Document:

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                                                                    EXHIBIT 10.3

THIS PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), NOR UNDER ANY APPLICABLE STATE SECURITIES LAWS. THIS
PROMISSORY NOTE HAS BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT
WITH RESPECT TO THIS PROMISSORY NOTE OR AN OPINION OF COUNSEL OR OTHER EVIDENCE
REASONABLY ACCEPTABLE TO MAKER THAT SUCH SALE OR TRANSFER IS EXEMPT FROM
REGISTRATION UNDER THE ACT.

                              VGR ACQUISITION INC.

                                 PROMISSORY NOTE

$________________                                            _____________, 2002

         FOR VALUE RECEIVED, VGR Acquisition Inc., a Delaware corporation
("Maker"), promises to pay [___________________________________] ("Payee"), in
lawful money of the United States of America, the principal sum of
[___________________________ ($______________)], together with interest in
arrears on the unpaid principal balance at an annual rate of 6 1/2%, in the
manner provided below. Interest shall be calculated on the basis of a year of
365 or 366 days, as applicable, and charged for the actual number of days
elapsed.

         This Note has been executed and delivered pursuant to and in accordance
with the terms and conditions of the Purchase and Sale Agreement, dated as of
February 15, 2002, among Maker, Payee, The Medallion Company Inc. (the
"Company") and the other stockholders of the Company (the "Agreement"), and is
subject to the terms and conditions of the Agreement, which are, by this
reference, incorporated herein and made a part hereof. Capitalized terms used in
this Note without definition shall have the respective meanings set forth in the
Agreement.

1.  PAYMENTS

1.1 PRINCIPAL AND INTEREST

         The principal amount of this Note shall be due and payable on [THE
FIFTH ANNIVERSARY OF THE CLOSING DATE]. Interest in arrears on the unpaid
principal balance of this Note shall be due and payable semi-annually on
__________ and __________, with the first payment on ________, 2002.

1.2 MANNER OF PAYMENT

         All payments of principal and interest on this Note shall be made by
wire transfer of immediately available funds to an account designated by Payee
in writing. If any payment of principal and interest on this Note is due on a
day that is not a Business Day, such payment shall be due on the next succeeding
Business Day, and such extension of time shall not be taken into

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account in calculating the amount of interest payable under this Note. "Business
Day" means any day other than a Saturday, Sunday or legal holiday in the State
of New York.

1.3 PREPAYMENT

         Maker may, without premium or penalty, at any time and from time to
time, prepay all or any portion of the outstanding principal balance due under
this Note, provided that each such prepayment is accompanied by accrued interest
on the amount of principal prepaid calculated to the date of such prepayment.

1.4 RIGHT OF SET-OFF

         Maker shall have the right to withhold and set-off against any amount
due hereunder the amount of any claim for indemnification or payment of damages
to which Maker may be entitled under the Agreement, as provided in Section 9.03
thereof.

2.  DEFAULTS

2.1 EVENTS OF DEFAULT

         The occurrence of any one or more of the following events shall
constitute an event of default hereunder ("Event of Default"):

         (a) If Maker shall fail to pay when due any payment of principal or
interest on this Note and such failure continues for 30 days after Payee
notifies Maker in writing; PROVIDED, HOWEVER, that the exercise by Maker in good
faith of its right of set-off pursuant to Section 1.4 above, whether or not
ultimately determined to be justified, shall not constitute an Event of Default.

         (b) If an "Event of Default" (as therein defined) shall occur under any
one or more of the other Promissory Notes.

         (c) The (i) filing by Maker or Guarantor of a petition or request for
liquidation, reorganization, arrangement, adjudication as a bankrupt, relief as
a debtor, or other relief under the bankruptcy, insolvency, or similar laws of
the United States of America or any state or territory thereof or any foreign
jurisdiction now or hereafter in effect; (ii) making by Maker or Guarantor of a
general assignment for the benefit of creditors; (iii) consent by Maker or
Guarantor to the appointment of a receiver or trustee, including, without
limitation, a "custodian," as defined in the Federal Bankruptcy Code, for Maker
or Guarantor or any substantial part of Maker's or Guarantor's assets; or (iv)
execution by Maker or Guarantor of a consent to any proceeding of the type
referred to in clause (i) above, or filing or commencement of any proceeding for
the dissolution or liquidation of, or winding up the affairs of, Maker or
Guarantor.

         (d) (i) The appointment of a receiver, trustee, custodian, or officer
performing similar functions, including, without limitation, a "custodian," as
defined in the Federal Bankruptcy Code, for Maker or Guarantor or any
substantial part of Maker's or Guarantor's

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assets; or the filing against Maker or Guarantor of a request or petition for
liquidation, reorganization, arrangement, adjudication as a bankrupt, or other
relief under the bankruptcy, insolvency, or similar laws of the United States of
America, any state or territory thereof, or any foreign jurisdiction now or
hereafter in effect; or if any proceeding for the dissolution or liquidation of,
or winding up the affairs of, Maker or Guarantor shall be instituted; and (ii)
such appointment shall not be vacated, or such petition or proceeding shall not
be dismissed, within one hundred twenty (120) days after such appointment,
filing, or institution.

         (e) Failure by Maker or Guarantor to pay, when due, (or, if permitted
by the terms of any applicable documentation, within any applicable grace
period) any indebtedness owing by Maker or Guarantor to any person or entity in
an amount in excess of $1,000,000, in the case of Maker, and $3,000,000, in the
case of Guarantor, whether such indebtedness shall become due by scheduled
maturity, by required prepayment, by acceleration, by demand, or otherwise, or
failure by Maker or Guarantor to perform any term, covenant, or agreement on its
part to be performed under any agreement or instrument (other than a Transaction
Document) evidencing or securing or relating to any indebtedness owing by Maker
or Guarantor when required to be performed if as a result of such failure the
maturity of such indebtedness in an amount in excess of $1,000,000, in the case
of Maker, and $3,000,000, in the case of Guarantor, has been accelerated,
without such acceleration having been rescinded or annulled for thirty (30)
days.

         (f) Any judgment or judgments against Maker or Guarantor (other than
any judgment for which such party is fully insured) in an amount in excess of
$1,000,000, in the case of Maker, and $3,000,000, in the case of Guarantor,
shall remain unpaid, undischarged, unbonded or undismissed for a period of
thirty (30) days after such judgment shall become final and unappealable.

         (g) If Maker shall cease to be a majority-owned subsidiary of Vector
Group Ltd., a Delaware corporation, directly or indirectly through one or more
other majority-owned subsidiaries, unless Maker shall have been merged with
Vector Group Ltd.

2.2 NOTICE BY MAKER

         Maker shall notify Payee in writing within five days after the
occurrence of any Event of Default of which Maker acquires knowledge.

2.3 REMEDIES

         Upon the occurrence of an Event of Default hereunder (unless all Events
of Default have been cured or waived by Payee), Payee may, at its option, (i) by
written notice to Maker, declare the entire unpaid principal balance of this
Note, together with all accrued interest thereon, immediately due and payable
regardless of any prior forbearance, and (ii) exercise any and all rights and
remedies available to it under applicable law, including, without limitation,
the right to collect from Maker all sums due under this Note. Maker shall pay
all reasonable costs and expenses incurred by or on behalf of Payee in
connection with Payee's exercise of any or all of its rights and remedies under
this Note, including, without limitation, reasonable attorneys' fees.

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2.4 DEFINITIONS

         The following terms used in this Section 2 shall have the following
meanings:

         "Federal Bankruptcy Code" means Title 11 of the United States Code,
entitled "Bankruptcy," as amended, or any successor federal bankruptcy law.

         "Guarantor" shall mean Vector Group Ltd., a Delaware corporation,
including its successors and assigns in interest.

         "Promissory Notes" shall have the meaning assigned to such term in
Section 1.01 of the Agreement.

         "Transaction Documents" shall mean the Agreement and all documents,
contracts, agreements, assignments, and certifications executed by the parties
in connection with the Agreement.

3.  MISCELLANEOUS

3.1 WAIVER

         The rights and remedies of Payee under this Note shall be cumulative
and not alternative. No waiver by Payee of any right or remedy under this Note
shall be effective unless in a writing signed by Payee. Neither the failure nor
any delay in exercising any right, power or privilege under this Note will
operate as a waiver of such right, power or privilege and no single or partial
exercise of any such right, power or privilege by Payee will preclude any other
or further exercise of such right, power or privilege or the exercise of any
other right, power or privilege. To the maximum extent permitted by applicable
law, (a) no claim or right of Payee arising out of this Note can be discharged
by Payee, in whole or in part, by a waiver or renunciation of the claim or right
unless in a writing, signed by Payee; (b) no waiver that may be given by Payee
will be applicable except in the specific instance for which it is given; and
(c) no notice to or demand on Maker will be deemed to be a waiver of any
obligation of Maker or of the right of Payee to take further action without
notice or demand as provided in this Note. Maker hereby waives presentment,
demand, protest and notice of dishonor and protest.

3.2 NOTICES

         Any notice required or permitted to be given hereunder shall be given
in accordance with Section 11.08 of the Agreement.

3.3 SEVERABILITY

         If any provision in this Note is held invalid or unenforceable by any
court of competent jurisdiction, the other provisions of this Note will remain
in full force and effect. Any provision of this Note held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.

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3.4 GOVERNING LAW

         This Note will be governed by the laws of the State of New York without
regard to conflicts of laws principles that would require the application of any
other law. The provisions of Section 11.10 (Consent to Jurisdiction) of the
Agreement shall apply to this Note as if fully set forth herein.

3.5 PARTIES IN INTEREST

         This Note shall not be assigned or transferred by Payee without the
express prior written consent of Maker, except the Payee may assign this Note to
a family trust of Payee provided such assignment shall not adversely affect, and
such assignee shall acknowledge in writing, Maker's rights under Section 1.4
hereof. Subject to the preceding sentence, this Note will be binding in all
respects upon Maker and inure to the benefit of Payee and its successor and
assigns.

3.6 NO RECOURSE AGAINST OTHERS

         A director, officer, employee or stockholder, as such, of Maker shall
not have liability for any obligations of Maker under this Note or for any claim
based on, in respect of or by reason of such obligations or their creation. By
accepting this Note, Payee shall waive and release all such liability. The
waiver and release shall be part of the consideration for the issue of this
Note.

3.7 NO JURY TRIAL

         Maker hereby waives all right to trial by jury in any action,
proceeding or counterclaim arising out of this Note or any transaction relating
thereto and all right to plead as a defense any statute of limitations or other
similar law or equitable doctrine.

3.8 SECTION HEADINGS, CONSTRUCTION

         The headings of Sections in this Note are provided for convenience only
and will not affect its construction or interpretation. All references to
"Section" or "Sections" refer to the corresponding Section or Sections of this
Note unless otherwise specified.

         All words used in this Note will be construed to be of such gender or
number as the circumstances require. Unless otherwise expressly provided, the
words "hereof" and "hereunder" and similar references refer to this Note in its
entirety and not to any specific section or subsection hereof, the words
"including" or "includes" do not limit the preceding words or terms and the word
"or" is used in the inclusive sense.

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         IN WITNESS WHEREOF, Maker has executed and delivered this Note as of
the date first stated above.

                                       VGR ACQUISITION INC.

                                       By:
                                          --------------------------------------
                                       Name (print):
                                                    ----------------------------
                                       Title:
                                             -----------------------------------

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                                                                    EXHIBIT 10.4

                            ASSET PURCHASE AGREEMENT

         THIS ASSET PURCHASE AGREEMENT dated as of ________________, 2002
between VGR Acquisition Inc., a Delaware corporation ("Purchaser"), and Gary L.
Hall ("Hall").

                              W I T N E S S E T H:

         WHEREAS, Hall has been engaged in the business of marketing and selling
cigarettes as an owner of a tobacco distribution business, and has developed
significant contacts within the tobacco industry;

         WHEREAS, Hall has been a shareholder and officer of The Medallion
Company, Inc., a Virginia corporation ("Company") since 1996, and thus engaged
in the manufacture of tobacco products and is personally responsible for
developing contacts with customers and suppliers of Company due in part to his
involvement in the tobacco distribution business for many years prior to the
incorporation of Company; and

         WHEREAS, pursuant to that certain Purchase and Sale Agreement between
Purchaser, Company and the stockholders of Company ("Purchase and Sale
Agreement"), Purchaser will acquire all the issued and outstanding shares of the
Common Stock of Company (certain capitalized terms set forth in this Asset
Purchase Agreement shall have the meaning attributed to them in the Purchase and
Sale Agreement).

         NOW THEREFORE, the parties agree as follows:

         1. TRANSFER OF ASSETS. Hall shall transfer and sell, and Purchaser
shall purchase, all of Hall's right, title and interest in any and all assets
and properties he possesses, of every kind, real, personal or mixed, absolute,
accrued, contingent or otherwise, tangible or intangible, wherever located, that
are used or useful in the conduct of Company's business, including but not
limited to any interest that Hall may have in agreements reached with customers
and suppliers of Company, with employees of Company and any other assets that
have been owned or acquired by Hall in connection with his ownership of Company
or as a result of Hall's involvement in the tobacco manufacturing business.

         2. MEMORANDA, NOTES, RECORDS, TRADE SECRETS, NON-COMPETITION.

                  (a) All memoranda, notes, records, files or other documents
made or compiled by Hall in connection with his involvement in tobacco
manufacturing businesses or made available to him as an employee of Company
shall be Purchaser's property and all originals or copies thereof shall be
delivered to Purchaser at any time on request of Purchaser.

                  (b) Hall shall not, for the period from the date of this Asset
Purchase Agreement to the date five years following the Closing Date, interfere
with the Company's relationships with, or endeavor to employ or entice away from
the Company, any person who at any time on or after January 1, 2001 was an
employee of the Company (other than those resigning as contemplated by the terms
of the Purchase and Sale Agreement and Gerald Barber).

         (c) Following the Closing Date, Hall shall not, directly or indirectly,
at any time, except with the prior express written consent of Purchaser,
disclose any Confidential

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Information that he may learn or have learned by reason of his involvement in
the tobacco manufacturing business or due to his employment or association with
the Company, or use any such information for his own personal benefit or gain.

                  (d) Except as set forth in Schedule 4.08 of the Purchase and
Sale Agreement, Hall shall not, for a period of five years following the Closing
Date, compete, directly or indirectly, with Purchaser or its affiliates by
engaging in the business, or lending assistance to anyone engaged in the
business of developing or manufacturing cigarettes in the United States or
elsewhere in the world, as an owner, investor, employee, or in any manner
whatsoever. Notwithstanding the foregoing, Hall shall not be prohibited from
making investments of less than 1% in the aggregate of publicly-traded tobacco
companies for his own account. The parties agree that $1,000,000 of the
Five-Year Promissory Note (as defined below) to be paid to Hall hereunder shall
be in consideration of Hall's agreement not to compete with Purchaser, as
described above.

         3. INTANGIBLE ASSETS. Hall shall never at any time have or claim any
right, title or interest in any patent, trade name, trademark, service mark,
copyright, trade secret, invention, discovery, concept, method, idea, software,
data bases, price lists, sales materials, sales aids, or other similar rights
developed by, generated by or made known to Hall as a result of his involvement
in tobacco manufacturing businesses or during the term of his employment with
the Company. All such tangible or intangible property shall be disclosed to and
be the sole and exclusive property of Purchaser. Hall shall fully describe any
such tangible or intangible property to an officer or director of Purchaser, and
upon request, Hall shall execute, acknowledge, and deliver, without further
consideration: (a) all papers, drawings, models, programs, data, documents and
other material pertaining to or in any way relating to or evidencing such
property; and (b) such assignments, certificates, and other documents as
Purchaser may consider necessary or appropriate to properly vest all rights,
title, and interest in such property in Purchaser or to enable Purchaser to file
and process applications for and to acquire, maintain and enforce any and all
patents, trademarks, registrations or copyrights or extensions, continuances or
renewals thereof.

         4. FURTHER ASSURANCES. Each party agrees without further consideration
to execute and deliver all such documents and instruments as the other party may
reasonably deem necessary or desirable to evidence the consummation of the
transactions contemplated by this Asset Purchase Agreement.

         5. PURCHASE PRICE AND PAYMENT. In consideration for the transfer of the
assets described above and in consideration of the other covenants described
above, Hall shall receive the sum of twenty-five million dollars ($25,000,000),
subject to reduction pursuant to Section 1.01 of the Purchase and Sale
Agreement. The purchase price described above shall be paid to Hall by delivery
on the Closing Date of the promissory note of Purchaser in the form of Exhibit B
to the Purchase and Sale Agreement (the "Five-Year Promissory Note"). The
Five-Year Promissory Note shall be guaranteed by Liggett Group Inc., a Delaware
corporation, and Vector Group Ltd., a Delaware corporation.

         6. CERTAIN PROVISIONS IN PURCHASE AND SALE AGREEMENT APPLY. The parties
agree that the following terms and provisions of the Purchase and Sale Agreement
shall be applicable to this Asset Purchase Agreement as if fully set forth
herein. For purposes of applying the terms and provisions of the Purchase and
Sale Agreement to this Asset Purchase Agreement, Hall shall

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be referred to as Seller for purposes of the terms and provisions of the
Purchase and Sale Agreement that are applicable to this Asset Purchase Agreement
and all representations, warranties, covenants and indemnities of Seller made in
the Purchase and Sale Agreement with respect to the Purchase and Sale Agreement
shall be deemed to be made with respect to this Asset Purchase Agreement:

            Article II- Representations and Warranties of Seller
            Article III- Representations and Warranties of Purchaser
            Article IV- Further Agreements and Assurances
            Article V- Conduct of Business
            Article VI- Conditions to Purchaser's Obligations
            Article VII- Conditions to Seller's and the Company's Obligations
            Article VIII- Survival
            Article IX- Indemnification
            Article X- Termination
            Article XI- Miscellaneous

Hall specifically agrees that all amounts due him under the Five-Year Promissory
Note are subject to the indemnification and right of setoff provisions set forth
in the Purchase and Sale Agreement.

         This Asset Purchase Agreement has been executed and delivered on the
Closing Date. The closing of the transaction contemplated by this Asset Purchase
Agreement shall occur simultaneously with, and be subject to all of the
conditions precedent to, the Closing of the sale and purchase of the Shares
contemplated by the Purchase and Sale Agreement. Upon termination of the
Purchase and Sale Agreement, this Asset Purchase Agreement shall also terminate.

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         IN WITNESS WHEREOF, the parties hereto have caused this Asset Purchase
Agreement to be duly executed as of the date first above written.

                                       VGR ACQUISITION INC.

                                       By:
                                           -------------------------------------
                                           Name:
                                           Title:

                                       HALL

                                       -----------------------------------------
                                       Gary L. Hall

For purposes of conveying all rights she has in the property being sold
hereunder, Donna M. Hall, wife of Gary L. Hall, signs below on the date first
written above.

                                       -----------------------------------------
                                       Donna M. Hall

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