Exhibit 10.1

ASSET PURCHASE AGREEMENT

     This Asset Purchase Agreement (the “Agreement”) dated this 4th day of June
2004, by and between VT Roxboro LLC, a Delaware limited liability company
(“Seller”) and Flue-Cured Tobacco Cooperative Stabilization Corporation, a North
Carolina corporation (“Purchaser”).

WITNESSETH:

     WHEREAS, Seller owns a tobacco processing and manufacturing facility in
Timberlake, North Carolina (“Timberlake Facility”); and

     WHEREAS, Seller desires to transfer, sell, convey, assign and deliver to
Purchaser, and Purchaser desires to acquire and accept from Seller, certain
assets of Seller relating to the Timberlake Facility, upon the terms and
conditions hereinafter set forth.

     NOW, THEREFORE, for and in consideration of the premises, mutual covenants
and agreements contained herein, and intending to be legally bound hereby, the
parties hereby agree as follows:

     1. Purchase and Sale of Assets. Subject to the terms and conditions of this
Agreement, at the consummation of the transactions contemplated by this
Agreement (the “Closing”) on the Closing Date (as defined below), Seller shall
transfer to Purchaser, and Purchaser shall acquire and accept from Seller, all
of Seller’s right, title and interest in, to and under all of the real property,
furniture, fixtures, equipment (including the rights under any leases that
encumber such equipment, to the extent transferable) and other assets, used or
located at the Timberlake Facility, less and except the Excluded Assets (as
defined below) (after giving effect to the exclusion of the Excluded Assets,
such assets being hereinafter collectively referred to as the “Transferred
Assets”), free and clear of any and all liens, mortgages, pledges, security
interests, charges, or other encumbrances whatsoever (“Liens”) except Permitted
Encumbrances (as defined below), such Transferred Assets to include, without
limitation:

  (a)   the real property and all buildings, structures, fixtures, easements and
improvements (except for the greenhouse) situated thereon, identified on
Schedule 1(a) (“Property”);

  (b)   the equipment and machinery consisting of and relating to primary
tobacco processing, puffed stem processing, and cigarette making and packing,
and spare parts and supplies, including the “twin track” king size (85mm) hard
pack box packing machine and foreign-type tax stamp application unit, all as
identified on Schedule 1(b), (“Plant Equipment”);

  (c)   the leased equipment and all rights under the equipment leases that
encumber any of the Transferred Assets (the “Equipment Leases”), identified on
Schedule 1(c), if Purchaser agrees to assume such Equipment Leases and to the
extent transferable;

 

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  (d)   furniture, furnishings and fixtures identified on Schedule 1(d);

  (e)   computer hardware and computer software documentation, to the extent
transferable (collectively, the “Software Licenses”), with all fees to be paid
by Purchaser, (subject to applicable license agreements) utilized at the
Timberlake Facility, including source code and systems documentation, if
available, described on Schedule 1(e); provided, however, if any such computer
software is not transferable without the consent or waiver of the licensor
thereof, the Seller shall use all reasonable efforts, and the Purchaser shall
cooperate with the Seller, to obtain the consent or waiver necessary to convey
to the Purchaser such software license;

  (f)   all licenses and permits to the extent transferable, as identified on
Schedule 1(f);

  (g)   all rights of the Seller under the Service Contracts (as defined below)
and Software Licenses, to the extent assignable, that Purchaser chooses to
accept (pursuant to an Assignment and Assumption Agreement); and

  (h)   all Stemmery Equipment identified on Schedule 1(h) (the “Stemmery
Equipment”).

     
Notwithstanding anything to the contrary contained herein, the Purchaser will
not assume any liability or obligation of any kind of the Seller, other than the
Permitted Encumbrances and any liability under any lease, the Equipment Leases,
the Service Contracts and Software Licenses that the Purchaser expressly assumes
pursuant to an Assignment and Assumption Agreement.

     2. Excluded Assets. Notwithstanding anything in Section 1 to the contrary,
Seller shall retain all of its right, title and interest in, to and under all,
and shall not transfer to Purchaser any of, the following assets, rights or
properties (the “Excluded Assets”):

  (a)   the greenhouse, as more particularly described on Schedule 2(a);
provided, however, that Seller and Purchaser shall enter into a ground lease
substantially in the form of Exhibit A hereto, for a period of thirty-six
(36) months following the Closing for a monthly lease payment of $1,000.00;

  (b)   all palladium-related equipment identified on Schedule 2(b); and

  (c)   all tobacco inventory, all manufactured tobacco goods, and all
non-tobacco production materials, including, without limitation, cigarette
paper, filter materials, glue, and packaging materials.

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     3. Purchase Price.

  (a)   The aggregate purchase price for the Transferred Assets (the “Purchase
Price”) is $25,800,000.00.

  (b)   The Purchase Price shall be allocated as set forth on Schedule 3(b). The
allocation of the Purchase Price is intended to comply with the requirements of
Section 1060 of the Internal Revenue Code (the “Code”). Purchaser and Seller
shall file Form 8594, Asset Acquisition Statement Under Section 1060 of the
Code, if applicable, with their respective income tax returns for the taxable
year that includes the Closing Date, in a manner consistent with the allocation
of the Purchase Price set forth herein. Purchaser and Seller agree to satisfy
all of the reporting requirements of Section 1060 of the Code. If either
Purchaser or Seller, in a subsequent taxable year, makes any allocation of an
increase or decrease in the Purchase Price for any asset, Purchaser or Seller,
as applicable, agrees to file a supplemental Form 8594 as required.

     4. Payment of Purchase Price. The Purchase Price is payable by Purchaser as
follows:

  (a)   Two Million Five Hundred Eighty Thousand Dollars ($2,580,000.00) upon
execution of this Agreement, by wire transfer of immediately available funds, to
be paid to Commonwealth Land Title Insurance Company (the “Escrow Agent”) and
applied in the manner described in Section 11 (together with any interest
accrued thereon, the “Deposit”); and

  (b)   The balance of the Purchase Price on the Closing Date, by wire transfer
of immediately available funds to an account in a U.S. bank specified by Seller.

     5. State of Title; Permitted Encumbrances. The Transferred Assets are to be
conveyed, and Purchaser agrees to purchase the same, free and clear of all
Liens, except for the matters identified in Schedule 5(a) (the “Permitted
Encumbrances”). Within fifteen (15) days from execution of this Agreement, the
Purchaser may obtain, at the Purchaser’s expense, a boundary and topographical
survey of the Property (the “Survey”), and a title insurance commitment for the
Property from the Escrow Agent (the “Commitment”). Within such fifteen (15) day
period, Purchaser will deliver a copy of the Commitment to Seller with a notice
of any objections to title contained therein. Such objections shall not include
any Permitted Encumbrances. Seller shall then have until the Closing Date, or
such later date as the parties agree, to cure.

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     6. Condition of Transferred Assets. Purchaser agrees that neither Seller
nor any agent or representative of Seller has made or is hereby making any
representation or warranty as to the physical condition, fitness for any
purpose, operation, or compliance with legal requirements of the Transferred
Assets, or the legal requirements applicable to the Transferred Assets, except
as may be specifically set forth in this Agreement.

     7. Representations and Warranties.

  7.1   Seller

  (a)   Seller represents and warrants to Purchaser, that as of the date hereof
(which representations and warranties shall be repeated as if made as of the
Closing Date and shall survive the Closing) that: (i) this Agreement and all
agreements and instruments to be executed and delivered by Seller pursuant to
this Agreement (collectively, the “Ancillary Agreements”) have been duly
authorized, and have been or will be, duly executed and delivered by Seller and
will constitute the legal, valid, and binding obligation of Seller, enforceable
against Seller in accordance with their terms (subject to applicable bankruptcy,
insolvency and similar laws affecting creditors’ rights generally and subject,
as to enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law)), and (ii) Seller is
a limited liability company duly organized and in good standing in the state of
its organization and is qualified to do business and in good standing in North
Carolina.

  (b)   Seller represents and warrants to Purchaser as of the date hereof (which
representations and warranties shall be repeated as if made as of the Closing
Date and shall survive the Closing to the extent provided in Section 14) as
follows:

  (i)   No action, suit, arbitration or proceeding is pending or, to the best of
Seller’s knowledge is threatened, against Seller in or by any court,
administrative or arbitral tribunal or government body, whether in respect of
eminent domain powers or otherwise, which asserts rights of any person other
than Seller to the Transferred Assets, which asserts that Seller’s present or
past use of the Transferred Assets has violated any provision of applicable law,
in any material respect, or which seeks to delay or prevent the transactions
contemplated by this Agreement.

  (ii)   The Seller is in compliance in all material respects with all laws,
material regulations, rules, decrees and ordinances of any court or governmental
body or agency applicable to the Seller, where the failure to comply would have
a material adverse effect on Seller’s ability to convey the Transferred Assets.

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  (iii)   A list of those service, maintenance, and utility contracts (the
“Service Contracts”) currently in force with respect to the Transferred Assets
is provided in Schedule 7.1(b)(iii); true and complete copies of the Service
Contracts, if available, have been or will be made available by Seller to
Purchaser. The Service Contracts are in full force and effect, and to the best
of Seller’s knowledge, no party is in default thereunder except as may be set
forth in Schedule 7.1(b)(iii). Seller shall not modify or terminate any Service
Contracts nor enter into any new service, maintenance or utility contracts with
respect to the Transferred Assets without Purchaser’s prior written consent,
other than contracts which will be terminated at Closing (as set forth on
Schedule 7.1(b)(iii)). Seller makes no warranty or representation, however, that
any party providing services to Seller under any Service Contract will be
willing or able to continue providing the same or similar services to Purchaser
on the same or similar terms and conditions.

  (iv)   There are no leases, licenses, occupancy agreements or other agreements
or contracts by which any party other than Purchaser may purchase any portion of
the Property or Plant Equipment or by which any party other than Seller is
entitled to occupy any portion of the Property and Seller shall not hereafter
enter into or permit any leases, licenses or other occupancy agreements or
contracts for the purchase or occupancy of any portion of the Property, except
for the tenancy of Vector Tobacco (USA) Ltd. (n/k/a Vector Tobacco Inc.) (“VT”),
which will be terminated at Closing.

  (v)   The facilities, computer equipment, Plant Equipment, furniture,
fixtures, buildings and other tangible assets which are included in the
Transferred Assets are in good operating condition and repair and are adequate
for the uses to which they have been put by Seller in the ordinary course of the
business of the Timberlake Facility, except for ordinary wear and tear, and are
free from known defects, except such as require routine maintenance and except
such minor defects as do not substantially interfere with the continued use
thereof in the conduct of Seller’s business. All of the Plant Equipment
necessary for the sustained, uninterrupted operation of the Timberlake

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      Facility complies, and during Seller’s operation of the Timberlake
Facility, the Plant Equipment has complied, in all material respects, with all
applicable laws, including the Occupational Safety and Health Act, as amended
(“OSHA”). To the best of Seller’s knowledge, the Seller has no liability (and to
Seller’s knowledge there is no basis for any present or future charge,
complaint, action, suit, proceeding, hearing, investigation, claim, or demand
against the Seller giving rise to any liability) under OSHA or any other law (or
rule or regulation thereunder) of any federal, state or local government (or
agency thereof) concerning employee health and safety.

  (vi)   The Transferred Assets constitute all of the property and assets
adequate for the operation of the Timberlake Facility as a tobacco processing
and cigarette manufacturing facility, substantially as the same was conducted by
Seller or VT prior to December 31, 2003.

  (vii)   No bankruptcy petition has been filed by or against Seller, nor has
Seller made an assignment for the benefit of creditors.

  (viii)   To the best of Seller’s knowledge, no tax deficiencies have been
proposed or assessed against the Seller.

  (ix)   Neither the execution and the delivery of this Agreement nor the
Ancillary Agreements, nor the consummation of the transactions contemplated
hereby and thereby, will (A) violate any statute, regulation, rule, judgment,
order, decree, stipulation, injunction, charge, or other restriction of any
government, governmental agency, or court to which the Seller or the Transferred
Assets is subject or any provision of the charter or limited liability company
agreement of the Seller; or (B) conflict with, result in a breach of, constitute
a default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice or third party
consent under any contract, lease, sublease, license, sublicense, permit,
indenture, instrument of indebtedness, Lien, or other agreement or arrangement
to which the Seller is a party or by which it is bound or to which any of the
Transferred Assets is subject (or result in the imposition of any Lien upon any
of its assets), except for any such violations, defaults or other events as
would not have a material adverse effect on Seller’s ability to convey the

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      Transferred Assets. The Seller does not need to give any notice to, make
any filing with, or obtain any consent, or approval of any court or government
or governmental agency in order to enter into this Agreement or the Ancillary
Agreements or to consummate the transactions contemplated by this Agreement or
the Ancillary Agreements.

  (x)   Other than the Permitted Encumbrances, the Seller has, or will have,
prior to the Closing, good and marketable title to all of the Transferred
Assets, free and clear of any Liens or restrictions on transfer other than the
Equipment Leases.

  (xi)   The Seller has received no notice and has no knowledge of any
condemnation proceedings affecting the Transferred Assets, any proceedings to
change the zoning of the Property, or any pending liens or assessments for
governmental improvements with respect to the Property.

  (xii)   With respect to the operation of the Timberlake Facility and the
Property, the Seller is, and at all times during the Seller’s ownership has
been, in compliance in all material respects with all Environmental Laws (as
defined below). To the best of Seller’s knowledge, Seller has no liability (and
to Seller’s knowledge there is no basis related to the past or present
operations of the Seller or its predecessors for any present or future
liability) under any Environmental Law. “Environmental Laws” means the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
the Resource Conservation and Recovery Act of 1976, the Federal Water Pollution
Control Act of 1972, the Clean Air Act of 1970, the Safe Drinking Water Act of
1974, the Toxic Substances Control Act of 1976, the Refuse Act of 1899, or the
Emergency Planning and Community Right-to-Know Act of 1986 (each as amended), or
any other law of any federal, state or local government or agency thereof
(including rules, regulations, codes, judgments, orders, decrees, stipulations,
injunctions, and charges thereunder) relating to public health and safety, or
pollution or protection of the environment, including, without limitation, laws
relating to emissions, discharges, or releases of pollutants, contaminants, or
chemical, industrial, hazardous or toxic materials or wastes into ambient air,
surface water, ground water, or lands or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport, or
handling of pollutants, contaminants, or chemical, industrial, hazardous, or
toxic materials or wastes.

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  (xiii)   The Seller has not received any notice alleging or notifying it that
it is in violation of any Environmental Law.

  (xiv)   To the best of Seller’s knowledge, no Hazardous Material (as defined
below) has been released, disposed of or placed on the Property or the
Transferred Assets in a manner that could give rise to liability to the owner or
operator of the Property of the Transferred Assets under any Environmental Law.
To the best of Seller’s knowledge, no above ground or underground storage tanks
have ever been located at, on or under the Property, except as set forth on
Schedule 7.1(b)(xiv). The Seller has delivered to the Purchaser a complete copy
of all environmental claims, reports, studies, compliance actions or the like of
the Seller or which are available to the Seller with respect to any of the
Property or any of the Transferred Assets. “Hazardous Materials” means any
substance which, under any Environmental Law, requires special handling or
notification of any federal, state or local governmental entity in its
collection, storage, treatment or disposal.

  (xv)   There are no outstanding judgments against Seller that would have a
material adverse effect on Seller’s ability to convey the Transferred Assets.

  (c)   As used in this Agreement, the phrase “to the best of Seller’s
knowledge” shall mean and shall be limited to the best of the actual, current
knowledge of Mr. Timothy Jackson, Manager of Seller, Mr. William Marks, Chief
Financial Officer of Seller, and Mr. John Schmelzer, Vice President – Operations
of VT.

  (d)   Prior to Closing, Seller will use commercially reasonable efforts to
clean the Timberlake Facility to remove genetically-modified tobacco with the
understanding that such removal would be deemed accomplished if samples from
test runs of non-genetically modified tobacco processed at the Timberlake
Facility failed to show evidence of genetically modified tobacco above
established detection levels utilizing the polymerase chain reaction (“PCR”)
method of detection. The method of sampling, testing and the established
detection levels shall be as set forth on Schedule 7.1(d).

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  (e)   Seller will promptly notify Purchaser by Closing of any state of facts
arising after the date hereof which would render materially untrue any of the
representations and warranties contained in subsection 7.1(b).

     7.2 Purchaser

  (a)   Purchaser represents and warrants to Seller, that as of the date hereof
(which representations and warranties shall be repeated as if made as of the
Closing) that: (i) this Agreement and the Ancillary Agreements have been duly
authorized, and have been or will be, duly executed and delivered by Purchaser
and will constitute the legal, valid, and binding obligation of Purchaser,
enforceable against Purchaser in accordance with their terms (subject to
applicable bankruptcy, insolvency and similar laws affecting creditors’ rights
generally and subject, as to enforceability, to general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity or at
law), and (ii) Purchaser is a corporation duly organized and in good standing in
the state of its organization.

  (b)   Purchaser has available resources or financing necessary to complete the
Closing.

  (c)   Neither the execution and the delivery of this Agreement nor the
Ancillary Agreements, nor the consummation of the transactions contemplated
hereby and thereby, will (A) violate any statute, regulation, rule, judgment,
order, decree, stipulation, injunction, charge, or other restriction of any
government, governmental agency, or court to which the Purchaser is subject or
any provision of the charter or limited liability company agreement of the
Purchaser; or (B) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice or third party
consent under any contract, lease, sublease, license, sublicense, permit,
indenture, instrument of indebtedness, Lien, or other agreement or arrangement
to which the Purchaser is a party or by which it is bound.

     8. The Closing; Apportionments.

  (a)   The Closing shall take place at 10:00 a.m. eastern time on or before
July 15, 2004 (unless extended by agreement of the parties or for any cure
period under this Agreement in which case Closing shall occur on the second
business day following such cure) (the “Closing Date”) at the offices of Smith,
Anderson, Blount, Dorsett, Mitchell & Jernigan, L.L.P., 2500 Wachovia Capitol
Center, Raleigh, North Carolina. TIME IS OF THE ESSENCE as to Seller’s and
Purchaser’s obligations to consummate the Closing on the Closing Date.

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  (b)   At the Closing:

  (i)   Seller will deliver to Purchaser vacant possession of the Property and a
Special Warranty Deed in customary form for commercial real estate transactions
in North Carolina as well as a bill of sale conveying the Transferred Assets to
Purchaser subject to the Permitted Encumbrances and any title defects waived by
Purchaser;

  (ii)   the Escrow Agent will deliver the Deposit to Seller;

  (iii)   Purchaser will deliver the balance of the Purchase Price to Seller as
provided in Section 4(b);

  (iv)   the following items will be apportioned between Seller and Purchaser as
of midnight of the day before the Closing Date: real and personal property taxes
(if a current rate has not been fixed for any tax, the tax will be apportioned
on the basis of the previous year’s rate, and readjusted post-Closing), fuel, if
any (on the basis of tank readings obtained by Seller), charges under the
Declaration of Covenants, Conditions and Restrictions identified in Schedule
5(a) and any other items customarily apportioned in similar commercial real
estate transactions in the county in which the Property is located. Any errors
in apportionments shall be corrected after the Closing, but only if notice of
such defect is delivered by the aggrieved party to the other party within thirty
(30) days after information from which such defect could be ascertained becomes
available to the aggrieved party. The parties’ respective obligations under the
immediately preceding sentence and under this clause (iv) of this Section 8(b)
shall survive the Closing for a period of one (1) year; and

  (v)   Purchaser and Seller shall have entered into an agreement pursuant to
which Seller will provide, or cause to be provided, advice and assistance to
Purchaser for up to three months following the Closing Date, (for which
Purchaser will pay Seller the sum of Four Hundred Thousand Dollars ($400,000))
regarding materials procurement; blend and product development; product testing
and analysis; applying for the necessary permits from Alcohol and Tobacco Tax
and Trade Bureau (“TTB”) (formerly the Bureau of Alcohol, Tobacco, and Firearms)
and developing procedures to comply with applicable TTB requirements; and
applying to become a participating manufacturer under the Master Settlement
Agreement (“MSA”) and developing procedures to comply with applicable MSA
reporting and operating requirements.

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  (c)   Also at the Closing:

  (i)   Seller shall by an Assignment and Assumption Agreement reasonably
satisfactory to Purchaser assign to Purchaser, subject to the terms of the
respective agreements, all of Seller’s rights under those Equipment Leases,
Service Contracts and Software Licenses which Purchaser elects to assume and
Purchaser shall by such Assignment and Assumption Agreement reasonably
satisfactory to Seller assume the obligations of Seller thereunder, in each case
to the extent such rights or obligations accrue from and after the Closing Date
(it being further understood that Seller shall retain responsibility for those
of the Service Contracts and Software Licenses that Purchaser does not assume);

  (ii)   Seller shall assign to Purchaser any licenses and permits, to the
extent assignable to Purchaser in accordance with the provisions thereof and
applicable law;

  (iii)   Seller shall deliver to the Escrow Agent such certificates and
affidavits as shall be reasonable and customary for comparable transactions in
order to permit issuance to Purchaser of a title insurance policy in customary
form;

  (iv)   Seller shall deliver to Purchaser copies of such plans and
specifications, licenses and permits and other material records relating to the
construction, operation and maintenance of the Property and as shall be in
Seller’s possession, custody or control;

  (v)   Seller shall deliver to Purchaser the keys to the building;

  (vi)   Seller and Purchaser shall execute such transfer tax returns, FIRPTA
affidavits and other documents as may be customary or required under applicable
law in connection with the conveyance of the Property and the building thereon
to Purchaser hereunder; and

  (vii)   Seller shall deliver to Purchaser a certificate certifying that each
of the conditions specified above and in Section 9(a) below is satisfied in all
material respects.

  (d)   Any installments of any assessments affecting the Property which are or
which could become a Lien on the Property will be apportioned as follows: if
such assessments are due prior to the Closing Date, they will be paid by Seller;
otherwise, they will be paid by Purchaser.

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     9. Conditions of Closing.

  (a)   Purchaser’s obligation to consummate the Closing will be subject to the
following:

  (i)   the Property being conveyed to Purchaser vacant, in reasonably clean
condition and free of all tenancies, occupants and rights of occupancy;

  (ii)   no title defect existing, other than Permitted Encumbrances, unless
waived by Purchaser;

  (iii)   test runs of tobacco at the Timberlake facility shall show no evidence
of genetically modified tobacco above established detection levels using the PCR
method of detection, in accordance with the methods of sampling, testing and
detection levels set forth in Schedule 7.1(d);

  (iv)   Seller not being in default of any of its obligations or in breach of
any of its covenants, representations or warranties under this Agreement except
such default or breach which would:

  (1)   result in reasonably foreseeable direct and/or consequential damages or
losses to Purchaser in an amount, in the aggregate, less than $100,000.00, or

  (2)   not materially interfere with Purchaser’s intended use of the Property
as a tobacco processing, cigarette manufacturing, warehouse and distribution
facility;

  (v)   no order of any court or governmental authority which seeks to restrain,
enjoin or otherwise prohibit consummation of the transactions contemplated by
this Agreement shall be in effect.

     
Seller will be given written notice by Purchaser of, and an opportunity to cure
(for up to ninety (90) days from the date on which Seller receives such written
notice, or any extensions thereof as may be agreed to by the parties), failure
of any condition in Section 9(a) or any breach or default by Seller under this
Agreement.

  (b)   Seller’s obligation to consummate the Closing will be subject to receipt
of the Purchase Price as provided herein, and Purchaser’s execution and delivery
of all Ancillary Agreements and Purchaser not being in default of its
representations and warranties.

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     10. Brokerage. Seller and Purchaser each represents to the other that such
representing party has not dealt with any broker, finder or similar person in
connection with the transactions contemplated by this Agreement. Each of Seller
and Purchaser will defend, indemnify and hold harmless the other from all
liability, costs and expenses (including, without limitation, reasonable
attorney’s fees) suffered by the indemnified party as a result of any breach of
the foregoing representation by the indemnifying party. The provisions of this
Section will survive the Closing.

     11. Escrow.

  (a)   In the event of termination of this Agreement pursuant to the provisions
of Section 12 or 19 hereof, the Escrow Agent shall disburse the Deposit to the
party entitled thereto within three (3) business days thereafter.

  (b)   Purchaser, Seller and the Escrow Agent shall enter into an Escrow
Agreement, substantially in the form of Exhibit B hereto.

  (c)   Purchaser will pay any escrow fee charged by the Escrow Agent for its
escrow services hereunder.

     12. Casualty and Condemnation.

  (a)   If, prior to the Closing, all or any portion of the Timberlake Facility
is damaged by casualty and the restoration costs are reasonably expected to
exceed $1,000,000.00, as estimated by a reputable contractor licensed in the
State of North Carolina, or, the operation of the facility is reasonably
expected to be interrupted beyond September 1, 2004, then Purchaser may elect
either (i) to terminate this Agreement, whereupon the Deposit will be returned
to Purchaser and neither party will have any further liability or obligation to
the other; or (ii) to consummate the Closing as provided herein, except that
Seller will additionally convey and assign to Purchaser at Closing all proceeds
of Seller’s casualty insurance in respect of such casualty and the Purchase
Price shall be reduced by the amount of any deductibles payable and other
amounts not covered under such insurance policies, to the extent that Seller
does not expend sums up to the amount of the deductible repairing the casualty.
In the event of any casualty in respect of which the restoration costs are not
reasonably expected to exceed $1,000,000.00, as estimated by a reputable
contractor licensed in the State of North Carolina, or operations are not
expected to be interrupted beyond September 1, 2004, the Closing will be
consummated as provided herein, except that Seller will additionally convey and
assign to Purchaser at Closing all proceeds of Seller’s casualty insurance in
respect of such casualty and the Purchase Price shall be reduced by the amount
of any deductibles payable and other amounts not covered under such insurance
policies, to the extent that Seller does not expend sums up to the amount of the
deductible repairing the casualty.

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  (b)   If, prior to the Closing, a proceeding in eminent domain is instituted
against the Timberlake Facility which contemplates the taking of any portion of
the buildings included in the Timberlake Facility or any portion of the land
included therein which would in any way materially interfere with or increase
the costs of Purchaser’s intended use of the Property and Timberlake Facility as
a tobacco processing, cigarette manufacturing, warehouse and distribution
facility, then Purchaser may elect either (i) to terminate this Agreement,
whereupon the Deposit will be returned to Purchaser and neither party will have
any further liability or obligation under this Agreement (except for obligations
specified in this Agreement to survive termination of this Agreement); or
(ii) to consummate the Closing as provided herein, except that Seller will
additionally convey and assign to Purchaser any rights Seller may have to the
condemnation award in respect of the Property.

     13. Covenants. During the period of time from the execution of this
Agreement through the Closing Date: (a) Upon reasonable notice, Seller will give
the Purchaser and its authorized representatives reasonable access during
regular business hours to the Timberlake Facility as they may reasonably request
(including for the purpose of conducting an environmental analysis on the
Property) and shall provide Purchaser with copies of any and all documents
relating to the operation of the Timberlake Facility and the Transferred Assets
as Purchaser may reasonably request, at Purchaser’s sole cost and expense, (b)
Seller will not enter into any transaction relating to the Transferred Assets
which would interfere with Seller’s ability to convey the Transferred Assets,
and (c) Seller will keep the Timberlake Facility and the Transferred Assets and
properties substantially intact. Following the Closing, the Seller shall have
one hundred eighty (180) days to remove from the Property, in its entirety and
at Seller’s sole cost and expense, the Excluded Assets other than the
greenhouse, which is subject to the terms of a lease agreement. The Seller shall
reimburse the Purchaser in full for any damage to the Property caused by the
removal of the Excluded Assets.

     14. Survival of Representations and Warranties. The representations and
warranties contained in Sections 7.1(a), 7.1(b)(ix) and 7.1(b)(x) hereof and
Sections 7.2(a) and 7.2(c) shall survive the Closing and continue in full force
and effect forever thereafter. The other representations and warranties of
Seller contained in Section 7.1(b) shall survive the Closing and continue in
full force and effect for a period of twelve (12) months thereafter.

     15. Indemnification.

  (a)   The Seller agrees to indemnify the Purchaser from and against the
entirety of any and all charges, complaints, actions, suits, proceedings,
hearings, investigations, claims, demands, judgments, orders, decrees,
stipulations, injunctions, damages, dues, penalties, fines, costs, amounts paid
in settlement, liabilities, obligations, Taxes, Liens, losses, expenses, and
fees, including all attorneys’ fees and court costs (“Adverse Consequences”) the
Purchaser may suffer resulting from, arising out of, relating to, in the nature
of, or caused by:

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  (i)   any breach or non-fulfillment of any of the Seller’s representations,
warranties or covenants contained in this Agreement or in any Ancillary
Agreement executed and/or delivered by the Seller; or

  (ii)   any liability or obligation of the Seller that was not expressly
assumed by Purchaser hereunder or under an Ancillary Agreement.

  (b)   The Purchaser agrees to indemnify the Seller from and against the
entirety of any Adverse Consequences the Seller may suffer resulting from,
arising out of, relating to, in the nature of, or caused by:

  (i)   any misrepresentation, breach or non-fulfillment of any of the
Purchaser’s representations, warranties or covenants contained in this Agreement
or in any Ancillary Agreement executed and/or delivered by the Purchaser; or

  (ii)   any liability or obligation of the Seller expressly assumed by
Purchaser hereunder or under an Ancillary Agreement.

  (c)   If any third party shall notify either Seller or Purchaser (the
“Indemnified Party”) with respect to any matter which may give rise to a claim
for indemnification against any other party (the “Indemnifying Party”) under
this Section 15, then the Indemnified Party shall notify the Indemnifying Party
thereof promptly; provided, however, that no delay on the part of the
Indemnified Party in notifying the Indemnifying Party shall relieve the
Indemnifying Party from any liability or obligation hereunder unless (and then
solely to the extent) the Indemnifying Party thereby is damaged as a result of
such failure. In the event any Indemnifying Party notifies the Indemnified Party
within fifteen (15) days after the Indemnified Party has given notice of the
matter, that the Indemnifying Party is assuming the defense thereof, (i) the
Indemnifying Party will defend the Indemnified Party against the matter with
counsel of the Indemnifying Party’s choice reasonably satisfactory to the
Indemnified Party, (ii) the Indemnified Party may retain separate co-counsel at
its sole cost and expense (except that the Indemnifying Party will be
responsible for the fees and expenses of the separate co-counsel to the extent
the Indemnified Party reasonably concludes that the counsel the Indemnifying
Party has selected has a conflict of interest), (iii) the Indemnified Party will
not consent to the entry of any judgment or enter into any settlement with
respect to the matter without the written consent of the Indemnifying Party (not
to be withheld unreasonably), and (iv) the Indemnifying Party will not consent

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      to the entry of any judgment with respect to the matter, or enter into any
settlement which does not include a provision whereby the plaintiff or claimant
in the matter releases the Indemnified Party from all liability with respect
thereto, without the written consent of the Indemnified Party (not to be
withheld unreasonably). In the event the Indemnifying Party does not notify the
Indemnified Party within fifteen (15) days after the Indemnified Party has given
notice of the matter, that the Indemnifying Party is assuming the defense
thereof, and/or in the event the Indemnifying Party shall fail to defend such
claim actively and in good faith, then the Indemnified Party may defend against,
or enter into any settlement with respect to, the matter in any manner it
reasonably may deem appropriate.

  (d)   Purchaser shall not be entitled to make any claim against Seller under
Section 15(a) unless and until the aggregate amount of Adverse Consequences with
respect to all such claims exceeds $100,000.00 in which event, Purchaser may
assert its right to indemnification to the extent of Adverse Consequences for
all such claims.

  (e)   Notwithstanding anything to the contrary in this Agreement, the maximum
amount of indemnifiable losses which may be recovered from the Seller shall be
an amount equal to $5,000,000.00, except for claims made with regard to Section
7.1(b)(x) (after any recovery under policies of title insurance), which shall be
limited to an amount equal to the Purchase Price. Notwithstanding the foregoing,
Seller’s aggregate obligations under this Section shall not exceed the Purchase
Price and shall be net of any recovery under policies of title insurance.

  (f)   VT has executed this Agreement for the limited purpose of guaranteeing
Seller’s indemnification obligations herein.

     16. Cooperation.

     The parties shall use their best efforts to cause the transactions
contemplated by this Agreement to be consummated, and Seller will assist
Purchaser in obtaining any licenses and approvals necessary to operate the
Timberlake Facility.

     17. Miscellaneous.

  (a)   North Carolina documentary transfer taxes in connection with the Closing
will be borne by Seller. North Carolina sales tax, if any, on the Plant
Equipment will be borne by Purchaser. Except as explicitly set forth herein to
the contrary, all expenses for title search, title insurance, survey and deed
recordation will be paid by Purchaser. Both parties agree that bulk sale or bulk
transfer laws are not applicable to the transactions contemplated by this
Agreement.

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  (b)   For a period of three (3) years from and after the Closing, neither
party nor any of their respective affiliates will, directly or indirectly, seek
to hire any employee then in the employment of the other party or the other
party’s respective affiliates or attempt to induce any such employee to
terminate such employment, without the prior written consent of the other party,
except with respect to the individuals listed on Schedule 17(b).

  (c)   The proceeds of any tax certiorari or similar property tax reduction
proceeding or claim for any tax year or portion thereof ending prior to the
Closing will belong to Seller and Seller will have the right to pursue any such
proceeding or claim. The proceeds of all other such proceedings and claims will
belong to Purchaser which shall have the right to pursue same.

  (d)   All notices under this Agreement will be in writing, addressed as
follows:

If to Seller:

VT Roxboro LLC
One Park Drive
Suite 150
Research Triangle Park, NC 27709
Attention: Timothy Jackson
                    Manager

With a copy to:

Vector Group Ltd.
100 SE 2nd Street
32nd Floor
Miami, FL 33131
Attention: Marc N. Bell, Esquire

If to Purchaser:

Flue-Cured Tobacco Cooperative Stabilization Corporation
1304 Annapolis Drive
Raleigh, North Carolina 27605
Attention: Lioniel Edwards

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With a copy to:

Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, L.L.P
2500 Wachovia Capitol Center
Post Office Box 2611
Raleigh, North Carolina 27602-2611
Attention: R. Marks Arnold, Esquire

Notices will be deemed given upon receipt. All notices must be sent via Federal
Express overnight delivery. Either, party may change the address for notices
hereunder, by notice to the other party. Notices given by the attorneys for any
party shall be deemed given by such party.

  (e)   The Exhibits and Schedules to this Agreement are incorporated herein and
are part of this Agreement.

  (f)   This Agreement shall be binding on the parties and their respective
successors and assigns; provided, however, that prior to the Closing, Purchaser
may not assign its rights hereunder without the consent of Seller, except to a
subsidiary formed by Purchaser, but such assignment shall not relieve Purchaser
of its obligations hereunder.

  (g)   This Agreement may be executed in any number of facsimile counterparts,
with the same effect as if the parties hereto had executed the same document.

  (h)   The parties hereto agree to make, execute and deliver all such further
instruments and documents, and to perform all such further acts, reasonably
necessary to consummate the transactions contemplated by this Agreement
(provided that neither party shall be obligated to incur any out-of-pocket
expenses under this Section). This Section will survive the Closing.

  (i)   This Agreement contains the entire agreement of the parties in relation
to the subject matter hereof, and supersedes all prior agreements (whether
written or oral). This Agreement may only be amended by a written instrument
executed and delivered by the parties.

  (j)   No waiver by any party of any default, breach of warranty or covenant
hereunder, whether intentional or not, shall be deemed to extend to any prior or
subsequent default, misrepresentation, or breach of warranty or covenant
hereunder or affect in any way any rights arising by virtue of any prior or
subsequent such occurrence.

  (k)   This Agreement shall be governed by the laws of the State of North
Carolina, without regard to principles of conflicts of laws.

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  (l)   If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any law or public policy, all other terms and
provisions of this Agreement shall nevertheless remain in full force and effect
for so long as the economic or legal substance of the transactions contemplated
by this Agreement is not affected in any manner materially adverse to any party.
Upon such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner in order that the transactions
contemplated by this Agreement are consummated as originally contemplated to the
greatest extent possible.

     18. Confidentiality.

  (a)   Purchaser agrees to treat all information supplied by Seller as
confidential, subject to the requirements of law, and except that this
obligation will not apply to publicly-available information. Purchaser may,
however, share such confidential information with its employees, directors,
advisors, consultants and prospective lenders on a need-to-know basis or as
otherwise may be required in furtherance of Purchaser’s due diligence. Neither
party will make any disclosure or release to the public pertaining to the
existence of this Agreement or the subject matter contained herein without the
consent of the other party hereto; provided, however, that each party shall be
permitted to make such disclosures to the public, governmental agencies or
courts of competent jurisdiction, as its counsel shall deem necessary to comply
with any applicable laws.

  (b)   The provisions of subsection (a) above shall survive the termination of
this Agreement (but not the Closing).

     19. Termination.

               This agreement may be terminated:

  (a)   by the mutual written consent of Seller and Purchaser at any time;

  (b)   by Seller, if, prior to the Closing Date, the condition set forth in
Section 9(a)(iii) or (v) has not been satisfied, or waived by Purchaser;

  (c)   by Purchaser, (i) pursuant to Section 12, or (ii) if on the Closing Date
or any extension thereof, any of the conditions to Closing set forth in Section
9(a) have not been satisfied or cured within any applicable cure period and
Seller is not in default hereunder;

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  (d)   by Seller, if Purchaser defaults under this Agreement by failing to
consummate the Closing, other than pursuant to Section 19(c), and upon such
termination Seller’s sole remedy shall be to obtain as liquidated damages the
Deposit, it being understood and agreed that Seller’s damages in the event of
such default by Purchaser will be impossible to ascertain, and such liquidated
damages provide a fair and reasonable estimate of damages under such
circumstances; or

  (e)   by Purchaser, if Seller defaults under this Agreement, and upon such
termination Purchaser shall be entitled to receive the Deposit, and proceed
against Seller to recover actual damages incurred by Purchaser, including,
without limitation, fees, expenses and costs associated with the negotiation of
this Agreement and conducting due diligence in connection therewith, such
damages not to exceed $2,580,000.00.

     20. Effect of Termination; Specific Performance.

     In the event of the termination of this Agreement pursuant to Section
19(a), (b) or (c), such termination shall be the sole remedy, this Agreement
shall forthwith become void (except for Section 18), and the Deposit shall be
returned to Purchaser. In the event of termination of this Agreement pursuant to
Section 19(d) or (e), the rights and obligations of the parties shall be as set
forth in such sections.

     Notwithstanding the foregoing, if Seller defaults under this Agreement,
Purchaser shall be entitled to seek specific performance as an alternative to
the remedies set forth in Section 19(e).

21. WAIVER OF JURY TRIAL

     EACH OF THE PARTIES HERETO HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. Each of the
parties hereto (a) certifies that no representative, agent or attorney of the
other party has represented, expressly or otherwise, that such other party would
not, in the event of litigation, seek to enforce the foregoing waiver and
(b) acknowledges that it and the other party hereto have been induced to enter
into this Agreement and the transactions contemplated by this Agreement, as
applicable, by, among other things, the mutual waivers and certifications in
this Section.

[Signature Page Follows]

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     IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first written above, the Escrow Agent has executed this Agreement
solely for purposes of Section 11 and Exhibit A, and VT has executed this
Agreement to acknowledge its guarantee of Seller’s indemnification obligations
herein.

            Seller:

VT Roxboro LLC
      By:   /s/ Timothy Jackson         Name:   Timothy Jackson        Title:  
Manager     

            Purchaser:

Flue-Cured Tobacco Cooperative
Stabilization Corporation
      By:   /s/ Lioniel Edwards         Name:   Lioniel Edwards        Title:  
General Manager & Secretary     

Escrow Agent:

Commonwealth Land Title Insurance Company

   
By:

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Name:
Title:

Vector Tobacco Inc.

   
By: /s/ Marc N. Bell

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Name: Marc N. Bell
Title: Senior Vice President and General Counsel

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