Registration Rights Agreement



 






EXHIBIT 4.2




REGISTRATION RIGHTS AGREEMENT




     REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of April 13, 2005, by and between
Vector Group Ltd., a Delaware corporation, with headquarters located at 100 S.E. Second Street,
Miami, FL 33131 (the “Company”), and Jefferies & Company, Inc., with an office at 11100 Santa
Monica Boulevard, 10th Floor, Los Angeles, CA 90025 (the “Initial Purchaser”).



     WHEREAS:



     A. The Company has authorized the issuance of up to $30,000,000 principal amount of its 5.0%
Variable Interest Senior Convertible Notes due 2011 to be issued pursuant to an Indenture, dated as
of the date hereof, between the Company and Wells Fargo Bank, N.A., as Trustee (as the same may be
amended from time to time, the “Indenture”), which will, among other things, be convertible into
shares of the Company’s common stock, par value $0.10 per share (as converted, the “Conversion
Shares”), in accordance with the terms of the Notes and the Indenture.



     B. In connection with the Purchase Agreement, dated as of March 30, 2005, by and between the
Company and the Initial Purchaser (the “Purchase Agreement”), the Company (i) agreed to issue and
sell to the Initial Purchaser an aggregate of $25,000,000 principal amount of its 5.0% Variable
Interest Senior Convertible Notes due 2011 (the “Firm Notes”) and (ii) granted the Initial
Purchaser an option to purchase up to an additional $5,000,000 principal amount of its 5.0%
Variable Interest Senior Convertible Notes due 2011 (the “Option Notes, and together with the Firm
Notes, the “Notes”), in each case, upon the terms and subject to the conditions set forth in the
Purchase Agreement.



     C. Pursuant to a letter dated March 31, 2005, the Initial Purchaser notified the Company of
its election to exercise the option to purchase the Option Notes in full.



     D. To induce the Initial Purchaser to execute and deliver the Purchase Agreement, the Company
has agreed to provide certain registration rights under the Securities Act of 1933, as amended, and
the rules and regulations thereunder, or any similar successor statute (collectively, the “1933
Act”), and applicable state securities laws.



     NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company agrees with the Initial Purchaser, (i) for the benefit of the Initial
Purchaser and (ii) for the benefit of each Holder, as follows:



     1. Definitions.



     Capitalized terms used herein and not otherwise defined herein shall have the respective
meanings set forth in the Purchase Agreement. As used in this Agreement, the following terms shall
have the following meanings:



 









 





     “1934 Act” means the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the SEC promulgated thereunder.



     “Affiliate” of any specified Person means any other Person directly or indirectly controlling
or controlled by or under direct or indirect common control with such specified Person. For the
purposes of this definition, “control” (including, with correlative meanings, the terms
“controlling,” “controlled by” and “under common control with”), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person whether through the ownership of voting
securities or by agreement or otherwise.



     "Business Day” means any day other than Saturday, Sunday or any other day on which commercial
banks in The City of New York are authorized or required by law to remain closed.



     “Closing Date” means the date of the closing of the sale of the Notes as contemplated by the
Purchase Agreement.



     “Common Stock” means the common stock, par value $0.10 per share, of the Company, as it exists
on the date of this Agreement and any other shares of capital stock or other securities of the
Company into which such Common Stock may be reclassified or changed, together with any and all
other securities which may from time to time be issuable upon conversion of Notes.



     “Company” has the meaning set forth in the preamble of this Agreement.



     “Conversion Shares” has the meaning set forth in the recitals hereto.



     “Effective Date” means the date the Registration Statement has been declared effective by the
SEC.



     “Firm Notes” has the meaning set forth in the recitals hereto.



     “Holder” means a Person (including the Initial Purchaser) who is a holder or beneficial owner
from time to time of any Notes or Conversion Shares; provided, that, unless otherwise expressly
stated herein, only registered holders of Notes or Conversion Shares shall be counted for purposes
of calculating any proportion of holders entitled to take any action or give notice pursuant to
this Agreement.



     “Holder Information,” with respect to any Holder, means information with respect to such
Holder required to be included in any Shelf Registration Statement or the related Prospectus
pursuant to the 1933 Act and which information is included therein in reliance upon
and in conformity with information furnished to the Company in writing by such Holder
specifically for inclusion therein.



     “Indenture” has the meaning set forth in the recitals hereto.



     “Initial Purchaser” has the meaning set forth in the preamble of this Agreement.



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     “Legal Counsel” means one firm or counsel designated by the Company (and reasonably acceptable
to the Initial Purchaser acting on behalf of the Holders) to act as counsel for the Holders in
connection therewith, which firm shall be Latham & Watkins LLP.



     “Losses” has the meaning set forth in Section 5(d) hereof.



     “Majority Holders” means the Holders of a majority of the then outstanding aggregate principal
amount of Notes being registered under a Shelf Registration Statement; provided, that Holders of
the shares of Common Stock issued upon conversion of Notes shall be deemed to be Holders of the
aggregate principal amount of Notes from which such Common Stock was converted; and provided,
further, that Notes or shares of Common Stock which have been sold or otherwise transferred
pursuant to the Shelf Registration Statement shall not be included in the calculation of Majority
Holders.



     “NASD” means the NASD, Inc.



     “Notes” has the meaning set forth in the recitals hereto.



     “Notice and Questionnaire” means a written notice delivered to the Company containing
substantially the information called for by the Selling Securityholder Notice and Questionnaire
attached as Annex B to the Final Offering Circular of the Company dated March 30, 2005 relating to
the Notes.



     “Notice Holder” means any Holder of Transfer Restricted Securities that has delivered a
properly completed and signed Notice and Questionnaire to the Company in accordance with Section
2(b) hereof.



     “Option Notes” has the meaning set forth in the recitals hereto.



     “Person” has the meaning set forth in the Indenture.



     “Post-Effective Amendment” has the meaning set forth in Section 2(b)(ii) of this Agreement.



     “Prospectus” means the prospectus included in any Shelf Registration Statement (including,
without limitation, a prospectus that discloses information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule 430A under the 1933
Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Notes or the Conversion Shares covered by such Shelf Registration
Statement, and all amendments and supplements to such prospectus, including all documents
incorporated or deemed to be incorporated by reference in such prospectus.



     “Purchase Agreement” has the meaning set forth in the recitals hereto.



     “Questionnaire Deadline” has the meaning set forth in Section 2(b) hereof.



     “Record Holder” means, with respect to a Registration Default Payments Payment Date, each
Person who is registered on the books of the registrar as the holder of Notes



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at the close of
business on the February 1, May 1, August 1 and November 1, as applicable, immediately preceding
such Registration Default Payments Payment Date.




     “Registration Default” has the meaning set forth in Section 2(e) hereof.



     “Registration Default Payments” has the meaning set forth in Section 2(e) hereof.



     “Registration Default Payments Payment Date” means each February 15, May 15, August 15 and
November 15.



     “Rule 144” means Rule 144 under the 1933 Act (or any successor provision promulgated by the
SEC).



     “Rule 144A” means Rule 144A under the 1933 Act (or any successor provision promulgated by the
SEC).



     “Rule 144(k)” means Rule 144(k) under the 1933 Act (or any successor provision promulgated by
the SEC).



     “Rule 415” means Rule 415 under the 1933 Act (or any successor provision promulgated by the
SEC).



     “SEC” means the Securities and Exchange Commission.



     “Shelf Registration” means a registration effected pursuant to Section 2 hereof.



     “Shelf Registration Period” has the meaning set forth in Section 2(c) hereof.



     “Shelf Registration Statement” means any “shelf” registration statement of the Company filed
pursuant to the provisions of Section 2 hereof which covers the Transfer Restricted Securities on
Form S-3 or on another appropriate form (as determined by the Company) for an offering to be made
on a delayed or continuous basis pursuant to Rule 415 and all amendments and supplements to such
registration statement, including post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all documents incorporated or deemed to be incorporated
by reference therein.



     “Suspension Period” has the meaning set forth in Section 2(d) hereof.



     “Transfer Restricted Securities” means each Note and each Conversion Share issuable upon
conversion thereof (and any security issued with respect thereto upon any stock dividend, split or
similar event) until the earliest of the date on which such Note or Conversion
Share, or any security issued with respect thereto upon any stock dividend, split or similar
event, as the case may be: (i) has been transferred pursuant to a Shelf Registration Statement or
another registration statement covering such Note or Conversion Share which has been filed with the
SEC pursuant to the 1933 Act, in either case after such registration statement has become effective
and while such registration statement is effective under the 1933 Act; (ii) has been transferred
pursuant to Rule 144; (iii) may be sold or transferred pursuant to Rule 144(k); or



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(iv) ceases to
be outstanding. Notwithstanding the foregoing, each Note and each Conversion Share issuable upon
conversion thereof (and any security issued with respect thereto upon any stock dividend, split or
similar event) that has not previously ceased to be a Transfer Restricted Security pursuant to the
previous sentence shall cease to be a Transfer Restricted Security on the date that is two (2)
years after the later of the Closing Date.



     “Trustee” means the trustee with respect to the Notes under the Indenture.



     All references in this Agreement to financial statements and schedules and other information
which is “contained,” “included,” or “stated” in the Shelf Registration Statement, any preliminary
Prospectus or Prospectus (and all other references of like import) shall be deemed to mean and
include all such financial statements and schedules and other information incorporated or deemed to
be incorporated by reference in such Shelf Registration Statement, preliminary Prospectus or
Prospectus, as the case may be; and all references in this Agreement to amendments or supplements
to the Shelf Registration Statement, any preliminary Prospectus or Prospectus shall be deemed to
mean and include any document filed with the SEC under the 1934 Act, after the date of such Shelf
Registration Statement, preliminary Prospectus or Prospectus, as the case may be, which is
incorporated or deemed to be incorporated by reference therein.



     2. Shelf Registration Statement.



          a. The Company shall, at its expense, prepare and file with the SEC within 60 days following
the Closing Date a Shelf Registration Statement with respect to resales of the Transfer Restricted
Securities by the Holders from time to time on a delayed or continuous basis pursuant to Rule 415
and in accordance with the methods of distribution set forth in such Shelf Registration Statement,
and thereafter shall use its reasonable best efforts to cause such Shelf Registration Statement to
be declared effective under the 1933 Act within 180 days after the Closing Date. The Company shall
supplement or amend the Shelf Registration Statement if required by the rules, regulations or
instructions applicable to the registration form used by the Company for the Shelf Registration
Statement, or by the 1933 Act, the 1934 Act or the SEC.



          b. (i) The Company shall name each Holder that delivers a properly completed and signed
Notice and Questionnaire to the Company as a selling Note holder in the Shelf Registration
Statement. A Holder of Transfer Restricted Securities may include such securities in the Shelf
Registration Statement only if the Holder sends by first-class registered mail or by courier with
delivery confirmation, a properly completed Notice and Questionnaire to the Company. The Company
shall deliver the Notice and Questionnaire to the Initial Purchaser within five (5) Business Days
of the Closing Date. In order to be included in the Shelf Registration Statement at the time of
its effectiveness, the Notice and Questionnaire must be sent on or prior to the 10th Business Day
after the date the Notice and Questionnaire is deemed to
have been given in accordance with Section 6(c) hereof (or, in the case of a Holder that is a
transferee of Transfer Restricted Securities, on or prior to the earlier of (x) the 20th Business
Day after the completion of the transfer of Transfer Restricted Securities to the transferee and
(y) 9:00 a.m., New York time, on the fifth Business Day prior to initial effectiveness of the Shelf
Registration Statement) (in any case, the “Questionnaire Deadline”). The Company agrees and
undertakes that it shall distribute a Notice and Questionnaire (A) no later than 30 Business Days



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prior to the expected effectiveness of the Shelf Registration Statement to each Holder in
accordance with Section 6(c) hereof, and (B) in the case of a Holder that is a transferee of
Transfer Restricted Securities, upon the request of such transferee Holder given in accordance with
Section 6(c) hereof, to such Holder at the address set forth in such request.



               (ii) Following the effectiveness of the Shelf Registration Statement, upon receipt of a
completed Notice and Questionnaire from a Holder, the Company will, as promptly as practicable, but
in any event within ten (10) Business Days after its receipt thereof, file any supplements to the
related Prospectus or file any post-effective amendment to the Shelf Registration Statement that is
required by applicable law to cause a Holder to be named as a selling securityholder in the Shelf
Registration Statement and permit such Holder to deliver the Prospectus to purchasers of Transfer
Restricted Securities (a “Post-Effective Amendment”) (subject to the right of the Company to
suspend the use of the Prospectus as described in Section 2(d) hereof); provided, however, that (x)
if a supplement to the related Prospectus is required to permit the Holder (or other Holders not
included in the Shelf Registration Statement upon effectiveness) to deliver the Prospectus to
purchasers of Transfer Restricted Securities, the Company shall not be required to file more than
one (1) such supplement during any twenty (20) day period and (y) if a Post-Effective Amendment to
the Shelf Registration Statement is required to permit the Holder (or other Holders not included in
the Shelf Registration Statement upon effectiveness) to deliver the Prospectus to purchasers of
Transfer Restricted Securities, the Company shall not be required to file more than one (1)
Post-Effective Amendment to the Shelf Registration Statement in any sixty (60) day period. The
Company shall use its reasonable best efforts to cause any such Post-Effective Amendment to become
effective under the 1933 Act as promptly as is practicable; provided, that if a Notice and
Questionnaire is delivered to the Company during a Suspension Period, the Company shall not be
obligated to amend the Shelf Registration Statement or supplement the Prospectus until the
termination of such Suspension Period.



               (iii) Each Holder as to which the Shelf Registration Statement is being effected shall furnish
promptly to the Company (x) such other information as the Company may reasonably request for use in
connection with the Shelf Registration Statement or Prospectus or in any application to be filed
with or under state securities laws and (y) all information required to be disclosed in order to
make the information previously furnished to the Company by such Holder not misleading.



          c. The Company shall use its reasonable best efforts to keep the Shelf Registration Statement
continuously effective, supplemented and amended under the 1933 Act in order to permit the
Prospectus forming a part thereof to be usable, subject to Section 2(d) hereof, by all Notice
Holders until the earliest to occur of: (i) the last date on which, in the opinion of counsel to
the Company, the holding period applicable to sales of all Transfer Restricted Securities under
Rule 144(k) has expired; (ii) the date as of which all Transfer Restricted
Securities have been transferred under Rule 144 under circumstances in which any legend borne
by such Notes or Conversion Shares relating to restrictions on transferability thereof, under the
1933 Act or otherwise, is removed; and (iii) such date as of which all Transfer Restricted
Securities have been sold pursuant to the Shelf Registration Statement after such registration
statement has been become effective and while such registration statement is effective under the
1933 Act (in any such case, such period being called the “Shelf Registration Period”). The



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Company
will, in order to fulfill its obligations and this Section 2(c): (x) subject to Section 2(b)(ii)
and 2(d), use its reasonable best efforts to prepare and file with the SEC such amendments and
Post-Effective Amendments to the Shelf Registration Statement as may be necessary to keep the Shelf
Registration Statement continuously effective for the Shelf Registration Period; (y) subject to
Section 2(b)(ii) and 2(d), cause the related Prospectus to be supplemented by any required
supplement, and as so supplemented to be filed pursuant to Rule 424 (or any similar provisions then
in force) under the 1933 Act; and (z) comply in all material respects with the provisions of the
1933 Act with respect to the disposition of all Transfer Restricted Securities covered by the Shelf
Registration Statement during the Shelf Registration Period.



          d. The Company may suspend the availability of any Shelf Registration Statement and the use of
any Prospectus (the period during which the availability of any Shelf Registration Statement and
any Prospectus may be suspended herein referred to as the “Suspension Period”), without incurring
any obligation to pay Registration Default Payments pursuant to Section 2(e), for a period not to
exceed: (i) 30 consecutive days at any one time; (ii) 45 days in the aggregate in any three-month
period; or (iii) 90 days in the aggregate during any 12-month period, in each case, only for valid
business reasons, to be determined in good faith by the Company in its reasonable judgment (which
shall not include the avoidance of the Company’s obligations hereunder), including, without
limitation, the acquisition or divestiture of assets, pending corporate developments, events listed
in Section 3(c), public filings with the SEC and similar events; provided, that the Company
promptly thereafter complies with the requirements of Section 3(j) hereof, if applicable, and
provided, further, that, if a Post-Effective Amendment is required by applicable law to cause a
Holder to be named as a selling securityholder in the Shelf Registration Statement, the period of
time between the filing and the effectiveness of any Post-Effective Amendment shall be not deemed
to be a Suspension Period hereunder. The first day of any Suspension Period must be at least two
(2) trading days after the last day of any prior Suspension Period.



          e. The Company and the Initial Purchaser agree that the Holders of Transfer Restricted
Securities will suffer damages, and it would not be feasible to ascertain the extent of such
damages with precision, if the Company fails to fulfill its obligations under Section 2 hereof.
Accordingly, if: (i) the Shelf Registration Statement is not filed with the SEC on or within 60
days after the Closing Date; (ii) the Shelf Registration Statement has not been declared effective
by the SEC within 180 days after the Closing Date; or (iii) the Shelf Registration Statement is
filed and declared effective but shall thereafter cease to be effective (without being succeeded
within three (3) Business Days by a replacement Shelf Registration Statement filed and declared
effective) or usable (including as a result of a Suspension Period) for the offer and sale of
Transfer Restricted Securities for a period of time (including any Suspension Period) which
exceeds: (x) 30 consecutive days at any time; (y) 45 days in the aggregate in any three-month
period; or (z) 90 days in the aggregate in any 12-month period
(each such event referred to in clauses (i) through (iii), a “Registration Default”),
provided, that any suspension of the Shelf Registration Statement as a result of the time required
by the SEC to declare effective a Post-Effective Amendment to the Shelf Registration Statement in
connection with the Company’s obligation to file such an amendment pursuant to Section 2(b)(ii)
hereof shall not be included in the calculation of a Registration Default; the Company shall pay to
each Notice Holder (who is also a Record Holder), as liquidated damages and not as a penalty,
during



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any period in which a Registration Default has occurred or is continuing, as partial relief
(which remedy shall not be exclusive of any other remedies available at law or in equity), in an
amount (the “Registration Default Payments”) equal to: (i) one-half of one percent (50 basis
points) per annum per $1,000 principal amount of Notes constituting Transfer Restricted Securities
for the period up to and including the 90th day during which such Registration Default has occurred
and is continuing; and (ii) one percent (100 basis points) per annum per $1,000 principal amount of
Notes constituting Transfer Restricted Securities for the period including and subsequent to the
91st day during which such Registration Default has occurred and is continuing, it being
understood that all calculations pursuant to this and the preceding sentence shall be carried out
to five decimal places. Following the cure of all Registration Defaults, Registration Default
Payments will cease to accrue with respect to such Registration Defaults. All accrued Registration
Default Payments shall be paid by the Company on each Registration Default Payments Payment Date in
cash to the date of such cure and Registration Default Payments will be calculated on the basis of
a 360-day year consisting of twelve 30-day months. The rate of accrual of the Registration Default
Payments with respect to any period shall not exceed the rate provided for in this paragraph
notwithstanding the occurrence of multiple concurrent Registration Defaults. The parties hereto
agree that the Registration Default Payments provided in this Section 2(e) constitute a reasonable
estimate of the damages that may be incurred by Holders by reason of a Registration Default and
that such Registration Default Payments are the only monetary damages available to Holders in the
event of a Registration Default. Notwithstanding anything in the Agreement to the contrary,
Registration Default Payments shall only be payable to Notice Holders.



          f. All of the Company’s obligations (including, without limitation, the obligation to pay
Registration Default Payments) set forth in the preceding paragraph which are outstanding or exist
with respect to any Transfer Restricted Security at the time such security ceases to be a Transfer
Restricted Security shall survive until such time as all such obligations with respect to such
security shall have been satisfied in full. Notwithstanding the foregoing, no Registration Default
Payments shall accrue as to any Transfer Restricted Security from and after the earlier of: (i) the
date such security is no longer a Transfer Restricted Security; and (ii) the expiration of the
Shelf Registration Period.



          g. Immediately upon the occurrence or the termination of a Registration Default, the Company
shall give the Trustee, so long as the Notes that are Transfer Restricted Securities remain
outstanding, notice of such commencement or termination of the obligation to pay Registration
Default Payments with regard to such Notes, and the amount thereof and of the nature of the default
giving rise to such commencement or the event giving rise to such termination, as the case may be
(such notice to be contained in an Officer’s Certificate (as such term is defined in the
Indenture)), and prior to receipt of such Officer’s Certificate the Trustee and the transfer and
paying agent shall be entitled to assume that no such commencement or termination has occurred, as
the case may be.



     3. Registration Procedures.



     In connection with any Shelf Registration Statement, the following provisions shall apply:



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          a. The Company shall: (i) furnish to the Initial Purchaser within a reasonable period of time,
but in any event within four (4) Business Days prior to the filing thereof with the SEC to afford
the Initial Purchaser a reasonable opportunity for review, a copy of each Shelf Registration
Statement, and each amendment thereof, and a copy of each Prospectus, and each amendment or
supplement thereto (excluding amendments caused by the filing of a report under the 1934 Act), and
shall reflect in each such document, when so filed with the SEC, such comments as the Initial
Purchaser, any Notice Holder and/or the Legal Counsel may reasonably propose therein; and (ii)
include information regarding the Notice Holders and the methods of distribution they have elected
for their Transfer Restricted Securities provided to the Company in Notice and Questionnaires as
necessary to permit such distribution by the methods specified therein.



          b. Subject to Section 2(d), the Company shall ensure that: (i) any Shelf Registration
Statement and any amendment thereto and any Prospectus forming a part thereof and any amendment or
supplement thereto comply as to form in all material respects with the 1933 Act and the rules and
regulations thereunder; (ii) any Shelf Registration Statement and any amendment thereto does not,
when it becomes effective, contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements therein not
misleading; and (iii) any Prospectus forming a part of any Shelf Registration Statement, and any
amendment or supplement to such Prospectus, does not include an untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; provided, that the Company makes no
representation with respect to any Holder Information.



          c. The Company, as promptly as reasonably practicable (but in any event within two (2)
Business Days), shall notify the Initial Purchaser and each Notice Holder:



               (i) When a Shelf Registration Statement or any Post-Effective Amendment thereto or any
Prospectus or any supplement thereto has been filed with the SEC and when the Shelf Registration
Statement or any Post-Effective Amendment thereto has become effective which notice and
confirmation can be made at the election of the Company by making a public announcement thereof by
release made to Reuters Economic Services and Bloomberg Business News;



               (ii) of any request, following effectiveness of the Shelf Registration Statement under the
1933 Act, by the SEC or any other federal or state governmental authority for amendments or
supplements to the Shelf Registration Statement or the Prospectus or for additional information
(other than any such request relating to a review of the Company’s 1934 Act filings);



               (iii) of the issuance by the SEC or any other federal or state governmental authority of any
stop order suspending the effectiveness of the Shelf Registration Statement or of any order
preventing or suspending the use of any Prospectus or the initiation or threat of any proceedings
for that purpose;



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               (iv) of the receipt by the Company of any notification with respect to the suspension of the
qualification or exemption from qualification of the Transfer Restricted Securities included in any
Shelf Registration Statement for sale in any jurisdiction or the initiation or threat of any
proceeding for that purpose;



               (v) of the occurrence of, but not the nature of or details concerning, any event or the
existence of any condition that requires the making of any changes in the Shelf Registration
Statement or the Prospectus or any document incorporated by reference therein so that, as of such
date, the statements therein are not misleading and the Shelf Registration Statement or the
Prospectus or any document incorporated by reference therein, as the case may be, does not include
an untrue statement of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein (in the case of the Prospectus, in the light of
the circumstances under which they were made) not misleading;



               (vi) of the Company’s determination that a Post-Effective Amendment to the Shelf Registration
Statement is necessary (other than a Post-Effective Amendment pursuant to Section 2(b)(ii)); and



               (vii) of the commencement (including as a result of any of the events or circumstances
described in paragraph (ii) above) and termination of any Suspension Period.



          d. The Company shall use its reasonable best efforts to obtain: (i) the withdrawal of any
order suspending the effectiveness of any Shelf Registration Statement and the use of any related
Prospectus; and (ii) the lifting of any suspension of the qualification (or exemption from
qualification) of any of the Transfer Restricted Securities for offer or sale in any jurisdiction
in which they have been qualified for sale, in each case, at the earliest possible time, and shall
provide notice to each Notice Holder and the Initial Purchaser of the withdrawal of any such orders
or suspensions.



          e. The Company shall promptly furnish to the Initial Purchaser (and, upon written request from
any Notice Holder, to such Notice Holder), without charge, at least one copy of any Shelf
Registration Statement and any Post-Effective Amendment thereto, excluding all documents
incorporated or deemed to be incorporated therein by reference and all exhibits thereto.



          f. The Company shall promptly furnish to the Legal Counsel (i) copies of any correspondence
from the SEC or the staff of the SEC to the Company or its representatives relating to any
Registration Statement, (ii) promptly after the same is prepared and filed with the SEC, one copy
of any Registration Statement and any amendment(s) thereto, including financial statements and
schedules, all documents incorporated therein by reference, if requested by a Holder, and all
exhibits and (iii) upon the effectiveness of any Registration Statement, one copy
of the prospectus included in such Registration Statement and all amendments and supplements
thereto.



          g. The Company shall, at the Effective Date, promptly provide each Holder a copy of the
Prospectus included in the Shelf Registration Statement at the time of the



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Effective Date and
during the Shelf Registration Period, promptly deliver to the Initial Purchaser and each Notice
Holder, without charge, as many copies of the Prospectus (including each preliminary Prospectus)
included in any Shelf Registration Statement, and any amendment or supplement thereto, as such
person may reasonably request and except as provided in Sections 2(d) and 3(r) hereof; and the
Company hereby consents to the use of the Prospectus and any amendment or supplement thereto by
each of the selling Holders in connection with the offering and sale of the Transfer Restricted
Securities covered by the Prospectus or any amendment or supplement thereto.



          h. The Company shall submit to the SEC, within two (2) Business Days after the Company learns
that no review of a particular Registration Statement will be made by the staff of the SEC or that
the staff has no further comments on a particular Registration Statement, as the case may be, a
request for acceleration of effectiveness of such Registration Statement to a time and date not
later than 48 hours after the submission of such request.



          i. Prior to any offering of Transfer Restricted Securities pursuant to any Shelf Registration
Statement, the Company shall register or qualify or cooperate with the Notice Holders and their
respective counsel in connection with the registration or qualification (or exemption from such
registration or qualification) of such Transfer Restricted Securities for offer and sale, under the
securities or blue sky laws of such jurisdictions within the United States as any such Notice
Holders reasonably request and shall maintain such qualification in effect so long as required and
do any and all other acts or things necessary or advisable to enable the offer and sale in such
jurisdictions of the Transfer Restricted Securities covered by such Shelf Registration Statement;
provided, however, that the Company will not be required to: (i) qualify generally to do business
as a foreign corporation or as a dealer in securities in any jurisdiction where it is not then so
qualified or; (ii) take any action which would subject it to service of process or taxation in
excess of a nominal dollar amount in any such jurisdiction where it is not then so subject.



          j. If the Transfer Restricted Securities are in certificated form, the Company shall cooperate
with the Holders to facilitate the timely preparation and delivery of certificates representing
Transfer Restricted Securities sold pursuant to any Shelf Registration Statement free of any
restrictive legends and, with respect of any Notes, in such denominations permitted by the
Indenture and registered in such names as Holders may request at least two (2) Business Days prior
to settlement of sales of Transfer Restricted Securities pursuant to such Shelf Registration
Statement.



          k. Subject to the exceptions contained in (i) and (ii) of Section 3(i) above, the Company
shall use its reasonable best efforts to cause the Transfer Restricted Securities covered by the
applicable Shelf Registration Statement to be registered with or approved by such other federal,
state and local governmental agencies or authorities, and self-regulatory organizations in the
United States as may be necessary to enable the Holders to consummate the
disposition of such Transfer Restricted Securities as contemplated by the Shelf Registration
Statement; without limitation to the foregoing, the Company shall provide all such information as
may be



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required by the NASD in connection with the offering under the Shelf Registration Statement
of the Transfer Restricted Securities (including, without limitation, such as may be required by
NASD Rule 2710 or 2720), and shall cooperate with each Holder in connection with any filings
required to be made with the NASD by such Holder in that regard.



          l. Upon the occurrence of any event described in Section 3(c)(iv) or 3(c)(v) hereof, the
Company shall promptly prepare and file with the SEC a Post-Effective Amendment to any Shelf
Registration Statement, or an amendment or supplement to the related Prospectus, or any document
incorporated therein by reference, or file a document which is incorporated or deemed to be
incorporated by reference in such Shelf Registration Statement or Prospectus, as the case may be,
so that, as thereafter delivered to purchasers of the Transfer Restricted Securities included
therein, the Shelf Registration Statement and the Prospectus, in each case, as then amended or
supplemented, will not include an untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements therein (in the
case of the Prospectus, in the light of the circumstances under which they were made) not
misleading and, in the case of a Post-Effective Amendment, use its reasonable best efforts to cause
it to become effective as promptly as practicable; provided, that the Company’s obligations under
this paragraph (l) shall be suspended if the Company has suspended the use of the Prospectus in
accordance with Section 2(d) hereof and given notice of such suspension to Notice Holders, it being
understood that the Company’s obligations under this Section 3(l) shall be automatically reinstated
at the end of such Suspension Period.



          m. The Company shall provide, prior to the effective date of any Shelf Registration Statement
hereunder, a CUSIP number for the Transfer Restricted Securities registered under such Shelf
Registration Statement.



          n. The Company shall use its reasonable best efforts to comply with all applicable rules and
regulations of the SEC and shall make generally available to its security holders an earnings
statement satisfying the provisions of Section 11(a) of the 1933 Act and Rule 158 promulgated by
the SEC thereunder (or any similar rule promulgated under the 1933 Act) for a 12-month period
commencing on the first day of the first fiscal quarter of the Company commencing after the
effective date of any Shelf Registration Statement or each Post-Effective Amendment to any Shelf
Registration Statement, which such statements shall be made available no later than 45 days after
the end of the 12-month period or 90 days after the end of the 12-month period, if the 12-month
period coincides with the fiscal year of the Company.



          o. The Company shall use its reasonable best efforts to cause the Indenture to be qualified
under the Trust Indenture Act (as defined in the Indenture) not later than the effective date of
the first Shelf Registration Statement.



          p. The Company shall cause all shares of Common Stock issuable upon conversion of the Notes to
be reserved for listing on each securities exchange or quotation system on which the Common Stock
is then listed no later than the date the applicable Shelf Registration Statement is declared
effective and, shall cause all Common Stock to be so listed
when issued, and, in connection therewith, to make such filings as may be required under the
1934 Act and to have such filings declared effective as and when required thereunder.



          q. The Company may require each Notice Holder of Transfer Restricted Securities to be sold
pursuant to any Shelf Registration Statement to furnish to the Company



12









 





such information regarding
the Notice Holder and the distribution of such Transfer Restricted Securities sought by the Notice
and Questionnaire and such additional information as may, from time to time, be required by the
1933 Act and/or the SEC or any other federal or state governmental authority, and the obligations
of the Company to any Notice Holder under this Agreement shall be expressly conditioned on the
compliance of such Notice Holder with such request.



          r. If reasonably requested in writing in connection with any disposition of Transfer
Restricted Securities pursuant to a Shelf Registration Statement, make reasonably available for
inspection during normal business hours by a representative for the Notice Holders of such Transfer
Restricted Securities and any broker-dealers, attorneys and accountants retained by such Notice
Holders, all relevant financial and other records, pertinent corporate documents and properties of
the Company and its subsidiaries, and cause the appropriate executive officers, directors and
designated employees of the Company and its subsidiaries to make reasonably available for
inspection during normal business hours all relevant information reasonably requested by such
representative for the Notice Holders or any such broker-dealers, attorneys or accountants in
connection with such disposition, in each case as is customary for similar “due diligence”
examinations; provided, however, that any information that is designated by the Company, in good
faith, as confidential at the time of delivery of such information shall be kept confidential by
such Persons, unless disclosure thereof is made in connection with a court, administrative or
regulatory proceeding or required by law, or such information has become available to the public
generally through the Company or through a third party without an accompanying obligation of
confidentiality.



          s. Each Notice Holder agrees that, upon receipt of notice of the happening of an event
described in Sections 3(c)(ii) through and including 3(c)(vi), it shall forthwith discontinue (and
shall cause its agents and representatives to discontinue) disposition of Transfer Restricted
Securities and will not resume disposition of Transfer Restricted Securities until such Holder has
received copies of an amended or supplemented Prospectus contemplated by Section 3(l) hereof, or
until such Notice Holder is advised in writing by the Company that the use of the Prospectus may be
resumed or that the relevant Suspension Period has been terminated, as the case may be, provided,
that the foregoing shall not prevent the sale, transfer or other disposition of Transfer Restricted
Securities by a Holder in a transaction which is exempt from, or not subject to, the registration
requirements of the 1933 Act, so long as such Holder does not and is not required to deliver the
applicable Prospectus or Shelf Registration Statement in connection with such sale, transfer or
other disposition, as the case may be; and provided, further, that the provisions of this Section
3(q) shall not prevent the occurrence of a Registration Default or otherwise limit the obligation
of the Company to pay Registration Default Payments.



          t. Each Notice Holder shall promptly notify the Company of any inaccuracies or changes in the
information requiring an amendment to the applicable Shelf Registration Statement or Prospectus
provided in such Notice Holder’s Notice and Questionnaire
that may occur subsequent to the date thereof at any time while the Shelf Registration
Statement remains effective.



13









 





          u. The Company shall use its reasonable best efforts to take all other steps necessary to
effect the registration of the Notes covered by the Shelf Registration Statement contemplated
hereby.



     4. Registration Expenses.



     The Company shall bear all fees and expenses incurred in connection with the performance of
its obligations under Sections 2 and 3 hereof and shall reimburse the Holders for the reasonable
fees and disbursements of the Legal Counsel. Such fees and expenses shall include, without
limitation: (i) all registration and filing fees and expenses (including filings made with the
NASD); (ii) all fees and expenses of compliance with federal securities and state Blue Sky or
securities laws; (iii) all expenses of printing (including printing of Prospectuses and
certificates for the Common Stock to be issued upon conversion of the Notes) and the Company’s
expenses for messenger and delivery services and telephone; (iv) all fees and disbursements of
counsel to the Company; (v) all application and filing fees in connection with listing (or
authorizing for quotation) the Common Stock on a national securities exchange or automated
quotation system pursuant to the requirements hereof; and (vi) all fees and disbursements of the
independent certified public accountants of the Company. The Company shall bear its internal
expenses (including, without limitation, all salaries and expenses of its officers and employees
performing legal, accounting or other duties), the expenses of any annual audit and the fees and
expenses of any Person, including special experts, retained by the Company. Notwithstanding the
provisions of this Section 4, each Holder shall bear the expense of any broker’s commission, agency
fee and underwriter’s discount or commission, if any, relating to the sale or disposition of such
Holder’s Transfer Restricted Securities pursuant to a Shelf Registration Statement.



     5. Indemnification and Contribution.



          a. The Company shall indemnify and hold harmless the Initial Purchaser and each Holder of
Transfer Restricted Securities covered by any Shelf Registration Statement, and each director,
officer, partner, member and employee of the Initial Purchaser or such Holder, as applicable, and
each Person, if any, who controls the Initial Purchaser or any such Holder, as applicable, within
the meaning of either the 1933 Act or the 1934 Act (collectively referred to for purposes of this
Section 5 as an “Indemnified Holder”) against any losses, claims, damages or liabilities, joint or
several, or actions in respect thereof, to which any of them may become subject, under the 1933 Act
or otherwise, insofar as such losses, claims, damages, liabilities or actions arise out of or are
based upon an untrue statement or alleged untrue statement of a material fact contained in the
Shelf Registration Statement, or in any Prospectus, or any amendment thereof or supplement thereto,
or arise out of or are based upon the omission or alleged omission to state therein a material fact
necessary to make the statements therein (in the case of any Prospectus, in the light of the
circumstances under which they were made) not misleading, and will reimburse each such party for
any legal or other expenses reasonably incurred by such party in connection with investigating or
defending any such action or claim as such expenses are incurred; provided, however, that: (i) the
Company shall not be liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based
upon Holder Information; (ii) with respect to any untrue statement or omission of material
fact made in any Shelf Registration Statement, or in any Prospectus, the indemnity agreement
contained in this Section 5(a) shall not inure to the benefit of an Indemnified Holder from whom



14









 





the Person asserting any such loss, claim, damage or liability purchased the securities concerned,
to the extent that any such loss, claim, damage or liability of such Indemnified Holder occurs
under the circumstance where it shall have been established that: (w) the Company had previously
furnished copies of the Prospectus, and any amendments and supplements thereto, to such Indemnified
Holder; (x) delivery of the Prospectus, and any amendment or supplements thereto, was required by
the 1933 Act to be made to such Person; (y) the untrue statement or omission of a material fact
contained in the Prospectus was corrected in amendments or supplements thereto timely provided to
such Indemnified Holder; and (z) there was not received by such Person, at or prior to the written
confirmation of the sale of such securities to such Person, a copy of such amendments or
supplements to the Prospectus; and (iii) the indemnification provisions of this Section shall not
apply to amounts paid in settlement of any loss, claim, damage or liability if such settlement is
effected without the prior written consent of the Company, which consent shall not be unreasonably
withheld or delayed. This indemnity agreement will be in addition to any liability that the
Company may otherwise have. This indemnity agreement will not apply to any loss, damage, expense,
liability or claim arising from an offer or sale, occurring during a Suspension Period, of Transfer
Restricted Securities by a Notice Holder who has previously received notice from the Company of the
commencement of the Suspension Period pursuant to Section 3(c)(vii).



          b. Each Indemnified Holder, severally and not jointly, agrees to indemnify and hold harmless
the Company, each of its directors and officers and each Person, if any, who controls the Company
within the meaning of either the 1933 Act or the 1934 Act, to the same extent as the foregoing
indemnity from the Company to the Indemnified Holders and shall reimburse each such indemnified
party, as incurred, for any legal or other expenses reasonably incurred by them in connection with
investigating or defending any loss, claim, damage, liability or action, but only with reference to
Holder Information supplied by such Indemnified Holder. In no event shall any Indemnified Holder,
its directors, officers, partners, members or employees or any Person, if any, who controls such
Indemnified Holder be liable or responsible for any amount in excess of the amount by which the
total amount received by such Indemnified Holder with respect to its sale of Transfer Restricted
Securities pursuant to a Shelf Registration Statement exceeds: (i) the amount paid by such
Indemnified Holder for such Transfer Restricted Securities; plus (ii) the amount of any damages
that such Indemnified Holder, its directors, officers or any Person who controls such Indemnified
Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. This indemnity agreement will be in addition to any liability that
such Indemnified Holder may otherwise have.



          c. Promptly after receipt by an indemnified party under this Section 5 of notice of any claim
or the commencement of any action or proceeding (including any governmental investigation), such
indemnified party will, if a claim for indemnification in respect thereof is to be made against the
indemnifying party under Section 5(a) or 5(b) hereof, notify the indemnifying party in writing of
the commencement thereof; but the omission so to notify the indemnifying party will not relieve it
from any liability which it may have to any indemnified party to the extent it is not materially
prejudiced as a result thereof and, in any
event, shall not relieve it from any liability which it may have otherwise than on account of
this indemnity agreement. In case any such action or proceeding is brought against any indemnified
party, and it notifies the indemnifying



15









 





party of the commencement thereof, the indemnifying party
will be entitled to participate therein (jointly with any other indemnifying party similarly
notified), and to the extent that it may elect, by written notice, delivered to such indemnified
party promptly after receiving the aforesaid notice from such indemnified party, to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified party; provided, however,
that if the defendants (including any impleaded parties) in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it and/or other indemnified parties which
are different from or additional to those available to the indemnifying party, the indemnified
party or parties shall have the right to select separate counsel to defend such action on behalf of
such indemnified party or parties. Upon receipt of notice from the indemnifying party to such
indemnified party of its election so to appoint counsel to defend such action and approval by the
indemnified party of such counsel, the indemnifying party will not be liable to such indemnified
party under this Section 5 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof unless: (i) the indemnified party shall
have employed separate counsel in accordance with the proviso to the preceding sentence (it being
understood, however, that the indemnifying party shall not be liable for the expense of more than
one separate counsel (in addition to any local counsel), approved by the Indemnified Holders in the
case of paragraph (a) of this Section 5, representing the indemnified parties under such paragraph
(a) who are parties to such action); (ii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the indemnified party within a
reasonable time after notice or commencement of the action; (iii) the indemnifying party has
authorized the employment of counsel for the indemnified party at the expense of the indemnifying
party; or (iv) the use of counsel chosen by the indemnifying party to represent the indemnified
party would present such counsel with a conflict of interest. An indemnifying party will not,
without the prior written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought hereunder (whether or
not the indemnified parties are actual or potential parties to such claim or action) unless such
settlement, compromise or consent includes an unconditional release of each indemnified party from
all liability arising out of such claim, action, suit or proceeding. Subject to the provisions of
the immediately following sentence, no indemnifying party shall be liable for any settlement,
compromise or the consent to the entry of judgment in connection with any such action effected
without its written consent, but if settled with its written consent or if there be a final
judgment for the plaintiff in any such action other than a judgment entered with the consent of
such indemnified party, the indemnifying party shall indemnify and hold harmless any indemnified
party from and against any loss or liability by reason of such settlement or judgment. If at any
time an indemnified party shall have requested that an indemnifying party reimburse the indemnified
party for reasonable fees and expenses of counsel as contemplated by this Section 5(c) and to which
it would be entitled under Section 5(a) or 5(b) hereof, the indemnifying party agrees that it shall
be liable for any settlement of any proceeding effect
ed without its written consent if: (x) such
settlement is entered into more than 60 days after receipt by such indemnifying party of such
request for reimbursement, (y) such indemnifying party shall have received notice of the terms of
such settlement at least 45 days
prior to such settlement being entered into and (z) such indemnifying party shall not have
reimbursed such indemnified party in accordance with such request prior to the date of such
settlement.




16









 








          d. In the event that the indemnity provided in paragraph (a) or (b) of this Section 5 is
unavailable to or insufficient to hold harmless an indemnified party for any reason, each
indemnifying party shall contribute to the aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in connection with investigating or
defending same) (collectively, “Losses”) to which the indemnified party may be subject in such
proportion as is appropriate to reflect the relative benefits received by the Company from the sale
of the Notes, on the one hand, and an Indemnified Holder with respect to the sale by such
Indemnified Holder of Notes or Common Stock, on the other hand; provided, however, that in no case
shall an indemnifying party that is an Indemnified Holder be responsible for any amount in excess
of the total price at which the Transfer Restricted Securities are sold by such Indemnified Holder
to a purchaser. If the allocation provided by the immediately preceding sentence is unavailable
for any reason, the Company and such Indemnified Holder shall contribute in such proportion as is
appropriate to reflect not only such relative benefits but also the relative fault of the Company
on the one hand and of such Indemnified Holder on the other hand in connection with the statements
or omissions which resulted in such Losses, as well as any other relevant equitable considerations.
The relative benefits received by the Company, on the one hand, and such Indemnified Holder, on
the other hand, shall be deemed to be in the same respective proportions as the total net proceeds
from the sale of the Notes (before deducting expenses) received by or on behalf of the Company, on
the one hand, and the total proceeds received by such Indemnified Holder with respect to its sale
of Transfer Restricted Securities under the Shelf Registration Statement, on the other hand, bear
to the total gross proceeds from the sale of the Notes. Relative fault shall be determined by
reference to, among other things, whether any untrue or any alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to information provided
by the Company, on the one hand, or relates to Holder Information supplied by such Indemnified
Holder, on the other hand, the intent of the parties and their relative knowledge, information and
opportunity to correct or prevent such untrue statement or omission. The parties agree that it
would not be just and equitable if contribution pursuant to this paragraph (d) were determined by
pro rata allocation or any other method of allocation that does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of this paragraph (d), no Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall
be entitled to contribution from any Person with respect to claims arising directly out of or
relating to such fraudulent misrepresentation who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 5(d), each Person who controls such Indemnified
Holder within the meaning of either the 1933 Act or the 1934 Act shall have the same rights to
contribution as such Indemnified Holder, and each Person who controls the Company within the
meaning of either the 1933 Act or the 1934 Act shall have the same rights to contribution as the
Company, subject in each case to the applicable terms and conditions of this paragraph (d).



          e. The remedies provided for in this Section 5 are not exclusive and shall not limit any
rights or remedies which may otherwise be available to any indemnified party at law or in equity.



          f. The provisions of this Section 5 will remain in full force and effect regardless of (i) the
termination of this Agreement, (ii) any investigation made by or on behalf of any Indemnified
Holder, any underwriter or the Company or any of the officers, directors or



17









 





controlling Persons
referred to in Section 5 hereof and (iii) the sale by an Indemnified Holder of Transfer Restricted
Securities covered by a Shelf Registration Statement.



          g. Rules 144 and 144A. The Company covenants that it shall use its reasonable best
efforts to file the reports required to be filed by it under the 1933 Act and the 1934 Act in a
timely manner so long as the Transfer Restricted Securities remain outstanding. If at any time the
Company is not required to file such reports, it will, upon request of any Holder or beneficial
owner of Transfer Restricted Securities, make available such information necessary to permit sales
pursuant to Rule 144A. The Company further covenants that, for as long as any Transfer Restricted
Securities remain outstanding, it will take such further action as any Holder of Transfer
Restricted Securities may reasonably request, all to the extent required from time to time to
enable such Holder to sell Transfer Restricted Securities without registration under the 1933 Act
within the limitation of the exemptions provided by Rule 144 and Rule 144A. Upon the written
request of any Holder of Transfer Restricted Securities, the Company shall deliver to such Holder a
written statement as to whether it has complied with such requirements.



     6. Miscellaneous.



          a. No Inconsistent Agreements. The Company has not, as of the date hereof, entered
into nor shall it, on or after the date hereof, enter into, any agreement with respect to its
securities that is inconsistent with the rights granted to the Holders herein or otherwise
conflicts with the provisions hereof. In addition, the Company shall not grant to any of its
Holders (other than the Holders of Transfer Restricted Securities in such capacity) the right to
include any of its securities in the Shelf Registration Statement provided for in this Agreement
other than the Transfer Restricted Securities.



          b. Amendments and Waivers. The provisions of this Agreement, including the provisions
of this sentence, may not be amended, qualified, modified or supplemented, and waivers or consents
to departures from the provisions hereof may not be given, unless the Company consents in writing
and the Company has obtained the written consent of at least the majority of the Holders of the
then outstanding Transfer Restricted Securities; provided, that with respect to any matter that
directly or indirectly affects the rights of the Initial Purchaser hereunder, the Company shall
obtain the written consent of the Initial Purchaser against which such amendment, qualification,
supplement, waiver or consent is to be effective. Notwithstanding the foregoing, a waiver or
consent to departure from the provisions hereof with respect to a matter that relates exclusively
to the rights of Holders whose Transfer Restricted Securities are being sold pursuant to a Shelf
Registration Statement and that does not directly or indirectly affect the rights of other Holders
may be given by the Majority Holders.



          c. Notices. All notices and other communications provided for or permitted hereunder
shall be made in writing by hand-delivery, first-class mail, telecopier, or air courier
guaranteeing overnight delivery:



               (i) if to any Holder, at the most current address of such Holder maintained by the Registrar
under the Indenture or the registrar of the Common Stock (provided that while the Notes or the
Common Stock are in book-entry form, notice to the Trustee shall



18









 





serve as notice to the Holders),
or, in the case of the Notice Holder, the address set forth in its Notice and Questionnaire;




		
	                     	(ii) if to the Company, to:


Vector Group Ltd.

100 S.E. Second Street, 32nd Floor

Miami, Florida 33131

Telephone: (305) 579-8000

Facsimile: (305) 579-8009

Attention: Richard J. Lampen


With a copy (for informational purposes only) to:


McDermott Will & Emery LLP

2049 Century Park East, 34th Floor

Los Angeles, California 90067

Telephone: (310) 284-6110

Facsimile: (310) 277-4730

Attention: Mark J. Mihanovic, Esq.






		
	                     	(iii) if to the Initial Purchaser, to:


Jefferies & Company, Inc.

11100 Santa Monica

10th Floor

Los Angeles, California 90025

Telephone: (310) 575-5261

Facsimile: (310) 575-5166

Attention: Andrew Whittaker


With a copy (for informational purposes only) to:


Latham & Watkins LLP

633 West Fifth Street

Suite 4000

Los Angeles, California 90071

Telephone: (213) 485-1234

Facsimile: (213) 891-8763

Attention: Mary Ellen Kanoff, Esq.





     All such notices and communications shall be deemed to have been duly given when received, if
delivered by hand or air courier, and when sent, if sent by first-class mail or telecopier.



     The Company and the Initial Purchaser by notice to the other may designate additional or
different addresses for subsequent notices or communications.



19









 





          d. Successors and Assigns. Any Person who purchases any Transfer Restricted
Securities from the Initial Purchaser shall be deemed, for purposes of this Agreement, to be an
assignee of the Initial Purchaser. This Agreement shall inure to the benefit of and be binding
upon the successors and assigns of each of the parties, including, without the need for an express
assignment or any consent by the Company thereto, subsequent Holders. The Company hereby shall
extend the benefits of this Agreement to any Holder and underwriter and any such Holder and
underwriter may specifically enforce the provisions of this Agreement as if an original party
hereto. In the event that any other Person shall succeed to the Company under the Indenture, then
such successor shall enter into an agreement, in form and substance reasonably satisfactory to the
Holders, whereby such successor shall assume all of the Company’s obligations under this Agreement.



          e. Counterparts. This Agreement may be executed in any number of counterparts and by
the parties hereto in separate counterparts, each of which when so executed shall be deemed to be
an original and all of which taken together shall constitute one and the same agreement; provided,
that a facsimile signature shall be considered due execution and shall be binding upon the
signatory thereto with the same force and effect as if the signature were an original, not a
facsimile signature.



          f. Headings. The headings in this Agreement are for convenience of reference only and
shall not limit or otherwise affect the meaning hereof.



          g. Governing Law. All questions concerning the construction, validity, enforcement
and interpretation of this Agreement shall be governed by the internal laws of the State of New
York, without giving effect to any choice of law or conflict of law provision or rule (whether of
the State of New York or any other jurisdictions) that would cause the application of the laws of
any jurisdictions other than the State of New York. Each party hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in The City of New York, Borough of
Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not
to assert in any suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient
forum or that the venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof to such party at the address for such notices
to it under this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed to limit in any
way any right to serve process in any manner permitted by law. If any provision of this Agreement
shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction
or the validity or enforceability of any provision of this Agreement in any other jurisdiction.
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL
FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION
HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.



20









 





          h. Severability. In the event that any one of more of the provisions contained
herein, or the application thereof in any circumstances, is 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 hereof shall not be in any way impaired or
affected thereby, it being intended that all of the rights and privileges of the parties shall be
enforceable to the fullest extent permitted by law.



          i. Notes Held by the Company, Etc. Whenever the consent or approval of Holders of a
specified percentage of principal amount of Notes or the shares of Common Stock issuable upon
conversion thereof is required hereunder, Notes or the shares of Common Stock issued upon
conversion thereof held by the Company or its Affiliates (other than subsequent Holders of Notes or
the Common Stock issued upon conversion thereof if such subsequent Holders are deemed to be
Affiliates solely by reason of their holdings of such Notes) shall not be counted in determining
whether such consent or approval was given by the Holders of such required percentage.



          j. Termination. This Agreement and the obligations of the parties hereunder shall
terminate upon the end of the Shelf Registration Period, except for any liabilities or obligations
under Section 2(e), 4 or 5.



21









 





     IN WITNESS WHEREOF, the Company and the Initial Purchaser have caused their respective
signature page to this Registration Rights Agreement to be duly executed as of the date first
written above.


	 	 	 	 	 
	 	COMPANY:



VECTOR GROUP LTD.

 	 
	 	By:  	/s/
Richard J. Lampen
 	 
	 	 	Name:  	Richard J. Lampen
 	 
	 	 	Title:  	Executive Vice President 	 
	 



	 	 	 	 	 
	 	INITIAL PURCHASER:



JEFFERIES & COMPANY, INC.

 	 
	 	By:  	/s/ Andrew Whittaker
 	 
	 	 	Name:  	Andrew Whittaker 	 
	 	 	Title:  	Vice Chairman 	 
	 





22