DATED August 1, 1997




             Trans-Continental Leaf Tobacco Corporation Limited, (1)
                Standard Commercial Tobacco Company (UK) Limited
                                       and
                      Standard Commercial Tobacco Co., Inc.
                                 (as Borrowers)

                       Standard Commercial Corporation (2)
                                 (as Guarantor)

                           The Steering Committee (3)

                        Deutsche Bank A.G. in Hamburg (4)
                                 (as Lead Bank)

                            Bankers Trust Company (5)
                    (as Co-Lead Bank and Documentation Agent)

                              MeesPierson N.V. (6)
                        (as International Security Agent)

                            Bankers Trust Company (7)
                             (as US Security Agent)

                                      -and-

                                  The Banks (8)



                  ---------------------------------------------


                          THIRD SUPPLEMENTAL AGREEMENT
                       TO THE MASTER FACILITIES AGREEMENT

                  ---------------------------------------------



                              LOVELL WHITE DURRANT
                               65 Holborn Viaduct
                                 London EC1A 2DY
                                 A1/KB/112557-1








<PAGE>







THIS AGREEMENT is made the      day of      1997

BETWEEN:

(1)  THE COMPANIES LISTED IN SCHEDULE 1 (the "Borrowers");

(2)  STANDARD  COMMERCIAL   CORPORATION   (Federal  Tax  Identification   Number
     13/1337610)  whose  registered  office is at 2201 Miller Road,  PO Box 450,
     Wilson NC 27894-0450, USA ("SCC");

(3)  BANKERS TRUST  COMPANY,  DEUTSCHE BANK A.G. IN HAMBURG,  MEESPIERSON  N.V.,
     NORDDEUTSCHE    LANDESBANK   GIROZENTRALE   AND   WESTDEUTSCHE   LANDESBANK
     GIROZENTRALE (the "Steering Committee");

(4)  DEUTSCHE BANK A.G. in Hamburg(the "Lead Bank");

(5)  BANKERS TRUST COMPANY (the "Co-Lead Bank" and the "Documentation Agent");

(6)  MEESPIERSON N.V. (the "International Security Agent");

(7)  BANKERS TRUST COMPANY (the "US Security Agent"); and

(8)  THE BANKS LISTED IN SCHEDULE 2 ("the Banks").

WHEREAS:

     (A)  On 5 May,  1995,  certain  of the  parties  entered  into  the MFA (as
          defined below).

     (B)  The  parties  now wish to amend and  supplement  the MFA as set out in
          this Agreement.


IT IS AGREED:

1.   DEFINITIONS

1.1  Save as expressly  provided in this Agreement,  expressions  defined in the
     MFA shall  bear the same  meanings  in this  Agreement  and  principles  of
     interpretation applicable to the MFA shall also apply to this Agreement.

1.2  In this  Agreement  the  following  expressions  shall  have the  following
     respective meanings:

     "MFA"means the Master Facilities Agreement dated 5th May 1995 as amended by
     a first  Supplemental  Agreement  dated 1  February  1996  and by a  Second
     Supplemental Agreement dated 16 July 1996 and otherwise as amended, varied,
     supplemented and in force immediately prior to the Effective Date;

     "Effective  Date"  means the first  date on which the Lead Bank  shall have
     received  the  documents  and  payments  referred  to in clause  2.3 below,
     satisfactory  in form and  substance to the Lead Bank and on which the Lead
     Bank is  satisfied  with the  matters  referred  to in  clause  2.3 of this
     Agreement;

     "Exiting Banks" means the Banks listed in Schedule 3;

     "Obligor" shall have the meaning given in the Appendix to this Agreement.


<PAGE>
                                     - 16 -



1.3  Unless otherwise specified,  any reference in this Agreement to a Clause or
     a Schedule is to a Clause or a Schedule of the MFA.

1.4  The MFA shall be amended as set out below.


2.   AMENDMENT

2.1  With effect from the  Effective  Date,  the MFA shall be amended to read as
     set out in the  attached  Appendix  and the  Borrowers,  SCC,  the Steering
     Committee,  the Lead Bank, the Co-Lead Bank, the  Documentation  Agent, the
     International  Security  Agent,  the US Security  Agent and the Banks shall
     each be parties to the MFA in their respective  capacities and on the terms
     set out in the Appendix to this Agreement.

2.2  SCC enters into this  Agreement on behalf of itself,  Spierer  Freres & Cie
     S.A.,  Werkhof  GmbH,  W.A.  Adams Company and General  Processors  Inc. In
     respect of Spierer Freres & Cie S.A.,  Werkhof GmbH, W.A. Adams Company and
     General  Processors  Inc, SCC enters into this Agreement on their behalf to
     agree the  amendment  of this  Agreement  which  releases  them from  their
     obligations to the Banks under the MFA.

2.3  (a)  Arrangement  Fees: the fees being the arrangement and renewal fee
          stated in the fees  letter of even date from the Lead Bank to Standard
          Commercial Tobacco Company Inc. ("SCTC Inc").

     (b)  Payment of Fees: all fees payable to the Lead Bank, MeesPierson NV and
          Bankers  Trust  Company  together  with  any   disbursements  and  any
          applicable taxes shall have been paid in full.

     (c)  Agreement:  this  Agreement  duly  signed  on  behalf  of  each of the
          parties.

     (d)  Company Documents

          (i)  Constitutional Documents:  certified copies of the certificate of
               incorporation, certificate of incorporation on change of name (if
               any) and current  memorandum  and articles of association of each
               person named in Schedule 1 to this  Agreement  or, if  previously
               provided to the Lead Bank, a certificate  signed by a director of
               such person confirming that the copies previously provided to the
               Lead Bank under the MFA remain unchanged;

          (ii) Certificate of Authorisation: in relation to SCTC Inc, SCTC (UK),
               and SCC, a certificate of two of its directors to the effect that
               the requisite resolution of its board of directors, in the Agreed
               Terms, has been duly and properly passed:-

               (aa) authorising its execution,  delivery and performance of this
                    Agreement and each other Finance  Document to be executed by
                    it; and

               (bb) authorising  a named  person or  persons  specified  in such
                    certificate  and whose specimen  signatures  appear there to
                    sign (where appropriate,  as a Deed) this Agreement and each
                    other  Finance  Document  to  be  executed  by  it  and  any
                    amendments  and renewals  thereof and to give any notices or
                    certificates required in connection with such documents,



<PAGE>

                    and confirming that such resolutions are still in effect and
                    have not been varied or rescinded or a  certificate  in such
                    other form as local  legal  counsel to the Lead Bank and the
                    Security Agents consider to be satisfactory;


                  (iii)   Authorising Board Resolutions: a certified copy of the
                          resolutions  of the board of directors  referred to in
                          paragraph (d) (ii) above or an original  Resolution by
                          Circular  Letter of TCLTC in the agreed  terms  unless
                          local legal  counsel to the Lead Bank and the Security
                          Agents advises that this is not necessary;

                  (iv)    Certificate of  Authorisation  of other  Obligors:  in
                          relation  to each  Obligor  other than SCTC Inc,  SCTC
                          (UK),  TCLTC,  and SCC,  a  certificate  of two of its
                          directors to the effect that the requisite  resolution
                          of its board of directors,  in the Agreed  Terms,  has
                          been duly and properly passed:-

                    (aa) approving   this   Agreement  and  each  other  Finance
                         Document and  authorising  the execution of any Finance
                         Document to be executed by it; and

                    (bb) authorising a named person or persons specified in such
                         certificate and whose specimen  signatures appear there
                         to sign (where  appropriate,  as a Deed) any amendments
                         and  renewals of any Finance  Document to which it is a
                         party and to give any notices or certificates  required
                         in connection with such Finance Documents,

                    and confirming that such resolutions are still in effect and
                    have not been varied or rescinded or a  certificate  in such
                    other form as local  legal  counsel to the Lead Bank and the
                    Security Agents consider to be satisfactory;

                    (v)  Authorising Board Resolutions:  a certified copy of the
                         resolutions  of the board of  directors of each Obligor
                         referred to in  paragraph  (d)(iv)  above  unless local
                         legal counsel to the Lead Bank and the Security  Agents
                         advises that this is not necessary;

     (e)  Directors'  Certificates:  a  certificate  (signed in each case by two
          directors)  of each of SCTC  Inc.  SCTC  (UK) and  TCLTC and SCC that,
          after making  diligent  enquiry,  the directors are not aware that any
          Event of  Default  or  Potential  Event of  Default  under the MFA has
          occurred and is Continuing.

     (f)  Budgets, Accounts and Reports

          (i)  Budget:   a  Budget  for  SCTC  Inc.  and  its  tobacco   trading
               Subsidiaries for the 12 month period ending 31 March 1998;

          (ii) The Cash Flow  Forecast:  a Cash Flow  Forecast for SCTC Inc. and
               its tobacco trading  Subsidiaries on a 12 month rolling basis for
               the period ending 31 March 1998.

     (g)  Security Documents and Legal Opinions

          (i)  UK:

               (aa) Supplemental  Deed to a Guarantee and Debenture by SCTC (UK)
                    in favour of MeesPierson NV dated 11 May 1995;


<PAGE>

               (bb) Supplemental  Deed to a Guarantee and Debenture by SCTC (UK)
                    in favour of MeesPierson NV dated 5 May 1995;


               (cc) Deed of release by MeesPierson NV and SCC of the Charge over
                    Shares by SCC to  MeesPierson  NV as  Security  Agent of its
                    shares in SCTC (UK) and SCTS (UK) dated 5 May 1995;

               (dd) Charge  over  Shares  by  SCTC,  Inc  to  MeesPierson  NV as
                    International  Security Agent of its shares in SCTC (UK) and
                    SCTS (UK);

               (ee) Minutes  of SCTC  (UK) and  SCTS  (UK)  Directors'  meetings
                    approving entry into the above documents; and

               (ff) Legal Opinion of Lovell White Durrant;

               (gg) Legal Opinion of Clifford Chance; and

               (hh) Share  Certificates  to be delivered in connection with (dd)
                    above.

          (ii) USA:

               (aa) Documents  Associated with Cancellation of Intercreditor and
                    Subordination Agreement

                    (1)  the Junior Lender Release  (Exhibit B to  Intercreditor
                         Agreement) .

          (bb) Documents  Associated with  Satisfaction  of ABL  Indebtedness of
               Release of ABLs' Security Interests and Liens

                    (1)  Payoff Letter which  terminates the  Intercreditor  and
                         Subordination Agreement, dated July 15, 1996.;

                    (2)  Escrow  Letter  which  relates  to,  inter  alia,   the
                         cancellation  of  the  $2,000,000   Standby  Letter  of
                         Credit;

                    (3)  UCC   termination   Statements   for  UCC-1   Financing
                         Statements by SCTC Inc.  filed in favour of ABLs in the
                         following locations:

          (x)  North Carolina:

               (A)  Secretary of State; and

               (B)  Wilson Country;

          (y)  Virginia:

               (A)  State Corporation commission; and

               (B)  City of Danville; and

          (z)  Kentucky:

               (A)  Secretary of State; and


<PAGE>

               (B)  Washington Country.


               (4)  UCC Termination Statements for UCC-1 Financing Statements by
                    General Processors, Inc, filed in the following locations:

          (x)  North Carolina:

               (A)  Secretary of State; and

               (B)  Granville County.

               (5)  UCC Termination Statements for UCC-1 Financing Statements by
                    W A Adams Company files in the following locations:

          (x)  North Carolina:

               (A)  Secretary of State; and

               (B)  Granville County.

               (6)  Release  Deed of Trust  for the Deed of Trust  and  Security
                    Agreement by SCTC Inc. ABLs (Wilson  County,  North Carolina
                    Property).

               (7)  Release of Deed of Trust for the Deed of Trust and  Security
                    Agreement  by General  Processors,  Inc. to ABLs  (Granville
                    County, North Carolina Property).

               (8)  Release  of Deed of Trust  for Deed of  Trust  and  Security
                    Agreement by W A Adams  Company to ABLs  (Granville  County,
                    North Carolina Property).

               (9)  Release of Mortgage by SCTC Inc. to ABLs (Washington County,
                    Kentucky Property).

     (cc) Documents  Relating  to  Guaranty,  Security,  etc that may be Amended
          and/or Restated

               (1)  amended and restated Guaranty Agreement.

               (2)  amended and restated Security Agreement.

               (3)  amended   and   restated   Hazardous   Materials   Indemnity
                    Agreement.

               (4)  amended and restated Deed of Trust and Security Agreement by
                    SCTC, Inc. (Wilson County, North Carolina Property).

               (5)  amended and restated Deed of Trust and Security Agreement by
                    General Processors,  Inc. (Granville County,  North Carolina
                    Property).

               (6)  amended and restated Deed of Trust and Security Agreement by
                    W  A  Adams  Company  (Granville   County,   North  Carolina
                    Property).



<PAGE>

               (7)  amended  and  restated  Mortgage  by SCTC  Inc.  (Washington
                    County, Kentucky Property).


               (8)  UCC-3 termination  financing  Statements  amendments by SCTC
                    Inc. filed in the following locations:

     (x)  North Carolina:

          (A)  Secretary of State; and

          (B)  Wilson County;

     (y)  Virginia:

          (A)  Secretary of State; and

          (B)  City of Danville;

     (z)  Kentucky:

          (A)  State Corporation Commission; and

          (B)  Washington County.

          (9)  UCC-3  termination  Financing  Statements by General  Processors,
               Inc. Filed in the following locations:

     (x)  North Carolina:

     (A)  North Carolina;

     (B)  Granville County.

     (10) UCC-3 termination  Financing  Statement by W.A. Adams Company filed in
          the following locations:

     (x)  North Carolina:

     (A)  Secretary of State; and

     (B)  Granville County.

     (11) Opinion Letters:

     (x)  State of North Carolina by Robinson, Bradshaw & Hinson

     (y)  State of North Carolina by Narron,  Holdford,  Babb, Harrison & Rhodes
          P.A.

     (z)  State of Kentucky by Wyatt Tarrant & Combs.


          (iii) Belgium:



<PAGE>



          (aa) Supplemental  Agreement to General  Letter of Pledge by SCTC (UK)
               to MeesPierson NV as Security Agent dated 30 May 1995;


          (bb) Supplemental  Agreement  to General  Letter of Pledge by TCLTC to
               MeesPierson NV as Security Agent dated 30 May 1995;

          (cc) Supplemental  Agreement to Warehouse  Locking  Agreement  between
               MeesPierson NV and SCTC (UK) and Tabaknatie; and

          (dd) Supplemental  Agreement to Warehouse  Locking  Agreement  between
               MeesPierson NV and TCLTC and Tabaknatie.

          (ee) legal opinion of Lovell White Durrant in Brussels;

     (iv) Jersey:

          (aa) Supplemental Agreement to the Security Agreement granted by TCLTC
               dated 26  February  1996 in  respect  of all the  shares in TCLTC
               Jersey;

          (bb) Deed of Covenant by TCLTC  Jersey,  TCLTC and SCTC Inc. in favour
               of the Security Agent in relation to TCLTC Jersey;

          (cc) Supplemental Agreement to Guarantee and Debenture by TCLTC Jersey
               in favour of the Security Agent dated 26 February 1996;

          (dd) power of attorney in respect of the TCLTC Jersey  signatories  of
               the documents at (bb) and (cc) above

          (ee) legal opinion of Bedell & Cristin;

          (ff) legal opinion of Mourant du Feu & Jeune;

          (gg) legal opinion of Clifford Chance.


         (v)      Canada:

                  (aa)    Deed  of  release  by  MeesPierson  NV and  SCC of the
                          Pledge by SCC to  MeesPierson  NV as Security Agent of
                          its shares in SCTC of Canada Limited dated 5 May 1995;
                          and

                  (bb)    Pledge by SCTC, Inc to MeesPierson NV as International
                          Security  Agent  of  its  shares  in  SCTC  of  Canada
                          Limited.

         (vi)     Liechtenstein:

                    (aa) Pledge by SCTC, Inc to MeesPierson NV as  International
                         Security  Agent  of its  shares  in TCLTC  including  a
                         release  of  SCC  in  respect  of  shares   pledged  in
                         TCLTC;.and

                    (bb) letter  of   instruction   from  SCC  to  Dr   Batliner
                         concerning the shares in TCLTC

         (vii)    Switzerland:



<PAGE>



                    (aa) Deed of release by MeesPierson NV and SCC of the Pledge
                         by SCC  to  MeesPierson  NV as  Security  Agent  of its
                         shares in Spierer Freres Cie dated 5 May 1995; and


                    (bb) Pledge by SCTC, Inc to MeesPierson NV as  International
                         Security Agent of its shares in Spierer Freres Cie.

                    (cc) a legal opinion to be given by Swiss counsel.

                    (dd) Spierer Freres & Cie S.A. 1996 Annual Report;

                    (ee) power  of  attorney  given  in  favour  of SCC  and the
                         addendum thereto;

                    (ff) certificate in relation to negative pledges;

                    (gg) certified  true copy of the  Memorandum and Articles of
                         Association of the Spierer Freres & Cie S.A.;

                    (hh) directors' certificate (in facsimile form);

                    (ii) attestation  of negative  result of a search  regarding
                         any pending  debt  collection  proceedings  against the
                         Spierer Freres & Cie S.A.;

                    (jj) certified  excerpt from the Geneva  Companies  registry
                         regarding the Spierer Freres & Cie S.A.; and

                    (kk) statement as to real estate  currently  held by Spierer
                         Freres & Cie S.A. in Switzerland.

     (viii) Germany:

                    (aa) the release of the Pledge by SCC to  MeesPierson  NV as
                         Security  Agent of its  shares in  Werkhof  dated 2 May
                         1995 and the  pledge  of the same  shares  by SCTC Inc.
                         after the transfer of shares to SCTC, Inc.

     (h)  Insurance   Arrangements:   a  letter  from  SCC's  insurance  brokers
          addressed to the Lead Bank (on behalf of itself and the other  Finance
          Parties)  setting out in relation to each  Tobacco  Group  Company the
          insurance  arrangements which will be in effect as at the date of this
          Agreement and showing that the resulting level and extent of insurance
          cover  are  sufficient  to enable  the  Borrowers  to comply  with the
          covenant in Clause  14.12  (Insurance)  of the MFA (as amended by this
          Agreement);

     (i)  Reorganisation:  confirmation  that the  group  reorganisation  of the
          Tobacco  Group  has been  carried  out and that the  structure  of the
          Tobacco  Group is as set out in Schedule  VII to the  Appendix to this
          Agreement;

     (j)  Auditors' Letter: a faxed copy of the signed Auditors' Letter;

     (k)  Bonds: written confirmation from SCTC Inc. and BT Securities Inc. that
          the  Bonds  have been  fully  subscribed  in an  amount  not less than
          $80,000,000 subject only to this Agreement becoming unconditional.



<PAGE>

          (l)  Financial   Statements:   a  copy  of  the  audited  consolidated
               financial   statements  of  SCC  and  the  individual   financial
               statements of SCTC Inc. each for the Accounting  Reference Period
               ending 31 March 1997.


     (m)  Exiting  Banks:  with  respect to each of the  Exiting  Banks a letter
          signed on behalf of such  Exiting  Bank  confirming  that  subject  to
          receipt of payment of amounts outstanding to it, its commitments under
          the MFA are  cancelled,  it agrees to the proposed  changes to the MFA
          and it authorises the International  Security Agent to execute certain
          releases on its behalf;

     (n)  Bank  Mandates:  such bank mandates,  specimen  signatures and similar
          documentation as each of the Banks may require in order to enable each
          of the  Facilities  made available by a Bank to be utilised by each of
          the Borrowers, duly signed on behalf of the relevant Borrower(s);

     (o)  Payment of Exiting Banks: written confirmation from BT Securities Inc.
          and Deutsche  Bank AG in Hamburg that they have sent,  by  telegraphic
          transfer,  sufficient  funds to the Exiting  Banks to repay all of the
          sums due to the Exiting Banks.

     (p)  Share Transfer Agreement: the share transfer agreement between SCC and
          SCTC Inc  transferring  ownership  in the sahres  referred  to in that
          agreement for the purposes of the group  reorganisation  duly executed
          by all parties to it.

     (q)  Other  Documentation:  such other  documentation  as the Lead Bank may
          specify in writing.

2.4  The  other  matters  referred  to in the  preamble  to  clause  2.1 of this
     Agreement are that no Event of Default or Potential  Event of Default shall
     have occurred and be Continuing.

2.5  The Lead Bank shall be entitled to  disregard  discrepancies  in any of the
     conditions  precedent  produced  to it  pursuant  to  clause  2.3  of  this
     Agreement  where it  considers  that  such  discrepancy  is of a minor  and
     non-material nature.

3.   Conditions Subsequent

3.1  The Borrowers  shall procure the delivery to the Lead Bank of the following
     conditions  subsequent,  no later than two Business  Days after the date of
     this  Agreement  (in  the  case  of the  condition  subsequent  set  out in
     sub-clause  (vii) below) and no later than 10 Business  Days after the date
     of this Agreement (in the case of all other  conditions  subsequent set out
     below) in form and substance satisfactory to the Lead Bank:

     (i)  Canada:

          (aa) a legal opinion to be given by Canadian counsel; and

          (bb) Company Certificate of SCTC of Canada Ltd.

     (ii) Germany:

          (aa) a  German  law  cash  charge  over  Designated  Accounts  held at
               Deutsche Bank AG in Hamburg.

          (bb) a legal opinion to be given by German counsel.

     (iii) Greece:



<PAGE>

          (aa) Amendment  to the Pledge by TCLTC to  MeesPierson  NV as Security
               Agent of its  shares  in  Transhellenic  Tobacco  SA dated 30 May
               1995.


          (bb) (1) certificate to be issued by the supervising  authority,  i.e.
               the Prefecture of  Thessaloniki,  confirming  that  Transhellenic
               continues to carry on its activities;

               (2)  certificate  to be issued by the Court of First  Instance of
                    Thessaloniki  confirming that  Transhellenic is not declared
                    bankrupt;

               (3)  certificate  to be issued by the Court of First  Instance of
                    Thessaloniki confirming that Transhellenic is not subject to
                    compulsory administration;

               (4)  certificate  to be issued by the Court of First  Instance of
                    Thessaloniki  confirming that Transhellenic  confirming that
                    there  is no  pending  application  for the  declaration  of
                    bankruptcy   or  for  the   appointment   of  a   compulsory
                    administrator.

     (iv) Liechtenstein:

          (aa) Supplemental Deed to a Guarantee and Debenture by TCLTC in favour
               of MeesPierson NV as Security Agent dated 5 May 1995; and

          (bb) a legal opinion to be given by Liechtenstein counsel.

          (cc) (1) extract from the Liechtenstein Public Register for TCLTC;

               (2)  board  resolution of TCLTC approving the new share pledge by
                    SCTC,  Inc,  the  Supplemental  Deed  to the  Guarantee  and
                    Debenture   and  the  amended  MFA  and  any  other  Finance
                    Documents it enters into

               (3)  power of  attorney  of TCLTC in favour of those  persons who
                    will execute the above mentioned documents;

               (4)  the Share  Certificates  in TCLTC (held by MeesPierson NV as
                    Security Agent) which should be in Liechtenstein at the time
                    of the new pledge and which should be endorsed with the name
                    of SCTC, Inc. when ownership is transferred;

               (5)  letter from SCC and SCTC,  Inc. to TCLTC  informing  it that
                    ownership of the shares in TCLTC has passed to SCTC, Inc.;

               (6)  extract from the share registry of TCLTC;

               (7)  board  resolution of TCLTC approving the registration of the
                    new share  pledge in the share  register of TCLTC and of any
                    sale of the Shares as a consequence of the Pledge Agreement.

     (dd) Supplemental  Agreement  to a  charge  over  shares  dated 30 May 1995
          granted  by TCLTC in favour of the  Security  Trustee  over  shares in
          Stancom Tobacco (Zimbabwe).



<PAGE>

     (ee) Security  Agreement  granted  by TCLTC in favour of the  International
          Security  Trustee in respect of  receivables  (governed by the laws of
          North Carolina)


     (ff) if  and to  the  extent  the  agreements  entered  into  by  TCLTC  at
          2.3(g)(iv)(aa)  and (bb) and 3.1 (iv)  (aa) are not  notarised  a Deed
          Poll executed by each Obligor party to such agreement;

          (v)  Philippines:

               (aa) Supplemental  Deed  to a  Deed  of  Assignment  relating  to
                    Philippine  receivables by TCLTC in favour of MeesPierson NV
                    as Security Agent dated 29 November 1995, including schedule
                    of outstanding  invoices payable by Philippine  customers as
                    at the same date.

               (bb) a legal opinion to be given by Philippines counsel.

          (vi) Switzerland:

               (aa) a board resolution ratifiying the execution of the Agreement
                    by SCC on behalf of Spierer Freres & Cie S.A.; and

               (bb) the share certificates in Spierer Freres & Cie S.A..


          (vi) Jersey:

               (aa) members' resolution in respect of TCLTC Jersey.

          (vii) USA:

               (aa) Endorsement to Chicago Title Mortgagee's Insurance Policy.

3.2  It is agreed that the  Security  Trustee  will  release  the share  pledges
     granted by Standard  Wool Inc.  and Advhus  Gestion SC over their shares in
     Standard Wool France SA after completion of the conditions precedent listed
     in clause 2.3

3.3  All fees  payable  to the  respective  legal  advisers  of the  Lead  Bank,
     MeesPierson  NV and Bankers  Trust  Company shall be paid together with any
     disbursements and any applicable taxes in full within five Business Days of
     the Effective Date.

3.4  In the event that the conditions subsequent listed in Clause 3.1 above are

     (i)  not satisfied within the relevant time limit set out therein; or

     (ii) not waived in writing by the Lead Bank; or

     (iii) the relevant time limit is not extended in writing by the Lead Bank

          the Lead Bank (acting on the  instructions  of the Majority Banks) may
          declare  all  of  the   Outstandings  in  respect  of  the  Facilities
          immediately due and repayable.

4.   Construction



<PAGE>



4.1  The MFA and this  Agreement  shall after the date of this Agreement be read
     and  construed as one document and  references  in the MFA and each Finance
     Document to the MFA shall be read and construed as references to the MFA as
     supplemented and amended by this Agreement.


4.2  The MFA  shall  continue  in  full  force  and  effect,  save as  otherwise
     expressly amended by this Agreement.

4.2  The amendments  contained in this Agreement  shall be without  prejudice to
     any rights and liabilities  arising under the MFA by reference to any acts,
     omissions and events occurring before such amendments come into effect.

5.   Costs and Expenses

          SCTC Inc. will reimburse the Lead Bank and each of the Security Agents
          on demand all reasonable costs and expenses (including legal costs and
          out-of-pocket  expenses)  and all value added tax thereon  incurred by
          the Bank in connection with the negotiation, preparation and execution
          of  this   Agreement   and  any  condition   precedent   documentation
          contemplated in it.

6.   Counterparts

         This  Agreement may be executed in any number of  counterparts,  all of
         which when taken together shall constitute a single instrument.

7.   Notices

          The provisions of Clause 32 (Notices) of the MFA shall be deemed to be
          incorporated, mutatis mutandis, in this Agreement.

8.   Governing Law and Jurisdiction

          The  provisions of Clause 40 (Governing Law and  Jurisdiction)  of the
          MFA shall be  deemed to be  incorporated,  mutatis  mutandis,  in this
          Agreement.

AS WITNESS the hands of the parties the day and year first above written.




<PAGE>



                                   SCHEDULE 1


                                  THE BORROWERS


Standard Commercial Tobacco Company (UK) Limited

Trans-Continental Leaf Tobacco Corporation Limited

Standard Commercial Tobacco Co., Inc.


<PAGE>



                                   SCHEDULE 2


                                    THE BANKS

Deutsche Bank A.G. in Hamburg

MeesPierson N.V.

Bankers Trust Company

Norddeutsche Landesbank Girozentrale

Westdeutsche Landesbank Girozentrale

Berliner Bank Aktiengesellschaft

Commerzbank A.G.

BHF-Bank Aktiengesellschaft

Berenberg Bank

ABN Amro Bank

Crestar Bank, Inc.

Kredietbank N.V.

Standard Chartered Bank


<PAGE>



                                   SCHEDULE 3


                                THE EXITING BANKS

The Thai Farmers Bank Public Company Limited

Bank Julius Baer & Co Limited

Bank of America National Trust and Savings Association

The Royal Bank of Scotland PLC


<PAGE>



                                 SIGNATURE PAGES


THE BORROWERS

TRANS-CONTINENTAL LEAF TOBACCO CORPORATION LIMITED
FL-9490 Vaduz,
Liechtenstein

Facsimile No:     (0)75 236 5555
Attention:        The Finance Director

By:


STANDARD COMMERCIAL TOBACCO COMPANY (UK) LIMITED
Standard House
Weyside Park
Godalming
Surrey GU7 1XE
England

Facsimile No:     01483 860176
Attention:        The Finance Director

By:


STANDARD COMMERCIAL TOBACCO CO., INC.
C/o C.T. Corporation Systems
225 Hillsborough Street
Raleigh
North Carolina 27603, USA

Facsimile No:
Attention:     The Finance Director



SCC

STANDARD COMMERCIAL CORPORATION

2201 Miller Road, P O Box 450,
Wilson NC 27894-0450, USA

Facsimile No:     00 1 919 237 1109
Attention:        The Finance Director

By:







<PAGE>



THE LEAD BANK


DEUTSCHE BANK A.G. IN HAMBURG
Firmen und Institutionen
Konzernbetreuung II
Adolphsplatz 7
20079 Hamburg, Germany

Facsimile No:     00 49 40 3701 4684
Attention:  Michael Ziesenitz

By:


THE CO-LEAD BANK AND DOCUMENTATION AGENT

BANKERS TRUST COMPANY
14 Wall Street - 3rd Floor
NY 10005
USA

Facsimile No:     00 1 212 618 2630
Attention:  Maureen Reilly

By:


THE INTERNATIONAL SECURITY AGENT

MEESPIERSON N.V.
Camomile Court
23 Camomile Street
London EC3A 7PP

Facsimile No:     0171 444 8810
Attention:        Iain Lappin-Smith

By:



<PAGE>






THE US SECURITY AGENT

BANKERS TRUST COMPANY
14 Wall Street - 3rd Floor
New York
NY 10005
USA

Facsimile No:     00 1 212 618 2630
Attention:  Maureen Reilly

By:


THE STEERING COMMITTEE

DEUTSCHE BANK A.G. IN HAMBURG
Firmen und Institutionen
Konzernbetreuung II
Adolphsplatz 7
20079 Hamburg, Germany

Facsimile No:     00 49 40 3701 4684
Attention:        Michael Ziesenitz

By:


MEESPIERSON N.V.

Coolsingel 93
PO Box 749
3000 AS Rotterdam
Netherlands

Facsimile No:     0031 10 401 6558
Attention:        Jaap Van Beveren

By:


BANKERS TRUST COMPANY
14 Wall Street - 3rd Floor
New York
NY 10005
USA

Facsimile No:     00 1 212 618 2630
Attention:  Maureen Reilly

By:



<PAGE>



NORDDEUTSCHE LANDESBANK GIROZENTRALE

Brodschrangen 4
20457 Hamburg
Germany

Facsimile No: 00 49 40 3765 5304
Attention: Mrs Glindmeyer

By:


WESTDEUTSCHE LANDESBANK GIROZENTRALE
Domstrasse 10
20095 Hamburg
Germany

Facsimile No: 00 49 40 339 68265
Attention: Mr T Richter

By:


THE BANKS

DEUTSCHE BANK A.G. IN HAMBURG

Firmen und Institutionen
Konzernbetreuung II
Adolphsplatz 7
20079 Hamburg, Germany

Facsimile No:     00 49 40 3701 4684
Attention:        Michael Ziesenitz

By:


MEESPIERSON N.V.

Coolsingel 93
PO Box 749
3000 AS Rotterdam
Netherlands

Facsimile No:     0031 10 401 6558
Attention:        Jaap Van Beveren

By:








<PAGE>



BANKERS TRUST COMPANY

14 Wall Street - 3rd Floor
New York
NY 10005
USA

Facsimile No:     00 1 212 618 2630
Attention:  Maureen Reilly

By:


NORDDEUTSCHE LANDESBANK GIROZENTRALE
Brodschrangen 4
20457 Hamburg
Germany

Facsimile No: 00 49 40 3765 5304
Attention: Mrs Glindmeyer

By:

WESTDEUTSCHE LANDESBANK GIROZENTRALE
Domstrasse 10
20095 Hamburg
Germany

Facsimile No: 00 49 40 339 68265
Attention: Mr T Richter

By:


BERENBERG BANK
Neuer Jungfernstieg 20
20354 Hamburg
Germany

Facsimile No:  00 49 40 354 248
Attention: Mr Schroder

By:


BHF-BANK AKTIENGESELLSCHAFT
Paulstrasse 5
20095 Hamburg
Germany

Facsimile No:  00 49 40 3200 9203
Attention:  Mr Theodore Budde

By:



<PAGE>



BERLINER BANK AKTIENGESELLSCHAFT

Niederlassung Hamburg
Domstrasse 21
20095 Hamburg
Germany

Facsimile No:  00 49 40 3020 5319
Attention:  Mr Gubel

By:


COMMERZBANK A.G.
Ness 7-9
20457 Hamburg
Germany

Facsimile No:  00 49 40 368 33305
Attention:  Mr Weidner

By:


ABN AMRO BANK
Frankrijklei 121
B-2000 Antwerpen
Belgium
Tel:              +32 3 2220425
Fax:              +32 3 2311031
Attention:  Mr. Paul Lenaerts/Mr. Rudolf Oldeman

By:


CRESTAR BANK
919 East Main Street
Richmond, VA 23219
USA
Tel:              +1 804 782 5237
Fax:              +1 804 782 5413
Attention:                 Mr. C Gray Key

By:

KREDIETBANK N.V.
5th Floor, Earl Place
15 Appold Street
London EC2A 2AA
England
Tel:              +44 171 256 4891
Fax:              +44 171 256 4870
Attention:                Mr. Kevin Giles

By:


<PAGE>





STANDARD CHARTERED BANK
37 Gracechurch Street
London EC3V OBX
England

Tel:              +44 171 280 7585
Fax:              +44 171 280 7598
Attention:                Mr. Robert Dean

By:





<PAGE>






THIS AGREEMENT is made the 5th day of May 1995

BETWEEN:


(1)  THE COMPANIES LISTED IN SCHEDULE I (the "Borrowers");

(2)  STANDARD  COMMERCIAL   CORPORATION   (Federal  Tax  Identification   Number
     13/1337610)  whose  registered  office is at 2201 Miller Road,  PO Box 450,
     Wilson NC 27894-0450, USA ("SCC");

(3)  BANKERS TRUST  COMPANY,  DEUTSCHE BANK A.G. IN HAMBURG,  MEESPIERSON  N.V.,
     WESTDEUTSCHE    LANDESBANK   GIROZENTRALE   and   NORDDEUTSCHE   LANDESBANK
     GIROZENTRALE (the "Steering Committee");

(4)  DEUTSCHE BANK A.G. in Hamburg (the "Lead Bank");

(5)  BANKERS TRUST COMPANY (the "Co-Lead Bank" and the "Documentation Agent");

(6)  MEESPIERSON N.V. (the "International Security Agent");

(7)  BANKERS TRUST COMPANY (the "US Security Agent"); and

(8)  THE BANKS LISTED IN SCHEDULE II (the "Banks"). .


IT IS AGREED:

                                     PART I

                         DEFINITIONS AND INTERPRETATION


1.   DEFINITIONS AND INTERPRETATION

1.1  Definitions

     In this Agreement,  the following terms shall have the following respective
     meanings:

     "Accounting  Reference  Period" shall have the same meaning as  "accounting
     reference period" in Part VII of the Act;

     "Accounts Date" 31 March in each year;

     "Accounts" (a) each of the Original Accounts; and

               (b)  each of the  accounts  delivered  to the Agent  pursuant  to
                    Clauses 15.4 (Quarterly Accounts) and 15.5 (Accounts);

     "Act" the Companies Act 1985 under the laws of England and Wales;


<PAGE>



     "Additional  Costs Rate" in relation to any Indebtedness  outstanding under
     any Finance Document to a Bank, the rate per annum determined in accordance
     with Schedule XIV (Additional Cost Rate);


     "Affiliate" in relation to any Group Company means:

               (a)  any  person in whom any Group  Company  holds  (directly  or
                    indirectly)  ten  per  cent.  or more  of the  issued  share
                    capital or stock (but which is not a Subsidiary of SCC); and

               (b)  any person which is not a subsidiary of SCC whose  policies,
                    management, officers or directors are directed or controlled
                    (directly or indirectly) by any Group Company;

          "Affiliate  Advances"  any  Financial   Accommodation  provided  by  a
          Borrower to an Affiliate;

          "Aggregate  Bank  Indebtedness"  shall have the meaning  given to that
          expression in Clause 26.1 (Notification);

          "Agreed  Terms" in  relation to any  document,  means the form of that
          document initialled by or on behalf of the Lead Bank and SCTC Inc.;

          "Approved  Warehouse"  a warehouse  approved by a Security  Agent from
          time to time;

          "Auditors"  at any time the  auditors of the Group,  being  Deloitte &
          Touche  or any  other  firm of  accountants  of  international  repute
          appointed in accordance with clause 14.32 (Auditors);

          "Auditors'  Letter" a letter from the  Auditors  addressed to the Lead
          Bank on behalf of the Banks  confirming that the Auditors will provide
          all certificates and confirmations  which the Lead Bank is entitled to
          request from the Auditors under the terms of this Agreement;

          "Available  Commitment"  in relation to a Bank and any  Facility,  the
          Dollar  Equivalent  of  that  Bank's  Commitment  in  respect  of such
          Facility,  less the Dollar Equivalent of all Outstandings  (including,
          in the case of foreign exchange transactions,  the amount deemed to be
          outstanding  by Clause 5.5 (Foreign  Exchange) and, in the case of any
          unmatured  liability,  the maximum amount of such liability capable of
          maturing into an actual liability) under such Facility at that time;

          "Bank" (a) each of the banks identified in Schedule II; and



<PAGE>



               (b)  any additional or substitute  bank or financial  institution
                    at any  time  hereafter  designated  as a Bank by  agreement
                    between the Lead Bank (acting with Majority  Bank  approval)
                    and SCTC Inc. pursuant to this Agreement


                    and each of their  respective  successors in title including
                    assignees  and  transferees  (but  only  for so long as such
                    person  has any  rights or  obligations  under  the  Finance
                    Documents);

          "Bank Loss" shall have the meaning given to that  expression in Clause
          26.9(a) (Final Equalisation);

          "Basle Paper" the paper entitled "International Convergence of Capital
          measurement and Capital Standards" dated July 1988 and prepared by the
          Basle  Committee on Banking  Regulations and Supervision as amended in
          November 1991;

          "Bill" a bill of exchange or promissory  note presented to a Bank by a
          Group Company for acceptance and discounting  pursuant to the terms of
          the  Facility   made   available  by  such  Bank  to  a  Borrower  and
          satisfactory in form and substance to such Bank;

          "Bonds" the $100 million  interest bearing notes due 2005 issued or to
          be issued by SCTC Inc. pursuant to an indenture dated 1st August 1997;

          "Bondholders" the holders from time to time of the Bonds in accordance
          with their terms;

          "Borrower" each of the companies listed in Schedule I;

          "Borrowers  Borrowing  Base" at any time means an amount  equal to the
          sum (without double counting) of:

               (a)  80 per cent. of the sum of the value of:

                    (i)  Inventory  which  is not  subject  to  any  Encumbrance
                         (other than any Encumbrance in favour of the Banks);

                    (ii) Receivables;

                    (iii)Eligible    Intercompany   Loans   (less   Intercompany
                         Payables)   up  to  a  maximum   aggregate   amount  of
                         $40,000,000; and

                    (iv) Supplier  Advances  and  Affiliate  Advances  up  to  a
                         maximum aggregate amount of $40,000,000;


<PAGE>



               LESS


                    (v)  Trade Payables; and


               (b)  50 per cent. of the value of Fixed Assets;

                    each as shown in the most recent  Borrowing Base Certificate
                    delivered to the International  Security Agent in accordance
                    with clause  15.2  (Borrowing  Base) (or, if such  Borrowing
                    Base  Certificate is not the latest required to be delivered
                    pursuant to that clause,  as determined by the International
                    Security Agent acting reasonably);

     "Borrowing  Base  Certificate"  a certificate  provided by SCTC Inc. to the
     International  Security Agent pursuant to clause 15.2  (Borrowing  Base) in
     the form set out in Schedule XII;

     "Borrowings" in relation to any person (including,  without  limitation,  a
     Group Company),  at any time, any  Indebtedness  incurred by that person in
     respect of all or any of the following (but without double counting):-

               (a)  money borrowed or raised;

               (b)  any debentures,  bonds, notes, loan stock,  commercial paper
                    or  similar   instruments   or   acceptance   credit,   bill
                    discounting  or note purchase  facilities  (except for bills
                    discounted without recourse of any kind to the Borrowers);

               (c)  counter-indemnity  obligations  of such person in respect of
                    letters of credit,  guarantees or similar instruments issued
                    by banks or financial institutions;

               (d)  receivables sold, assigned or discounted;

               (e)  the capital element of conditional  purchase,  hire purchase
                    and leases which are defined as finance leases in SSAP 21;

               (f)  any  guarantee,   indemnity  or  other   assurance   against
                    financial loss in respect of any  Indebtedness  of any other
                    person of a kind referred to in this definition;



<PAGE>



               (g)  any interest rate or currency swap,  forward rate agreement,
                    cap, floor or collar transaction  calculated by reference to
                    the  net  amount   payable  under  any  such   agreement  if
                    closed-out or terminated at that time (but giving credit for
                    any net amount  receivable  by that person under a connected
                    transaction of a similar nature); and


          "Budget"  (a)  the  budget  for  the  Tobacco   Group   including  the
          projections to 31 March 1998 and projections for 1999 and 2000 annexed
          as Appendix A to this Agreement; and

               (b)  each budget now or hereafter delivered or to be delivered to
                    the  International  Security  Agent  pursuant to Clause 15.6
                    (Budget);

          "Business  Day" a day (other  than a Saturday  or Sunday) on which the
          relevant  financial markets are open for dealings between banks (a) in
          London,  New York and  Frankfurt and (b) where a payment is to be made
          under this Agreement in any currency  other than Sterling,  Dollars or
          DM, the principal financial centre of the currency concerned;

          "Capital  Adequacy  Requirement" a request or requirement  relating to
          the  maintenance of capital,  including one which makes a change to or
          is based upon any alteration in, the interpretation of the Basle Paper
          and/ or the  Solvency  Directives  or which  increases  the  amount of
          capital required thereunder,  other than a request or requirement made
          by way or implementation of the Basle Paper or the Solvency Directives
          in the manner in which any of them is being implemented at the date of
          this Agreement;

          "Capital Expenditure" in relation to any person means:

               (a)  expenditure   made   and   liabilities   incurred   for  the
                    acquisition  of  assets  which  would be  shown  as  capital
                    expenditure  in the  audited  financial  statements  of such
                    person (prepared in accordance with GAAP); and

               (b)  to the extent not included in (a) above, Investments;

          "Cash Flow  Forecast"  (a) the rolling four quarter cash flow forecast
          for the  Tobacco  Group for the  period to 31 March 1998  attached  as
          Appendix B to this Agreement; and

               (b)  each cash flow forecast now or hereafter  delivered or to be
                    delivered to the  International  Security  Agent pursuant to
                    Clause 15.3 (Cash Flow Forecast);

          "Code" the  Internal  Revenue  Code of 1986,  as amended  from time to
          time, and the regulations  promulgated  and rulings issued  thereunder
          under US law;



<PAGE>



          "Co-Lead  Bank"  Bankers Trust Company in its capacity as Co-Lead Bank
          under this  Agreement and any successor  appointed  under the terms of
          this Agreement;


          "Committed  Banks" all Banks (to the  extent  and in  respect  only of
          their respective Commitments);

          "Commitment"  in relation  to a Bank and a Facility,  means the amount
          set  opposite  such  Bank's  name in  Schedule  II under  the  heading
          "Commitment"  in  relation  to  such  Facility  as  the  same  may  be
          transferred  (in whole or in part),  reduced,  varied or terminated in
          accordance with the terms of this Agreement;

          "Continuing"  in the context of an Event of Default shall be construed
          as follows:-

               (a)  so that where the underlying circumstances which caused that
                    Event of Default  are  incapable  of  remedy,  that Event of
                    Default  is  Continuing,   unless  and  until  it  has  been
                    expressly  waived in writing by the Lead Bank (acting on the
                    instructions  of the Majority  Banks) and any  conditions of
                    such waiver have been fulfilled to the  satisfaction  of the
                    Lead Bank (acting on the instructions of Majority Banks); or

               (b)  in any other  case,  that  Event of  Default  is  Continuing
                    unless and until either:-

               (i)  it has been  expressly  waived in  writing  by the Lead Bank
                    (acting on the  instructions  of the Majority Banks) and any
                    conditions  of  such  waiver  have  been  fulfilled  to  the
                    satisfaction of the Lead Bank (acting on the instructions of
                    the Majority Banks); or

               (ii) the  underlying  circumstances  which  caused  that Event of
                    Default have been remedied to the  satisfaction  of the Lead
                    Bank (acting on the instructions of the Majority Banks);

          "Convertible  Subordinated the $69,000,000  principal amount of 7 1/4%
          convertible  Debentures"  debentures maturing March 31, 2007 issued by
          SCC to refinance certain working capital facilities;

          "Disposal" any sale or disposition  prior to the  Enforcement  Date of
          any of the shares or the goodwill and/or assets of the business of any
          Tobacco  Group  Company,  but  excluding  (a) stock in trade sold by a
          Tobacco Group  Company in the normal  course of its business;  and (b)
          any sale or  disposition  of  shares,  goodwill  and/or  assets by one
          Tobacco Group  Company to another  Tobacco Group Company as part of an
          intra-Group reorganisation.


<PAGE>



          "DM" lawful currency of the Republic of Germany;


          "Documentation  Agent"  Bankers  Trust  Company  in  its  capacity  as
          Documentation   Agent   under  this   Agreement   and  any   successor
          Documentation Agent appointed under the terms of this Agreement;

          "Dollar  Equivalent"  (a)  on  any  date  in  relation  to  an  amount
          denominated in Dollars means the amount thereof; and

               (b)  on any  date  in  relation  to an  amount  denominated  in a
                    currency  other  than  Dollars  means the  amount of Dollars
                    which would be  required  to  purchase  such sum at the spot
                    rate of  exchange  quoted by the Lead Bank at 11.00 a.m.  on
                    that date for the  purchase of the  relevant  currency  with
                    Dollars;

          "Dollars" and $ lawful currency of the United States;

          "EBITDA" in respect of any period and any person or any person and its
          Subsidiaries  (a  "Group"),  means the  consolidated  profits  of that
          person or Group on ordinary activities for that period as shown in the
          consolidated profit and loss accounts of that person or Group for that
          period  before the  deduction of interest and  corporation  tax on the
          overall  income of that  person or Group  payable  in  respect of that
          period:

               (a)  adding  back  an  amount  equal  to  any   depreciation  and
                    amortisation charged during such period;

               (b)  excluding  any gain or loss  realised on the disposal of any
                    assets (other than stock in trade already taken into account
                    in the  calculation  of the  profit or loss of the person or
                    Group) and excluding any exceptional or extraordinary items;

               (c)  not  including  interest  of whatever  nature  received by a
                    person or member of the Group;

               (d)  adding back any debits  arising as a result of  amortisation
                    of goodwill and/or know-how or other intangible assets;

               (e)  deducting  any profit  arising out of release of  provisions
                    for  liabilities  and  charges,  (other  than in the  normal
                    course of business and in accordance with GAAP);

               (f)  excluding any share of the profits of  associated  companies
                    which  are not  wholly  owned  by such  person,  except  for
                    dividends actually received by such person;


<PAGE>



               (g)  reversing any adjustments  required to be made by applicable
                    GAAP;


          "Eligible  Intercompany  Loans"  principal  Indebtedness in respect of
          Borrowings  of an  Eligible  Tobacco  Group  Company  from a  Borrower
          arising in connection  with a transaction  for the sale or purchase of
          tobacco in the ordinary  course of business of such  Eligible  Tobacco
          Group Company;

          "Eligible Tobacco Group Company" a member of the Tobacco Group (except
          a Borrower)  over whose  shares a Security  Agent  holds an  effective
          charge or pledge for the benefit of the Finance Parties or in relation
          to which share  certificates  representing the entire  shareholding of
          members of the Tobacco Group in that company have been  deposited with
          a Security Agent;

          "Eligible   Transferee"   includes  a   commercial   bank,   financial
          institution  or other  "accredited  investor"  (as  defined  in United
          States SEC Regulation D) in each case which is not a direct competitor
          of a Borrower  or SCC or engaged in the same or similar  business as a
          Borrower or SCC or any of their Subsidiaries or is not an affiliate of
          any  such   competitors   of  a  Borrower  or  SCC  or  any  of  their
          Subsidiaries;

          "Encumbrance"  any  mortgage,  pledge,  lien,  hypothecation,  charge,
          security  interest,  assignment  or deposit by way of  security or any
          other agreement or arrangement  whatsoever (whether conditional or not
          and  whether  relating to  existing  or to future  assets)  having the
          effect of providing a security or preferential treatment to a creditor
          (including  set-off,  title  retention,  defeasance or reciprocal  fee
          arrangements)  or any  agreement  or  arrangement  to give any form of
          security or preferential treatment to a creditor;

          "Enforcement  Date" the date on which a Security  Agent first enforces
          any part of the security constituted by any Security Document pursuant
          to the terms of this Agreement or the relevant Security Document;

          "Environmental  Claims"  any and all  administrative,  regulatory,  or
          judicial  actions,  suits,  demands,  demand letters,  claims,  liens,
          notices of non-compliance or violation,  investigations or proceedings
          relating  in any way to any  Environmental  Law or any  permit  issued
          under any such law (hereafter "Claims") including without limitation:



<PAGE>



               (a)  any and all Claims by governmental or regulatory authorities
                    for enforcement, cleanup, removal, remedial or other actions
                    or damages pursuant to any applicable Environmental Law; and


               (b)  any and all  Claims  by any  third  party  seeking  damages,
                    contribution,  indemnification,  cost recovery, compensation
                    or injunctive  relief  arising from  Hazardous  Materials or
                    arising from  alleged  injury or threat of injury to health,
                    safety or the environment;

          "Environmental  Law"  means  any  federal,  state,  foreign  or  local
          statute, law, rule, regulation,  ordinance, code guideline,  policy or
          rule of common  law now or  hereafter  in  effect  and in each case as
          amended,  and any judicial or administrative  interpretation  thereof,
          including  any judicial or  administrative  order,  consent  decree or
          judgment,  relating to the  environment,  health,  safety or Hazardous
          Materials,    including    without    limitation   the   Comprehensive
          Environmental  Response,  Compensation,  and Liability Act of 1980, as
          amended,  42 U.S.C.ss.  9601 et seq.;  ------ the Hazardous  Materials
          Transportation  Act, as amended, 49 U.S.C.ss.1801 et seq; the Resource
          Conservation  and Recovery Act, as amended,  42  U.S.C.ss.6901 et seq;
          ------ the  Federal  Water  Pollution  Control  Act,  as  amended,  33
          U.S.C.ss.  1251 et seq;  ------ the Toxic  Substances  Control Act, 15
          U.S.C.ss.2601 et seq; the Clean Air Act, 42 ------  U.S.C.ss.  1401 et
          seq; the Safe  Drinking  Water Act, 42 U.S.C.ss.  300f et seq; the Oil
          Pollution  Act of 1990,  33 U.S.C.  et seq;  and their state and local
          ------- counterparts and equivalents under US law.

          "ERISA" the Employee Retirement Income Security Act of 1974 as amended
          from time to time, and the regulations  promulgated and rulings issued
          thereunder under US law;

          "ERISA  Affiliate"  each person (as defined in Section  3(9) of ERISA)
          which  together  with the Borrowers or  Subsidiaries  of the Borrowers
          would be deemed to be a "single  employer"  (i) within the  meaning of
          Section  414(b),  (c), (m) or (o) of the Code;  or (ii) as a result of
          the Borrowers or any Subsidiary of the Borrowers  being or having been
          made a general partner of such person;

          "Event of Default" shall unless otherwise stated mean a declaration by
          the Lead Bank that an event of default has occurred in accordance with
          Clause 17.1 (Termination in Case of Default);

          "Existing Security" Encumbrances over assets of members of the Tobacco
          Group which are in existence as at the date of this  Agreement and are
          detailed in Part II of Schedule IV;



<PAGE>



          "Facility" (a) each  facility  made  available  pursuant to a Facility
               Letter; and

               (b)  each  facility  made  available  by a Bank as at the date of
                    this Agreement and detailed in Schedule II  (notwithstanding
                    that such facility may not be documented); and

               (c)  each other  facility at any time  hereafter  designated as a
                    Facility by  agreement  between the Lead Bank  (acting  with
                    Majority  Bank  approval)  and SCTC  Inc.  pursuant  to this
                    Agreement;

                    and "Facilities" shall be construed accordingly;

          "Facility Agreements" (a) the Facility Letters;

               (b)  the security  documents details of which are set out in Part
                    II of Schedule IV;

               (c)  each other agreement,  deed,  document,  notice,  guarantee,
                    indemnity  or  certificate  entered  into by any  Obligor in
                    favour of any Bank  pursuant to any document  referred to in
                    (a) or (b) in this  definition  or otherwise  in  connection
                    therewith; and

               (d)  each  other  agreement  or  document  at any time  hereafter
                    designated as a Facility  Agreement by agreement between the
                    Lead Bank (acting with Majority Bank approval) and SCTC Inc.
                    pursuant to this Agreement;

                    and "Facility Agreement" shall be construed accordingly;

          "Facility Letters" (a) the facility letters and agreements, details of
          which are set out in Part I of Schedule IV as amended and supplemented
          from time to time in accordance with this Agreement; and

               (b)  each other  facility  letter,  agreement  or document at any
                    time hereafter  designated as a Facility Letter by agreement
                    between the Lead Bank (acting with Majority  Bank  approval)
                    and SCC pursuant to this Agreement,

                    and each is a "Facility Letter";



<PAGE>



          "Facility  Office" in  relation to a Bank or a  Transferee,  means the
          office  identified  at the end of this  Agreement  or in the  relevant
          Transfer Certificate,  as the case may be, or any replacement facility
          office nominated in accordance with Clause 32 (Notices);


          "Final  Repayment  Date"  31st  July  2000  or,  if that  day is not a
          Business Day, the immediately preceding Business Day;

          "Finance  Documents"  this  Agreement,  the Facility  Agreements,  the
          Security Documents,  any Transfer Certificate and any other agreements
          or documents entered into by any Tobacco Group Company pursuant to the
          terms of the Finance  Documents or any of them and any other agreement
          or document now or in the future  designated as a Finance  Document by
          agreement  between the Lead Bank (acting with Majority Bank  approval)
          and SCTC Inc.  and includes  each such  Finance  Document as extended,
          supplemented, varied, restated and/or replaced in any manner from time
          to time (even if changes  are made to the  composition  of the Finance
          Parties and/or the other parties to the Finance  Documents) and/or any
          document which extends, supplements,  varies, restates and/or replaces
          such  Finance  Document  and also  includes  each or any such  Finance
          Document and each is a "Finance Document";

          "Finance  Parties" the banks and financial  institutions  for the time
          being  comprising  Finance  Parties  pursuant  to the  terms  of  this
          Agreement (including, without limitation, the Banks and any additional
          or  substitute  bank or financial  institution  at any time  hereafter
          designated as a Finance Party to the extent and for the  purpose(s) so
          designated  by agreement  between the Lead Bank (acting with  Majority
          Bank approval) and SCTC Inc.  pursuant to this  Agreement) and each of
          their  respective  successors  in title  and  permitted  assignees  or
          transferees  (but only for so long as such  person  has any  rights or
          obligations  under any Finance Document) and also includes each or any
          of them and each is a "Finance Party";

          "Financial Accommodation" financial accommodation given by a person to
          a second  person (the  "Debtor")  where such  financial  accommodation
          constitutes a Borrowing by the Debtor;

          "Fixed  Assets"  any real  property  unencumbered,  otherwise  than in
          favour of the Security Agents, located in the USA and owned by General
          Processors  Inc.,  W.A.  Adams  Company or SCTC Inc.  and the land and
          buildings  located in Godalming,  Surrey,  United Kingdom and owned by
          SCTC (UK) (but only after the RBS Legal Charge has been  released) and
          effectively  mortgaged or charged to a Security  Agent for the benefit
          of the Finance  Parties for the  avoidance of doubt any such  property
          released from a mortgage or charge by the Security Agent in accordance
          with Clause 23.4 shall no longer constitute a Fixed Asset;


<PAGE>



          "Foreign  Pension  Plan"  any plan,  fund,  or other  similar  program
          established or maintained  outside the USA by the Borrowers or any one
          or more of their  Subsidiaries  primarily for the benefit of employees
          of the Borrowers or such  Subsidiaries  residing outside the USA which
          plan,  fund or similar  program  provides  or results  in,  retirement
          income,  a  deferral  of  income in  contemplation  of  retirement  or
          payments to be made upon  termination of employment and is not subject
          to ERISA or the Code;


          "Free Cash Flow" means for any period,  without double  counting,  the
          aggregate unconsolidated EBITDA of the Borrowers plus the aggregate of
          Borrowings  (excluding  the  proceeds  of the Bonds)  received  by the
          Borrowers  during that period (except for  Borrowings  pursuant to the
          Facilities);

          LESS

               (a)  all Capital  Expenditure  incurred by the  Borrowers  during
                    such  period  (to the  extent not  financed  by a  Borrowing
                    pursuant to the  Facilities  as permitted  under clause 14.4
                    (a);

               (b)  all permanent repayments of Borrowings made by the Borrowers
                    during such period;

               (c)  interest,   commissions  and  other  costs  payable  by  the
                    Borrowers in cash in connection with Borrowings  during such
                    period;

               (d)  cash payments of corporation  and other Taxes payable by the
                    Borrowers during that period;

               (e)  cash payments of dividends,  distributions,  management fees
                    and other payments to shareholders during that period; and

               (f)  other  acquisitions  and  Investments  made by the Borrowers
                    with cash during that period (to the extent not  financed by
                    a Borrowing  pursuant to the  Facilities as permitted  under
                    clause 14.4 (a);

          "GAAP" in  relation  to any Group  Company  means  generally  accepted
          accounting principles in its country of incorporation;

          "Greater Group" at any time SCC and its Subsidiaries at that time;

          "Group Company" a member of the Greater Group;

     "Hazardous Materials"

          (a)  any  petroleum  or  petroleum  products,  radioactive  materials,
               friable asbestos and polychlorinated biphenyls; and


<PAGE>



          (b)  any chemicals,  materials or substances defined as or included in
               the definition of "hazardous  substances",  "extremely  hazardous
               wastes",  "hazardous  materials",  "restricted hazardous wastes",
               "toxic  substances",  "toxic  pollutants",   "contaminants",   or
               "pollutants"  or words of  similar  import  under any  applicable
               Environmental Law;


          "Holding Company" a "holding company" as defined in Section 736 of the
          Act;

          "Indebtedness" at any time any obligation for the payment or repayment
          of money, whether present or future, actual or contingent;

          "Intangible  Assets"  means,  as at  the  date  of  any  determination
          thereof,  the  total  amount of all  assets  consisting  of  goodwill,
          patents, trade names, trademarks, copyrights, franchises, experimental
          expense, organisation expense, unamortised debt, discount and expense,
          deferred  assets other than prepaid  insurance and prepaid taxes,  the
          excess of cost of shares  acquired  over book value of related  assets
          and such  other  assets  as are  properly  classified  as  "intangible
          assets" in accordance with generally accepted accounting principles in
          the United States of America;

          "Intercompany Payables" at any time, amounts owing by a Borrower to an
          Eligible Tobacco Group Company at such time;

          "Interest" in respect of any period, means the aggregate of:

          (a)  interest  payable (on an accruals  basis) by the Borrowers  under
               the Facilities and this Agreement during the period;

          (b)  interest,  commission  and other charges on any other  Borrowings
               payable (on an accruals  basis) by the Tobacco  Group during that
               period,  including  the  interest  element of hire  purchase  and
               finance leases; and

          (c)  the  consideration  attributable to the finance cost given by the
               Tobacco  Group during that period  (whether by way of discount or
               otherwise)  in  connection  with finance for the Tobacco Group by
               way of acceptance  credit,  bill  discounting,  debt factoring or
               other like arrangement, and further adjusted:



<PAGE>



               (i)  by deducting any such interest or  consideration  payable by
                    one Tobacco Group  Company to another  Tobacco Group Company
                    (to the extent not already netted out on consolidation);


               (ii) deducting  other  interest  income  received,   of  whatever
                    nature;

          "Interest  Cover Ratio" for any period means the ratio of consolidated
          EBITDA of the Tobacco  Group to  Interest  for that period as shown in
          the most recent quarterly  management or audited accounts (as the case
          may be)  delivered to the  International  Security  Agent  pursuant to
          clause 15.4 (Quarterly Accounts) or 15.5 (Accounts);

          "Interest  Indebtedness" all accrued, but unpaid, amounts of interest,
          commission,  bank  charges,  costs and  expenses  payable to a Finance
          Party by an Obligor under a Facility  which have not been  capitalised
          to become Principal Indebtedness;

          "International  Security  Agent"  MeesPierson  N.V. in its capacity as
          security  agent for the  Finance  Parties and any  successor  security
          agent appointed under the terms of this Agreement;

          "Inventory" stocks of tobacco owned by a Borrower;

          "Investments" investments in and subscriptions for and acquisitions of
          shares  and  capital  stock  in  a  person  or  any  Subsidiaries  and
          Affiliates of a person  (including SCC) or in any joint venture or any
          similar  or  analogous  investment  or any  purchase  of the assets or
          business of a person but not including the purchase of stock in trade;

          "JTI Letter of Credit" a Joint  Liability  Letter of Credit issued for
          the benefit of the Japanese Tobacco Monopoly;

          "Lead Bank" Deutsche Bank A.G. in Hamburg in its capacity as lead bank
          to the Banks under this Agreement and any successor  thereto appointed
          under the terms of this Agreement;

          "Letter of Credit" a letter of credit, bank guarantee,  standby letter
          of credit, bid bond or performance bond;

          "Majority  Banks" at any time those  Banks whose  Commitments  at such
          time are  equal to or  exceed 67 per  cent.  of the  aggregate  of all
          Commitments at such time;

          "Margin" for the period from the date of this Agreement until 31 March
          1998,  means 1.0 per cent.  and  thereafter  shall;  be  determined in
          accordance with clause 6.2 as follows:

               Interest Cover Ratio Margin

               greater than 3.25:1 0.625 per cent.


<PAGE>





          equal to or greater than 3.00:1 and 0.75 per cent.  less than or equal
          to 3.25:1

          equal to or greater than 2.5:1 1.00 per cent. and less than 3.00:1

          equal to or greater than 2.25:1 and less than 2.5:1 1.25 per cent.

          equal to or greater than 2.00:1 and less than 2.25:1 1.5 per cent.

          equal to or greater than 1.75:1 and less than 2.00:1 1.75 per cent.

          less than 1.75:1 2.00 per cent.

     "Master  Facilities  Termination  the  earlier  of 5.00  p.m.  on the Final
     Repayment Date Date" or the time when an Event of Default occurs;

     "Material Adverse Change" an event or circumstance  which (when taken alone
     or together  with any  previous  event or  circumstance)  constitute(s)  an
     adverse change in the assets,  financial or trading position of any Tobacco
     Group Company such that, in the opinion of the Majority  Banks any Borrower
     or SCC is likely to be unable  to  comply  with its  obligations  under any
     Finance Document to which it is a party;

     "Material Adverse Effect" an event or circumstance  which (when taken alone
     or  together  with  any  previous  event  or  circumstance)  has,  or could
     reasonably  be  expected in the opinion of the  Majority  Banks to have,  a
     serious  effect on the assets,  business or financial  condition or trading
     prospects of any Borrower or of the Tobacco  Group as a whole such that any
     Obligor is  unlikely to be able to comply  with its  obligations  under any
     Finance Document;

     "Month" a period  starting on one day in a calendar month and ending on the
     numerically  corresponding  day in the  next  calendar  month  or,  if that
     corresponding  day is not a Business  Day,  ending on the next Business Day
     unless that falls in another  calendar  month in which case it shall end on
     the preceding  Business Day, save that if there is no corresponding  day in
     the month in which  the  period  ends,  that  period  shall end on the last
     Business Day in the later month;

     "Mortgaged  Property" any real  property and  improvements  owned,  leased,
     used,  operated or occupied by any Tobacco  Group  Company and mortgaged in
     favour of a Security Agent;



<PAGE>



     "Net Borrowings" all Borrowings of the Borrowers (excluding  liabilities of
     a Borrower in respect of Letters of Credit to the extent that such  Letters
     of Credit  are (a) back to back with  another  Letter of Credit of the same
     amount and payment terms in favour of the same Borrower; or (b) issued by a
     Bank at the request of a Borrower to a customer of that  Borrower to secure
     a pre-payment  made by that  customer to that  Borrower or (c)  documentary
     Letters of Credit  issued by a Bank at the request of a Borrower in respect
     of the  purchase  and shipment of tobacco  where no  obligation  to pay has
     arisen as a result of such tobacco not having been delivered;) less ---cash
     for the time being  deposited  by a  Borrower  with a Bank which are at all
     times  capable  of  being  set off by such  Bank  against  such  Borrower's
     liabilities to it;


     "Net  Income"  net income of any person as shown in the  audited  financial
     statements of that person prepared according to GAAP less any extraordinary
     gains and positive adjustments attributable to such person;

     "Net Disposal  Proceeds"  the proceeds of any Disposal by a Borrower  after
     deducting the reasonable  costs of that Disposal and any Taxes payable by a
     Borrower in connection with that Disposal;

     "Obligors" at any time,  each of SCC, the Companies  listed in Schedule III
     and any other  person  now or in the  future  designated  in  writing as an
     Obligor by the Lead Bank (acting with Majority Bank approval) and SCTC Inc.
     pursuant to this Agreement and each is an "Obligor";

     "Original Accounts" each of:

               (a)  the audited accounts of the Greater Group; and

               (b)  the audited consolidated accounts of the SCTC Inc. Group and
                    each member of the SCTC Inc.  Group (both  consolidated  and
                    unconsolidated)

                    for their respective Accounting Reference Periods ended 31st
                    March 1997;

     "Outstandings"  at any time in respect of a Bank means the aggregate of the
     Dollar  Equivalent  of each amount  which a Borrower may at any time owe to
     such Bank under the terms of its  Facility or in respect of which such Bank
     has recourse to a Borrower under its Facility and including (without double
     counting) the maximum potential  liability of a Bank in respect of a Letter
     of Credit from time to time;



<PAGE>



     "PBGC" the Pension Benefit  Guaranty  Corporation  established  pursuant to
     Section 4002 of ERISA or any successor thereto;


     "Permitted Borrowings" (a) Borrowings under the Facilities on the terms and
     up to the limits  applicable  therein as at the date of this  Agreement (as
     such limits may be reduced from time to time in  accordance  with the terms
     of the respective agreement and/or this Agreement);

               (b)  Borrowings by any Tobacco Group Company  (except a Borrower)
                    from a third party  lender on arms  length  terms to finance
                    stock in trade in the  ordinary  course of its  business  as
                    carried on at the date of this  Agreement,  provided that if
                    security is given for such Borrowing, such security shall be
                    granted  only to such  lender  and only over  stock in trade
                    financed  by  such  lender  and  without   recourse  to  any
                    Borrower;

               (c)  Borrowings pursuant to any Bankers Automated Clearing System
                    facility provided by Lloyds Bank Plc to Standard  Commercial
                    Tobacco  Services  (UK)  Limited  from  time to time for the
                    purpose of paying  employees  wages and to the  extent  such
                    Borrowings are  outstanding  for a period not in excess of 2
                    Business Days; and

               (d)  Borrowings  which  constitute  normal trade credit and other
                    agreed  periods  for payment of  Indebtedness  incurred by a
                    Tobacco Group Company in the ordinary  course of carrying on
                    its business as carried on at the date of this Agreement;

               (e)  Indebtedness  incurred  pursuant to a Ring Fenced  Financing
                    Arrangement;

               (f)  liabilities  assumed  under  guarantees  given by a  Tobacco
                    Group  Company  prior  to the  date  of  this  Agreement  or
                    Indebtedness  incurred by a Tobacco  Group  Company prior to
                    the  date of  this  Agreement  where,  in  each  case,  such
                    guarantee  or  Indebtedness  is  detailed  in  Part  III  of
                    Schedule IV;

               (g)  liabilities assumed under guarantees given by SCC in respect
                    of (i) Borrowings of a subsidiary of SCC which are Permitted
                    Borrowings  under  paragraph (b) above;  (ii) the Bonds;  or
                    (iii)  obligations  of a Wool Group Company  incurred in the
                    ordinary course of carrying on its business as carried on at
                    the date of this Agreement;


<PAGE>



               (h)  Borrowings  by any  Tobacco  Group  Company  which  is not a
                    Borrower by way of term loans on arms length  terms from any
                    bank or  financial  institution  which have no  recourse  in
                    respect of such term loans to any of the Borrowers;


               (i)  discounting of bills of exchange and  promissory  notes by a
                    Tobacco Group Company on arms length terms without  recourse
                    to any Tobacco Group Company;

               (j)  in relation to SCTC (UK), the RBS Guarantee;

               (k)  hire purchase and leasing arrangements;

               (l)  in relation to SCTC, Inc. the Bonds;  (m) any Borrowings not
                    falling  within  any of (a) to  (l)  above  up to a  maximum
                    aggregate  Dollar  Equivalent  amount  of  $2,000,000;   (n)
                    Borrowings detailed in Schedule XIII;


          "Permitted Disposal"

               (a)  the  disposal  of the whole of the issued  share  capital in
                    Standard Wool (UK) to SCC or any of its  Subsidiaries  which
                    is  not  a  Tobacco   Group   Company  for  the  purpose  of
                    transferring  Standard  Wool (UK) Limited out of the Tobacco
                    Group;

               (b)  a  disposal  of stock in trade on arms  length  terms in the
                    ordinary course of business; and

               (c)  a disposal of any asset of a Borrower  or an Obligor  (other
                    than stock in trade) where:

                    (i)  the relevant  Borrower or Obligor  (excluding  SCC) has
                         notified  the Lead Bank of its  intention to dispose of
                         that asset (if that asset has a book value in excess of
                         $2,000,000 or is subject to a fixed charge in favour of
                         a Security Agent);

                    (ii) no Event of Default has occurred and is Continuing;

                    (iii)such disposal is made on arms length terms at book
                         value for cash; and

                    (iv) the proceeds of such disposal are applied in accordance
                         with Clause 8 (Prepayments); and


<PAGE>



     (d)  any other  disposal  which has been  approved  in  writing by the Lead
          Bank, acting on the instructions of the Majority Banks;


     "Permitted  Encumbrances"

          (a)  Encumbrances  granted to a Security  Agent for the benefit of the
               Finance  Parties  or granted  with the prior  consent of the Lead
               Bank (acting on the instructions of the Majority Banks);

          (b)  any Existing Security provided that such Existing Security is not
               amended,  extended or renewed so that the amounts secured thereby
               are not increased;

          (c)  liens  arising  by  operation  of  law in the  normal  course  of
               business as conducted at the date of this Agreement;

          (d)  Encumbrances comprised in the Security Documents or arising under
               any agreement existing at the date of this Agreement in favour of
               any of the Banks in connection  with credit balances held by that
               Bank  which  permit  the  netting  of  credit  balances,   or  in
               connection with any Bankers Automated Clearing System facility or
               any  conditional   purchase,   hire  purchase  or  finance  lease
               arrangement which, in each case, is a Permitted Borrowing, to the
               extent that it may otherwise constitute an Encumbrance;

          (e)  any  Encumbrance  arising in the normal course of business of any
               Tobacco Group Company (except for a Borrower) over stock in trade
               of such Tobacco Group Company;

          (f)  any  Encumbrance  created by any Group  Company  (except SCC or a
               Borrower)  in relation to any  Borrowing  to finance  tobacco and
               which  is  granted  to the  relevant  lender  only  over  tobacco
               financed  by such  lender or the right to  receive  such  tobacco
               and/or the  proceeds of sale of such  tobacco  where such tobacco
               and  proceeds  have not been  pledged and are not  required to be
               pledged  to the  Security  Agent  (or,  if they are so pledged or
               required to be pledged, the Security Agent has given a consent or
               release to enable such Encumbrance to be created);



<PAGE>



          (g)  any  Encumbrance  over any asset  acquired after the date of this
               Agreement  and  created   solely  for  the  purpose  of  securing
               indebtedness  incurred  only to finance the payment of (and where
               the principal  amount of such  indebtedness  does not exceed) the
               purchase price at fair market value of such asset;


          (h)  any Encumbrance (the "New Encumbrance") created solely to replace
               an existing  Encumbrance (the "Old Encumbrance"),  provided that:
               (i) the New Encumbrance  subsists over the same asset as had been
               secured by the Old  Encumbrance and is made available on terms no
               more onerous than the terms governing the Old  Encumbrance;  (ii)
               the New  Encumbrance  secures no greater  amount of  Indebtedness
               than the Old  Encumbrance;  and (iii) the Old  Encumbrance  was a
               Permitted Encumbrance;

          (i)  any Encumbrance  arising in connection with a Permitted Borrowing
               where such Encumbrance arises solely by reason of entering into a
               hire purchase agreement, finance lease or operating lease and not
               by the creation of specific security;

          (j)  any Encumbrance arising pursuant to a title retention arrangement
               with a supplier to the  relevant  Tobacco  Group  Company on such
               supplier's  normal  business  terms  for  supply  of any asset or
               product  (other than tobacco or wool) in the  ordinary  course of
               the business of such Tobacco  Group  Company as carried on at the
               date of this Agreement;

          (k)  any  Encumbrance  granted by a Subsidiary of a Borrower to a bank
               or financial  institution to secure  Borrowings  permitted  under
               paragraph (h) of the definition of Permitted Borrowings;

          (l)  in  relation  only to SCC,  the share  pledges  to be  granted in
               favour of the  holders  of the Bonds over the shares of SCTC Inc.
               and Standard Wool Inc.;

          (m)  in relation only to SCTC Inc., the share pledges to be granted to
               the  Security  Agents or  either of them over the  shares in SCTC
               (UK) and TCLTC;

          (n)  in relation to SCTC (UK), the RBS Legal Charge;

          (o)  any  Encumbrance  which does not fall within (a) to (n) inclusive
               above,  provided  that the  aggregate  Dollar  Equivalent  of the
               payment  obligations of all Borrowers secured by such Encumbrance
               does not exceed $2,000,000 (or its equivalent) at any time; and


<PAGE>



          (q)  any Encumbrance referred to in Schedule XIII;


          (r)  in relation to SCTC Inc.  the deed of trust  granted in favour of
               Branch Banking & Trust Company over land, buildings and machinery
               located in Springfield, Kentucky, USA.

          "Plan" any pension plan as defined in Section 3(2) of ERISA,  which is
          maintained  or  contributed  to by (or where there is an obligation to
          contribute  of) any  Borrower  or any  Subsidiary  of a Borrower or an
          ERISA   Affiliate  and  each  such  plan  for  the  five  year  period
          immediately  following the latest date on which the Borrowers,  or any
          Subsidiary  of the  Borrowers,  or  any  ERISA  Affiliate  maintained,
          contributed to or had an obligation to contribute to such plan;

          "Potential  Event of Default"

          (a)  any event or the existence of any  circumstance  which,  with the
               giving  of  notice,  the  lapse of  time,  any  determination  of
               materiality, the satisfaction of any applicable condition, or any
               combination  of them is  likely in the  opinion  of the Lead Bank
               (acting on the  instructions of the Majority Banks) to constitute
               or bring about any event set out in clause 17.1(a)-(t); or

          (b)  that financial  circumstances exist, such that (in the opinion of
               the Lead Bank (acting on the instructions of the Majority Banks))
               on  the  subsequent  publication  of  any  audited  or  quarterly
               accounts by reference to which the financial  covenants in Clause
               16.1 (Financial Covenants) are to be calculated, there would then
               be a breach of one or more of those financial covenants;

          "Preferential  Claim"  means a claim by a Bank for sums  advanced to a
          Borrower to which  Section 386 and  Schedule 6 of the  Insolvency  Act
          1986 (or any analogous provision in any other applicable jurisdiction)
          applies;

         "Principal Indebtedness"

          (a)  means, in relation to a Facility under which actual  Indebtedness
               is  owing,   the  principal  amount  for  the  time  being  owing
               thereunder  (including the face amount of any  outstanding  Bills
               accepted  and  discounted  by a Bank under an  acceptance  credit
               Facility  and  the  amount  of  any   interest   which  has  been
               capitalised  to  become  Principal   Indebtedness  but  excluding
               Interest Indebtedness);



<PAGE>



          (b)  means,   in  relation  to  a  Facility   under  which   unmatured
               liabilities  exist, the maximum unmatured  liability from time to
               time  capable  of  maturing  into an actual  principal  liability
               thereunder  or (if such  liability  has  matured)  the  principal
               amount  of it  (excluding  Interest  Indebtedness  but  including
               interest  which  has  been   capitalised   to  become   Principal
               Indebtedness),  except that unmatured  liabilities under spot and
               forward foreign exchange  currency  Facilities shall be valued in
               accordance  with  Clause  5.5  (Foreign   Exchange)  and  matured
               liabilities  under all such Facilities shall be valued at the net
               actual amount of such liabilities;


          "Properties"  at any time,  all  interests in freehold  and  leasehold
          property then owned by any member of the Group;

          "Proportion of Aggregate in relation to any Bank, means the proportion
          which  its  Commitments"  Commitment  bears  to the  aggregate  of all
          Commitments on the Enforcement Date;

          "Proportion of Aggregate in relation to any Bank, means the proportion
          which its  Outstandings"  Outstandings  bear to the  aggregate  of all
          Outstandings on the Enforcement Date except in relation to Clause 26.2
          (Calculation)  when it  shall  mean,  in  relation  to any  Bank,  the
          proportion  which  its  Aggregate  Bank  Indebtedness   bears  to  the
          aggregate of all the Aggregate Bank  Indebtedness  of the Banks on the
          Enforcement Date;

          "Proportion  of  Bank  Loss"  in  relation  to  any  Bank,  means  the
          proportion  which its Bank Loss bears to the aggregate of all the Bank
          Loss of the Banks on the date on which the relevant  notice  delivered
          pursuant to Clause 26.9(a);

          "Pro  Rata  Share"  in  relation  to any  Bank  at any  time,  means a
          percentage  equal to that proportion  which such Bank's  Commitment at
          such time bears to the aggregate of all the  Commitments  of the Banks
          at such time;

          "Quarter Date" each of 31 March, 30 June, 30 September and 31 December
          in any year;

          "RBS" The Royal Bank of Scotland plc;

          "RBS  Guarantee"  the two  guarantees  given  by  SCTC  (UK) to RBS in
          respect of the  obligations  of Standard  Wool (UK)  Limited  dated 12
          February 1992 and 30 June 1994 respectively;

          "RBS Legal  Charge" the first  legal  charge  dated 19  December  1991
          granted  by SCTC  (UK) to RBS in  respect  of land  and  buildings  in
          Godalming, Surrey;



<PAGE>



          "Realisation Account" an interest-bearing Dollar account opened in the
          books of Deutsche Bank A.G. entitled "Deutsche Bank A.G. - Realisation
          Account re [*Group  Company*]" into which Net Disposal Proceeds are to
          be paid pursuant to Clause 14.8 (Realisation Account);


          "Receivables"  the  aggregate of all amounts owing to the Borrowers by
          debtors and  representing  the purchase price payable to the Borrowers
          in respect of tobacco supplied or to be supplied by them for customers
          but excluding:

               (a)  any such receivables which are outstanding more than 90 days
                    after their due date;

               (b)  receivables  whose due date for payment  falls more than 180
                    days  after  the date the  relevant  goods or  services  are
                    supplied;

               (c)  receivables  in respect of which the  relevant  Borrower has
                    made  provision in its books in accordance  with GAAP on the
                    basis that it considers it unlikely  that those  receivables
                    will be paid;

               (d)  receivables owed by Wool Group Companies;

               (e)  receivables owed by one Borrower to another;

          "Recoveries"  the net amounts (after deducting and retaining or paying
          all proper costs,  charges and expenses (including legal expenses) and
          receivers  and other  costs of  enforcement)  received,  recovered  or
          realised by:-

               (a)  a Security  Agent  pursuant to the Security  Documents on or
                    after the Enforcement Date; and/or

               (b)  any Bank,  the  Co-Lead  Bank or the Lead Bank in respect of
                    the  Indebtedness  of the  Obligors  or any of them under or
                    pursuant  to  the  Facilities,  this  Agreement  and/or  the
                    Finance Documents or any of them on or after the Enforcement
                    Date,

                    and  includes   any   proceeds   derived  on  or  after  the
                    Enforcement  Date from an insurance  claim in respect of any
                    asset or property charged under any Security Document;

     "Recoveries  Account" shall bear the meaning  attributed  thereto in Clause
     25.3 (Recoveries to be held as Trustee);

     "Regulation  D"  Regulation  D of the  Board of  Governors  of the  Federal
     Reserve System as from time to time in effect and any successor to all or a
     portion thereof establishing reserve requirements.



<PAGE>



     "Relevant Date" 1st August 1997;


     "Reportable  Event" an event  prescribed  in Section  4043(c) of ERISA with
     respect  to a Plan that is  subject  to Title IV of ERISA  other than those
     events as to which the 30-day notice period is waived under subsection -22,
     -23, -25, -27, or -28 of PBGC Regulation Subsection 4043;

     "Reserve" a reserve for unmatured  liabilities  made in accordance with the
     provisions of this Agreement;

     "Ring Fenced Financing  Arrangement" a Borrowing by a Tobacco Group Company
     which is wholly financed by SCC or third parties who have recourse only (a)
     to the assets  acquired with the proceeds of such  Borrowing and not to any
     other assets of a Tobacco Group Company;  and/or (b) to SCC on an unsecured
     basis under a guarantee given by SCC which is a Permitted Borrowing by SCC;

     "SCC" Standard Commercial Corporation,  a company registered in the laws in
     the State of North Carolina,  USA, with Federal Tax  Identification  Number
     13/1337610;

     "SCC Tangible Net Worth" means at any time,  consolidated net shareholders'
     equity of SCC and its Subsidiaries  determined in accordance with generally
     accepted accounting principles in the United States of America applied on a
     consistent  basis,  with no  upward  adjustments  due to a  revaluation  of
     assets,  less  all  Intangible  Assets  of SCC  and  its  Subsidiaries  and
     excluding cumulative transaction adjustments.

     "SCTC Inc's  Borrowing  Base" at any time means an amount  equal to the sum
     (without double counting) of:

               (a)  80 per cent. of the sum of the value of:

                    (i)  SCTC  Inc.'s  Inventory  which  is not  subject  to any
                         Encumbrance  (other than any  Encumbrance  in favour of
                         the Banks);

                    (ii) SCTC Inc.'s Receivables;

                    (iii)SCTC   Inc.'s   Eligible   Intercompany   Loans   (less
                         Intercompany Payables) up to a maximum aggregate amount
                         of $40,000,000; and



<PAGE>



                    (iv) SCTC Inc.'s Supplier Advances and SCTC Inc.'s Affiliate
                         Advances   up  to  a   maximum   aggregate   amount  of
                         $40,000,000;


     LESS

                    (v)  SCTC Inc.'s Trade Payables; and

          (b)  50 per cent.  of the value of Fixed Assets  except those owned by
               SCTC (UK).;

               each as shown  in the  most  recent  Borrowing  Base  Certificate
               delivered to the International  Security Agent in accordance with
               clause  15.2  (Borrowing   Base)  (or,  if  such  Borrowing  Base
               Certificate is not the latest  required to be delivered  pursuant
               to that clause, as determined by the International Security Agent
               acting reasonably);

               SCTC Inc.'s Net Borrowings all Borrowings of SCTC Inc. (excluding
               liabilities  of SCTC Inc.  in respect of Letters of Credit to the
               extent  that such  Letters  of  Credit  are (a) back to back with
               another  Letter of Credit of the same amount and payment terms in
               favour of SCTC Inc.;  or (b)  issued by a Bank at the  request of
               SCTC Inc. to a customer of SCTC Inc. to secure a pre-payment made
               by that  customer  to SCTC Inc.  or (c)  documentary  Letters  of
               Credit issued by a Bank at the request of SCTC Inc. in respect of
               the purchase and shipment of tobacco  where no  obligation to pay
               has arisen under the relevant  documentary  Letter of Credit as a
               result of such tobacco not having been  delivered;) less cash for
               the time being  deposited by ---- SCTC Inc. with a Bank which are
               at all times  capable of being set off by such Bank  against SCTC
               Inc.'s liabilities to it;

               "SCTC (UK)" Standard  Commercial  Tobacco Company (UK) Limited, a
               company  registered  under the laws of  England  and  Wales  with
               registered number 1411968;

               "SCTC Inc." Standard  Commercial Tobacco Company,  Inc. a company
               registered under the laws of the State of North Carolina;

               "SCTC Inc.  Group" the Tobacco  Group  Companies and (for so long
               only as Standard  Wool (UK) Limited  remains a Subsidiary of SCTC
               (UK)  or  another  Tobacco  Group  Company)  Standard  Wool  (UK)
               Limited;

               "Security  Agents" the  International  Security  Agent and the US
               Security Agent and each is a "Security Agent";



<PAGE>



               "Security  Documents" each of the documents detailed in Schedules
               IV and V and any  new,  substituted  or  additional  security  or
               guarantees  entered  into by any person in favour of the Security
               Agent on or after the date of this  Agreement  to secure  amounts
               now or hereafter due or owing (actually or  contingently)  to any
               Finance  Party under or pursuant to the Finance  Documents or any
               of them;


               "Solvency  Directive"  the EC Directives  on Solvency  Ratios for
               Credit   Institutions  and  Own  Funds  of  Credit   Institutions
               (89/647/EEC  of 18 December 1989 and  89/299/EEC of 17 April 1989
               respectively)  as  amended  and in  force  on the  date  of  this
               Agreement;

               "SSAP" a Standard Statement of Accounting  Practice issued by the
               Institute of Chartered Accountants;

               "Standard   Wool   Tangible   Net  Worth"   means  at  any  time,
               consolidated net shareholders' equity of Standard Wool UK Limited
               and its  Subsidiaries  determined  in accordance  with  generally
               accepted  accounting  principles  in the United States of America
               applied on a consistent basis, with no upward  adjustments due to
               a revaluation of assets,  less all Intangible  Assets of Standard
               Wool UK Limited and its  Subsidiaries  and  excluding  cumulative
               transaction adjustments.

               "Steering  Committee" means Bankers Trust Company,  Deutsche Bank
               A.G.  in  Hamburg,   MeesPierson  N.V.,  Norddeutsche  Landesbank
               Girozentrale and Westdeutsche Landesbank Girozentrale and in each
               case their  successors  approved in accordance  with the terms of
               this agreement.

               "Sterling" or "(pound)" lawful currency of the United Kingdom;

               "Subsidiary"

                    (a)  a subsidiary as defined in Section 736 of the Act; and

                    (b)  for the purposes of Clause 15  (Information  Covenants)
                         and  Clause  16  (Financial  Covenants),  a  subsidiary
                         undertaking as defined in Section 258 of the Act;

               "Supplier" a supplier of tobacco or other goods or services  (not
               being a Group Company or Affiliate) to a Group Company;

               "Supplier  Advances"  Financial   Accommodation   provided  by  a
               Borrower to a Supplier;



<PAGE>



               "Taxes" all present and future taxes,  levies,  imposts,  duties,
               charges,  fees,  deductions and withholdings imposed or levied by
               any  governmental,  fiscal  or  other  competent  authority  (and
               includes  without  limitation  any penalty  payable in connection
               with any  failure  by any  Group  Company  to pay or delay by any
               Group Company in paying any of the same) and "Tax" and "Taxation"
               shall be construed accordingly;


               "Tax on Overall Net Income" of a Finance Party shall be construed
               as a reference to tax (except tax  deducted or withheld  from any
               amounts  paid or payable  under this  Agreement)  imposed on that
               Finance Party by the jurisdiction  under the laws of which it has
               been  incorporated  or in which its Facility Office is located on
               (a) the  net  income,  profits  or  gains  of the  Finance  Party
               worldwide or (b) such of the net income,  profits or gains of the
               Finance  Party as are  considered  to arise in or to relate to or
               are taxable in that jurisdiction;

               "TCLTC"  Trans-Continental  Leaf Tobacco  Corporation  Limited, a
               company   registered  under  the  laws  of   Liechtenstein   with
               registered number H.LIV/14;

               "TCLTC  (Jersey)"   Trans-Continental  Leaf  Tobacco  Corporation
               (Jersey)  Limited a company  registered  under the laws of Jersey
               with registered number 64368;

               "Tobacco  Group  Company" SCTC Inc. and each other body corporate
               detailed in  Schedule  VII save for  Standard  Wool UK Limited or
               such other group of  companies as SCTC Inc. and the Lead Bank may
               agree in writing from time to time and the "Tobacco  Group" means
               all the Tobacco Group  Companies and references in this Agreement
               to the audited  accounts of the Tobacco  Group shall be deemed to
               be  references  to the audited  accounts  of the SCTC Inc.  Group
               having  deducted  any  entries  relating  to  Standard  Wool (UK)
               Limited from such audited accounts;

               "Tobacco   Group   Tangible   Net  Worth"   means  at  any  time,
               consolidated  net  shareholders'  equity  of  SCTC  Inc.  and its
               Subsidiaries  determined in accordance  with  generally  accepted
               accounting  principles in the United States of America applied on
               a  consistent  basis,  with  no  upward   adjustments  due  to  a
               revaluation of assets,  less all  Intangible  Assets of SCTC Inc.
               and  its  Subsidiaries  and  excluding   cumulative   translation
               adjustments but deducting the Standard Wool Tangible Net Worth.

               "Trade  Payables"  the  aggregate  of all  amounts  owing  by the
               Borrowers  to  trade  creditors  in the  ordinary  course  of the
               respective businesses of the Borrowers;

               "Trading  Period" the three monthly periods by reference to which
               SCC prepares:-



<PAGE>



                    (a)  the  management  accounts to be  delivered  to the Lead
                         Bank under Clause 15.8 (Quarterly Accounts); and


                    (b)  the Cash Flow  Forecasts  to be  delivered  to the Lead
                         Bank under Clause 15.3 (Cash Flow Forecast);

               "Transferee"  a bank or other  financial  institution  to which a
               Bank  seeks to  transfer  or has  transferred  all or part of its
               rights  and  obligations  under  this  Agreement  and each  other
               Finance  Document in accordance with Clause 21  (Assignments  and
               Transfers);

               "Transfer  Certificate" a certificate  substantially  in the form
               set out in Schedule VI signed by a Transferee and a Bank;

               "Unfunded  Current  Liability" of any Plan shall mean the amount,
               if any, by which the actuarial  present value of the  accumulated
               plan  benefits  under the Plan as at the close of its most recent
               plan year, determined in accordance with actuarial assumptions at
               such time  consistent  with  Statement  of  Financial  Accounting
               Standard N.-87,  exceeds the market value of the assets allocable
               thereto;

               "United States" or "USA" the United States of America;

               "unmatured   liability"  an   unmatured,   contingent  or  future
               liability or any other liability which is not immediately due and
               owing;

               "US  Security  Agent"  Bankers  Trust  Company in its capacity as
               security  agent for the  Finance  Parties  and any  successor  US
               Security Agent appointed under the terms of this Agreement;

               "WAFS System" the record keeping system used by the Tobacco Group
               (as varied  from time to time with the prior  written  consent of
               the Security Agent) to record and monitor the uncommitted tobacco
               owned by the Borrowers and other Tobacco Group Companies. WAFS is
               an acronym for World Available For Sale;

               "Wool Group  Company" a Subsidiary  of SCC which is not a Tobacco
               Group Company; and


1.2  Interpretation

     In this Agreement, save as otherwise expressly provided:-



<PAGE>



          (a)  references  in this  Agreement  to this  Agreement  or any  other
               document include  references to this Agreement,  its Recitals and
               its  Schedules  or  such  other  document  as  extended,  varied,
               supplemented, restated and/or replaced in any manner from time to
               time (even if changes are made to the composition of the Finances
               Parties   and/or  the  other  parties  to  this   Agreement)  and
               references  to this  Agreement  shall also  include any  document
               which  extends,  supplements,  varies,  restates or replaces this
               Agreement;


          (b)  subject to Clause 21 (Assignments  and Transfers),  references to
               any party shall, where relevant, be deemed to be references to or
               to include,  as appropriate,  their respective lawful successors,
               assigns or transferees;

          (c)  references  to  Clauses,  paragraphs  and  Schedules  are  to  be
               construed  as  references  to  Clauses  and  paragraphs  of,  and
               Schedules to, this Agreement;

          (d)  references to any enactment shall be deemed to include references
               to such enactment as re-enacted, amended or extended;

          (e)  references to a "person" shall include any  individual,  company,
               corporation,   firm,  partnership,   joint  venture  association,
               organisation, institution, trust or agency, whether or not having
               a separate legal personality;

          (f)  references  to the "assets" of any person shall be construed as a
               reference to the whole or any part of its business,  undertaking,
               property,  shareholdings,  assets, rights and revenues (including
               any right to receive revenues and uncalled capital);

          (g)  references  to the one gender  shall  include  all  genders,  and
               references  to the  singular  shall  include  the plural and vice
               versa;

          (h)  headings are inserted for  convenience  only and shall be ignored
               in construing this Agreement;

          (i)  references  to  "including"  and  "in  particular"  shall  not be
               construed   restrictively  but  shall  be  construed  as  meaning
               "including, without prejudice to the generality of the foregoing"
               and "in  particular,  but without  prejudice to the generality of
               the foregoing" respectively;

          (j)  references  to "law" shall be construed as including  any present
               or future  common law,  statute,  statutory  instrument,  treaty,
               regulation,  directive, order, decree, other legislative measure,
               code, circular,  notice,  demand, or injunction,  including those
               with which it is customary  for persons to whom it is directed to
               comply, even if compliance is not mandatory;

          (k)  references to "writing" include telex and facsimile  transmission
               legibly   received,   except  in  relation  to  any  certificate,
               forecast,  report, notice,  resolution or other document which is
               expressly  required by this Agreement to be signed, and "written"
               has a corresponding meaning;

               (l)  any consent or approval  required from the Lead Bank, and/or
                    any of the Banks,  to any Borrower under this Agreement must
                    be  obtained  in writing  and shall be of no effect if it is
                    not in writing;

          (m)  a reference to time is to London time;

          (n)  the  value  of  assets  for  the  purpose  of the  definition  of
               "Borrowing Base" shall be determined as follows:

               (i)    the value of  Inventory  and Fixed  Assets  shall be their
                      value in the books of the relevant  Tobacco  Group Company
                      provided  such books are  maintained  in  accordance  with
                      GAAP;


<PAGE>



               (ii) the value of Receivables,  Intercompany Loans,  Intercompany
                    Payables,  Supplier  Advances  and Trade  Payables  shall be
                    their principal face value exclusive of any interest; and


          (o)  a  reference  to the  approval  of the  Steering  Committee  is a
               reference  to an  approval  by at  least  four out of five of the
               members of the Steering Committee.


<PAGE>



                                     PART II


                     FACILITIES, LETTERS OF CREDIT AND BILLS


2.   FACILITIES

2.1  Facilities:

     (a)  Subject to the terms of this  Agreement,  each of the Banks  agrees to
          make available its Facilities up to the amount of its Commitment.  The
          Banks may if they wish make such Facilities  available under the terms
          of a facility letter substantially in the form set out in Schedule XV.

     (b)  No Bank shall be required to permit a  utilisation  of its  Facilities
          where an event  set out in  Clause  17.1(a)-(t)  (ignoring  any  grace
          periods or notice requirements therein) has occurred and is continuing
          or would result from such  utilisation.  If at any time  following the
          delivery  to the  International  Security  Agent of a  Borrowing  Base
          Certificate   pursuant   to  clause   15.2   (Borrowing   Base),   the
          International Security Agent notifies SCTC Inc. that:

          (i)  the  aggregate Net  Borrowings  exceed the level of the Borrowing
               Base demonstrated in such Borrowing Base Certificate; or

          (ii) the aggregate Outstandings exceed all aggregate Commitments; or

          (iii)SCTC Inc's Net  Borrowings  exceed SCTC Inc's  Borrowing  Base as
               demonstrated in such Borrowing Base Certificate.

               SCTC Inc. shall,  within two Business Days, prepay or procure the
               prepayment of an amount of the  Outstandings  necessary to ensure
               that the relevant defect set out above is remedied.

     (c)  All Facilities shall be available  within the limits  applicable under
          the Borrowers  Borrowing Base and in the case of SCTC Inc.  within the
          limits  applicable  under SCTC Inc.'s Borrowing Base to all Borrowers.
          For the  avoidance  of doubt  neither  TCLTC  nor SCTC  (UK)  shall be
          jointly  liable  with  SCTC  Inc.  to  the  Banks  in  respect  of any
          Borrowings of SCTC Inc. under the Facilities.

     (d)  The  obligations  of the Banks are  several and no Bank shall have any
          liability  for  another  Bank  except  as  expressly  stated  in  this
          Agreement.

3.   LETTERS OF CREDIT

3.1  Letters of Credit:

     (a)  Where a  Borrower  wishes to utilise a Facility  for the  issuance  of
          Letters of Credit,  the Borrower  shall deliver to such Bank, no later
          than noon on the Business Day before the proposed  issue of the Letter
          of  Credit  (or such  later  time as such  Borrower  and such Bank may
          agree) a written request stating:

          (i)  the beneficiary of the proposed Letter of Credit;

          (ii) the expiry date thereof;


<PAGE>



          (iii)instructions  as to the form of such  Letter  of  Credit  and the
               manner in which is it to be issued  (which must be  acceptable to
               such Bank).


     (b)  A request for the issue of a Letter of Credit shall be irrevocable.

     (c)  Where a Bank (the  "Issuing  Bank") agrees to issue a Letter of Credit
          under its Facilities and this Agreement, each of the Borrowers jointly
          and severally:-


          (i)  agrees to keep the Issuing Bank  indemnified from and against all
               actions,  proceedings,  liabilities,  claims,  demands,  damages,
               costs and  expenses in relation to or arising out of or appearing
               to such  Issuing  Bank to arise  out of a Letter of Credit or any
               indemnity  given by the Issuing  Bank in relation  thereto and to
               pay to such Issuing Bank on demand all payments,  losses,  costs,
               charges,  damages  and  expenses  suffered  or  incurred  by such
               Issuing  Bank in  consequence  thereof or  arising in  connection
               therewith,  whether  directly  or  indirectly  other  than  those
               incurred,  suffered or sustained as a direct  result of the gross
               negligence or wilful default misconduct of such Issuing Bank;

          (ii) irrevocably  authorises  the Issuing Bank to debit to any account
               of the Borrowers with the Issuing Bank all such payments, losses,
               costs, charges,  damages and expenses and agrees that the Issuing
               Bank shall be entitled at any time  without  notice to or consent
               from any  Borrower  to apply or  transfer  any  money at any time
               standing to the credit of any account of such  Borrower with such
               Issuing  Bank in part payment or payment of such sums of money as
               may now or  hereafter  from  time to  time  be or  become  due or
               arising from such Borrower pursuant to paragraph (i) above;

          (iii)irrevocably  authorises  and directs the Issuing Bank to make any
               payments  and  comply  with any  demands  which may be claimed or
               appear  to the  Issuing  Bank  to be  claimed  or made  under  or
               pursuant to such Letter of Credit or any  indemnity  given by the
               Issuing  Bank in relation  thereto  without any  reference  to or
               further  authority  from any Borrower and agrees that any payment
               made by the Issuing Bank in  accordance  with or appearing to the
               Issuing Bank to be in accordance with the Letter of Credit and/or
               any  indemnities of the Issuing Bank in respect  thereof shall be
               binding upon each of the  Borrowers  and shall be accepted by the
               Borrowers as conclusive evidence that the Issuing Bank was liable
               to make such  payment or comply  with such demand and the Issuing
               Bank may at any time  determine or procure the  determination  of
               any Letter of Credit and/or any of the indemnities of the Issuing
               Bank in respect thereof;

          (iv) agrees that the  liability of the  Borrowers  under this Clause 3
               shall  apply  also to any  extension  or  renewal  of a Letter of
               Credit  (whether  in the same  terms  or  otherwise  and  whether
               arising by  agreement,  operation of law or otherwise  howsoever)
               and the  liabilities  and obligations of the Borrowers under this
               Clause 3 shall  continue  in  respect of the  relevant  Letter of
               Credit as so extended or renewed;



<PAGE>



                    (v)  agrees to provide to the Issuing Bank on demand made at
                         any time following the  declaration by the Lead Bank of
                         an Event of Default in  accordance  with  Clause  17.1,
                         cash  cover for all  liabilities  of the  Issuing  Bank
                         under or  pursuant  to each  Letter of Credit or any of
                         their Outstandings at the time of such demand;


                    (vi) agrees that  nothing in this Clause 3 shall impose on a
                         Bank a duty to give or procure the giving of any Letter
                         of  Credit   requested  by  a  Borrower  if  such  Bank
                         certifies to the relevant Borrower that it is unlawful,
                         or that it would not be in such Bank's general business
                         interests to issue such a Letter of Credit;

                    (vii)agrees that the  indemnity  contained  in this Clause 3
                         shall be in addition to and not in substitution for any
                         other indemnity or  reimbursement  right which any Bank
                         may hold as at the date of this Agreement;

          (d)  From  time to time a Bank may  agree to issue a Letter  of Credit
               which the Lead Bank has  designated by not less than 2 days prior
               notice to the Banks to be a "Joint  Liability  Letter of Credit".
               Where a Bank issues a Joint Liability Letter of Credit, such Bank
               shall have,  in addition to the benefit of the  indemnity set out
               in clause 3(c) above,  the benefit of the counter  guarantee from
               the Banks set out in clause 3(e) below.  Joint Liability  Letters
               of Credit shall be priced at the  applicable  Margin from time to
               time,  but the JTI  Letter  of  Credit  shall  be  priced  at the
               applicable  Margin less 1/4 per cent. per annum,  but shall never
               be priced at less than 1/2 per cent. per annum;

          (e)  Where a Bank (the "Joint Liability  Issuing Bank") issues a Joint
               Liability Letter of Credit each of the Banks agrees as follows:

               If any demand is made upon the Joint Liability Issuing Bank under
               the Joint Liability Letter of Credit,  each other Bank guarantees
               and undertakes  that it will pay to the Joint  Liability  Issuing
               Bank forthwith on demand by the Joint  Liability  Issuing Bank an
               amount equal to its Share (as defined  below) of the liability of
               the Joint  Liability  Issuing  Bank under  such  Joint  Liability
               Letter  of  Credit.  The  amount  of  any  actual  or  Contingent
               Liability  for or  payment  made by a Bank  under  its  guarantee
               contained  in this  clause 3(e) shall be deemed to  constitute  a
               utilisation  of such Bank's  Facility by the Borrowers in respect
               of which the Borrowers shall be jointly and severally  liable and
               the amount of each Bank's Facility available for drawing shall be
               reduced accordingly,  but such guarantee may not be for an amount
               which  would  allow  Outstandings  owed to a Bank to exceed  such
               Bank's Commitment.

               In this  clause  3(e) a  reference  to a Bank's  Share  means the
               proportion  which its  Commitments as at the date of issue of the
               Joint Liability  Letter of Credit,  bears to the aggregate of all
               the  Commitments of the Banks liable under this Sub-Clause (e) on
               such date.

          (f)  No Bank shall be  entitled  to refuse to  participate  in a Joint
               Liability  Letter of Credit  except  where the issue of the Joint
               Liability  Letter of Credit would  infringe any general policy of
               such Bank and such Bank has confirmed that fact in writing to the
               Lead Bank and each of the Banks no later  than 24 hours  prior to
               the  issue  of such  Joint  Liability  Letter  of  Credit  giving
               reasons.



<PAGE>



          (g)  If a Bank is required by law to make a  withholding  or deduction
               from any  amount  payable  by it  pursuant  to clause  3(e),  the
               relevant  sum  payable  by such Bank  shall be  increased  to the
               extent  necessary  to  ensure  that,  after  the  making  of such
               deduction  or  withholding,  the Joint  Liability  Issuing  Banks
               receives  and is entitled  to retain  (free of any  liability  in
               respect of any such deduction or  withholding) a net sum equal to
               the amount  which it would have  received  and so retained had no
               such deduction been made or required to be made.


          (h)  If a Bank makes a payment in respect of a Joint Liability  Letter
               of  Credit,  the  amount of such  payment  shall be  treated as a
               Borrowing under the Facilities.

3.2  The Banks may call for cash cover from the  Borrowers in respect of Letters
     of Credit  issued in  accordance  with Clause 3.1 and Bills  discounted  in
     accordance  with Clause 4 if it is  required to do so under any  regulation
     imposed by any central bank or other fiscal or monetary authority.

4.   BILLS

4.   Bills:

     (a)  If a Bank (an "Accepting  Bank") agrees,  pursuant to the terms of its
          Facility to accept a Bill, such acceptance  shall (unless such bill is
          discounted  without recourse to the Borrower) give rise to a debt from
          the Borrower by whom or on whose behalf such Bill was presented to the
          Accepting  Bank for  acceptance  equal to the face value of such Bill,
          which debt shall be due for payment on the  maturity of such Bill.  An
          Accepting Bank may at any time  following the  declaration by the Lead
          Bank of an Event of Default in accordance with Clause 17.1 demand full
          cash cover for the aggregate amount of all outstanding Bills.

     (b)  The  Borrowers  will provide an Accepting  Bank with such  information
          with  respect  to any Bill  proposed  to be  discounted  by it as such
          Accepting Bank may reasonably request.



<PAGE>





                                    PART III

                         MASTER FACILITIES ARRANGEMENTS

5.   MASTER FACILITIES ARRANGEMENTS

5.1  Application:

         (a)      The terms of the Facilities and the Facility  Agreements shall
                  be amended and supplemented to the extent  expressly  provided
                  in this Agreement.

         (b)      In the event of any  conflict  or  inconsistency  between  the
                  terms of this Agreement and the terms of any Finance Document,
                  the terms of this Agreement shall prevail.

         (c)      Save as varied or supplemented by this Agreement, the terms of
                  the  Facility  Agreements  and the  Facilities  and all of the
                  rights, benefits, commitments,  obligations and liabilities of
                  the Banks and each of the  Obligors  thereunder  or in respect
                  thereof  shall  continue in full force and effect and continue
                  to be regulated by the terms applicable thereto.

         (d)      Nothing contained in or done or omitted to be done pursuant to
                  this Agreement shall discharge, release or otherwise adversely
                  affect the  obligations of any person under any Encumbrance or
                  guarantee  granted or created by such person in relation to or
                  in  connection  with the  Facilities.  References  in any such
                  guarantee  or  Encumbrance  to any  Facility  Agreement  shall
                  (where the terms of such  guarantee or  Encumbrance so permit)
                  apply as if the references were to such document as varied and
                  supplemented by the terms of this Agreement.

5.2  Amendments:

         (a)      Save as expressly provided in this Agreement, no Finance Party
                  shall, or shall agree to, vary, amend, waive or supplement the
                  terms  of any of the  Facilities  or the  Facility  Agreements
                  (save with the prior  written  consent of the Lead Bank acting
                  with  Majority Bank  approval),  provided that a Finance Party
                  may  amend,  vary or  waive  in  writing  any  provision  of a
                  Facility or a Facility Agreement to the extent that:-

                  (i)       such  amendment,  waiver or variation is of a purely
                            technical, non-material and mechanical nature and is
                            not  inconsistent  with the terms of this  Agreement
                            and does not have the  effect of  conferring  on any
                            Finance  Party any  priority  over the  rights of or
                            otherwise  prejudicing  or adversely  affecting  any
                            other Finance Party; and

                  (ii)      the Lead Bank  receives  at least 7  Business  Days'
                            prior  written  notice of the full terms thereof and
                            has  not  objected  to  such  amendment,  waiver  or
                            variation in writing.

5.3  Survival of Provisions of Master  Facilities  Agreement:  Save as expressly
     provided in this  Agreement,  the provisions of this Agreement shall remain
     in full force and effect after the Master  Facilities  Termination Date for
     so long as any amount is due or owing or may be or become due or owing from
     any Obligor to any Finance Party under or pursuant to any Finance  Document
     and as  otherwise  required to give full effect to the  provisions  of this
     Agreement.



<PAGE>



5.4      Outstandings: For the purpose of calculating any amount in any currency
         as between a Borrower and a Bank, the  Outstandings and the Commitments
         shall  continue to be calculated  in  accordance  with the terms of the
         relevant  Facility  Agreements (save as provided in Clause 5.5 (Foreign
         Exchange) and Clause 28  (Calculation  of  Outstandings)).  Where it is
         necessary  for the  purpose of this  Agreement  to  calculate  any such
         amount,   then  the  Lead  Bank  shall  make  such  calculation   after
         consultation with the relevant Bank and the relevant Borrower and shall
         notify the relevant  Bank and the relevant  Borrower of such amount and
         such  notification  shall, save in the case of manifest error, be prima
         facie evidence for the purposes of this Agreement.


5.5  Foreign  Exchange:  In determining the amount of any Outstandings from time
     to time at any time prior to the Enforcement  Date,  each foreign  exchange
     transaction between a Bank and a Borrower shall be treated as follows:-

         (a)      with respect to any foreign exchange transaction whose initial
                  term is 210 days or less,  an amount equal to 10 per cent.  of
                  the gross amount  payable by the  Borrower  under such foreign
                  exchange   transaction  shall  be  deemed  to  be  the  amount
                  outstanding  under the  relevant  Facility  for the purpose of
                  calculating such Bank's Outstandings;

         (b)      with respect to any foreign exchange transaction whose initial
                  term is greater than 210 days, an amount equal to 20 per cent.
                  of the gross amount payable by the Borrower under such foreign
                  exchange   transaction  shall  be  deemed  to  be  the  amount
                  outstanding  under the  relevant  Facility  for the purpose of
                  calculating such Bank's Outstandings.




<PAGE>



                                     PART IV


                             INTEREST AND COMMISSION


6.   INTEREST AND COMMISSION

6.1  Interest Rate:

     (a)  The interest  rate per annum  payable by the  Borrowers on any advance
          (including any overdraft)  under any of the Facilities shall be a rate
          per annum equal to the aggregate of:-

          (i)  the Margin;

          (ii) the funding rate as provided in the relevant  Facility  Agreement
               or if no  rate  is  specified  or the  relevant  Facility  is not
               documented,  the  cost of funds  to such  Bank  (as  conclusively
               determined by it) in respect of such advance; and

          (iii)the  Additional  Costs Rate (if any)  applicable  to the relevant
               Facility;

     (b)  All other interest, commission, fees and charges payable under each of
          the  Facilities  shall be agreed  between each Bank and the  Borrowers
          and,  failing such agreement,  shall be the rates prevailing under the
          relevant Facility at the Relevant Date.

6.2  Changes in the Margin:

     (a)  On  receipt  by the  International  Security  Agent of the  management
          accounts  covering  the six  month  period  to each of 31 March and 31
          September in each year of the term of this  Agreement  (commencing  31
          March 1998), if the most recent accounts provided to the International
          Security   Agent   pursuant  to  clause  15.4   (Quarterly   Accounts)
          demonstrate  that the Margin may be  adjusted in the manner set out in
          the  definition  of "Margin",  then the Lead Bank shall notify the new
          Margin to the Banks and the  Borrowers  and the Margin  applicable  to
          each Facility shall be adjusted  accordingly with effect from the next
          rollover  date  for  that  Facility.   Provided  that,  following  the
          occurrence  of an Event of  Default  and for so long as such  Event of
          Default is  Continuing,  the Margin  shall be three per cent.  For the
          purposes of this sub-clause  adjustments of Margins in respect of each
          period  shall be  calculated  with  reference  to the  four  preceding
          consolidated  quarterly  accounts delivered pursuant to clause 15.4(e)
          (Quarterly Accounts) of the Tobacco Group on a rolling basis.

     (b)  Where the ratio of EBITDA to Interest  has been tested by reference to
          unaudited management accounts of the Tobacco Group, the ratio shall be
          retested  on  delivery  of the  audited  consolidated  accounts of the
          Tobacco Group to the  International  Security Agent in accordance with
          clause 15.5 (Accounts) and if such retesting indicates that the Margin
          charged  for any  Interest  Period  applicable  to an advance  under a
          Facility was less than the Margin which would have been charged on the
          basis of the  audited  accounts  of the Tobacco  Group,  a  correcting
          payment  shall be made by the  relevant  Borrower or  Borrowers to the
          Banks within 14 days of a notice from the International Security Agent
          to SCTC Inc. requiring a correcting payment to be made;

6.3  Commission  and Other  Charges:  Commissions,  guarantee  fees and  similar
     charges  applicable  to  Letters of Credit  and all other  utilisations  of
     Facilities  (except for advances)  shall be those agreed  between the Banks
     and the Borrowers from time to time;


<PAGE>



6.4  Interest  Periods:  The periods for which each  interest rate is calculated
     and by  reference  to which  interest  is to be paid,  interest  rests  and
     debiting  intervals  shall be determined by agreement  between the relevant
     Borrower(s) and the relevant Bank (and,  failing such  agreement,  shall in
     each case be 30  days),  provided  that the  maximum  duration  of any such
     period and of any advance under any Facility shall be 180 days and provided
     that accrued interest shall be paid  additionally on the Master  Facilities
     Termination Date.




6.5  Default Interest Rate:

     (a)  If any Borrower or SCC fails to pay any amount of principal,  interest
          or any other sum (each  referred  to in this Clause 6.5 as an "overdue
          sum")  when it is due under  this  Agreement  and/or  the terms of any
          Facility (as amended by this Agreement),  then the Borrower or SCC (as
          the case may be) shall pay interest on such overdue sum for the period
          from the due  date to the date of  actual  payment,  as well  after as
          before judgment.

     (b)  Such  interest  shall  be  calculated  and  payable  by  reference  to
          successive  interest periods which may be of variable  durations.  The
          first interest  period shall begin on the due date and each subsequent
          interest  period shall begin on the expiry of the previous  one.  Each
          such interest period shall be of such duration as the relevant Finance
          Party may at its absolute discretion select.

     (c)  The rate of interest applicable for each such interest period shall be
          the rate per annum (as determined by the relevant Finance Party) equal
          to the sum of (a) 3% and (b) the cost of funds to such  Finance  Party
          (as conclusively determined by it) in respect of such overdue sum.

     (d)  Any interest  payable under this Clause 6.5 which is not paid when due
          shall be deemed an overdue sum and itself bear interest accordingly.

6.6  Alternative  Interest Rates: If it becomes impossible for any Finance Party
     to determine  any  appropriate  interest  rate basis under the terms of any
     Finance Document (as varied or supplemented by this Agreement) then:-

     (a)  the relevant Finance Party shall promptly notify the Lead Bank and the
          Borrowers;

     (b)  the  rate of  interest  applicable  to the  sum in  respect  of  which
          interest  is to be  determined  from time to time  during  any  period
          applicable to it shall be the rate per annum which is the aggregate of
          (i) the Margin,  (ii) the Additional Costs Rate (if any) and (iii) the
          rate per annum determined by the relevant Finance Party to be the cost
          to it of funding such sum during such period from whatever  sources it
          may select.

6.7  Accrual:  Interest shall accrue from day to day and be payable on the basis
     of a 365 day  year (in the  case of  Sterling)  and a 360 day year or other
     customary term in the case of any other currency.



<PAGE>



6.8  Payment of Interest  etc:  Any  payments to be made by any  Borrower or SCC
     under or  pursuant  to any Finance  Document  shall be made in  immediately
     available  funds  before  11.00 a.m.  on the day in question to the account
     specified by the relevant Finance Party. Interest,  principal and all other
     amounts  payable to any Finance Party under this  Agreement or the terms of
     any Facility shall be paid by the relevant Borrower or SCC (as the case may
     be) directly to the relevant Finance Party on the date applicable under the
     terms of the relevant  Facility  Agreement or if no such date is specified,
     on the last  Business Day of each month  during the term of this  Agreement
     and additionally on the Master  Facilities  Termination  Date. Each payment
     shall be made in the  manner  provided  under  the  terms  of the  relevant
     Facility or  otherwise as agreed  between the relevant  Borrower or SCC (as
     the case may be) and the relevant Finance Party.


6.9  Indemnity:  Each  Borrower  and SCC shall on demand  indemnify  any Finance
     Party  against  any  funding or other  loss,  cost or expense or  liability
     sustained or incurred by such Finance  Party as a result of any sum payable
     by any Obligor under any Finance  Document not being paid when due; and the
     occurrence  and/or  continuance  of any other  Event of Default  and/or the
     declaration  of all the  amounts  outstanding  to be due and  payable  as a
     result thereof.



<PAGE>



                                     PART V


                            REPAYMENT AND PREPAYMENT


7.   REPAYMENT

7.   Final  Repayment:  The Borrowers shall repay all outstanding  amounts under
     (a) the Facilities and (b) each Finance Document and provide cash cover for
     all  unmatured  liabilities  of the Banks  under or pursuant to each of the
     Facilities in each case on or before the Final Repayment Date.

8.   PREPAYMENT

8.   Prepayment: Subject to clause 9.7(b):

     (a)  Subject to clause  8(b) and 8(c) all Net  Disposal  Proceeds  shall be
          applied within 180 days of receipt by any Borrower either;

          (i)  where such Net Disposal  Proceeds arise from the sale of an asset
               by an Obligor  (excluding  SCC),  in or towards the purchase of a
               replacement  asset  for  use  in the  business  of  such  Obligor
               (excluding SCC) where such replacement  asset will not be subject
               to any  Encumbrance  (except  in  favour  of the  Banks)  and the
               replacement  assets will have an aggregate  market value at least
               equal to the market value immediately  before the disposal of the
               assets to be replaced; or

          (ii) by way of prepayment of  Outstandings  to each Bank  individually
               under the Facilities pro rata pari passu.

     (b)  Any proceeds  payable to a Tobacco  Group Company on a disposal of the
          whole or any part of the shares or  business  of a Wool Group  Company
          shall be paid into an account of a Borrower with the Lead Bank but are
          not required to be applied as contemplated in clause 8(a) above.

         (c)      Net  Disposals  Proceeds not  exceeding  $2,000,000 in any one
                  Accounting Reference Period need not be applied as prepayments
                  nor used to purchase replacement assets.



<PAGE>



                                     PART VI


                                  NO DEDUCTIONS


9.       NO DEDUCTIONS

9.1      Payments:

         (a)      Each  payment to be made by any Borrower or SCC to any Finance
                  Party  shall  be  made  free  and  clear  of and  without  any
                  withholding, deduction or set-off whatsoever, including for or
                  on account of Taxes,  unless that Borrower or SCC (as the case
                  may be) is required  by law to make such a payment  subject to
                  deduction or withholding.

         (b)      If a  Borrower  or SCC is  required  by  law  to  make  such a
                  deduction or withholding from such a payment, the relevant sum
                  payable by such  Borrower or SCC (as the case may be) shall be
                  increased to the extent  necessary  to ensure that,  after the
                  making of such  deduction or  withholding,  the payee receives
                  and retains  (free from any  liability  in respect of any such
                  deduction or  withholding) a net sum equal to the sum which it
                  would have  received and so retained had no such  deduction or
                  withholding been made or required to be made.

9.2      Withholdings:

         Each Borrower and SCC shall:-

          (a)  pay the full amount of any deduction or withholding,  which it is
               required to make by law,  to the  relevant  authority  within the
               payment period stipulated by the relevant law; and

          (b)  promptly after any such payment,  deliver to the relevant Finance
               Party, an original (or certified copy) official receipt issued by
               the  relevant  authority  in respect of the  amount  withheld  or
               deducted  or,  if the  relevant  authority  does not  issue  such
               official  receipts,  such other evidence of payment of the amount
               withheld or deducted as is reasonably  acceptable to such Finance
               Party.

9.3      Indemnity:  Without  prejudice to the  provisions of Clause 9.1, if any
         Finance  Party is  required  by law to make any  payment  on account of
         Taxes (other than Tax on Overall Net Income of such  Finance  Party) on
         or in relation to any sum received or receivable by such Finance Party,
         or any  liability in respect of any such payment is imposed,  levied or
         assessed against such Finance Party,  the relevant  Borrower or SCC (as
         the case may be) shall, on demand by such Finance Party, indemnify such
         Finance  Party  against  such payment or  liability  together  with any
         interest, penalties and expenses payable or incurred in connection with
         it.

9.4      Tax Credits:



<PAGE>



         (a)      If a Finance Party in its sole  discretion  determines that it
                  has  received  the  benefit  of a Tax  credit or an  allowance
                  resulting  from a payment  which  includes an amount paid by a
                  Borrower  or SCC under  Clause 9.1 or Clause 9.3, it shall (to
                  the extent  that it can do so in its sole  discretion  without
                  prejudice to the  retention of such credit or allowance and to
                  the extent that it is lawful and not  contrary to any official
                  directive for it to do so) pay to the relevant Borrower or SCC
                  (as the case may be) such part of that  benefit  as is, in the
                  opinion of that Finance Party, attributable to the withholding
                  or deduction giving rise to payment of that additional amount,
                  provided that such Finance Party shall:-


               (i)  be the sole judge of the amount of any such benefit to be so
                    paid to the  relevant  Borrower  or SCC  and of the  date on
                    which it is received;

               (ii) have an  absolute  discretion  as to the order and manner in
                    which it  employs  or  claims  Tax  credits  and  allowances
                    available to it or otherwise arranges its Tax affairs; and

               (iii)not be obliged  to  disclose  to any person any  information
                    regarding its Tax affairs or Tax computations.

         (b)      Any payment by a Finance  Party under this Clause 9.4 shall be
                  conclusive  evidence  of the  amounts due to a Borrower or SCC
                  (as the case may be) under this Clause.

9.5      Readjustment:  If any Finance  Party makes any payment to a Borrower or
         SCC  pursuant  to  Clause  9.4  and  such  Finance  Party  subsequently
         determines,  in its  opinion,  that the credit,  relief,  remission  or
         repayment in respect of which such payment was made:-

         (a)      was not available to it; or

         (b)      has been withdrawn from it; or

         (c)      was unable to be used by it in full;

         the relevant  Borrower or SCC (as the case may be) shall reimburse such
         Finance Party for the amount  determined by such Finance Party,  in its
         sole  opinion,  to be  necessary  to  place  it in the  same  after-Tax
         position in which it would have been if such credit, relief,  remission
         or repayment  had been obtained and had been fully used and retained by
         such Finance Party.

9.6      UK Increased  Costs:  in relation to any Bank domiciled in or providing
         Facilities  from a branch,  Subsidiary  or  Affiliate  situated  in the
         European Union, if by reason of (i) the  introduction of, or any change
         in, any law,  treaty or  directive  (whether or not having the force of
         law  or  in  its  interpretation,   application  or  administration  or
         compliance with any Capital Adequacy  Requirement or other request from
         or requirement of any central bank (other than the  requirements of the
         Bank of  England  reflected  in the  Additional  Costs  Rate)  or other
         fiscal, monetary or other authority (but if such request or requirement
         does not have the force of law, only if compliance with such request or
         requirement  is in accordance  with the general  practice of persons to
         whom such  request or  requirements  is intended to apply) in each case
         after the date of this Agreement and, as a consequence thereof:

         (a)      a Finance Party (or any holding company of such Finance Party)
                  is unable to obtain the rate of return on its capital which it
                  would  have  been able to obtain  but for such  Finance  Party
                  having  entered into and/or  assumed  and/or  maintaining  its
                  Commitment and/or performing its obligations under the Finance
                  Documents;

         (b)      a Finance Party (or any holding company of such Finance Party)
                  incurs any greater cost,  increased cost or additional cost as
                  a result of its having  entered  into  and/or  performing  its
                  obligations  under this Agreement and/or the Facilities and/or
                  its assuming or  maintaining  a Commitment  under any Facility
                  and/or making any advances and/or  permitting any utilisations
                  under a Facility  and/or  accepting any Bills and/or  issuing,
                  participating  in or  making a  payment  under  any  Letter of
                  Credit pursuant to a Facility; or


<PAGE>



         (c)      there is any  increase in the cost to a Finance  Party (or any
                  holding   company  of  such  Finance   Party)  of  funding  or
                  maintaining  all or any of the advances  made or to be made by
                  such  Finance  Party  under its  Facilities  or in funding any
                  amount paid or to be paid under any Letter of Credit; or


         (d)      a Finance Party (or any holding company of such Finance Party)
                  becomes  liable to make any  payment  on  account  of Tax (not
                  being  a Tax  on  Overall  Net  Income)  on or  calculated  by
                  reference to the amount of the advances and/or drawings and/or
                  utilisations  made and/or the amount of any Bills  accepted or
                  any Letter of Credit  issued or to be issued under or pursuant
                  to any Finance  Document and/or any sum received or receivable
                  by it under this Agreement or under the Facilities;

         then the Borrowers  shall,  from time to time on demand by the relevant
         Finance  Party,  pay  to  that  Finance  Party  amounts  sufficient  to
         indemnify  that  Finance  Party (or to  enable  that  Finance  Party to
         indemnify its holding  company)  from and against,  as the case may be,
         such  reduction,  cost,  such increased cost or such liability (or such
         proportion  of such cost as is, in the opinion of such  Finance  Party,
         attributable to its obligations under any Finance  Document),  provided
         that:

          (i)  no Bank may make any such claim for  indemnity  in respect of any
               such reduction,  cost,  increased cost or liability to the extent
               that  additional  amounts  have are payable  under  Clause 9.1 or
               Clause 9.3 in respect of the same amount;

          (ii) no payment under this Clause 9.6 shall be made in relation to any
               matter compensated for by the application of the Additional Costs
               Rate;

9.7  Other Increased Costs: In respect of Banks other than those to which clause
     9.6 applies:

     (a)  in the event that (x) in the case of subclause (i) below,  any Bank or
          (y) in the case of  clauses  (ii) and (iii)  below any Bank shall have
          determined  (which  determination  made in  good  faith  shall  in the
          absence of manifest error be prima facie evidence):

          (i)  on any date on which  the cost of funds to any  Borrower,  as set
               out in clause  6.1(a)(ii) (the "Costs of Funds"),  is determined,
               that by  reason  of any  changes  arising  after the date of this
               Agreement  affecting  the  interbank  markets,  adequate and fair
               means do not exist for ascertaining the applicable Costs of Funds
               on the basis provided for in the relevant Finance Document; or

          (ii) at any time that a Bank shall incur increased costs or reductions
               in the amounts  received or receivable  hereunder with respect to
               any  Facility  because of (x) any  change  since the date of this
               Agreement in any applicable law,  governmental rule,  regulation,
               guideline, order or request (such as but without limitation (A) a
               change in the basis of  taxation  or  payment  to any Bank of the
               principal  of or  interest on any  Facility or any other  amounts
               payable  hereunder  (except for changes  with  respect to any tax
               imposed on or  determined  by  reference to the net income or net
               profits of such Bank pursuant to the laws of the  jurisdiction in
               which such Bank is  organised  or in which such Bank's  principal
               office or applicable lending office is located or any subdivision
               thereof  or  therein  or  (B)  a  change  in   official   reserve
               requirements but in all events excluding  reserves required under
               Regulation  D to the extent  included in the  computation  of the
               Costs of Funds  and/or  (y) other  circumstances  affecting  such
               interbank market or the position of such Bank in such market); or



<PAGE>



          (iii)at any time since the date of this  Agreement  that the making or
               continuation of any Facility has become unlawful by compliance by
               such Bank with any law, governmental rule, regulation,  guideline
               or order  (or would  conflict  with any law,  governmental  rule,
               regulation,  guideline,  order or request not having the force of
               law but with which such Bank  customarily  complies  even  though
               failure to comply  therewith would not be unlawful) or has become
               unpracticable  as a result of a contingency  occurring  after the
               date of this Agreement which materially and adversely affects the
               interbank market;


               then and in any such event such Bank shall  promptly  give notice
               (by telephone  confirming in writing) to the Borrowers and to the
               Lead Bank of such determination (which notice the Lead Bank shall
               promptly transmit to each of the other Banks).  Thereafter (x) in
               the case of sub clause (i) above  Facilities  to be  provided  by
               such Bank  shall no longer be  available  until  such time as the
               relevant Bank notifies the Borrowers and the other Banks that the
               circumstances  giving rise to such notice by the relevant Bank no
               longer  exist  notices of drawdown in respect of such  Facilities
               which have not yet been incurred (including by way of conversion)
               shall be deemed  rescinded by the  Borrowers,  (y) in the case of
               sub  clause  (ii) above the  Borrowers  agree to pay to such Bank
               upon written demand therefor such additional amounts (in the form
               of an  increased  rate of or a  different  method of  calculating
               interest or otherwise as such Bank in its sole  discretion  shall
               determine) as shall be required to compensate  such Bank for such
               increased  costs or reductions in amounts  received or receivable
               hereunder (a written notice as to the additional  amounts owed to
               such  Bank  showing  in  reasonable  detail  the  basis  for  the
               calculation  thereof  submitted to the  Borrowers by such Bank in
               good  faith  shall  in the  absence  of  manifest  error be final
               conclusive  and  binding  although  the  failure to give any such
               notice  shall  not  release  or  diminish  any of the  Borrowers'
               obligations  to pay  additional  amounts  pursuant to this clause
               upon the  subsequent  receipt of such notice) and (z) in the case
               of sub clause  (iii)  above the  Borrowers  shall take one of the
               actions  specified  in sub clause  9.7(b) as promptly as possible
               and in any event within the time period required by law.

     (b)  At any  time  that  any  Facility  is  affected  by the  circumstances
          described in sub clauses (a)(ii) or (iii) above the Borrowers may (and
          in the case of  Facilities  affected  pursuant to sub clause (a) (iii)
          the Borrowers shall) either (i) if the affected Facility is then being
          made  pursuant  to a  Borrowing  cancel and if  necessary  prepay such
          Borrowing by giving the Lead Bank telephone notice (confirmed promptly
          in writing)  thereof on the same date that the Borrowers were notified
          by a Bank  pursuant  to sub  clauses (a) (ii) or (iii)) or (ii) if the
          affected  Facility is then  outstanding  upon at least three  Business
          Days notice to the Lead Bank require the affected Bank to convert such
          Facility into a base rate loan: provided that if more than one Bank is
          affected at any time then all affected  Banks must be treated the same
          pursuant to this clause 9.7 (b)



<PAGE>



     (c)  If any Bank  shall  have  determined  that  after the date  hereof the
          adoption or  effectiveness  of any  applicable  law rule or regulation
          regarding  capital adequacy or any change therein or any change in the
          interpretation   or   administration   thereof  by  any   governmental
          authority,   central  bank  or  comparable  agency  charged  with  the
          interpretation or administration thereof or compliance by such Bank or
          any  corporation  controlling  such Bank with any request or directive
          regarding  capital adequacy (whether or not having the force of law of
          any such  authority,  central bank, or comparable  agency has or would
          have the effect of reducing  the rate of return on such Bank's or such
          other corporation's  capital or assets as a consequence of such Bank's
          Commitments or obligations  hereunder to a level below that which such
          Bank or such  other  corporation  could  have  achieved  but for  such
          adoption effectiveness change or compliance (taking into consideration
          such  Bank's or such  other  corporation's  policies  with  respect to
          capital  adequacy)  then from time to time upon written demand by such
          Bank (with a copy to the Lead Bank) accompanied by the notice referred
          to in the last sentence of this sub clause (c) the Borrower  shall pay
          to such Bank such  additional  amounts as will compensate such Bank or
          other  corporation for such reduction.  Each Bank upon  determining in
          good faith that any  additional  amounts  will be payable  pursuant to
          this sub clause (c) will give  prompt  written  notice  thereof to the
          Borrowers  (a copy of  which  shall  be sent by such  Bank to the Lead
          Bank) which notice shall set forth in  reasonable  detail the basis of
          the  calculation of such  additional  amounts  although the failure to
          give any such  notice  shall not release or  diminish  the  Borrowers'
          obligations to pay additional  amounts pursuant to this sub clause (c)
          upon the subsequent  receipt of such notice. A Bank's  reasonable good
          faith  determination  of compensation  owing under this sub clause (c)
          shall in the absence of manifest error be prima facie evidence.


9.8  Increased Costs Claims:

     (i)  A Finance Party  intending to make a claim pursuant to clauses 9.6 and
          9.7  shall  notify  the  Borrowers  and the Lead  Bank of the event by
          reason of which it is entitled to do so and shall set out the basis on
          which  the claim was  computed.  Nothing  herein  shall  require  such
          Finance Party to disclose any confidential information relating to the
          organisation of its affairs; and

     (ii) to the extent that any Bank gives notice of any increased  costs under
          clause 9.6 or 9.7 more than six weeks after such Bank becomes aware of
          the required payment,  such Bank may not be entitled to such increased
          costs for any period prior to the date being six weeks before the date
          it gives such notice to a Borrower.

10.  CHANGE IN LAW OR REGULATIONS

10.1 Change in Law or Regulations:  If, as the result of the enactment or making
     of or any change (after the date of this  Agreement) in any applicable law,
     or in its  interpretation  administration  or  application by any authority
     charged with its  administration,  or compliance with any requests (whether
     or not having the force of law,  but if not having the force of law,  being
     requests   with  which  banks   generally   (operating   in  the   relevant
     jurisdictions)  are  accustomed  to  comply)  of any  central  bank  or any
     governmental,   regulatory  or  comparable  authority,  any  Finance  Party
     demonstrates  to the reasonable  satisfaction of the Lead Bank (acting with
     Steering  Committee  approval)  that it has or  will  become  unlawful  (or
     contrary  to any such  directive  or  request)  for it to  maintain or give
     effect to its  obligations as  contemplated  by this  Agreement,  then such
     Finance Party (the "affected  party") shall so inform the Borrowers through
     the Lead Bank and (while such  circumstances  are continuing)  such Finance
     Party shall not  thereafter  be obliged to permit any  further  drawings or
     utilisations of its Facilities.

10.2 Notice to Repay:  If no agreement to the contrary  shall be reached  before
     the  expiry  of any  grace  period  allowed  by such  enactment,  change or
     request,  the affected party's Commitment under this Agreement shall reduce
     to zero,  and the relevant  Borrowers  shall repay to such  affected  party
     within 30 days or such earlier date (if any) as that  affected  party shall
     certify to be  necessary to comply with the relevant law all of the amounts
     due or owing to such Finance Party under or pursuant to this  Agreement and
     the relevant Finance Documents.



<PAGE>



11.  CANCELLATION


     Subject to clause  9.7(b) and subject to clause 14.7 (c), the Borrowers may
     inform  the Lead Bank who shall in turn  inform the Banks that they wish to
     cancel all or any part (being  $5,000,000 or more) of the Facilities at any
     time on a pro rata  basis in respect  of the  Commitments  of the Banks who
     indicate  to the Lead  Bank  that  they  wish to have  part or all of their
     Facilities cancelled, provided that:-

     (a)  no amount is on such date  outstanding  in  respect of the part of the
          Facility to be cancelled under or pursuant to any Finance Document;

     (b)  the  Borrowers  shall have given not less than 6 months' prior written
          notice during the period ending one calendar year from the date hereof
          and  thereafter 90 days prior  written  notice to the Lead Bank of the
          date of cancellation; and

     (c)  the  Borrowers  have  paid to the  Lead  Bank  sufficient  funds,  for
          distribution  amongst such of the Banks as have  indicated to the Lead
          Bank that they wish to have part or all of their Facilities  cancelled
          accordingly  pro  rata  to  their  respective  Commitments  as at  the
          Relevant Date.  Provided that the Borrowers have paid to the Lead Bank
          sufficient funds, they may cancel all of the Facilities made available
          by the  Banks  who have  indicated  to the Lead Bank that they wish to
          have their Facilities cancelled.

     (d)  if the amount of the  Facilities  which the Banks,  who indicate  that
          they wish to have cancelled part or all of their Facilities,  does not
          equal or exceed the amount the  Borrowers  wish to cancel,  the excess
          shall be applied in cancelling the Facilities of all Banks pro rata to
          their respective Commitments.

     (e)  if no Banks  indicate  to the Lead Bank that they wish to have part or
          all of their  Facilities  cancelled,  then the Facilities of all Banks
          shall be cancelled pro rata to their respective Commitments.


<PAGE>



                                    PART VII


                                    GUARANTEE



12.  GUARANTEE

12.1 Guarantee: SCC irrevocably and unconditionally:-

     (a)  as  principal  obligor,   guarantees  to  each  Finance  Party  prompt
          performance by each Obligor of all its payment  obligations under each
          Finance Document;

     (b)  undertakes to each Finance Party that whenever an Obligor does not pay
          any amount when due under or in connection with any Finance  Document,
          SCC  shall  forthwith  on  demand  by the  Lead  Bank  (acting  on the
          instructions  of the Majority Banks) pay that amount as if SCC instead
          of the relevant  Obligor were  expressed to be the principal  obligor;
          and

     (c)  indemnifies each Finance Party on demand against any loss or liability
          suffered by such Finance  Party if any  obligation  guaranteed  by SCC
          hereunder  is or becomes  unenforceable,  void,  voidable,  invalid or
          illegal  (whether or not such defect was known to such  Finance  Party
          prior to the date of this Agreement).

12.2 Continuing  Guarantee:  This  guarantee is a continuing  guarantee and will
     extend to the ultimate  balance of all sums  payable by the Obligors  under
     the  Finance  Documents  or any of  them,  regardless  of any  intermediate
     payment or  discharge  in whole or in part and for the  avoidance  of doubt
     will  continue   until  the   discharge  of  all  sums  hereby   guaranteed
     notwithstanding  any  termination  or  cancellation  of  all  or any of the
     Facilities  or  Facility   Agreements  or  the  occurrence  of  the  Master
     Facilities Termination Date.

12.3 Reinstatement:

     (a)  Where any  discharge  (whether  in  respect of the  obligations  of an
          Obligor or any security for those obligations or otherwise) is made in
          whole  or in part or any  arrangement  is  made  on the  faith  of any
          payment,  security  or other  disposition  which is avoided or must be
          restored on insolvency,  liquidation or otherwise without  limitation,
          the  liability  of SCC under this  Clause 12 shall  continue as if the
          discharge or arrangement had not occurred.

     (b)  A Finance Party may concede or compromise  any claim that any payment,
          security or other disposition is liable to avoidance or restoration.

12.4 Waiver of Defences: The obligations of SCC under this Clause 12 will not be
     affected  by any  act,  omission,  matter  or  thing  which,  but for  this
     provision,  would reduce, release or prejudice any of its obligations under
     this Clause 12 or prejudice or diminish  those  obligations  in whole or in
     part, including (whether or not known to it or any Finance Party):-

     (a)  any time or waiver  granted to, or  composition  with,  any Obligor or
          other person;



<PAGE>



     (b)  the taking, variation, compromise, exchange, renewal or release of, or
          refusal or neglect to perfect, take up or enforce, any rights against,
          or  security  over  assets  of,  any  Obligor  or other  person or any
          non-presentation   or   non-observance   of  any  formality  or  other
          requirement in respect of any instrument or any failure to realise the
          full value of any security;


     (c)  any incapacity or lack of powers, authority or legal personality of or
          dissolution  or change in the  members  or status of an Obligor or any
          other person;

     (d)  any  unenforceability,  illegality or invalidity of any  obligation of
          any  person  under  any  Finance  Document  or any other  document  or
          security,  to the intent that the obligations of SCC under this Clause
          12  shall  remain  in  full  force  and  its  guarantee  be  construed
          accordingly,  as if  there  were no  unenforceability,  illegality  or
          invalidity;

     (e)  any  postponement,  discharge,  reduction,  non-provability  or  other
          similar  circumstance  affecting  any  obligation of any Obligor under
          this  Agreement   resulting  from  any   insolvency,   liquidation  or
          dissolution  proceedings or from any law,  regulation or order so that
          each such obligation  shall for the purposes of the obligations of SCC
          under  this  Clause  12  be   construed  as  if  there  were  no  such
          circumstance; and

     (f)  any  variation  or  departure  (however  fundamental)  of or from this
          Agreement,  and any such  variation or departure  shall,  whatever its
          nature, be binding upon SCC in all circumstances, notwithstanding that
          it may increase or otherwise affect the liability of SCC.

12.5 Immediate Recourse: SCC waives any right it may have of first requiring any
     Finance Party to proceed against or enforce any other rights or security or
     claim for  payment  from any  person  before  claiming  from SCC under this
     Clause 12.

12.6 Appropriations:  Until all  amounts  which may be or  become  payable  to a
     Finance Party under or in connection  with the Finance  Documents have been
     irrevocably paid in full, such Finance Party may:-

     (a)  refrain from applying or enforcing any other money, security or rights
          held or received by any such Finance Party (or any trustee or agent on
          its behalf) in respect of those amounts, or apply and enforce the same
          in such manner and order as it sees fit (whether against those amounts
          or  otherwise)  and SCC shall not be  entitled  to the  benefit of the
          same; and

     (b)  hold in a suspense account (with full set-off against interest payable
          under the Finance Documents) any money received from SCC or on account
          of the liability of SCC under this Clause 12.

12.7 Non-Competition:  Subject to Clause 12.3 (Reinstatement), until all amounts
     which may be or become payable by the Obligors under or in connection  with
     the Finance  Documents have been  irrevocably  paid in full, SCC shall not,
     after any  failure  by any  Obligor to pay any sum in  accordance  with the
     relevant Finance Documents or by virtue of any payment or performance by it
     under this Clause 12:-

     (a)  be  subrogated  to any rights,  security or moneys  held,  received or
          receivable  by any  Finance  Party  or be  entitled  to any  right  of
          contribution  or  indemnity  in respect of any  payment  made or money
          received on account of SCC's liability under this Clause 12;



<PAGE>



     (b)  claim,  rank, prove or vote as a creditor of any Obligor or its estate
          in competition with any Finance Party; or


     (c)  receive,  claim or have the benefit of any  payment,  distribution  or
          security  from or on account of any Obligor,  or exercise any right of
          set-off as against any Obligor.

          SCC shall hold in trust for and  forthwith pay or transfer to the Lead
          Bank, any payment or distribution  or benefit of security  received by
          it contrary to this Clause 12.7.

12.8 Additional Security: This guarantee is in addition to and is not in any way
     prejudiced  by any other  security  now or  hereafter  held by the  Finance
     Parties or any of them or by any agent or trustee for their benefit.

12.9 Currency:  The obligation of SCC hereunder  shall be to make payment in the
     same currency as that in which the principal obligation in respect of which
     such payment is being made was incurred. If:-

     (a)  for any reason any amount  payable by SCC under this Agreement is paid
          to or is  recovered  by a Finance  Party  (in  whatever  manner)  in a
          currency  (the  "payment  currency")  other  than  that in which it is
          required  to  be  paid  under  the  relevant   Finance  Document  (the
          "contractual currency"); and

     (b)  the payment  made in the  payment  currency  to the  relevant  Finance
          Party,  when  converted at the  applicable  rate of exchange  into the
          contractual  currency,  is less than the relevant  unpaid amount under
          the relevant Finance Document;

          then SCC  shall,  as a  separate  and  independent  obligation,  fully
          indemnify such Finance Party against the amount of the  shortfall.  If
          the payment made in the payment  currency to such  Finance  Party when
          converted  at the  applicable  rate of exchange  into the  contractual
          currency exceeds the relevant unpaid amount under the relevant Finance
          Document,  then the relevant  Finance Party shall  promptly pay to SCC
          (or,  after the  Enforcement  Date,  each of the  Security  Agents) an
          amount  equal to the amount of such  excess.  For the purposes of this
          Clause 12.12 the expression "applicable rate of exchange" means a fair
          market rate at which the relevant  Finance  Party is able,  as soon as
          reasonably  practicable  after  receipt,  to purchase the  contractual
          currency  with the payment  currency,  taking  into  account any costs
          associated with the exchange.


<PAGE>



                                    PART VIII


                         REPRESENTATIONS AND WARRANTIES


13.  REPRESENTATIONS AND WARRANTIES

13.1 Representations  and Warranties:  each of SCC and the Borrowers jointly and
     severally represents and warrants to each of the Finance Parties that:-

     (a)  Status:  each Obligor is a limited company duly incorporated,  validly
          existing and registered  under the  jurisdiction of its  incorporation
          and has the power and all necessary  governmental  and other consents,
          approvals,  licences and authorities under any applicable jurisdiction
          to own its assets and carry on its business;

     (b)  Powers:  each Obligor is empowered to enter into,  exercise its rights
          and perform and comply with its  obligations  contained in the Finance
          Documents  to which it is a party and no  limits on the  powers of any
          Obligor  will be  exceeded  as a result  of the  borrowings,  grant of
          security  and giving of  guarantees  or the taking of any other action
          contemplated by any Finance Document;

     (c)  Due Authorisation:

          (i)  all  actions,   conditions  and  things  required  to  be  taken,
               fulfilled  or done  (including  the  obtaining  of any  necessary
               consents) in order to enable each Obligor lawfully to enter into,
               exercise  its rights and perform and comply with its  obligations
               contained in any Finance  Document to which it is a party, and to
               ensure that those obligations are legally binding and enforceable
               (subject  to  all   necessary   registrations   of  the  Security
               Documents) have been taken, fulfilled or done; and

          (ii) the requisite  resolutions of each  Obligor's  board of directors
               have  been  duly  and  properly  passed  at a duly  convened  and
               constituted  meeting at which all  statutory  and other  relevant
               formalities   were   observed  to  authorise  its  execution  and
               performance of the Finance  Documents to which it is a party (or,
               in the case  only of SCC,  the  requisite  resolutions  have been
               passed by (aa) a written  resolution  of each of the directors of
               SCC in  accordance  with the by-laws of SCC or (bb) the Executive
               Committee of the board of directors of SCC in accordance with the
               authorities  granted  to  such  Executive   Committee)  and  such
               resolutions are in full force and effect and have not been varied
               or rescinded;

     (d)  Obligations  Binding:  each Finance  Document and the Borrowings under
          the  Facilities,  the grant of security  and the giving of  guarantees
          contemplated by this Agreement constitute the legal, valid and binding
          obligations of each Obligor  enforceable in accordance with its terms,
          except as such enforceability may be limited by:-

          (i)  application of equitable principles;

          (ii) the  non-availability  of  the  equitable  remedies  of  specific
               performance or injunctive relief; and

          (iii)administration,  bankruptcy,  insolvency, liquidation and similar
               laws generally affecting the rights of creditors;


<PAGE>





     (e)  Non-Contravention:  neither the  execution  or delivery of any Finance
          Document nor any  borrowing  under the  Facilities by any Borrower nor
          the  grant of any  security  or the  giving of any  guarantees  by any
          Borrower or any other Obligor nor the carrying out of any  transaction
          or the exercise of any rights or the  performance  of any  obligations
          contemplated by any Finance Document by any Obligor will result in:-

          (i)  any violation of any law to which such persons are subject; or

          (ii) any breach of any of the  memorandum  and articles of association
               or  other  constitutional  documents  of  any  Obligor  or of any
               borrowing limits contained in any such document; or

          (iii)any  breach  of any deed,  agreement  or  obligation  of any such
               persons made with or owed to any other person (including, without
               limitation, any negative pledge or similar restriction); or

          (iv) any breach of any limits on any powers of any Obligor;

     (f)  Encumbrances:

          (i)  there  are no  Encumbrances  affecting  any of the  assets of the
               Borrowers or the assets of any Tobacco Group  Company  except for
               Permitted Encumbrances; and

          (ii) neither the execution of any Finance  Document by any Obligor nor
               the performance by or exercise of any rights of any Obligor under
               the  terms  of any  such  Finance  Document  will  result  in the
               existence  of,  or  oblige  any  Group  Company  to  create,  any
               Encumbrance in favour of any person  (except the Finance  Parties
               or as  contemplated by this Agreement) over the whole or any part
               of the undertaking or assets (present or future) of such Obligor;

     (g)  Invoice  Discounting:  except for the  arrangements  between TCLTC and
          Trans-Continental  Leaf  Tobacco  (Jersey)  Limited in force as at the
          Relevant Date, there are no invoice discounting,  factoring or similar
          goods or  receivables  sale or  assignment  arrangements  in existence
          relating to the  receivables of any Borrower except for those detailed
          in Schedule XIII;

     (h)  No Default:  no event listed in Clause  17.1(a)-(t) has occurred which
          is Continuing;

          (i)  No Litigation: no Tobacco Group Company is involved in or engaged
               in any  litigation,  arbitration or other legal  proceedings of a
               litigious  nature  (whether as plaintiff or defendant and whether
               civil, criminal or administrative)  (other than the litigation in
               respect of Transcatab SpA previously  disclosed to the Lead Bank)
               which,  (alone  or  taken  together  with any  other  litigation,
               arbitration or legal proceedings) if adversely determined,  would
               be likely to result in a liability (including costs) to it of the
               greater of (i)  $2,000,000  (or its foreign  currency  equivalent
               from time to time) and (ii) 3 per cent.  of the net worth of such
               Tobacco Group Company (as shown in its latest available quarterly
               accounts   delivered   pursuant  to  Clause  15.4(e)   (Quarterly
               Accounts)) nor are there any circumstances likely to give rise to
               any such  litigation,  arbitration or proceedings,  provided that
               this  representation  shall  not  apply to any  such  litigation,
               arbitration  or  proceedings  where  the  whole of the  actual or
               potential  liability of the  relevant  Tobacco  Group  Company in
               respect of such  litigation,  arbitration or proceedings is fully
               covered by insurance;


<PAGE>





     (j)  No Material  Adverse  Change:  since the last  Accounts Date there has
          been no Material Adverse Change in the financial or trading  condition
          of any Borrower or Obligor or of the Tobacco Group taken as a whole;

     (k)  Plans and  Reports:  each  Budget and each Cash Flow  Forecast  fairly
          presents  the business and  financial  condition of the Tobacco  Group
          when they are submitted and, in particular:-

          (i)  all  statements  of fact  relating to the  Tobacco  Group and its
               business  contained in those  documents were true and accurate in
               all material respects at the date when such documents were issued
               and no events have  occurred  since such date which make any such
               statements  of fact untrue or  inaccurate  or  misleading  in any
               material  respect,  or mean that they  have in any  material  way
               ceased to represent  the current  position as at the date of this
               Agreement;

          (ii) all statements of opinion, intention and expectation expressed in
               those documents were honestly made after careful consideration;

          (iii)the   assumptions   upon  which  the  forecasts  and  projections
               contained in those  documents  are based were and are  reasonable
               and made in good faith after careful consideration;

          (iv) the forecasts and  projections  contained in those documents were
               and are reasonable and consistent with the  assumptions  referred
               to in (iii) above; and

          (v)  none of the Borrowers is aware of any facts or matters not stated
               in those  documents  the omission or failure to take into account
               of  which  makes  any  factual   statements   contained  in  them
               misleading  or  unlikely  to be  fulfilled  in  each  case in any
               material respect;

               (l)  Audited Accounts: the Original Accounts of the Greater Group
                    and the SCTC Inc.  Group and the  Tobacco  Group and  (where
                    these  representations and warranties are repeated) the most
                    recent Accounts,  including the notes to them,  delivered to
                    the International  Security Agent pursuant to Clause 15.5(a)
                    (Audited  Accounts) or 15.5(b)  (Tobacco Group  Accounts) or
                    Clause 15.5  (Quarterly  Accounts) give a true and fair view
                    of the  state  of  affairs  and  financial  position  of the
                    companies  to which they relate as at the date to which they
                    were  made up.  In  particular,  the  Accounts  either  make
                    adequate  provision  for or, as  appropriate,  disclose  all
                    other material  liabilities,  whether actual,  contingent or
                    disputed  (including  financial lease  commitments,  pension
                    liabilities and liabilities to Taxation) of the companies to
                    which they relate and all material  capital  commitments  of
                    the  companies  to which they relate as at such date in each
                    case in accordance  with, and if and to the extent  required
                    by, generally accepted  accounting  principles in the United
                    States (in the case of the consolidated financial statements
                    of the Greater  Group,  the  Tobacco  Group or the SCTC Inc.
                    Group) or the  jurisdiction of incorporation of the relevant
                    Borrower  (in the case of any  other  financial  statements)
                    consistently applied;

     (m)  Non-Disclosure:  the Borrowers have not failed to disclose to the Lead
          Bank any facts or  circumstances  which are within their knowledge and
          which could reasonably be expected to have a significant effect upon:-



<PAGE>



     (i)  any  Borrower's  ability to pay or repay any  Indebtedness  under this
          Agreement or any Obligor's  ability to comply with the terms of any of
          the Finance Documents; or


          (ii) the validity or enforceability of any of the Finance Documents;

     (n)  Minority Interests: except in respect of interests:-

          (i)  held by the Finance Parties pursuant to the Security Documents;

          (ii) detailed in the group structure set out in Schedule VII; or

          (iii) of the Bondholders in the shares of SCTC Inc;

               no person has any  interest  in the issued  share  capital of any
               Tobacco Group Company  (including an interest  derived through an
               option over or other agreement in relation to such shares);

     (o)  Group  Structure:  the structure of the Tobacco Group is as set out in
          Schedule VII;

     (p)  Tax  Liabilities:  no claims  are being or are  likely to be  assessed
          against any Tobacco  Group  Company with  respect to Taxes  which,  if
          adversely determined, would have (either individually or collectively)
          a Material Adverse Effect.  No Tobacco Group Company is overdue in the
          filing of any Tax returns required to be filed by it and to the extent
          the  same  have  been  finally  settled  with  the  relevant  taxation
          authority  each Tobacco  Group  Company has paid all Taxes shown to be
          due on such returns or on any  assessments  made against it unless any
          such failure would not have a Material Adverse Effect;

     (q)  Borrowings:  no Tobacco  Group Company has any  Borrowings  other than
          Permitted Borrowings;

     (r)  Joint  Ventures:  no  Tobacco  Group  Company  has  entered  into  any
          partnership,   joint  venture  or  other  agreement,   arrangement  or
          understanding  with any person outside the Tobacco Group for the joint
          development  of any  business or the sharing of any assets or revenues
          derived  from any  business  other than as  existing as at the date of
          this Agreement and set out in Schedule X. All transactions detailed in
          Schedule X are approved for the purposes of this  Agreement,  together
          with their associated Borrowings and Encumbrances detailed in Schedule
          XIII;

     (s)  Budget:  the Budget for the Tobacco  Group for the period from 1 April
          1997 to 31 March 1998  annexed as  Appendix  A to this  Agreement  was
          prepared on the basis of the information  available to SCTC Inc. after
          making diligent  enquiries and SCTC Inc. considers that as at the date
          of this  Agreement  such Budget is fair and  reasonable  based on that
          information;

     (t)  Intra-Group Indebtedness: details of the Indebtedness as at March 1997
          of:

          (i)  Tobacco Group  Companies to other Tobacco Group Companies or Wool
               Group Companies; and

          (ii) Wool Group Companies to Tobacco Group Companies,

               are set out in Schedule IX;


<PAGE>



     (u)  Environment:


          (i)  no Tobacco Group Company has generated  used treated or stored on
               or transported to or from any Mortgaged Property or any adjoining
               property any Hazardous  Materials  except in the normal course of
               that Tobacco  Group  Company's  business and in  compliance  with
               Environmental Laws;

          (ii) to the best  knowledge of each Tobacco  Group  Company  Hazardous
               Materials  have not at any time been  released  or disposed of on
               any  Mortgaged  Property or any property  adjoining any Mortgaged
               Property;

          (iii)to the best  knowledge of each Tobacco  Group Company each member
               of the Tobacco Group is an  compliance  in all material  respects
               with  all  applicable  Environmental  Laws  with  respect  to any
               Mortgaged  Property and the  requirements  of any permits  issued
               under such laws with respect to such property;

          (iv) to the best  knowledge of each Tobacco Group Company there are no
               past,  pending or  threatened  Environmental  Claims  against any
               Tobacco  Group  Company  or  any  Mortgaged  Property  which,  if
               adversely determined, would have a Material Adverse Effect;

          (v)  to the best  knowledge of each Tobacco Group Company there are no
               facts, circumstances,  conditions or occurrences on any Mortgaged
               Property or any property  adjoining any  Mortgaged  Property that
               could  reasonably  be  anticipated  (aa) to form the  basis of an
               Environmental  Claim  against  any Tobacco  Group  Company or any
               Mortgaged Property or assets which, if adversely determined would
               have a Material  Adverse Effect,  or (bb) to cause such Mortgaged
               Property  or  assets to be  subject  to any  restrictions  on the
               ownership,  occupancy,  use or  transferability of such Mortgaged
               Property under any Environmental Law;

          (vi) to the best knowledge of each Tobacco Group Company there are not
               now and  never  have  been  save in  respect  of the  underground
               storage   tanks   details  of  which  have  been   disclosed  any
               underground storage tanks located on any Mortgaged Property;

          (v)  ERISA:

               (i)  each Plan (and each  related  trust,  insurance  contract or
                    fund) is in substantial  compliance  with its terms and with
                    all applicable laws including, without limitation, ERISA and
                    the Code;

               (ii) each Plan (and each related  trust if any) which is intended
                    to be  qualified  under  Section  401(a)  of  the  Code  has
                    received a  determination  letter from the Internal  Revenue
                    Service  to the  effect  that it meets the  requirements  of
                    Sections  401(a)  and  501(a)  of the  Code or the Plan is a
                    standardised  prototype plan for which no such determination
                    letter is  required  under the Code and  whose  sponsor  has
                    received  a  favourable   determination  from  the  Internal
                    Revenue Service;

               (iii) no Reportable Event has occurred;

               (iv) no Plan  which  is a multi  employer  plan  (as  defined  in
                    Section   4001  (a)  (3)  of  ERISA)  is   insolvent  or  in
                    reorganization;


<PAGE>



               (v)  no Plan has an Unfunded Current Liability;


               (vi) no Plan  which  is  subject  to  Section  412 of the Code or
                    Section 302 of ERISA has an accumulated  funding  deficiency
                    or extension of any  amortization  period within the meaning
                    of Section 412 of the Code or Section 303 of 304 of ERISA;

               (vii)all  contributions  required  to be made with  respect  to a
                    Plan have been timely made;

               (viii) neither the Borrowers nor any  Subsidiary of the Borrowers
                    nor any ERISA Affiliate has incurred any material  liability
                    to or on account of a Plan pursuant to Section 409,  502(i),
                    502(1),  515, 4062, 4063, 4064, 4069, 4201, 4204, or 4212 of
                    ERISA  or  Section  401(a)(29),  4971 or 4975 of the Code or
                    expects  to  incur  any  such  liability  under  any  of the
                    foregoing sections with respect to any Plan;

               (ix) no condition  exists which  presents a material  risk to the
                    Borrowers or any  Subsidiary  of the  Borrowers or any ERISA
                    Affiliate  or  incurring a  liability  to or on account of a
                    Plan pursuant to the  foregoing  provisions of ERISA and the
                    Code;

               (x)  no proceedings  have been instituted to terminate or appoint
                    a trustee to  administer  any Plan which is subject to Title
                    IV of ERISA, no action, suit, hearing,  proceeding, audit or
                    investigation with respect to any Plan is pending,  expected
                    or threatened;

               (xi) no lien imposed under the Code or ERISA on the assets of the
                    Borrowers or any  Subsidiary  of the  Borrowers or any ERISA
                    Affiliate exist or is likely to arise on account of any Plan
                    and  the   Borrowers  and  their   Subsidiaries   may  cease
                    contributions  to or  terminate  any  employee  benefit plan
                    maintained  by any of them  without  incurring  any material
                    liability;

               (xii)each Foreign Pension Plan has been maintained in substantial
                    compliance  with its terms and with the  requirements of any
                    and all applicable  laws,  statutes,  regulations and orders
                    and all contributions  required to be made with respect to a
                    Foreign Contributions Plan have been timely made;

               (xiii) neither  the  Borrowers  nor any of its  Subsidiaries  has
                    incurred any obligation in connection  with the  termination
                    of or withdrawal  from any Foreign Pension Plan. The present
                    value of the  accrued  benefit  liabilities  (whether or not
                    vested) under each Foreign  Pension  Plan,  determined as of
                    the end of the Borrowers' most recently ended fiscal year on
                    the  basis  of  actuarial  assumptions,  each  of  which  is
                    reasonable,  did not exceed the current  value of the assets
                    of such  Foreign  Pension  Plan  allocable  to such  benefit
                    liabilities.

13.2 Repetition:  On each  occasion  on which a drawing or  utilisation  is made
     under the Facilities and on each Interest Payment Date the  representations
     and warranties set out above shall be deemed to be repeated by reference to
     the then existing circumstances on such date save for:

     (1)  the  representations  and  warranties in Clause  13.1(k) and (l) which
          shall  be  deemed  to be  repeated  on the  date  of  delivery  of the
          documents  specified  in such  sub-clauses,  by  reference to the then
          existing facts; and



<PAGE>



     (2)  the representations  and warranties in Clause 13.1(f),  (g), (i), (n),
          (o), (q), (r), (s), (t), (u) and (v).


13.3 Acknowledgement  by Borrowers and SCC:  Each Borrower and SCC  acknowledges
     that the Finance Parties are relying on the  representations and warranties
     and not on any other  information  contradictory to them or varying them of
     which the  Finance  Parties  or any of them or their  respective  agents or
     advisers may have actual or constructive knowledge.



<PAGE>



                                     PART IX


                                    COVENANTS


14.  GENERAL COVENANTS

     For so long as any liability  remains  outstanding or any amount is capable
     of being  drawn down under the  Finance  Documents,  SCC and the  Borrowers
     undertake that:-

14.1 Ranking of Liabilities: the liabilities (whether actual or contingent) of:-

     (a)  each of the Obligors (except SCC) under the Finance Documents to which
          it is a party shall at all times constitute the direct,  unconditional
          obligations  of such  Obligor and will rank in priority to all present
          and future Indebtedness issued, created, assumed or guaranteed by such
          Obligor (except for Indebtedness  which is entitled to priority solely
          by operation of law or by reason of a Permitted Encumbrance); and

     (b)  SCC  under  this   Agreement   shall  at  all  times   constitute  the
          unconditional  obligations  of SCC and shall  rank at least pari passu
          with all present and future liabilities  issued,  created,  assumed or
          guaranteed  by SCC  (except  for  Indebtedness  which is  entitled  to
          priority  solely  by  operation  of law or by  reason  of a  Permitted
          Encumbrance);

14.2 Restriction  on  Encumbrances:  neither  SCC nor any member of the  Tobacco
     Group  shall  create or agree to create or permit to arise or  subsist  any
     Encumbrance on its present or future undertaking,  property, assets, rights
     or revenues or any part of them (except Permitted Encumbrances);

14.3 Restriction on Borrowings:  neither SCC nor any member of the Tobacco Group
     shall incur or permit to subsist Borrowings, except Permitted Borrowings;

14.4 Capital Expenditure:  the aggregate Capital Expenditure of the Borrowers at
     any time shall not exceed the aggregate of:

     (a)  $40,000,000  which  shall be financed  by  Borrowings  pursuant to the
          Facilities;

     Plus an additional amount in each Accounting  Reference Period equal to the
     aggregate of:

     (b)  50% of Free Cash Flow calculated by reference to the audited financial
          statements of the Borrowers  for the  preceding  Accounting  Reference
          Period most  recently  delivered  pursuant  to clause 15.5  (Accounts)
          commencing  with the audited  financial  statements for the Accounting
          Reference Period ending 31 March 1998; and

     (c)  all Net Disposal  Proceeds  received by a Borrower in cash during that
          Accounting Reference Period.

          Any part of any unused  additional amount as calculated above which is
          not used for the  purposes  of  Capital  Expenditure  in the  relevant
          Accounting Reference Period may be carried forward and utilised in the
          following Account Reference Period.

14.5 Inter-Company Indebtedness:

     (a)  no Tobacco Group Company will give any Financial  Accommodation to any
          person except in accordance with this clause;


<PAGE>



     (b)  a Tobacco Group Company may give  Financial  Accommodation  to another
          Tobacco  Group Company  provided that the net Financial  Accommodation
          given to any single  Tobacco  Group  Company by any Borrower  does not
          exceed $40,000,000;


     (c)  Tobacco Group Companies may not give Financial Accommodation in excess
          of  $20,000,000  in  aggregate  to  the  Wool  Group  Companies.  Such
          Financial  Accommodation shall be deemed to be Capital Expenditure and
          shall be applied against the $40,000,000 limit in Clause 14.4(a);

     (d)  the loans  detailed  in  Schedule  IX may be  continued  provided  the
          aggregate principal Indebtedness under those loans is not increased;

14.6 Loans to Suppliers and Affiliates:

     (a)  for each period  referred to below,  the maximum  aggregate  Financial
          Accommodation  made to Suppliers and/or Affiliates by the Borrowers at
          any time shall not exceed the figure set out against that period:

          Period Aggregate Limit

          Date of this Agreement to $50,000,000 31 March 1998 1 April 1998 to 31
          March  1999   $60,000,000  1  April  1999  to  Final   Repayment  Date
          $70,000,000

     (b)  within the limit in (a) for each period referred to below, the maximum
          aggregate Financial  Accommodation made at any time by any Borrower to
          any single  Supplier or Affiliate  shall not exceed the figure set out
          against that period:

          Period Individual Limit

          Date of this Agreement to $20,000,000 31 March 1998 1 April 1998 to 31
          March  1999  $25,000,000  1 April  1999 to the  Final  Repayment  Date
          $27,500,000

14.7 Restriction on Disposals:

     (a)  No Borrower  shall  (except  with the prior  consent of the Lead Bank,
          acting on the  instructions  of the Majority  Banks)  sell,  transfer,
          lend, license,  lease, surrender or otherwise dispose of, whether by a
          single  transaction or a number of transactions and whether related or
          not,  the whole or any part of its  undertaking,  business  or assets,
          except for a Permitted Disposal;



<PAGE>



     (b)  Nothing in this  Clause 14.7 shall  enable any  Borrower to dispose of
          assets which are subject to a fixed charge unless the disposal of such
          assets shall be a Permitted  Disposal  (including any floating  charge
          which has  crystallised) in favour of either of the Security Agents on
          behalf of the Finance Parties  ("Fixed Charge  Assets")  without prior
          written consent from the Lead Bank (acting on the  instructions of the
          Majority  Banks).  The Lead Bank  (acting on the  instructions  of the
          Majority  Banks) shall have an absolute  discretion  to give or refuse
          any such consent or to grant a consent  subject to such  conditions as
          it may think fit,  without  giving  any reason for so doing.  However,
          unless an Event of  Default or  Potential  Event has  occurred  and is
          Continuing,  consent will  generally be given provided the proceeds of
          such disposal are applied in accordance  with Clause 8  (Prepayments);
          and


     (c)  Notwithstanding  sub-clauses (a) and (b) the Borrowers may not dispose
          of assets whose aggregate  market value exceeds  $2,000,000 in any one
          Accounting  Reference  Period nor  dispose of assets  whose  aggregate
          market  value  exceeds  $5,000,000  in  three  consecutive  Accounting
          Reference  Periods  without the prior written consent of the Lead Bank
          (acting on the instructions of the Majority  Banks),  such consent not
          to be  unreasonably  withheld if the proceeds of such disposals are to
          be used to purchase new assets.  For the  avoidance of doubt,  no such
          consent  shall be  required  if the  proceeds of sale are used to make
          cancellations in accordance with Clause 11.

14.8 Realisation  Account:  Following the occurrence of an Event of Default, the
     Borrowers  shall procure that all Net Disposal  Proceeds shall be paid into
     one or more  Realisation  Accounts with the Lead Bank or such other Bank as
     the  International  Security Agent may nominate and charged to the Security
     Agent for the benefit of the Finance Parties by way of fixed security;

14.9 Nature of Business: each Borrower shall carry on its business in the normal
     course in the manner carried on by it at the date of this Agreement and not
     make any material change to the nature or extent of any business carried on
     by it at the date of this Agreement;

14.10Restriction on Issue and Disposals of Shares:  SCC shall not dispose of any
     of its  legal or  beneficial  interest  in the share  capital  of SCTC Inc.
     without  the  prior  written  consent  of  the  Lead  Bank  (acting  on the
     instructions of the Majority Banks);

14.11Dividends and  Distributions:  the Borrowers shall deliver to the Lead Bank
     not less than ten  Business  Days prior to the date on which a dividend  or
     distribution is proposed to be paid by a Borrower,  a certificate  from two
     directors of the relevant  Borrower  addressed to the Lead Bank  containing
     calculations where necessary and to the effect that:-

     (a)  the  directors  are  not  aware,  after  reasonable  enquiry,  of  the
          occurrence  of a Potential  Event of Default or of an Event of Default
          which is Continuing;

     (b)  so far as the directors are aware, after reasonable  enquiry,  if such
          payment(s)  were to be made, no Event of Default or Potential Event of
          Default would occur;

     (c)  following  delivery  of  such  certificate,   the  Borrowers  may  pay
          dividends to SCTC Inc. (in the case of SCTC (UK) and TCLTC) or SCC (in
          the  case of SCTC  Inc.) in each  Accounting  Reference  Period  of an
          aggregate amount up to the higher of:

          (i)  such amount as is required to enable SCC to meet its  obligations
               to creditors; and

          (ii) during the period:

               (aa) of the first  calendar  year from the date hereof 60% of the
                    Borrower's Net Income  demonstrated by the audited  accounts
                    of the Borrowers;

               (bb) of the second  calendar year from the date hereof 70% of the
                    Borrower's Net Income  demonstrated by the audited  accounts
                    of the Borrowers; and

               (cc) of the third  calendar  year from the date hereof 80% of the
                    Borrower's Net Income  demonstrated by the audited  accounts
                    of the Borrowers.


<PAGE>



14.12Insurance:  the  Borrowers  shall  procure that each Tobacco  Group Company
     shall,  either  under  a  group  policy  maintained  by SCC or  separately,
     maintain  such policies of insurance in relation to its business and assets
     as a  reasonably  prudent  person  carrying  on a similar  business to that
     Tobacco Group Company might be expected to maintain over such assets and/or
     in  respect  of such  liabilities  (including  policies  to  cover  public,
     environmental,  terrorism and third party  liability) and from time to time
     upon request supply to each of the Security  Agents copies of all schedules
     of  insurance  relating  to such  insurance  policies  or  certificates  of
     insurance or such other  evidence of the  existence of such policies as may
     be acceptable to each of the Security Agents together with  confirmation of
     payment of premiums;


14.13Tobacco Inventory: the Borrowers shall forthwith, upon demand by a Security
     Agent in writing,  if a Security Agent (acting on the  instructions  of the
     Majority Banks) considers that it would improve the security to the Finance
     Parties,  transfer or procure the transfer any stocks of tobacco owned by a
     Tobacco  Group  Company  and not  held in an  Approved  Warehouse,  into an
     Approved Warehouse and deliver to such Security Agent such documentation in
     connection therewith (including,  without limitation,  warehouse warranties
     and executed pledges) as such Security Agent may require;

14.14Registrations:  the Borrowers will effect all necessary  registrations  and
     notices to perfect and protect the Security Documents from time to time and
     meet all  proper  costs in  connection  with  them save in  respect  of the
     registrations listed in Schedule XIII;

14.15 Consents and Filings: the Borrowers will ensure that:

     (i)  all  consents,   licences,   approvals  and  authorisations  shall  be
          obtained, complied with, renewed and maintained;

     (ii) all  filings,   recordings,   registrations  or  enrolments  shall  be
          effected; and

     (iii) any stamp, registration or similar tax shall be promptly paid;

               from,  with or to any  governmental  authorities  or  agencies or
               courts  to  the  extent  required  under  any  applicable  law or
               regulation to enable any Obligor to perform its obligations under
               any  Finance  Document  to which it is a party or to  ensure  the
               legality,   validity  and  enforceability  of  any  such  Finance
               Document save in respect of those listed in Schedule XIII;

14.16Maintenance of Licences:  the Borrowers  will take all necessary  action to
     protect and maintain (and take no action which could reasonably foreseeably
     imperil the  continuation  of) the licences and  statutory  authorisations,
     intellectual property,  trade names,  franchises and contracts (referred to
     in this Clause 14.16 as the  "Authorisations")  which are necessary for the
     conduct  of  the   business  of  each  of  the  Tobacco   Group   Companies
     substantially  as it is presently  conducted and to enable such business to
     be carried on substantially as at present;

14.17Maintenance  of Accounts:  All proceeds  from a  transaction  financed by a
     Bank  entered  into with or for the account of any  Borrower  shall be paid
     into an account designated by the Lead Bank;

14.18Access:  each  of the  Borrowers  and  SCC  will  permit  any  one or  more
     representatives  of the Lead Bank, the Security Agents or their  respective
     advisers to have access to the property,  assets,  books and records of SCC
     and any Tobacco Group Company and to inspect the same;



<PAGE>



14.19Substantial  Contracts:  the  Borrowers  will  notify  the Lead Bank if any
     contract  entered into by any Tobacco Group Company which represents 10 per
     cent. or more of the gross turnover of any Borrower or of the Tobacco Group
     is  terminated  for any reason (and for these  purposes  turnover  shall be
     calculated  by  reference  to the then  most  recent  audited  consolidated
     accounts of the Tobacco Group delivered to the Lead Bank);


14.20Derivatives:  no Tobacco Group Company will enter into any  transaction  in
     derivatives with any person, except:

     (a)  an interest rate or currency  swap, a forward rate agreement or a cap,
          floor or collar  transaction  entered into solely to hedge an existing
          or future  liability  permitted  under this  Agreement of such Tobacco
          Group Company in the ordinary  course of business (as conducted at the
          date of this Agreement); or

     (b)  a transaction  in  derivatives  entered into by SCTC Inc. to hedge its
          liability under the Bonds;

4.2  No  Payment:  so  far  as  reasonably   practicable,   no  bank,  financial
     institution or other lender will be paid or repaid from a drawing under any
     of the Facilities (other than in the ordinary course of business);

4.3  Compliance  with  Laws:  each  Tobacco  Group  Company  will  comply in all
     respects with all laws and  regulations  binding upon it in connection with
     the carrying on of its  business  where a failure so to comply would have a
     Material Adverse Effect;

4.4  Taxes:  each Tobacco Group Company will pay all Taxes due and payable by it
     on the  relevant  due date  where a failure so to pay would have a Material
     Adverse Effect;

4.5  Delivery  of Deeds:  each  Tobacco  Group  Company  will if,  and  whenever
     reasonably  required  by a  Security  Agent,  execute  and  deliver to such
     Security Agent or procure the execution and delivery to such Security Agent
     of all or any guarantees  and/or debentures and/or mortgages and/or charges
     and/or pledges and/or deeds, documents and certificates reasonably required
     by such Security Agent to guarantee or (as may be required) create security
     for all or any part of the money and liabilities  outstanding in respect of
     or  pursuant  to the  Facilities  and/or any of them  and/or to perfect and
     protect the Security  Documents or any of them. Any such guarantees  and/or
     security and other  documents  referred to in this Clause 14.24 shall be in
     such form as such Security Agent may reasonably require;

4.6  Security:  each  Tobacco  Group  Company  will give to each of the Security
     Agents such  assistance as it may  reasonably  require in  connection  with
     obtaining  security  over  stocks of  tobacco  or other  assets  (including
     receivables  and shares)  owned by any Tobacco  Group  Company from time to
     time and pay and discharge on demand all reasonable costs, charges and fees
     (including  legal  fees)  incurred  by  each  of  the  Security  Agents  in
     connection with such security and execute or cause to be executed in favour
     of each of the Security Agents such new or additional  guarantees,  charges
     and/or  other  security  over such of its  assets  as each of the  Security
     Agents  may from time to time  reasonably  specify  to secure all money and
     liabilities  for the time being due, owing or incurred to any Finance Party
     whether outstanding under any Finance Document or otherwise;

4.7  Write Offs: no Tobacco Group Company will make  provisions or write-offs in
     its  accounting  records  or  financial  statements,  except to the  extent
     required  to  comply  with the Act (or  other  applicable  legislation  for
     companies incorporated outside England) or good accounting practice;



<PAGE>



4.8  Pro Rata  Utilisation:  each  Borrower  will use  reasonable  endeavours to
     ensure that the  proportion  which the aggregate of the  Outstandings  from
     time to time  under the  Facilities  bears to the  aggregate  of the Banks'
     Commitments is the same as the proportion which each Bank's Outstandings at
     such time bear to such Bank's Commitment at such time;


4.9  Property:  each Tobacco Group Company will maintain all  Properties and all
     plant and  machinery  used in the business of any Tobacco  Group Company in
     good repair;

4.10 Report: each Tobacco Group Company will co-operate fully with any reporting
     accountants  or  consultants  (each  a  "Consultant")  from  time  to  time
     appointed at the request of the Lead Bank,  each of the Security Agents and
     the Steering Committee  following the occurrence of an Event of Default, to
     investigate  and report upon the  Tobacco  Group  and/or any Tobacco  Group
     Company  and  provide  on  demand  all  information  requested  by any such
     Consultant and pay the fees of any such Consultant promptly on demand;

4.11 Accounting  Reference Period: the Borrowers will ensure that the Accounting
     Reference  Period of each Tobacco  Group  Company shall end on 31 March and
     that no Tobacco Group Company shall alter its Accounting  Reference  Period
     so as to end other than on 31 March without the prior  approval of the Lead
     Bank and in giving any such  approval the Lead Bank may require such change
     in the financial covenants contained in Clause 16 (Financial  Covenants) as
     will reflect the change  notified to it),  and procure that the  Accounting
     Reference Date of each Tobacco Group Company shall be the same;

4.12 Auditors:  the Borrowers will not change the Auditors except with the prior
     approval of the Lead Bank in  writing.  The  Borrowers  may not request the
     consent  of the Lead  Bank to a change  in the  Auditors  unless  they have
     delivered to the Lead Bank  written  details of the reasons for the change.
     Provided  the Lead Bank has  received  such  details,  the Lead Bank  shall
     approve  the  appointment  of KPMG,  Coopers & Lybrand,  Price  Waterhouse,
     Arthur Andersen or Ernst & Young or their respective successor firms;

4.13 Limit on Term:  the Borrowers will ensure that the maximum period for which
     any advance or Bill is  outstanding  under any Facility is 180 days and the
     maximum  period  for  which any  foreign  exchange  transaction,  Letter of
     Credit,  indemnity or other  contingent  obligation  entered into by a Bank
     under a Facility is capable of being outstanding is 180 days;

4.14 Constitutive  Documents:  no Obligor will alter its memorandum and articles
     of association or other constitutive documents unless:

     (a)  it has previously  given not less than 14 days prior written notice to
          the Lead Bank of its intention so to do; and

     (b)  such alteration will not adversely  affect the position of any Finance
          Party;

4.15 Claims: SCC and the Borrowers will not during the period from the Effective
     Date of this  Agreement  until  the  Master  Facilities  Termination  Date,
     compromise,  discharge, postpone, release or subordinate claims or debts in
     excess of a maximum  aggregate amount of $2,000,000 or waive their right of
     action in connection  with any such claim or debt provided that this Clause
     14.34 shall not apply to:

     (a)  normal substitutions of tobacco in the ordinary course of the business
          of such Borrower as conducted at the date of this Agreement; or

     (b)  the  subordination  of the debt owed by Standard  Wool (UK) Limited to
          SCTC (UK) pursuant to a Subordination  Agreement dated on or about the
          date of this  Agreement  made  between SCTC (UK),  Standard  Wool (UK)
          Limited,  the Financial  Institutions  identified therein and National
          Westminster Bank Plc;


<PAGE>



     (c)  the loan of up to  (pound)1,700,000  to be made by SCC to Tentler & Co
          B.V. and subordinated pursuant to a Deed of Subordination  executed on
          or about the date of this Agreement and made between  Deutsche Bank de
          Bary N.V., MeesPierson N.V., SCC and Tentler & Co B.V.;


     (d)  the conversion of  inter-company  loans into equity as may be required
          from time to time by Italian  regulators  in relation to Transcatab in
          order to enable  continued  trading (not exceeding an aggregate amount
          of $10,000,000);

4.16 Announcement:  any  public  announcement  which  a  Tobacco  Group  Company
     proposes  to  make  which  directly  refers  to  the  Banks,  the  Steering
     Committee,  the Lead Bank, the Co-Lead Bank or the Security  Agents (or any
     of them) or the arrangements contained in any Finance Document, will not be
     made until the Lead Bank,  the  Security  Agents and any Bank named in such
     announcement have been given ten Business Days to consider the form of such
     announcement,  provided that the  restriction set out above shall not apply
     to an announcement  which is required to be made pursuant to any regulatory
     requirement  and which does not identify any Finance  Party by name and the
     Borrowers shall deliver a copy of each public announcement  contemplated by
     this Clause 14.35 to the Lead Bank;

4.17 Co-operation:  each Obligor shall co-operate with the Lead Bank and each of
     the Security Agents and provide each of them with such  information as they
     may reasonably require in order to carry out their functions hereunder;

4.18 Compliance:  the Borrowers shall not pay or discharge or satisfy by set-off
     or otherwise any amount of principal to any Bank or other  lender,  save as
     expressly contemplated in this Agreement;

4.19 Revaluation  of Assets:  no Tobacco  Group Company shall revalue any of its
     assets, except in accordance with applicable GAAP;

4.20 Book Debts: the Borrowers and TCLTC (Jersey) shall pay all amounts received
     by them in respect of book and other debts into the account(s) from time to
     time designated by the Lead Bank in writing.

4.21 Inventory:  the  aggregate  uncommitted  inventory of the Tobacco Group (as
     shown on the WAFS System) shall not exceed $65,000,000 at any time provided
     that the  Steering  Committee  may  authorise  an increase in this limit to
     $80,000,000.

4.22 Refinancing:  the  Borrowers  shall  not use the  Facilities  to  refinance
     Borrowings of any Tobacco Group Company from any lender which is not a Bank
     except in the course of a  transaction  for the sale or purchase of tobacco
     in the ordinary  course of business  where the facility  made  available by
     such lender is not permanently reduced as a result;

4.23 Environment:

     (a)  the Borrower  will comply with all  Environmental  Laws  applicable to
          ownership or use of the  Mortgaged  Property and will causes all other
          Tobacco Group  Companies  and all tenants and other persons  occupying
          the  Mortgaged  Property to comply with all such  Environmental  Laws,
          will  immediately  pay or  cause  to be paid all  costs  and  expenses
          incurred in such compliance and will keep or cause to be kept all such
          Properties  free  and  clear of any  liens  imposed  pursuant  to such
          Environmental Law;



<PAGE>



     (b)  no Tobacco Group Company will generate,  use, treat, store, release or
          dispose of or permit the generation, use, treatment,  storage, release
          or disposal of  Hazardous  materials  on any  Mortgaged  Property,  or
          transport or permit the  transportation  of Hazardous  Materials to or
          from any Mortgaged Property;


     (c)  On the  written  request of the Lead Bank at any time and from time to
          time  during the  existence  of this  Agreement,  the  Borrowers  will
          provide,  at the Borrowers'  sole cost and expense,  an  environmental
          site assessment report concerning any Mortgaged Property,  prepared by
          an environmental consulting firm approved by the Lead Bank, indicating
          the presence or absence of Hazardous  Materials and the potential cost
          of any removal or remedial  action in  connection  with any  Hazardous
          Materials on such property;

4.24 ERISA:  As soon as possible  and, in any event,  within ten (10) days after
     the Borrowers,  any Tobacco Group Company or any ERISA  Affiliate  knows or
     has reason to know of the occurrence of any of the following,  the relevant
     Borrower will deliver to the International  Security Agent a certificate of
     a director  setting  forth the full details as to such  occurrence  and the
     action,  if any,  that such Borrower or Tobacco Group Company or such ERISA
     Affiliate  is  required  or  proposes  to take,  together  with any notices
     required or  proposed  to be given to or filed with or by such  Borrower or
     Tobacco Group Company, the ERISA Affiliate, the PBGC, a Plan participant or
     the Plan administrator with respect thereto:

     (1)  that a Reportable  Event has occurred  (except to the extent that such
          Borrower or Tobacco  Group  Company has  previously  delivered  to the
          International  Security  Agent a  certificate  and  notices  (if  any)
          concerning such event pursuant to the next clause hereof):

     (2)  that a  contributing  sponsor  (as defined in Section  4001(a)(13)  of
          ERISA)  of a Plan  subject  to Title IV of  ERISA  is  subject  to the
          advance  reporting  requirement  of PBGC  Regulation  Section  4043.61
          (without  regard  to  subparagraph  (b)(1)  thereof),   and  an  event
          described in  subsection  .62,  .63, .64, .65, .66, .67 or .68 of PGBC
          Regulation  Section 4043 is reasonably  expected to occur with respect
          to such Plan within the following 30 days;

     (3)  that an accumulated funding deficiency,  within the meaning of Section
          412 of the Code or  Section  302 of  ERISA,  has been  incurred  or an
          application  may be or has been made for a waiver or  modification  of
          the  minimum  funding  standard  (including  any  required  instalment
          payments) or an extension of any amortization period under Section 412
          of the Code or Section 303 or 304 of ERISA with respect to a Plan;

     (4)  that any  contribution  required to be made with  respect to a Plan or
          Foreign Pension Plan has not been timely made;

     (5)  that a Plan has been or may be terminated, reorganised, partitioned or
          declared insolvent under Title IV of ERISA;

     (6)  that a Plan has an Unfunded Current Liability;

     (7)  that  proceedings  may be or have  been  instituted  to  terminate  or
          appoint a trustee to administer a Plan which is subject to Title IV of
          ERISA;

     (8)  that a proceeding has been instituted pursuant to Section 515 of ERISA
          to collect a delinquent contribution to a Plan;



<PAGE>



     (9)  that the  relevant  Borrower  or  Tobacco  Group  Company or any ERISA
          Affiliate  will or may incur any  liability  (including  any indirect,
          contingent,   or  secondary   liability)  to  or  on  account  of  the
          termination  of or withdrawal  from a Plan under  Section 4062,  4063,
          4064,  4069,  4201,  4204 or 4212 of ERISA or with  respect  to a Plan
          under  Section  409 or 502(i) or 502(1) of ERISA or with  respect to a
          group  health plan (as  defined in Section  607(1) of ERISA or Section
          4980B(g)(2|) of the Code) under Section 4980B of the Code;


     (10) or that  relevant  Borrower  or Tobacco  Group  Company  may incur any
          material  liability  pursuant to any employee welfare benefit plan (as
          defined in Section  3(1) of ERISA) that  provides  benefits to retired
          employees or other former employees (other than as required by Section
          601 of ERISA) or any Plan or any Foreign Pension Plan.

The Borrowers will deliver to the International Security Agent:

          (i)  a complete copy of the annual report (on Internal Revenue Service
               Form  5500-series)  of  each  Plan  (including,   to  the  extent
               required,  the related  financial  and actuarial  statements  and
               opinions  and  other   supporting   statements,   certifications,
               schedules and information) required to be filed with the Internal
               Revenue Service; and

 (11)     (ii) copies of any records,  documents or other  information that must
          be furnished to the PBGC with respect to any Plan  pursuant to Section
          4010 of ERISA. In addition to any certificates or notices delivered to
          the  International  Security Agent pursuant to this Clause,  copies of
          annual  reports  and  any  records,  documents  or  other  information
          required  to be  furnished  to the  PBGC,  and  any  material  notices
          received by the Borrowers and the Tobacco Group Companies or any ERISA
          Affiliate  with  respect to any Plan or Foreign  Pension Plan shall be
          delivered to the  International  Security Agent no later than ten (10)
          days  after  the date  such  annual  report  has been  filed  with the
          Internal Revenue Service or such records, documents and/or information
          has been furnished to the PBGC or such notice has been received by the
          Borrowers,  the Tobacco  Group  Companies or the ERISA  Affiliate,  as
          applicable.

4.25 Invoice  Discounting:  Save for the  arrangements  between  TCLTC and TCLTC
     (Jersey) no Borrower  shall enter into  invoice  discounting,  factoring or
     similar goods or receivables sales or assignment agreements relating to the
     receivables of such Borrower save for those detailed in Schedule XIII.

15.  INFORMATION COVENANTS

     For so long as any liability remains  outstanding or capable of being drawn
     down under the Finance Documents, the Borrowers shall:-

15.1 Borrowings:  provide to the Co-Lead Bank, the International  Security Agent
     and any other Bank which  requests it, within two Business Days of the last
     day in each week,  details of the  outstanding  Net  Borrowings  under this
     Agreement  of the  Borrowers  due to each  Bank as at the  last  day of the
     preceding week;

15.2 Borrowing Base: provide to the International  Security Agent monthly within
     30 days of the last day of each month,  or weekly within five Business Days
     of the  last  day of  that  week  for so long  as the  aggregate  Available
     Commitment under the Facilities is less than $10,000,000,  a Borrowing Base
     Certificate  setting out a calculation of the Borrowing Base as at the last
     day of  such  month  (or  week,  as  the  case  may  be)  in  the  form  or
     substantially the form of Schedule XII;



<PAGE>



15.3 Monthly Reports:  deliver to the International Security Agent in sufficient
     numbers for distribution to each of the Banks:


     (a)  Cash Flow Forecast: no later than the thirtieth day in each month with
          respect  to the  preceding  month,  a rolling  twelve  month Cash Flow
          Forecast  for the  Borrowers  in the  form or  substantially  the form
          attached as Appendix B for the Trading  Periods  next  following  such
          date and the  International  Security  Agent agrees to use  reasonable
          endeavours to distribute  such Cash Flow Forecast to the Banks as soon
          as reasonably practicable; and

     (b)  Receivables:  not later  than 30 days after the end of each  month,  a
          report on  receivables  of each of the  Borrowers  arising  during the
          month  preceding  such report  including  their  payment terms and due
          dates for payment and details of all debts owed by debtors  which were
          due for payment in that month and are over 90 days past their due date
          for  payment,  in a form  notified to SCTC Inc.  by the  International
          Security Agent;

15.4 Quarterly  Reports:   deliver  to  the  International   Security  Agent  in
     sufficient  numbers for distribution to each of the Banks not later than 45
     days after each Quarter Day:

     (a)  Receivables:  a report on receivables of each of the Borrowers arising
          during the quarter preceding such report including their payment terms
          and due dates for  payment  and  details  of all debts owed by debtors
          which were due for  payment in that  quarter and are over 90 days past
          their due date for  payment,  in a form  notified  to SCTC Inc. by the
          International Security Agent;

     (b)  Supplier and Affiliate  Advances:  for the  Borrowers,  details of all
          Supplier  Advances  and  Affiliate  Advances  provided or agreed to be
          provided by such Borrowers during the preceding quarter,  in each case
          in a form notified by the International Security Agent to SCTC Inc.;

     (c)  Additional Information:

          (i)  a  report  on the  amount  of  Capital  Expenditure  incurred  or
               committed  for  during  the  preceding  quarter  by  each  of the
               Borrowers,   together  with  the  aggregate   amount  of  Capital
               Expenditure  incurred by each of those  companies  as at the last
               day of the preceding quarter; and

          (ii) a report of all amounts payable and all  liabilities  incurred to
               trade  creditors by each of the  Borrowers  during the  preceding
               quarter;

               in each case in a form notified to SCTC Inc. by the International
               Security Agent;

     (d)  Bank Facility  Utilisation  Report:  details of all Borrowings of each
          Tobacco  Group  Company as at the end of the Trading  Period ending on
          such Quarter Date in such detail as the  International  Security Agent
          may require;

     (e)  Quarterly Accounts:  with respect to the Trading Period preceding such
          Quarter Date:

          (i)  individual  profit and loss accounts and balance  sheets for each
               of the Borrowers;

          (ii) a consolidated  profit and loss account and balance sheet for the
               Tobacco Group; and


<PAGE>



          (iii)a consolidated  profit and loss account and balance sheet for the
               Greater Group;


          (iv) accompanied  by a  compliance  certificate  signed by the Finance
               Director  of SCTC Inc.  indicating  whether or not the  financial
               covenants  contained in Clause 16.1 have been  complied  with and
               containing   calculations   demonstrating  in  reasonable  detail
               compliance (or otherwise) with such covenants.

15.5 Accounts: deliver to all the Banks:

     (a)  Audited Accounts:  as soon as reasonably  practicable and in any event
          within  90 days  from  the end of the  relevant  Accounting  Reference
          Period copies of:

          (i)  the audited  consolidated  profit and loss account of the Greater
               Group;

          (ii) the audited consolidated profit and loss account of the SCTC Inc.
               Group;

          (iii)individual  profit and loss  accounts  and balance  sheets of the
               Borrowers and each other member of the Tobacco Group;

          (iv) accompanied  by a certificate  signed by the Auditors  confirming
               (or  otherwise)  that the  financial  covenants set out in Clause
               16.1  have  been  complied  with  and   containing   calculations
               demonstrating in reasonable detail compliance (or otherwise) with
               such covenants.

     (b)  Tobacco Group Accounts:  at the same time as the audited  consolidated
          accounts of the SCTC Inc.  Group are to be  delivered  pursuant to (a)
          above,  SCTC Inc. shall also deliver pro forma  consolidated  accounts
          for the Tobacco Group based on the audited  accounts for the SCTC Inc.
          Group  but  excluding  any  figures  relating  to  Standard  Wool (UK)
          Limited;

     (c)  Other  Information:  any other information  concerning the business or
          financial  condition of any Tobacco Group Company or the Tobacco Group
          as a whole which the Lead Bank,  or either of the Security  Agents may
          reasonably  require or any Bank may  reasonably  require  from time to
          time;

15.6 Budget:  submit,  not  later  than 30 days  before  the  beginning  of each
     Accounting  Reference  Period of SCTC Inc.  commencing  with the Accounting
     Reference Period beginning on 1 April 1997, to the  International  Security
     Agent (in sufficient  numbers for distribution to the Banks),  copies of an
     itemised consolidated budget, in the format reasonably approved by the Lead
     Bank for the forthcoming Accounting Reference Period for the Tobacco Group.
     Each such budget  shall  contain,  inter alia,  (in such detail as the Lead
     Bank reasonably  considers to be necessary) the aggregate amount of Capital
     Expenditure  (separately specifying individual items of Capital Expenditure
     in excess of  $5,000,000)  intended to be  incurred  by the  Tobacco  Group
     during that Accounting Reference Period.



<PAGE>



     Such budget shall have been  approved by the senior  tobacco  management of
     SCC and shall include consolidated  statements for each of SCC, the Tobacco
     Group and each of the  Borrowers and  individual  statements of each of the
     Borrowers  (in each case for each  Trading  Period  during such  Accounting
     Reference  Period),  of  forecast  profit and loss,  revenue  and cash flow
     including  a rolling  four  quarter  cashflow  in a format  approved by the
     International  Security Agent and a balance sheet,  to include a commentary
     on the above and to be in such form and to contain  such other  information
     as is, in the  reasonable  opinion  of the  International  Security  Agent,
     necessary;


15.7 Circulars  and Trade  Information:  deliver to the  International  Security
     Agent copies of all circulars  issued to  shareholders of any Tobacco Group
     Company  or any class of them,  all  filings  with  regulatory  authorities
     relating to any Tobacco Group Company and such other trade  information  as
     is available to the Tobacco Group as the Lead Bank may  reasonably  require
     from time to time;

15.8 Inventory  Programme:  maintain  a  programme  to the  satisfaction  of the
     Security  Agents,  as far as possible,  for the purpose of  monitoring  and
     reporting levels of Inventory not sold to third parties;

15.9 Consistent  Application:  ensure  that all  accounts  and  other  financial
     information  submitted  to the Lead  Bank and the  Co-Lead  Bank  have been
     prepared  using  accounting  bases,  policies,   practices  and  procedures
     consistent  with the  policies  applied  in the  Original  Accounts  and in
     accordance  with  generally  accepted  accounting  principles  consistently
     applied,  (except in any case as  approved  by the  Auditors in which event
     SCTC Inc.  shall  notify  such  modifications  to the Lead  Bank).  In such
     circumstances the Lead Bank (in consultation with SCC and the Auditors) may
     require such changes to the financial covenants contained in this Agreement
     as shall  reflect  such  modifications.  SCTC Inc.  shall  ensure that such
     accounts  give a true and  fair  view of the  results  of its  (and,  where
     consolidated,  its Subsidiaries') operations for the period in question and
     the state of its (and, where consolidated, its Subsidiaries') affairs as at
     the date to which such  accounts are made and  disclose or reserve  against
     all of its (and, where consolidated, its Subsidiaries') liabilities, actual
     and contingent;

15.10Auditor's  Certificate:  require  the  Auditors  for the time being (and at
     SCTC  Inc.'s  expense)  if  required by the Lead Bank at the request of the
     Majority Banks:-

     (a)  to verify to the Lead Bank's  satisfaction  and certify any  financial
          information required by this Agreement to be provided to the Lead Bank
          and/or the Banks; and

     (b)  to verify and  certify any figures  required to  calculate  any of the
          financial covenants contained in Clause 16 (Financial Covenants);

15.11Litigation:  advise  the  Lead  Bank  immediately  of  the  details  of any
     litigation,  arbitration or  administrative  proceeding (to the best of its
     knowledge  and belief)  pending or  threatened  against  any Tobacco  Group
     Company which could, if adversely determined,  result in a liability to the
     Group  (including  costs) in excess of  $2,000,000  and  detailing  to what
     extent such liability is covered by insurance;

15.12Event of  Default:  notify the Lead Bank in writing of any event set out in
     Clause  17.1(a)-(t)  (ignoring  any grace  periods  or notice  requirements
     therein) or any Potential Event of Default  immediately upon becoming aware
     of such occurrence;

15.13Notification:  notify the International  Security Agent in writing promptly
     upon  becoming  aware of any  request  received  by a Borrower  to give any
     Encumbrance,  guarantee  or  indemnity  or of any  demand by any person for
     repayment of any principal amount or forthwith upon becoming aware that any
     person is taking any steps to recovery any principal amount from it;

15.14Revision of Time Limits at Year End: notwithstanding the provisions of this
     clause,  where  information to be provided under those clauses with respect
     to any month relates to the month immediately  preceding the financial year
     end of the  Borrowers,  the period of 30 days  referred  to in this  Clause
     shall be deemed to be changed to 60 days.


<PAGE>





15.15Environment:  the  Borrowers  will  immediately  notify  the  Lead  Bank in
     writing of the occurrence of any of the following:

     (a)  any  pending or  threatened  Environmental  Claim  against any Tobacco
          Group Company or any Mortgaged Property;

     (b)  any condition or occurrence on any Mortgaged Property that (i) results
          in  material  noncompliance  by any  Tobacco  Group  Company  with any
          applicable  Environmental  Law or (ii) could reasonably be anticipated
          to form the basis of an Environmental  Claim against any Tobacco Group
          Company or any Mortgaged Property;

     (c)  any condition or occurrence on any Mortgaged  Property or any property
          adjoining  or in the  vicinity of any  Mortgaged  Property  that could
          reasonably  be  anticipate  to cause  such  Mortgaged  Property  to be
          subject  to any  restrictions  on  the  ownership,  occupancy,  use or
          transferability  of such Mortgaged  Property  under any  Environmental
          Law;

     (d)  the  taking of any  removal  or  remedial  action in  response  to the
          presence  or  alleged  presence  of  any  Hazardous  Material  on  any
          Mortgaged Property;


          All such notices shall describe in reasonable detail the nature of the
          claim,  investigation,  occurrence,  condition  or removal or remedial
          action and the Borrowers' response thereto. In addition, the Borrowers
          will provide the Lead Bank with copies of all communications  with any
          government or governmental  agency relating to Environmental Laws, all
          communications  with any person relating to  Environmental  Claims and
          such detailed reports of any Environmental  Claim as may reasonably be
          requested by the Lead Bank.

     (e)  the Borrowers will undertake any cleanup,  removal,  remedial or other
          action  necessary to remove and clean up all Hazardous  Materials from
          any Mortgaged  Property in  accordance  with the  requirements  of all
          applicable Environmental Laws;

     (f)  the Borrowers  agree to defend,  protect,  indemnify and hold harmless
          each of the  Finance  Parties and each of their  respective  officers,
          directors,  employees,  attorneys and agents (the  "Indemnitees") from
          and against all liabilities,  obligations, losses, damages, (including
          foreseeable  and  unforeseeable  consequential  damages  and  punitive
          damages) penalties, actions, judgments, suits, claims, costs, expenses
          and disbursements  (including  reasonable  attorney's and consultants'
          fees and  disbursements)  of any kind or nature whatsoever that may at
          any  time  be  incurred  by,  imposed  on  or  asserted  against  such
          Indemnitees  directly or  indirectly  based on or arising or resulting
          from (i) the actual or alleged  presence of  Hazardous  Materials  on,
          under  or  at  any   Mortgaged   Property  (ii)  the  failure  of  any
          representation   or  warranty   made  by  the   Borrowers   (iii)  any
          Environmental Claim relating to any member of the Tobacco Group or any
          Mortgaged Property or arising out of the use of any Mortgaged Property
          or (iv) the  exercise the rights of the Finance  Parties  under any of
          the provisions of this Clause (the "Indemnified  Matters")  regardless
          of when such Matters  arise but  excluding  any Matter based solely on
          the gross negligence or wilful misconduct of any Indemnitee;

     (g)  to the  extent  that  the  foregoing  paragraph  may be  unenforceable
          because it is violative  of any law or public  policy,  the  Borrowers
          will contribute the maximum portion that they are permitted to pay and
          satisfy under  applicable law to the payment and  satisfaction  of all
          Indemnified Matters incurred by the Indemnitees;


<PAGE>



     (h)  the  undertakings  set forth in this  clause  and in clauses 13 and 14
          with respect to  environmental  matters shall survive the repayment of
          the Facilities, the release of the mortgage on any Mortgaged Property,
          any  foreclosure  of any  such  mortgage  or  delivery  of a  deed  or
          assignment in lieu of  foreclosure  or otherwise,  and the transfer of
          all or any right,  title or interest in and to any Mortgaged  Property
          by any Tobacco Group Company;


16.  FINANCIAL COVENANTS

16.1 For so long as any  liability  remains  outstanding  or capable of becoming
     outstanding under any of the Finance Documents, the Borrowers shall procure
     that:

     (a)  Tobacco Group Tangible Net Worth: Tobacco Group Tangible Net Worth for
          each of the  periods  detailed  below shall not fall below the amounts
          specified below:

          Minimum Tangible Net Worth Period

                  $  80,000,000    Date of this Agreement to 31 March 1998
                  $  95,000,000    1 April 1998 to 31 March 1999
                  $ 110,000,000    1 April 1999 to 31 March 2000
                  $ 125,000,000    1 April 2000 until the Final Repayment Date

     (b)  SCC  Tangible Net Worth during each of the periods set out below shall
          not fall below the amounts set out below:

          SCC Tangible Net Worth Period

                  $125,000,000     Date of this Agreement to 31 March 1998
                  $140,000,000     1 April 1998 to 31 March 1999
                  $155,000,000     1 April 1999 to 31 March 2000
                  $170,000,000     1 April 2000 until the Final Repayment Date

     (c)  Tobacco Interest Cover Ratio: the ratio of the consolidated  EBITDA to
          Interest for the Tobacco Group shall not at any time fall below 1.5:1.

16.2 Testing of Covenants:

     (a)  The covenants contained in Clauses 16.1(a) (Tobacco Group Tangible Net
          Worth)  and  16.1(b)  (SCC  Tangible  Net  Worth)  shall  apply  on  a
          continuing basis and shall be tested quarterly.

     (b)  The covenant  contained in clause 16.1(c) (Interest Cover Ratio) shall
          apply on a  continuing  basis and shall be tested  quarterly  first by
          reference  to the three month  period  ending 30 June 1997,  second by
          reference to the six month period ending 30 September 1997, thirdly by
          reference to the nine month period ending 31 December  1997,  fourthly
          by  reference  to the  12  month  period  ending  31  March  1997  and
          thereafter  on a rolling 12 month  basis by  reference  first,  to the
          quarterly  accounts  delivered pursuant to clause 15.4(e) and secondly
          by reference to the audited  accounts of the Tobacco  Group  delivered
          pursuant to clause 15.5(a).

     (c)  The Lead Bank may  require  any  calculation  based on the  management
          figures to be restated and certified as accurate by the Auditors if in
          the bona fide opinion of the Lead Bank the  subsequent  publication of
          audited  figures or any other  information  becoming  available to the
          Lead Bank casts doubt on any relevant management figures.


<PAGE>



                                     PART X


                                EVENTS OF DEFAULT


17.  TERMINATION IN CASE OF DEFAULT

17.1 Demand on Event of Default:  Upon the  occurrence  of any of the  following
     events:-

     (a)  Failure  to Pay:  failure  by any  Obligor  to pay in full any sum due
          under,  and in the manner  required  by, this  Agreement  or any other
          Finance Document on the due date (or, if such failure is due solely to
          an  administrative  failure on the part of such Obligor's bank and not
          to any default of such  Obligor,  within two Business  Days of the due
          date); or

     (b)  Incorrect  Representation:  any representation,  warranty or statement
          made by or in  relation to SCC or any  Tobacco  Group  Company in this
          Agreement or any other Finance  Document or in any document  furnished
          under or in connection  with such documents  being incorrect as at the
          date on which it is made or deemed to be repeated; or

     (c)  Breach  of  Agreement:  failure  by any  Obligor  to  comply  duly and
          punctually,  or to procure that any Tobacco Group Company so complies,
          with any other provision of any Finance  Document and such failure (if
          capable of remedy) is not remedied within ten Business Days; or

     (d)  Failure to Discharge Indebtedness:

          (i)  failure by SCC or any Tobacco  Group  Company to discharge on its
               due date (but only on the expiry of any  applicable  grace period
               contained  in the  original  document  evidencing  the  same) any
               Indebtedness  unless the  Indebtedness  is being disputed in good
               faith by SCC or the relevant  Tobacco  Group Company with (in the
               opinion of its legal advisers) a good prospect of success; or

          (ii) any  Borrowings  of SCC or any Tobacco Group Company are declared
               due and payable  prior to their stated  maturity or are placed on
               demand by reason of an event of default  (however  called) or any
               circumstances  arise as a result of which any Borrowings could be
               so declared due and payable prior to their stated maturity; or

          (iii)any  money  repayable  on  demand  by SCC or  any  Tobacco  Group
               Company is not repaid on demand being made; or

          (iv) any  lender or other  person in whose  favour  SCC has  granted a
               guarantee, makes demand under such guarantee;

               where  the  aggregate  liability  of SCC  and/or  members  of the
               Tobacco Group in respect of such claims exceeds $10,000,000;

     (e)  Suspension and Expropriation:

          (i)  the  suspension  or  the  threatened   suspension  of  all  or  a
               substantial part of the operations of any Borrower or SCC; or


<PAGE>





          (ii) the  expropriation  of all or a substantial part of any assets of
               any  Borrower  or SCC  by any  governmental  or  other  competent
               authority; or

     (f)  Insolvency:

          (i)  Winding Up:

               (aa) a meeting is convened; or

               (bb) a petition is presented  (unless (a) the relevant Company is
                    able to satisfy the Steering Committee that such petition is
                    frivolous   or  vexatious   and/or  (b)  such   petition  is
                    discharged  within  10  Business  Days  of the  date  of its
                    presentation  if  presented in a  jurisdiction  in which any
                    Obliger is domiciled  and/or (c) such petition is discharged
                    within 21 Business Days of the date of its  presentation  if
                    presented  in  a   jurisdiction   in  which  no  Obligor  is
                    domiciled); or

               (cc) an order is made; or

               (dd) a resolution is passed;

                    for the  winding-up of any Obligor  (except for the purposes
                    of a reconstruction  or amalgamation  while solvent on terms
                    previously approved in writing by the Lead Bank); or

          (ii) Administration:

               (aa) a meeting is convened; or

               (bb) an application is made; or

               (cc) a petition is presented;

                    for the appointment of an  administrator  in relation to any
                    Obligor; or

          (iii)Request by Directors or Members: the directors or a member of SCC
               or  a  Tobacco  Group  Company   request  the  appointment  of  a
               liquidator,  receiver,  administrative receiver, administrator or
               similar official; or



<PAGE>



     (g)  Bankruptcy:  Obligor shall commence a voluntary case concerning itself
          under Title 11 of the United  States Code entitled  "Bankruptcy"  (the
          "Bankruptcy  Code") or an  involuntary  case is commenced  against any
          Obligor and the petition is not controverted  within 30 days or is not
          dismissed within 60 days after commencement of the case or a custodian
          (as defined in the Bankruptcy  Code) is appointed for, or takes charge
          of, all or  substantially  all of the  property  of any Obligor or any
          Obligor  commences  any other  proceeding  under  any  reorganization,
          arrangement,  adjustment  of debt,  relief  of  debtors,  dissolution,
          insolvency or liquidation or similar law of any  jurisdiction  whether
          now or  hereafter  in  effect  relating  to any  Obligor  or  there is
          commenced  against  any  Obligor  any such  proceeding  which  remains
          undismissed  for a period of 60 days;  or any  Obligor is  adjudicated
          insolvent or bankrupt; or any order of relief or other order approving
          any such case or  proceedings is entered;  or any Obligor  suffers any
          appointment  of any  custodian  or the like for it or any  substantial
          part of its property to continue undischarged or unstayed for a period
          of 60 days; or any Obligor makes a general  assignment for the benefit
          of  creditors;  or any  corporate  action is taken by any  Obligor for
          purpose of effecting any of the foregoing; or


     (h)  Distress etc.: a distress,  execution or other legal process is levied
          in respect of a judgement for an amount in excess of $500,000  against
          any of the assets of any  Obligor  and is not  discharged  or paid out
          within 14 days; or

     (i)  Enforcement Proceedings:

          (i)  an encumbrancer takes possession; or


          (ii) a  receiver  or  an   administrative   receiver,   administrator,
               liquidator,  special manager,  trustee,  supervisor or similar or
               equivalent officer is appointed,

               of the  whole or any part of the  assets  or  undertaking  of any
               Obligor; or

     (j)  Ceasing Payment of Debts: any Obligor:-

          (i)  becomes  insolvent  or bankrupt  or ceases or suspends  generally
               payment of its debts (or  announces  an intention to do so) or is
               unable  to pay its  debts or is  deemed  unable  to pay its debts
               within  the  meaning of Section  123 of the  Insolvency  Act 1986
               (provided  that the figure of  (pound)750  referred to in Section
               123(1)(a) of the Insolvency Act 1986 shall be deemed to have been
               increased to $10,000); or

          (ii) commences,  or announces  an intention to commence,  negotiations
               with  one or more  of its  creditors  with a view to the  general
               readjustment   or  rescheduling  of  all  or  any  class  of  its
               Indebtedness or seeks protection from its creditors; or

          (iii)proposes  or  its  directors  make  a  proposal  for a  voluntary
               arrangement under Part I of the Insolvency Act 1986; or

          (iv) enters into any composition or other  arrangement for the benefit
               of its creditors generally or any class of creditors; or

          (v)  is the subject of any  proceedings  under any law,  regulation or
               procedure  relating  to  reconstruction  or  readjustment  of its
               debts; or

          (vi) has a moratorium declared in respect of its Indebtedness; or

     (k)  Unlawful Performance:

          (i)  it  becomes  unlawful  for SCC or any  Tobacco  Group  Company to
               perform  any of its  obligations  under any  Finance  Document to
               which it is a party; or

          (ii) any  Finance  Document  is not or ceases  to be legal,  valid and
               binding  on and  enforceable  against  SCC or any  Tobacco  Group
               Company which is a party thereto or is materially impaired; or



<PAGE>



          (iii)any Obligor shall at any time give notice purporting to determine
               its  liability  under any  guarantee  or  security  securing  the
               amounts  from  time  to  time  due  under  any  Finance  Document
               (including further amounts which may be drawn down under it); or


               (l)  Material Adverse Change:

                    (i)  there occurs a Material Adverse Change; or

                    (ii) litigation  is brought  against SCC or a Tobacco  Group
                         Company  which  is  likely  to  succeed  and  which  if
                         successful  would result in a Material  Adverse Change;
                         or

                    (iii)the Majority Banks  consider that,  since the Effective
                         Date, there has been a Material Adverse Change;

     (m)  Auditors'  Report:  the Auditors  qualify  their report to the audited
          Accounts; or

     (n)  Change of Control:  any person (whether acting alone or with any other
          person)  which  does not have  control  at the date of this  Agreement
          becomes  the  beneficial  owner of shares in the share  capital of SCC
          carrying  the right to  exercise  more than 25 per cent.  of the votes
          exercisable  at a general  meeting of SCC or  otherwise  acquires  the
          power to control the affairs and policies of SCC; or

     (o)  Ceasing  Business:  any Tobacco Group  Company  ceases or threatens to
          cease to carry on any  material  part of the business it carries on at
          the date of this Agreement,  except as expressly  permitted under this
          Agreement; or

     (p)  Repudiates  Obligations:  any of the  Obligors  repudiates  any of its
          obligations under any of the Finance Documents; or

     (q)  Analogous Events:  any event occurs which, under the applicable law of
          any relevant  jurisdiction,  has an analogous or equivalent  effect to
          any of the above events mentioned in this Clause 17.1;

     (r)  Borrowing Base:

          (i)  any Borrower  makes a utilisation  of the  Facilities  where such
               utilisation would cause the Net Borrowings to exceed the level of
               the   Borrower's   Borrowing   Base,  as  at  the  date  of  that
               utilisation; or

          (ii) SCTC  Inc.  makes a  utilisation  of the  Facilities  where  such
               utilisation  would cause SCTC Inc.'s Net Borrowings to exceed the
               level  of SCTC  Inc.'s  Borrowing  Base,  as at the  date of that
               utilisation  in  each  case   demonstrated  by  the  most  recent
               Borrowing  Base  Certificate  delivered  pursuant  to Clause 15.2
               (Borrowing  Base) and such  default is not  remedied  within five
               Business Days;

     (s)  Erisa:



<PAGE>



          (i)  Any Plan shall  fail to  satisfy  the  minimum  funding  standard
               required for any plan year or part thereof  under  Section 412 of
               the Code or Section 302 of ERISA or a waiver of such  standard or
               extension of any  amortization  period is sought or granted under
               Section  412 of the  Code  or  Section  303  or 304 of  ERISA,  a
               Reportable Event shall have occurred,  a contributing sponsor (as
               defined in  Section  4001(a)(13)  of ERISA) of a Plan  subject to
               Title  IV of ERISA  shall be  subject  to the  advance  reporting
               requirement of PBGC Regulation Section 4043.61 (without regard to
               subparagraph (b((1) thereof) and an event described in subsection
               .62, .63, .64,  .65, .66, .67 or .68 of PGBC  Regulation  Section
               4043 shall be  reasonably  expected to occur with respect to such
               Plan within the  following 30 days,  any Plan which is subject to
               Title IV of ERISA  shall  have had or is likely to have a trustee
               appointed to administer  such Plan,  any Plan which is subject to
               Title  IV of  ERISA  is,  shall  have  been  or is  likely  to be
               terminated or to be the subject of termination  proceedings under
               ERISA,  any Plan  shall have an  Unfunded  Current  Liability,  a
               contribution  required  to be made  with  respect  to a Plan or a
               Foreign  Pension Plan has not been timely made,  the Borrowers or
               any  Tobacco  Group or any ERISA  Affiliate  has  incurred  or is
               likely to incur any  liability  to or on  account of a Plan under
               Section 409, 502(i),  502(1),  515, 4062, 4063, 4064, 4069, 4201,
               4204 OR 4212 of ERISA or Section 401(a)(29),  4971 or 4975 of the
               Code or on account of a Group  health plan (as defined in Section
               607(1) of ERISA or Section 4980B(g)(2) of the Code) under Section
               4980B  of the  Code,  or the  Company  or any  Subsidiary  of the
               Company has incurred or is likely to incur  liabilities  pursuant
               to one or more  employee  welfare  benefit  plans (as  defined in
               Section 3(1) of ERISA) that provide benefits to retired employees
               or other former  employees (other than as required by Section 601
               of ERISA or any other applicable  continuation of coveraged laws)
               or Plans or Foreign Pension Plans;


          (ii) there shall  result from any such event or events the  imposition
               of a lien, the granting of a security interest, or a liability or
               a material risk of incurring a liability; and

          (iii)such lien, security interest or liability,  individually,  and/or
               in the aggregate,  in the opinion of the Majority Banks, has had,
               or could  reasonably  be  expected  to have,  a material  adverse
               effect upon the  business,  operations,  condition  (financial or
               otherwise)  or  prospects of the  Borrowers or any Tobacco  Group
               Company; or

     (t)  any of the Finance  Documents  ceasing to be binding on the parties to
          it or any provision of it ceasing to be legally  enforceable or any of
          the Finance  Documents  being amended,  supplemented or varied without
          the consent of the Lead Bank,

          then and in any such event and at any time while it is Continuing, the
          Lead Bank may, in its sole  discretion,  and at the instruction of the
          Majority  Banks shall,  by notice in writing to the Borrowers  declare
          that an event of  default  has  occurred  and such  declaration  shall
          constitute  an Event of Default or any analogous  such event  (however
          described) under each Facility  Agreement  whereupon each Bank (or the
          Lead Bank on its behalf) may declare that its  Commitment is cancelled
          and reduced to zero and all amounts  outstanding to such Bank under or
          in  connection  with any Facility  and/or  Finance  Document  shall be
          repayable on demand  whereupon they shall become  immediately  due and
          payable   together   with  all  accrued   interest  and  other  costs,
          commissions  and charges  owing  under such  Facility  and/or  Finance
          Document  forthwith  upon demand  being made by such Bank (or the Lead
          Bank on its behalf).  For the avoidance of doubt,  an Event of Default
          may be waived only with the consent of the Majority Banks.

17.2 Demand:  no Bank may demand  permanent  repayment of any  Indebtedness as a
     result of an acceleration under a Facility Agreement to which it is a party
     except in accordance with clause 17.1;


<PAGE>



17.3 Enforcement  of Existing  Security:  no Bank may enforce any  guarantee  or
     Encumbrance  granted  to it by an Obligor in  connection  with the  Finance
     Documents  unless the Lead Bank has instructed the Security Agents pursuant
     to clause 17.1 to enforce the security granted to the Security Agents;


17.4 Foreign  Exchange and Cash Cover:  Upon the making of a declaration  by the
     Lead Bank of an Event of Default  under Clause 17.1 above,  each Bank shall
     be entitled,  in addition to any rights conferred upon it under Clause 17.1
     above:-

     (a)  to close out all or any  foreign  exchange  contracts  then  currently
          outstanding under or pursuant to the Facility; and

     (b)  to call for the immediate  payment to it of full cash cover in respect
          of all unmatured liabilities of any Obligor to such Bank.



<PAGE>






                                     PART XI

                         FEES, EXPENSES AND STAMP DUTIES


18.  FEES

18.1 Arrangement Fees: the Borrowers shall on the Effective Date pay to the Lead
     Bank for the Banks a fee of an amount equal to _ per cent. of the aggregate
     of the  Commitments of the Banks on the date of this Agreement and the Lead
     Bank shall  distribute  such fee amongst  all the Banks,  pro rata to their
     respective Commitments on the date on which such payment falls to be made.

18.2 Management Fee: On the Effective Date the Borrowers shall pay the following
     management fees:

     (a)  to the Lead Bank $400,000;

     (b)  to the Co-Lead Bank $300,000;

     (c)  to the International Security Agent $100,000;

18.3 Commitment Fee: During the term of this Agreement,  the Borrowers shall pay
     to the Lead Bank for the  account  of the Banks on the  Effective  Date and
     thereafter on each subsequent  Quarter Date, a commitment fee calculated at
     the rate of 0.25 per cent. per annum on the aggregate Commitments. Such fee
     shall  accrue  from day to day and on the basis of a 360 day year and shall
     be distributed between the Banks in their Pro Rata Shares. For the purposes
     of this Clause 18.3  Commitments  shall be  calculated  by reference to the
     Commitments of the Banks on the day on which such payment falls to be made.

18.4 VAT:  Where the costs and fees  specified  in this Clause 18 attract  value
     added tax or any similar tax, the  relevant  Borrower  and/or SCC shall pay
     the relevant amount of such tax in addition to the cost or fee concerned.

19.  EXPENSES

     The  Borrowers  shall  reimburse  the Finance  Parties on demand (on a full
     indemnity basis and whether or not any of the Facilities are utilised after
     the date of this Agreement) for all reasonable  fees, costs and expenses in
     any relevant jurisdiction  (including,  without limitation reasonable legal
     fees,  valuation,  accountancy and consultancy fees and  communication  and
     out-of-pocket  expenses) and any value added or similar tax upon such costs
     and expenses, incurred by:-

     (a)  the Lead Bank, the Co-Lead Bank and the Security  Agents in connection
          with  the  carrying  out of  due  diligence  procedures,  negotiation,
          preparation, execution, and completion of the Finance Documents or any
          of  the  documents  referred  to  in  any  Finance  Documents  or  the
          transactions  contemplated  by them  including,  for the  avoidance of
          doubt,  any such  fees,  costs and  expenses  incurred  by each of the
          Security  Agents in  connection  with the taking of any security  from
          time to time as contemplated by this Agreement; and



<PAGE>



     (b)  the Lead Bank, the Co-Lead Bank, the Security  Agents and the Steering
          Committee in connection  with the operation of this  Agreement  and/or
          any Finance  Document and/or the performance of their duties under any
          such agreement including, without limitation, legal fees and reporting
          accountants' fees; and


     (c)  the Lead Bank, the Co-Lead Bank, the Security  Agents and each Bank in
          connection  with  the  enforcement  or  preservation  of any of  their
          respective  rights  under any of the Finance  Documents  or any of the
          documents referred to in such Finance Documents in any jurisdiction.

20.  STAMP DUTY

     The Borrowers  jointly and severally agree to pay on demand all present and
     future  stamp,  registration  and  similar  taxes or  charges  which may be
     payable or determined to be payable in any  jurisdiction in connection with
     the execution,  delivery,  performance or enforcement of any of the Finance
     Documents or any judgment given in connection with them and shall indemnify
     each of the Lead Bank, the Co-Lead Bank, the Security Agents,  the Steering
     Committee  and  the  Banks  against  any  and  all  liabilities,  including
     penalties  with respect to or  resulting  from its delay or omission to pay
     any such stamp,  registration  and similar taxes or charges (except for any
     such  stamp,   registration  and  similar  taxes  or  charges  incurred  in
     connection  with any  assignment or transfer by a Bank in  accordance  with
     Clause 21 (Assignments and Transfers)).


<PAGE>



                                    PART XII



                            ASSIGNMENTS AND TRANSFERS

21.  ASSIGNMENTS AND TRANSFERS

21.1 Borrower:  No  Borrower  may  assign  or  transfer  any  of its  rights  or
     obligations under any Finance Document.

21.2 Banks: Any Finance Party may, after prior  consultation  with the Lead Bank
     and with the  prior  written  consent  of SCTC  Inc.  (which  shall  not be
     unreasonably  withheld  or  delayed),  (save  in  respect  of  assignments,
     transfers  or  sub-participations  to a  Subsidiary  or  Affiliate  of such
     transferor, assignor or sub-participator or a Finance Party or a Subsidiary
     or an Affiliate  of a Finance  Party in which case the consent of SCTC Inc.
     shall not be required,  but the  transferor,  assignor or  sub-participator
     shall  notify  SCTC  Inc.  promptly  after  such  transfer,  assignment  or
     sub-participation) and subject to Clause 21.3:-

     (a)  assign its rights and benefits under its Facilities and this Agreement
          and each other Finance Document to which it is a party; or

     (b)  transfer in  accordance  with Clause 21.4 its  obligations  under this
          Agreement and each other Finance Document; or

     (c)  sub-participate  all or any of its rights and/or obligations under the
          terms  applicable to its  Facilities and this Agreement and each other
          Finance Document to which it is a party;

          to an  Eligible  Transferee,  where in each  case  (i) such  assignee,
          transferee or  sub-participant  is acting as principal  only; and (ii)
          the  rights  and/or   obligations   being   assigned   transferred  or
          sub-participated to it represent all or a minimum of $5 million of the
          Commitment of the assignor, transferor or sub-participator;  (iii) and
          such  transfer  does not of itself result in any Borrower or SCC being
          required to make an  additional  payment  under Clause 9 in connection
          with any Finance Document.  Any  sub-participation  to a Subsidiary or
          Affiliate  of  the  sub-participator  shall  not  be  subject  to  the
          restrictions  in  (i),  provided  the  sub-participator   remains  the
          principal, and (ii) above.



<PAGE>



          Any  Finance  Party  wishing to assign or  transfer  any of its rights
          and/or  obligations  under this Agreement (the "Proposed  Transferor")
          shall  first  notify the Lead Bank of its  intention  so to do and the
          proposed terms of such assignment or transfer (the "Transfer  Notice")
          and shall not be entitled to make such  assignment or transfer until a
          period of fourteen days (the "14 Day Period")  shall have elapsed from
          the date of  receipt  by the Lead  Bank of the  Transfer  Notice.  If,
          within the 14 Day Period,  any Finance Party has notified the Proposed
          Transferor  that it is willing to accept an  assignment or transfer on
          the same terms as those detailed in the Transfer  Notice and otherwise
          on the terms of this Agreement (which notification shall be binding on
          such  Finance  Party)  (an  "Acceptance  Notice")  then  the  Proposed
          Transferor  shall be obliged to make such  assignment  or  transfer to
          such  Finance  Party and not to any third  party.  Such 14 Day  Period
          shall  not  apply  in  respect   of  any   assignment,   transfer   or
          sub-participation  to a Finance  Party, a Subsidiary or Affiliate of a
          Finance  Party and the terms set out above  shall not  apply.  If more
          than one Finance  Party shall have given an  Acceptance  Notice to the
          Proposed  Transferor  within the 14 Day Period,  the obligation of the
          Proposed  Transferor  hereunder  shall  be to  transfer  to the  first
          Finance Party to give an Acceptance Notice to the Proposed Transferor.
          If no Acceptance  Notice is received from any Finance Party during the
          14  Day  Period  with  respect  to a  Transfer  Notice,  the  Proposed
          Transferor may assign or transfer its rights and obligations specified
          in the Transfer  Notice on the terms specified in such Transfer Notice
          and  otherwise  in  accordance  with the terms of this  Agreement.  No
          assignment or transfer of any rights and/or  obligations  of a Finance
          Party  hereunder may be made on terms which have not  previously  been
          notified in full to the Lead Bank in a Transfer  Notice in  accordance
          with the terms of this Clause.


21.3 Transfer  Certificate:  Any  permitted  transfer  of the  obligations  of a
     Finance Party (a "Transferor")  under this Agreement and each other Finance
     Document  to which it is a party  may be made in whole or in part and shall
     be effected by the delivery to the Lead Bank of a Transfer Certificate duly
     completed and signed by the Transferor and the Transferee.

21.4 Effective Date: Each of the parties to this Agreement agrees that following
     receipt by the Lead Bank of a completed and signed Transfer Certificate and
     with effect from the date specified in such certificate:-

     (a)  to the extent that the Transferor elects in such Transfer  Certificate
          to transfer its  obligations  under its  Facilities and this Agreement
          and each other Finance Document to which it is a party, the Transferor
          shall be released from further  obligations  to each Obligor and their
          respective  rights against each other (except for rights accrued prior
          to the date on which such Transfer  Certificate takes effect) shall be
          cancelled;

     (b)  the Transferee shall assume obligations  towards each Obligor and each
          Obligor shall acquire rights against the Transferee  which differ from
          the rights and  obligations so discharged only insofar as each Obligor
          and the Transferee  have assumed and/or  acquired the same in place of
          the Obligors and the Transferor (as the case may be); and

     (c)  the Lead Bank, the  Transferee  and the other Finance  Parties (as the
          case may be) shall  acquire  towards  each  other the same  rights and
          assume  the same  obligations  between  themselves  as they would have
          acquired  and assumed had such  Transferee  been an original  party to
          this Agreement and each other Finance Document as a Finance Party with
          the  obligations  acquired  and/or  assumed  by it as a result of such
          transfer  (and, to that extent,  the Lead Bank, the Transferor and the
          other Finance Parties shall each be released from further  obligations
          to each other under this Agreement and such Finance Documents).

21.5 Lead Bank's  Notification:  The Lead Bank shall promptly  notify SCTC Inc.,
     the Security Agents and the other Finance Parties for the time being of the
     receipt of a Transfer Certificate and shall deliver a copy of such Transfer
     Certificate to SCTC Inc..

21.6 SCC's  and  Borrower's  Authorisation:  SCC and the  Borrowers  irrevocably
     authorise  the Finance  Parties to  deliver,  and the Lead Bank to receive,
     Transfer Certificates in accordance with this Clause 21.

21.7 Further  Assurance:  Each of SCC and the Borrowers agrees to enter into and
     to  procure  that the other  Obligors  shall  enter  into  such  additional
     documentation  (if any) as may be required by the Lead Bank or any Security
     Agent to effect any  assignment or transfer in accordance  with this Clause
     21.

21.8 Transferee Acknowledgement: Each Transferee, by its execution of a Transfer
     Certificate,  acknowledges  that  none  of the  other  Finance  Parties  is
     responsible to it for:-



<PAGE>



     (a)  the accuracy and/or  completeness  of any information  supplied to the
          Transferee  in  connection  with the  Finance  Documents,  the matters
          referred to in those documents or the Group;


     (b)  the financial condition, creditworthiness,  condition, affairs, status
          and nature of any of the Group  Companies or the  observance by any of
          the Obligors of any provisions of the Finance  Documents of any of its
          obligations under this Agreement or any document so relating; or

     (c)  the legality, validity,  effectiveness,  adequacy or enforceability of
          the Finance Documents or any document relating to this Agreement or to
          those documents.

21.9 No Obligation:  The Transferor shall not be obliged by any Finance Document
     to:-

     (a)  accept a re-transfer  from the  Transferee of any of the rights and/or
          obligations assigned or transferred under this Clause 21; or

     (b)  indemnify  the  Transferee  for any  losses  arising  by reason of any
          Obligor's  failure  to  perform  its  obligations  under  the  Finance
          Documents or otherwise.

21.10Fee: On the date that a transfer  becomes  effective,  the Transferee shall
     pay to the Lead Bank a fee of $100 for its own account.

21.11 Information

     Each of SCC and the  Borrowers  agrees that the Finance  Parties may at any
     time disclose such information  relating to it and each other Tobacco Group
     Company as shall come into their possession,  whether or not in relation to
     the Facilities:-

     (a)  save in respect of any publicly available information,  with the prior
          consent  of SCTC  Inc.  to any  prospective  assignee,  Transferee  or
          sub-participant not being a licensed bank;

     (b)  to any person which is a licensed bank (not falling within (d) below);

     (c)  to their respective  advisers,  (professional or otherwise) and to any
          reporting  accountant,  consultant or surveyor  appointed from time to
          time in relation to any Tobacco Group Company and to the Auditors;

     (d)  to the other Finance  Parties and their  Subsidiaries  and  Affiliates
          (provided  such   Subsidiary  or  Affiliate  has  either   executed  a
          confidentiality agreement in favour of SCTC Inc. reasonably acceptable
          to SCTC Inc. or the Finance Party disclosing such information  remains
          liable  for  any  failure  by such  Affiliate  or  Subsidiary  to keep
          information disclosed confidential);

     (e)  if required to do so by an order of a court in any jurisdiction;

     (f)  pursuant  to any law or  regulation  or to any  applicable  regulatory
          authority (including,  without limitation, the Bank of England) in any
          jurisdiction; and

     (g)  where such information shall have already entered the public domain,



<PAGE>



          and in the case of paragraphs (a) and (b) above,  subject to requiring
          and SCTC Inc. receiving a written  confidentiality  agreement from the
          recipient  of  the  information  in  form  and  substance   reasonably
          acceptable  to  SCTC  Inc.  that  it  will  treat  in  confidence  any
          confidential  information  so  disclosed  to it and not use it for any
          unauthorised purpose.





                                    PART XIII


                        AGENCY AND INTER-BANK PROVISIONS

22.  LEAD BANK, CO-LEAD BANK,  DOCUMENTATION AGENT, SECURITY AGENTS AND STEERING
     COMMITTEE

22.1 Appointment:

     (a)  Each Finance Party appoints:-

          (i)  the  Lead  Bank  to act as its  agent  in  connection  with  this
               Agreement and  authorises  the Lead Bank to exercise such rights,
               powers and discretions as are specifically delegated to it by the
               terms of this Agreement together with all such rights, powers and
               discretions as are reasonably incidental to them;

          (ii) the  Co-Lead  Bank to act as its  agent in  connection  with this
               Agreement and the Documentation Agent to act as its Documentation
               Agent in connection  with this Agreement and  authorises  each of
               the Co-Lead  Bank and the  Documentation  Agent to exercise  such
               rights,  powers and discretions as are specifically  delegated to
               them by the  terms  of this  Agreement  together  with  all  such
               rights,  powers and  discretions as are reasonably  incidental to
               them.  References  in clauses 22, 23 and 24 to the  Co-Lead  Bank
               shall be  deemed  to  include a  reference  to the  Documentation
               Agent;

          (iii)the Steering  Committee to act on its behalf in  exercising  such
               rights,  powers and discretions as are specifically  delegated to
               it by the terms of this Agreement  together with all such rights,
               powers and discretions as are reasonably incidental to them; and

          (iv) the US Security Agents to act as its agent and the  International
               Security Agent to act as its agent and trustee in relation to the
               Security Documents and authorises the Security Agents to exercise
               such rights, powers and discretions as are specifically delegated
               to them by the terms of this Agreement and the Security Documents
               together  with all such  rights,  powers and  discretions  as are
               reasonably incidental to them.

               The Obligors  shall be entitled to assume that the Lead Bank, the
               Co-Lead Bank, the Security Agents and the Steering  Committee act
               with the approval of all Banks or the Majority Banks (as the case
               may be),  and that all  consents  and notices  given or decisions
               made, by the Lead Bank, the Co-Lead Bank, the Security  Agents or
               the Steering  Committee  under or in connection  with the Finance
               Documents are validly given or made.

22.2 Powers:  Each of the Lead Bank, the Co-Lead Bank,  the Security  Agents and
     each member of the Steering Committee may:-

     (a)  assume that:-


<PAGE>



          (i)  any representation  made by the Obligors in or in connection with
               the Finance Documents is true;


          (ii) no Event of Default or Potential  Event of Default has  occurred;
               and

               unless the Lead Bank,  or the Co-Lead  Bank,  as the case may be,
               Security Agents or the Steering  Committee has in its capacity as
               such received  actual notice to the contrary,  at its address for
               communications  under this Agreement from any other party to this
               Agreement;

     (b)  assume that each  Transferee's  Facility  Office is that identified in
          the Transfer  Certificate  pursuant to which it became a party to this
          Agreement  until  it  has  received  from  such  Transferee  a  notice
          designating  some  other  office of such  Transferee  as its  Facility
          Office and act upon any such notice until the same is  superseded by a
          further such notice;

     (c)  (in the case only of the Lead Bank and the Security Agents) engage and
          pay for the advice or services of any  lawyers,  accountants  or other
          advisers whose advice or services may to it seem necessary,  expedient
          or desirable and rely upon any advice so obtained;

     (d)  rely as to matters of fact which  might  reasonably  be expected to be
          within the  knowledge  of an Obligor or any  officer or employee of an
          Obligor upon a certificate or statement signed by or on behalf of that
          Obligor or that officer or employee;

     (e)  rely upon any  communication or document  believed by it to be genuine
          and correct and to have been  communicated  or signed by the person by
          whom it purports to be communicated or signed;

     (f)  refrain from  exercising any right,  power or discretion  vested in it
          under any Finance Document unless and until instructed by the Majority
          Banks  whether  or  not  such  right,  power  or  discretion  is to be
          exercised and, if it is to be exercised, the manner in which it should
          be exercised, and it shall not be liable for acting or refraining from
          acting in accordance with or in the absence of  instructions  from the
          Majority Banks;

     (g)  refrain  from  taking any step to protect or enforce the rights of any
          Finance  Party  under any Finance  Document,  or  beginning  any legal
          action or proceeding  arising out of or in connection with any Finance
          Document until it shall have been indemnified and/or secured as it may
          require  (whether by way of payment in advance or  otherwise)  against
          all costs,  claims,  expenses  (including  legal fees) and liabilities
          which  it  will  or  may  expend  or  incur  in  complying  with  such
          instructions;

     (h)  refrain  from doing  anything  which  would or might in its opinion be
          contrary to any  applicable  law or any  requirements  (whether or not
          having the force of law) of any  governmental,  judicial or regulatory
          body or  otherwise  render it liable to any person and may do anything
          which is in its opinion  necessary to comply with any such  applicable
          law or requirement;

     (i)  do any act or thing in the  exercise  of any of its  powers and duties
          under any Finance Document which may lawfully be done and which in its
          absolute  discretion it deems advisable for the protection and benefit
          of the Finance Parties;

     (j)  perform any of its duties,  obligations and responsibilities under any
          Finance Document by or through its personnel or agents;


<PAGE>



     (k)  accept deposits from,  lend money to and generally  engage in any kind
          of banking or other  business with any Tobacco  Group Company  without
          any  liability to account  (and it is expressly  agreed that this will
          not be a breach of any of their duties to the Finance Parties); and


          (l)  accept instant enquiry,  requisition,  objection or investigation
               such title as any person  may have to any  property  or assets of
               such person which is the subject of any Security Document;

     (m)  (in the case only of the Lead Bank and the Security  Agents) from time
          to time  send to each  Finance  Party  (other  than  itself)  a notice
          requesting such details of such Finance Party's  Facilities,  Facility
          Agreements, Outstandings, Commitment and other information relating to
          the Facilities as it may require and each Finance Party  undertakes to
          complete and return promptly any such notice which it receives.

22.3 Duties:  Each of the Lead Bank, the Co-Lead Bank,  the Security  Agents and
     Steering Committee shall:

     (a)  (in the case only of the Lead Bank,  the Co-Lead Bank and the Security
          Agents) except as regards purely administrative acts which do not have
          a material effect upon any of the Banks,  consult whenever  reasonably
          practicable  with the Banks before doing or refraining  from doing any
          act or thing in the exercise of its powers as such;

     (b)  (in the case only of the Lead Bank,  the Co-Lead Bank and the Security
          Agents)  promptly  notify each Bank of the occurrence of any Potential
          Event of Default or Event of  Default  or any  material  breach by any
          Obligor in the due  performance of its  obligations  under any Finance
          Document  which the Lead Bank,  Co-Lead Bank or, as the case may be, a
          Security  Agents (in its capacity as such) has received  actual notice
          from any other party to such Finance Document;

     (c)  subject to the foregoing  provisions of this Clause 22.3 and to Clause
          22.4,  act in  accordance  with  any  instructions  given to it by the
          Majority Banks; and

     (d)  if so instructed by the Majority Banks,  except in  circumstances  set
          out in Clause  25.1(b)  (Enforcement),  refrain  from  exercising  any
          right, power or discretion vested in it under the Finance Documents.

22.4 Emergency  Powers: If it becomes necessary in the opinion of the Lead Bank,
     the Co-Lead Bank,  any Security  Agent or the Steering  Committee to do any
     act or thing in the  exercise  of any of its  powers,  trusts,  authorities
     and/or discretion under this Agreement or any other Finance Document in any
     case where (in the opinion of the Lead Bank, the Co-Lead Bank, any Security
     Agent  or the (as the case may be)) it is not  practicable  to  obtain  the
     prior  agreement  of the  Majority  Banks or all the Banks (as the case may
     require)  before  doing so,  then the Lead  Bank,  the  Co-Lead  Bank,  any
     Security  Agent or the Steering  Committee (as the case may be) shall be at
     liberty  to take such  steps as it shall in its  absolute  discretion  deem
     advisable  for the  protection  and  benefit of the  Finance  Parties or to
     refrain  from taking any steps and shall have no  liability  to any Finance
     Party by reason  of any  exercise  or  failure  to  exercise  such  powers,
     authorities and discretions.



<PAGE>



22.5 Waivers  and Deemed  Consents:  Each Bank shall be deemed to consent to the
     Lead Bank (i) granting such waivers as the Lead Bank considers  appropriate
     in  relation  to Clause  14.2  (Restriction  on  Encumbrances)  and/or  any
     provision of a similar  nature  applicable  to any Facility to any proposed
     lender  to any  subsidiary  of a  Borrower  where  the  Borrowing  by  such
     Subsidiary would be a Permitted Borrowing or (ii) agreeing the terms of the
     financial  covenants  to be  incorporated  in this  Agreement  (pursuant to
     Clause 16), where:-


     (a)  the Lead Bank shall have notified all Banks in writing by facsimile of
          (i)  details  of the  waiver  requested  and the  terms of the  waiver
          proposed  to be  given  by the  Lead  Bank or (ii)  the  terms  of the
          financial covenants proposed to be incorporated in this Agreement,  as
          the case may be; and

     (b)  the Banks shall have been given at least two clear Business Days after
          the later of the  notifications  given to the Lead Bank in  sub-clause
          (a) above to respond to such notification (in the case of a waiver) or
          five clear Business Days to respond to such  notification (in the case
          of financial covenants); and

     (c)  (in the case of a waiver)  the  Majority  Banks  shall have  expressly
          agreed to such waiver,  or shall not have  objected to it prior to the
          time  specified  in such  notification,  or (in the case of  financial
          covenants) all Banks which have responded  prior to the time specified
          in such notification have expressly agreed such financial covenants or
          have not objected to them.

22.6 Exoneration:  Notwithstanding anything to the contrary expressed or implied
     in this  Agreement,  none of the Lead Bank,  the Co-Lead Bank, any Security
     Agent nor any member of the Steering Committee shall:-

     (a)  be bound to enquire as to:-

          (i)  whether or not any representation or warranty made by any Obligor
               under or in connection with any Finance Document is true;

          (ii) the  occurrence or otherwise of any Event of Default or Potential
               Event of Default;

          (iii)the  performance  by any  Obligor  of its  obligations  under any
               Finance Document;

          (iv) any  breach  of  or  default  by  any  Obligor  of or  under  its
               obligations under any Finance Document;

     (b)  be bound to account to any  Finance  Party for any fee or other sum or
          the profit element of any sum received by it for its own account;

     (c)  be bound to disclose to any other person any  information  relating to
          any Tobacco  Group  Company if such  disclosure  would or might in its
          opinion  constitute a breach of any law or  regulation or be otherwise
          actionable at the suit of any person;

     (d)  be under any  fiduciary  duty  towards any Finance  Party or under any
          obligations other than those expressly  provided for in this Agreement
          and the Security Documents;

     (e)  be  liable  (in the  absence  of its own  gross  negligence  or wilful
          misconduct):-

          (i)  for any failure to obtain any licence, consent or other authority
               or for any  failure,  omission,  or defect in the due  execution,
               delivery,    validity,    legality,    adequacy,     performance,
               enforceability,  or  admissibility  in  evidence  of any  Finance
               Document or any communication, report or other document delivered
               under this Agreement or under any Finance Document; or


<PAGE>



          (ii) in respect of its  exercise  or  failure to  exercise  any of its
               powers,  duties and discretions under this Agreement or under any
               Finance Document; or


          (iii)for any failure to effect or procure registration of or otherwise
               protect  all or  part of the  security  created  by any  Security
               Document or for any failure to take or require any Tobacco  Group
               Company  to take any  steps to render  the  Security  created  or
               purported to be created by or pursuant to any  security  Document
               effective or  enforceable  or to perfect any such  security or to
               secure the creation of any ancillary charge under the laws of any
               territory

     (f)  be under any obligations  except those expressly  provided for in this
          Agreement  and shall have no liability or  responsibility  of whatever
          kind (in the absence of its own gross negligence or wilful misconduct)
          to:-

          (i)  any Tobacco  Group  Company  arising out of or in relation to any
               failure  or delay in the  performance  or breach  by any  Finance
               Party of any of its obligations under any Finance Document; or

          (ii) any Finance Party arising out of or in relation to any failure or
               delay in the  performance  or breach by any Tobacco Group Company
               of any of its obligations under any Finance Document.

22.7 The Security Agents:

     (a)  Any  Security  Agent shall  receive and apply as agent  and/or (in the
          case of any Security  Agent other than the US Security  Agent) trustee
          as the case may be for the Finance Parties all amounts paid to them by
          way of Recoveries  under or pursuant to this  Agreement or any Finance
          Document  (except any amounts paid to it in respect of fees,  costs or
          expenses of any Security  Agent,  the Lead Bank, the Co-Lead Bank, the
          Steering Committee or any professional  advisers appointed by the Lead
          Bank or any Security Agent).

     (b)  Except as stated in Clause 22.6(a),  amounts  received by the Security
          Agents in respect of Recoveries  will be applied  between the Banks in
          accordance with the provisions of Part XIV  (Enforcement) and Schedule
          VIII (Distribution of Recoveries between Finance Parties).

     (c)  All interest  earned on money held by any Security Agent in respect of
          Recoveries  pending  application will be added to and from part of the
          money held.

     (d)  Any  Security  Agent  will use  reasonable  endeavours  to  distribute
          amounts  received  by  them  in  respect  of  Recoveries  as  soon  as
          reasonably practicable following receipt.

     (e)  Each of the  Security  Agents  shall be at liberty to place any of the
          Finance  Documents  and  any  other  instruments  documents  or  deeds
          delivered to it pursuant to this  Agreement or in connection  with any
          Finance  Document and for the time being in its possession in any safe
          deposit or safe selected by it with the Lead Bank of any other bank or
          any company whose business  includes  undertaking  the safe custody of
          documents  or any  lawyers and shall not be  responsible  for any loss
          thereby  incurred  (otherwise than as a result of its gross negligence
          or wilful misconduct).



<PAGE>



     (f)  Each of the Security Agents may,  whenever it thinks fit,  delegate by
          power of attorney or  otherwise to any person or persons all or any of
          the rights, powers, authorities and discretions vested in it by any of
          the Finance  Documents and such delegation may be made upon such terms
          and subject to such  conditions as the Security Agents shall think fit
          and the  Security  Agents shall not be bound to supervise or be in any
          way  responsible  for any loss  incurred  by reason of any  default or
          misconduct on the part of such person or persons.


     (g)  Each of the  Security  Agents may refrain  from doing  anything  which
          would or in their opinion might be contrary to any relevant law in any
          jurisdiction or any relevant directive or regulation or which would or
          might render it liable to any person and may do anything  which is, in
          its  opinion,  necessary  to comply with any such law,  regulation  or
          directive.

     (h)  Each of the  Security  Agents  and  every  attorney  or  other  person
          appointed  by it under  any of the  Finance  Documents  may  indemnify
          itself out of the Security  and/or the Recoveries  against all claims,
          demand, liabilities,  claims, costs, proceedings,  losses and expenses
          incurred by any of them in relation to or arising out of any  Security
          Document  or its  enforcement  or the  exercise  of any of the rights,
          powers  and  discretions  vested in them or any other  matter or thing
          done or  omitted  to be done in  connection  with  any of the  Finance
          Documents  (otherwise  than as a result  of its  gross  negligence  or
          wilful misconduct).

     (i)  Each of the Security  Agents may take such security (if any) on behalf
          of the  Finance  Parties  after  the  date of this  Agreement  as such
          Security  Agent  in  its  sole  discretion  may  consider  appropriate
          provided that the Security  Agent shall use  reasonable  endeavours to
          notify the Banks from time to time of the  security  taken or proposed
          to be taken by it. The  Security  Agent shall have no liability to any
          Finance  Party in respect of any such  security or any failure to take
          any such  security  or any  failure,  omission  or  defect  in the due
          execution,  delivery, validity, legality, adequacy,  enforceability or
          admissibility in evidence of any such security.

22.8 The Steering Committee, Duties:

     (a)  Except  as  regards  purely   administrative  acts,  whenever  in  its
          reasonable  opinion  practicable,  the Steering Committee shall notify
          all the Banks of any  proposal to do or refrain  from doing any act or
          thing  in  the  exercise  of  its  duties  or,  if it is  not,  in the
          reasonable opinion of the Steering Committee, practicable to so notify
          the Banks beforehand, it will so notify the Banks promptly thereafter.

     (b)  Any decision of the Steering  Committee shall be made by a majority of
          at least  four out of five by number of the  members  of the  Steering
          Committee.  In any case where the Steering Committee cannot reach such
          a decision, the matter shall be determined by the Majority Banks (save
          where some other or additional majority is expressly specified in this
          Agreement).

     (c)  The  Steering  Committee  shall  promptly  notify  each  Bank  of  the
          occurrence of any Event of Default of which the Steering Committee has
          actual knowledge or actual notice.

22.9 Group  Indemnity:  SCC and  the  Borrowers  hereby  jointly  and  severally
     undertake  to indemnify  forthwith  upon demand from time to time on a full
     indemnity basis:-



<PAGE>



     (a)  the Lead Bank, the Co-Lead Bank, any Security Agent and each member of
          the Steering  Committee against all reasonable costs  (including,  but
          not limited to, professional fees and reporting  accountants' fees and
          disbursements) claims,  expenses,  demands and liabilities incurred or
          sustained by the Lead Bank, the Co-Lead Bank and/or any Security Agent
          and/or each member of the  Steering  Committee in the  performance  of
          their duties as contemplated  in this  Agreement,  or by reason of any
          act or omission of the Lead Bank, the Co-Lead Bank, any Security Agent
          and/or the Steering Committee acting in its capacity as such, together
          with value added tax and any other  applicable taxes and undertake not
          to challenge any costs so incurred;


     (b)  each  Finance  Party  against all  actions,  charges,  claims,  costs,
          damages, demands, expenses, liabilities, losses or proceedings (each a
          "Claim") which may be brought or threatened against such Finance Party
          or incurred or sustained by such Finance Party in connection  with any
          Finance  Document  (save  where such  Claim  arises as a result of the
          gross negligence or wilful misconduct of such Finance Party).

          Each Finance Party agrees (without prejudice to the obligations of SCC
          and the  Borrowers  under  this  Clause  22.9) to  provide  reasonable
          details of any Claim in respect  of which it makes  demand  under this
          Clause 22.9.

22.10Banks' Indemnity:  Each Bank shall, on demand by the Lead Bank, the Co-Lead
     Bank, any Security Agent or any member of the Steering Committee, indemnify
     the Lead Bank,  the Co-Lead Bank,  any Security Agent or such member of the
     Steering  Committee (as the case may be),  against any and all fees (to the
     extent properly chargeable by the Lead Bank, the Co-Lead Bank, any Security
     Agent or the Steering  Committee (as the case may be) under this  Agreement
     or under any other Finance Document but not promptly  reimbursed by SCC and
     the Borrowers) and all costs,  claims,  demands,  expenses and  liabilities
     which the Lead Bank, the Co-Lead Bank, any Security  Agents or the Steering
     Committee  (as the case may be) may pay or incur  (except  by reason of its
     own gross  negligence  or wilful  misconduct)  in acting in its capacity as
     such on behalf of the  Finance  Parties  or any of them or by reason of any
     act or omission of the Lead Bank,  the Co-Lead  Bank,  any  Security  Agent
     and/or the Steering  Committee  acting in its capacity as such. The cost of
     indemnifying  the Lead Bank,  the Co-Lead Bank,  any Security  Agent or the
     Steering  Committee (as the case may be) shall be borne by each Bank in the
     proportion  which its Commitment on such date bears to the aggregate amount
     of the Commitments of all Banks on such date,  provided that the Lead Bank,
     the  Co-Lead  Bank,  any  Security  Agent or such  member  of the  Steering
     Committee  shall  make an  appropriate  refund to such  Banks of any amount
     subsequently  received by it from SCC and/or the Borrowers or any person in
     respect of such fee, cost, claim, expense and/or liability.

     If a Bank  (referred to in this Clause 22.10 as a "defaulting  Bank") fails
     to pay its due contribution under this indemnity, then:-

     (a)  The Lead Bank,  the Co-Lead Bank,  any Security  Agent or the Steering
          Committee  (as the case may be) may  (without  prejudice  to its other
          rights and remedies)  deduct the amount due from the  defaulting  Bank
          from any  sums  which  are then or  afterwards  in its  possession  or
          control which would otherwise be payable to the defaulting Bank;

     (b)  If the Lead Bank, the Co-Lead Bank, any Security Agent or the Steering
          Committee  is at the  relevant  date unable to recover the full amount
          due from the defaulting Bank from such  Recoveries  either because the
          Security  Documents  have not been enforced or because there are no or
          insufficient  Recoveries  then  available  for the purpose,  the other
          Banks liable to  contribute  under  Clause 22.10 (the  "non-defaulting
          Banks")  shall pay to the Lead Bank,  the Co-Lead  Bank,  any Security
          Agent or the  Steering  Committee  (as the case may be) the  amount or
          balance of the  contribution  outstanding from the defaulting Bank (to
          the extent that it has not been  satisfied out of  Recoveries)  in the
          proportion in which the non-defaulting Banks would otherwise have been
          required  to  indemnify  to it if the  defaulting  Bank had not been a
          party to this Agreement and in this event:-


<PAGE>



          (i)  any money subsequently recovered from the defaulting Bank; and/or


          (ii) the  proportion of any  Recoveries  subsequently  received by any
               Security Agent which would, in the normal course of events,  have
               been paid to the  defaulting  Bank up to an amount not  exceeding
               the aggregate  amount of the payments made by the  non-defaulting
               Banks under this Clause 22;

               shall  be  shared  between  the   non-defaulting   Banks  in  the
               proportions  that  such   non-defaulting   Banks  have  paid  the
               outstanding   contribution   of  the   defaulting   Bank.   22.11
               Disclaimer:  The Lead Bank,  the Co-Lead Bank, any Security Agent
               and  the  Steering  Committee  accept  no  responsibility  to any
               Finance  Party  for  the  accuracy  and/or  completeness  of  any
               information  supplied in connection with any Finance  Document or
               for  the   legality,   validity,   effectiveness,   adequacy   or
               enforceability  of any Finance  Document  and the Lead Bank,  the
               Co-Lead Bank, any Security Agent and the Steering Committee shall
               be under no liability to any Finance  Party as a result of taking
               or  omitting  to take  any  action  in  relation  to any  Finance
               Document  (save in the case of the  gross  negligence  or  wilful
               misconduct of the Lead Bank, the Co-Lead Bank, any Security Agent
               or the Steering  Committee (as the case may be)).  The Lead Bank,
               the Co-Lead Bank, any Security Trustee and the Steering Committee
               shall not be liable  for any  failure to take any action if it is
               not expressly obliged to take such action under this Agreement.

22.12No Actions against Individuals:  Each Finance Party agrees that it will not
     assert or seek to assert  against any director,  officer or employee of the
     Lead  Bank,  the  Co-Lead  Bank,  any  Security  Agent or any member of the
     Steering  Committee any claim it may have against any of them in respect of
     the matters referred to in this Clause 22.

22.13Credit  Appraisals:  It is agreed by each Finance  Party that it has itself
     been,  and will  continue  to be,  solely  responsible  for  making its own
     independent  appraisal of and investigations into the financial  condition,
     creditworthiness,  condition,  affairs,  status and nature of each  Tobacco
     Group Company and SCC, and, accordingly, each Finance Party confirms to the
     Lead Bank,  the Co-Lead  Bank,  the Security  Agents and each member of the
     Steering  Committee  that it has not relied and will not hereafter  rely on
     the Lead Bank, the Co-Lead Bank, any Security Agent, the Steering Committee
     or any other Bank:-

     (a)  to check or enquire  on its  behalf  into the  adequacy,  accuracy  or
          completeness of any representation, warranty, statement or information
          provided by or on behalf of any Tobacco  Group  Company in  connection
          with any Finance Document or any  communication or document  delivered
          under any of them and/or the security  contemplated  in such documents
          (whether or not such information has been or is after the date of this
          Agreement  circulated  to such  Finance  Party by the Lead  Bank,  the
          Co-Lead Bank, either Security Agent or the Steering  Committee (as the
          case may be)); or

     (b)  to provide it with any  information  in relation to any Tobacco  Group
          Company or (save as expressly  provided in this  Agreement)  assess or
          keep   under   review  on  its   behalf   the   financial   condition,
          creditworthiness, condition, business affairs, status or nature of any
          Tobacco Group Company; or

     (c)  to advise it on the effect of or the implications of any provisions of
          any Finance Document or any security rights or obligations hereunder.



<PAGE>



22.14Information:  Each  Finance  Party (other than the  International  Security
     Agent) agrees that it will deliver to the  International  Security Agent no
     later than ten  Business  Days  following  the end of each  calendar  month
     (commencing on or about 31st August 1997) details of its Outstandings as at
     the last  Business  Day of the  preceding  month in such detail as the Lead
     Bank may  require.  If any  Finance  Party  fails  to  provide  details,  a
     calculation  by the Lead Bank of the  Outstandings  of such  Finance  Party
     shall be conclusive for the purposes of this Agreement.



22.15Security  Agent  Report:  The  Security  Agents  shall  report to the Banks
     monthly in a format to be agreed  between the Security  Agents and the Lead
     Bank (acting on the instructions of the Majority Banks).

22.16 Security Matters:

     (a)  Each Bank authorizes and directs each Security Agent to enter into the
          Security  Documents  for the  benefit of the Banks.  Each Bank  hereby
          agrees  that,  except as otherwise  expressly  set forth  herein,  any
          action taken by the Majority Banks in accordance with the provision of
          this  Agreement  or the  Security  Documents,  and the exercise by the
          Majority  Banks of the powers set forth  herein or  therein,  together
          with such other powers as are reasonable incidental thereto,  shall be
          authorised  and binding upon all of the Banks.  Each Security Agent is
          hereby authorised on behalf of all of the Banks, without the necessity
          of any notice to or further  consent from any Bank,  from time to time
          prior to an Event of Default or  Potential  Event of Default,  to take
          any action with  respect to any Security or Security  Documents  which
          may be  necessary  to perfect  and  maintain  perfected  the  security
          interest  in and  liens  upon the  Security  granted  pursuant  to the
          Security Documents.

     (b)  The Banks hereby  authorize each Security  Agent, at its option and in
          its  discretion,  upon the direction of the Lead Bank (acting with the
          approval of the Majority Banks) to release any Encumbrance  granted to
          or held by such Security Agent upon any Security:

          (i)  upon  termination of the commitments and payment and satisfaction
               of all of the obligations at any time arising under or in respect
               of this  Agreement or the Finance  Documents or the  transactions
               contemplated hereby or thereby;

          (ii) constituting  property  being sold or disposed of upon receipt of
               the proceeds of such sale by such  Security  Agent in  compliance
               with this clause; or

          (iii)if  approved,  authorized  or ratified in writing by the Majority
               Banks,  unless such  release is required to be approved by all of
               the Banks  hereunder.  Upon request by the Lead Bank at any time,
               the Banks will confirm in writing any Security Agent's  authority
               to release particular types of Security pursuant to this Clause;

     (c)  Upon any sale and transfer of Security  which is  expressly  permitted
          pursuant to the terms of the Agreement,  or consented to in writing by
          the Majority  Banks or all of the Banks,  as  applicable,  and upon at
          lease five (5) Business Days' (or such shorter period as is acceptable
          to the relevant Security Agent) prior written request by the Borrowers
          the  relevant   Security  Agent  shall  (and  is  hereby   irrevocably
          authorized by the Banks to) execute such documents as may be necessary
          to evidence  the release of the  Encumbrances  granted to the Security
          Agent for the benefit of the Banks herein or pursuant  hereto upon the
          Security that was sold or transferred; provided, that



<PAGE>



          (i)  no Security  Agent shall be required to execute any such document
               on terms which, in such Security  Agent's  opinion,  would expose
               such  Security  Agent to  liability or create any  obligation  or
               entail  any   consequence   other   than  the   release  of  such
               Encumbrances without recourse, representation or warranty; and


          (ii) such release shall not in any manner discharge,  affect or impair
               the obligations or any  Encumbrances  upon (or obligations of the
               Obligors in respect of) all  interests  retained by the Obligors,
               including,  without limitation,  the proceeds of the sale, all of
               which shall continue to constitute  part of the Security.  In the
               event of any  foreclosure  or  similar  enforcement  action  with
               respect to any of the Security, the relevant Security Agent shall
               be authorised to deduct all of the expenses  reasonably  incurred
               by such  Security  Agent  from the  proceeds  of any  such  sale,
               transfer or foreclosure.

     (d)  No Security Agent shall have any obligation whatsoever to the Banks or
          to any other person to assure that the Security  exists or is owned by
          the  Obligors  or is  cared  for,  protected  or  insured  or that the
          Encumbrances  granted to any Security Agent herein or pursuant  hereto
          have been properly or  sufficiently  or lawfully  created,  perfected,
          protected or enforced or are entitled to any particular  priority,  or
          to exercise or to continue exercising at all or in any manner or under
          any duty of care, disclose or fidelity any of the rights,  authorities
          and powers  granted or available to such Security Agent in this Clause
          or in any of the Finance  Documents,  it being  understood  and agreed
          that in respect of the Security, or any act, omission or event related
          thereto,  each  Security  Agent  may  act in any  manner  it may  deem
          appropriate,  in its sole discretion,  given such Security Agent's own
          interest  in the  Security  as one of the Banks  and that no  Security
          Agent shall have any duty or liability whatsoever to the Banks, except
          for its gross negligence or willful misconduct.

23.  AMENDMENTS AND DECISIONS

23.1 Majority Bank Decisions:  Except as provided in Clause 23.2, with the prior
     written consent of the Majority Banks, the Lead Bank and SCTC Inc. may from
     time to time enter into written  amendments,  supplements  or variations to
     this  Agreement  (however  fundamental)  for  the  purpose  of  adding  any
     provisions  to the Finance  Documents  or changing in any manner the rights
     and/or  obligations  of all or any of the parties to this Agreement and the
     Lead Bank may  execute  and  deliver to any  Borrower a written  instrument
     waiving, prospectively or retrospectively,  on such terms and conditions as
     the Lead Bank may specify in such  instrument,  any of the  requirements of
     any of the Finance Documents.

23.2 Unanimous Consent:

     (a)  No waiver  of and no  amendment,  supplement  or  modification  to any
          Finance Document shall, without the prior consent of all the Banks:-

          (i)  amend  the  definitions  of  Borrowings,  Encumbrance,  Event  of
               Default,  Majority  Banks,  Potential  Event of  Default or Final
               Repayment Date;

          (ii) amend or waive any provision of Clause 6 (Interest),  this Clause
               23,  Clause 25  (Enforcement  of  Security  and  Distribution  of
               Recoveries),  26 (Equalisation)  or 27 (Interim  Distributions of
               Recoveries and Creation of Reserves) or Schedule VIII;



<PAGE>



          (iii)have the effect of  changing  the amount of any  Facility  or any
               Bank's  Commitment or the principal or face amount or currency of
               any utilisation, or extend the term of any Facility; or


          (iv) have the  effect of  decreasing  the  amount  of,  or change  the
               currency of or extend the date for any payment of interest,  fees
               or any other amount payable to all or any of the Finance  Parties
               under any of the Finance Documents; or

     (b)  notwithstanding any other provision in this Agreement,  the Lead Bank,
          the Co-Lead Bank, the Security  Agents or the Steering  Committee,  as
          the case may be,  shall not be  obliged  to agree to any such  waiver,
          amendment or supplement if the same would:-

          (i)  amend or waive any provision of this Clause 23; or

          (ii) otherwise amend or waive any rights of the Lead Bank, the Co-Lead
               Bank, the Security Agents or the Steering  Committee under any of
               the Finance Documents or subject the Lead Bank, the Co-Lead Bank,
               the Security  Agents or the Steering  Committee to any additional
               obligations under such documents.

23.3 Costs: If any Borrower requests any amendment, supplement,  modification or
     waiver in accordance  with Clause 23.1,  then the Borrowers  shall,  within
     five  Business  Days  of  demand  by the  Lead  Bank or a  Security  Agent,
     reimburse  the Lead Bank or a  Security  Agent (as the case may be) for all
     reasonable costs and expenses (including,  without limitation, legal fees),
     together  with any value added tax on them,  incurred by the Lead Bank or a
     Security Agent in the negotiation, preparation and execution of any written
     instrument contemplated by Clause 23.1.

23.4 Release of  Security:  Each of the  Security  Agents  shall  release at the
     request of a Borrower  any asset or assets from the  Security  Documents to
     the extent that their  disposal or release is  permitted or required by the
     terms of this Agreement or any of the Security Documents, without reference
     to the Banks. In addition, each of the Security Agents shall be entitled to
     release:-

     (a)  any  fixed  security  held by it over any  stock in trade of a Tobacco
          Group  Company at any time in order to permit a disposal of such stock
          in trade by such  Tobacco  Group  Company  in the  ordinary  course of
          carrying on its business (but so that the proceeds of such stock shall
          continue to be subject to such security);

     (b)  and will release any fixed  security held by it over the shares in any
          Tobacco  Group  Company  which  is not a  Borrower  provided  that the
          Borrowers have confirmed that Eligible Intercompany Loans made to such
          Tobacco  Group  Company  are not  required  for either the  Borrower's
          Borrowing Base or SCTC Inc.'s  Borrowing Base to exceed Net Borrowings
          or SCTC Inc.'s Net Borrowings respectively; and

     (c)  any security held by it upon written  instructions  from the Lead Bank
          (acting on the instructions of the Majority Banks).

23.5 Administrative Determinations: The Lead Bank shall be entitled to determine
     purely  administrative  matters which do not materially affect the position
     of any Finance Party without reference to the Finance Parties.



<PAGE>



23.6 Prior  Notice:  Where a  Finance  Document  provides  for any  matter to be
     determined  by  reference  to the  opinion of the  Majority  Banks or to be
     subject to the consent or request of the  Majority  Banks or for any action
     to be  taken on the  instructions  of the  Majority  Banks,  such  opinion,
     consent,  request or  instructions  shall only be  regarded  as having been
     validly  given or issued by the Majority  Banks if all the Banks shall have
     received prior notice of the matter on which such opinion, consent, request
     or instructions is sought, but so that the Borrowers shall be entitled (and
     bound) if so informed  by the Lead Bank to assume  that such  notice  shall
     have been duly received by each Bank and that the relevant  majority  shall
     have been obtained to constitute  Majority Banks whether or not this is the
     case.


24.  RETIREMENT  OF LEAD  BANK,  CO-LEAD  BANK,  SECURITY  AGENTS  AND  STEERING
     COMMITTEE

24.1 Notification  of Intention:  If the Lead Bank,  the Co-Lead Bank or, as the
     case may be, any  Security  Agent  wishes at any time to  retire,  it shall
     notify the  Borrowers  and the other  Finance  Parties  (and in the case of
     retirement of a Security Agent any other  beneficiaries  under the Security
     Documents),  of its  intention to do so and upon receipt of such notice the
     Majority Banks may in writing (after consultation with SCC for a period not
     exceeding 7 days) appoint a successor  Lead Bank, a successor  Co-Lead Bank
     or, as the case may be, a successor Security Agent. If such a successor has
     not been appointed and accepted  office in writing within thirty days after
     the Lead Bank or Co-Lead  Bank's,  as the case may be, a  Security  Agent's
     notice of proposed  retirement,  the Lead Bank,  or Co-Lead Bank or, as the
     case may be, such Security Agent may within a further fourteen days give to
     the  Borrowers  and the  other  Finance  Parties  (and  in the  case of the
     retirement of a Security Agent any other  beneficiaries  under the Security
     Documents)  fourteen days' prior written  notice  nominating an alternative
     successor  Lead Bank or Co-Lead Bank or, as the case may be, an alternative
     successor Security Agent.

24.2 Nominee:  Unless the Majority Banks shall have appointed a successor  which
     has accepted office within such notice period of fourteen days,  then, upon
     the expiry of such  fourteen day period and upon the written  acceptance in
     such form as the Banks may  unanimously  approve  (such  approval not to be
     unreasonably  withheld or delayed) of its  nomination by the Lead Bank's or
     Co-Lead  Bank's  or,  as the case may be, a  Security  Agent's  nominee  as
     successor  Lead  Bank or  successor  Co-Lead  Bank or,  as the case may be,
     successor  Security Agent and, in the case of a successor  Security  Agent,
     due  execution  of such  documentation  as may be necessary to transfer and
     vest in such successor Security Agent all the rights and obligations of the
     retiring Security Agent under the Security Documents, such nominee shall be
     deemed to have been  appointed  to the office of Lead Bank or Co-Lead  Bank
     or, as the case may be, Security Agent.

24.3 Provisions  relating  to  Successor:  With  effect  from  the  date  that a
     successor is appointed  and accepts the office of Lead Bank or Co-Lead Bank
     or,  as the case may be, a  Security  Agent  and  executes  such  necessary
     documentation in accordance with this Clause 24:-

     (a)  as regards the other Finance Parties, and the Obligors, such successor
          shall  become  bound by all the  obligations  of the Lead  Bank or the
          Co-Lead  Bank or,  as the case may be, a  Security  Agent  and  become
          entitled  to all  the  rights,  privileges,  powers,  authorities  and
          discretions  of the Lead Bank or the Co-Lead  Bank or, as the case may
          be, a Security Agent under the Finance Documents;



<PAGE>



     (b)  the agency of the  retiring  Lead Bank or Co-Lead Bank or, as the case
          may be, the trusteeship of the retiring Security Agent shall terminate
          and the retiring Lead Bank or Co-Lead Bank or, as the case may be, the
          retiring Security Agent shall be discharged from any further liability
          or obligation under the Finance  Documents,  but without  prejudice to
          any  liabilities  which the retiring  Lead Bank or Co-Lead Bank or, as
          the case may be, the retiring  Security  Agent may have incurred prior
          to the termination of its agency;


     (c)  the costs,  charges and  expenses of the  retiring  Lead Bank,  or the
          retiring  Co-Lead Bank or, as the case may be, the  retiring  Security
          Agent shall be discharged if recoverable  under the provisions of this
          Agreement; and

     (d)  the provisions of the Finance  Documents  shall continue in effect for
          the benefit of the retiring Lead Bank or the retiring Co-Lead Bank or,
          as the case may be,  the  retiring  Security  Agent in  respect of any
          actions  taken or  omitted  to be taken by it or any  event  occurring
          before the termination of its agency.

24.4 Retirement of Steering Committee:

     (a)  The role of any  Bank as a member  of the  Steering  Committee  may be
          terminated at any time by:-

          (i)  that Bank  giving at least 21 days' prior  written  notice to all
               Finance Parties of its resignation; or

          (ii) the Majority  Banks (which shall be  calculated  by excluding the
               Commitment of the Bank whose resignation is sought) notifying the
               relevant  Steering  Committee member of the proposed  termination
               with  effect  from a date at  least  21 days  after  the  date of
               delivery of such notice.

     (b)  As soon as practical  after  delivery of such  notice,  or in any case
          where any Banks request the  appointment of any  additional  member or
          members, the Steering Committee shall consult with the Finance Parties
          as to  whether  a  successor  (or  additional  member or  members)  is
          considered  necessary.  If  so,  the  Steering  Committee  shall  make
          arrangements   for  the  Majority   Banks  (voting  on  the  basis  of
          Commitments) to appoint a successor.

     (c)  With effect from the operative  date of  resignation/termination  of a
          Steering Committee member:-

          (i)  the  role  of  the  retiring  Steering   Committee  member  shall
               terminate  but without  prejudice  to any  liabilities  which the
               retiring Steering Committee member may have incurred or rights it
               may have acquired prior to its termination;

          (ii) the retiring  Steering  Committee member shall be discharged from
               any further  liability or obligations as a member of the Steering
               Committee under this Agreement; and

          (iii)the  costs,   charges  and  expenses  of  the  retiring  Steering
               Committee  member incurred in such capacity shall be paid in full
               by the parties liable.

     (d)  With effect from the operative  date of  appointment of a new Steering
          Committee  member,  such  successor  shall  become  bound  by all  the
          obligations of a member of the Steering  Committee and become entitled
          to all the rights, privileges,  powers, authorities and discretions of
          a member of the Steering Committee under this Agreement.


<PAGE>



                                    PART XIV


                                   ENFORCEMENT



25.  ENFORCEMENT OF SECURITY AND DISTRIBUTION OF RECOVERIES

25.1 Enforcement:  Each  of the  Security  Agents  shall  enforce  the  security
     constituted by the Security Documents:

     (a)  before the Final  Repayment Date if the Majority Banks so direct after
          the Lead Bank has declared an Event of Default pursuant to Clause 17.1
          (Demand on Event of  Default)  of this  Agreement  and demand has been
          made for the  payment of all or part of the  Indebtedness  owing under
          the Facilities; or

     (b)  if after the Final  Repayment Date any Bank so requests in writing not
          less  than 90 days  after the Final  Repayment  Date in  circumstances
          where a Obligor has failed to repay Indebtedness due and owing to such
          Bank under its Facilities; or

     (c)  at any time,  if  requested  to do so in writing  by an Obligor  (with
          respect only to the security granted by such Obligor).

          provided that the Security  Agents may only be required to enforce the
          security in accordance with the terms of the Security Documents.

25.2 Distribution of Recoveries: The Recoveries shall be distributed between the
     Finance  Parties  in the  order  of  priority  set  out in  Schedule  VIII.
     Distributions  of Recoveries  shall be made in the manner set out in Clause
     27.1 (Interim Distributions of Recoveries and Creation of Reserves).

25.3 Recoveries to be Held as Trustee: Each Finance Party (other than a Security
     Agent)  shall  pay  any  Recoveries  received  by  it to a  Security  Agent
     forthwith  upon  receipt.  Each  Security  Agent shall hold the  Recoveries
     received  by  it  in  an  interest  bearing  Dollar  deposit  account  (the
     "Recoveries Account") as trustee for distribution to the Finance Parties in
     accordance  with the  provisions  of Clause 27  (Interim  Distributions  of
     Recoveries  and Creation of Reserves) and Schedule  VIII of this  Agreement
     and shall hold the security  constituted by the Security Documents as agent
     and trustee for the Finance  Parties to give effect to this  Agreement  and
     shall exercise its rights,  powers and duties under the Security  Documents
     (and  particularly  those  concerned with the protection and enforcement of
     the security  afforded by such  documents)  and/or under this Agreement for
     the  benefit of all  Finance  Parties.  For the  avoidance  of doubt,  each
     Security  Agent agrees that it will not exercise or purport to exercise any
     right of set-off  over any amount from time to time  standing to the credit
     of the Recoveries Account.



<PAGE>



25.4 Proceeds of Existing Security:  Proceeds derived by a Bank from enforcement
     of or sale or  disposition  of  property  subject to  Existing  Security in
     favour of such Bank  shall  (after  providing  for any  claims  ranking  in
     priority) be applied, first, in or toward payment or discharge of the money
     and  liabilities   due,  owing  or  incurred   (actually  or  contingently)
     (including the provision of cash cover for any contingent  liabilities)  to
     the Bank in whose favour such Existing Security was granted up to the limit
     of such  Bank's  Commitment  (and shall  reduce  such  Bank's  claim on any
     Recoveries   accordingly)  and,  second,   the  balance  of  such  proceeds
     (including the amount of any cash cover which proves to be excessive) shall
     be deemed to be  Recoveries  where it is recovered  from any Tobacco  Group
     Company or other person from which a Security  Agent also holds a guarantee
     and/or security.


25.5 Proceeds of  Litigation:  any amounts  received by any Bank, the Lead Bank,
     the  Co-Lead  Bank or either  Security  Agent  after the  Enforcement  Date
     pursuant to any legal action or proceeding  arising out of or in connection
     with any Finance  Document shall (after deduction of all costs and expenses
     payable in connection therewith) be deemed to form part of the Recoveries.

25.6 Treatment  of  a  Bank's  Preferential   Claims:  All  Preferential  Claims
     recovered by a Bank on or after the  Enforcement  Date shall be retained by
     the relevant Bank and its claim on any Recoveries reduced accordingly.

25.7 Currency Conversion:

     (a)  Each Security Agent is authorised to make such currency conversions as
          it considers necessary or appropriate in order to convert into Dollars
          any  Recoveries  received by it in any  currency  other than  Dollars,
          provided that,  where Recoveries are available for distribution in the
          same  currency  as that of the  Indebtedness  in  respect  of  which a
          payment  or  Reserve  is to be made out of such  Recoveries,  then the
          amount of such payment or Reserve  shall be  calculated  in accordance
          with Clause 25.7(b) but paid or made in such currency.

     (b)  Where  it  is  necessary  to  calculate   the  amount  of   Recoveries
          distributable  to a  Bank,  such  Bank's  Commitment  and  the  amount
          outstanding  to such Bank  under any  Finance  Document  in a currency
          other than  Dollars  shall be  deemed,  for the  purpose  only of such
          calculation,  to be converted  from such  currency into Dollars at the
          spot  buying rate of the Lead Bank for the  purchase of that  currency
          with  Dollars  in  similar  amounts  at or about  11.00 am on the date
          following receipt by a Security Agent of the relevant Recoveries.

26.  EQUALISATION

26.1 Notification:  Within five Business Days after the  Enforcement  Date, each
     Bank shall  notify the Lead Bank and the Security  Agents of the  aggregate
     amount of Indebtedness  incurred by each Tobacco Group Company to such Bank
     (actually or  contingently)  under its Facilities and each Finance Document
     as at the Enforcement Date; (its "Aggregate Bank Indebtedness").

26.2 Calculation:  The Lead Bank  shall  calculate  as at the  Enforcement  Date
     (taking into account both actual  Indebtedness  and any provisions made for
     unmatured liabilities):  the balancing credit or balancing payment (if any)
     due to or from each Bank,  being the amount required to be paid or received
     in order to equalise each Bank's Proportion of Aggregate  Outstandings with
     its Proportion of Aggregate  Commitments  and shall notify each Bank of the
     amount (if any) payable or receivable by such Bank accordingly.

26.3 Payments:  Forthwith upon receipt of a written  request from the Lead Bank,
     each  relevant  Bank shall pay to the Lead Bank the amount of the balancing
     payment shown as payable by it under Clause 26.2.



<PAGE>



26.4 Distribution of Balancing Payments:  Out of the amounts paid to it pursuant
     to Clause 26.3, the Lead Bank shall,  as soon as  practicable,  pay to each
     Bank to which a balancing credit is due the amount of such credit, provided
     that  where an amount is claimed  by a Bank as a Reserve  for an  unmatured
     liability, then the amount of the Reserve (as determined pursuant to Clause
     27.2)  (Calculation  of  Reserves)  shall be paid into an  interest-bearing
     deposit account in accordance with Clause 27.6 (Account).


26.5 No Change in Indebtedness:  The provisions of Clauses 26.1, 26.2, 26.3, and
     26.4  shall not  operate to  increase  or reduce  the  indebtedness  of the
     Obligors to the Banks nor shall any amounts  received by a Bank pursuant to
     Clause 26.4 be applied in actual  reduction of any part of the indebtedness
     of any Obligor to the Banks until the Lead Bank shall notify the Banks that
     no further distributions of the Recoveries will be made; nor shall any such
     payment be deemed to constitute an assignment to another Bank of a debt due
     to one Bank.

26.6 Interest: Any payment made by any Bank under Clause 26.3 shall be deemed as
     between  the  Banks  for the  purposes  only of this  Agreement  (including
     distribution  of  Recoveries)  to bear interest from the date of payment at
     the rate stated by the Lead Bank from time to time.  It is agreed,  for the
     avoidance  of  doubt,  that in the  case of any  unmatured  claim by a Bank
     against a Tobacco Group Company,  interest thereon shall be calculated with
     effect from the date on which it matures into an actual liability.

26.7 Suspense Account:

     (a)  Where any Bank receives funds  pursuant to Clauses 25.2  (Distribution
          of Recoveries),  26.4 or 27.1 (Interim  Distribution of Recoveries) it
          shall not (unless  required by law) apply any part of such funds in or
          towards payment of the relevant  indebtedness  but shall instead place
          the funds on an interest  bearing  overnight  suspense  account  until
          otherwise agreed by all the Banks.

     (b)  If any estimate made by the Lead Bank (or any other Finance  Party) in
          order  to  calculate,   directly  or  indirectly,   the  distributions
          hereunder shall prove to be inaccurate when made or becomes inaccurate
          through the passage of time or otherwise, then the amounts received by
          each Bank shall be adjusted  by the Lead Bank to take  account of such
          inaccuracy and such Bank shall  forthwith upon notice by the Lead Bank
          pay to the Lead Bank any part of the funds  standing  to the credit of
          such suspense account as may be required to achieve such a correction.

26.8 Currency Conversions:  Where it is necessary to calculate the amount of any
     payment  to be made to or by any  Bank  pursuant  to this  Clause  26,  the
     amounts  outstanding  to a Bank in a currency  other than Dollars  shall be
     deemed,  for the purpose only of such  calculation,  to be  converted  into
     Dollars at the spot buying  rate of the Lead Bank for the  purchase of that
     currency  with Dollars in similar  amounts at or about 11.00 am on the date
     on which the calculation falls to be made.

26.9 Final Equalisation:  The provisions of this Clause 26.9 shall be applied at
     such time or times after the Enforcement  Date as the Security Agents shall
     consider appropriate, (provided that such provisions will, unless otherwise
     agreed by all the  Banks,  be  applied  at least  once by no later than the
     first anniversary of the Enforcement Date), as follows:

     (a)  before each occasion on which it intends to implement  the  provisions
          of this Clause 26.9, a Security Agent shall send a notice to each Bank
          requiring it to notify that Security Agent of (i) the aggregate amount
          of Indebtedness  incurred by each Group Company to such Bank (actually
          or contingently)  under its Facilities and each Finance Document as at
          the date of such  notice  and which has not been paid or cash cover or
          other security provided  therefor as at the date of such notice;  (its
          "Bank Loss").

     (b)  Each Bank shall deliver the information  requested by a Security Agent
          no  later  than 10  Business  Days  after  receipt  by it of a  notice
          pursuant to sub-clause (a) above.


<PAGE>



     (c)  Based on the information  given to it under Clause 26.9(b) (subject to
          any adjustments it regards as appropriate) the relevant Security Agent
          shall calculate the balancing credit on balancing payment (if any) due
          to or from each Bank, being the amount required to be paid or received
          in order to  equalise  such  Bank's  Proportion  of Bank Loss with its
          Proportion of Aggregate Commitments, and shall notify each Bank of the
          amount (if any) payable or receivable by each Bank accordingly.


     (d)  Forthwith upon receipt of a written request by a Security Agent,  each
          relevant  Bank  shall  pay  to a  Security  Agent  the  amount  of the
          balancing  payment  notified as payable by it under Clause 26.9(c) and
          the Security Agent shall, as soon as practicable,  pay to each Bank to
          which a balancing  credit is due, the amount of such credit,  provided
          that  where  an  amount  is  claimed  by a Bank  as a  Reserve  for an
          unmatured liability, then the amount of the Reserve shall be paid into
          an  interest-bearing  deposit  account in accordance  with Clause 27.6
          (Account).

     (e)  If a Bank fails to make a payment due from it under this Clause  26.9,
          a Security  Agent  shall be  entitled  to take action on behalf of the
          Banks to whom such payment was to be  redistributed  (subject to being
          indemnified  to its  satisfaction  by such  Banks)  but shall  have no
          obligation  or liability to those Banks or any other person as regards
          such default and any loss  suffered as a result of such default  shall
          lie where it falls.

          Any  equalisation  under this  Clause 26.9 shall be in addition to any
          equalisation  conducted  pursuant to Clause 26.1 and will take account
          of previous adjustments under Clauses 26.1 and 26.9 as appropriate.

27.  INTERIM DISTRIBUTIONS OF RECOVERIES AND CREATION OF RESERVES

27.1 Interim  Distribution  of  Recoveries:  The  Lead  Bank  shall  as  soon as
     practicable  following  receipt of  Recoveries  and  applying  the order of
     priority set out in Schedule VIII:-

     (a)  pay to each Bank that part of its pro rata share (calculated  pursuant
          to paragraph 3 of Schedule  VIII) as is referable to claims which have
          matured; and

     (b)  create a  Reserve  equal  to that  part of a  Bank's  pro  rata  share
          (calculated  pursuant to paragraph 3 of Schedule VIII) as is referable
          to the provision made for unmatured liabilities in accordance with the
          following provisions of this Clause 27.

27.2 Calculation of Reserves:

     (a)  The Lead Bank shall,  after consultation with the Banks, and acting on
          the  instructions of the Majority  Banks,  decide on the amount of the
          provision  which  should be made in respect of  unmatured  liabilities
          under the Facilities as soon as practicable after the Enforcement Date
          for the purpose of creating Reserves for such claims.

     (b)  Any  provision  made by the  Lead  Bank  in  respect  of an  unmatured
          liability  of a Bank shall be regarded as the amount of its  potential
          claim in respect of the relevant  unmatured  liability  solely for the
          purpose of creating a Reserve and shall not  prejudice  the claim of a
          Bank under Clauses 25  (Enforcement  of Security and  Distribution  of
          Recoveries)  or 26  (Equalisation)  if the  amount  of such  provision
          proves to have been insufficient.

27.3 Release of Reserves: Subject to Clause 27.4, a Reserve shall be released to
     the relevant Bank upon the maturity of the  unmatured  liability in respect
     of which that Reserve had been created.


<PAGE>



27.4 Excess Reserves: If the provision for an unmatured liability proves to have
     been  excessive,  then an amount  equal to the  difference  between (i) the
     amount of the Reserve  actually made for such liability and (ii) the amount
     of the Reserve  which  otherwise  would have been made if the amount of the
     provision had equalled the amount of the liability  which actually arose at
     maturity,  shall  form  part of the  Recoveries  and  shall be  applied  in
     accordance with the provisions of Clause 25.2 (Distribution of Recoveries).


27.5 Insufficient   Reserves:  If  the  amount  of  any  Reserve  proves  to  be
     insufficient to meet the pro rata claim of the relevant Bank intended to be
     covered by such  Reserve,  then such  adjustment  shall be made between the
     Banks  forthwith on demand by the Lead Bank as shall be necessary to ensure
     that such pro rata claim is met in full.

27.6 Account: Pending distribution pursuant to this clause:-

     (a)  the Recoveries  shall be placed in an interest bearing deposit account
          in the joint names of a Security  Agent and the relevant  Bank (or, if
          that Bank is a Security  Agent, in the name of a Security Agent acting
          as Security Agent);

     (b)  any  Reserve  may, at the option of a Security  Agent,  be paid to the
          relevant Bank (whereupon such Reserve shall be held by such Bank in an
          interest  bearing  deposit account until released to the relevant Bank
          pursuant to Clause 27.3) or be placed in an interest  bearing  deposit
          account in the name of a Security  Agent pending  release  pursuant to
          Clause 27.3.  The interest  earned on any Reserves  shall form part of
          such Reserve.

27.7 Alternative Method: Notwithstanding the foregoing provisions of this Clause
     27, each Finance Party shall (if requested by the Lead Bank) implement such
     alternative method as the Lead Bank may reasonably require (on the basis of
     legal  advice  received by it) to achieve the same result  contemplated  by
     Clauses  26,  27, 29 and 31 and  Schedule  VIII  without  the  creation  of
     Reserves,   having   regard  to  the  law   applicable   in  each  relevant
     jurisdiction.

28.  CALCULATION OF OUTSTANDINGS

     For the purpose of calculating any payments due to a Bank under Clause 26.3
     (Payments),  Equalisation  Payments and amounts payable to a Bank by way of
     distribution  of Recoveries in accordance with the terms of this Agreement,
     Outstandings shall be calculated as follows:-

     (a)  Overdrafts:  the amount  recorded in the relevant  Bank's books at the
          opening of  business  on the  Enforcement  Date (or,  if that is not a
          Business Day, the next  following  Business Day) together with accrued
          interest thereon;

     (b)  Acceptance  Credits:  the face  amount  of the  Bill(s)  accepted  and
          discounted by such Bank as at the Enforcement Date, to the extent that
          the  relevant  Bank  has not  already  received  cash  cover  for such
          Bill(s);

     (c)  Loans and Advances:  the aggregate amount of principal and accrued but
          unpaid interest outstanding from each of the Borrowers to the relevant
          Bank  at  the  opening  of  business  of  the  relevant  Bank  on  the
          Enforcement Date;

     (d)  Foreign Exchange: the amount of the loss which the relevant Bank would
          have incurred on a foreign  exchange  transaction  entered into with a
          Borrower  pursuant to a Facility prior to Enforcement  Date, if it had
          closed out that transaction on the Enforcement Date or (if that is not
          a  Business  Day) the next  succeeding  Business  Day or on such other
          basis as may be approved by the Steering Committee;


<PAGE>



     (e)  Applications:  sums  received  by a Bank  which it is free to apply to
          reduce  Indebtedness  under any Finance  Document and cash  collateral
          held by a Bank in respect of any  Outstandings  as at the  Enforcement
          Date shall,  for the  purposes of  calculations  to be made under this
          Clause  28,  be deemed to have been  applied  to reduce  the  relevant
          indebtedness;


     (f)  Dual Claims:  in any case where a Bank has claims  against two or more
          Tobacco Group  Companies in respect of the same Facility,  (including,
          but not limited to the case where a Bank makes a Facility available to
          one Tobacco Group Company and holds a guarantee  from another  Tobacco
          Group  Company)  calculation  of its  entitlement  under this Schedule
          shall be based on its Facility  claim only and no greater  entitlement
          will be  permitted  by  reason  of its  having  more than one claim in
          respect of the same Facility;

     (g)  Letters of Credit: the amount of the maximum potential  liability of a
          Bank (without  double  counting) in respect of a Letter of Credit from
          time to time.

29.  FURTHER SECURITY, SET-OFF AND EXCESS CASH COVER

29.1 Sureties,  Set-off  and Excess Cash Cover:  Except as  otherwise  expressly
     stated in this Agreement including,  in particular Clause 25.4, if any Bank
     shall, on or after the Enforcement Date:-

     (a)  hold  (otherwise  than as a Security Agent pursuant to this Agreement)
          from any Tobacco Group Company or any other  person,  any  Encumbrance
          (which  expression  shall  include any  guarantee or indemnity) of any
          nature in respect of any Facility granted by it; or

     (b)  be  otherwise  entitled  to have  recourse to any of the assets of any
          Tobacco  Group Company or of any other person in respect of Facilities
          provided by it; or

     (c)  be entitled to any negotiable or other instruments,  being instruments
          on which any Tobacco Group Company is or may be liable,  but excluding
          cheques,  bills or  notes  which a Bank  may  have  purchased  without
          recourse  from a Tobacco  Group  Company  and in  respect of which the
          relevant  Bank has already  given  value (such Bank being  entitled to
          retain for its own benefit  any  proceeds  recoverable  from any third
          party in connection therewith); or

     (d)  shall  receive  any other  money,  whether  by way of  contractual  or
          voluntary payment or otherwise, from or on behalf of any Tobacco Group
          Company in respect of the  liabilities of any Tobacco Group Company to
          the Banks;

          then,  in any such  case,  subject  to Clause  29.2,  such Bank  shall
          account to a Security Agent for the proceeds  thereof and the Security
          Agent shall (i)  distribute  such proceeds as Recoveries in accordance
          with Schedule VIII and (ii) pay any surplus after such  application to
          the Bank which received such proceeds for its sole benefit.

29.2 Permitted  Exception:  The  provisions of Clause 29.1(b) shall not apply to
     any credit balance (in whatever currency denominated) held by a Bank at the
     Enforcement  Date to the extent that it is capable of being set off against
     any accrued liability to that Bank at the Enforcement Date, where:-



<PAGE>



     (a)  the amount  represents  cash cover for an existing  Facility which the
          Bank is permitted to hold under this Agreement, in which case the cash
          cover  may be  applied  against  the  liability  (if any)  under  such
          Facility and any surplus from such cash cover shall be  distributed as
          Recoveries in accordance with Schedule VIII;


     (b)  the set-off arises from operation of a composite accounting or similar
          scheme  in  existence  at the date of this  Agreement  which  case the
          set-off may be operated and the Bank  concerned may retain the benefit
          of such set-off to the extent permitted by the  documentation  for the
          existing  Facility and any surplus shall be  distributed in accordance
          with Schedule VIII.

     In all other cases, the relevant amounts shall be distributed as Recoveries
in accordance with Schedule VIII.

29.3 In the event that any distribution  pursuant to Schedule VIII called for by
     Clause 29.2 is  prevented  by  mandatory  statutory  set-off,  the affected
     Security Agent shall notify the relevant  parties of the adjustments  which
     are required to their  entitlements  to Recoveries and deemed  indebtedness
     (and,  if  required,  by way of  inter-bank  payments)  to produce the same
     result as if no such mandatory  statutory  set-off had occurred and instead
     distribution had been made pursuant to Schedule VIII and (if required) such
     parties shall promptly make such payments among themselves.

29.4 Excess Cash Cover:  If, after the Enforcement  Date, a Bank is holding cash
     cover for a Facility  (which it is permitted to hold under this  Agreement)
     but the liability in respect of which the cash cover is held fails to arise
     or arises for less than the amount of the cash cover,  then that Bank shall
     (if it is  lawfully  able to do so) pay such  excess  to the Lead  Bank who
     shall distribute the same as Recoveries.

30.  THIRD PARTY SECURITY

     Third Party Security: Save as otherwise expressly provided below, where any
     Security  secures  both  the  liabilities  of a  Group  Company  under  the
     Facilities  and the  liabilities  of a person  (other than a Tobacco  Group
     Company) and where the Bank holding such  Security is entitled to elect (at
     its discretion) how the recoveries or benefit derived  therefrom  should be
     applied and appropriated as between the Indebtedness thereby secured,  then
     such Bank shall bring into  account as part of the  Recoveries  any benefit
     derived  therefrom  to  the  extent  that  such  benefit  is  not  actually
     appropriated  and applied in or towards the  discharge of any  Indebtedness
     incurred to such Bank by such person.

31.  CLOSING OUT OF FOREIGN EXCHANGE TRANSACTIONS

31.1 Closing  out:  Each Bank may at its option  close out any foreign  exchange
     facilities forthwith upon either Security Agent taking any steps to enforce
     the security  constituted by the Security Documents or any part of it or at
     any time or times thereafter as it thinks fit and, in each case, all costs,
     losses  and  liabilities  resulting  from such  closing  out  shall  become
     immediately due and payable to such Bank by the relevant Borrower.

31.2 Retention of Net Profit:  A Bank shall be entitled to retain any net profit
     made on the closing out of any foreign exchange  transactions of a Borrower
     (having  deducted  any  losses  arising  from the  closing  out of any such
     transactions)  and shall apply the same against any amounts  owing to it by
     any Obligor in such manner as it deems appropriate and such profits, to the
     extent  they are so  applied,  shall not be treated as forming  part of the
     Recoveries.


<PAGE>



                                    PART XVI


                                  NOTICES, ETC.



32.  NOTICES

32.1 Communications  through Lead Bank: A copy of any  communication or document
     from or to any  party to this  Agreement  in  connection  with any  Finance
     Document shall be sent in writing to the Lead Bank.

32.2 Addresses:  Any notices,  demands,  proceedings or other  documents made in
     writing  to be  sent  to any  party  to  this  Agreement  pursuant  to this
     Agreement  shall be  addressed to such party at the address or telex or fax
     number  and marked  for the  attention  of the person (if any) from time to
     time  designated by that party in writing to the Lead Bank (or, in the case
     of the Lead Bank,  by it to each  other  party to this  Agreement)  for the
     purpose of this Agreement.  The initial address,  telex and fax numbers and
     person(s)  (if any) so  designated by each party are set out under its name
     at the end of this Agreement.  The initial  address,  telex and fax numbers
     and person(s)  (if any) so designated by a Transferee  are those set out at
     the end of the relevant Transfer Certificate.

32.3 Time of Delivery:

     (a)  Any  communication  to any  Obligor  or to any Bank shall be deemed to
          have been received by that Obligor or that Bank:-

          (i)  if delivered by hand, at the time of actual delivery;

          (ii) if   transmitted   by  telex  or   facsimile,   at  the  time  of
               transmission;

          (iii)if sent by pre-paid  first class post within  Great  Britain,  at
               noon on the next Business Day following the day of posting or, if
               sent by pre-paid  first class air mail post to or from an address
               outside  Great  Britain,  at  noon  on  the  fifth  Business  Day
               following  the day of posting and in each case shall be effective
               notwithstanding   that  it  may  be   misdelivered   or  returned
               undelivered.

               In  proving  such  service it shall be  sufficient  to prove that
               personal  delivery was made, or that the envelope  containing the
               communication  was  correctly  addressed  and  posted or that the
               telex was  transmitted  with the  correct  answer  back or that a
               facsimile transmission report (or other appropriate evidence) was
               obtained  that  the  facsimile  had  been   transmitted   to  the
               addressee.

     (b)  Any communication by any Obligor to the Lead Bank, the Co-Lead Bank, a
          Security Agent, the Steering  Committee or any Bank shall be deemed to
          have been given only on actual  receipt by the Lead Bank,  the Co-Lead
          Bank, a Security  Agent,  the Steering  Committee or such Bank (as the
          case may be).

32.4 Language:  all  communications  pursuant to this Agreement  shall be in the
     English language.

33.  INDEMNITIES

33.1 Currency  of Account:  Dollars are the  currency of account and payment for
     each sum due from any Tobacco Group Company hereunder, provided that:-


<PAGE>



     (a)  each  repayment of any of the  Facilities  or a part thereof  shall be
          made in the currency in which the relevant  obligation is  denominated
          at the time of that repayment;


     (b)  each  payment of interest  shall be made in the  currency in which the
          sum in respect of which such interest is payable is denominated;

     (c)  each  payment in respect  of costs and  expenses  shall be made in the
          currency in which the same were incurred; and

     (d)  any amount  expressed  to be payable in a currency  other than Dollars
          shall be paid in that currency.

          If any Finance Party  receives an amount in a currency  other than the
          currency  payable as provided  above,  it shall  convert that currency
          (the "received  currency") to the relevant currency at its spot buying
          rate for the relevant  currency with the received  currency as soon as
          reasonably practicable after the date of receipt and, for the purposes
          hereof,  shall be deemed to have  received that amount of the relevant
          currency on the date of such conversion.

33.2 Currency Indemnity: If:-

     (a)  for any reason any amount  payable under this  Agreement is paid or is
          recovered  by any  Finance  Party (in  whatever  manner) in a currency
          (referred  to in this Clause 33.2 as the  "received  currency")  other
          than  that in  which  it is  required  to be paid  under  any  Finance
          Document  (referred  to  in  this  Clause  33.2  as  the  "contractual
          currency"); and

     (b)  the payment  made in the received  currency to the Finance  Party when
          converted  at the  applicable  rate of exchange  into the  contractual
          currency, is less than the relevant unpaid amount under the applicable
          Finance Document;

          then, the Borrowers  shall, as a separate and independent  obligation,
          fully  indemnify the relevant  Finance Party against the amount of the
          shortfall.  For  the  purposes  of this  Clause  33.2  the  expression
          "applicable  rate of  exchange"  means the rate at which the  relevant
          Finance  Party  is  able,  as soon  as  reasonably  practicable  after
          receipt,  to  purchase  the  contractual  currency  in London with the
          received  currency,  taking into account any costs associated with the
          exchange.

33.3 Miscellaneous Indemnities:  The relevant Borrower shall on demand indemnify
     each Finance  Party  against any funding or other costs,  loss,  expense or
     liability sustained by such Finance Party as a consequence of:-

     (a)  a requested utilisation under a Facility not being made for any reason
          (other  than  default  by  such  Finance  Party  in  its   obligations
          hereunder)  on the  date  specified  in the  relevant  request  by any
          Borrower;

     (b)  the receipt by any Bank of any payment,  or an overdue sum,  otherwise
          than on the due date for payment thereof;

     (c)  any  default or delay in payment by any  Borrower of any sums when due
          under any Finance Document; or

     (d)  the  occurrence  or  continuance  of any Event of Default or Potential
          Event of Default and/or the  declaration of amounts  outstanding to be
          due and payable as a result.



<PAGE>



34.  CERTIFICATES, CALCULATIONS AND EVIDENCE OF DEBT


34.1 Basis of Calculation: Interest and fees shall accrue from day to day and be
     calculated  on the basis of the actual number of days elapsed and a 365 day
     year in the  case of sums  denominated  in  sterling  and a 360 day year or
     other customary  period in the case of sums  denominated in Dollars,  DM or
     any other currency.  In determining the number of days in a period from one
     day to another, the first day shall be included but the last day shall not.

34.2 Accounts as Evidence: Evidence made in the accounts maintained respectively
     by each Finance  Party in  connection  with this  Agreement  shall,  in the
     absence of manifest  error,  be  conclusive  evidence of sums owing to that
     Finance Party.

34.3 Certificates from the Finance Parties: A certificate of:-

     (a)  the  Lead  Bank as to (i) an  interest  rate  payable  under  Clause 6
          (Interest)  or (ii)  the  Additional  Costs  Rate or (iii)  any  costs
          claimed under Clause 33.3  (Miscellaneous  Indemnities);  or any other
          certificate,  determination,  notification or opinion  provided for in
          this Agreement; and

     (b)  a Bank as to (i) any  amount by which a sum is to be  increased  under
          Clause 9.1  (Payments) or 9.3  (Indemnity);  (ii) any increased  costs
          claimed under Clause 9.6  (Increased  Costs);  (iii) any costs claimed
          under Clause 33.3 (Miscellaneous Indemnities);

          shall  constitute  prima  facie  evidence  in the  absence of manifest
          error.

35.  SET-OFF

     Each Borrower  authorises each Finance Party without notice to any Borrower
     to apply any credit balance to which such Borrower shall be entitled on any
     account of such Borrower (in whatever  currency such credit  balance may be
     denominated and whether or not there are any restrictions on the withdrawal
     of such credit  balance  with any office  anywhere of such  Finance  Party)
     against any amounts due from such Borrower  pursuant to a Finance  Document
     but unpaid.  Each Finance  Party is authorised by each Borrower to purchase
     with the money standing to credit of any such account such other currencies
     as may  be  necessary  to  effect  such  application.  Notwithstanding  the
     provisions of this Clause 35, no charge or  proprietary  or other  security
     interest shall be created by this Clause 35.

36.  FORBEARANCE AND PARTIAL INVALIDITY

36.1 Forbearance:  No  failure  or  delay  in  exercising  any  right,  power or
     privilege by any Finance Party under any Finance  Document shall operate as
     a waiver, nor shall any single or partial exercise of any such right, power
     or privilege preclude any other or further exercise of such right, power or
     privilege,  or the exercise of any other  right,  power or  privilege.  The
     rights and remedies provided in any Finance Document are cumulative and not
     exclusive  of any  rights or  remedies  provided  by law or under any other
     Finance Document.

36.2 Partial  Invalidity:  If at any time any provision of this  Agreement is or
     becomes illegal,  invalid or  unenforceable  in any respect,  the legality,
     validity or  enforceability  of the remaining  provisions of this Agreement
     shall not in any way be affected or impaired.



<PAGE>



36.3 Waiver:


     (a)  Each Bank consents to the charges created or to be created at any time
          pursuant  to this  Agreement  or any  Security  Document  and for such
          purpose  hereby  waives  any  rights  exercisable  by  it  during  the
          subsistence  of any  Security  Document  to  prevent or  restrict  any
          Obligor from creating such charges.

     (b)  Each Bank waives any  restrictions  on any Obligor imposed by it under
          its  Facility  Agreement  on (a) the sale or disposal of the assets of
          any Tobacco Group Company or (b) changes in the business carried on by
          any  Tobacco  Group  Company  for so long and to such extent as may be
          necessary to implement  and enforce  this  Agreement  and the Security
          Documents.

37.  AUTHORITY OF SCTC INC.

37.1 Amendment:  Each Tobacco Group  Company which is a party to this  Agreement
     (other than SCTC Inc.) hereby  irrevocably  authorises SCTC Inc. to sign on
     its behalf any document  extending the term of this  Agreement or otherwise
     extending,  amending,  varying,  supplementing,  replacing and or restating
     this  Agreement  or any Finance  Document  or any  documents  ancillary  or
     supplemental  to it in any way (even if changes are made to the composition
     of the Finance  Parties  and/or the other  parties to this  Agreement)  and
     further irrevocably authorises SCTC Inc. on its behalf:-

     (a)  by agreement with the Lead Bank (acting with Majority Bank  approval),
          to  designate  or cease to  designate  any  person as a Bank  and/or a
          Finance Party from time to time under this Agreement;

     (b)  by agreement with the Lead Bank (acting with Majority Bank  approval),
          to  designate  or cease to  designate  any  person as a Tobacco  Group
          Company or an Obligor from time to time under this Agreement; and

     (c)  by agreement with the Lead Bank (acting with Majority Bank  approval),
          to  designate  or cease to  designate  any  agreement or document as a
          Facility Letter or a Finance Document under this Agreement.

37.2 Agreement:  TCLTC  hereby  irrevocably  appoints  SCTC (UK) as its agent to
     execute  on its behalf an  agreement  for the  purpose of the  re-execution
     before a Notary  Public in London of the  agreement  contained in Clause 40
     (Governing Law and  Jurisdiction) for the submission by such company to the
     non-exclusive  general jurisdiction of the English Courts and other matters
     dealt  with  therein  to  comply  with  the  relevant   provisions  of  the
     Liechtenstein Law on Civil Procedure.

38.  COUNTERPARTS

     This Agreement may be executed in any number of counterparts,  all of which
     when taken together shall constitute a single instrument.

39.  FINANCE PARTIES

     The Finance  Parties as at 31st July 1997  constitute  the Banks,  the Lead
     Bank, the Co-Lead Bank, the  International  Security Agent, the US Security
     Agent, the Documentation Agent and the members of the Steering Committee as
     at that date.



<PAGE>



40.  GOVERNING LAW AND JURISDICTION


40.1 This  Agreement  shall be  governed by and  construed  in  accordance  with
     English law.

40.2 (a) For the  benefit of each  other  party,  each  party to this  Agreement
     irrevocably  agrees that the  English  Courts are to have  jurisdiction  to
     settle  any  disputes  which may arise  out of or in  connection  with this
     Agreement  or  any  other  Finance   Document  and  that   accordingly  any
     proceedings  (referred to in this Clause 40 as the  "Proceedings")  arising
     out of or in connection  with this  Agreement may be brought in the English
     Courts.

     (b)  Each of SCC and the Borrowers hereby designates, appoints and empowers
          Standard  Commercial  Tobacco  Services  (UK) Limited  ("SCTS") at its
          registered office at the date of this Agreement (or such other address
          in England as SCTS may notify to the Lead Bank in accordance  with the
          provisions  of Clause 32  (Notices))  to accept  service of process in
          such  jurisdiction  in any Proceedings and agrees that failure by such
          firm to give notice of such service of process to the Borrowers or the
          Covenantors shall not impair or affect the validity of such service or
          any judgment based on it.

     (c)  Each party to this Agreement irrevocably waives any objection which it
          may  have  now  or  hereafter  to  the  laying  of  the  venue  of any
          Proceedings  in the  English  Courts  and  any  claim  that  any  such
          Proceedings  have been  brought in an  inconvenient  forum and further
          irrevocably agrees that a judgment in any such Proceedings  brought in
          the English  Courts shall be conclusive and binding upon it and may be
          enforced in any other jurisdiction.

     (d)  Nothing contained in this Clause 40 shall limit the right of any party
          to take  action  against  any other  party in any  court of  competent
          jurisdiction, nor shall the taking of Proceedings by any party against
          another  party in one or more  jurisdictions  preclude  the  taking of
          Proceedings in any other jurisdiction whether concurrently or not.

     (e)  Each  party  whose  registered  office is  outside  England  and Wales
          further  irrevocably  consents  to the  service of process  out of the
          English  Courts  in any such  Proceedings  by the  mailing  to them of
          copies by registered or certified airmail, postage prepaid.


AS WITNESS the hands of the parties the day and year first above written.


<PAGE>



                                   SCHEDULE I



                                  THE BORROWERS


Name                                                          Company Number



Trans-Continental Leaf Tobacco Corporation Limited            H.LIV/14



Standard Commercial Tobacco Company (UK) Limited              1411968



Standard Commercial Tobacco Co., Inc.                         56-0323420


<PAGE>



                                   SCHEDULE II


                                    THE BANKS

Banks                                                        Commitment

Berliner Bank Aktiengesellschaft                             $15,000,000

Berenberg Bank                                               $ 7,500,000

BHF-Bank Aktiengesellschaft                                  $15,000,000

Commerzbank A.G.                                             $15,000,000

Deutsche Bank A.G. in Hamburg                                $37,500,000

MeesPierson N.V.                                             $15,000,000

Norddeutsche Landesbank Girozentrale                         $20,000,000

Westdeutsche Landesbank Girozentrale                         $20,000,000

Bankers Trust Company                                        $15,000,000

ABN Amro Bank                                                $ 5,000,000

Crestar Bank, Inc.                                           $10,000,000

Kredietbank N.V.                                             $10,000,000

Standard Chartered Bank                                      $15,000,000


<PAGE>



                                  SCHEDULE III


                                  THE OBLIGORS




                                            Place of
Name                                        Incorporation     Company Number


Standard Commercial Corporation             North Carolina    13/1337610

Trans-Continental Leaf Tobacco
Corporation Limited                         Liechtenstein     H. LIV/14


Standard Commercial Tobacco Company
(U.K.) Limited                              England           1411968


Standard Commercial Tobacco
Co., Inc.                                   North Carolina    56-0323420

Trans-Continental Leaf Tobacco
Corporation (Jersey) Limited                Jersey            64368


W.A. Adams Company                          North Carolina    56-1783750


General Processors Inc.                     North Carolina    56-0887857



<PAGE>



                                   SCHEDULE IV



                                     PART I

                              THE FACILITY LETTERS

<TABLE>
<CAPTION>

------------------------------------ ------------------------------------------- ---------------------------------------

<S>                                  <C>                                         <C>
               Bank                                   Borrower                              Type of Facility
------------------------------------ ------------------------------------------- ---------------------------------------
------------------------------------ ------------------------------------------- ---------------------------------------

BHF-Bank Aktiengesellschaft          Trans-Continental Leaf Tobacco              Revolving
                    Corporation Limited and Spierer Freres &
                                    Cie S.A.

------------------------------------ ------------------------------------------- ---------------------------------------
------------------------------------ ------------------------------------------- ---------------------------------------

Commerzbank Aktiengesellschaft       Trans-Continental Leaf Tobacco              Revolving
                    Corporation Limited and Spierer Freres &
                                    Cie S.A.
------------------------------------ ------------------------------------------- ---------------------------------------
------------------------------------ ------------------------------------------- ---------------------------------------

MeesPierson N.V.                     Standard Wool Argentina S.A., Tentler &     Revolving
                                     Co. B.V., Lohmann & Company GmbH,
                                     Standard Commercial Tobacco Company (UK)
                                     Limited, Trans-Continental Leaf Tobacco
                                     Corporation Limited, Spierer Freres & Cie
                                     S.A., Standard Wool (UK) Limited and        Foreign Exchange
                                     Jacomb Hoare (Bradford) Limited

------------------------------------ ------------------------------------------- ---------------------------------------
------------------------------------ ------------------------------------------- ---------------------------------------

Norddeutsche Landesbank              Standard Commercial Tobacco Company (UK)    Revolving
Girozentrale                         Limited,   Trans-Continental  Leaf  Tobacco
                                     Available   for   cash    credits,    short
                                     Corporation  Limited and  Spierer  Freres &
                                     term loans, L/Cs/bank guarantees Cie S.A

------------------------------------ ------------------------------------------- ---------------------------------------
------------------------------------ ------------------------------------------- ---------------------------------------

Westdeutsche Landesbank              Trans-Continental Leaf Tobacco              Revolving
Girozentrale                         Corporation Limited

------------------------------------ ------------------------------------------- ---------------------------------------
------------------------------------ ------------------------------------------- ---------------------------------------

Joh. Berenberg, Gossler & Co.        Trans-Continental Leaf Tobacco              internal credit facility
                                     Corporation Limited

------------------------------------ ------------------------------------------- ---------------------------------------
------------------------------------ ------------------------------------------- ---------------------------------------

Berliner Bank Aktiengesellschaft     Werkhof GmbH, Trans-Continental Rohtabak    Revolving
                    A.G., Standard Commercial Tobacco Company
                    (UK) Limited and Spierer Freres & Cie S.A

------------------------------------ ------------------------------------------- ---------------------------------------
------------------------------------ ------------------------------------------- ---------------------------------------

Deutsche Bank                        SCTC (UK), TCLTC and SCTC Inc.              $37,500,000 Revolving Facility
AG in Hamburg

------------------------------------ ------------------------------------------- ---------------------------------------



                                     PART II

                              THE EXISTING SECURITY


--------------------------------------- ==========================================================================

Bank                                    Details

--------------------------------------- ==========================================================================
--------------------------------------- ==========================================================================

Deutsche Bank A.G.                      Import Finanzierung (Mantelvertrag) mit Sicherheitenbestellung of
               Trans-Continental Leaf Tobacco Corporation Limited.
--------------------------------------- ==========================================================================
--------------------------------------- ==========================================================================

The                                     Royal  Bank of  Scotland  plc All  money
                                        first    legal    charge   by   Standard
                                        Commercial  Tobacco Company (UK) Limited
                                        over  office   premises  in   Godalming,
                                        Surrey, England.
--------------------------------------- ==========================================================================
--------------------------------------- ==========================================================================

Joh. Berenberg, Gossler & Co            Importsicherungsvertrage mit Sicherheitenstellung (Waren/Forderungen) of
               Trans-Continental Leaf Tobacco Corporation Limited
--------------------------------------- ==========================================================================
--------------------------------------- ==========================================================================

BHF-Bank                                Aktiengesellschaft    Import    security
                                        agreement  to be  entered  into to cover
                                        import transactions of Trans-Continental
                        Leaf Tobacco Corporation Limited
--------------------------------------- ==========================================================================
--------------------------------------- ==========================================================================

MeesPierson N.V.                        The Bank's general terms and conditions provide for a pledge on all
                                        goods and documents of title which are in the possession or will come
                                        into  possession  of the Bank or a third
                                        party on the Bank's  behalf  from or for
                                        the benefit of the customer.
--------------------------------------- ==========================================================================
--------------------------------------- ==========================================================================

Westdeutsche Landesbank Girozentrale    Importsicherungsvertrag of Trans-Continental Leaf Tobacco Corporation
                                        Limited.
--------------------------------------- ==========================================================================
--------------------------------------- ==========================================================================

Norddeutsche Landesbank Girozentrale    The Bank's general terms and conditions provide for a pledge on all the
                                        Borrowers' assets (e.g. goods, money, securities, etc.) which are in the
                                        possession or will come into the possession of the Bank
--------------------------------------- ==========================================================================
--------------------------------------- ==========================================================================

Thai Farmers Bank Public Company        Sicherungsvereinbarung Import-Kredite of Trans-Continental Leaf Tobacco
Limited                                 Corporation Limited dated 18 May 1978
--------------------------------------- ==========================================================================
--------------------------------------- ==========================================================================

ABN Amrobank                            Charge over assets of Exelka Greece
--------------------------------------- ==========================================================================
--------------------------------------- ==========================================================================

ABN Amrobank                            Charge over assets of SPI Turkey
--------------------------------------- ==========================================================================
--------------------------------------- ==========================================================================

Barclays                                Charge over assets of Exelka Greece
--------------------------------------- ==========================================================================
--------------------------------------- ==========================================================================

Barclays                                Charge over assets of Stancom Malawi
--------------------------------------- ==========================================================================
--------------------------------------- ==========================================================================

Citibank                                Charge over assets of Exelka Greece
--------------------------------------- ==========================================================================
--------------------------------------- ==========================================================================

Egnatia Bank                            Charge over assets of Exelka Greece
--------------------------------------- ==========================================================================
--------------------------------------- ==========================================================================

Ioman Bank                              Charge over assets of Exelka Greece
--------------------------------------- ==========================================================================
--------------------------------------- ==========================================================================

Midland Bank                            Charge over assets of Exelka Greece
--------------------------------------- ==========================================================================
--------------------------------------- ==========================================================================

National Bank of Greece                 Charge over assets of Exelka Greece
--------------------------------------- ==========================================================================
--------------------------------------- ==========================================================================

Xkebank                                 Charge over assets of Exelka Greece
--------------------------------------- ==========================================================================
--------------------------------------- ==========================================================================

Toronto Dominion                        Charge over assets of SCTC Canada
--------------------------------------- ==========================================================================
--------------------------------------- ==========================================================================

Chemical Bank                           Charge over assets of SPI Turkey
--------------------------------------- ==========================================================================
--------------------------------------- ==========================================================================

MeesPierson                             Charge over assets of SPI Turkey
--------------------------------------- ==========================================================================
--------------------------------------- ==========================================================================

T. Ekonomi Bank                         Charge over assets of SPI Turkey
--------------------------------------- ==========================================================================
--------------------------------------- ==========================================================================

UOB Geneva                              Charge over assets of SPI Turkey
--------------------------------------- ==========================================================================
--------------------------------------- ==========================================================================

Commercial Bank of Malawi               Charge over assets of Stancom Malawi
--------------------------------------- ==========================================================================
--------------------------------------- ==========================================================================

Equator Bank                            Charge over assets of Stancom Malawi
--------------------------------------- ==========================================================================
--------------------------------------- ==========================================================================

Indebank                                Charge over assets of Stancom Malawi
--------------------------------------- ==========================================================================
--------------------------------------- ==========================================================================

Merchant Bank of C.A.                   Charge over assets of Stancom Zimbabwe
--------------------------------------- ==========================================================================
--------------------------------------- ==========================================================================

National Merchant Bank                  Charge over assets of Stancom Zimbabwe
--------------------------------------- ==========================================================================
--------------------------------------- ==========================================================================

Stanble                                 Charge over assets of Stancom Zimbabwe
--------------------------------------- ==========================================================================
--------------------------------------- ==========================================================================

Syfrets                                 Charge over assets of Stancom Zimbabwe
--------------------------------------- ==========================================================================
--------------------------------------- ==========================================================================

Thai Farmers Bank                       Charge over assets of Stec Thailand
--------------------------------------- ==========================================================================
--------------------------------------- ==========================================================================

Assic Edila                             Charge over assets of Transacatab Italy
--------------------------------------- ==========================================================================
--------------------------------------- ==========================================================================

Banco di Napoli                         Charge over assets of Transacatab Italy
--------------------------------------- ==========================================================================
--------------------------------------- ==========================================================================

Monte dei Paschi                        Charge over assets of Transacatab Italy
--------------------------------------- ==========================================================================
--------------------------------------- ==========================================================================

Asefa                                   Charge over assets of WWY Spain
--------------------------------------- ==========================================================================
--------------------------------------- ==========================================================================

Banca Commerciale Italiana              Charge over assets of WWY Spain
--------------------------------------- ==========================================================================
--------------------------------------- ==========================================================================

Banca Nazionale del Lavoro              Charge over assets of WWY Spain
--------------------------------------- ==========================================================================
--------------------------------------- ==========================================================================

Banco Bilbao Vizcaya                    Charge over assets of WWY Spain
--------------------------------------- ==========================================================================
--------------------------------------- ==========================================================================

Banco Extrenadura                       Charge over assets of WWY Spain
--------------------------------------- ==========================================================================
--------------------------------------- ==========================================================================

Banco Centra Hispana                    Charge over assets of WWY Spain
--------------------------------------- ==========================================================================
--------------------------------------- ==========================================================================

Banco Popular                           Charge over assets of WWY Spain
--------------------------------------- ==========================================================================
--------------------------------------- ==========================================================================

Bancato                                 Charge over assets of WWY Spain
--------------------------------------- ==========================================================================
--------------------------------------- ==========================================================================

Maofre                                  Charge over assets of WWY Spain
--------------------------------------- ==========================================================================
--------------------------------------- ==========================================================================

NationsBank                             Charge over assets of Standard Commercial Tobacco Inc.
--------------------------------------- ==========================================================================
--------------------------------------- ==========================================================================

National Bank of Australia              Charge over assets of Standard Wool Australia
--------------------------------------- ==========================================================================
--------------------------------------- ==========================================================================

Bank West                               Charge over assets of Standard Wool Australia
--------------------------------------- ==========================================================================
--------------------------------------- ==========================================================================

BHF Bank                                Charge over assets of Standard Wool Germany
--------------------------------------- ==========================================================================
--------------------------------------- ==========================================================================

Bremer Bank                             Charge over assets of Standard Wool Germany
--------------------------------------- ==========================================================================
--------------------------------------- ==========================================================================

Bremer Landesbank Girozentrale          Charge over assets of Standard Wool Germany
--------------------------------------- ==========================================================================
--------------------------------------- ==========================================================================

Commerzbank A.G.                        Charge over assets of Standard Wood Germany
--------------------------------------- ==========================================================================
--------------------------------------- ==========================================================================

Westdeutsche Landesbank Girozentrale    Charge over assets of Standard Wool Germany
--------------------------------------- ==========================================================================
</TABLE>



<PAGE>



                                   SCHEDULE V

                               SECURITY DOCUMENTS

1.   Pledge by SCTC Inc. to  MeesPierson  NV as Security  Agent of its shares in
     Werkhof dated 2 May 1995.

2.   Pledge  by SCTC  Inc.  to  MeesPierson  NV of its  shares in SCTC of Canada
     Limited dated 5 May 1995.

3.   Share  Pledge  Agreement  relating  to 75% of the shares in  Standard  Wool
     France SA and made  between  SCTC (UK),  Advhus  Gestion  SNC, the Steering
     Committee,  the Lead Bank,  the  Security  Agent and the Banks  dated 5 May
     1995.

4.   Share  Pledge  Agreement  relating  to 25% of the shares in  Standard  Wool
     France SA and made between Standard Wool, Inc., the Steering Committee, the
     Lead Bank, the Security Agent and the Banks dated 5 May 1995.

5.   Guarantee  and Debenture by TCLTC in favour of  MeesPierson  NV as Security
     Agent dated 5 May 1995.

6.   Pledge by SCTC Inc. to  MeesPierson  NV as Security  Agent of its shares in
     Spierer dated 5 May 1995.

7.   Guarantee  and  Debenture  by SCTC  (UK) in  favour  of  MeesPierson  NV as
     Security Agent dated 5 May 1995.

8.   Charge by SCC to  MeesPierson  NV as  Security  Agent of its shares in SCTC
     (UK) and SCTS (UK) dated 5 May 1995.

9.   Guarantee  and  Debenture  by SCTC  (UK) in  favour  of  MeesPierson  NV as
     Security Agent dated 11 May 1995.

10.  General  Letter of Pledge by SCTC (UK) to  MeesPierson NV as Security Agent
     dated 30 May 1995.

11.  General Letter of Pledge by TCLTC to MeesPierson NV as Security Agent dated
     30 May 1995.

12.  Warehouse  Locking  Agreement  between  MeesPierson  NV and  SCTC  (UK) and
     Tabaknatie dated 30 May 1995.

13.  Warehouse Locking Agreement between MeesPierson NV and TCLTC and Tabaknatie
     dated 30 May 1995.

14.  Pledge by TCLTC to MeesPierson NV of its shares in Transhellenic Tobacco SA
     dated 30 May 1995.

15.  Second Equitable Mortgage of Shares in Tobacco Processors  (Malawi) Limited
     by Stancom  Tobacco  (Malawi)  Limited to  MeesPierson NV as Security Agent
     dated 30 May 1995.



<PAGE>

16.  Charge by SCTC (UK) to  MeesPierson  NV of its  shares in  Stancom  Tobacco
     Company  (Malawi) Limited and Siemssen  Threshie  (Malawi) Limited dated 30
     May 1995.

17.  Security  Agreement  between TCLTC Limited and  MeesPierson  NV as Security
     Agent relating to receivables dated 30 May 1995.

18.  Charge by TCLTC Limited to  MeesPierson  NV as Security Agent of its shares
     in Stancom Tobacco (Private) Limited dated 30 May 1995.

19.  Pledge by SCTC Inc. to  MeesPierson  NV as Security  Agent of its shares in
     TCLTC dated 17 July 1995.

20.  Deed of Assignment relating to Philippine receivables by TCLTC in favour of
     MeesPierson NV as Security Agent dated 29 November 1995, including schedule
     of  outstanding  invoices  payable by  Philippine  customers as at the same
     date.

21.  Deed of Covenant by TCLTC Jersey, TCLTC and SCC in favour of MeesPierson NV
     as Security Agent in relation to TCLTC Jersey dated 26 February 1996.

22.  Guarantee  and  Debenture  by TCLTC Jersey in favour of  MeesPierson  NV as
     Security Agent dated 26 February 1996.

23.  Security  Agreement by TCLTC in respect of shares of TCLTC Jersey in favour
     of MeesPierson NV as Security Agent dated 26 February 1996.

24.  Guaranty  Agreement  made  jointly  and  severally  by SCTC,  Inc,  General
     Processors,  Inc and W.A. Adams Company (the  "Companies") in favour of the
     Finance Parties and MeesPierson NV as Security Agent dated 12 July 1996.

25.  Security  Agreement  made by the Companies in favour of  MeesPierson  NV as
     Security Agent dated 12 July 1996.

26.  Hazardous  Materials  Indemnity  Agreement  by the  Companies  in favour of
     MeesPierson NV as Security Agent dated 12 July 1996.

27.  Deed of Trust and Security  Agreement by SCTC,  Inc (Wilson  County,  North
     Carolina Property) dated 12 July 1996.

28.  Deed of Trust and Security Agreement by General Processors,  Inc (Granville
     County, North Carolina Property) dated 12 July 1996.

29.  Deed of Trust and  Security  Agreement  by W.A.  Adams  Company  (Granville
     County, North Carolina Property) dated 12 July 1996.

30.  Mortgage and Security Agreement by SCTC, Inc (Washington  County,  Kentucky
     Property) dated 12 July 1996.



<PAGE>


                                   SCHEDULE VI

                          Form of Transfer Certificate


To:      (1)    [The Lead Bank]
                [*insert address*]
                Attention:***

         (2)    [The Borrowers]
                [*insert address*]
                Attention:***
                ("the Borrowers")                                   [Date]



                              Transfer Certificate

This  Transfer  Certificate  relates  to a  Master  Facilities  Agreement  ("the
Agreement"  which  expression  shall include any  amendments to it in force from
time to time) dated [*insert date*] between [* insert names of parties*].  Terms
defined  in the  Agreement  shall  have  the  same  meanings  in  this  Transfer
Certificate.

1.   [insert name of Transferor Bank] (the  "Transferor")  (a) confirms that the
     details  appearing  in the  attached  Schedule are correct and (b) requests
     [*insert name of Transferee Bank*] (the "Transferee") to accept and procure
     the  transfer  to the  Transferee  of  the  obligations  of the  Transferor
     specified in the attached  Schedule by  countersigning  and delivering this
     Transfer  Certificate  to the Lead Bank at its  address  for the service of
     notice specified in the Agreement.

2.   The Transferee  requests the Lead Bank to accept this Transfer  Certificate
     as  being  delivered  pursuant  to and for the  purposes  of  Clauses  21.4
     (Transfer  Certificate) and 21.5 (Effective Date) of the Agreement so as to
     take effect in  accordance  with the terms of such clauses on [*insert date
     of transfer*] (the "Transfer  Date") or if applicable on such later date as
     may be determined in accordance with the terms thereof.

3.   The Transferee  undertakes to the Lead Bank, the Transferor and each of the
     other parties to the Agreement that it will:-

     (a)  perform in accordance with their terms all those  obligations which by
          the terms of the  Agreement  will be assumed by it after  delivery  of
          this Transfer  Certificate to the Lead Bank and after  satisfaction of
          the conditions (if any) subject to which this Transfer  Certificate is
          expressed to take effect; and

     (b)  comply  with  and be  bound by the  terms  of the  Agreement  and each
          Finance  Document to which the Transferor is a party as if it had been
          an original party to such Agreement and each such Finance  Document in
          the capacity of [*specify capacities*].

4.   The Transferee confirms that:-



<PAGE>



     (a)  it has received copies of the Agreement and each such Finance Document
          and each Security Document and all other documentation and information
          required  by  the  Transferee  in  connection  with  the  transactions
          contemplated        by        this        Transfer        Certificate;

     (b)  it has  made  and  will  continue  to make  its own  assessmen  of the
          adequacy,  legality,   enforceability  and  validity  of  the  Finance
          Documents  and this Transfer  Certificate  and has not relied and will
          not  rely  on the  Lead  Bank,  the  Security  Agent  or the  Steering
          Committee or any statements made by any of them in that respect;

     (c)  it has made and will  continue  to make its own credit  assessment  of
          SCC, the Borrowers, and the other parties to the Finance Documents and
          has not relied and will not rely on the Lead Bank,  the Security Agent
          or the  Steering  Committee or any  statements  made by any of them in
          that respect; and

     (d)  the Lead Bank, the Co-Lead Bank,  the Security  Agents or the Steering
          Committee  shall  not  have any  liability  or  responsibility  to the
          Transferee in respect of any of the foregoing matters.

5.   The  Transferor  makes  no   representation  or  warranty  and  assumes  no
     responsibility  with respect to the adequacy,  legality,  enforceability or
     validity of any Finance  Document  and  assumes no  responsibility  for the
     financial  condition  of SCC,  the  Borrowers,  or any  other  party to any
     Finance  Document  or for  the  performance  and  observance  by  SCC,  the
     Borrowers,  or any other  such  party of any of its  obligations  under any
     Finance Document and all such conditions and warranties,  whether expressed
     or implied by law or otherwise, are excluded.

6.   Nothing in this Transfer  Certificate or any Finance  Document  obliges the
     Transferor to:-

     (a)  accept a re-transfer  from the  Transferee of any of the rights and/or
          obligations   assigned,   transferred   or  novated  under  Clause  21
          (Assignments and Transfers) of the Agreement; or

     (b)  support  any  losses  incurred  by the  Transferee  by  reason  of the
          non-performance  by any Borrower of any of its  obligations  under any
          Finance Document or otherwise.

7.   The Transferee  confirms that, in executing this Transfer  Certificate,  it
     acts as principal.

8.   This Transfer  Certificate  and the rights and  obligations  of the parties
     under it shall be governed by and construed in accordance with English law.

Note:This  Transfer  Certificate  is  not a  security,  bond,  note,  debenture,
     investment or other similar instrument.

AS WITNESS the hands of the authorised  signatories of the parties hereto on the
date appearing below.



<PAGE>



                        SCHEDULE TO TRANSFER CERTIFICATE

Details of Obligations to be transferred



[All]  obligations  of the  Transferor  under or pursuant to each of the Finance
Documents  including,  without limitation,  the obligations of the Transferor in
respect of its Commitment referred to below.


                                        Portion of Commitment
Transferor's Commitment under:          Transferred

[*details to     ] Facility             $[***]       $[***]
[  be inserted*] Facility               $[***]       $[***]


                      Administrative Details of Transferee


Name of Transferee:

Lending Office:

Address for service of notices (if different):

Account for payments:

Telephone:

Telex:

Attention:


Dated: ......................                 Dated: ......................

SIGNED by ...................                 SIGNED by ...................
for and on behalf of                            for and on behalf of
[Transferor Bank]                                 [Transferee Bank]




<PAGE>



                                  SCHEDULE VII


                                 GROUP STRUCTURE






<PAGE>



                                  SCHEDULE VIII


               DISTRIBUTION OF RECOVERIES BETWEEN FINANCE PARTIES

                                  (Clause 25.2)

5.   Each Security Agent shall hold the  Recoveries  received by it on trust for
     distribution in accordance with the provision of this Schedule.  Each other
     Finance Party shall, promptly on request from a Security Agent, pay to such
     Security Agent all Recoveries  held by such Finance Party or apply the same
     as such Security Agent may direct.

6.   Recoveries  shall be distributed by each Security Agent between the Finance
     Parties in the following order of priority:-

     (1)  FIRST,  to pay to the Security  Agents,  the Co-Lead Bank and the Lead
          Bank the amount of any fees due from the Group  Companies  pursuant to
          Clause 18 (Fees) of this  Agreement and to reimburse  each of them for
          all costs (including legal costs) charges and expenses  incurred by it
          in connection with the Finance  Documents and in addition such sums as
          shall be  sufficient  to indemnify  the Security  Agents,  the Co-Lead
          Bank,  the Lead Bank and the  Steering  Committee  fully  against  any
          obligations or liabilities incurred in their respective  capacities as
          such (except if and insofar as incurred as a result of their own gross
          negligence or wilful misconduct);

     (2)  SECOND,  to pay to the Banks the amount of any losses incurred by them
          in respect of any foreign exchange transaction which the relevant Bank
          has agreed not to close out on the Enforcement  Date at the request of
          a receiver of the relevant  Group Company and with the approval of the
          Lead Bank (acting with the consent of all the Banks);

     (3)  THIRD,  to pay  to  the  Banks  pro  rata  pari  passu  all  Principal
          Indebtedness  then due,  owing or incurred under the Facilities (up to
          the level of each Bank's  Commitment)  and to create  Reserves for any
          such indebtedness as is unmatured (as adjusted,  where applicable,  to
          take into  account  any  Equalisation  Payments  made under  Clause 26
          (Equalisation)),  together  with  all  Interest  Indebtedness  accrued
          thereon,  until all such matured indebtedness has been repaid and full
          Reserves have been made for all such unmatured liabilities;

     (4)  FOURTH,  to pay to the Banks pro rata pari  passu all other  money and
          liabilities  (if any) due,  owing or incurred  by the  Obligors to the
          Finance Parties under or in connection with the Facilities  and/or the
          Finance  Documents and to create Reserves for any such  liabilities as
          are unmatured,  until all such matured  liabilities  have been paid in
          full  and full  Reserves  have  been  created  for all such  unmatured
          liabilities;

     (5)  FIFTH, to pay any surplus to whomsoever is entitled to it;

          where the expression "pro rata" means: -

          (i)  in  relation to  paragraph  2(c) above,  the  proportion  which a
               Bank's  Outstandings  as at the  Enforcement  Date  bears  to the
               aggregate  amount  of all  Outstandings  of the  Banks  as at the
               Enforcement Date; and



<PAGE>



          (ii) in relation to paragraph  2(d) above,  the  proportion  which the
               amount of  indebtedness  of the  Obligors to each  Finance  Party
               under or in  connection  with the  Facilities  and/or the Finance
               Documents  at  such  time  bears  to  the  aggregate   amount  of
               indebtedness  of the Obligors to all Finance  Parties under or in
               connection  with the Facilities  and/or the Finance  Documents at
               such time; and

          (iii)in relation to paragraph  2(e) above,  the  proportion  which the
               amount of the  Indebtedness  described in paragraph 2(e) above of
               the  Obligors  to each  Finance  Party at such time  bears to the
               aggregate  amount of such  Indebtedness  of the  Obligors  to all
               Finance Parties at such time.

     For the purpose of this Schedule there shall be no double  counting.  Where
     there  are two  claims  for the same debt (for  example  a  guarantee  of a
     Facility) only one such claim shall be taken into account.

7.   For the purposes of calculating  the claim of each Finance Party under this
     Schedule and calculating the amount of Indebtedness  outstanding to each of
     them for the purposes of this Schedule:-

     (1)  the  provisions of Clause 26  (Equalisation)  shall be applied,  where
          applicable, before establishing Indebtedness for such purpose;

     (2)  any  claim  made  by  a  Bank  in  respect  of  any  foreign  exchange
          transaction shall be limited to the amount of the loss which that Bank
          would  have  incurred  on that  transaction  if it had closed out that
          transaction on the Enforcement Date or (if that is not a Business Day)
          on the next succeeding  Business Day, or on such other basis as may be
          approved by the Lead Bank (acting with all Bank  consent) if such Bank
          is asked by a receiver of the relevant  Group Company not to close out
          the transaction or not to do so immediately;

     (3)  sums  received  by a  Finance  Party  and  passed or to be passed to a
          Security Agent pursuant to Clauses 29.1 (Further Security, Set-Off and
          Excess Cash Cover) or 30 (Third Party  Security) shall be disregarded,
          so  that  as  between  the  Finance  Parties  for  such  purpose,  the
          outstanding  Indebtedness  of the Group  Companies to a Finance  Party
          shall be deemed  to be the  amount  of the  indebtedness  of the Group
          Companies  to such  Finance  Party  before  the sums to be passed to a
          Security Agent are received by such Finance Party.

8.   Where any Finance Party  receives  funds pursuant to this Schedule it shall
     (unless required by law) apply such funds in or towards satisfaction of the
     relevant debt or liability or (if so directed by a Security  Agent with the
     consent   of  the   Majority   Banks)   instead   place  the  funds  on  an
     interest-earning  suspense account until otherwise  specified by a Security
     Agent.

9.   If any  calculation  or  estimate  made by a  Security  Agent (or any other
     person) in order to  determine  directly or  indirectly  the  distributions
     hereunder  shall prove to be  inaccurate  when made or becomes  inaccurate,
     whether through the passage of time or otherwise, then the amounts received
     by each Finance Party shall be adjusted to take account of such  inaccuracy
     and such Finance Party shall  forthwith upon notice by a Security Agent pay
     to such  Security  Agent such  funds as may be  required  to  achieve  such
     correction.



<PAGE>


10.  If requested by a Security  Agent,  a Finance Party shall purchase for cash
     such portion of the monetary amounts and claims owing to one or more of the
     other Finance  Parties from the Group  Companies,  or to sell for cash such
     portion  of  the  monetary  amounts  and  claims  owing  to it  from  Group
     Companies,  or adopt  such  alternative  method  as a  Security  Agent  may
     reasonably  require (on the basis of legal  advice  received by it) to give
     effect  to  the  provisions  of  Clauses  26  (Equalisation),  27  (Interim
     Distributions  of  Recoveries  and  Creation  of  Reserves),   29  (Further
     Security,  Set-Off  and Excess Cash  Cover) or 30 (Third  Party  Security),
     having  regard  to  the  law  applicable  in  the  relevant   jurisdiction.

11.  Where the amount of any  unmatured  liability  is to be  estimated  for the
     purpose of this  Schedule,  the Finance  Party to which such  liability  is
     owing shall provide such  information to each of the Security  Agents as it
     may  reasonably  require to agree or determine  the amount of such estimate
     and the amount so agreed or determined  by the Security  Agents shall apply
     for such purpose.



<PAGE>

                                   SCHEDULE IX



                        EXISTING INTRA-GROUP INDEBTEDNESS

                                (Clause 13.1(v))



<PAGE>


                                   SCHEDULE X

                         DETAILS OF GROUP JOINT VENTURES

                                (Clause 13.1(r))


<PAGE>


                                   SCHEDULE XI

                              WOOL GROUP COMPANIES


<PAGE>


                                  SCHEDULE XII
<TABLE>
<CAPTION>

                  NEW GLOBAL FACILITY - PROFORMA BORROWING BASE

Amounts show as of 31 March 1997

----------------------------- ------------------- --------------------- ------------------ =====================
<S>                              <C>                    <C>                 <C>                   <C>
      (US $ millions)             SCTC Inc.              TCLTC              SCTC(UK)              TOTAL

----------------------------- ------------------- --------------------- ------------------ =====================
----------------------------- ------------------- --------------------- ------------------ =====================

Inventory                            66.2                 35.7                 3.3                105.2
Receivables                          34.0                 40.6                  13                 87.6
Less: ineligibles                    N/A                  N/A                  N/A                 N/A
Sub Total                           100.2                 76.3                16.3                192.8
----------------------------- ------------------- --------------------- ------------------ =====================
----------------------------- ------------------- --------------------- ------------------ =====================

Eligible InterCompany Loans           0.3                  9.2                 1.8                 11.3
Less payables
Sub Total                             0.6                  7.2                 1.3                  9.1
(cap $40,000,000)                    (0.3)                 2.0                 0.5                  2.2
----------------------------- ------------------- --------------------- ------------------ =====================
----------------------------- ------------------- --------------------- ------------------ =====================

Supplier Advances and                 3.8                 11.4                11.8                 27.0
Affiliates Advances (cap
$40,000,000)                        (2.0)                (52.3)               (7.3)               (61.6)
Less Trade Payables                 101.7                 37.4                21.3                160.4
Total Cur Assets
----------------------------- ------------------- --------------------- ------------------ =====================
----------------------------- ------------------- --------------------- ------------------ =====================

Availability                         81.4                 29.9                17.0                128.3
@ 80%
----------------------------- ------------------- --------------------- ------------------ =====================
----------------------------- ------------------- --------------------- ------------------ =====================

Fixed Assets                         21.0
Availability                         10.5
@ 50%
Total                                91.9                                                         138.8
Borrowing Base
----------------------------- ------------------- --------------------- ------------------ =====================
----------------------------- ------------------- --------------------- ------------------ =====================

-Borrowings (less all                23.7                 21.3                15.7                 60.7
guarantees and letters of
credit)
-plus all guarantees and             25.7                 11.3                                     36.5
letters of credit
-less back to back,
prepayment secured and
undrawn documentary letters
of credit
-less cash                            0.4                 13.4                  3.5                17.3
Net Borrowings                       48.5                 19.2                12.2                 79.9
----------------------------- ------------------- --------------------- ------------------ =====================
----------------------------- ------------------- --------------------- ------------------ =====================

Availability                         43.4                 10.7                 4.8                 58.9
----------------------------- ------------------- --------------------- ------------------ =====================
N.B. all figures set out above are illustrative only.
</TABLE>


<PAGE>



                                  SCHEDULE XIII


                    GRANDFATHERED BORROWINGS AND ENCUMBRANCES
<TABLE>
<CAPTION>



<S>                <C>               <C>                 <C>                   <C>                <C>
Borrowing          Guarantor of      Nature of                                 Type of            Amount Currently
Company            Encumbrance       Encumbrances        Lender                Credit Facility    Secured
---------------------------------------------------------------------------------------------------------------------
----------------  -----------------  -----------------   -------------------   ----------------   -------------------
Stancom Tanzania   Stancom Tanzania  Trading Assets,     Bank syndicate led    Seasonal credit    $37.5 million,
(Jersey) Limited   (Jersey) Limited  SCC's shares in     by AGN-Amro.          lines renewed       amounts will vary
                                     the local company                         annually.           depending on crop
                                     or land and buildings                                         size and sales plan.
                                     depending on the                          Term Loan for
                                     final joint venture                       purchase of shares  $5-15 million,
                                     arrangements.                             and construction     depending on final
                                                                               of new tobacco       joint venture
                                                                               storage in Tabora.   arrangements.
----------------   ----------------  ----------------     -------------------  ----------------    ------------------
Standard Brazil    Standard Brazil   Inventory and        Bank syndicate led   Seasonal credit     Up to $50 million,
Limited            Limited           Receivables          AGN-Amro             lines.              amounts will vary
                                                                                                   depending on crop size
                                                                                                   and sales plan.
----------------   ----------------  ----------------     ------------------   ----------------   -------------------
Standard's joint   Standard's joint  Inventory and        Local Indian banks   Seasonal credit     To be determined
venture in         venture in        Receivables.                              lines.
Gunthur, India     Gunthur, India
(name to be        (name to be
determined).       determined).

----------------   ----------------  ----------------     --------------       ----------------    ------------------
Seakins Limited    Seakins Limited   Inventory and        United Overseas      Seasonal credit     Up to $50 million.
                                     Receivables          Bank
----------------   ----------------  ----------------     --------------       ----------------     -----------------
Various SCC        Various SCC       Trading Assets       Local Banks          Ring-Fenced          Varies by country
Subsidiaries and   Subsidiaries and  and local fixed                           Financing            and season
Affiliates in      Affiliates in     assets                                    Arrangements as
tobacco sourcing   tobacco sourcing                                            defined in the
countries          countries                                                   MFA
---------------    ----------------  -----------------    ---------------      -----------------   ------------------
Various Wool       Various Wool      Trading Assets and   Local Banks          Seasonal credit      Varies by country
Group companies    Group companies   local fixed assets                        lines                and season

Standard Wool      Standard Wool     Land and buildings   Royal Bank           Seasonal credit      $5,395,000
(UK) Ltd           (UK) Ltd                               of Scotland          lines
---------------    ----------------  -----------------    ---------------      ------------------   -----------------
Standard           Standard          Land, buildings      Branch Banking       Industrial Revenue   $2,940,000
Commercial         Commercial        and machinery        and Trust             Bonds
Tobacco Co,        Tobacco Co,       in Springfield,
Ltd                Ltd               Kentucky, USA
----------------   ----------------  -----------------    ---------------      ------------------   -----------------
Carolina Tobacco   CRES Tobacco      CRES factory land    Bank of America      Term Loan            $3,102,000
Inc                Inc and Standard  and buildings
                   Commercial Tobacco
                   Co, Inc
</TABLE>


<PAGE>






                                  SCHEDULE XIV


                              ADDITIONAL COSTS RATE

* Subject to review by the Banks *

The  Additional  Cost  Rate  to  compensate  each  of the  Banks  for  the  cost
attributable to the Facilities,  or other sum for any period for which such cost
is to be computed under this Agreement  resulting from the imposition  from time
to time by the Bank of England (or other  governmental  authorities or agencies)
of a requirement or request to place non-interest-bearing deposits with the Bank
of England,  for the payment of special  deposits and the maintenance of secured
money with certain  financial  institutions  (recognised for this purpose by the
Bank of England) will be the rate  determined by the Bank (rounded  upwards,  if
necessary,  to the nearest  one-sixteenth  of one per cent (1/16%)) on the first
day of the  relevant  period and for the  duration  of such period (or, if for a
period longer than three Months,  the average of the rates  (rounded  upwards as
aforesaid)  computed on a three  Monthly basis during such period) in accordance
with the following formula:

              rate      = XL+ B(L-C) + S(L-D) 100 -
                          (X + S)

Where:

                    "X"  is the amount  required to be maintained by the Bank as
                         non-interest-bearing  balances with the Bank of England
                         expressed as a percentage of eligible liabilities fixed
                         by  the  Bank  of   England   (or  other   governmental
                         authorities or agencies).

                    "L"  is the average of the offered  quotations in the London
                         Interbank  Market for Sterling  deposits for the period
                         for which the  formula  is being  applied in the London
                         Interbank  Market at or about 11.00 am on the first day
                         of that period.

                    "B"  is the average level of secured deposits expressed as a
                         percentage  of eligible  liabilities  which the Bank is
                         required  by the  Bank  of  England  to  maintain  with
                         certain  financial  institutions  (recognised  for this
                         purpose by the Bank of England).

                    "C"  is the average of the rates at which certain  financial
                         institutions  (recognised  for this purpose by the Bank
                         of England)  bid for  Sterling  deposits for the period
                         for which the formula is being applied from the Bank at
                         or about 11.00 am on the first day of that period.

                    "S"  is  the  amount  of  special  deposits  required  to be
                         maintained  by the Bank  expressed as a  percentage  of
                         eligible  liabilities  fixed by the Bank of England (or
                         other governmental authorities or agencies).

                    "D"  is the rate of interest  paid by the Bank of England on
                         special deposits.

In the  application  of the  above  formula  X, L,  B,  C, S and D will  each be
expressed as a number and not as a percentage rate per annum.



<PAGE>



In the  event of any  change  in  circumstances  (including  the  imposition  of
alternative or additional official requirements) which renders the above formula
inapplicable,  any relevant Bank shall notify SCTC Inc. in reasonable  detail of
the manner  (including the basis and  computation)  in which the Additional Cost
Rate shall be  determined  thereafter  and,  if  appropriate,  substitute  a new
formula for that set out above.

If the above  formula does not  represent  the cost to any relevant Bank of such
compliance  as  mentioned  earlier,  the  Borrowers  will on demand by such Bank
indemnify the Bank for any such cost of compliance  demonstrated by such Bank to
the  Borrowers  in  reasonable  detail and  certified  by such Bank as not being
otherwise covered by such formula.  A certificate as to such further cost signed
on behalf of such Bank shall be conclusive in the absence of manifest error.



<PAGE>




                                   SCHEDULE XV

                    STANDARD FORM BI-LATERAL FACILITY LETTER



To:  Standard  Commercial Tobacco Co., Inc. Standard  Commercial Tobacco Company
     (UK) Limited Trans-Continental Leaf Tobacco Corporation Limited


     [date]


Dear Sirs,

We are pleased to offer to make available to you (the  "Borrowers" and each is a
"Borrower") the following facilities (the "Facilities") subject to the terms and
conditions set out in this letter and the MFA (as defined  below).  [This letter
supplements and amends our existing  facility letter dated [*] as amended and in
force on the date of this letter.]  This letter is a Facility  Letter as defined
in the MFA.

          1.   Facility Amount

               Up to a maximum of $[*] in  aggregate  of which up to $[*] may be
               drawn by way of  revolving  credit  advances for periods of up to
               [*]  days and up to $[*] by way of the  issuance  of  Letters  of
               Credit. [state any other forms of permitted utilisations].

          2.   Purpose

               The Facilities may be used for the general corporate  purposes of
               the Borrowers (excluding hostile acquisitions).

          3.   Interest and Commissions

               Interest on advances  shall be payable in accordance  with clause
               [6] of the MFA.  Commissions  and fees on  Letters  of Credit and
               [state  any other  permitted  utilisations]  shall be  payable as
               follows:

               [State amounts and times]

          4.   Letter of Credit Documentation



<PAGE>



               If any  Borrower  requests  us at any time to  issue a Letter  of
               Credit on its behalf, such Borrower shall deliver to us a copy of
               our standard form application for the issue of a letter of credit
               and  counterindemnity  duly  executed on behalf of such  Borrower
               together  with  any  other  documentation  referred  to  in  that
               application  and any fees then  payable.  All  Letters  of Credit
               proposed to be issued by us shall be in a form  acceptable to us.
               Where a  Borrower  requests  the  issue of a Letter  of Credit in
               connection with the acquisition of tobacco by that Borrower, such
               Borrower   shall  also  deliver  to  us  duly   executed   pledge
               documentation in our standard form in respect of such tobacco and
               deliver  to us the  documents  of  title  to such  tobacco.  Each
               Borrower  agrees that it will  execute  such trust  receipts  and
               other  documents and give such  instructions to warehouses as may
               be necessary to give effect to any such pledge.


          5.   Other utilisations

               All  utilisations of the Facilities  shall,  except to the extent
               expressly  provided  in this letter or in the MFA, be made on our
               standard  terms  and  conditions  which  shall  be  deemed  to be
               incorporated  in this  letter.  To the  extent  that there is any
               inconsistency  between  the  terms  of  this  letter  and/or  our
               standard  terms and the terms of the MFA, the  provisions  of the
               MFA shall prevail.

          6.   Repayment

               The Facilities  shall be repayable at the times and in the manner
               stated in the MFA.

          7.   Security

               The obligations of the Borrowers under or pursuant to this letter
               and the Finance Documents from time to time shall be secured by:

               (a)  [list existing security held by that Bank];

               (b)  the Security Documents; and

               (c)  any  express or implied  rights of security to which we may,
                    now  or  hereafter,  be  entitled  as a  matter  of  law  or
                    contract.

          8.   Other Terms

               [state any other terms applicable to the Facilities]

          9.   Interpretation

               In this letter "MFA" means the Master Facilities  Agreement dated
               5 May  1996 as  supplemented  and  amended  on [*]  1997 and made
               between the Borrowers (1) Standard Commercial Corporation (2) the
               Steering  Committee  (3) Deutsche Bank AG in Hamburg as Lead Bank
               (4) Bankers Trust Company as Co-Lead Bank and Documentation Agent
               (5)  MeesPierson NV as  International  Security Agent (6) Bankers
               Trust Company as the US Security Agent (7) and the Banks (8).

               Expressions  defined in the MFA and not otherwise defined in this
               letter shall have the respective meanings given to those terms in
               the MFA and  principles of  interpretation  applicable to the MFA
               shall also apply to this letter.

          10.  Governing Law

               This letter shall be governed by and construed in accordance with
               [*] law.



<PAGE>


Each of the Borrowers  should  countersign  and return the enclosed copy of this
letter  to  indicate  its  agreement  to its  terms  together  with a copy  of a
resolution  of its board of directors  approving  this letter and  authorising a
named  individual to  countersign  this letter on its behalf.  This letter shall
remain open for acceptance until [*] after which time it shall lapse.

Yours faithfully,


For [Bank]

[On copy only]

We agree to and accept the terms of the above facility letter


 ...........................................          Date

 ...........................................          Date

 ...........................................          Date


[NB/ All Borrowers to sign]


<PAGE>


THE BORROWERS

TRANS-CONTINENTAL LEAF TOBACCO CORPORATION LIMITED
FL-9490 Vaduz,
Liechtenstein

Facsimile No:         (0)75 236 5555
Attention:            The Finance Director

By:


STANDARD COMMERCIAL TOBACCO COMPANY (UK) LIMITED
Standard House
Weyside Park
Godalming
Surrey GU7 1XE
England

Facsimile No:         01483 860176
Attention:            The Finance Director

By:


STANDARD COMMERCIAL TOBACCO CO., INC.
C/o C.T. Corporation Systems
225 Hillsborough Street
Raleigh
North Carolina 27603, USA

Facsimile No:
Attention:     The Finance Director



SCC

STANDARD COMMERCIAL CORPORATION

2201 Miller Road, P O Box 450,
Wilson NC 27894-0450, USA

Facsimile No:         00 1 919 237 1109
Attention:            The Finance Director

By:







<PAGE>


THE LEAD BANK

DEUTSCHE BANK A.G. IN HAMBURG
Firmen und Institutionen
Konzernbetreuung II
Adolphsplatz 7
20079 Hamburg, Germany

Facsimile No:         00 49 40 3701 4684
Attention:  Michael Ziesenitz

By:


THE CO-LEAD BANK AND DOCUMENTATION AGENT

BANKERS TRUST COMPANY
14 Wall Street - 3rd Floor
NY 10005
USA

Facsimile No:         00 1 212 618 2630
Attention:  Maureen Reilly

By:


THE INTERNATIONAL SECURITY AGENT

MEESPIERSON N.V.
Camomile Court
23 Camomile Street
London EC3A 7PP

Facsimile No:         0171 444 8810
Attention:            Iain Lappin-Smith

By:



THE US SECURITY AGENT

BANKERS TRUST COMPANY
14 Wall Street - 3rd Floor
New York
NY 10005
USA

Facsimile No:         00 1 212 618 2630
Attention:  Maureen Reilly

By:


<PAGE>


THE STEERING COMMITTEE

DEUTSCHE BANK A.G. IN HAMBURG
Firmen und Institutionen
Konzernbetreuung II
Adolphsplatz 7
20079 Hamburg, Germany

Facsimile No:         00 49 40 3701 4684
Attention:            Michael Zietsenitz

By:


MEESPIERSON N.V.

Coolsingel 93
PO Box 749
3000 AS Rotterdam
Netherlands

Facsimile No:         0031 10 4016558
Attention:            Jaap Van Beveren

By:


BANKERS TRUST COMPANY
14 Wall Street - 3rd Floor
New York
NY 10005
USA

Facsimile No:         00 1 212 618 2630
Attention:  Maureen Reilly

By:


NORDDEUTSCHE LANDESBANK GIROZENTRALE
Brodschrangen 4
20457 Hamburg
Germany

Facsimile No: 00 49 40 3765 5304
Attention: Mrs Glindmeyer

By:




<PAGE>


WESTDEUTSCHE LANDESBANK GIROZENTRALE
Domstrasse 10
20095 Hamburg
Germany

Facsimile No: 00 49 40 339 68265
Attention: Mr T Richter

By:


THE BANKS

DEUTSCHE BANK A.G. IN HAMBURG

Firmen und Institutionen
Konzernbetreuung II
Adolphsplatz 7
20079 Hamburg, Germany

Facsimile No:         00 49 40 3701 4684
Attention:            Michael Ziesenitz

By:


MEESPIERSON N.V.

Coolsingel 93
PO Box 749
3000 AS Rotterdam
Netherlands

Facsimile No:         0031 10 401 6558
Attention:            Jaap Van Beveren

By:


BANKERS TRUST COMPANY
14 Wall Street - 3rd Floor
New York
NY 10005
USA

Facsimile No:         00 1 212 618 2630
Attention:  Maureen Reilly

By:




<PAGE>


NORDDEUTSCHE LANDESBANK GIROZENTRALE
Brodschrangen 4
20457 Hamburg
Germany

Facsimile No: 00 49 40 3765 5304
Attention: Mrs Glindmeyer

By:


WESTDEUTSCHE LANDESBANK GIROZENTRALE
Domstrasse 10
20095 Hamburg
Germany

Facsimile No: 00 49 40 339 68265
Attention: Mr T Richter

By:


BERENBERG BANK
Neuer Jungfernstieg 20
20354 Hamburg
Germany

Facsimile No:  00 49 40 354 248
Attention: Mr Schroder

By:


BHF-BANK AKTIENGESELLSCHAFT
Paulstrasse 5
20095 Hamburg
Germany

Facsimile No:  00 49 40 3200 9203
Attention:  Mr Theodore Budde

By:

BERLINER BANK AKTIENGESELLSCHAFT
Niederlassung Hamburg
Domstrasse 21
20095 Hamburg
Germany

Facsimile No:  00 49 40 3020 5319
Attention:  Mr Gubel

By:


<PAGE>


COMMERZBANK A.G.
Ness 7-9
20457 Hamburg
Germany

Facsimile No:  00 49 40 368 33305
Attention:  Mr Weidner

By:


ABN AMRO BANK
Frankrijklei 121
B-2000 Antwerpen
Belgium
Tel:                            +32 3 2220425
Fax:                            +32 3 2311031
Attention: Mr. Paul Lenaerts/Mr. Rudolf Oldeman


By:

CRESTAR BANK
919 East Main Street
Richmond, VA 23219
USA
Tel:                            +1 804 782 5237
Fax:                            +1 804 782 5413
Attention:                      Mr. C Gray Key

By:

KREDIETBANK N.V.
5th Floor, Earl Place
15 Appold Street
London EC2A 2AA
England
Tel:                            +44 171 256 4891
Fax:                            +44 171 256 4870
Attention:                      Mr. Kevin Giles

By:

STANDARD CHARTERED BANK
37 Gracechurch Street
London EC3V OBX
England

Tel:                            +44 171 280 7585
Fax:                            +44 171 280 7598
Attention:                      Mr. Robert Dean



<PAGE>


By:

                                   APPENDIX A

                                   THE BUDGET


<PAGE>


                                   APPENDIX B

                             THE CASH FLOW FORECAST



                                    APPENDIX


                                DATED 5 May 1995



             Trans-Continental Leaf Tobacco Corporation Limited, (1)
                Standard Commercial Tobacco Company (UK) Limited
                                       and
                    Standard Commercial Tobacco Company, Inc.
                                 (as Borrowers)

                       Standard Commercial Corporation (2)
                                 (as Guarantor)

                           The Steering Committee (3)

                        Deutsche Bank A.G. in Hamburg (4)
                                 (as Lead Bank)

                            Bankers Trust Company (5)
                    (as Co-Lead Bank and Documentation Agent)

                              MeesPierson N.V. (6)
                        (as International Security Agent)

                            Bankers Trust Company (7)
                             (as US Security Agent)

                                      -and-

                                  The Banks (8)


                  ---------------------------------------------

                           MASTER FACILITIES AGREEMENT
                           AS AMENDED AND RESTATED ON
                                 1st AUGUST 1997

                  ---------------------------------------------



                              *DRAFT 23 July 1997*



                              LOVELL WHITE DURRANT
                               65 Holborn Viaduct
                                 London EC1A 2DY
                                 A1/KB/105079-4

                        *Subject to the Banks' comments*


<PAGE>



                                    CONTENTS

                                  Heading Page

               Parties

               Recitals

                                     PART I

1.             Definitions and Interpretation

                                     PART II

2.             Facilities
3.             Letters of Credit
4.             Bills

                                    PART III

5.             Master Facilities Arrangements

                                     PART IV

6.             Interest and Commission


                                     PART V

7.             Repayment
8.             Prepayment

                                     PART VI

9.             No deductions
10.            Change in Law or Regulations
11.            Cancellation

                                    PART VII


12.            Guarantee

                                    PART VIII

13.            Representations and Warranties



                                     PART IX

14.            General Covenants
15.            Information Covenants
16.            Financial Covenants



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                                     PART X

17.  Termination in Case of Default


                                     PART XI

18.  Fees 19. Expenses 20. Stamp Duty

                                    PART XII

21.  Assignments and Transfers

                                    PART XIII

22.  Lead  Bank,  Co-Lead  Bank,  Security  Agents  and  Steering  Committee  23
     Amendments  and  Decisions  24.  Retirement  of Lead  Bank,  Co-Lead  Bank,
     Security Agents and Steering Committee


                                    PART XIV


25.  Enforcement of Security and Distribution of Recoveries 26. Equalisation 27.
     Interim   Distributions   of  Recoveries   and  Creation  of  Reserves  28.
     Calculation of  Outstandings 29 Further  Security,  Set-Off and Excess Cash
     Cover  30.  Third  Party  Security  31.  Closing  out of  Foreign  Exchange
     Transactions

                                     PART XV

32.  Notices 33. Indemnities 34. Certificates, Calculations and Evidence of Debt
     35. Set-Off 36.  Forbearance and Partial  Invalidity 37.  Authority of SCTC
     Inc.  38.   Counterparts   39.  Finance  Parties  40.   Governing  Law  and
     Jurisdiction


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                                    SCHEDULES


Schedule I                 :        The Borrowers
Schedule II                :        The Banks
Schedule III               :        The Obligors
Schedule IV                :        Existing Security Documents
Schedule V                 :        Security Documents
Schedule VI                :        Form of Transfer Certificate
Schedule VII               :        Group Structure
Schedule VIII              :        Distribution of Recoveries
Schedule IX                :        Existing Intra-Group Indebtedness
Schedule X                 :        Details of Group Joint Ventures
Schedule XI                :        Wool Group Companies
Schedule XII               :        Borrowing Base Certificate
Schedule XIII              :        Grandfathered Borrowings and Encumbrances
Schedule XIV               :        Additional Costs Rate
Schedule XV                :        Standard Form Bi-Lateral Facility Letter
Signing Pages

Appendix A                 :        The Budget
Appendix B                 :        The Cash Flow Forecast