Document:

ex42vector2021offering-p

  Exhibit 4.2       PLEDGE AGREEMENT        DATED JANUARY 28, 2021          between        VGR HOLDING LLC          and          U.S. BANK NATIONAL ASSOCIATION    as Collateral Agent                  

 

   i  CONTENTS  Clause Page    1. INTERPRETATION............................................................................................................1  1.1 Definitions................................................................................................................1  1.2 Construction .............................................................................................................2  2. SECURED LIABILITIES ...................................................................................................3  2.1 Secured Liabilities ...................................................................................................3  2.2 Specification of Secured Liabilities .........................................................................4  3. CREATION OF PLEDGE AND SECURITY .....................................................................4  3.1 Security interest .......................................................................................................4  3.2 General .....................................................................................................................4  4. PERFECTION ANd FURTHER ASSURANCES ..............................................................5  4.1 General perfection ....................................................................................................5  4.2 Delivery of certificates .............................................................................................5  4.3 Filing of financing statements ..................................................................................6  4.4 Communication with Issuers....................................................................................6  4.5 Further assurances ....................................................................................................6  5. REPRESENTATIONS AND WARRANTIES....................................................................7  5.1 Representations and warranties ................................................................................7  5.2 The Pledgor ..............................................................................................................7  5.3 The Pledged Collateral .............................................................................................7  5.4 No liability ...............................................................................................................8  5.5 Consideration and solvency .....................................................................................9  5.6 Times for making representations and warranties ...................................................9  6. UNDERTAKINGS ............................................................................................................10  6.1 Undertakings ..........................................................................................................10  6.2 The Pledgor ............................................................................................................10  6.3 The Pledged Collateral ...........................................................................................11  6.4 Notices ...................................................................................................................12  7. WHEN SECURITY BECOMES ENFORCEABLE .........................................................13  8. ENFORCEMENT OF SECURITY ...................................................................................13  

 

 ii  8.1 [Reserved] ..............................................................................................................13  8.2 General ...................................................................................................................13  8.3 Dividend and voting rights.....................................................................................14  8.4 Collateral Agent’s rights upon default ...................................................................14  8.5 No Marshaling .......................................................................................................15  9. APPLICATION OF PROCEEDS ......................................................................................16  10. EXPENSES AND INDEMNITY ......................................................................................16  11. EVIDENCE AND CALCULATIONS ..............................................................................17  12. CHANGES TO THE PARTIES ........................................................................................17  12.1 Pledgor ...................................................................................................................17  12.2 Collateral Agent .....................................................................................................17  12.3 Successors and assigns ...........................................................................................18  13. MISCELLANEOUS ..........................................................................................................18  13.1 Amendments and waivers ......................................................................................18  13.2 Waivers and remedies cumulative .........................................................................18  13.3 Counterparts ...........................................................................................................18  14. SEVERABILITY ...............................................................................................................18  15. RELEASE ..........................................................................................................................19  16. NOTICES ...........................................................................................................................19  16.1 Notices ...................................................................................................................19  16.2 Contact Details .......................................................................................................19  16.3 Effectiveness ..........................................................................................................19  17. GOVERNING LAW ..........................................................................................................20  18. ENFORCEMENT ..............................................................................................................20  18.1 Jurisdiction .............................................................................................................20  18.2 Service of Process ..................................................................................................21  18.3 Complete Agreement .............................................................................................21  18.4 Waiver of Jury Trial ...............................................................................................21    SCHEDULE 1: Pledged Equity Interests  SIGNATORIES  

 

    1  THIS AGREEMENT (this “Agreement”) is dated January 28, 2021  BETWEEN:  (1) VGR HOLDING LLC, a Delaware limited liability company, as pledgor (the  “Pledgor”); and  (2) U.S. BANK NATIONAL ASSOCIATION, as collateral agent for the Noteholders  under the Indenture described below (in this capacity, the “Collateral Agent”).  BACKGROUND:  The Pledgor enters into this Agreement in connection with the Indenture, dated January 28, 2021  (as amended, supplemented, or otherwise modified from time to time, the “Indenture”), by and  among Vector Group Ltd. (“Vector Group”), the Guarantors party thereto and U.S. Bank  National Association, as trustee (together with any successor in such capacity, the “Trustee”).   Pursuant to the Indenture, Vector Group is issuing Notes and Pledgor is guaranteeing the Notes  as provided in the Indenture.  Pledgor now wishes to secure its obligations under the Indenture  by entering into this Agreement.  IT IS AGREED as follows:  1. INTERPRETATION  1.1 Definitions  In this Agreement:   “Finance Documents” means the Indenture, all Notes issued from time to time under the  Indenture, this Agreement and all other pledges, security agreements, control agreements  and other agreements and documents entered into the connection with the transactions  contemplated by the Indenture.   “Guarantors” means the Pledgor and the other guarantors under the Indenture.  “Issuer” means each of Liggett Group and Vector Tobacco.   “Liggett Group” means Liggett Group LLC, a Delaware limited liability company.  “Note” means any note issued from time to time under the Indenture.  “Noteholder” means any Person which from time to time is the holder of a Note.  “Obligors” means Vector Group, the Pledgor and the other Guarantors.   “Pledged Collateral” means:  (a) the Pledged Equity Interests;  

 

  2  (b) all additional shares, securities, and interests in either Issuer, and all warrants,  rights, and options to purchase or receive shares, securities, or interests in either  Issuer, in which the Pledgor at any time has or obtains any interest;  (c) all management rights, all voting rights and any interest in any capital account of  Pledgor in either Issuer;  (d) all dividends, interest, revenues, income, distributions, and proceeds of any kind,  whether cash, instruments, securities, or other property, received by or  distributable to the Pledgor in respect of, or in exchange for, the Pledged Equity  Interests or any other Pledged Collateral; and  (e) to the extent not listed above as original Pledged Collateral, proceeds and  products of, and accessions to, each of the above assets.   “Pledged Equity Interests” means all equity interests in the Issuers, which equity  interests as they exist on the date hereof are described in Schedule I (Pledged Equity  Interests) to this Agreement.  “Secured Liabilities” means each liability and obligation specified in Clause 2 (Secured  Liabilities).  “Secured Parties” means the Trustee, the Collateral Agent, the Paying Agent, the  Registrar and the Noteholders.   “Security” means any security interest created by this Agreement.  “Security Period” means the period beginning on the date of this Agreement and ending  on the date on which all the Secured Liabilities have been indefeasibly, unconditionally  and irrevocably paid and discharged in full (other than in respect of contingent  obligations for which no claim has been asserted).  The Security Period will be extended  to take into account any extension or reinstatement of this Agreement under Clause 3.2(b)  (General).    “UCC” means the Uniform Commercial Code as in effect from time to time in the State  of New York.  “Vector Tobacco” means Vector Tobacco Inc., a Virginia corporation.    1.2 Construction  (a) Any term defined in the UCC and not defined in this Agreement has the meaning  given to that term in the UCC.  (b) Any term defined in the Indenture and not defined in this Agreement or the UCC  has the meaning given to that term in the Indenture.  

 

  3  (c) No reference to “proceeds” in this Agreement authorizes any sale, transfer or  other disposition of Collateral by the Pledgor that is not permitted by the  Indenture.  (d) In this Agreement, unless the contrary intention appears, a reference to:  (i) an “amendment” includes a supplement, novation, restatement or  re-enactment and “amended” will be construed accordingly;  (ii) a Clause, a Subclause or a Schedule is a reference to a Clause or  Subclause of, or a Schedule to, this Agreement;  (iii) a law is a reference to that law as amended or re-enacted and to any  successor law;  (iv) an agreement is a reference to that agreement as amended;  (v) “fraudulent transfer law” means any applicable U.S. Bankruptcy Law or  state fraudulent transfer or conveyance statute, and the related case law;  and  (vi) “law” includes any law, statute, regulation, regulatory requirement, rule,  ordinance, ruling, decision, treaty, directive, order, guideline, regulation,  policy, writ, judgment, injunction or request of any court or other  governmental, inter-governmental or supranational body, officer or  official, fiscal or monetary authority, or other ministry or public entity  (and their interpretation, administration and application), whether or not  having the force of law.  (e) In this Agreement:  (i) “includes” and “including” are not limiting;  (ii) “or” is not exclusive; and  (iii) the headings are for convenience only, do not constitute part of this  Agreement and are not to be used in construing it.  2. SECURED LIABILITIES  2.1 Secured Liabilities  Each obligation and liability whether:  (a) present or future, actual, contingent or unliquidated; or  (b) owed jointly or severally (or in any other capacity whatsoever),  

 

  4  of the Pledgor to any Noteholder, the Trustee, the Paying Agent, the Registrar or the  Collateral Agent under or in connection with each Finance Document is a Secured  Liability.  2.2 Specification of Secured Liabilities  The Secured Liabilities include any liability or obligation for:  (a) repayment of the principal of any Note;  (b) payment of interest and any other amount payable under the Finance Documents;  (c) payment and performance of all other obligations and liabilities of any Obligor  under the Finance Documents;  (d) payment of any amount owed under any amendment, modification, renewal,  extension or novation of any of the above obligations; and  (e) payment of any amount that arises after a petition is filed by, or against, any  Obligor under the U.S. Bankruptcy Code of 1978 even if the obligations do not  accrue because of the automatic stay under Section 362 of the U.S. Bankruptcy  Code of 1978 or otherwise.  3. CREATION OF PLEDGE AND SECURITY  3.1 Security interest  As security for the prompt and complete payment and performance of the Secured  Liabilities when due (whether due because of stated maturity, acceleration, mandatory  prepayment, or otherwise) and to induce the Noteholders to purchase the Notes, the  Pledgor pledges to the Collateral Agent for the benefit of the Secured Parties, and grants  to the Collateral Agent for the benefit of the Secured Parties a continuing security interest  in, the Pledgor’s right, title and interest in and to the Pledged Collateral.  3.2 General  (a) All the Security created under this Agreement:  (i) is continuing security for the irrevocable and indefeasible payment in full  of the Secured Liabilities, regardless of any intermediate payment or  discharge in whole or in part;  (ii) is in addition to, and not in any way prejudiced by, any other security now  or subsequently held by the Collateral Agent.  (b) If, at any time for any reason (including the bankruptcy, insolvency, receivership,  reorganization, dissolution or liquidation of any Obligor or the appointment of  any receiver, intervenor or conservator of, or agent or similar official for, any  

 

  5  Obligor or any of their respective properties), any payment received by the  Collateral Agent or any Noteholder in respect of the Secured Liabilities is  rescinded or avoided or must otherwise be restored or returned by the Collateral  Agent or any Noteholder, that payment will not be considered to have been made  for purposes of this Agreement, and this Agreement will continue to be effective  or will be reinstated, if necessary, as if that payment had not been made.  (c) This Agreement is enforceable against the Pledgor to the maximum extent  permitted by the fraudulent transfer laws.  4. PERFECTION AND FURTHER ASSURANCES  4.1 General perfection  The Pledgor shall take, at its own expense, promptly, and in any event within any  applicable time limit:  (a) whatever action is necessary; and  (b) any action that the Collateral Agent may reasonably require,  to ensure that the Security is, as of the date the Notes are first issued under the Indenture,  and will continue to be until the end of the Security Period, a validly created, attached,  enforceable and perfected first priority continuing security interest in the Pledged  Collateral, subject to no Liens other than Permitted Liens, in all relevant jurisdictions,  securing payment and performance of the Secured Liabilities.  Such actions include the giving of any notice, order or direction, the making of any filing  or registration, the passing of any resolution and the execution and delivery of any  documents or agreements that the Collateral Agent may reasonably require.  4.2 Delivery of certificates  (a) The Pledgor represents and warrants that it has delivered to the Collateral Agent  (or as directed by the Collateral Agent) in the State of New York all original  certificates and instruments evidencing or representing the Pledged Equity  Interests existing on the date of this Agreement.  (b) The Pledgor shall deliver to the Collateral Agent (or as directed by the Collateral  Agent) in the State of New York, promptly upon receipt, all original certificates  and instruments evidencing or representing any Pledged Collateral arising or  acquired by the Pledgor after the date of this Agreement.  (c) The Pledgor shall cause all Pledged Collateral delivered under this Agreement to  be either:  (i) duly endorsed and in suitable form for transfer by delivery; or  

 

  6  (ii) accompanied by undated instruments of transfer endorsed in blank, as  directed by the Collateral Agent, and in form and substance reasonably  satisfactory to the Collateral Agent.  (d) Until the end of the Security Period, the Collateral Agent shall hold (directly or  through an agent) all certificates, instruments, and stock powers delivered to it.   4.3 Filing of financing statements  (a) The Pledgor authorizes the Collateral Agent to prepare and file, at the Pledgor’s  expense:  (i) financing statements describing the Pledged Collateral;  (ii) continuation statements; and  (iii) any amendment in respect of those statements.  (b) Promptly after filing an initial financing statement in respect of the Pledged  Collateral, the Pledgor must provide the Collateral Agent with an official report  from the Secretary of State of the State of Delaware indicating that the Collateral  Agent’s security interest in the Pledged Collateral is prior to all other security  interests or other interests reflected in the report, other than Permitted Prior Liens.  4.4 Communication with Issuers  The Pledgor authorizes the Collateral Agent at any time and from time to time to  communicate with the Issuers with regard to any matter relating to any Pledged  Collateral.  4.5 Further assurances  (a) The Pledgor shall take, at its own expense, promptly, and in any event within any  applicable time limit, whatever action may reasonably be required under the  Indenture or this Agreement for:  (i) creating, attaching, perfecting and protecting, and maintaining the priority  of, any security interest intended to be created by this Agreement;  (ii) facilitating the enforcement of the Security or the exercise of any right,  power or discretion exercisable by the Collateral Agent or any of its  delegates or sub-delegates in respect of any of the Pledged Collateral;  (iii) obtaining possession and control of any Pledged Collateral; and  (iv) facilitating the assignment or transfer of any rights and/or obligations of  the Collateral Agent under this Agreement.  

 

  7  Such actions include the execution and delivery of any transfer, assignment or other  agreement or document, whether to the Collateral Agent or its nominee, that the  Collateral Agent may reasonably require.  (b) The Pledgor irrevocably constitutes and appoints the Collateral Agent, with full  power of substitution, as the Pledgor’s true and lawful attorney-in-fact, in the  Pledgor’s name or in the Collateral Agent’s name or otherwise, and at the  Pledgor’s expense, to take any of the actions referred to in paragraph (a) above  without notice to or the consent of the Pledgor.  This power of attorney is a power  coupled with an interest and cannot be revoked.  The Pledgor ratifies and  confirms all actions taken by the Collateral Agent or its agents under this power  of attorney.  5. REPRESENTATIONS AND WARRANTIES  5.1 Representations and warranties  The representations and warranties set out in this Clause are made by the Pledgor to the  Collateral Agent and each Noteholder.  5.2 The Pledgor  (a) It is organized under the laws of the State of Delaware.  (b) Its exact legal name, as it appears in the public records of its jurisdiction of  incorporation or organization, is VGR Holding LLC.  It has not changed its name,  whether by amendment of its organizational documents, reorganization, merger or  otherwise, in the past five years.  (c) Its organizational identification number, as issued by its jurisdiction of  organization is 3097262.    (d) It keeps at its address indicated in Clause 16 (Notices), or at the addresses of the  Issuers indicated in Clause 5.3(a), its corporate records and all records, documents  and instruments constituting, relating to or evidencing Pledged Collateral, except  for the Pledged Collateral delivered to the Collateral Agent in compliance with  Clause 4.2 (Delivery of certificates).  5.3 The Pledged Collateral  (a) Liggett Group keeps at its address at 100 Maple Lane, Mebane, North Carolina  27302 and Vector Tobacco keeps at its address at 3800 Paramount Parkway, Suite  250, PO Box 2010, Morrisville, NC 27560 their respective corporate records,  stock ledger and all of their respective records, documents and instruments  relating to or evidencing the applicable Pledged Collateral.  (b) The Pledged Equity Interests have been duly authorized and are validly issued,  fully-paid and non-assessable.  

 

  8  (c) The Pledged Equity Interests constitute all of the issued and outstanding equity or  ownership interests in the Issuers, and there are no other equity or ownership  interests in the Issuers, options or rights to acquire or subscribe for any such  interests, or securities or instruments convertible into or exchangeable or  exercisable for any such interests.  (d) The Pledged Equity Interests are “securities” under Article 8 of the UCC and are  represented by certificates, all of which have been delivered to the Collateral  Agent.  (e) Except as permitted under the Indenture:  (i) it is the sole legal and beneficial owner of, and has the power to transfer  and grant a security interest in, the Pledged Equity Interests and all other  Pledged Collateral now in existence;  (ii) none of the Pledged Collateral is subject to any Lien other than the  Collateral Agent’s security interest and other Permitted Liens;  (iii) it has not agreed or committed to sell, assign, pledge, transfer, license,  lease or encumber any of the Pledged Collateral, or granted any option,  warrant, or right with respect to any of the Pledged Collateral; and  (iv) no effective mortgage, deed of trust, financing statement, security  agreement or other instrument similar in effect is on file or of record with  respect to any Pledged Collateral, except for those that create, perfect or  evidence the Collateral Agent’s security interest and other Permitted  Liens.  (f) No litigation, arbitration or administrative proceedings are current or pending or,  to its knowledge, threatened, involving or affecting the Pledged Collateral, and  none of the Pledged Collateral is subject to any order, writ, injunction, execution  or attachment, in each case, that would reasonably be expected to have a material  adverse effect on the Collateral Agent’s security interest or the Collateral Agent’s  rights under this Agreement.   (g) None of the Pledged Collateral constitutes “margin stock” within the meaning of  Regulation U or X issued by the Board of Governors of the United States Federal  Reserve System.  5.4 No liability  Except, in each case, as would not reasonably be expected to adversely affect the  Collateral Agent’s security interest or the Collateral Agent’s rights under this Agreement  in any material respect:  

 

  9  (a) its rights, interests, liabilities and obligations under contractual obligations that  constitute part of the Pledged Collateral are not affected by this Agreement or the  exercise by the Collateral Agent of its rights under this Agreement;  (b) neither the Collateral Agent nor any Noteholder, unless it expressly agrees in  writing, will have any liabilities or obligations under any contractual obligation  that constitutes part of the Pledged Collateral as a result of this Agreement, the  exercise by the Collateral Agent of its rights under this Agreement or otherwise;  and  (c) neither the Collateral Agent nor any Noteholder has or will have any obligation to  collect upon or enforce any contractual obligation or claim that constitutes part of  the Pledged Collateral, or to take any other action with respect to the Pledged  Collateral.  5.5 Consideration and solvency  (a) Terms used in this Subclause have the meanings given to them in, and must be  construed in accordance with, the fraudulent transfer laws.  (b) It will receive valuable direct and indirect benefits as a result of the transactions  financed by the issuance of the Notes and these benefits constitute “reasonably  equivalent value” and “fair consideration” as those terms are used in the  fraudulent transfer laws.    (c) To the best of its knowledge, the Secured Parties have acted in good faith in  connection with the transactions contemplated by this Agreement.  (d) The sum of its debts (including its obligations under this Agreement) is less than  the value of its property (calculated at the lesser of fair valuation and present fair  saleable value).  (e) Its capital is not unreasonably small to conduct its business as currently conducted  or as proposed to be conducted.  (f) It has not incurred, does not intend to incur and does not believe it will incur debts  beyond its ability to pay as they mature.  (g) It has not made a transfer or incurred an obligation under this Agreement with the  intent to hinder, delay or defraud any of its present or future creditors.  5.6 Times for making representations and warranties  (a) The representations and warranties set out in this Agreement (including in this  Clause 5) are made on the date of this Agreement.  

 

  10  (b) The representations and warranties under Clause 5.5 are deemed to be repeated by  the Pledgor on the date of each issuance of Notes under the Indenture with  reference to the facts and circumstances then existing.  (c) When representations and warranties are repeated, they are applied to the  circumstances existing at the time of repetition.  (d) The representations and warranties of the Pledgor contained in this Agreement or  made by the Pledgor in any certificate, notice or report delivered under this  Agreement will survive each issuance of Notes and any transfer or assignment of  the Notes.  6. UNDERTAKINGS  6.1 Undertakings  The Pledgor agrees to be bound by the covenants set out in this Clause.  6.2 The Pledgor  (a) Except as permitted under the Indenture, the Pledgor shall preserve its limited  liability company existence and will not, except as permitted by the Indenture, in  one transaction or a series of related transactions, merge into or consolidate with  any other entity, or sell all or substantially all of its assets.  (b) The Pledgor shall not change the jurisdiction of its organization without providing  the Collateral Agent with at least 10 days’ prior written notice.  (c) The Pledgor shall not change its name without providing the Collateral Agent  with at least 10 days’ prior written notice.  (d) The Pledgor shall keep at its address indicated in, or otherwise notified to the  Collateral Agent pursuant to, Clause 16 (Notices), or at the addresses of the  Issuers indicated in Clause 5.3(a), its corporate records and all records, documents  and instruments constituting, relating to or evidencing Pledged Collateral, except  for the Pledged Collateral delivered to the Collateral Agent in compliance with  Clause 4.2 (Delivery of certificates).  (e) The Pledgor shall permit the Collateral Agent and its agents and representatives,  at mutually agreed times during normal business hours and upon reasonable  notice, to inspect the Pledged Collateral, to examine and make copies of and  abstracts from the records referred to in paragraph (d) above, and to discuss  matters relating to the Pledged Collateral directly with the Pledgor’s officers and  employees.  (f) At the Collateral Agent’s request, the Pledgor shall provide the Collateral Agent  with any information concerning the Collateral that the Collateral Agent may  reasonably request.  

 

  11  6.3 The Pledged Collateral  (a) The Pledgor shall cause the Issuers to keep and maintain, at their respective  addresses indicated in Clause 5.3(a) (The Pledged Collateral) their respective  corporate records and all of their respective records, documents and instruments  constituting, relating to, or evidencing the applicable Pledged Collateral.  The  Pledgor agrees to cause the Issuers to permit the Collateral Agent and its agents  and representatives, at mutually agreed times during normal business hours and  upon reasonable notice, to examine and make copies of and abstracts from the  records and stock ledgers and to discuss matters relating to the Issuers and its  records directly with the Issuers’ officers and employees.  (b) Except as permitted by the Indenture or this Agreement, the Pledgor:  (i) shall maintain sole legal and beneficial ownership of the Pledged  Collateral;  (ii) shall not permit any Pledged Collateral to be subject to any Lien other  than the Collateral Agent’s security interest and other Permitted Liens and  shall at all times warrant and defend the Collateral Agent’s security  interest in the Pledged Collateral against all other Liens (other than  Permitted Liens) and claimants;  (iii) shall not sell, assign, transfer, pledge, license, lease or further encumber,  or grant any option, warrant, or right with respect to, any of the Pledged  Collateral, or agree or contract to do any of the foregoing; and  (iv) shall not waive, amend or terminate, in whole or in part, any material  accessory or ancillary right or other right in respect of any Pledged  Collateral.  (c) The Pledgor shall pay, prior to delinquency, all material taxes, assessments and  governmental levies imposed on or in respect of Pledged Collateral and all claims  against the Pledged Collateral, including claims for labor, materials and supplies,  in each case, except such as are contested in good faith and by appropriate  proceedings or where the failure to effect such payment is not adverse in any  material respect to the Collateral Agent.    (d) In any suit, legal action, arbitration or other proceeding involving the Pledged  Collateral or the Collateral Agent’s security interest, the Pledgor shall take all  lawful action to avoid impairment of the Collateral Agent’s security interest or the  Collateral Agent’s rights under this Agreement or the imposition of a Lien (other  than Permitted Liens) on any of the Pledged Collateral.  (e) Except as permitted by the Indenture or this Agreement, the Pledgor shall not  permit either Issuer to cancel or change the terms of the Pledged Equity Interests,  or authorize, create or issue any additional shares of capital stock or ownership  interests in either Issuer; provided that the Pledgor may convert Vector Tobacco  

 

  12  from a corporation to a limited liability company so long as (1) the Issuer gives  the Collateral Agent at least 10 days prior written notice of such conversion, (2)  the resulting limited liability company is formed under the laws of a State in the  United States, (3) the limited liability company or operating agreement of the  resulting limited liability company expressly provides that all equity interests in  such resulting limited liability company are “securities” under Article 8 of the  UCC and are represented by certificates, (4) promptly following such conversion  the Pledgor delivers to the Collateral Agent in New York certificates representing  all membership or other equity or ownership interests in the converted entity,  together with stock powers or the equivalent executed by the Pledgor in blank and  in form and substance reasonably satisfactory to the Collateral Agent, (5) the  Issuer agrees, in documentation reasonably satisfactory to the Collateral Agent,  that such equity interests are subject to the Collateral Agent’s security interest and  to the terms of this Agreement, and (6) an appropriate financing statement or  amendment to the existing financing statement is promptly filed in the appropriate  office or offices, so as to perfect and/or continue to perfect the Collateral Agent’s  security interest.  The Pledgor shall ensure that at all times the operating  agreement of Liggett Group provides that all equity interests in Liggett Group are  “securities” under Article 8 of the UCC and are represented by certificates.  The  Pledgor shall not effect or permit any change of control of either Issuer, except as  permitted by the Indenture.  (f) The Pledgor shall take no action, and shall not permit either Issuer to take any  action, that could cause any of the Pledged Collateral to constitute “margin stock”  within the meaning of Regulation U or X issued by the Board of Governors of the  United States Federal Reserve System.  6.4 Notices  (a) The Pledgor shall give the Collateral Agent prompt notice of the occurrence of  any of the following events:  (i) any pending or threatened claim, suit, legal action, arbitration or other  proceeding involving or affecting the Pledgor, either Issuer or any Pledged  Collateral that would reasonably be expected to materially impair the  Collateral Agent’s security interest or, the Collateral Agent’s rights under  this Agreement or result in the imposition of a Lien (other than Permitted  Liens) on any Pledged Collateral; or  (ii) any representation or warranty contained in this Agreement is or becomes  untrue, incorrect or incomplete in any material respect.  (b) Each notice delivered under this Clause, must include:  (i) reasonable details about the event; and  (ii) the Pledgor’s proposed course of action.  

 

  13  Delivery of a notice under this Clause does not affect the Pledgor’s obligations to comply  with any other term of this Agreement.  7. WHEN SECURITY BECOMES ENFORCEABLE  Subject to the terms of the Indenture, this Security may be enforced by the Collateral  Agent at any time after an Event of Default has occurred and is continuing.  8. ENFORCEMENT OF SECURITY  8.1 [Reserved]  8.2 General  (a) After this Security has become enforceable, the Collateral Agent may  immediately, in its absolute discretion, exercise any right under:  (i) applicable law; or  (ii) this Agreement,  to enforce all or any part of the Security in respect of any Pledged Collateral in  any manner or order it sees fit.  (b) The foregoing includes:  (i) any rights and remedies available to the Collateral Agent under applicable  law and under the UCC (whether or not the UCC applies to the affected  Pledged Collateral and regardless of whether or not the UCC is the law of  the jurisdiction where the rights or remedies are asserted) as if those rights  and remedies were set forth in this Agreement in full;  (ii) transferring or assigning to, or registering in the name of, the Collateral  Agent or its nominees any of the Pledged Collateral;  (iii) exercising any voting, consent, management and other rights relating to  any Pledged Collateral;  (iv) performing or complying with any contractual obligation that constitutes  part of the Pledged Collateral;  (v) receiving, endorsing, negotiating, executing and delivering or collecting  upon any check, draft, note, account, acceptance, instrument, document,  letter of credit, contract, agreement, receipt, release, bill of lading, invoice,  endorsement, assignment, bill of sale, deed, security, share certificate,  stock power, proxy, or instrument of conveyance or transfer constituting  or relating to any Pledged Collateral;  

 

  14  (vi) asserting, instituting, filing, defending, settling, compromising, adjusting,  discounting or releasing any suit, action, claim, counterclaim, right of set- off or other right or interest relating to any Pledged Collateral;  (vii) executing and delivering acquittances, receipts and releases in respect of  Pledged Collateral; and  (viii) exercising any other right or remedy available to the Collateral Agent  under the other Finance Documents or any other agreement between the  parties.  8.3 Dividend and voting rights  (a) So long as payment of the Secured Liabilities has not been accelerated (whether  automatically or otherwise), the Pledgor will be entitled to exercise all voting and  other consensual rights with respect to the Pledged Collateral for any purpose not  inconsistent with the terms of the Finance Documents and to receive and retain all  dividends and other payments in respect of the Pledged Collateral to the extent  permitted by the Finance Documents.  (b) Upon the acceleration of the payment of the Secured Liabilities (whether  automatically or otherwise), all rights of the Pledgor to exercise voting and other  consensual rights with respect to the Pledged Collateral and to receive dividends  and other payments in respect of the Pledged Collateral will cease, and all these  rights will immediately become vested solely in the Collateral Agent or its  nominees, and the Pledgor grants the Collateral Agent or its nominees the  Pledgor’s irrevocable and unconditional proxy for this purpose.  After the  acceleration of the payment of the Secured Liabilities (whether automatically or  otherwise), any dividends and other payments in respect of the Pledged Collateral  received by the Pledgor will be held in trust for the Collateral Agent, and the  Pledgor shall keep all such amounts separate and apart from all other funds and  property so as to be capable of identification as the property of the Collateral  Agent and will deliver these amounts at such time as the Collateral Agent may  request to the Collateral Agent in the identical form received, properly endorsed  or assigned if required to enable the Collateral Agent to complete collection.  8.4 Collateral Agent’s rights upon default  (a) The Pledgor irrevocably constitutes and appoints the Collateral Agent, with full  power of substitution, as the Pledgor’s true and lawful attorney-in-fact, in the  Pledgor’s name or in the Collateral Agent’s name or otherwise, and at the  Pledgor’s expense, to take any of the actions authorized by this Agreement or  permitted under applicable law upon the occurrence and during the continuation  of an Event of Default, without notice to or the consent of the Pledgor.  This  power of attorney is a power coupled with an interest and cannot be revoked.  The  Pledgor ratifies and confirms all actions taken by the Collateral Agent or its  agents under this power of attorney.  

 

  15  (b) The Pledgor agrees that 10 days’ notice shall constitute reasonable notice in  connection with any sale, transfer or other disposition of Pledged Collateral.  (c) The Collateral Agent may comply with any applicable state or federal law  requirements in connection with a disposition of Pledged Collateral and  compliance will not be considered adversely to affect the commercial  reasonableness of any sale of Pledged Collateral.  (d) The grant to the Collateral Agent under this Agreement of any right, power or  remedy does not impose upon the Collateral Agent any duty to exercise that right,  power or remedy.  The Collateral Agent will have no obligation to take any steps  to preserve any claim or other right against any Person or with respect to any  Pledged Collateral.  (e) The Pledgor bears the risk of loss, damage, diminution in value, or destruction of  the Pledged Collateral.  (f) The Collateral Agent will have no responsibility for any act or omission of any  courier, bailee, broker, bank, investment bank or any other Person chosen by it  with reasonable care.  (g) The Collateral Agent makes no express or implied representations or warranties  with respect to any Pledged Collateral or other property released to the Pledgor or  its successors and assigns.  (h) The Pledgor agrees that the Collateral Agent will have met its duty of care under  applicable law if it holds, maintains and disposes of Pledged Collateral in the  same manner that it holds, maintains and disposes of property for its own account.  (i) Except as set forth in this Clause or as required under applicable law, the  Collateral Agent will have no duties or obligations under this Agreement or  otherwise with respect to the Pledged Collateral.  (j) The sale, transfer or other disposition under this Agreement of any right, title, or  interest of the Pledgor in any item of Pledged Collateral will:  (i) operate to divest the Pledgor permanently and all Persons claiming under  or through the Pledgor of that right, title, or interest, and  (ii) be a perpetual bar, both at law and in equity, to any claims by the Pledgor  or any Person claiming under or through the Pledgor  with respect to that item of Pledged Collateral.  8.5 No Marshaling  (a) The Collateral Agent need not, and the Pledgor irrevocably waives and agrees that  it shall not invoke or assert any law requiring the Collateral Agent to:  

 

  16  (i) attempt to satisfy the Secured Liabilities by collecting them from any  other Person liable for them; or  (ii) marshal any security or guarantee securing payment or performance of the  Secured Liabilities or any particular asset of the Pledgor.  (b) The Collateral Agent may release, modify or waive any collateral or guarantee  provided by any other Person to secure any of the Secured Liabilities, without  affecting the Collateral Agent’s rights against the Pledgor.  9. APPLICATION OF PROCEEDS  Any moneys received in connection with the Pledged Collateral by the Collateral Agent  after this Security has become enforceable shall be applied in the following order of  priority:  (a) first, in or towards payment of or provision for all costs and expenses incurred by  the Collateral Agent in connection with the enforcement of this Security;  (b) second, in or towards payment of, or provision for, the Secured Liabilities; and  (c) third, in payment of the surplus (if any) to the Pledgor or any other Person  entitled to it under applicable law.  This Clause is subject to the payment of any claims having priority over this Security  under mandatory provisions of applicable law.  This Clause does not prejudice the right  of any Noteholder to recover any shortfall from the Pledgor.  10. EXPENSES AND INDEMNITY  (a) The Pledgor shall pay promptly on demand to the Collateral Agent all reasonable  and documented costs and expenses incurred by the Collateral Agent, any  Noteholder, attorney, manager, delegate, sub-delegate, agent or other Person  appointed by the Collateral Agent under this Agreement for the purpose of  enforcing its rights under this Agreement.  Such costs and expenses may include:  (i) costs of foreclosure and of any transfer, disposition or sale of Pledged  Collateral;  (ii) costs of maintaining or preserving the Pledged Collateral or assembling it  or preparing it for transfer, disposition or sale;  (iii) costs of obtaining money damages; and  (iv) fees and expenses of attorneys employed by the Collateral Agent for any  purpose related to this Agreement or the Secured Liabilities, including  consultation, preparation and negotiation of any amendment or  

 

  17  restructuring, drafting documents, sending notices or instituting,  prosecuting or defending litigation or arbitration.  (b) The Pledgor shall indemnify and keep indemnified the Secured Parties and their  respective affiliates, directors, officers, representatives and agents from and  against all claims, liabilities, obligations, losses, damages, penalties, judgments,  costs and expenses of any kind (including attorney’s fees and expenses) that may  be imposed on, incurred by or asserted against any of them by any Person  (including any Noteholder) in any way relating to or arising out of:  (i) this Agreement;  (ii) the Pledged Collateral;  (iii) the Collateral Agent’s security interest in the Pledged Collateral;  (iv) any Event of Default;  (v) any action taken or omitted by the Collateral Agent under this Agreement  or any exercise or enforcement of rights or remedies under this  Agreement; or  (vi) any transfer sale or other disposition of or any realization on Pledged  Collateral.  (c) The Pledgor shall not be liable to an indemnified party to the extent any liability  results from that indemnified party’s gross negligence or willful misconduct.   Payment by an indemnified party will not be a condition precedent to the  obligations of the Pledgor under this indemnity.  (d) This Clause survives the issuance of the Notes, the repayment of the Notes, any  transfer or assignment of the Notes and the termination of this Agreement.  11. EVIDENCE AND CALCULATIONS  In the absence of manifest error, the records of the Collateral Agent shall be conclusive  evidence of the existence and the amount of the Secured Liabilities.  12. CHANGES TO THE PARTIES  12.1 Pledgor  The Pledgor may not assign, delegate or transfer any of its rights or obligations under this  Agreement without the consent of the Collateral Agent, and any purported assignment,  delegation or transfer in violation of this provision shall be void and of no effect.  12.2 Collateral Agent  

 

  18  The Collateral Agent may assign or transfer its rights and obligations under this  Agreement in the manner permitted under the Indenture.  12.3 Successors and assigns  This Agreement shall be binding on and inure to the benefit of the respective successors  and permitted assigns of the Pledgor and the Collateral Agent.  13. MISCELLANEOUS  13.1 Amendments and waivers  Any term of this Agreement may be amended or waived only by the written agreement of  the Pledgor and the Collateral Agent.  13.2 Waivers and remedies cumulative  (a) The rights and remedies of the Collateral Agent under this Agreement:  (i) may be exercised as often as necessary;  (ii) are cumulative and not exclusive of its rights under applicable law; and  (iii) may be waived only in writing and specifically.  (b) Delay in exercising, or non-exercise, of any right or remedy under this Agreement  is not a waiver of that right or remedy.  13.3 Counterparts  This Agreement may be executed in counterparts, and this has the same effect as if the  signatures on the counterparts were on a single copy of this Agreement.  The words  “execution,” “executed,” “signed,” “signature,” “delivery” and words of like import in or  relating to this Agreement or any document to be signed in connection with this  Agreement shall be deemed to include electronic signatures, deliveries or the keeping of  records in electronic form, each of which shall be of the same legal effect, validity or  enforceability as a manually executed signature, physical delivery thereof or the use of a  paper-based recordkeeping system, as the case may be, and the parties hereto consent to  conduct the transactions contemplated hereunder by electronic means.  14. SEVERABILITY  If any term of this Agreement is or becomes illegal, invalid or unenforceable in any  jurisdiction, that will not affect:  (a) the legality, validity or enforceability in that jurisdiction of any other term of this  Agreement; or  

 

  19  (b) the legality, validity or enforceability in any other jurisdiction of that or any other  term of this Agreement.  15. RELEASE  At the end of the Security Period and at the other times provided in the Indenture, the  Security hereunder will be released in accordance with the Indenture and the Collateral  Agent must, at the request and cost of the Pledgor, promptly take whatever action is  necessary to release all or any applicable part of the Pledged Collateral from this Security  in accordance with the terms of the Indenture.  16. NOTICES  16.1 Notices  Any communication in connection with this Agreement must be given in writing and,  unless otherwise stated, must be given in person, by first class mail (registered or  certified, return receipt requested), overnight courier guaranteeing next day delivery, or  by fax.   16.2 Contact Details  (a) The contact details of the Pledgor for this purpose are:  Address: 4400 Biscayne Boulevard, 10th Floor    Miami, FL 33137  Fax:  (305) 579-8016  Attention: Marc N. Bell  (b) The contact details of the Collateral Agent for this purpose are:  Address: U.S. Bank National Association     Global Corporate Trust Services    60 Livingston Avenue    EP-MN-WS3C    St. Paul, MN 55107-2292  Fax:  (651) 466-7430  Attention: Joshua A. Hahn  (c) Either party may change its contact details by giving five Business Days’ notice  to the other party.  (d) Where a party nominates a particular department or officer to receive a  communication, a communication will not be effective if it fails to specify that  department or officer.  16.3 Effectiveness  (a) Except as provided below, any communication in connection with this Agreement  will be deemed to be given as follows:  

 

  20  (i) if delivered in person, at the time of delivery;  (ii) if by e-mail or fax, when sent with confirmation of transmission.  (b) A communication given under this Clause but received on a non-working day or  after business hours in the place of receipt will only be deemed to be given on the  next working day in that place.  17. GOVERNING LAW  This Agreement, the relationship between the Pledgor, the Secured Parties and any claim  or dispute (whether sounding in contract, tort, statute or otherwise) relating to this  Agreement or that relationship shall be governed by and construed in accordance with  law of the State of New York, including section 5-1401 of the New York General  Obligations Law but excluding any other conflict of law rules that would lead to the  application of the law of another jurisdiction.  If the law of a jurisdiction other than New  York is, under section 1-105(2) of the UCC, mandatorily applicable to the perfection,  priority or enforcement of any security interest granted under this Agreement in respect  of any part of the Pledged Collateral, that other law shall apply solely to the matters of  perfection, priority or enforcement to which it is mandatorily applicable.  18. ENFORCEMENT  18.1 Jurisdiction  (a) Each of the Parties agrees that any New York State court or Federal court sitting  in the City and County of New York has jurisdiction to settle any disputes in  connection with this Agreement and accordingly submits to the jurisdiction of  those courts.  (b) Each of the Parties:  (i) waives objection to the New York State and Federal courts on grounds of  personal jurisdiction, inconvenient forum or otherwise as regards  proceedings in connection with this Agreement; and  (ii) agrees that a judgment or order of a New York State or Federal court in  connection with this Agreement is conclusive and binding on it and may  be enforced against it in the courts of any other jurisdiction.  (c) Nothing in this Clause limits the right of the Collateral Agent or any Noteholder  to bring proceedings against the Pledgor in connection with this Agreement:  (i) in any other court of competent jurisdiction; or  (ii) concurrently in more than one jurisdiction.  

 

  21  18.2 Service of Process  The Pledgor consents to the service of process relating to any proceedings by a notice  given in accordance with Clause 16 (Notices) above.   18.3 Complete Agreement  This Agreement and the other Finance Documents contain the complete agreement  between the parties on the matters to which they relate and supersede all prior  commitments, agreements and understandings, whether written or oral, on those matters.  18.4 Waiver of Jury Trial  THE PLEDGOR AND THE COLLATERAL AGENT (FOR ITSELF AND ON  BEHALF OF THE NOTEHOLDERS) WAIVE ANY RIGHTS THEY MAY HAVE TO  A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED ON OR ARISING  FROM THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS  AGREEMENT.  In the event of litigation, this Agreement may be filed as a written  consent to a trial by the court.  The undersigned, intending to be legally bound, have executed and delivered this Agreement on  the date stated at the beginning of this Agreement. 

 

   (Signature Page to Pledge Agreement)    SIGNATORIES   IN WITNESS WHEREOF, the Pledgor has caused this Pledge Agreement to be duly  executed by its duly authorized officer as of the day and year first above written.  Pledgor  VGR HOLDING LLC      By: /s/ James B. Kirkland III   Name: James B. Kirkland III  Title: Vice President, Treasurer and Chief Financial Officer     

 

(Signature Page to Pledge Agreement)    Collateral Agent  U.S. BANK NATIONAL ASSOCIATION, as Collateral Agent    By: /s/ Joshua A. Hahn                   Name: Joshua A. Hahn  Title: Vice President 

 

       SCHEDULE 1  PLEDGED EQUITY INTERESTS      Name Certificate No. No. of Shares/  % of Membership  Interests  LIGGETT GROUP  LLC                 1 100% of  membership  interests  VECTOR  TOBACCO INC.             1 100 sharesex43vector2021offering-s

 Exhibit 4.3         SECURITY AGREEMENT        DATED JANUARY 28, 2021    between    VECTOR TOBACCO INC.    and    U.S. BANK NATIONAL ASSOCIATION    as Collateral Agent  

 

  i    CONTENTS    Clause Page  1. Interpretation ........................................................................................................................1  2. Secured liabilities .................................................................................................................5  3. Creation of security ..............................................................................................................5  4. Perfection and further assurances ........................................................................................6  5. Representations and warranties ............................................................................................8  6. Undertakings ......................................................................................................................12  7. When security becomes enforceable ..................................................................................14  8. Enforcement of security .....................................................................................................14  9. Application of proceeds .....................................................................................................17  10. Expenses and indemnity ....................................................................................................18  11. Evidence and calculations ..................................................................................................19  12. Changes to the parties ........................................................................................................19  13. Miscellaneous ....................................................................................................................19  14. Severability ........................................................................................................................20  15. Release ...............................................................................................................................20  16. Notices ...............................................................................................................................20  17. Governing law ....................................................................................................................21  18. Enforcement .......................................................................................................................22  19. Intercreditor Agreement .....................................................................................................22          Schedule 1 – Commercial Tort Claims  Schedule 2 – Intellectual Property  Exhibit 1 – Form of Patent Security and Pledge Agreement  Exhibit 2 – Form of Trademark Security and Pledge Agreement  Exhibit 3 – Form of Copyright Security Agreement      

 

   1    THIS AGREEMENT is dated January 28, 2021  BETWEEN:  (1) VECTOR TOBACCO INC., a Virginia corporation, as grantor (the “Grantor”); and  (2) U.S. BANK NATIONAL ASSOCIATION, as collateral agent for the Noteholders under  the Indenture described below (in this capacity, the “Collateral Agent”).  BACKGROUND:  The Grantor enters into this Agreement in connection with the Indenture, dated January 28, 2021  (as amended, supplemented, or otherwise modified from time to time, the “Indenture”), by and  among Vector Group Ltd. (“Vector Group”), the Guarantors party thereto and U.S. Bank National  Association, as trustee (together with any successor in such capacity, the “Trustee”).  Pursuant to  the Indenture, Vector Group is issuing Notes and the Grantor is guaranteeing the Notes as provided  in the Indenture.  The Grantor now wishes to secure its obligations under the Indenture by entering  into this Agreement.  IT IS AGREED as follows:  1. INTERPRETATION  1.1 Definitions  In this Agreement:  The term “Collateral” means all personal property, wherever located, in which the Grantor  now has or later acquires any right, title or interest, including all:  (a) accounts and chattel paper;  (b) goods (including equipment, inventory and fixtures);  (c) health-care-insurance receivables;  (d) instruments (including promissory notes);  (e) documents;  (f) letter-of-credit rights;  (g) general intangibles (including payment intangibles and software);  (h) the commercial tort claims described in Schedule 1 (Commercial Tort Claims);  (i) supporting obligations;  (j) Intellectual Property (together with the right to sue or otherwise recover for past,  present and future infringement, misappropriation, dilution or other violation or  

 

   2      impairment thereof, and all proceeds of the foregoing, including license fees,  royalties, income, payments, claims, damages and proceeds of suit) and Intellectual  Property Licenses; and  (k) to the extent not listed above as Collateral, proceeds and products of, and accessions  to, each of the above assets.    The term “Collateral” excludes (i) any property, right or interest in which a security  interest may not be granted under applicable law, (ii) any equity interest of the Grantor in  any Affiliate of the Grantor, (iii) any equipment to the extent a grant of a security interest  in such equipment would be precluded by or require a consent under the terms and  conditions of any existing or future purchase money or other financing of such equipment  permitted under the terms of the Indenture, (iv) any intent-to-use trademark application  prior to the filing of a “Statement of Use” or “Amendment to Allege Use” with respect  thereto, to the extent, if any, that, and solely during the period, if any, in which, the grant  of a security interest therein would impair the validity or enforceability of such intent-to- use trademark application or any registration that issues therefrom under applicable federal  law, (v) any aircraft, aircraft engines or motor vehicles, (vi) any deposit accounts, (vii) any  cash (other than any identifiable proceeds of Collateral), (viii) any investment property and  (ix) any Excluded Assets.  “Copyright Licenses” means any and all agreements providing for the granting of any  right in or to Copyrights or otherwise providing for a covenant not to sue (whether the  Grantor is licensee or licensor thereunder) including each Exclusive Copyright License  referred to in Schedule 2 under the heading “Copyright Licenses” (as such schedule may  be amended or supplemented from time to time).  “Copyrights” means all United States copyrights (including Community designs),  including copyrights in software and databases, and all Mask Works (as defined under 17  U.S.C. 901 of the U.S. Copyright Act), whether registered or unregistered, including: (a)  all registrations and applications therefor including, the registrations and applications  required to be listed in Schedule 2 under the heading “Copyrights” (as such schedule may  be amended or supplemented from time to time) and (b) all extensions and renewals  thereof.  “Finance Documents” means the Indenture, all Notes issued from time to time under the  Indenture, this Agreement and all other pledges, security agreements, control agreements  and other agreements and documents entered into in connection with the transactions  contemplated by the Indenture.  “First Priority Debt” has the meaning given to that term in the Intercreditor Agreement.  “Guarantors” means the Grantor and the other guarantors under the Indenture.  “Intellectual Property” means, collectively, all intellectual property and proprietary  rights, including Copyrights, Patents, Trademarks and Trade Secrets.  

 

   3      “Intellectual Property Licenses” means, collectively, all agreements providing for the  granting of any right in or to any Intellectual Property (whether the Grantor is licensee or  licensor thereunder), including the Copyright Licenses, the Patent Licenses, the Trademark  Licenses and the Trade Secret Licenses.  “Intercreditor Agreement” means the Second Amended and Restated Intercreditor and  Lien Subordination Agreement, dated January 28, 2021, between Wells Fargo Bank,  National Association, as agent, the Collateral Agent, Liggett Group LLC, 100 Maple LLC  and each other party from time to time party thereto, as amended, supplemented, or  otherwise modified from time to time.  “Note” means any note issued from time to time under the Indenture.  “Noteholder” means any Person that from time to time is the holder of a Note.  “Obligors” means Vector Group and the Guarantors.  “Patent Licenses” means any and all agreements providing for the granting of any right in  or to Patents or otherwise providing for a covenant not to sue under Patents (whether the  Grantor is licensee or licensor thereunder).  “Patents” means all United States patents and certificates of invention, or similar industrial  property rights, and applications for any of the foregoing, including: (a) each patent and  patent application required to be listed in Schedule 2 hereto under the heading “Patents”  (as such schedule may be amended or supplemented from time to time) and (b) all reissues,  divisions, continuations, continuations-in-part, extensions, renewals, and reexaminations  thereof and (c) all inventions and improvements described therein.  “Priority Liens” means the Liens securing the First Priority Debt.  “Secured Liabilities” means each liability and obligation specified in Clause 2 (Secured  Liabilities).  “Secured Parties” means the Trustee, the Collateral Agent, the Paying Agent, the  Registrar and the Noteholders.   “Security” means any security interest created by this Agreement.  “Security Period” means the period beginning on the date of this Agreement and ending  on the date on which all the Secured Liabilities have been indefeasibly, unconditionally  and irrevocably paid and discharged in full (other than in respect of contingent obligations  for which no claim has been asserted).  The Security Period will be extended to take into  account any extension or reinstatement of this Agreement under Clause 3.2(b) (General).    “Trademark Licenses” means any and all agreements providing for the granting of any  right in or to Trademarks or permitting co-existence with respect to Trademarks (whether  the Grantor is licensee or licensor thereunder).  

 

   4      “Trademarks” means all United States trademarks, trade names, corporate names,  company names, business names, fictitious business names, Internet domain names,  service marks, certification marks, collective marks, logos, or other source or business  identifiers, and all registrations and applications for any of the foregoing including: (a) the  registrations and applications required to be listed in Schedule 2 under the heading  “Trademarks” (as such schedule may be amended or supplemented from time to time), (b)  all extensions and renewals of any of the foregoing and (c) all of the goodwill of the  business connected with the use of and symbolized by the foregoing.  “Trade Secret Licenses” means any and all agreements providing for the granting of any  right in or to Trade Secrets or otherwise providing for a covenant not to sue under Trade  Secrets (whether the Grantor is licensee or licensor thereunder).   “Trade Secrets” means all trade secrets and all other confidential proprietary information  and know-how, whether or not reduced to a writing or other tangible form.  “UCC” means the Uniform Commercial Code as in effect from time to time in the State of  New York.  1.2 Construction  (a) Any term defined in the UCC and not defined in this Agreement has the meaning  given to that term in the UCC.  (b) Any term defined in the Indenture and not defined in this Agreement or the UCC  has the meaning given to that term in the Indenture.  (c) No reference to “proceeds” in this Agreement authorizes any sale, transfer or other  disposition of Collateral by the Grantor that is not permitted by the Indenture.  (d) In this Agreement, unless the contrary intention appears, a reference to:  (i) an “amendment” includes a supplement, novation, restatement or re- enactment and “amended” will be construed accordingly;  (ii) a Clause, a Subclause, an Exhibit or a Schedule is a reference to a Clause or  Subclause of, or an Exhibit or Schedule to, this Agreement;  (iii) a law is a reference to that law as amended or re-enacted and to any  successor law;  (iv) an agreement is a reference to that agreement as amended;  (v) “fraudulent transfer law” means any applicable U.S. Bankruptcy Law or  state fraudulent transfer or conveyance statute, and the related case law; and  (vi) “law” includes any law, statute, regulation, regulatory requirement, rule,  ordinance, ruling, decision, treaty, directive, order, guideline, regulation,  policy, writ, judgment, injunction or request of any court or other  

 

   5      governmental, inter-governmental or supranational body, officer or official,  fiscal or monetary authority, or other ministry or public entity (and their  interpretation, administration and application), whether or not having the  force of law.  (e) In this Agreement:  (i) “includes” and “including” are not limiting;  (ii) “or” is not exclusive; and  (iii) the headings are for convenience only, do not constitute part of this  Agreement and are not to be used in construing it.  2. SECURED LIABILITIES  2.1 Secured Liabilities  Each obligation and liability whether:  (a) present or future, actual, contingent or unliquidated; or  (b) owed jointly or severally (or in any other capacity whatsoever),  of the Grantor to any Noteholder, the Trustee, the Paying Agent, the Registrar or the  Collateral Agent under or in connection with each Finance Document is a Secured  Liability.  2.2 Specification of Secured Liabilities  The Secured Liabilities include any liability or obligation for:  (a) repayment of the principal of any Note;  (b) payment of interest and any other amount payable under the Finance Documents;  (c) payment and performance of all other obligations and liabilities of any Obligor  under the Finance Documents;  (d) payment of any amount owed under any amendment, modification, renewal,  extension or novation of any of the above obligations; and  (e) payment of any amount that arises after a petition is filed by, or against, any Obligor  under the U.S. Bankruptcy Code of 1978 even if the obligations do not accrue  because of the automatic stay under Section 362 of the U.S. Bankruptcy Code of  1978 or otherwise.  3. CREATION OF SECURITY  3.1 Security Interest  

 

   6      As security for the prompt and complete payment and performance of the Secured  Liabilities when due (whether due because of stated maturity, acceleration, mandatory  prepayment, or otherwise) and to induce the Noteholders to purchase the Notes, the Grantor  grants to the Collateral Agent for the benefit of the Secured Parties a continuing security  interest in the Grantor’s right, title and interest in and to the Collateral.  3.2 General  (a) All the Security created under this Agreement:  (i) is continuing security for the irrevocable and indefeasible payment in full  of the Secured Liabilities, regardless of any intermediate payment or  discharge in whole or in part;  (ii) is in addition to, and not in any way prejudiced by, any other security now  or subsequently held by the Collateral Agent.  (b) If, at any time for any reason (including the bankruptcy, insolvency, receivership,  reorganization, dissolution or liquidation of any Obligor or the appointment of any  receiver, intervenor or conservator of, or agent or similar official for, any Obligor  or any of their respective properties), any payment received by the Collateral Agent  or any Noteholder in respect of the Secured Liabilities is rescinded or avoided or  must otherwise be restored or returned by the Collateral Agent or any Noteholder,  that payment will not be considered to have been made for purposes of this  Agreement, and this Agreement will continue to be effective or will be reinstated,  if necessary, as if that payment had not been made.  (c) This Agreement is enforceable against the Grantor to the maximum extent  permitted by the fraudulent transfer laws.  4. PERFECTION AND FURTHER ASSURANCES  4.1 General perfection  The Grantor shall take, at its own expense, promptly, and in any event within any applicable  time limit:  (a) whatever action is necessary; and  (b) any action that the Collateral Agent may reasonably require,  to ensure that the Security is, as of the date the Notes are first issued under the Indenture,  and will continue to be until the end of the Security Period, a validly created, attached,  enforceable and perfected continuing security interest in the U.S. Collateral, to the extent  such security interest can be perfected by the filing of financing statements and short-form  security interests as described in Sections 4.2 and 4.3, subject to no Liens other than  Permitted Liens and subject in priority to no Liens other than Permitted Prior Liens, in all  relevant jurisdictions, securing payment and performance of the Secured Liabilities.  

 

   7      This includes the giving of any notice, order or direction, the making of any filing or  registration, the passing of any resolution and the execution and delivery of any documents  or agreements which the Collateral Agent may reasonably require.  4.2 Filing of financing statements  (a) The Grantor authorizes the Collateral Agent to prepare and file, at the Grantor’s  expense:  (i) financing statements describing the Collateral as “all assets” or “all personal  property” or words of similar effect, of the Grantor, whether now owned or  hereafter existing or acquired by the Grantor;  (ii) continuation statements; and  (iii) any amendment in respect of those statements.  (b) Promptly after filing an initial financing statement in respect of the Collateral, the  Grantor must provide the Collateral Agent with an official report from the Secretary  of State of the Commonwealth of Virginia indicating that the Collateral Agent’s  security interest in the Collateral provided by the Grantor is prior to all other  security interests or other interests reflected in the report, other than Permitted Prior  Liens.  4.3 Intellectual Property Recording Requirements.  (a) In the case of any Collateral consisting of U.S. Patents that are issued by or subject  to a pending application before the U.S. Patent and Trademark Office and owned  by the Grantor, the Grantor shall execute and deliver to the Collateral Agent a  Patent Security Agreement in substantially the form of Exhibit 1 hereto (or a  supplement thereto) covering all such Patents, in appropriate form for recordation  with the U.S. Patent and Trademark Office with respect to the security interest of  the Collateral Agent.  (b) In the case of any Collateral consisting of U.S. Trademarks that are registered with  or subject to a pending application before the U.S. Patent and Trademark Office  and owned by the Grantor, the Grantor shall execute and deliver to the Collateral  Agent a Trademark Security Agreement in substantially the form of Exhibit 2  hereto (or a supplement thereto) covering all such Trademarks in appropriate form  for recordation with the U.S. Patent and Trademark Office with respect to the  security interest of the Collateral Agent.  (c) In the case of any Collateral consisting of registered U.S. Copyrights registered  with the U.S. Copyright Office and owned by the Grantor, and Copyright Licenses  in respect of U.S. Copyrights registered with the U.S. Copyright Office for which  the Grantor is the exclusive licensee (“Exclusive Copyright Licenses”), the Grantor  shall execute and deliver to the Collateral Agent a Copyright Security Agreement  in substantially the form of Exhibit 3 hereto (or a supplement thereto) covering all  such Copyrights and Exclusive Copyright Licenses in appropriate form for  

 

   8      recordation with the U.S. Copyright Office with respect to the security interest of  the Collateral Agent.  4.4 Further assurances  (a) The Grantor shall take, at its own expense, promptly, and in any event within any  applicable time limit, whatever action may reasonably be required under the  Indenture or this Agreement for:  (i) creating, attaching, perfecting and protecting, and maintaining the priority  of, any security interest intended to be created by this Agreement;  (ii) facilitating the enforcement of the Security or the exercise of any right,  power or discretion exercisable by the Collateral Agent or any of its  delegates or sub-delegates in respect of any Collateral; and  (iii) facilitating the assignment or transfer of any rights and/or obligations of the  Collateral Agent under this Agreement.  Such actions include the execution and delivery of any transfer, assignment or other  agreement or document, whether to the Collateral Agent or its nominee, that the Collateral  Agent may reasonably require.  (b) The Grantor irrevocably constitutes and appoints the Collateral Agent, with full  power of substitution, as the Grantor’s true and lawful attorney-in-fact, in the  Grantor’s name or in the Collateral Agent’s name or otherwise, and at the Grantor’s  expense, to take any of the actions referred to in paragraph (a) above without notice  to or the consent of the Grantor.  This power of attorney is a power coupled with  an interest and cannot be revoked.  The Grantor ratifies and confirms all actions  taken by the Collateral Agent or its agents under this power of attorney.  5. REPRESENTATIONS AND WARRANTIES  Representations and warranties  The representations and warranties set out in this Clause are made by the Grantor to the  Collateral Agent and each Noteholder.  5.1 The Grantor  (a) It is incorporated or organized under the laws of the state indicated in the preamble  to this Agreement.  (b) Its exact legal name, as it appears in the public records of its jurisdiction of  incorporation or organization, is as stated in the preamble to this Agreement.  It has  not changed its name, whether by amendment of its organizational documents,  reorganization, merger or otherwise, in the past five years.  (c) Its organizational identification number, as issued by its jurisdiction of  incorporation is 0469701-7.    

 

   9      (d) It keeps at its address indicated in Clause 16 (Notices) its corporate records and all  records, documents and instruments constituting, relating to or evidencing  Collateral.  5.2 The Collateral  (a) Except as permitted under the Indenture:  (i) it is the sole legal and beneficial owner of, and has the power to transfer and  grant a security interest in, the Collateral;  (ii) none of the Collateral is subject to any Lien other than the Collateral  Agent’s security interest and other Permitted Liens;  (iii) it has not agreed or committed to sell, assign, pledge, transfer, lease or grant  any Lien (other than Permitted Liens) on any of the Collateral, or granted  any option, warrant or right with respect to any of the Collateral; and  (iv) no effective mortgage, deed of trust, financing statement, security  agreement or other instrument similar in effect is on file or of record with  respect to any Collateral, except for those that create, perfect or evidence  the Collateral Agent’s security interest and other Permitted Liens.  (b) No litigation, arbitration or administrative proceedings are current or pending or, to  its knowledge, threatened, involving or affecting the Collateral, and none of the  Collateral is subject to any order, writ, injunction, execution or attachment, in each  case, that would reasonably be expected to have a material adverse effect on the  Collateral Agent’s security interest or the Collateral Agent’s rights under this  Agreement.   5.3 No liability  Except, in each case, as would not reasonably be expected to adversely affect the Collateral  Agent’s security interest  or the Collateral Agent’s rights under this Agreement in any  material respect:   (a) its rights, interests, liabilities and obligations under contractual obligations that  constitute part of the Collateral are not affected by this Agreement or the exercise  by the Collateral Agent of its rights under this Agreement;  (b) neither the Collateral Agent nor any Noteholder, unless it expressly agrees in  writing, will have any liabilities or obligations under any contractual obligation that  constitutes part of the Collateral as a result of this Agreement, the exercise by the  Collateral Agent of its rights under this Agreement or otherwise; and  (c) neither the Collateral Agent nor any Noteholder has or will have any obligation to  collect upon or enforce any contractual obligation or claim that constitutes part of  the Collateral, or to take any other action with respect to the Collateral.  5.4 Consideration and solvency  

 

   10      (a) Terms used in this Subclause have the meanings given to them in, and must be  construed in accordance with, the fraudulent transfer laws.  (b) It will receive valuable direct and indirect benefits as a result of the transactions  financed by the issuance of the Notes and these benefits constitute “reasonably  equivalent value” and “fair consideration” as those terms are used in the fraudulent  transfer laws.  (c) To the best of its knowledge, the Secured Parties have acted in good faith in  connection with the transactions contemplated by this Agreement.  (d) The sum of its debts (including its obligations under this Agreement) is less than  the value of its property (calculated at the lesser of fair valuation and present fair  saleable value).  (e) Its capital is not unreasonably small to conduct its business as currently conducted  or as proposed to be conducted.  (f) It has not incurred, does not intend to incur and does not believe it will incur debts  beyond its ability to pay as they mature.  (g) It has not made a transfer or incurred an obligation under this Agreement with the  intent to hinder, delay or defraud any of its present or future creditors.  5.5 Intellectual Property  (a) Schedule 2 (as such schedule may be amended or supplemented from time to time)  lists all registered Copyrights and applications therefor, issued Patents and Patent  applications and all registered Trademarks and applications therefor, in each case  owned or purported to be owned by the Grantor, and to its knowledge (i) the  Grantor is the sole and exclusive owner of the entire right, title, and interest in and  to all Intellectual Property listed on Schedule 2 (as such schedule may be amended  or supplemented from time to time), and (ii) owns or has the valid right to use and,  where the Grantor does so, sublicense others to use, all other Intellectual Property  used in and necessary to conduct its business, in each case, free and clear of all  Liens except for Permitted Liens.   (b) All Intellectual Property material to its business and owned by the Grantor is  subsisting and has not been adjudged invalid or unenforceable, in whole or in part,  nor are any Patents owned by the Grantor and material to its business the subject of  a reexamination proceeding, and the Grantor has performed all acts and has paid all  renewal, maintenance, and other fees and taxes required to maintain each and every  registration and application of Copyrights, Patents and Trademarks owned by the  Grantor and material to its business in full force and effect.  (c) (i) To the knowledge of the Grantor, all Intellectual Property material to its business  and owned by the Grantor is valid and enforceable; and (ii) no action or proceeding  is pending or, to the best of the Grantor’s knowledge, threatened before any court  or administrative authority challenging the validity or scope of, the Grantor’s right  

 

   11      to register, or the Grantor’s rights to own or use, any Intellectual Property material  to its business.  (d) All registrations and applications for Copyright registrations, Patents and  Trademark registrations material to the Grantor’s business and owned or purported  to be owned by the Grantor are standing in the name of the Grantor.  (e) The Grantor uses commercially reasonable standards of quality in the manufacture,  distribution, and sale of all products sold and in the provision of all services  rendered under or in connection with all Trademarks owned by the Grantor and  material to its business, and has taken commercially reasonable actions to ensure  that all licensees of the Trademarks owned by the Grantor and material to its  business use adequate standards of quality.  (f) To the best of the Grantor’s knowledge, the conduct of the Grantor’s business does  not infringe upon or misappropriate or otherwise violate any trademark, patent,  copyright, trade secret or other intellectual property right of any other Person in any  manner that is or would reasonably be expected to be material to its business; except  as would not reasonably be expected to be material, no unresolved claim has been  asserted in writing against Grantor asserting that the Grantor infringes upon,  misappropriates or otherwise violates the intellectual property rights of any other  Person, or otherwise demanding that the Grantor enter into a license or co-existence  agreement.  (g) To the best of the Grantor’s knowledge, no other Person is infringing upon,  misappropriating or otherwise violating any rights in any Intellectual Property  owned by the Grantor in a manner that would reasonably be expected to be material  to the Grantor’s business.  (h) No settlement or consents, covenants not to sue, co-existence agreements, non- assertion assurances, or releases have been entered into by the Grantor or bind the  Grantor in a manner that could adversely affect in any material respect the Grantor’s  rights to own, license or use any Intellectual Property material to its business.  5.6 Times for making representations and warranties  (a) The representations and warranties set out in this Agreement (including in this  Clause 5) are made on the date of this Agreement.  (b) The representations and warranties under Clause 5.5 are deemed to be repeated by  the Grantor on the date of each issuance of Notes under the Indenture with reference  to the facts and circumstances then existing.  (c) When representations and warranties are repeated, they are applied to the  circumstances existing at the time of repetition.  (d) The representations and warranties of the Grantor contained in this Agreement or  made by the Grantor in any certificate, notice or report delivered under this  

 

   12      Agreement will survive each issuance of Notes and any transfer or assignment of  the Notes.  6. UNDERTAKINGS  Undertakings  The Grantor agrees to be bound by the covenants set out in this Clause.  6.1 The Grantor  (a) Except as permitted under the Indenture, the Grantor shall preserve its corporate or  limited liability company existence and will not, except as permitted by the  Indenture, in one transaction or a series of related transactions, merge into or  consolidate with any other entity, or sell all or substantially all of its assets.  (b) The Grantor shall not change the jurisdiction of its incorporation or organization  without providing the Collateral Agent with at least 10 days’ prior written notice.  (c) The Grantor shall not change its name without providing the Collateral Agent with  at least 10 days’ prior written notice.  (d) The Grantor shall keep at its address indicated in, or otherwise notified to the  Collateral Agent pursuant to, Clause 16 (Notices) its corporate records and all  records, documents and instruments constituting, relating to or evidencing  Collateral.  (e) The Grantor shall permit the Collateral Agent and its agents and representatives, at  mutually agreed times during normal business hours and upon reasonable notice,  to inspect the Collateral, to examine and make copies of and abstracts from the  records referred to in paragraph (d) above, and to discuss matters relating to the  Collateral directly with the Grantor’s officers and employees.  (f) At the Collateral Agent’s request, the Grantor shall provide the Collateral Agent  with any information concerning the Collateral that the Collateral Agent may  reasonably request.  6.2 The Collateral  (a) Except as permitted by the Indenture or this Agreement, the Grantor:  (i) shall maintain sole legal and beneficial ownership of the Collateral;  (ii) shall not permit any Collateral to be subject to any Lien other than the  Collateral Agent’s security interest and other Permitted Liens and shall at  all times warrant and defend the Collateral Agent’s security interest in the  Collateral against all other Liens (other than Permitted Liens) and  claimants;  

 

   13      (iii) shall not sell, assign, transfer, pledge, license, lease or further encumber, or  grant any option, warrant, or right with respect to, any of the Collateral, or  agree or contract to do any of the foregoing; and  (iv) shall not waive, amend or terminate, in whole or in part, any material  accessory or ancillary right or other right in respect of any Collateral.  (b) The Grantor shall pay, prior to delinquency, all material taxes, assessments and  governmental levies imposed on or in respect of Collateral and all claims against  the Collateral, including claims for labor, materials and supplies, in each case,  except such as are contested in good faith and by appropriate proceedings or where  the failure to effect such payment is not adverse in any material respect to the  Collateral Agent.    (c) In any suit, legal action, arbitration or other proceeding involving the Collateral or  the Collateral Agent’s security interest, the Grantor shall take all lawful action to  avoid impairment of the Collateral Agent’s security interest or the Collateral  Agent’s rights under this Agreement or the imposition of a Lien (other than  Permitted Liens) on any Collateral.  6.3 Intellectual Property  (a) It shall not do any act or omit to do any act whereby any of the  Intellectual Property  which is owned by and material to the business of the Grantor may lapse, or become  abandoned, dedicated to the public, or unenforceable, or which would adversely  affect the validity, grant, or enforceability of the security interest granted therein  (except, in each case, to the extent such action or inaction is deemed advisable in  the Grantor’s reasonable business judgment).  (b) It shall not, with respect to any Trademarks owned by the Grantor and material to  its business, cease the use of any of such Trademarks or fail to maintain the level  of the quality of products sold and services rendered under any of such Trademark  at a level at least substantially consistent with the quality of such products and  services as of the date hereof, and the Grantor shall take commercially reasonable  steps to ensure that licensees of such Trademarks use such consistent standards of  quality (except, in each case, to the extent such action or inaction is deemed  advisable in the Grantor’s reasonable business judgment).   (c) It shall take all reasonable steps in the United States Patent and Trademark Office  and the United States Copyright Office to continue prosecution of any current  application and maintain any registration of each Trademark, Patent, and  Copyright, in each case, that is owned by and material to the Grantor.  (d) It shall hereafter use commercially reasonable efforts so as not to permit the  inclusion in any contract to which it hereafter becomes a party of any provision that  would materially impair or prevent the creation of a security interest in, or the  assignment of, the Grantor’s rights and interests in any Intellectual Property  material to its business acquired under such contracts.    

 

   14      (e) In the event that the Grantor becomes aware that any Intellectual Property owned  by the Grantor and material to its business is infringed, misappropriated, or diluted  by a third party, the Grantor shall promptly take such actions the Grantor deems  appropriate under the circumstances, in its reasonable business judgment, to protect  its rights in such Intellectual Property.  (f) It shall take commercially reasonable steps to protect the secrecy of its material  Trade Secrets, including, to the extent such action is deemed advisable in the  Grantor’s reasonable business judgment, by entering into confidentiality  agreements with employees and consultants and labeling and restricting access to  secret information and documents.  6.4 Notices  (a) The Grantor shall give the Collateral Agent prompt notice of the occurrence of any  of the following events:  (i) any pending or threatened claim, suit, legal action, arbitration or other  proceeding involving or affecting the Grantor or any Collateral that would  reasonably be expected to materially impair the Collateral Agent’s security  interest or the Collateral Agent’s rights under this Agreement or result in  the imposition of a Lien (other than Permitted Liens) on any Collateral;  (ii) any loss or damage to any material portion of the Collateral; or  (iii) any representation or warranty contained in this Agreement is or becomes  untrue, incorrect or incomplete in any material respect.  (b) Each notice delivered under this Clause, shall include:  (i) reasonable details about the event; and  (ii) the Grantor’s proposed course of action.  Delivery of a notice under this Clause does not affect the Grantor’s obligations to comply  with any other term of this Agreement.  7. WHEN SECURITY BECOMES ENFORCEABLE  Subject to the terms of the Indenture, this Security may be enforced by the Collateral Agent  at any time after an Event of Default has occurred and is continuing.  8. ENFORCEMENT OF SECURITY  8.1 [Reserved]  8.2 General  (a) After this Security has become enforceable, the Collateral Agent may immediately,  in its absolute discretion (but, if Grantor is party to the Intercreditor Agreement,  subject to the Intercreditor Agreement), exercise any right under:  

 

   15      (i) applicable law; or  (ii) this Agreement,  to enforce all or any part of the Security in respect of any Collateral in any manner or order  it sees fit.  (b) The foregoing includes:  (i) any rights and remedies available to the Collateral Agent under applicable  law and under the UCC (whether or not the UCC applies to the affected  Collateral and regardless of whether or not the UCC is the law of the  jurisdiction where the rights or remedies are asserted) as if those rights and  remedies were set forth in this Agreement in full;  (ii) transferring or assigning to, or registering in the name of, the Collateral  Agent or its nominees any of the Collateral;  (iii) exercising any consent and other rights relating to any Collateral;  (iv) performing or complying with any contractual obligation that constitutes  part of the Collateral;  (v) receiving, endorsing, negotiating, executing and delivering or collecting  upon any check, draft, note, acceptance, account, instrument, document,  letter of credit, contract, agreement, receipt, release, bill of lading, invoice,  endorsement, assignment, bill of sale, deed, security, share certificate, stock  power, proxy, or instrument of conveyance or transfer constituting or  relating to any Collateral;  (vi) asserting, instituting, filing, defending, settling, compromising, adjusting,  discounting or releasing any suit, action, claim, counterclaim, right of set- off or other right or interest relating to any Collateral;  (vii) executing and delivering acquittances, receipts and releases in respect of  Collateral; and  (viii) exercising any other right or remedy available to the Collateral Agent under  the other Finance Documents or any other agreement between the parties.  8.3 Collections after an Event of Default  Subject to the rights of the holders of First Priority Debt under the Intercreditor Agreement  (if the Grantor is party to the Intercreditor Agreement):  (a) if an Event of Default occurs and is continuing, the Grantor shall hold all funds and  other property received or collected in respect of the Collateral in trust for the  Collateral Agent, and shall keep these funds and this other property segregated from  all other funds and property so as to be capable of identification;  

 

   16      (b) the Grantor shall deliver those funds and that other property to the Collateral Agent  in the identical form received, properly endorsed or assigned when required to  enable the Collateral Agent to complete collection; and  (c) after the occurrence and during the continuation of an Event of Default, the Grantor  may not settle, compromise, adjust, discount or release any claim in respect of  Collateral, and the Grantor may not accept any returns of merchandise other than  in the ordinary course of business.  8.4 Collateral Agent’s rights upon default  (a) The Grantor irrevocably constitutes and appoints the Collateral Agent, with full  power of substitution, as the Grantor’s true and lawful attorney-in-fact, in the  Grantor’s name or in the Collateral Agent’s name or otherwise, and at the Grantor’s  expense, to take any of the actions authorized by this Agreement or permitted under  applicable law upon the occurrence and during the continuation of an Event of  Default, without notice to or the consent of the Grantor.  This power of attorney is  a power coupled with an interest and cannot be revoked.  The Grantor ratifies and  confirms all actions taken by the Collateral Agent or its agents under this power of  attorney.  (b) The Grantor agrees that 10 days’ notice shall constitute reasonable notice in  connection with any sale, transfer or other disposition of Collateral.  (c) The Collateral Agent may comply with any applicable state or federal law  requirements in connection with a disposition of Collateral and compliance will not  be considered adversely to affect the commercial reasonableness of any sale of  Collateral.  (d) The grant to the Collateral Agent under this Agreement of any right, power or  remedy does not impose upon the Collateral Agent any duty to exercise that right,  power or remedy.  The Collateral Agent will have no obligation to take any steps  to preserve any claim or other right against any Person or with respect to any  Collateral.  (e) The Grantor bears the risk of loss, damage, diminution in value, or destruction of  the Collateral.  (f) The Collateral Agent will have no responsibility for any act or omission of any  courier, bailee, broker, bank, investment bank or any other Person chosen by it with  reasonable care.  (g) The Collateral Agent makes no express or implied representations or warranties  with respect to any Collateral or other property released to the Grantor or its  successors and assigns.  (h) The Grantor agrees that the Collateral Agent will have met its duty of care under  applicable law if it holds, maintains and disposes of Collateral in the same manner  that it holds, maintains and disposes of property for its own account.  

 

   17      (i) Except as set forth in this Clause or as required under applicable law, the Collateral  Agent will have no duties or obligations under this Agreement or otherwise with  respect to the Collateral.  (j) The sale, transfer or other disposition under this Agreement of any right, title, or  interest of the Grantor in any item of Collateral will:  (i) operate to divest the Grantor permanently and all Persons claiming under or  through the Grantor of that right, title, or interest, and  (ii) be a perpetual bar, both at law and in equity, to any claims by the Grantor  or any Person claiming under or through the Grantor  with respect to that item of Collateral.  8.5 No marshaling  (a) The Collateral Agent need not, and the Grantor irrevocably waives and agrees that  it shall not invoke or assert any law requiring the Collateral Agent to:  (i) attempt to satisfy the Secured Liabilities by collecting them from any other  Person liable for them; or  (ii) marshal any security or guarantee securing payment or performance of the  Secured Liabilities or any particular asset of the Grantor.  (b) The Collateral Agent may release, modify or waive any collateral or guarantee  provided by any other Person to secure any of the Secured Liabilities, without  affecting the Collateral Agent’s rights against the Grantor.  8.6 Grant of Intellectual Property License   For the purpose of enabling the Collateral Agent, during the continuance of an Event of  Default, to exercise rights and remedies under this Clause 8 at such time as the Collateral  Agent shall be lawfully entitled to exercise such rights and remedies, and for no other  purpose, the Grantor hereby grants to the Collateral Agent an irrevocable, non-exclusive  license to use, license or sublicense any of the Intellectual Property now owned or hereafter  acquired by the Grantor, wherever the same may be located.  Such license shall be subject,  in the case of Trademarks, to sufficient rights to quality control and inspection in favor of  the Grantor to avoid the risk of invalidation of said Trademarks. Such license shall include  reasonable access to all media in which any of the licensed items may be recorded or stored  and to all computer programs used for the compilation or printout hereof.    9. APPLICATION OF PROCEEDS  Any moneys received in connection with the Collateral by the Collateral Agent after this  Security has become enforceable shall be applied in the following order of priority:  

 

   18      (a) first, in or towards payment of or provision for all costs and expenses incurred by  the Collateral Agent in connection with the enforcement of this Security;  (b) second, in or towards payment of, or provision for, the Secured Liabilities; and  (c) third, in payment of the surplus (if any) to the Grantor or any other Person entitled  to it under applicable law.  This Clause is subject to the prior payment of any claims having priority over this Security  under mandatory provisions of applicable law and, if the Grantor is party to the  Intercreditor Agreement, First Priority Debt in accordance with the terms of the  Intercreditor Agreement.  This Clause does not prejudice the right of any Noteholder to  recover any shortfall from the Grantor.  10. EXPENSES AND INDEMNITY  (a) The Grantor shall pay promptly on demand to the Collateral Agent all reasonable  and documented costs and expenses incurred by the Collateral Agent, any  Noteholder, attorney, manager, delegate, sub-delegate, agent or other Person  appointed by the Collateral Agent under this Agreement for the purpose of  enforcing its rights under this Agreement.  Such costs and expenses include:  (i) costs of foreclosure and of any transfer, disposition or sale of Collateral;  (ii) costs of maintaining or preserving the Collateral or assembling it or  preparing it for transfer, disposition or sale;  (iii) costs of obtaining money damages; and  (iv) fees and expenses of attorneys employed by the Collateral Agent for any  purpose related to this Agreement or the Secured Liabilities, including  consultation, preparation and negotiation of any amendment or  restructuring, drafting documents, sending notices or instituting,  prosecuting or defending litigation or arbitration.  (b) The Grantor shall indemnify and keep indemnified the Secured Parties and their  respective affiliates, directors, officers, representatives and agents from and against  all claims, liabilities, obligations, losses, damages, penalties, judgments, costs and  expenses of any kind (including attorney’s fees and expenses) that may be imposed  on, incurred by or asserted against any of them by any Person (including any  Noteholder) in any way relating to or arising out of:  (i) this Agreement;  (ii) the Collateral;  (iii) the Collateral Agent’s security interest in the Collateral;  

 

   19      (iv) any Event of Default;  (v) any action taken or omitted by the Collateral Agent under this Agreement  or any exercise or enforcement of rights or remedies under this Agreement;  or  (vi) any transfer sale or other disposition of or any realization on Collateral.  (c) The Grantor shall not be liable to an indemnified party to the extent any liability  results from that indemnified party’s gross negligence or willful misconduct.   Payment by an indemnified party will not be a condition precedent to the  obligations of the Grantor under this indemnity.  (d) This Clause survives the issuance of the Notes, the repayment of the Notes, any  transfer or assignment of the Notes and the termination of this Agreement.  11. EVIDENCE AND CALCULATIONS  In the absence of manifest error, the records of the Collateral Agent shall be conclusive  evidence of the existence and the amount of the Secured Liabilities.  12. CHANGES TO THE PARTIES  12.1 Grantor  The Grantor may not assign, delegate or transfer any of its rights or obligations under this  Agreement without the consent of the Collateral Agent, and any purported assignment,  delegation or transfer in violation of this provision shall be void and of no effect.  12.2 Collateral Agent  The Collateral Agent may assign or transfer its rights and obligations under this Agreement  in the manner permitted under the Indenture.  12.3 Successors and assigns  This Agreement shall be binding on and inure to the benefit of the respective successors  and permitted assigns of the Grantor and the Collateral Agent.  13. MISCELLANEOUS  13.1 Amendments and waivers  Any term of this Agreement may be amended or waived only by the written agreement of  the Grantor and the Collateral Agent. Notwithstanding the foregoing, the Grantor may, but  shall have no obligation to, update the schedules hereto from time to time by delivering  such updated schedules to the Collateral Agent.  13.2 Waivers and remedies cumulative  (a) The rights and remedies of the Collateral Agent under this Agreement:  (i) may be exercised as often as necessary;  

 

   20      (ii) are cumulative and not exclusive of its rights under applicable law; and  (iii) may be waived only in writing and specifically.  (b) Delay in exercising, or non-exercise, of any right or remedy under this Agreement  is not a waiver of that right or remedy.  13.3 Counterparts  This Agreement may be executed in counterparts, and this has the same effect as if the  signatures on the counterparts were on a single copy of this Agreement.  The words  “execution,” “executed,” “signed,” “signature,” “delivery” and words of like import in or  relating to this Agreement or any document to be signed in connection with this Agreement  shall be deemed to include electronic signatures, deliveries or the keeping of records in  electronic form, each of which shall be of the same legal effect, validity or enforceability  as a manually executed signature, physical delivery thereof or the use of a paper-based  recordkeeping system, as the case may be, and the parties hereto consent to conduct the  transactions contemplated hereunder by electronic means.  14. SEVERABILITY  If any term of this Agreement is or becomes illegal, invalid or unenforceable in any  jurisdiction, that will not affect:  (a) the legality, validity or enforceability in that jurisdiction of any other term of this  Agreement; or  (b) the legality, validity or enforceability in any other jurisdiction of that or any other  term of this Agreement.  15. RELEASE  At the end of the Security Period and at the other times provided in the Indenture, the  Collateral will be released in accordance with the  Indenture and the Collateral Agent must,  at the request and cost of the Grantor, promptly take whatever action is necessary to release  all or any applicable part of the Collateral from this Security in accordance with the terms  of the Indenture.  16. NOTICES  16.1 Notices  Any communication in connection with this Agreement must be in writing and, unless  otherwise stated, must be given in person, by first class mail (registered or certified, return  receipt requested), overnight courier guaranteeing next day delivery, or by fax.  16.2 Contact details  (a) The contact details of the Grantors for this purpose are:  Vector Tobacco Inc.  

 

   21      Address: 3800 Paramount Parkway    Suite 250    PO Box 2010    Morrisville, NC 27560  Fax:  (305) 579-8016  Attention: Marc N. Bell       (b) The contact details of the Collateral Agent for this purpose are:     U.S. Bank National Association  Address: Global Corporate Trust Services    60 Livingston Avenue    EP-MN-WS3C    St. Paul, MN 55107-2292  Fax:  (651) 466-7430  Attention: Joshua A. Hahn    (c) Either party may change its contact details by giving five Business Days’ notice to  the other party.  (d) Where a party nominates a particular department or officer to receive a  communication, a communication will not be effective if it fails to specify that  department or officer.  16.3 Effectiveness  (a) Except as provided below, any communication in connection with this Agreement  will be deemed to be given as follows:  (i) if delivered in person, at the time of delivery;  (ii) if by e-mail or fax, when sent with confirmation of transmission.  (b) A communication given under this Clause but received on a non-working day or  after business hours in the place of receipt will only be deemed to be given on the  next working day in that place.  17. GOVERNING LAW  This Agreement, the relationship between the Grantor, the Secured Parties and any claim  or dispute (whether sounding in contract, tort, statute or otherwise) relating to this  Agreement or that relationship shall be governed by and construed in accordance with law  of the State of New York including section 5-1401 of the New York General Obligations  Law but excluding any other conflict of law rules that would lead to the application of the  law of another jurisdiction.  If the law of a jurisdiction other than New York is, under  section 1-105(2) of the UCC, mandatorily applicable to the perfection, priority or  enforcement of any security interest granted under this Agreement in respect of any  

 

   22      particular Collateral, that other law shall apply solely to the matters of perfection, priority  or enforcement to which it is mandatorily applicable.  18. ENFORCEMENT  18.1 Jurisdiction  (a) Each of the Parties agrees that any New York State court or Federal court sitting in  the City and County of New York has jurisdiction to settle any disputes in  connection with this Agreement and accordingly submits to the jurisdiction of those  courts.  (b) Each of the Parties:  (i) waives objection to the New York State and Federal courts on grounds of  personal jurisdiction, inconvenient forum or otherwise as regards  proceedings in connection with this Agreement; and  (ii) agrees that a judgment or order of a New York State or Federal court in  connection with this Agreement is conclusive and binding on it and may be  enforced against it in the courts of any other jurisdiction.  (c) Nothing in this Clause limits the right of the Collateral Agent or any Noteholder to  bring proceedings against the Grantor in connection with this Agreement:  (i) in any other court of competent jurisdiction; or  (ii) concurrently in more than one jurisdiction.  18.2 Service of Process   The Grantor consents to the service of process relating to any proceedings by a notice given  in accordance with Clause 16 (Notices) above.  18.3 Complete Agreement  This Agreement and the other Finance Documents contain the complete agreement  between the parties on the matters to which they relate and supersede all prior  commitments, agreements and understandings, whether written or oral, on those matters.  18.4 Waiver of Jury Trial  THE GRANTOR AND THE COLLATERAL AGENT (FOR ITSELF AND ON BEHALF  OF THE NOTEHOLDERS) WAIVE ANY RIGHTS THEY MAY HAVE TO A JURY  TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED ON OR ARISING FROM  THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS  AGREEMENT.  In the event of litigation, this Agreement may be filed as a written consent  to a trial by the court.  19. INTERCREDITOR AGREEMENT  

 

   23      On and after the date from which the Grantor becomes a borrower under the Liggett Credit  Agreement and executes joinder agreement to become a party to the Intercreditor  Agreement, the Lien granted to the Collateral Agent pursuant to this Agreement shall be  subject in priority to the Priority Liens, and the exercise of any right or remedy by the  Collateral Agent hereunder shall be subject to the provisions of the Intercreditor  Agreement. From and after such date, in the event of any conflict between the terms of the  Intercreditor Agreement and this Agreement, the terms of the Intercreditor Agreement shall  govern and control.  The undersigned, intending to be legally bound, have executed and delivered this Agreement on  the date stated at the beginning of this Agreement.    

 

   (Signature Page to Security Agreement – Vector Tobacco Inc.)  SIGNATORIES  IN WITNESS WHEREOF, the Grantor has caused this Security Agreement to be duly executed  by its duly authorized officer as of the day and year first above written.    Grantor  VECTOR TOBACCO INC.  By: /s/ Marc N. Bell  Name: Marc N. Bell  Title: Senior Vice President, General Counsel and Secretary  

 

   (Signature Page to Security Agreement – Vector Tobacco Inc.)  Collateral Agent  U.S. BANK NATIONAL ASSOCIATION  as Collateral Agent  By: /s/ Joshua A. Hahn  Name: Joshua A. Hahn  Title: Vice President    

 

   26  SCHEDULE 1    COMMERCIAL TORT CLAIMS    None. 

 

    SCHEDULE 2    INTELLECTUAL PROPERTY  Copyrights:  Registrations  Title Reg. No.  Reg. Date  Status Owner   Quest 1 cigarette packaging in blue VA0001390735  12/22/2005  Registered Vector Tobacco, Inc.    Applications:    None.    Exclusive Copyright Licenses:    None.    Patents:    Registrations:      Applications:  None.    Trademarks:    Registrations:  Title App. No.  App. Date  Patent No.  Issue Date  Status Owner  Reduced risk tobacco products and  methods of making same  14102340  12/10/2013  9439452  9/13/2016  Issued  Vector Tobacco Inc.  Reduced risk tobacco products and  methods of making same  1599002  5/25/2018  10,709,164  7/14/2020  Issued  Vector Tobacco Inc.  Approaches to identify less harmful  tobacco and tobacco products  11596088  4/4/2008  7662565  2/16/2010  Issued  Vector Tobacco Inc.  Frank Traganos  Zbigniew Darzynkiewicz  Method of making a smoking composition 10871863  6/18/2004  6959712  11/1/2005  Issued  Vector Tobacco Inc.  Method of making a smoking composition 10007724  11/9/2001  6789548  9/14/2004  Issued  Vector Tobacco Inc.  

 

     Trademark App. No.  App. Date  Reg. No.  Reg. Date  Status Owner  EAGLE 20'S 73065753  14-OCT-1975  1041041  08-JUN-1976  Renewed in 2016 Vector Tobacco Inc.   SILVER EAGLE 78632586  18-MAY-2005  3140520  05-SEP-2006  Renewed in 2016 Vector Tobacco Inc.   WHY PAY MORE? 87265921  12-DEC-2016  5241313  11-JUL-2017  Registered Vector Tobacco Inc.   EAGLE 86574929  24-MAR-2015  5271626  22-AUG- 2017  Registered Vector Tobacco Inc.       Applications:    None.          

 

    EXHIBIT 1    FORM OF    PATENT SECURITY AND PLEDGE AGREEMENT  This PATENT SECURITY AND PLEDGE AGREEMENT, dated as of  [            , 2021] (as may be amended, restated, amended and restated, supplemented or  otherwise modified from time to time, this “Agreement”), is made by Vector Tobacco Inc.,  a Virginia corporation (the “Grantor”) in favor of U.S. Bank National Association, as  collateral agent (in such capacity, the “Collateral Agent”) for the Noteholders (as defined  in the Security Agreement referred to below).    WHEREAS, the Grantor has guaranteed the Notes issued under the Indenture, dated  as of January 28, 2021 (as amended, supplemented, or otherwise modified from time to  time, the “Indenture”) among Vector Group Ltd. (the “Issuer”), the Grantor and certain of  the Issuer’s other direct and indirect subsidiaries and the Collateral Agent, in its capacity  as trustee thereunder.    WHEREAS, it is a condition precedent to the obligations of the Collateral Agent  under the Indenture that the Grantor shall have executed and delivered that certain Security  Agreement, dated as of January 28, 2021, in favor of the Collateral Agent (as amended,  supplemented, replaced or otherwise modified from time to time, the “Security  Agreement”).    WHEREAS, under the terms of the Security Agreement, the Grantor has granted a  security interest in certain property, including certain Intellectual Property of the Grantor  to the Collateral Agent for the benefit of the Secured Parties, and has agreed as a condition  thereof to execute this Agreement for recording with the United States Patent and  Trademark Office and other applicable Governmental Authorities.    WHEREAS, this Agreement is supplemental to the provisions contained in the  Security Agreement and, in the event of an inconsistency among them, the Security  Agreement shall control over this Agreement.    NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency  of which are hereby acknowledged, the Grantor agrees as follows:    1. DEFINITIONS.  1.1 Terms Defined in the Security Agreement.  All capitalized terms used in this  Agreement and not otherwise defined herein shall have the meanings assigned to them in  the Security Agreement.  1.2 Certain Defined Terms.  As used in this Agreement, the following terms shall have  the following meanings:  

 

    “Assignment of Patents” has the meaning set forth in Section 2.2 herein.  “Patent Collateral” has the meaning set forth in Section 2.1 herein.  “PTO” means the United States Patent and Trademark Office.  1.3 Rules of Construction.  Unless otherwise provided herein, the rules of construction  set forth in Section 1.2 of the Security Agreement shall be applicable to this Agreement.  2. GRANT OF SECURITY INTEREST.  2.1 Security Interest.  As collateral security for the payment and performance in full of  all of the Secured Liabilities, the Grantor hereby grants to the Collateral Agent, for the  benefit of the Secured Parties, a continuing security interest in and lien on all of the  Grantor’s right, title and interest in all Patents owned by the Grantor, including the Patents  referred to on Schedule A hereto (as such schedule may be amended or supplemented from  time to time), in each case whether now or hereafter existing or arising or in which the  Grantor now has or hereafter owns or acquires, all inventions and improvements described  therein, all rights to sue for past, present and future infringements thereof, and all proceeds  of the foregoing, including license fees, royalties, income, payments, claims, damages, and  proceeds of suit (collectively, the “Patent Collateral”).    2.2 Assignment of Patents upon Default.  The Grantor acknowledges that the Collateral  Agent has the right, pursuant to the power of attorney granted the Collateral Agent  hereunder and under the Security Agreement, upon the occurrence and during the  continuance of an Event of Default, to execute on behalf of the Grantor an assignment of  Patents that constitute Patent Collateral (each an “Assignment of Patents”) for the sole  purpose of effecting the Collateral Agent’s exercise of its remedies under Section 8 of the  Security Agreement.  In furtherance of the foregoing, the Grantor hereby authorizes the  Collateral Agent to complete, execute and record with the PTO an Assignment of Patents  on behalf of the Grantor upon the occurrence and during the continuance of an Event of  Default for the sole purpose of effecting the Collateral Agent’s exercise of its remedies  under Section 8 of the Security Agreement.  2.3 Conditional Assignment.  In addition to, and not by way of limitation of, the grant  and pledge of the Patent Collateral provided in Section 2.1, the  Grantor hereby grants,  assigns, transfers, conveys and sets over to the Collateral Agent, for the benefit of the  Secured Parties, the Grantor’s entire right, title and interest in and to the Patent Collateral;  provided, that such grant, assignment, transfer and conveyance shall be and become of  force and effect only (a) in connection with the Collateral Agent’s exercise of its rights and  remedies in strict accordance with the terms of the Security Agreement, and (b) upon or  after the occurrence and during the continuance of an Event of Default and (c) either (i)  upon the written demand of the Collateral Agent at any time during such continuance or  (ii) immediately and automatically (without notice or action of any kind by the Collateral  Agent) upon an Event of Default for which acceleration of the payment of the Notes is  automatic under the Indenture or upon the sale or other disposition of or foreclosure upon  the Collateral pursuant to the Security Agreement and applicable law (including the  

 

    transfer or other disposition of the Collateral by the Grantor to the Collateral Agent or its  nominee in lieu of foreclosure).  2.4 Security Agreement.  Pursuant to the Security Agreement the Grantor has granted  to the Collateral Agent, for the benefit of the Secured Parties, a continuing security interest  in and lien on the Collateral (including the Patent Collateral).  The Security Agreement,  and all rights and interests of the Collateral Agent in and to the Collateral (including the  Patent Collateral) thereunder, are hereby ratified and confirmed in all respects, and the  Grantor hereby acknowledges and affirms that the rights and remedies of the Collateral  Agent with respect to the security interest in the Patent Collateral granted hereby are more  fully set forth in the Security Agreement, the terms and provisions of which are  incorporated by reference herein as if fully set forth herein.  In no event shall this  Agreement, the grant, assignment, transfer and conveyance of the Patent Collateral  hereunder, or the recordation of this Agreement (or any other document hereunder) with  the PTO, adversely affect or impair, in any way or to any extent, the Security Agreement,  the security interest of the Collateral Agent in the Collateral (including the Patent  Collateral) pursuant to the Security Agreement, the attachment and perfection of such  security interest under the UCC (including the security interest in the Patent Collateral), or  any present or future rights and interests of the Collateral Agent in and to the Collateral  under or in connection with the Security Agreement or the UCC.  In the event that any  provision of this Agreement is deemed to conflict with the Security Agreement, the  provisions of the Security Agreement shall control.     3. AFTER-ACQUIRED PATENTS   3.1 After-acquired Patents.  If, after the execution of this Agreement and before the end  of the Security Period, the Grantor shall develop or acquire any new Patents, the provisions  of this Agreement shall automatically apply thereto.  3.2 Amendment to Schedule.  The Grantor authorizes the Collateral Agent to modify  this Agreement and the Assignments of Patents, without the necessity of the Grantor’s  further approval or signature, by amending Schedule A hereto and the Annex to each  Assignment of Patents to include any future or other Patents that become part of the Patent  Collateral under Section 2 or Section 3.1.  4. GOVERNING LAW; CONSENT TO JURISDICTION.   This Agreement, the relationship between the parties hereunder and any claim or  dispute (whether sounding in contract, tort, statute or otherwise) relating to this Agreement  or that relationship shall be governed by and construed in accordance with law of the State  of New York including section 5-1401 of the New York General Obligations Law but  excluding any other conflict of law rules that would lead to the application of the law of  another jurisdiction.  If the law of a jurisdiction other than New York is, under section 1- 105(2) of the UCC, mandatorily applicable to the perfection, priority or enforcement of  any security interest granted under this Agreement in respect of any Patent Collateral, that  other law shall apply solely to the matters of perfection, priority or enforcement to which  it is mandatorily applicable.    

 

    5. MISCELLANEOUS.   5.1 Headings.  The headings of each section of this Agreement are for convenience  only and shall not define or limit the provisions thereof.  This Agreement and all rights and  obligations hereunder shall be binding upon the Grantor and its respective successors and  assigns, and shall inure to the benefit of the Secured Parties and their respective successors  and assigns.  If any term of this Agreement shall be held to be invalid, illegal or  unenforceable, the validity of all other terms hereof shall in no way be affected thereby,  and this Agreement shall be construed and be enforceable as if such invalid, illegal or  unenforceable term had not been included herein.  The Grantor acknowledges receipt of a  copy of this Agreement.  5.2 Counterparts.  This Agreement may be executed in any number of counterparts,  each of which when so executed and delivered shall be deemed an original, but all such  counterparts together shall constitute but one and the same instrument.    [Signatures begin on next page]  

 

    IN WITNESS WHEREOF, the Grantor has caused this Patent Security and  Pledge Agreement to be executed and delivered by its duly authorized officer as of the day  and year first above written.    [                      ], as Grantor      By: ______________________________      Name:        Title:      U.S. Bank National Association, as  Collateral Agent      By:  ______________________________     Name:     Title:  

 

    Schedule A  to the Patent Security and Pledge Agreement    [To be completed by the Grantor]      Grantor: [___]    Issued U.S. Patents of Grantor    Patent No. Issue Date Title                                    Pending U.S. Patent Applications of Grantor    Application No. Filing Date Title                            

 

      EXHIBIT 2    FORM OF   TRADEMARK SECURITY AND PLEDGE AGREEMENT  This TRADEMARK SECURITY AND PLEDGE AGREEMENT, dated as of  [            , 2021] (as may be amended, restated, amended and restated, supplemented or  otherwise modified from time to time, this “Agreement”), is made by Vector Tobacco Inc.,  a Virginia corporation (the “Grantor”) in favor of U.S. Bank National Association, as  collateral agent (in such capacity, the “Collateral Agent”) for the Noteholders (as defined  in the Security Agreement referred to below).  WHEREAS, the Grantor has guaranteed the Notes issued under the Indenture, dated  as of January 28, 2021 (as amended, supplemented, or otherwise modified from time to  time, the “Indenture”) among Vector Group Ltd. (the “Issuer”), the Grantor and certain of  the Issuer’s other direct and indirect subsidiaries and the Collateral Agent, in its capacity  as trustee thereunder.    WHEREAS, it is a condition precedent to the obligations of the Collateral Agent  under the Indenture that the Grantor shall have executed and delivered that certain Security  Agreement, dated as of January 28, 2021, in favor of the Collateral Agent (as amended,  supplemented, replaced or otherwise modified from time to time, the “Security  Agreement”).  WHEREAS, under the terms of the Security Agreement, the Grantor has granted a  security interest in certain property, including certain Intellectual Property of the Grantor  to the Collateral Agent for the benefit of the Secured Parties, and has agreed as a condition  thereof to execute this Agreement for recording with the United States Patent and  Trademark Office and other applicable Governmental Authorities.  WHEREAS, this Agreement is supplemental to the provisions contained in the  Security Agreement and, in the event of an inconsistency among them, the Security  Agreement shall control over this Agreement.  NOW, THEREFORE, for good and valuable consideration, the receipt and  sufficiency of which are hereby acknowledged, the Grantor agrees as follows:  6. DEFINITIONS.  6.1 Terms Defined in the Security Agreement.  All capitalized terms used in this  Agreement and not otherwise defined herein shall have the meanings assigned to them in  the Security Agreement.  6.2 Certain Defined Terms.  As used in this Agreement, the following terms shall have  the following meanings:  “Assignment of Marks” has the meaning set forth in Section 2.2 herein.  

 

      “PTO” means the United States Patent and Trademark Office.  “Trademark Collateral” has the meaning set forth in Section 2.1 herein.  6.3 Rules of Construction.  Unless otherwise provided herein, the rules of construction  set forth in Section 1.2 of the Security Agreement shall be applicable to this Agreement.  7. GRANT OF SECURITY INTEREST.  7.1 Security Interest.  As collateral security for the payment and performance in full of  all of the Secured Liabilities, the Grantor hereby pledges and grants to the Collateral Agent,  for the benefit of the Secured Parties, a continuing security interest in and lien on all of the  Grantor’s right, title and interest in all Trademarks owned by the Grantor, including the  Trademarks referred to on Schedule A hereto (as such schedule may be amended or  supplemented from time to time), in each case whether now or hereafter existing or arising  or in which the Grantor now has or hereafter owns or acquires, and all rights to sue for past,  present and future infringements or dilutions thereof, and all proceeds of the foregoing,  including license fees, royalties, income, payments, claims, damages, and proceeds of suit  (collectively, the “Trademark Collateral”).   7.2 Assignment of Trademarks upon Default.  The Grantor acknowledges that the  Collateral Agent has the right, pursuant to the power of attorney granted the Collateral  Agent hereunder and under the Security Agreement, upon the occurrence and during the  continuance of an Event of Default, to execute on behalf of the Grantor an assignment of  Trademarks that constitute Trademark Collateral (each an “Assignment of Trademarks”)  for the sole purpose of effecting the Collateral Agent’s exercise of its remedies under  Section 8 of the Security Agreement.  In furtherance of the foregoing, the Grantor hereby  authorizes the Collateral Agent to complete, execute and record with the PTO an  Assignment of Trademarks on behalf of the Grantor upon the occurrence and during the  continuance of an Event of Default for the sole purpose of effecting the Collateral Agent’s  exercise of its remedies under Section 8 of the Security Agreement.  7.3 Conditional Assignment.  In addition to, and not by way of limitation of, the grant  and pledge of the Trademark Collateral provided in Section 2.1, the Grantor hereby grants,  assigns, transfers, conveys and sets over to the Collateral Agent, for the benefit of the  Secured Parties, the Grantor’s entire right, title and interest in and to the Trademark  Collateral; provided, that such grant, assignment, transfer and conveyance shall be and  become of force and effect only (a) in connection with the Collateral Agent’s exercise of  its rights and remedies in strict accordance with the terms of the Security Agreement, and  (b) upon or after the occurrence and during the continuance of an Event of Default and (c)  either (i) upon the written demand of the Collateral Agent at any time during such  continuance or (ii) immediately and automatically (without notice or action of any kind by  the Collateral Agent) upon an Event of Default for which acceleration of the payment of  the Notes is automatic under the Indenture or upon the sale or other disposition of or  foreclosure upon the Collateral pursuant to the Security Agreement and applicable law  (including the transfer or other disposition of the Collateral by the Grantor to the Collateral  Agent or its nominee in lieu of foreclosure).  

 

      7.4 Security Agreement.  Pursuant to the Security Agreement the Grantor has granted  to the Collateral Agent, for the benefit of the Secured Parties, a continuing security interest  in and lien on the Collateral (including the Trademark Collateral).  The Security  Agreement, and all rights and interests of the Collateral Agent in and to the Collateral  (including the Trademark Collateral) thereunder, are hereby ratified and confirmed in all  respects, and the Grantor hereby acknowledges and affirms that the rights and remedies of  the Collateral Agent with respect to the security interest in the Trademark Collateral  granted hereby are more fully set forth in the Security Agreement, the terms and provisions  of which are incorporated by reference herein as if fully set forth herein.  In no event shall  this Agreement, the grant, assignment, transfer and conveyance of the Trademark  Collateral hereunder, or the recordation of this Agreement (or any other document  hereunder) with the PTO, adversely affect or impair, in any way or to any extent, the  Security Agreement, the security interest of the Collateral Agent in the Collateral  (including the Trademark Collateral) pursuant to the Security Agreement, the attachment  and perfection of such security interest under the UCC (including the security interest in  the Trademark Collateral), or any present or future rights and interests of the Collateral  Agent in and to the Collateral under or in connection with the Security Agreement or the  UCC.  In the event that any provision of this Agreement is deemed to conflict with the  Security Agreement, the provisions of the Security Agreement shall control.  8. AFTER-ACQUIRED TRADEMARKS  8.1 After-acquired Trademarks.  If, after the execution of the Agreement and before the  end of the Security Period, the Grantor shall develop or acquire any new Trademarks, the  provisions of this Agreement shall automatically apply thereto.  8.2 Amendment to Schedule.  The Grantor authorizes the Collateral Agent to modify  this Agreement and the Assignments of Trademarks, without the necessity of the Grantor’s  further approval or signature, by amending Schedule A hereto and the Annex to each  Assignment of Trademarks to include any future or other Trademarks that become part of  the Trademark Collateral under Section 2 or Section 3.1.  9. GOVERNING LAW; CONSENT TO JURISDICTION.   This Agreement, the relationship between the parties hereunder and any claim or  dispute (whether sounding in contract, tort, statute or otherwise) relating to this Agreement  or that relationship shall be governed by and construed in accordance with law of the State  of New York including section 5-1401 of the New York General Obligations Law but  excluding any other conflict of law rules that would lead to the application of the law of  another jurisdiction.  If the law of a jurisdiction other than New York is, under section 1- 105(2) of the UCC, mandatorily applicable to the perfection, priority or enforcement of  any security interest granted under this Agreement in respect of any Trademark Collateral,  that other law shall apply solely to the matters of perfection, priority or enforcement to  which it is mandatorily applicable.    10. MISCELLANEOUS.   

 

      (a) Headings.  The headings of each section of this Agreement are for  convenience only and shall not define or limit the provisions thereof.  This  Agreement and all rights and obligations hereunder shall be binding upon  the Grantor and its respective successors and assigns, and shall inure to the  benefit of the Secured Parties and their respective successors and assigns.   If any term of this Agreement shall be held to be invalid, illegal or  unenforceable, the validity of all other terms hereof shall in no way be  affected thereby, and this Agreement shall be construed and be enforceable  as if such invalid, illegal or unenforceable term had not been included  herein.  The Grantor acknowledges receipt of a copy of this Agreement.  (b) Counterparts.  This Agreement may be executed in any number of  counterparts, each of which when so executed and delivered shall be deemed  an original, but all such counterparts together shall constitute but one and  the same instrument.    [Signatures begin on next page]  

 

    IN WITNESS WHEREOF, the Grantor has caused this Trademark Security and Pledge  Agreement to be executed and delivered by its duly authorized officer as of the day and year first  above written.      [                             ], as Grantor    By: ______________________________      Name:        Title:       U.S. Bank National Association, as Collateral  Agent    By:    _______________________________      Name:        Title:   

 

      Schedule A  to the Trademark Security and Pledge Agreement  (to be completed by the Grantor)    Grantor: [                        ]    United States Trademark Registrations of Grantor    Trademark  Registration No./  Application No.  Registration Date/  Application Date                                                                                                                                  

 

    EXHIBIT 3    FORM OF  COPYRIGHT SECURITY AGREEMENT  This COPYRIGHT SECURITY AGREEMENT, dated as of [            , 2021] (as  may be amended, restated, amended and restated, supplemented or otherwise modified  from time to time, this “Agreement”), is made by Vector Tobacco Inc., a Virginia  corporation (the “Grantor”) in favor of U.S. Bank National Association, as collateral agent  (in such capacity, the “Collateral Agent”) for the Noteholders (as defined in the Security  Agreement referred to below).  WHEREAS, the Grantor has guaranteed the Notes issued under the Indenture, dated  as of January 28, 2021 (as amended, supplemented, or otherwise modified from time to  time, the “Indenture”) among Vector Group Ltd. (the “Issuer”), the Grantor and certain of  the Issuer’s other direct and indirect subsidiaries and the Collateral Agent, in its capacity  as trustee thereunder.    WHEREAS, it is a condition precedent to the obligations of the Collateral Agent  under the Indenture that the Grantor shall have executed and delivered that certain Security  Agreement, dated as of January 28, 2021, in favor of the Collateral Agent (as amended,  supplemented, replaced or otherwise modified from time to time, the “Security  Agreement”).  WHEREAS, under the terms of the Security Agreement, the Grantor has granted a  security interest in certain property, including certain Intellectual Property of the Grantor  to the Collateral Agent for the benefit of the Secured Parties, and has agreed as a condition  thereof to execute this Agreement for recording with the United States Copyright Office  and other applicable Governmental Authorities.  WHEREAS, this Agreement is supplemental to the provisions contained in the  Security Agreement and, in the event of an inconsistency among them, the Security  Agreement shall control over this Agreement.  NOW, THEREFORE, for good and valuable consideration, the receipt and  sufficiency of which are hereby acknowledged, the Grantor agrees as follows:  11. DEFINITIONS  11.1 Terms Defined in the Security Agreement.  All capitalized terms used in this  Agreement and not otherwise defined herein shall have the meanings assigned to them in  the Security Agreement.  11.2 Certain Defined Terms.  As used in this Agreement, the following terms shall have  the following meanings:  “Assignment of Copyrights” has the meaning set forth in Section 2.2 herein.  “Copyright Collateral” has the meaning set forth in Section 2.1 herein.  

 

        11.3 Rules of Construction.  Unless otherwise provided herein, the rules of construction  set forth in Section 1.2 of the Security Agreement shall be applicable to this Agreement.  12. GRANT OF SECURITY INTEREST  12.1 Security Interest. As collateral security for the payment and performance in full of  all of the Secured Liabilities, the Grantor hereby pledges and grants to the Collateral Agent,  for the benefit of the Secured Parties, a continuing security interest in and lien on all of the  Grantor’s right, title and interest in, to and under the Copyrights and Copyright Licenses,  including the Copyrights and exclusive Copyright Licenses referred to on Schedule I hereto  (as such schedule may be amended or supplemented from time to time), in each case  whether presently existing or hereafter created or acquired, and all rights to sue for past,  present and future infringements thereof, and all proceeds of the foregoing, including  license fees, royalties, income, payments, claims, damages, and proceeds of suit  (collectively, the “Copyright Collateral”).  12.2 Assignment of Copyrights upon Default.  The Grantor acknowledges that the  Collateral Agent has the right, pursuant to the power of attorney granted the Collateral  Agent hereunder and under the Security Agreement, upon the occurrence and during the  continuance of an Event of Default, to execute on behalf of the Grantor an assignment of  Copyrights and Copyright Licenses that constitute Copyright Collateral (each an  “Assignment of Copyrights”) for the sole purpose of effecting the Collateral Agent’s  exercise of its remedies under Section 8 of the Security Agreement.  In furtherance of the  foregoing, the Grantor hereby authorizes the Collateral Agent to complete, execute and  record with the United States Copyright Office an Assignment of Copyrights on behalf of  the Grantor upon the occurrence and during the continuance of an Event of Default for the  sole purpose of effecting the Collateral Agent’s exercise of its remedies under Section 8 of  the Security Agreement.  12.3 Conditional Assignment.  In addition to, and not by way of limitation of, the grant  and pledge of the Copyright Collateral provided in Section 2.1, the Grantor hereby grants,  assigns, transfers, conveys and sets over to the Collateral Agent, for the benefit of the  Secured Parties, the Grantor’s entire right, title and interest in and to the Copyright  Collateral; provided, that such grant, assignment, transfer and conveyance shall be and  become of force and effect only (a) in connection with the Collateral Agent’s exercise of  its rights and remedies in strict accordance with the terms of the Security Agreement, and  (b) upon or after the occurrence and during the continuance of an Event of Default and (c)  either (i) upon the written demand of the Collateral Agent at any time during such  continuance or (ii) immediately and automatically (without notice or action of any kind by  the Collateral Agent) upon an Event of Default for which acceleration of the payment of  the Notes is automatic under the Indenture or upon the sale or other disposition of or  foreclosure upon the Collateral pursuant to the Security Agreement and applicable law  (including the transfer or other disposition of the Collateral by the  Grantor to the Collateral  Agent or its nominee in lieu of foreclosure).  12.4 Security Agreement.  Pursuant to the Security Agreement the Grantor has granted  to the Collateral Agent, for the benefit of the Secured Parties, a continuing security interest  in and lien on the Collateral (including the Copyright Collateral).  The Security Agreement,  and all rights and interests of the Collateral Agent in and to the Collateral (including the  

 

        Copyright Collateral) thereunder, are hereby ratified and confirmed in all respects, and the  Grantor hereby acknowledges and affirms that the rights and remedies of the Collateral  Agent with respect to the security interest in the Copyright Collateral granted hereby are  more fully set forth in the Security Agreement, the terms and provisions of which are  incorporated by reference herein as if fully set forth herein.  In no event shall this  Agreement, the grant, assignment, transfer and conveyance of the Copyright Collateral  hereunder, or the recordation of this Agreement (or any other document hereunder) with  the United States Copyright Office, adversely affect or impair, in any way or to any extent,  the Security Agreement, the security interest of the Collateral Agent in the Collateral  (including the Copyright Collateral) pursuant to the Security Agreement, the attachment  and perfection of such security interest under the UCC (including the security interest in  the Copyright Collateral), or any present or future rights and interests of the Collateral  Agent in and to the Collateral under or in connection with the Security Agreement or the  UCC.  In the event that any provision of this Agreement is deemed to conflict with the  Security Agreement, the provisions of the Security Agreement shall control.  13. AFTER-ACQUIRED COPYRIGHTS  13.1 After-Acquired Copyrights.  If, after the execution of the Agreement and before the  end of the Security Period, the Grantor shall develop or acquire any new Copyrights or  Copyright Licenses, the provisions of this Agreement shall automatically apply thereto.  13.2 Amendment to Schedule.  The Grantor authorizes the Collateral Agent to modify  this Agreement and the Assignment of Copyrights, without the necessity of the Grantor’s  further approval or signature, by amending Schedule I hereto and the Annex to each  Assignment of Copyrights and to include any future or other Copyrights or Copyright  Licenses that become part of the Copyright Collateral under Section 2 or Section 3.1.  14. GOVERNING LAW; CONSENT TO JURISDICTION  This Agreement, the relationship between the parties hereunder and any claim or  dispute (whether sounding in contract, tort, statute or otherwise) relating to this Agreement  or that relationship shall be governed by and construed in accordance with law of the State  of New York including section 5-1401 of the New York General Obligations Law but  excluding any other conflict of law rules that would lead to the application of the law of  another jurisdiction.  If the law of a jurisdiction other than New York is, under section 1- 105(2) of the UCC, mandatorily applicable to the perfection, priority or enforcement of  any security interest granted under this Agreement in respect of any Copyright Collateral,  that other law shall apply solely to the matters of perfection, priority or enforcement to  which it is mandatorily applicable.  15. MISCELLANEOUS.   15.1 Headings.  The headings of each section of this Agreement are for convenience  only and shall not define or limit the provisions thereof.  This Agreement and all rights and  obligations hereunder shall be binding upon the Grantor and its respective successors and  assigns, and shall inure to the benefit of the Secured Parties and their respective successors  and assigns.  If any term of this Agreement shall be held to be invalid, illegal or  unenforceable, the validity of all other terms hereof shall in no way be affected thereby,  

 

        and this Agreement shall be construed and be enforceable as if such invalid, illegal or  unenforceable term had not been included herein.  The Grantor acknowledges receipt of a  copy of this Agreement.  15.2 Counterparts.  This Agreement may be executed in any number of counterparts,  each of which when so executed and delivered shall be deemed an original, but all such  counterparts together shall constitute but one and the same instrument.  [Signatures begin on next page]  

 

    IN WITNESS WHEREOF, the Grantor has caused this Copyright Security  Agreement to be executed and delivered by its duly authorized officer as of the date first  set forth above.  [                             ],  as Grantor      By:   Name:   Title:          U.S. Bank National Association,  as Collateral Agent      By:   Name:   Title:  

 

    SCHEDULE I  to  COPYRIGHT SECURITY AGREEMENT  COPYRIGHT REGISTRATIONS AND APPLICATIONS  Registrations  Registration No. Registration Date Title        Applications  Application No. Application Date Title

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