Document:

<PAGE>

                                                                    EXHIBIT 10.3

                FIRST AMENDMENT TO COLLATERAL AGENCY AGREEMENT

                  This First Amendment to Collateral Agency Agreement (this
"AMENDMENT") is made and entered into as of September 4, 2001 by and among (i)
VGR Holding Inc., a Delaware corporation (formerly known as BGLS Inc., the
"COMPANY"), (ii) Brooke Group Holding Inc., a Delaware corporation ("BROOKE
HOLDING"), (iii) Vector Group Ltd., a Delaware corporation ("VECTOR"), (iv) New
Valley Holdings, Inc., a Delaware corporation ("NV HOLDINGS"), (parties (i)
through (iv) the "COMPANY PARTIES"), (v) The Bank of New York, a New York
banking corporation as successor in interest to United States Trust Company of
New York, a New York banking corporation as collateral agent (the "COLLATERAL
AGENT") appointed pursuant to the Collateral Agency Agreement dated May 14, 2001
(the "AGREEMENT") with reference to that certain Note Purchase Agreement (the
"NOTE PURCHASE AGREEMENT") dated as of May 14, 2001 under which the Company has
issued to the purchasers (the "PURCHASERS") $60,000,000 in aggregate principal
amount of the Company's 10% Senior Secured Notes due March 31, 2006 (the
"NOTES") and (vi) the Holders (as defined below) of the Notes listed on the
signature pages hereto. Capitalized terms used but not defined herein shall have
the meaning ascribed to them in the Agreement.

                                    RECITALS

                  WHEREAS, the obligations of the Company under the Notes and
the Note Purchase Agreement are secured by the Security Agreements;

                  WHEREAS, pursuant to the Security Agreements, the Company
Parties have granted to the Collateral Agent, for the benefit of the holders of
the Notes (the "HOLDERS"), a security interest in and liens on the Collateral
(as defined in the Note Purchase Agreement);

                  WHEREAS, the Company is changing its name from BGLS Inc. to
VGR Holding Inc;

                  WHEREAS, the Uniform Commercial Code financing statements on
file relating to the Collateral will need to be amended to reflect the Company's
name change in order to maintain the perfected security interest of the
Collateral Agent in the Collateral in which a security interest may be perfected
by filing Uniform Commercial Code financing statements;

                  WHEREAS, it is a specific duty of the Collateral Agent,
pursuant to SECTION 3.01(A) of the Agreement, to maintain the perfection of any
lien in, to or upon the Collateral or any portion thereof, that has been, are or
will be granted in favor of the Collateral Agent pursuant to the Security
Agreements;

                  WHEREAS, this duty can be more effectively performed by
amending the Agreement to authorize the Collateral Agent to file the Uniform
Commercial Code financing statements and amendments to the Uniform Commercial
Code financing statements it deems reasonably necessary at any time and for any
reason including without limitation a change in the name of any Company Party;
and

                  WHEREAS, the parties listed above wish to amend the Agreement
to give the Collateral Agent such authorization.

<PAGE>

                  NOW THEREFORE, in consideration of the foregoing and the
mutual agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

                                    AGREEMENT

         1. AMENDMENT OF SECTION 3.01. Section 3.01 is amended as follows:

                  a.       The word "and" is omitted from the end of clause (i).

                  b.       The period is omitted from the end of clause (j) and
                           is replaced with "; and".

                  c.       3.01 (k) is added which shall read in its entirety:
                           "The Majority Holders may instruct the Collateral
                           Agent from time to time to file or record Uniform
                           Commercial Code financing statements and other filing
                           or recording documents or instruments with respect to
                           the Collateral in such form and in such offices as
                           the Majority Holders reasonably determine appropriate
                           to perfect or to ensure the continuing perfection or
                           priority of the security interest in favor of the
                           Collateral Agent."

         2. AMENDMENT OF SECTION 3.03. Section 3.03 shall be amended as follows:

                  a.       The word "and" is omitted from the end of clause (b).

                  b.       The period is omitted from the end of clause (c) and
                           is replaced with "; and".

                  c.       Section 3.03 (d) is added which shall read in its
                           entirety: "The Collateral Agent is authorized to file
                           or record from time to time Uniform Commercial Code
                           financing statements and other filing or recording
                           documents or instruments with respect to the
                           Collateral in such form and in such offices as the
                           Collateral Agent may be specifically instructed by
                           the Majority Holders to file or record, to perfect or
                           to ensure the continuing perfection or priority of
                           the security interest in favor of the Collateral
                           Agent. The Collateral Agent shall have no obligation
                           to make any independent investigation or
                           determination as to the necessity or propriety of
                           filing any such financing statements or other
                           documents. However, if at any time, the Collateral
                           Agent receives actual notice or is advised by
                           in-house or outside legal counsel that it is
                           necessary or proper to file any such financing
                           statement or other document to perfect or to ensure
                           the continuing perfection or priority of the security
                           interest in favor of the Collateral Agent, then the
                           Collateral Agent shall be obligated to so inform the
                           Majority Holders, and the Majority Holders shall
                           thereupon instruct the Collateral Agent to take, or
                           refrain from taking, as the case may be, any action
                           with respect to such filing. In the event that the
                           Majority Holders fail to so instruct the Collateral
                           Agent, the Majority Holders shall be deemed to have
                           instructed the Collateral Agent to take no action."

                                       2
<PAGE>

         3. COUNTERPARTS. This Amendment may be executed in multiple
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. Delivery of an executed
counterpart of a signature page of this Amendment by facsimile or e-mail
transmission shall be effective as delivery of a manually executed counterpart
of this Agreement.

         4. HEADINGS. The section and other headings contained in this Amendment
are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.

         5. CHOICE OF LAW. This Amendment shall be construed and enforced in
accordance with, and governed by the law of the State of New York.

            [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

                                       3
<PAGE>

         6. NO OTHER AMENDMENTS: CONFIRMATION. Except as expressly amended,
modified and supplemented hereby, the provisions of the Collateral Agency
Agreement and the other Note Documents are and still remain in full force and
effect.

         7. REFERENCE TO AND EFFECT ON COLLATERAL AGENCY AGREEMENT. On and after
the date of this Amendment, each reference in the Collateral Agency Agreement to
"this Agreement", "hereunder", "hereof", "herein" or words of like meaning
referring to the Collateral Agency Agreement, and each reference in the Note
Documents, other than the Collateral Agency Agreement, and any ancillary
documents to the "Collateral Agency Agreement", "thereunder", "thereof", or
words of like meaning referring to the Collateral Agency Agreement shall mean
and be a reference to the Collateral Agency Agreement as so amended by this
Amendment.

                  IN WITNESS WHEREOF, the parties hereto have executed this
Amendment by their duly authorized officers as of the day and year first above
written.

                                          VGR HOLDING INC.

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

                                       4

<PAGE>

                                          BROOKE GROUP HOLDING INC.

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

                                       5
<PAGE>

                                          VECTOR GROUP LTD.

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

                                       6
<PAGE>

                                          NEW VALLEY HOLDINGS, INC.

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

                                       7
<PAGE>

                                        THE BANK OF NEW YORK,
                                        as successor in interest to
                                        UNITED STATES TRUST COMPANY OF NEW YORK,
                                        as Collateral Agent

                                        By: /s/ Patricia Gallagher
                                            ------------------------------------
                                            Name:     Patricia Gallagher
                                            Title:    Authorized Signatory

                                      8
<PAGE>

                                        TCW LEVERAGED INCOME TRUST, L.P.,
                                        By:      TCW Advisers (Bermuda), Ltd.,
                                                 as its General Partner

                                        By: /s/ Melissa V. Weiler
                                            ------------------------------------
                                            Name:     Melissa V. Weiler
                                            Title:   Managing Director

                                        By:  TCW Investment Management Company,
                                             as Investment Adviser

                                        By: /s/ Darryl L. Schall
                                            ------------------------------------
                                            Name:     Darryl L. Schall
                                            Title:    Managing Director

                                      9
<PAGE>

                                        TCW LEVERAGED INCOME TRUST II, L.P.
                                               By: TCW (LINC II), L.P.
                                                   as its General Partner

                                        By:  TCW Advisers (Bermuda), Ltd.,
                                             its General Partner

                                        By:  /s/ Melissa V. Weiler
                                            ------------------------------------
                                            Name:  Melissa V. Weiler
                                            Title: Managing Director

                                        By: TCW Investment Management Company,
                                            as Investment Adviser

                                        By:  /s/ Darryl L. Schall
                                            ------------------------------------
                                            Name:  Darryl L. Schall
                                            Title: Managing Director

                                     10
<PAGE>

                                        TCW LINC III CBO LTD.
                                        By:  TCW Investment Management Company,
                                             as Collateral Manager

                                        By:  /s/ Melissa V. Weiler
                                            ------------------------------------
                                            Name:  Melissa V. Weiler
                                            Title: Managing Director

                                        By:  Darryl L. Schall
                                            ------------------------------------
                                            Name:  Darryl L. Schall
                                            Title: Managing Director

                                       11
<PAGE>

                                        POWRs 1997-2 (Participating Obligations
                                        with Residuals 1997-2)

                                        By: Citibank Global Asset Management,
                                            Its Investment Advisor

                                        By: TCW Asset Management Company,
                                            Its Portfolio Manager

                                        By:  /s/ Melissa V. Weiler
                                            ------------------------------------
                                            Name:   Melissa V. Weiler
                                            Title:  Managing Director

                                        By:  /s/ Darryl L. Schall
                                            ------------------------------------
                                            Name:   Darryl L. Schall
                                            Title:  Managing Director

                                       12
<PAGE>

                                        CAPTIVA II FINANCE LTD.,
                                        By:     TCW Advisors, Inc.
                                                Its Financial Manager

                                        By:  /s/ Melissa V. Weiler
                                            ------------------------------------
                                            Name:  Melissa V. Weiler
                                            Title: Managing Director

                                        By:  /s/ Darryl L. Schall
                                            ------------------------------------
                                            Name:  Darryl L. Schall
                                            Title: Managing Director

                                       13
<PAGE>

                                   AIMCO CDO, SERIES 2000-A
                                   By:   Allstate Investment Management Company,
                                              Its Collateral Manager
                                   By:        TCW Asset Management Company,
                                              Its Investment Advisor

                                   By:  /s/ Melissa V. Weiler
                                       -----------------------------------------
                                       Name:     Melissa V. Weiler
                                       Title:    Managing Director

                                   By:  /s/ Darryl L. Schall
                                       -----------------------------------------
                                       Name:     Darryl L. Schall
                                       Title:    Managing Director

                                       14<PAGE>
                                                                    EXHIBIT 10.4

                               FIRST AMENDMENT TO
                             NOTE PURCHASE AGREEMENT

                  This First Amendment to Note Purchase Agreement is dated as of
November 6, 2001 (this "FIRST AMENDMENT") and amends the Note Purchase
Agreement, dated as of May 14, 2001 (the "NOTE PURCHASE AGREEMENT"), by and
between VGR Holding Inc. (formerly known as BGLS Inc.), a Delaware corporation
(the "COMPANY"), and the other signatories hereto who collectively are the
Majority Holders as defined in the Note Purchase Agreement.

                  WHEREAS, the Company and the Majority Holders desire to amend
the Note Purchase Agreement as set forth herein.

                  NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:

                  1. AMENDMENTS TO NOTE PURCHASE AGREEMENT.

                  a. SECTION 8.9. Section 8.9 of the Note Purchase Agreement is
         hereby amended by deleting the third, fourth, fifth and sixth
         paragraphs therein in their entirety.

                  b. SCHEDULE B. Schedule B to the Note Purchase Agreement is
         hereby amended by deleting the definition of "TAX SHARING ATTRIBUTES"
         in its entirety.

                  c. EXHIBIT 8.9. Exhibit 8.9 to the Note Purchase Agreement is
         hereby deleted in its entirety.

                  2. CONDITIONS TO EFFECTIVENESS. This First Amendment shall
become effective on the date (the "EFFECTIVE Date") on which each of the Company
and the Majority Holders shall have executed and delivered this First Amendment.

                  3. REPRESENTATIONS AND WARRANTIES. The Company hereby
represents and warrants that as of the Effective Date the representations and
warranties made by it in the Note Documents to which it is a party are true and
correct in all material respects on and as of the Effective Date as if made on
and as of the Effective Date.

                  4. REFERENCE TO THE NOTE PURCHASE AGREEMENT. Each reference in
the Note Purchase Agreement to "this Agreement," "hereunder," "hereof,"
"herein," or words of like import referring to the Note Purchase Agreement,
shall mean and be a reference to such Note Purchase Agreement as amended by this
First Amendment.

                  5. LIMITED EFFECT. Except as expressly amended and modified by
this First Amendment, the Note Purchase Agreement shall continue to be, and
shall remain, in full force and effect in accordance with its terms.

                  6. AFFIRMATION OF PLEDGE AGREEMENTS. Each of Brooke Holding
and NV Holdings hereby consents to the execution and delivery of this First
Amendment and reaffirms its obligations under the Brooke Holding Pledge
Agreement and the NV Holdings Pledge Agreement, respectively.

<PAGE>

                  7. SUCCESSORS. All agreements of the parties to this First
Amendment shall bind their respective successors.

                  8. COUNTERPARTS. This First Amendment may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. Delivery of an
executed counterpart of a signature page of this First Amendment by facsimile or
electronic mail transmission shall be effective as delivery of a manually
executed counterpart of this First Amendment.

                  9. GOVERNING LAW. THIS FIRST AMENDMENT AND ALL ISSUES
HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE INTERNAL
LAWS OF THE STATE OF NEW YORK.

                  10. SEVERABILITY. In case any one or more of the provisions in
this First Amendment shall be held invalid, illegal or unenforceable, in any
respect for any reason, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions shall not in
any way be affected or impaired thereby, it being intended that all of the
provisions hereof shall be enforceable to the full extent permitted by law.

                  11. HEADINGS. The headings of the Sections of this First
Amendment have been inserted for convenience of reference only, are not to be
considered a part of this First Amendment and shall in no way modify or restrict
any of the term or provisions of this First Amendment.

                            [SIGNATURE PAGES FOLLOW]

                                       2
<PAGE>

                  IN WITNESS WHEREOF, the parties hereto have caused this First
Amendment to be duly executed and delivered by their respective proper and duly
authorized officers as of the day and year first above written.

                                         VGR HOLDING INC.

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

                                         BROOKE GROUP HOLDING INC.

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

                                         NEW VALLEY HOLDINGS, INC.

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

                                       3
<PAGE>

                                         TCW LEVERAGED INCOME TRUST, L.P.

                                         By: TCW Advisers (Bermuda), Ltd.
                                             as its General Partner

                                             By:  /s/ Darryl L. Schall
                                                 -------------------------------
                                                   Name:     Darryl L. Schall
                                                   Title:    Managing Director

                                         By: TCW Investment Management Company
                                             as Investment Adviser

                                             By:  /s/ James M. Hassett
                                                  ------------------------------
                                                   Name:     James M. Hassett
                                                   Title:    Managing Director

                                       4
<PAGE>

                                        TCW LEVERAGED INCOME TRUST II, L.P.

                                        By: TCW (LINC II), L.P.
                                            as its General Partner

                                        By: TCW Advisers (Bermuda), Ltd.
                                            its General Partner

                                            By:   /s/ Darryl L. Schall
                                                 ------------------------------
                                                  Name:     Darryl L. Schall
                                                  Title:    Managing Director

                                        By: TCW Investment Management Company
                                            as Investment Adviser

                                            By:  /s/ James M. Hassett
                                                -------------------------------
                                                  Name:     James M. Hassett
                                                  Title:    Managing Director

                                       5
<PAGE>

                                          TCW LINC III CBO LTD.

                                          By:  TCW Investment Management Company
                                                   as Collateral Manager

                                          By:  /s/ Darryl L. Schall
                                               ------------------------------
                                          Name:  Darryl L. Schall
                                          Title: Managing Director

                                          By:  /s/ James M. Hassett
                                               ------------------------------
                                          Name:  James M. Hassett
                                          Title: Managing Director

                                       6
<PAGE>

                                     AIMCO CDO, SERIES 2000-A

                                     By:  Allstate Investment Management Company
                                              Its Collateral Manager

                                     By:  TCW Asset Management Company
                                              Its Investment Advisor

                                     By:  /s/ Darryl L. Schall
                                         -------------------------------
                                     Name:  Darryl L. Schall
                                     Title: Managing Director

                                     By:  /s/ James M. Hassett
                                          ------------------------------
                                     Name:  James M. Hassett
                                     Title: Managing Director

                                       7
<PAGE>

                                    POWRs 1997-2 (Participating Obligations with
                                    Residuals 1997-2)

                                    By:  Citibank Global Asset Management
                                           Its Investment Advisor

                                    By:  TCW Asset Management Company
                                           Its Portfolio Manager

                                    By:  /s/ Darryl L. Schall
                                         ------------------------------
                                    Name:  Darryl L. Schall
                                    Title: Managing Director

                                    By:  /s/ James M. Hassett
                                         ------------------------------
                                    Name:  James M. Hassett
                                    Title: Managing Director

                                       8
<PAGE>

                                             CAPTIVA II FINANCE LTD.

                                             By:  TCW Advisors, Inc.
                                                    Its Financial Manager

                                             By:  /s/ Darryl L. Schall
                                                  ------------------------------
                                             Name:  Darryl L. Schall
                                             Title: Managing Director

                                             By:  /s/ James M. Hassett
                                                  ------------------------------
                                             Name:  James M. Hassett
                                             Title: Managing Director

                                        9

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