UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): NOVEMBER 18, 2004
VECTOR GROUP LTD.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 1-5759 65-0949535
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(State or Other Jurisdiction of (Commission File Number) (I.R.S. Employer Identification No.)
Incorporation)
100 S.E. SECOND STREET, MIAMI, FLORIDA 33131
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(Address of Principal Executive Offices) (Zip Code)
(305) 579-8000
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(Registrant's Telephone Number, Including Area Code)
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On November 18, 2004, Vector Group Ltd. (the "Company") completed
the sale of $65.5 million of its 5% Variable Interest Senior Convertible Notes
due 2011 (the "Notes") to qualified institutional buyers in accordance with Rule
144A of the Securities Act of 1933, as amended. The buyers of the Notes will
have the right, for a 120-day period ending on March 18, 2005, to purchase an
additional $16.375 million of the Notes. The Notes are governed by the terms of
an Indenture, dated as of November 18, 2004 (the "Indenture"), between the
Company and Wells Fargo Bank, N.A., as Trustee, a copy of which is attached
hereto as Exhibit 4.1.
On November 19, 2004, the Company used the net proceeds of the
issuance to redeem at par all of the remaining $63 million principal amount of
the 10% Senior Secured Notes due March 31, 2006 issued by the Company's
subsidiary, VGR Holding Inc. The redemption price, together with accrued and
unpaid interest, was $65.17 million.
On November 18, 2004, in connection with the closing of the sale of
the Notes, Bennett S. LeBow, as the principal stockholder of the Company, and
LeBow Gamma Limited Partnership entered into a Master Securities Loan Agreement
and accompanying letter agreement (together, the "Agreement") with Jefferies &
Company, Inc. ("Jefferies"), the placement agent for the Notes. Copies of the
Agreement are incorporated as Exhibits 10.1 and 10.2 hereto. Under the
Agreement, LeBow Gamma Limited Partnership has agreed to lend Jefferies from
time to time up to 3,472,875 shares of the Company's common stock held by LeBow
Gamma Limited Partnership (the "Shares") for the purpose of allowing Jefferies,
in turn, to lend such Shares to its customers (including the purchasers of the
Notes) who may, from time to time, sell such Shares short. The Shares must be
available for an initial period of 30 months. After the end of such initial
30-month period until November 15, 2011, the Shares also must be available
during any period in which Mr. LeBow, any member of his immediate family and any
person or group controlled by Mr. LeBow or any member of his immediate family
(or any trust or partnership controlled by any of the foregoing), either
individually or collectively, are beneficial owners of more than 50% of the
aggregate ordinary voting power of the Company. Mr. LeBow and LeBow Gamma
Limited Partnership have the right to assign to Howard Lorber some or all of
their obligation to lend the Shares under the Agreement. LeBow Gamma Limited
Partnership also agreed with Jefferies that it will not dispose of the Shares
during the period that they must be available under the Agreement, subject to
limited exceptions.
In connection with the private offering of the Notes, the purchasers
of the Notes required that Mr. LeBow, as the principal stockholder of the
Company, grant Jefferies the right to borrow the Shares from Mr. LeBow or an
entity affiliated with him as discussed above. In consideration for Mr. LeBow,
as the Company's principal stockholder, agreeing to lend the Shares in order to
facilitate the Company's offering of the Notes and accepting the resulting
liquidity risk, the Company and Mr. LeBow entered into a letter agreement (the
"Letter Agreement") on November 22, 2004 whereby the Company agreed to pay Mr.
LeBow or an affiliate designated by him an annual fee, payable on a quarterly
basis in cash or, by mutual agreement of the Company and Mr. LeBow, in shares of
common stock, equal to 1% of the aggregate market value of the Shares. In
addition, the Company agreed to hold Mr. LeBow harmless on an after-tax basis
against any increase, if any, in the income tax rate applicable to dividends
paid on the Shares as a result of the Letter Agreement. In the event of an
assignment
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by Mr. LeBow to Mr. Lorber of some or all of the obligation to lend Shares under
the Agreement, the rights of Mr. LeBow under the Letter Agreement will be
assigned on a pro rata basis to Mr. Lorber. A copy of the Letter Agreement is
incorporated as Exhibit 10.3 hereto.
The summary of the foregoing transaction is qualified in its
entirety by reference to the text of the related agreements, which are included
as exhibits hereto and are incorporated herein by reference.
ITEM 2.03. CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER
AN OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT.
See Item 1.01, which is incorporated herein by reference.
ITEM 2.04. TRIGGERING EVENTS THAT ACCELERATE OR INCREASE A DIRECT FINANCIAL
OBLIGATION OR AN OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT.
See Item 1.01, which is incorporated herein by reference.
ITEM 3.02. UNREGISTERED SALES OF EQUITY SECURITIES.
See Item 1.01, which is incorporated herein by reference.
ITEM 5.05. AMENDMENTS TO THE REGISTRANT'S CODE OF ETHICS, OR WAIVER OF A
PROVISION OF THE CODE OF ETHICS.
On November 22, 2004, the Company entered into the Letter Agreement
with Mr. LeBow, as the principal stockholder of the Company, in connection with
his entry into the Agreement to lend the Shares in order to facilitate the
Company's offering of the Notes. See Item 1.01, which is incorporated herein by
reference. The Audit Committee of the Company approved the Letter Agreement,
including any assignment thereof to Mr. Lorber, on November 22, 2004 and granted
an exception under the Company's Code of Business Conduct and Ethics in order to
permit the Company to enter into the Letter Agreement and any assignment
thereof.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
The following Exhibits are filed herewith:
Exhibit 4.1. Indenture, dated as of November 18, 2004, among
Vector Group Ltd. and Wells Fargo Bank, N.A.,
relating to the 5% Variable Interest Senior
Convertible Notes due 2011 (the "Notes"),
including the form of Note.
Exhibit 10.1. Master Securities Loan Agreement, dated November
18, 2004, between LeBow Gamma Limited Partnership
and Jefferies (incorporated by reference to
Exhibit 12 to Amendment No. 11,
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dated November 23, 2004, to the Schedule 13D filed
by Bennett S. LeBow with respect to the Company's
common stock).
Exhibit 10.2. Agreement, dated November 18, 2004, between Mr.
LeBow, LeBow Gamma Limited Partnership and
Jefferies (incorporated by reference to Exhibit 13
to Amendment No. 11, dated November 23, 2004, to
the Schedule 13D filed by Bennett S. LeBow with
respect to the Company's common stock).
Exhibit 10.3. Letter Agreement, dated November 22, 2004,
between the Company and Mr. LeBow (incorporated by
reference to Exhibit 14 to Amendment No. 11, dated
November 23, 2004, to the Schedule 13D filed by
Bennett S. LeBow with respect to the Company's
common stock).
Exhibit 99.1. Press Release dated November 18, 2004.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
VECTOR GROUP LTD.
By: /s/ Joselynn D. Van Siclen
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Joselynn D. Van Siclen
Vice President and Chief Financial Officer
Date: November 23, 2004
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