EXHIBIT 13
November 18, 2004
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Executive Vice President
▇▇▇▇▇▇▇▇▇ & Company, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear ▇▇▇▇▇▇:
On the terms set forth in the Master Securities Loan Agreement dated
as of November 18, 2004 (the "Loan Agreement"), between the undersigned and
Jefferies & Company, Inc. ("Jefferies"), and for other good and valuable
consideration, the receipt of which is hereby acknowledged, notwithstanding any
other agreement, the undersigned has agreed to lend or re-lend, in case the loan
is terminated, to Jefferies 3,472,875 shares (as such number of shares may be
reduced based upon assignments permitted by the last paragraph hereof, the
"Borrowed Shares") of common stock of Vector Group Ltd., a Delaware corporation
("Vector"), owned beneficially and of record by the undersigned. The undersigned
hereby agrees not to dispose of or encumber or otherwise impair in any fashion
at any time, the availability of such Borrowed Shares during the Availability
Period. The "Availability Period" shall mean (i) the period commencing on the
date hereof and ending on the date that is thirty (30) months after the date
hereof and (ii) from the date that is thirty (30) months after the date hereof
and continuing until November 15, 2011, any period during which ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
("▇▇. ▇▇▇▇▇") and the ▇▇▇▇▇ Persons are, either individually or collectively,
"beneficial owners" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of more than 50% of the aggregate ordinary voting power
represented by issued and outstanding voting stock of Vector. The undersigned
also will use commercially reasonable efforts to cooperate with Vector to assure
that the Form S-3 registration statement relating to the Borrowed Shares is
available and effective for the loan of the Borrowed Shares during the
Availability Period. "▇▇▇▇▇ Persons" means any member of the immediate family of
▇▇. ▇▇▇▇▇ and any "person" or "group" under Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") that is controlled by
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ or his immediate family or any trust or partnership controlled
by any of the foregoing.
Notwithstanding any of the covenants or agreements set forth herein,
in no event shall any such covenants or agreements: (1) prohibit the undersigned
from selling or otherwise disposing of any or all of the Borrowed Shares in a
"Change of Control Transaction" (as such term is defined herein) or (2) affect
or be deemed to affect the rights and obligations of ▇▇. ▇▇▇▇▇ as a director or
officer of Vector (including relating to any Board of Director vote), or the
right of the undersigned or any affiliate thereof to vote any shares of common
stock of Vector
owned thereby, in favor of any Change of Control Transaction (provided that if
any affiliate of the undersigned acquires the Borrowed Shares pursuant to a
transaction described in the first bullet point below, such affiliate shall
assume the obligations hereunder) or on any other matter in the sole discretion
of the undersigned or any such affiliate, provided, however, that the rights of
the undersigned or any affiliate thereof set forth in this sentence do not alter
the undersigned's or any such affiliate's obligation to loan to Jefferies, and
not to dispose of, any new or different security exchanged for the Borrowed
Shares in connection with a recapitalization, merger, consolidation, stock
purchase or other corporate action. For purposes of this letter, a "Change of
Control Transaction" means:
- the acquisition by any "person" or group under Section 13(d)(3) of
the Exchange Act (collectively, "Person") unaffiliated with ▇▇.
▇▇▇▇▇ or any ▇▇▇▇▇ Person of beneficial ownership, directly or
indirectly, through a purchase, merger, or other acquisition
transaction or series of transactions, of shares of Vector's capital
stock entitling such Person to exercise more than 50% of the total
voting power of all shares of Vector's capital stock entitling the
holders thereof to vote generally in elections of directors, or
- any consolidation of Vector with, or merger of Vector into, any
other Person, any merger of another Person into Vector, or any sale
or transfer of all or substantially all of Vector's assets to
another Person, other than a merger or sale of assets that (x) is
effected solely to change Vector's jurisdiction of incorporation and
results in a reclassification, conversion, or exchange of
outstanding shares of common stock solely into shares of common
stock, or (y) does not have the result that Vector's shareholders
immediately before such transaction beneficially own, directly or
indirectly, immediately following such transaction, less than 50% of
the combined total voting power of all shares of capital stock of
the Person resulting from such transaction entitling the holders
thereof to vote generally in elections of directors.
This Letter and the Loan Agreement shall terminate in the event that: (i)
Vector has redeemed all of Vector's issued and outstanding 5% Variable Interest
Senior Convertible Notes due 2011 (the "Notes") in accordance with the terms of
the indenture governing the Notes, or (ii) all of the issued and outstanding
Notes have been converted by the holders thereof into common stock of Vector in
accordance with the terms of the indenture governing the Notes.
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The undersigned may assign to ▇▇▇▇▇▇ ▇▇▇▇▇▇, pursuant to identical terms
and conditions as set forth in this letter, some or all of the undersigned's
obligation to lend the Borrowed Shares provided that the total number of shares
subject to this letter agreement and the total number of shares subject to the
▇▇▇▇▇▇ ▇▇▇▇▇▇ letter agreement (pursuant to the contemplated assignment) shall
at all times equal 3,472,875 and that all such shares are subject to an
effective Registration Statement on Form S-3 relating to the loan of such shares
during the Availability Period.
▇▇▇▇▇ GAMMA LIMITED PARTNERSHIP
By: ▇▇▇▇▇ Gamma Inc., Its General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President and Chief Executive Officer
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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