DEFINED IN THE NOTE PURCHASE
AGREEMENT) OR NEW VALLEY CORPORATION SHALL BE PERMITTED TO VOTE ANY NOTES THAT
ANY OF THEM MAY HOLD FROM TIME TO TIME UNDER ANY CIRCUMSTANCES, INCLUDING,
WITHOUT LIMITATION, IN THE EVENT OF A BANKRUPTCY OF THE COMPANY. IN THE EVENT
OF A BANKRUPTCY OF THE COMPANY, ALL GROUP EXECUTIVES AND NEW VALLEY CORPORATION
SHALL BE DEEMED TO BE ENTITIES DESIGNATED IN 11 U.S.C. SS.1126(E) FOR PURPOSES
OF DETERMINING ACCEPTANCE OF ALLOWED CLAIMS PURSUANT TO 11 U.S.C. SS.1126(C).
This Note shall be construed and enforced in accordance with
the laws of the State of New York.
VGR HOLDING INC.
By:
----------------------------------------
Name:
Title:
VECTOR GUARANTEE
Vector Group Ltd. hereby unconditionally and irrevocably guarantees to
the holder of the foregoing Note the due and punctual payment of all principal,
interest and Prepayment Premium, if any, on said Note as more fully provided in
the Vector Pledge Agreement.
VECTOR GROUP LTD.
By:
----------------------------------------
Name:
Title:
▇▇▇▇▇▇▇ GUARANTEE
▇▇▇▇▇▇▇ Group Inc. hereby unconditionally and irrevocably guarantees,
subject to the ▇▇▇▇▇▇▇ Subordination Agreement, to the holder of the foregoing
Note the due and punctual payment of all principal, interest and Prepayment
Premium, if any, on said Note as more fully provided in the ▇▇▇▇▇▇▇ Guarantee.
▇▇▇▇▇▇▇ GROUP INC.
By:
----------------------------------------
Name:
Title: