Convertible Senior Notes. In April 2011, we issued $75.0 million in aggregate principal amount of 6.00% convertible senior notes (the “Convertible Senior Notes”) due 2016. During the three months ended September 30, 2014, holders of approximately $34.1 million of our Convertible Senior Notes exercised their conversion rights. As of September 30, 2014, the carrying value of the Convertible Senior Notes, comprised of the aggregate principal amount outstanding less the unaccreted discount initially recorded upon issuance of the Convertible Senior Notes, is approximately $40.0 million. The Convertible Senior Notes mature on April 15, 2016 (the “Maturity Date”), unless previously converted or repurchased in accordance with their terms. The Convertible Senior Notes bear interest at a rate of 6.00% per year payable semiannually in arrears on April 15 and October 15 of each year, commencing on October 15, 2011. The Convertible Senior Notes are our senior unsecured obligations and rank senior in right of payment to our existing and future indebtedness that is expressly subordinated in right of payment to the Convertible Senior Notes; equal in right of payment to our existing and future unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of our secured indebtedness (including unsecured indebtedness that we later secure) to the extent of the value of the assets securing such indebtedness; and structurally junior to all existing and future indebtedness (including trade payables) incurred by our subsidiaries, financing vehicles or similar facilities. Prior to the close of business on the business day immediately preceding October 15, 2015, holders may convert their Convertible Senior Notes only under certain circumstances set forth in the indenture. On or after October 15, 2015 until the close of business on the scheduled trading day immediately preceding the Maturity Date, holders may convert their Convertible Senior Notes at any time. Upon conversion, we will pay or deliver, as the case may be, at our election, cash, shares of our common stock or a combination of cash and shares of our common stock. The conversion rate will initially be 84.0972 shares of common stock per $1,000 principal amount of Convertible Senior Notes (equivalent to an initial conversion price of approximately $11.89 per share of common stock). The conversion rate will be subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. In addition, if certain corporate events occur prior to the Maturity Date, the conversion rate will be increased for converting holders. As of September 30, 2014, the conversion rate was 87.5583 shares of common stock per $1,000 principal amount of Convertible Senior Notes (equivalent to an adjusted conversion price of approximately $11.42 per share of common stock). We may not redeem the Convertible Senior Notes prior to maturity. No sinking fund is provided for the Convertible Senior Notes. In addition, if certain corporate events occur, holders of the Convertible Senior Notes may require us to repurchase for cash all or part of their Convertible Senior Notes at a repurchase price equal to 100% of the principal amount of the Convertible Senior Notes to be repurchased, plus accrued and unpaid interest through, but excluding, the required repurchase date. The Convertible Senior Notes are accounted for in accordance with ASC 470-20 (previously FASB Staff Position No. APB 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)”). In accounting for the Convertible Senior Notes, we estimated at the time of issuance that the values of the debt and the embedded conversion feature of the Convertible Senior Notes were approximately 92.8% and 7.2%, respectively. The original issue discount of 7.2% attributable to the conversion feature of the Convertible Senior Notes was recorded in “capital in excess of par value” in the consolidated statement of assets and liabilities. As a result, we record interest expense comprised of both stated interest expense as well as accretion of the original issue discount resulting in an estimated effective interest rate of approximately 8.1%. Upon meeting the stock trading price conversion requirement during the three months ended June 30, 2014, the Convertible Senior Notes became convertible on July 1, 2014 and continued to be convertible through September 30, 2014. As of September 30, 2014, approximately $34.1 million of the Convertible Senior Notes were converted and were settled with a combination of cash equal to the outstanding principal amount of the converted notes and approximately 924,000 shares of our common stock. Upon meeting the stock trading price conversion requirement during the three months ended September 30, 2014, the Convertible Senior Notes continue to be convertible through December 30, 2014. See “Subsequent Events.” We recorded a loss on extinguishment of debt for the proportionate amount of unamortized debt issuance costs and original issue discount. The loss was partially offset by a gain in the amount of the difference between the outstanding principal balance of the converted notes and the fair value of the debt instrument. The net loss on extinguishment of debt we recorded for the three and nine months ended September 30, 2014 was approximately $1.0 million and was classified as a component of net investment income in our Consolidated Statements of Operations. As of September 30, 2014 (unaudited) and December 31, 2013, the components of the carrying value of the Convertible Senior Notes were as follows: September 30, December 31, (in thousands) 2014 2013 Principal amount of debt $ 40,923 $ 75,000 Original issue discount, net of accretion (911) (2,481) Carrying value of Convertible Senior Notes $ 40,012 $ 72,519 For the three and nine months ended September 30, 2014 and 2013 (unaudited), the components of interest expense, fees and cash paid for interest expense for the Convertible Senior Notes were as follows: Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2014 2013 2014 2013 Stated interest expense $ 184 $ 1,125 $ 2,434 $ 3,375 Accretion of original issue discount 197 271 738 812 Amortization of debt issuance cost 105 144 394 433 Total interest expense $ 486 $ 1,540 $ 3,566 $ 4,620 Cash paid for interest expense $ — $ — $ 2,250 $ 2,250 The estimated effective interest rate of the debt component of the Convertible Senior Notes, equal to the stated interest of 6.0% plus the accretion of the original issue discount, was approximately 8.1% for the three and nine months ended September 30, 2014 and 2013. Interest expense decreased by approximately $950,000 during both the three and nine months ended September 30, 2014 from the comparative periods in 2013, due to Convertible Senior Notes settled prior to the interest payment date. As of September 30, 2014, we are in compliance with the terms of the indentures governing the Convertible Senior Notes. Xxxxx Facility In August 2008, we entered into a $50.0 million two-year revolving senior secured credit facility with Xxxxx Fargo Capital Finance (the “Xxxxx Facility”). On June 20, 2011, we renewed the Xxxxx Facility, and the Xxxxx Facility was further amended on August 1, 2012, December 17, 2012 and August 8, 2014. Under this senior secured facility, Xxxxx Fargo Capital Finance has made commitments of $75.0 million. The facility contains an accordion feature, in which we can increase the credit line up to an aggregate of $300.0 million, funded by additional lenders and with the agreement of Xxxxx Fargo Capital Finance and subject to other customary conditions. We expect to continue discussions with various other potential lenders to join the new facility; however, there can be no assurances that additional lenders will join the Xxxxx Facility. On August 1, 2012, we entered into an amendment to the Xxxxx Facility that reduced the interest rate floor by 75 basis points to 4.25% and extended the maturity date by one year to August 2015. Additionally, the August 2012 amendment added an amortization period that commences on the day immediately following the end of the revolving credit availability period and ends one year thereafter on the maturity date. The August 2012 amendment also reduced the unused line fee, as further discussed below. On August 8, 2014, the Company entered into a further amendment to the Xxxxx Facility to set the interest rate floor at 4.00% and to extend the revolving credit availability period to August 2017. As amended, borrowings under the Xxxxx Facility will generally bear interest at a rate per annum equal to LIBOR plus 3.50%, with a floor of 4.00% and an advance rate of 50% against eligible debt investments. The Xxxxx Facility is secured by debt investments in the borrowing base. The Xxxxx Facility requires payment of a non-use fee on a scale of 0.0% to 0.50% of the average monthly outstanding balance. The monthly payment of a non-use fee thereafter shall depend on the average balance that was outstanding on a scale between 0.0% and 0.50%. For the three and nine months ended September 30, 2014 and 2013, this non-use fee was approximately $96,000 and $284,000, respectively. On June 20, 2011 we paid an additional $1.1 million in structuring fees in connection with the Xxxxx Facility which are being amortized through the end of the term of the Xxxxx Facility. In connection with the August 2014 amendments, the Company paid an additional $750,000 in structuring fees in connection with the Xxxxx Facility which are being amortized through the end of the term of the Xxxxx Facility. The Xxxxx Facility includes various financial and operating covenants applicable to us and our subsidiaries, in addition to those applicable to Hercules Funding II, LLC. As amended, these covenants require us to maintain certain financial ratios and a minimum tangible net worth in an amount, when added to outstanding subordinated indebtedness, that is in excess of $500.0 million plus 90% of the cumulative amount of equity raised after June 30, 2014. The Xxxxx Facility provides for customary events of default, including, but not limited to, payment defaults, breach of representations or covenants, bankruptcy events and change of control. We were in compliance with all covenants at September 30, 2014. See Note 4 to our consolidated financial statements for more detail on the Xxxxx Facility.
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Samples: investor.htgc.com
Convertible Senior Notes. In April 2011, we issued $75.0 million in aggregate principal amount of 6.00% convertible senior notes (the “Convertible Senior Notes”) due 2016. During the three months ended September As of June 30, 2014, holders of approximately $34.1 million of our Convertible Senior Notes exercised their conversion rights. As of September 30, 20142013, the carrying value of the Convertible Senior Notes, comprised of the aggregate principal amount outstanding less the unaccreted discount initially recorded upon issuance of the Convertible Senior Notes, is approximately $40.0 72.0 million. The Convertible Senior Notes mature on April 15, 2016 (the “Maturity Date”), unless previously converted or repurchased in accordance with their terms. The Convertible Senior Notes bear interest at a rate of 6.00% per year payable semiannually in arrears on April 15 and October 15 of each year, commencing on October 15, 2011. The Convertible Senior Notes are our senior unsecured obligations and rank senior in right of payment to our existing and future indebtedness that is expressly subordinated in right of payment to the Convertible Senior Notes; equal in right of payment to our existing and future unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of our secured indebtedness (including unsecured indebtedness that we later secure) to the extent of the value of the assets securing such indebtedness; and structurally junior to all existing and future indebtedness (including trade payables) incurred by our subsidiaries, financing vehicles or similar facilities. Prior to the close of business on the business day immediately preceding October 15, 2015, holders may convert their Convertible Senior Notes only under certain circumstances set forth in the indentureIndenture. On or after October 15, 2015 until the close of business on the scheduled trading day immediately preceding the Maturity Date, holders may convert their Convertible Senior Notes at any time. Upon conversion, we will pay or deliver, as the case may be, at our election, cash, shares of our common stock or a combination of cash and shares of our common stock. The conversion rate will initially be 84.0972 shares of common stock per $1,000 principal amount of Convertible Senior Notes (equivalent to an initial conversion price of approximately $11.89 per share of common stock). The conversion rate will be subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. In addition, if certain corporate events occur prior to the Maturity Date, the conversion rate will be increased for converting holders. As of September 30, 2014, the conversion rate was 87.5583 shares of common stock per $1,000 principal amount of Convertible Senior Notes (equivalent to an adjusted conversion price of approximately $11.42 per share of common stock). We may not redeem the Convertible Senior Notes prior to maturity. No sinking fund is provided for the Convertible Senior Notes. In addition, if certain corporate events occur, holders of the Convertible Senior Notes may require us to repurchase for cash all or part of their Convertible Senior Notes at a repurchase price equal to 100% of the principal amount of the Convertible Senior Notes to be repurchased, plus accrued and unpaid interest through, but excluding, the required repurchase date. The Convertible Senior Notes are accounted for in accordance with ASC 470-20 (previously FASB Staff Position No. APB 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)”). In accounting for the Convertible Senior Notes, we estimated at the time of issuance that the values of the debt and the embedded conversion feature of the Convertible Senior Notes were approximately 92.8% and 7.2%, respectively. The original issue discount of 7.2% attributable to the conversion feature of the Convertible Senior Notes was has initially been recorded in “capital in excess of par value” in the consolidated statement of assets and liabilities. As a result, we record interest expense comprised of both stated interest expense as well as accretion of the original issue discount resulting in an estimated effective interest rate of approximately 8.1%. Upon meeting the stock trading price conversion requirement during the three months ended 7.9% As of June 30, 2014, the Convertible Senior Notes became convertible on July 1, 2014 and continued to be convertible through September 30, 2014. As of September 30, 2014, approximately $34.1 million of the Convertible Senior Notes were converted and were settled with a combination of cash equal to the outstanding principal amount of the converted notes and approximately 924,000 shares of our common stock. Upon meeting the stock trading price conversion requirement during the three months ended September 30, 2014, the Convertible Senior Notes continue to be convertible through December 30, 2014. See “Subsequent Events.” We recorded a loss on extinguishment of debt for the proportionate amount of unamortized debt issuance costs and original issue discount. The loss was partially offset by a gain in the amount of the difference between the outstanding principal balance of the converted notes and the fair value of the debt instrument. The net loss on extinguishment of debt we recorded for the three and nine months ended September 30, 2014 was approximately $1.0 million and was classified as a component of net investment income in our Consolidated Statements of Operations. As of September 30, 2014 2013 (unaudited) and December 31, 20132012, the components of the carrying value of the Convertible Senior Notes were as follows: September 30, December 31, (in thousands) 2014 As of June 30, 2013 As of December 31, 2012 Principal amount of debt $ 40,923 75,000 $ 75,000 Original issue discount, net of accretion (9113,023) (2,4813,564) Carrying value of Convertible Senior Notes debt $ 40,012 71,977 $ 72,519 71,436 For the three and nine six-months ended September June 30, 2014 2013 and 2013 2012 (unaudited), the components of interest expense, fees and cash paid for interest expense for the Convertible Senior Notes were as follows: Three Months Ended September 30June, Nine Six Months Ended September 30June, (in thousands) 2014 2013 2014 2012 2013 2012 Stated interest expense $ 184 $ $1,125 $ 2,434 $ 3,375 $1,125 $2,250 $2,250 Accretion of original issue discount 197 271 738 812 271 541 541 Amortization of debt issuance cost 105 144 394 433 144 289 289 Total interest expense $ 486 $ $1,540 $ 3,566 $ 4,620 Cash $1,540 $3,080 $3,080 Xxxx paid for interest expense $ — $ — $ $2,250 $ $2,250 The estimated effective interest rate $2,250 $2,250 As of the debt component of the Convertible Senior Notes, equal to the stated interest of 6.0% plus the accretion of the original issue discount, was approximately 8.1% for the three and nine months ended September June 30, 2014 and 2013. Interest expense decreased by approximately $950,000 during both the three and nine months ended September 30, 2014 from the comparative periods in 2013, due to Convertible Senior Notes settled prior to the interest payment date. As of September 30, 2014, we are in compliance with the terms of the indentures governing the Convertible Senior Notes. Xxxxx Facility In August 2008, we entered into a $50.0 million two-year revolving senior secured credit facility with Xxxxx Fargo Capital Finance (the “Xxxxx Facility”). On June 20, 2011, we renewed the Xxxxx Facility, and the Xxxxx Facility was further amended on August 1, 2012, December 17, 2012 and August 8, 2014. Under this senior secured facility, Xxxxx Fargo Capital Finance has made commitments of $75.0 million. The facility contains an accordion feature, in which we can increase the credit line up to an aggregate of $300.0 million, funded by additional lenders and with the agreement of Xxxxx Fargo Capital Finance and subject to other customary conditions. We expect to continue discussions with various other potential lenders to join the new facility; however, there can be no assurances that additional lenders will join the Xxxxx Facility. On August 1, 2012, we entered into an amendment to the Xxxxx Facility that reduced the interest rate floor by 75 basis points to 4.25% and extended the maturity date by one year to August 2015. Additionally, the August 2012 amendment added an amortization period that commences on the day immediately following the end of the revolving credit availability period and ends one year thereafter on the maturity date. The August 2012 amendment also reduced the unused line fee, as further discussed below. On August 8, 2014, the Company entered into a further amendment to the Xxxxx Facility to set the interest rate floor at 4.00% and to extend the revolving credit availability period to August 2017. As amended, borrowings under the Xxxxx Facility will generally bear interest at a rate per annum equal to LIBOR plus 3.50%, with a floor of 4.00% and an advance rate of 50% against eligible debt investments. The Xxxxx Facility is secured by debt investments in the borrowing base. The Xxxxx Facility requires payment of a non-use fee on a scale of 0.0% to 0.50% of the average monthly outstanding balance. The monthly payment of a non-use fee thereafter shall depend on the average balance that was outstanding on a scale between 0.0% and 0.50%. For the three and nine months ended September 30, 2014 and 2013, this non-use fee was approximately $96,000 and $284,000, respectively. On June 20, 2011 we paid an additional $1.1 million in structuring fees in connection with the Xxxxx Facility which are being amortized through the end of the term of the Xxxxx Facility. In connection with the August 2014 amendments, the Company paid an additional $750,000 in structuring fees in connection with the Xxxxx Facility which are being amortized through the end of the term of the Xxxxx Facility. The Xxxxx Facility includes various financial and operating covenants applicable to us and our subsidiaries, in addition to those applicable to Hercules Funding II, LLC. As amended, these covenants require us to maintain certain financial ratios and a minimum tangible net worth in an amount, when added to outstanding subordinated indebtedness, that is in excess of $500.0 million plus 90% of the cumulative amount of equity raised after June 30, 2014. The Xxxxx Facility provides for customary events of default, including, but not limited to, payment defaults, breach of representations or covenants, bankruptcy events and change of control. We were in compliance with all covenants at September 30, 2014. See Note 4 to our consolidated financial statements for more detail on the Xxxxx FacilityConvertible Senior Notes.
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Samples: investor.htgc.com
Convertible Senior Notes. In April 2011, we issued Variable Interest Convertible Senior Notes due 2019 (the “Notes”) Aggregate Principal Amount Offered: $75.0 million in aggregate 200,000,000 principal amount of 6.00the Notes (or a total of $230,000,000 principal amount of the Notes if the underwriter exercises in full its over-allotment option to purchase additional Notes) Public Offering Price: 100% of principal amount Maturity: January 15, 2019, unless earlier converted or repurchased Annual Interest Rate: 2.50%, with an additional amount of cash interest payable on each Interest Payment Date based on the amount of cash dividends per share paid by the Issuer on the Common Stock during the prior three-month period ending on the Record Date for such interest payment multiplied by the total number of shares of the Common Stock into which the Notes are convertible senior notes on such Record Date (together, the “Convertible Senior NotesTotal Interest”) due 2016). During Notwithstanding the three months ended September 30foregoing, 2014, holders of approximately $34.1 million of our Convertible Senior Notes exercised their conversion rights. As of September 30, 2014however, the carrying value interest payable on each Interest Payment Date shall be the higher of (a) the Total Interest and (b) 7.50% per annum. In addition, if the Notes would otherwise constitute “applicable high yield discount obligations” within the meaning of Section 163(i)(1) of the Convertible Senior NotesInternal Revenue Code of 1986, comprised of on each Interest Payment Date on or after January 15, 2018, the aggregate principal Issuer will pay additional interest on a Note in an amount outstanding less equal to the unaccreted amount required to be paid to prevent such Note from being treated as an applicable high yield discount initially recorded upon issuance of obligation Comparable Yield: 8.00% Interest Payment Dates and Record Dates: Interest will accrue from the Convertible Senior NotesSettlement Date or from the most recent date to which interest has been paid or duly provided for, is approximately $40.0 million. The Convertible Senior Notes mature and will be payable quarterly in arrears on January 15, April 15, 2016 (the “Maturity Date”), unless previously converted or repurchased in accordance with their terms. The Convertible Senior Notes bear interest at a rate of 6.00% per year payable semiannually in arrears on April July 15 and October 15 of each year, commencing on October 15, 2011. The Convertible Senior Notes are our senior unsecured obligations and rank senior in right of payment to our existing and future indebtedness that is expressly subordinated in right of payment to the Convertible Senior Notes; equal person in right of payment to our existing and future unsecured indebtedness that whose name the Note is not so subordinated; effectively junior in right of payment to any of our secured indebtedness (including unsecured indebtedness that we later secure) to the extent of the value of the assets securing such indebtedness; and structurally junior to all existing and future indebtedness (including trade payables) incurred by our subsidiaries, financing vehicles or similar facilities. Prior to registered at the close of business on the business day immediately preceding January 1, April 1, July 1 or October 15, 2015, holders may convert their Convertible Senior Notes only under certain circumstances set forth in the indenture. On or after October 15, 2015 until the close of business on the scheduled trading day immediately preceding the Maturity Date, holders may convert their Convertible Senior Notes at any time. Upon conversion, we will pay or deliver1, as the case may be, at our electionimmediately preceding the relevant Interest Payment Date Last Reported Sale Price of Common Stock on NYSE on November 14, cash2012: $15.20 per share of Common Stock Reference Price: $14.80 per share of Common Stock, the Public Offering Price per share in the Common Stock Offering Conversion Premium: Approximately 25.00% above the Reference Price Initial Conversion Price: Approximately $18.50 per share of Common Stock Initial Conversion Rate: 54.0541 shares of our common stock or a combination of cash and shares of our common stock. The conversion rate will initially be 84.0972 shares of common stock Common Stock per $1,000 principal amount of Convertible Senior Notes (equivalent to an initial conversion price of approximately $11.89 per share of common stock). The conversion rate will be the Notes, subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. In addition, if certain corporate events occur prior to Use of Proceeds: The Issuer estimates that the Maturity Date, the conversion rate will be increased for converting holders. As of September 30, 2014, the conversion rate was 87.5583 shares of common stock per $1,000 principal amount of Convertible Senior Notes (equivalent to an adjusted conversion price of approximately $11.42 per share of common stock). We may not redeem net proceeds from the Convertible Senior Notes prior Offering will be approximately $190.2 million (or approximately $219.0 million if the underwriter exercises its over-allotment option to maturitypurchase additional Notes in full), after deducting the underwriter’s discount and estimated fees and expenses payable by the Issuer. No sinking fund is provided for The Issuer plans to use the net proceeds from the Convertible Senior NotesNotes Offering for general corporate purposes, including in its existing tobacco business and in additional investments in real estate through its wholly owned subsidiary, New Valley LLC. In addition, if certain corporate events occur, holders The Issuer may also consider using a portion of the proceeds of the Convertible Senior Notes may require us Offering to repurchase for cash all or part address upcoming debt maturities. Pending the use of their the net proceeds from the Convertible Senior Notes at Offering, the Issuer may invest the proceeds in short-term securities Sole Book-Running Manager: Jxxxxxxxx & Company, Inc. CUSIP Number: 92240M AY4 ISIN Number: US92240MAY49 Fundamental Change: If the Issuer undergoes certain corporate transactions or events that constitute a “fundamental change” (as defined in the preliminary prospectus supplement dated November 14, 2012 for the Convertible Senior Notes Offering), a holder will have the option to require the Issuer to repurchase all or any portion of the holder’s Notes in integral multiples of $1,000 principal amount. The fundamental change repurchase price equal to will be 100% of the principal amount of the Convertible Senior Notes to be repurchased, repurchased plus any accrued and unpaid interest throughto, but excluding, the required fundamental change repurchase date. The Convertible Senior Notes are accounted Issuer will pay cash for in accordance with ASC 470all convertible notes so repurchased Adjustment to Shares Delivered Upon Make-20 (previously FASB Staff Position No. APB 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)”). In accounting for Whole Fundamental Change: The following table sets forth the Convertible Senior Notes, we estimated at the time number of issuance additional shares of Common Stock that the values of the debt and the embedded conversion feature of the Convertible Senior Notes were approximately 92.8% and 7.2%, respectively. The original issue discount of 7.2% attributable will be added to the conversion feature of the Convertible Senior Notes was recorded in “capital in excess of par value” in the consolidated statement of assets and liabilities. As a result, we record interest expense comprised of both stated interest expense as well as accretion of the original issue discount resulting in an estimated effective interest rate of approximately 8.1%. Upon meeting the stock trading price conversion requirement during the three months ended June 30, 2014, the Convertible Senior Notes became convertible on July 1, 2014 and continued to be convertible through September 30, 2014. As of September 30, 2014, approximately per $34.1 million of the Convertible Senior Notes were converted and were settled with a combination of cash equal to the outstanding 1,000 principal amount of the converted notes Notes for each stock price and approximately 924,000 shares of our common stock. Upon meeting the stock trading price conversion requirement during the three months ended September 30, 2014, the Convertible Senior Notes continue to be convertible through December 30, 2014. See effective date set forth below in certain circumstances in connection with a “Subsequent Events.make-whole fundamental change” We recorded a loss on extinguishment of debt for the proportionate amount of unamortized debt issuance costs and original issue discount. The loss was partially offset by a gain (as defined in the amount of the difference between the outstanding principal balance of the converted notes and the fair value of the debt instrument. The net loss on extinguishment of debt we recorded for the three and nine months ended September 30preliminary prospectus supplement dated November 14, 2014 was approximately $1.0 million and was classified as a component of net investment income in our Consolidated Statements of Operations. As of September 30, 2014 (unaudited) and December 31, 2013, the components of the carrying value of the Convertible Senior Notes were as follows: September 30, December 31, (in thousands) 2014 2013 Principal amount of debt $ 40,923 $ 75,000 Original issue discount, net of accretion (911) (2,481) Carrying value of Convertible Senior Notes $ 40,012 $ 72,519 For the three and nine months ended September 30, 2014 and 2013 (unaudited), the components of interest expense, fees and cash paid for interest expense 2012 for the Convertible Senior Notes were Offering): Stock Price Effective Date $14.80 $15.25 $16.00 $17.00 $18.50 $21.00 $25.00 $30.00 $37.00 $45.00 November 20, 2012 13.5135 13.4186 13.2015 12.8479 9.4826 5.9015 3.0047 1.4945 0.6119 0.1678 January 15, 2013 13.5135 13.3522 13.0826 12.5380 9.2666 5.7306 2.9083 1.4426 0.5869 0.1567 January 15, 2014 13.5135 13.2001 12.7737 12.0413 8.7458 5.2339 2.5343 1.2189 0.4855 0.1195 January 15, 2015 13.5135 12.9067 12.4034 11.3216 8.0145 4.5687 2.0682 0.9597 0.3742 0.0795 January 15, 2016 13.5135 12.5915 11.9348 10.2654 6.9764 3.6770 1.5021 0.6740 0.2590 0.0403 January 15, 2017 13.5135 12.2584 11.3548 8.8487 5.5858 2.5351 0.8685 0.3930 0.1553 0.0143 January 15, 2018 13.5135 11.8981 10.0267 7.0263 3.7156 1.0849 0.2357 0.1231 0.0484 0.0022 January 15, 2019 13.5135 11.5197 8.4459 4.7695 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 The exact stock price and effective date may not be set forth in the table above, in which case: · If the stock price is between two stock prices in the table or the effective date is between two effective dates in the table, the number of additional shares will be determined by a straight-line interpolation between the number of additional shares set forth for the higher and lower stock prices and the earlier and the later effective dates, as follows: Three Months Ended September 30applicable, Nine Months Ended September 30, based on a 365-day year. · If the stock price is greater than $45.00 (subject to adjustment in thousands) 2014 2013 2014 2013 Stated interest expense $ 184 $ 1,125 $ 2,434 $ 3,375 Accretion of original issue discount 197 271 738 812 Amortization of debt issuance cost 105 144 394 433 Total interest expense $ 486 $ 1,540 $ 3,566 $ 4,620 Cash paid for interest expense $ — $ — $ 2,250 $ 2,250 The estimated effective interest rate the same manner as the stock prices set forth in the column headings of the debt component table above), no additional shares will be added to the conversion rate. · If the stock price is less than $14.80 (subject to adjustment in the same manner as the stock prices set forth in the column headings of the table above), no additional shares will be added to the conversion rate. Notwithstanding the foregoing, in no event will the conversion rate be increased as a result of this section to exceed 67.5676 shares of Common Stock per $1,000 principal amount of the Notes, subject to adjustment in the same manner, at the same time and for the same events for which the Issuer must adjust the conversion rate as set forth under “Description of Notes—Conversion Rights—Conversion Rate Adjustments” in the preliminary prospectus supplement dated November 14, 2012 for the Convertible Senior NotesNotes Offering. Common Stock Offering Title of Securities: Common stock, equal par value $0.10 per share, of the Issuer (the “Common Stock”) Shares Offered: Up to 6,114,000 shares of Common Stock, which we will lend to Jxxxxxxxx & Company, Inc. (the “Share Borrower”) to offer and sell. The Share Borrower will initially offer and sell to the stated interest of 6.0% plus public, concurrently with the accretion of the original issue discount, was approximately 8.1% for the three and nine months ended September 30, 2014 and 2013. Interest expense decreased by approximately $950,000 during both the three and nine months ended September 30, 2014 from the comparative periods in 2013, due to Convertible Senior Notes settled prior Offering, the Fixed Price Shares at the Public Offering Price for settlement on the Settlement Date. From time to time after the completion of the offering of the Fixed Price Shares, the Share Borrower will offer and sell to the interest payment date. As public the Variable Price Shares at prices prevailing in the market at the time of September 30, 2014, we are in compliance with the terms of the indentures governing the Convertible Senior Notes. Xxxxx Facility In August 2008, we entered into a $50.0 million two-year revolving senior secured credit facility with Xxxxx Fargo Capital Finance (the “Xxxxx Facility”). On June 20, 2011, we renewed the Xxxxx Facility, and the Xxxxx Facility was further amended on August 1, 2012, December 17, 2012 and August 8, 2014. Under this senior secured facility, Xxxxx Fargo Capital Finance has made commitments of $75.0 millionsale or at negotiated prices. The facility contains an accordion featureVariable Price Shares will be sold from time to time in transactions, including block sales, on NYSE, in which we can increase the credit line up to an aggregate of $300.0 millionover-the-counter market, funded by additional lenders and with the agreement of Xxxxx Fargo Capital Finance and subject to other customary conditions. We expect to continue discussions with various other potential lenders to join the new facility; however, there can be no assurances that additional lenders will join the Xxxxx Facility. On August 1, 2012, we entered into an amendment to the Xxxxx Facility that reduced the interest rate floor by 75 basis points to 4.25% and extended the maturity date by one year to August 2015. Additionally, the August 2012 amendment added an amortization period that commences on the day immediately following the end of the revolving credit availability period and ends one year thereafter on the maturity date. The August 2012 amendment also reduced the unused line fee, as further discussed below. On August 8, 2014, the Company entered into a further amendment to the Xxxxx Facility to set the interest rate floor at 4.00% and to extend the revolving credit availability period to August 2017. As amended, borrowings under the Xxxxx Facility will generally bear interest at a rate per annum equal to LIBOR plus 3.50%, with a floor of 4.00% and an advance rate of 50% against eligible debt investments. The Xxxxx Facility is secured by debt investments in the borrowing base. The Xxxxx Facility requires payment of a non-use fee on a scale of 0.0% to 0.50% of the average monthly outstanding balance. The monthly payment of a non-use fee thereafter shall depend on the average balance that was outstanding on a scale between 0.0% and 0.50%. For the three and nine months ended September 30, 2014 and 2013, this non-use fee was approximately $96,000 and $284,000, respectively. On June 20, 2011 we paid an additional $1.1 million in structuring fees in connection with the Xxxxx Facility which are being amortized through the end of the term of the Xxxxx Facilitynegotiated transactions or otherwise. In connection with the August 2014 amendmentssale of the Variable Price Shares, the Company paid Share Borrower, or its affiliates, may effect such transactions in subsequent offerings by selling the Variable Price Shares to or through dealers, and these dealers may receive compensation in the form of discounts, concessions or commissions from the Share Borrower and/or from purchasers of Variable Price Shares for whom the dealers may act as agents or to whom they may sell as principals. Over the same period that the Share Borrower, or its affiliates, sells the Variable Price Shares, it or its affiliates may, in their discretion, purchase an additional equal number of shares of our Common Stock on the open market Fixed Price Shares: Up to 3,057,000 shares of Common Stock Variable Price Shares: Up to 3,057,000 shares of Common Stock Last Reported Sale Price of Common Stock on NYSE on November 14, 2012: $750,000 in structuring fees in connection with 15.20 per share of Common Stock Public Offering Price: $14.80 per share of Common Stock Use of Proceeds: The Issuer will not receive any proceeds from the Xxxxx Facility which are being amortized through Common Stock Offering, other than a nominal loan fee from the end Share Borrower equal to $0.10 per share of Common Stock loaned to the Share Borrower. The Issuer expects to use those proceeds for general corporate purposes. The Share Borrower or its affiliates will receive all the proceeds from the Common Stock Offering Sole Book-Running Manager: Jxxxxxxxx & Company, Inc. CUSIP Number: 90000X000 ISIN Number: Underwriting: US92240M1080 Ladenburg Txxxxxxx & Co. Inc. (“Ladenburg”) will be a member of the term selling group in the Common Stock Offering. Ladenburg is an affiliate of the Xxxxx Facility. The Xxxxx Facility includes various financial Issuer and operating covenants applicable would be deemed to us and our subsidiaries, have a “conflict of interest” as defined in addition to those applicable to Hercules Funding II, LLC. As amended, these covenants require us to maintain certain financial ratios and a minimum tangible net worth in an amount, when added to outstanding subordinated indebtedness, that is in excess Rule 5121 (Public Offerings of $500.0 million plus 90% Securities with Conflicts of Interest) of the cumulative amount of equity raised after June 30Financial Industry Regulatory Authority, 2014Inc. (“Rule 5121”). The Xxxxx Facility provides for customary events of defaultAccordingly, including, but not limited to, payment defaults, breach of representations or covenants, bankruptcy events and change of control. We were this offering will be made in compliance with all covenants at September 30the applicable provisions of Rule 5121. In accordance with Rule 5121, 2014Ladenburg will not make sales to discretionary accounts without the prior written consent of the customer The Issuer has filed a registration statement (including preliminary prospectus supplements each dated November 14, 2012 and an accompanying prospectus dated November 9, 2012) with the Securities and Exchange Commission, or SEC, for the offerings to which this communication relates. See Note 4 to our consolidated financial statements Before you invest, you should read the relevant preliminary prospectus supplement, the accompanying prospectus and the other documents the Issuer has filed with the SEC for more detail complete information about the Issuer and the offerings. You may get these documents for free by visiting EXXXX on the Xxxxx FacilitySEC web site at wxx.xxx.xxx. Alternatively, copies may be obtained from Vector Group Ltd., 100 X.X. Xxxxxx Xxxxxx, Xxxxx, Xxxxxxx 00000, Telephone Number: (000) 000-0000. This communication should be read in conjunction with the preliminary prospectus supplements dated November 14, 2012 and the accompanying prospectus. The information in this communication supersedes the information in the relevant preliminary prospectus supplement and the accompanying prospectus to the extent inconsistent with the information in such preliminary prospectus supplement and the accompanying prospectus. ANY DISCLAIMERS OR OTHER NOTICES THAT MAY APPEAR BELOW ARE NOT APPLICABLE TO THIS COMMUNICATION AND SHOULD BE DISREGARDED. SUCH DISCLAIMERS OR OTHER NOTICES WERE AUTOMATICALLY GENERATED AS A RESULT OF THIS COMMUNICATION BEING SENT VIA BLOOMBERG OR ANOTHER EMAIL SYSTEM.
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Convertible Senior Notes. In April 2011, we issued Variable Interest Convertible Senior Notes due 2019 (the “Notes”) Aggregate Principal Amount Offered: $75.0 million in aggregate 200,000,000 principal amount of 6.00the Notes (or a total of $230,000,000 principal amount of the Notes if the underwriter exercises in full its over-allotment option to purchase additional Notes) Public Offering Price: 100% of principal amount Maturity: January 15, 2019, unless earlier converted or repurchased Annual Interest Rate: 2.50%, with an additional amount of cash interest payable on each Interest Payment Date based on the amount of cash dividends per share paid by the Issuer on the Common Stock during the prior three-month period ending on the Record Date for such interest payment multiplied by the total number of shares of the Common Stock into which the Notes are convertible senior notes on such Record Date (together, the “Convertible Senior NotesTotal Interest”) due 2016). During Notwithstanding the three months ended September 30foregoing, 2014, holders of approximately $34.1 million of our Convertible Senior Notes exercised their conversion rights. As of September 30, 2014however, the carrying value interest payable on each Interest Payment Date shall be the higher of (a) the Total Interest and (b) 7.50% per annum. In addition, if the Notes would otherwise constitute “applicable high yield discount obligations” within the meaning of Section 163(i)(1) of the Convertible Senior NotesInternal Revenue Code of 1986, comprised of on each Interest Payment Date on or after January 15, 2018, the aggregate principal Issuer will pay additional interest on a Note in an amount outstanding less equal to the unaccreted amount required to be paid to prevent such Note from being treated as an applicable high yield discount initially recorded upon issuance of obligation Comparable Yield: 8.00% Interest Payment Dates and Record Dates: Interest will accrue from the Convertible Senior NotesSettlement Date or from the most recent date to which interest has been paid or duly provided for, is approximately $40.0 million. The Convertible Senior Notes mature and will be payable quarterly in arrears on January 15, April 15, 2016 (the “Maturity Date”), unless previously converted or repurchased in accordance with their terms. The Convertible Senior Notes bear interest at a rate of 6.00% per year payable semiannually in arrears on April July 15 and October 15 of each year, commencing on October 15, 2011. The Convertible Senior Notes are our senior unsecured obligations and rank senior in right of payment to our existing and future indebtedness that is expressly subordinated in right of payment to the Convertible Senior Notes; equal person in right of payment to our existing and future unsecured indebtedness that whose name the Note is not so subordinated; effectively junior in right of payment to any of our secured indebtedness (including unsecured indebtedness that we later secure) to the extent of the value of the assets securing such indebtedness; and structurally junior to all existing and future indebtedness (including trade payables) incurred by our subsidiaries, financing vehicles or similar facilities. Prior to registered at the close of business on the business day immediately preceding January 1, April 1, July 1 or October 15, 2015, holders may convert their Convertible Senior Notes only under certain circumstances set forth in the indenture. On or after October 15, 2015 until the close of business on the scheduled trading day immediately preceding the Maturity Date, holders may convert their Convertible Senior Notes at any time. Upon conversion, we will pay or deliver1, as the case may be, at our electionimmediately preceding the relevant Interest Payment Date Last Reported Sale Price of Common Stock on NYSE on November 14, cash2012: $15.20 per share of Common Stock Reference Price: $14.80 per share of Common Stock, the Public Offering Price per share in the Common Stock Offering Conversion Premium: Approximately 25.00% above the Reference Price Initial Conversion Price: Approximately $18.50 per share of Common Stock Initial Conversion Rate: 54.0541 shares of our common stock or a combination of cash and shares of our common stock. The conversion rate will initially be 84.0972 shares of common stock Common Stock per $1,000 principal amount of Convertible Senior Notes (equivalent to an initial conversion price of approximately $11.89 per share of common stock). The conversion rate will be the Notes, subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. In addition, if certain corporate events occur prior to Use of Proceeds: The Issuer estimates that the Maturity Date, the conversion rate will be increased for converting holders. As of September 30, 2014, the conversion rate was 87.5583 shares of common stock per $1,000 principal amount of Convertible Senior Notes (equivalent to an adjusted conversion price of approximately $11.42 per share of common stock). We may not redeem net proceeds from the Convertible Senior Notes prior Offering will be approximately $190.2 million (or approximately $219.0 million if the underwriter exercises its over-allotment option to maturitypurchase additional Notes in full), after deducting the underwriter’s discount and estimated fees and expenses payable by the Issuer. No sinking fund is provided for The Issuer plans to use the net proceeds from the Convertible Senior NotesNotes Offering for general corporate purposes, including in its existing tobacco business and in additional investments in real estate through its wholly owned subsidiary, New Valley LLC. In addition, if certain corporate events occur, holders The Issuer may also consider using a portion of the proceeds of the Convertible Senior Notes may require us Offering to repurchase for cash all or part address upcoming debt maturities. Pending the use of their the net proceeds from the Convertible Senior Notes at Offering, the Issuer may invest the proceeds in short-term securities Sole Book-Running Manager: Jxxxxxxxx & Company, Inc. CUSIP Number: 92240M AY4 ISIN Number: US92240MAY49 Fundamental Change: If the Issuer undergoes certain corporate transactions or events that constitute a “fundamental change” (as defined in the preliminary prospectus supplement dated November 14, 2012 for the Convertible Senior Notes Offering), a holder will have the option to require the Issuer to repurchase all or any portion of the holder’s Notes in integral multiples of $1,000 principal amount. The fundamental change repurchase price equal to will be 100% of the principal amount of the Convertible Senior Notes to be repurchased, repurchased plus any accrued and unpaid interest throughto, but excluding, the required fundamental change repurchase date. The Convertible Senior Notes are accounted Issuer will pay cash for in accordance with ASC 470all convertible notes so repurchased Adjustment to Shares Delivered Upon Make-20 (previously FASB Staff Position No. APB 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)”). In accounting for Whole Fundamental Change: The following table sets forth the Convertible Senior Notes, we estimated at the time number of issuance additional shares of Common Stock that the values of the debt and the embedded conversion feature of the Convertible Senior Notes were approximately 92.8% and 7.2%, respectively. The original issue discount of 7.2% attributable will be added to the conversion feature of the Convertible Senior Notes was recorded in “capital in excess of par value” in the consolidated statement of assets and liabilities. As a result, we record interest expense comprised of both stated interest expense as well as accretion of the original issue discount resulting in an estimated effective interest rate of approximately 8.1%. Upon meeting the stock trading price conversion requirement during the three months ended June 30, 2014, the Convertible Senior Notes became convertible on July 1, 2014 and continued to be convertible through September 30, 2014. As of September 30, 2014, approximately per $34.1 million of the Convertible Senior Notes were converted and were settled with a combination of cash equal to the outstanding 1,000 principal amount of the converted notes Notes for each stock price and approximately 924,000 shares of our common stock. Upon meeting the stock trading price conversion requirement during the three months ended September 30, 2014, the Convertible Senior Notes continue to be convertible through December 30, 2014. See effective date set forth below in certain circumstances in connection with a “Subsequent Events.make-whole fundamental change” We recorded a loss on extinguishment of debt for the proportionate amount of unamortized debt issuance costs and original issue discount. The loss was partially offset by a gain (as defined in the amount of the difference between the outstanding principal balance of the converted notes and the fair value of the debt instrument. The net loss on extinguishment of debt we recorded for the three and nine months ended September 30preliminary prospectus supplement dated November 14, 2014 was approximately $1.0 million and was classified as a component of net investment income in our Consolidated Statements of Operations. As of September 30, 2014 (unaudited) and December 31, 2013, the components of the carrying value of the Convertible Senior Notes were as follows: September 30, December 31, (in thousands) 2014 2013 Principal amount of debt $ 40,923 $ 75,000 Original issue discount, net of accretion (911) (2,481) Carrying value of Convertible Senior Notes $ 40,012 $ 72,519 For the three and nine months ended September 30, 2014 and 2013 (unaudited), the components of interest expense, fees and cash paid for interest expense 2012 for the Convertible Senior Notes were Offering): Stock Price Effective Date $14.80 $15.25 $16.00 $17.00 $18.50 $21.00 $25.00 $30.00 $37.00 $45.00 November 20, 2012 13.5135 13.4186 13.2015 12.8479 9.4826 5.9015 3.0047 1.4945 0.6119 0.1678 January 15, 2013 13.5135 13.3522 13.0826 12.5380 9.2666 5.7306 2.9083 1.4426 0.5869 0.1567 January 15, 2014 13.5135 13.2001 12.7737 12.0413 8.7458 5.2339 2.5343 1.2189 0.4855 0.1195 January 15, 2015 13.5135 12.9067 12.4034 11.3216 8.0145 4.5687 2.0682 0.9597 0.3742 0.0795 January 15, 2016 13.5135 12.5915 11.9348 10.2654 6.9764 3.6770 1.5021 0.6740 0.2590 0.0403 January 15, 2017 13.5135 12.2584 11.3548 8.8487 5.5858 2.5351 0.8685 0.3930 0.1553 0.0143 January 15, 2018 13.5135 11.8981 10.0267 7.0263 3.7156 1.0849 0.2357 0.1231 0.0484 0.0022 January 15, 2019 13.5135 11.5197 8.4459 4.7695 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 The exact stock price and effective date may not be set forth in the table above, in which case: · If the stock price is between two stock prices in the table or the effective date is between two effective dates in the table, the number of additional shares will be determined by a straight-line interpolation between the number of additional shares set forth for the higher and lower stock prices and the earlier and the later effective dates, as follows: Three Months Ended September 30applicable, Nine Months Ended September 30, based on a 365-day year. · If the stock price is greater than $45.00 (subject to adjustment in thousands) 2014 2013 2014 2013 Stated interest expense $ 184 $ 1,125 $ 2,434 $ 3,375 Accretion of original issue discount 197 271 738 812 Amortization of debt issuance cost 105 144 394 433 Total interest expense $ 486 $ 1,540 $ 3,566 $ 4,620 Cash paid for interest expense $ — $ — $ 2,250 $ 2,250 The estimated effective interest rate the same manner as the stock prices set forth in the column headings of the debt component table above), no additional shares will be added to the conversion rate. · If the stock price is less than $14.80 (subject to adjustment in the same manner as the stock prices set forth in the column headings of the table above), no additional shares will be added to the conversion rate. Notwithstanding the foregoing, in no event will the conversion rate be increased as a result of this section to exceed 67.5676 shares of Common Stock per $1,000 principal amount of the Notes, subject to adjustment in the same manner, at the same time and for the same events for which the Issuer must adjust the conversion rate as set forth under “Description of Notes—Conversion Rights—Conversion Rate Adjustments” in the preliminary prospectus supplement dated November 14, 2012 for the Convertible Senior NotesNotes Offering. Common Stock Offering Title of Securities: Common stock, equal par value $0.10 per share, of the Issuer (the “Common Stock”) Shares Offered: Up to 6,114,000 shares of Common Stock, which we will lend to Jxxxxxxxx & Company, Inc. (the “Share Borrower”) to offer and sell. The Share Borrower will initially offer and sell to the stated interest of 6.0% plus public, concurrently with the accretion of the original issue discount, was approximately 8.1% for the three and nine months ended September 30, 2014 and 2013. Interest expense decreased by approximately $950,000 during both the three and nine months ended September 30, 2014 from the comparative periods in 2013, due to Convertible Senior Notes settled prior Offering, the Fixed Price Shares at the Public Offering Price for settlement on the Settlement Date. From time to time after the completion of the offering of the Fixed Price Shares, the Share Borrower will offer and sell to the interest payment date. As public the Variable Price Shares at prices prevailing in the market at the time of September 30, 2014, we are in compliance with the terms of the indentures governing the Convertible Senior Notes. Xxxxx Facility In August 2008, we entered into a $50.0 million two-year revolving senior secured credit facility with Xxxxx Fargo Capital Finance (the “Xxxxx Facility”). On June 20, 2011, we renewed the Xxxxx Facility, and the Xxxxx Facility was further amended on August 1, 2012, December 17, 2012 and August 8, 2014. Under this senior secured facility, Xxxxx Fargo Capital Finance has made commitments of $75.0 millionsale or at negotiated prices. The facility contains an accordion featureVariable Price Shares will be sold from time to time in transactions, including block sales, on NYSE, in which we can increase the credit line up to an aggregate of $300.0 millionover-the-counter market, funded by additional lenders and with the agreement of Xxxxx Fargo Capital Finance and subject to other customary conditions. We expect to continue discussions with various other potential lenders to join the new facility; however, there can be no assurances that additional lenders will join the Xxxxx Facility. On August 1, 2012, we entered into an amendment to the Xxxxx Facility that reduced the interest rate floor by 75 basis points to 4.25% and extended the maturity date by one year to August 2015. Additionally, the August 2012 amendment added an amortization period that commences on the day immediately following the end of the revolving credit availability period and ends one year thereafter on the maturity date. The August 2012 amendment also reduced the unused line fee, as further discussed below. On August 8, 2014, the Company entered into a further amendment to the Xxxxx Facility to set the interest rate floor at 4.00% and to extend the revolving credit availability period to August 2017. As amended, borrowings under the Xxxxx Facility will generally bear interest at a rate per annum equal to LIBOR plus 3.50%, with a floor of 4.00% and an advance rate of 50% against eligible debt investments. The Xxxxx Facility is secured by debt investments in the borrowing base. The Xxxxx Facility requires payment of a non-use fee on a scale of 0.0% to 0.50% of the average monthly outstanding balance. The monthly payment of a non-use fee thereafter shall depend on the average balance that was outstanding on a scale between 0.0% and 0.50%. For the three and nine months ended September 30, 2014 and 2013, this non-use fee was approximately $96,000 and $284,000, respectively. On June 20, 2011 we paid an additional $1.1 million in structuring fees in connection with the Xxxxx Facility which are being amortized through the end of the term of the Xxxxx Facilitynegotiated transactions or otherwise. In connection with the August 2014 amendmentssale of the Variable Price Shares, the Company paid Share Borrower, or its affiliates, may effect such transactions in subsequent offerings by selling the Variable Price Shares to or through dealers, and these dealers may receive compensation in the form of discounts, concessions or commissions from the Share Borrower and/or from purchasers of Variable Price Shares for whom the dealers may act as agents or to whom they may sell as principals. Over the same period that the Share Borrower, or its affiliates, sells the Variable Price Shares, it or its affiliates may, in their discretion, purchase an additional equal number of shares of our Common Stock on the open market Fixed Price Shares: Up to 3,057,000 shares of Common Stock Variable Price Shares: Up to 3,057,000 shares of Common Stock Last Reported Sale Price of Common Stock on NYSE on November 14, 2012: $750,000 in structuring fees in connection with 15.20 per share of Common Stock Public Offering Price: $14.80 per share of Common Stock Use of Proceeds: The Issuer will not receive any proceeds from the Xxxxx Facility which are being amortized through Common Stock Offering, other than a nominal loan fee from the end Share Borrower equal to $0.10 per share of Common Stock loaned to the Share Borrower. The Issuer expects to use those proceeds for general corporate purposes. The Share Borrower or its affiliates will receive all the proceeds from the Common Stock Offering Sole Book-Running Manager: Jxxxxxxxx & Company, Inc. CUSIP Number: 90000X000 ISIN Number: Underwriting: US92240M1080 Ladenburg Txxxxxxx & Co. Inc. (“Ladenburg”) will be a member of the term selling group in the Common Stock Offering. Ladenburg is an affiliate of the Xxxxx Facility. The Xxxxx Facility includes various financial Issuer and operating covenants applicable would be deemed to us and our subsidiaries, have a “conflict of interest” as defined in addition to those applicable to Hercules Funding II, LLC. As amended, these covenants require us to maintain certain financial ratios and a minimum tangible net worth in an amount, when added to outstanding subordinated indebtedness, that is in excess Rule 5121 (Public Offerings of $500.0 million plus 90% Securities with Conflicts of Interest) of the cumulative amount of equity raised after June 30Financial Industry Regulatory Authority, 2014Inc. (“Rule 5121”). The Xxxxx Facility provides for customary events of defaultAccordingly, including, but not limited to, payment defaults, breach of representations or covenants, bankruptcy events and change of control. We were this offering will be made in compliance with all covenants at September 30the applicable provisions of Rule 5121. In accordance with Rule 5121, 2014Ladenburg will not make sales to discretionary accounts without the prior written consent of the customer The Issuer has filed a registration statement (including preliminary prospectus supplements each dated November 14, 2012 and an accompanying prospectus dated November 9, 2012) with the Securities and Exchange Commission, or SEC, for the offerings to which this communication relates. See Note 4 to our consolidated financial statements Before you invest, you should read the relevant preliminary prospectus supplement, the accompanying prospectus and the other documents the Issuer has filed with the SEC for more detail complete information about the Issuer and the offerings. You may get these documents for free by visiting EXXXX on the Xxxxx Facility.SEC web site at wxx.xxx.xxx. Alternatively, copies may be obtained from Vector Group Ltd., 100 S.E. Second Street, Miami, Florida 33131, Telephone Number: (000) 000-0000. This communication should be read in conjunction with the preliminary prospectus supplements dated November 14, 2012 and the accompanying prospectus. The information in this communication supersedes the information in the relevant preliminary prospectus supplement and the accompanying prospectus to the extent inconsistent with the information in such preliminary prospectus supplement and the accompanying prospectus. ANY DISCLAIMERS OR OTHER NOTICES THAT MAY APPEAR BELOW ARE NOT APPLICABLE TO THIS COMMUNICATION AND SHOULD BE DISREGARDED. SUCH DISCLAIMERS OR OTHER NOTICES WERE AUTOMATICALLY GENERATED AS A RESULT OF THIS COMMUNICATION BEING SENT VIA BLOOMBERG OR ANOTHER EMAIL SYSTEM. SCHEDULE 1(n) Sale of Sxxxxxx Title Guaranty Company for approximately $3.7 million. EXHIBIT A Form of Lock-Up Agreement November 15, 2012 Jxxxxxxxx & Company, Inc. c/o Jefferies & Company, Inc. 500 Xxxxxxx Xxxxxx Xxx Xxxx, Xxx Xxxx 00000 RE: VECTOR GROUP LTD. (the “Company”) Ladies and Gentlemen: The undersigned is an owner of record or a beneficial owner of certain shares of common stock, par value $0.10 per share, of the Company (“Shares”) or securities convertible into or exchangeable or exercisable for Shares. The Company proposes to conduct a public offering of (i) variable interest convertible senior notes (the “Notes Offering”) that will be convertible into Shares (the “Notes”) and (ii) Shares (the “Common Stock Offering” and together with the Notes Offering, the “Offerings”), and in each case, Jxxxxxxxx & Company, Inc. (“Jefferies”) will act as the underwriter. The undersigned recognizes that the Offerings will be of benefit to the undersigned and will benefit the Company. The undersigned acknowledges that you are relying on the representations and agreements of the undersigned contained in this letter agreement in carrying out the Offerings and, at a subsequent date, entering into an Underwriting Agreement with respect to each Offering (collectively, the “Underwriting Agreements”) with the Company with respect to the Offerings. Annex A sets forth definitions for capitalized terms used in this letter agreement that are not defined in the body of this agreement. Those definitions are a part of this agreement. In consideration of the foregoing, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the undersigned hereby agrees that, during the Lock-up Period, the undersigned will not, directly or indirectly, without the prior written consent of Jefferies, which may withhold its consent in its sole discretion:
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