Document:

EX-4.3 Security Agreement (Vector and U.S. Bank)

 

Exhibit 4.3

SECURITY AGREEMENT

DATED August 16, 2007

between

VECTOR TOBACCO INC.

and

U.S. BANK NATIONAL ASSOCIATION

as Collateral Agent

 

 

CONTENTS

	 	 	 	 	 	 	 
	Clause	 	 	 	Page
	1.

	 	Interpretation
	 	 	1	 
	2.

	 	Secured liabilities
	 	 	5	 
	3.

	 	Creation of security
	 	 	6	 
	4.

	 	Perfection and further assurances
	 	 	7	 
	5.

	 	Representations and warranties
	 	 	9	 
	6.

	 	Undertakings
	 	 	12	 
	7.

	 	When security becomes enforceable
	 	 	15	 
	8.

	 	Enforcement of security
	 	 	16	 
	9.

	 	Application of proceeds
	 	 	19	 
	10.

	 	Expenses and indemnity
	 	 	20	 
	11.

	 	Evidence and calculations
	 	 	21	 
	12.

	 	Changes to the parties
	 	 	21	 
	13.

	 	Miscellaneous
	 	 	21	 
	14.

	 	Severability
	 	 	22	 
	15.

	 	Release
	 	 	22	 
	16.

	 	Notices
	 	 	22	 
	17.

	 	Governing law
	 	 	23	 
	18.

	 	Enforcement
	 	 	23	 
	 

	 	SCHEDULE 1 COMMERCIAL TORT CLAIMS
	 	 	26	 
	 

	 	SCHEDULE 2 INTELLECTUAL PROPERTY
	 	 	27	 
	 

	 	SIGNATORIES
	 	 	34	 
	 

	 	EXHIBIT 1 Form of Patent Security Agreement
	 	 	36	 
	 

	 	EXHIBIT 2 Form of Trademark Security Agreement
	 	 	3	 
	 

	 	EXHIBIT 3 Form of Copyright Security Agreement
	 	 	3	 

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THIS AGREEMENT is dated August 16, 2007

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 August 16, 2007 (the
Indenture) by and among Vector Group Ltd. (Vector Group), the Guarantors party thereto and U.S.
Bank National Association, as trustee (the Trustee) under the Indenture. 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:
	 
	 	 	Affiliate means, with respect to a specified Person, any Person that, directly or
indirectly, through one or more intermediaries, controls, is controlled by, or is under
common control with, the specified Person.
	 
	 	 	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;
	 
	 	(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);

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	 	(i)	 	supporting obligations;
	 
	 	(j)	 	Intellectual Property;

	 	 	and to the extent not listed above as original 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 under applicable
federal law, (v) any aircraft or aircraft engines, (vi) any deposit accounts, (vii) any cash
and (viii) any investment property.
	 
	 	 	Copyright Licenses shall mean any and all agreements, licenses and covenants 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, without limitation,
each agreement referred to in Schedule 2 under the heading “Copyright Licenses” (as
such schedule may be amended or supplemented from time to time).
	 
	 	 	Copyrights shall mean all United States copyrights (including Community designs), including
but not limited to copyrights in software and all rights in and to databases, and all Mask
Works (as defined under 17 U.S.C. 901 of the U.S. Copyright Act), whether registered or
unregistered, moral rights, reversionary interests, termination rights, and, with respect to
any and all of the foregoing: (a) all registrations and applications therefor including,
without limitation, 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), (b) all extensions and renewals thereof, (c) all rights to sue for past,
present and future infringements thereof, and (d) all proceeds of the foregoing, including,
without limitation, licenses, royalties, income, payments, claims, damages and proceeds of
suit.
	 
	 	 	Event of Default means an event specified as such in Clause 8.1 (Events of
Default).
	 
	 	 	Finance Documents means the Indenture, all Notes issued from time to time under the
Indenture, the Purchase Agreement, the Registration Rights Agreement, this Agreement and all
other pledges, security agreements, control agreements and all other agreements and
documents entered into the connection with the transactions contemplated by the Indenture.
	 
	 	 	Guarantors means the Grantor and the other guarantors under the Indenture.

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	 	 	Intellectual Property shall mean, collectively, the Copyrights, the Copyright Licenses, the
Patents, the Patent Licenses, the Trademarks, the Trademark Licenses, the Trade Secrets, and
the Trade Secret Licenses.
	 
	 	 	Intellectual Property Licenses shall mean, collectively, the Copyright Licenses, Patent
Licenses, Trademark Licenses and Trade Secret Licenses.
	 
	 	 	Lien means any security interest, lien, mortgage, pledge, encumbrance, charge, assignment,
hypothecation, adverse claim, claim, or restriction on assignment, transfer or pledge or any
other arrangement having the effect of conferring security.
	 
	 	 	Note means any note issued from time to time under the Indenture, including any exchange
note.
	 
	 	 	Noteholder means any Person which from time to time is the holder of a Note.
	 
	 	 	Obligors means Vector Group and the Guarantors.
	 
	 	 	Patent Licenses shall mean all agreements, licenses and covenants providing for the
granting of any right in or to Patents or otherwise providing for a covenant not to sue
(whether the Grantor is licensee or licensor thereunder) including, without limitation, each
agreement referred to in Schedule 2 under the heading “Patent Licenses” (as such
schedule may be amended or supplemented from time to time).
	 
	 	 	Patents shall mean all United States patents and certificates of invention, or similar
industrial property rights, and applications for any of the foregoing, including, but not
limited to: (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), (b) all reissues, divisions, continuations, continuations-in-part,
extensions, renewals, and reexaminations thereof, (c) all inventions and improvements
described therein, (d) all rights to sue for past, present and future infringements thereof,
(e) all licenses, claims, damages, and proceeds of suit arising therefrom, and (f) all
proceeds of the foregoing, including, without limitation, licenses, royalties, income,
payments, claims, damages, and proceeds of suit.
	 
	 	 	Person means any individual, partnership, limited liability company, joint venture,
corporation, trust, unincorporated organization, government or any department or agency
thereof or any entity similar to any of the foregoing.
	 
	 	 	Secured Liabilities means each liability and obligation specified in Clause 2
(Secured Liabilities).
	 
	 	 	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. The Security Period will be extended to take into
account any extension or reinstatement of this Agreement under Clause 3.2(b)
(General).

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	 	 	Furthermore, if the Collateral Agent considers that an amount paid to it or a Noteholder
under a Finance Document is capable of being avoided or otherwise set aside on the
bankruptcy, liquidation, insolvency or administration of the payer or otherwise then that
amount will not be considered to have been irrevocably paid for the purposes of this
Agreement.
	 
	 	 	Trademark Licenses shall mean any and all agreements, licenses and covenants providing for
the granting of any right in or to Trademarks or otherwise providing for a covenant not to
sue or permitting co-existence (whether the Grantor is licensee or licensor thereunder)
including, without limitation, each agreement required to be listed in Schedule 2
under the heading “Trademark Licenses” (as such schedule may be amended or supplemented from
time to time).
	 
	 	 	Trademarks shall mean 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, other source or business identifiers, designs
and general intangibles of a like nature, all registrations and applications for any of the
foregoing including, but not limited to: (a) the registrations and applications referred to
in Schedule 2 under the heading “Trademarks” (as such schedule may be amended or
supplemented from time to time), (b) all extensions or renewals of any of the foregoing, (c)
all of the goodwill of the business connected with the use of and symbolized by the
foregoing, (d) the right to sue for past, present and future infringement or dilution of any
of the foregoing or for any injury to goodwill, and (e) all proceeds of the foregoing,
including, without limitation, licenses, royalties, income, payments, claims, damages, and
proceeds of suit.
	 
	 	 	Trade Secret Licenses shall mean any and all agreements providing for the granting of any
right in or to Trade Secrets (whether the Grantor is licensee or licensor thereunder)
including, without limitation, each agreement referred to in Schedule 2 under the
heading “Trade Secret Licenses” (as such schedule may be amended or supplemented from time
to time).
	 
	 	 	Trade Secrets shall mean all trade secrets and all other confidential or proprietary
information and know-how whether or not such Trade Secret has been reduced to a writing or
other tangible form, including all documents and things embodying, incorporating, or
referring in any way to such Trade Secret, including but not limited to: (a) the right to
sue for past, present and future misappropriation or other violation of any Trade Secret,
and (b) all proceeds of the foregoing, including, without limitation, licenses, royalties,
income, payments, claims, damages, and proceeds of suit.
	 
	 	 	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.

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	 	(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.
	 
	 	(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 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),

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	 	of the Grantor to any Noteholder 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 Financing 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 an amount which arises after a petition is filed by, or against, any
Obligor under the US Bankruptcy Code of 1978 even if the obligations do not accrue
because of the automatic stay under Section 362 of the US Bankruptcy Code of 1978 or
otherwise.

	3.	 	CREATION OF 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 Grantor grants to the
Collateral Agent for the benefit of the Noteholders a continuing security interest in 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

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	 	 	 	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 must take, at its own expense, promptly, and in any event within any applicable
time limit:

	 	(a)	 	whatever action is necessary or reasonably desirable; and
	 
	 	(b)	 	any action which the Collateral Agent may reasonably require,

	 	 	to ensure that this Security is as of the date 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 Collateral, in
all relevant jurisdictions, securing payment and performance of the Secured Liabilities.
	 
	 	 	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 think expedient.
	 
	4.2	 	Filing of financing statements

	 	(a)	 	The Grantor authorizes the Collateral Agent to prepare and file, at such
Grantor’s expense:

	 	(i)	 	financing statements describing the 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
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.

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	4.3	 	Intellectual Property Recording Requirements

	 	(a)	 	In the case of any Collateral consisting of U.S. Patents and Patent Licenses in
respect of U.S. Patents for which the Grantor is the licensee, 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 and Patent Licenses 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 and Trademark
Licenses in respect of U.S. Trademarks for which the Grantor is the licensee, 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 and Trademark Licenses 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 and
Copyright Licenses in respect of U.S. Copyrights for which the Grantor is the licensee,
the Grantor will 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 Copyright and Copyright Licenses in appropriate form for
recordation with the U.S. Copyright Office with respect to the security interest of the
Collateral Agent.

	4.4	 	Further assurances

	 	(a)	 	The Grantor must take, at its own expense, promptly, and in any event within
any applicable time limit, whatever action the Collateral Agent may reasonably require
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 this 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.

	 	 	This includes the execution and delivery of any transfer, assignment or other agreement or
document, whether to the Collateral Agent or its nominee, which the Collateral Agent may
think expedient.

	 	(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

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	 	 	 	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
	 
	5.1	 	Representations and warranties
	 
	 	 	The representations and warranties set out in this Clause are made by the Grantor to the
Collateral Agent and each Noteholder.
	 
	5.2	 	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, since its date of incorporation, April 1, 2002.
	 
	 	(c)	 	Its organizational identification number, as issued by its jurisdiction of
incorporation is 0469701-7.
	 
	 	(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.

	5.3	 	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;
	 
	 	(iii)	 	it has not agreed or committed to sell, assign, pledge,
transfer, license, lease or encumber 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.

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	 	(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.

	5.4	 	No liability

	 	(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.

	5.5	 	Consideration and solvency

	 	(a)	 	Terms used in this Clause 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.
	 
	 	(c)	 	To the best of its knowledge, the Collateral Agent and the Noteholders 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	 	Intellectual Property

	 	(a)	 	It 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

10

 

	 	 	 	supplemented from time to time), and owns or has the valid right to use and,
where the Grantor does so, sublicense others to use, all other Intellectual Property
used in or necessary to conduct its business, free and clear of all Liens, claims,
encumbrances and licenses, except for the licenses set forth on Schedule 2 (as
such schedule may be amended or supplemented from time to time).
	 
	 	(b)	 	All Intellectual Property is subsisting and has not been adjudged invalid or
unenforceable, in whole or in part, nor, in the case of Patents, is any of the
Intellectual Property 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 in full force and effect.
	 
	 	(c)	 	All Intellectual Property is valid and enforceable; no holding, decision,
ruling, or judgment has been rendered in any action or proceeding before any court or
administrative authority challenging the validity or scope of, the Grantor’s right to
register, or the Grantor’s rights to own or use, any Intellectual Property and no such
action or proceeding is pending or, to the best of the Grantor’s knowledge, threatened.
	 
	 	(d)	 	All registrations and applications for Copyright registrations, Patents and
Trademark registrations are standing in the name of the Grantor, and none of the
Trademarks, Patents, Copyrights or Trade Secrets has been licensed by any Grantor to
any Affiliate or third party, except as disclosed in Schedule 2 (as such
schedule may be amended or supplemented from time to time), and all exclusive Copyright
Licenses have been properly recorded in the U.S. Copyright Office.
	 
	 	(e)	 	The Grantor has not made a previous assignment, sale, transfer, exclusive
license or agreement constituting a present or future assignment, sale, transfer,
exclusive license or agreement of any Intellectual Property that has not been
terminated or released.
	 
	 	(f)	 	The Grantor has been using appropriate statutory notice of registration in
connection with its use of registered Trademarks, proper marking practices in
connection with the use of Patents, and appropriate notice of copyright in connection
with the publication of Copyrights.
	 
	 	(g)	 	The Grantor uses adequate 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 Trademark Collateral and has taken all action
necessary to insure that all licensees of the Trademark Collateral owned by the Grantor
use such adequate standards of quality.
	 
	 	(h)	 	The conduct of such 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; no claim has been made that the use
of any Intellectual Property owned or used by the Grantor (or any of its

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	 	 	 	respective
licensees) infringes upon, misappropriates or otherwise violates the asserted rights
of any other Person, and no demand that the Grantor enter into a license or
co-existence agreement has been made but not resolved.
	 
	 	(i)	 	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,
licensed or used by the Grantor, or any of its respective licensees.
	 
	 	(j)	 	No settlement or consents, covenants not to sue, co-existence agreements,
non-assertion assurances, or releases have been entered into by the Grantor or binds
the Grantor in a manner that could adversely affect the Grantor’s rights to own,
license or use any Intellectual Property.

	5.7	 	Times for making representations and warranties

	 	(a)	 	The representations and warranties set out in this Agreement (including in this
Clause) are made on the date of this Agreement.
	 
	 	(b)	 	Unless a representation and warranty is expressed to be given at a specific
date, all representations and warranties under this Agreement 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
Agreement will survive each issuance of Notes, the repayment of the Notes, and any
transfer or assignment of the Notes.

	6.	 	UNDERTAKINGS
	 
	6.1	 	Undertakings
	 
	 	 	The Grantor agrees to be bound by the covenants set out in this Clause.
	 
	6.2	 	The Grantor

	 	(a)	 	Except as permitted under the Indenture, the Grantor must 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 may not change the jurisdiction of its incorporation or
organization without providing the Collateral Agent with at least 30 days’ prior
written notice.

12

 

	 	(c)	 	The Grantor may not change its name without providing the Collateral Agent with
at least 30 days’ prior written notice.
	 
	 	(d)	 	The Grantor must keep at its address indicated in Clause 16 (Notices)
its corporate records and all records, documents and instruments constituting, relating
to or evidencing Collateral.
	 
	 	(e)	 	The Grantor will permit the Collateral Agent and its agents and
representatives, 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 must provide the Collateral
Agent with any information concerning the Collateral that the Collateral Agent may
reasonably request.

	6.3	 	The Collateral

	 	(a)	 	Except as expressly permitted by the Indenture or this Agreement, the Grantor:

	 	(i)	 	must maintain sole legal and beneficial ownership of the
Collateral;
	 
	 	(ii)	 	must not permit any Collateral to be subject to any Lien other
than the Collateral Agent’s security interest and must at all times warrant and
defend the Collateral Agent’s security interest in the Collateral against all
other Liens and claimants;
	 
	 	(iii)	 	must not sell, assign, transfer, pledge, license, lease or
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;
	 
	 	(iv)	 	must not waive, amend or terminate, in whole or in part, any
material accessory or ancillary right or other right in respect of any
Collateral; and
	 
	 	(v)	 	must not take any action which would result in a reduction in
the value of any Collateral.

	 	(b)	 	The Grantor must pay when due (and in any case before any penalties are
assessed or any Lien is imposed on any Collateral) all taxes, assessments and charges
imposed on or in respect of Collateral and all claims against the Collateral, including
claims for labor, materials and supplies.
	 
	 	(c)	 	In any suit, legal action, arbitration or other proceeding involving the
Collateral or the Collateral Agent’s security interest, the Grantor must 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 on any
Collateral.

13

 

	6.4	 	Intellectual Property

	 	(a)	 	It shall not do any act or omit to do any act whereby any of the Intellectual
Property which is material to the business of the Grantor or which is of material value
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.
	 
	 	(b)	 	It shall not, with respect to any Trademarks, 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 all steps necessary to insure that licensees of such Trademarks use such
consistent standards of quality.
	 
	 	(c)	 	It shall, within thirty (30) days of the creation or acquisition or exclusive
license of any Copyrightable work which is material to the business of the Grantor or
otherwise of material value, apply to register the Copyright and, in the case of an
exclusive Copyright License, record such license, in the United States Copyright
Office.
	 
	 	(d)	 	It shall promptly notify the Collateral Agent if it knows or has reason to know
that any item of Intellectual Property material to its business may become (i)
abandoned or dedicated to the public or placed in the public domain, (ii) invalid or
unenforceable, (iii) subject to any adverse determination or development (including the
institution of proceedings) in any action or proceeding in the United States Patent and
Trademark Office, the United States Copyright Office, any state registry, any foreign
counterpart of the foregoing, or any court or (iv) be the subject of any reversion or
termination rights.
	 
	 	(e)	 	It shall take all reasonable steps in the United States Patent and Trademark
Office, the United States Copyright Office to pursue any application and maintain any
registration of each Trademark, Patent, and Copyright owned by or exclusively licensed
to the Grantor which is now or shall become included in the Intellectual Property
including, but not limited to, those items on Schedule 3 (as such may be
amended or supplemented from time to time).
	 
	 	(f)	 	It shall hereafter use best efforts so as not to permit the inclusion in any
contract to which it hereafter becomes a party of any provision that could or might in
any way materially impair or prevent the creation of a security interest in, or the
assignment of, the Grantor’s rights and interests in any property included within the
definitions of any Intellectual Property acquired under such contracts.
	 
	 	(g)	 	In the event that any Intellectual Property owned by or exclusively licensed to
the Grantor is infringed, misappropriated, or diluted by a third party, the Grantor
shall promptly take all reasonable actions to stop such infringement, misappropriation,

14

 

	 	 	 	or dilution and protect its rights in such Intellectual Property including, but not
limited to, the initiation of a suit for injunctive relief and to recover damages.
	 
	 	(h)	 	It shall take all steps reasonably necessary to protect the secrecy of all
Trade Secrets, including, without limitation, entering into confidentiality agreements
with employees and consultants and labeling and restricting access to secret
information and documents.
	 
	 	(i)	 	It shall use proper statutory notice in connection with its use of any of the
Intellectual Property.
	 
	 	(j)	 	It shall continue to collect, at its own expense, all amounts due or to become
due to the Grantor in respect of the Intellectual Property or any portion thereof. In
connection with such collections, the Grantor may take (and, at the Collateral Agent’s
reasonable direction, shall take) such action as the Grantor or the Collateral Agent
may deem reasonably necessary or advisable to enforce collection of such amounts.
Notwithstanding the foregoing, the Collateral Agent shall have the right at any time,
to notify, or require the Grantor to notify, any obligors with respect to any such
amounts of the existence of the security interest created hereby.

	6.5	 	Notices

	 	(a)	 	The Grantor must 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 which could reasonably be expected to impair the Collateral Agent’s
security interest or the Collateral Agent’s rights under this Agreement or
result in the imposition of a Lien 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, must 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.

15

 

	7.	 	WHEN SECURITY BECOMES ENFORCEABLE
	 
	 	 	This Security may be enforced by the Collateral Agent at any time after an Event of Default
has occurred.
	 
	8.	 	ENFORCEMENT OF SECURITY
	 
	8.1	 	Events of Default
	 
	 	 	Each of the events set out in this Subclause is an Event of Default.

	 	(a)	 	The Grantor fails to comply with Clause 6.3(a) (The Collateral);
	 
	 	(b)	 	The Grantor fails to comply with any other term of this Agreement or any
Control Agreement unless the non-compliance:

	 	(i)	 	is capable of remedy; and
	 
	 	(ii)	 	is remedied within 14 days of the Collateral Agent giving
notice to the Grantor;

	 	(c)	 	A representation or warranty made or repeated in this Agreement or any Control
Agreement, is untrue or incorrect in any material aspect when made or deemed to be
repeated;
	 
	 	(d)	 	Any attachment, execution or levy is made in respect of material part of the
Collateral; or
	 
	 	(e)	 	An “Event of Default” (as that term is defined in the Indenture) occurs.

	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 Collateral in any manner or
order it sees fit.

	 	(b)	 	This 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;

16

 

	 	(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

	 	(a)	 	If an Event of Default occurs and is continuing, the Grantor must hold all
funds and other property received or collected in respect of the Collateral in trust
for the Collateral Agent, and must keep these funds and this other property segregated
from all other funds and property so as to be capable of identification.
	 
	 	(b)	 	The Grantor must 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.
	 
	 	(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

17

 

	 	 	 	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.
	 
	 	(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

18

 

	 	 	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 will 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 hereof 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, to the extent
assignable, an irrevocable, non-exclusive license to use, assign, 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 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 must 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 Grantor 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 Grantor.

19

 

	10.	 	EXPENSES AND INDEMNITY

	 	(a)	 	The Grantor must pay promptly on demand to the Collateral Agent all 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. This includes:

	 	(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 must indemnify and keep indemnified the Collateral Agent, the
Noteholders 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) which 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;
	 
	 	(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 will 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.

20

 

	 	(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 are 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.
	 
	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.

21

 

	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.
	 
	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, the Collateral Agent must, at the request and cost of the
Grantor, take whatever action is necessary to release 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 or by fax.
	 
	16.2	 	Contact details

	 	(a)	 	The contact details of the Grantors for this purpose are:

	 	 	 	 	 
	 	 	Vector Tobacco Inc.
	 

	 	Address:
	 	One Park Drive
	 

	 	 	 	Suite 150
	 

	 	 	 	Post Office Box 13818
	 

	 	 	 	Research Triangle Park, NC 27709
	 

	 	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:
	 	60 Livingston Avenue
	 

	 	 	 	EP-MN-WS3C
	 

	 	 	 	St. Paul, MN 55107-2292
	 

	 	Fax:
	 	(651) 495-8097
	 

	 	Attention:
	 	Rick Prokosch

22

 

	 	(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 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 Collateral Agent and the
Noteholders 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 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

23

 

	 	(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

	 	(a)	 	The Grantor irrevocably appoints CT Corporation System, 111 8th Avenue, 13th
Floor, New York, New York 10011 as its agent for service of process in relation to
proceedings before any courts located in the State of New York in connection with this
Agreement.
	 
	 	(b)	 	The Grantor agrees to maintain an agent for service of process in the State of
New York until the end of the Security Period.
	 
	 	(c)	 	The Grantor agrees that failure by a process agent to notify the Grantor of the
process will not invalidate the proceedings concerned.
	 
	 	(d)	 	The Grantor consents to the service of process relating to any proceedings by a
notice given in accordance with Clause 16 (Notices) above.
	 
	 	(e)	 	If the appointment of any person mentioned in paragraph (a) above ceases to be
effective, the Grantor must immediately appoint a further person in the State of New
York to accept service of process on its behalf in the State of New York, and, if the
Grantor does not appoint a process agent within 15 days, the Grantor authorizes the
Collateral Agent to appoint a process agent for the Grantor.

	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.

24

 

The undersigned, intending to be legally bound, have executed and delivered this Agreement on the
date stated at the beginning of this Agreement.

25

 

SCHEDULE 1

COMMERCIAL TORT CLAIMS

None.

26

 

SCHEDULE 2

INTELLECTUAL PROPERTY

Copyrights:

Registrations

	 	 	 	 	 	 	 
	Owner	 	Registration No.	 	Registration Date	 	Title
	Vector Tobacco Inc.

	 	VA-1-390-735
	 	December 22, 2005
	 	QUEST 1 CIGARETTE

PACKAGING IN BLUE

Applications:

None.

Copyright Licenses:

None.

Patents:

Registrations

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Application No.	 	Priority	 	Date	 	Filing Date	 	 
	Title	 	Country	 	Patent
No.	 	Date	 	Filed on	 	Entitled	 	Issue Date
	Modifying 

Nicotine And 

Nitrosamine 

Levels In 

Tobacco

	 	USA
	 	10/729,121
6,789,548
	 	6/8/01
	 	12/5/03
	 	6/6/02
	 	9/14/04
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Method Of 

Making A 

Smoking 

Composition

	 	USA
	 	10/007724
6,789,548
	 	11/10/00
	 	11/9/01
	 	11/9/01
	 	9/14/04
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Method Of 

Making A 

Smoking 

Composition

	 	USA
	 	10/871863
 6,959,712
	 	11/10/00
	 	6/18/04
	 	6/18/04
	 	11/1/05
	 
	 	 	 	 	 	 	 	 	 	 	 	 

27

 

Applications:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Application No.	 	 	 	 	 	 	 	 
	Title	 	Country	 	Patent No.	 	Priority Date	 	Date Filed on	 	Filing Date Entitled	 	Issue Date
	Modifying Nicotine 

And Nitrosamine 

Levels In Tobacco

	 	USA
	 	11/285,537
	 	6/8/01
	 	11/22/05
	 	6/6/02	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Modifying Nicotine 

And Nitrosamine 

Levels In Tobacco

	 	USA
	 	11/416,270
	 	6/8/01
	 	5/1/06
	 	6/6/02	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Modifying Nicotine 

And Nitrosamine 

Levels In Tobacco

	 	USA
	 	11/077,752
	 	6/8/01
	 	3/10/05
	 	6/6/02	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Modifying Nicotine 

And Nitrosamine 

Levels In Tobacco

	 	USA
	 	11/416,262
	 	6/8/01
	 	5/1/06
	 	6/6/02	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Tobacco Having
Reduced Nicotine
and Nitrosamines

	 	USA
	 	10/943346
	 	4/9/02
	 	9/17/04
	 	4/7/03	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Method Of Making A 

Smoking Composition

	 	USA
	 	11/253,430
	 	11/10/00
	 	10/19/05	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Method of Reducing
the Harmful Effects
of Orally or
Transdermally
Delivered Nicotine

	 	USA
	 	11/293,680
	 	 	 	12/2/05	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Method of Reducing
the Harmful Effects
of Orally or
Transdermally
Delivered Nicotine

	 	USA
	 	11/415,817
	 	 	 	5/02/06	 	 	 	 

28

 

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Application No.	 	 	 	 	 	 	 	 
	Title	 	Country	 	Patent No.	 	Priority Date	 	Date Filed on	 	Filing Date Entitled	 	Issue Date
	Method of Reducing
the Harmful Effects
of Orally or
Transdermally
Delivered Nicotine

	 	USA
	 	10/559,113
	 	 	 	12/2/05	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Method and
Composition for
Mentholation of
Charcoal Filtered
Cigarettes

	 	USA
	 	10/838876
	 	11/9/01
	 	5/3/04
	 	11/7/02	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Method and
Compositions for
Imparting Cooling
Effect to Tobacco
Products

	 	USA
	 	10/838872
	 	12/19/01
	 	5/3/04
	 	12/18/02	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Method and
Composition for
Mentholation of
Cigarettes

	 	USA
	 	10/838521
	 	12/19/01
	 	5/3/04
	 	12/18/02	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Tobacco Product 

Labeling System

	 	USA
	 	11/393,176
	 	10/2/03
	 	3/30/06	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Tobacco Product 

Labeling System

	 	USA
	 	11/412,492
	 	10/2/03
	 	4/27/06	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 

Patent Licenses:

None.

Trademarks:

Registrations

	 	 	 	 	 
	 	 	 	 	REGISTRATION NUMBER /
	MARK 	 	REGISTRATION DATE
	 
	 	 	 	 
	

	 	 	 	2748408

8/5/2003
	 
	 	 	 	 
	1 and Design

	 	
	 	2849708

6/1/2004
	 
	 	 	 	 
	New 1 & Design

	 	 	 	3,053,228

1/31/2006
	
	 	 	 	 

29

 

	 	 	 	 	 
	 	 	 	 	REGISTRATION NUMBER /
	MARK 	 	REGISTRATION DATE
	2 and Design

	 	
	 	2849709

6/1/2001
	 
	 	 	 	 
	New 2 & Design

	 	 	 	3,053,229

1/31/2006
	
	 	 	 	 
	 
	 	 	 	 
	3 and Design

	 	
	 	2,849,710

6/1/2004
	 
	 	 	 	 
	New 3 & Design

	 	 	 	3,053,230

1/31/2006
	
	 	 	 	 
	 
	 	 	 	 
	EAGLE 20’S

	 	 	 	1041041

6/8/1976
	 
	 	 	 	 
	EAGLE 20’s & Design

	 	 	 	1900069

6/13/1995
	
	 	 	 	 
	 
	 	 	 	 
	MAKE IT YOUR QUEST

	 	 	 	2782773

11/11/2003
	 
	 	 	 	 
	MERIDIAN & Design

	 	 	 	1863306

11/15/1994
	
	 	 	 	 
	 
	 	 	 	 
	NICOTINE FREE — SIMPLE AS 1-2-3

	 	 	 	2883026

09/07/2004
	 
	 	 	 	 
	OMNI

	 	 	 	1159377

6/30/1981
	 
	 	 	 	 
	QUEST (Stylized)

	 	 	 	2,858,950

6/29/2004
	
	 	 	 	 
	 
	 	 	 	 
	QUEST 1

	 	 	 	2837372

4/27/2004

30

 

	 	 	 	 	 
	 	 	 	 	REGISTRATION NUMBER /
	MARK 	 	REGISTRATION DATE
	QUEST 1

(Black & White Packaging)

	 	 	 	2979617

7/26/2005
	 
	
	 	 	 	 
	 
	 	 	 	 
	QUEST 1

(Blue Packaging)

	 	 	 	3,038,371

1/31/2006
	 
	
	 	 	 	 
	 
	 	 	 	 
	QUEST 1 (Green Packaging)

	 	 	 	3,091,066

5/9/2006
	
	 	 	 	 
	 
	 	 	 	 
	QUEST 2

	 	 	 	2837373

4/27/2004
	 
	 	 	 	 
	QUEST 2

(Black & White Packaging)

	 	 	 	2979618

7/26/2005
	 
	
	 	 	 	 
	 
	 	 	 	 
	QUEST 2 (Blue Packaging)

	 	 	 	3,086,264

4/25/2006
	
	 	 	 	 
	 
	 	 	 	 
	QUEST 2 (Green Packaging)

	 	 	 	3,091,067

5/9/2006
	
	 	 	 	 
	 
	 	 	 	 
	QUEST 3

	 	 	 	2837374

4/27/2004

31

 

	 	 	 	 	 
	 	 	 	 	REGISTRATION NUMBER /
	MARK 	 	REGISTRATION DATE
	QUEST 3

(Black & White Packaging)

	 	 	 	2979619

7/26/2005
	 
	
	 	 	 	 
	 
	 	 	 	 
	QUEST 3

(Blue Packaging)

	 	 	 	3,056,373

1/31/2006
	 
	
	 	 	 	 
	 
	 	 	 	 
	QUEST 3 (Green Packaging)

	 	 	 	3,071,883

3/21/2006
	
	 	 	 	 
	 
	 	 	 	 
	REDUCED CARCINOGENS. PREMIUM TASTE.

	 	 	 	2696969

3/18/2003
	 
	 	 	 	 
	SILVER EAGLE

	 	 	 	3,140,520

9/5/2006
	 
	 	 	 	 
	STEP TO NICOTINE FREE!

	 	 	 	2,875,596

8/17/2004

Applications:

	 	 	 
	 	 	APPLICATION NUMBER /
	MARK	 	APPLICATION DATE
	MONTERA

	 	78/411,476

4/30/2004
	 
	 	 
	QUEST

	 	78/718,785

9/22/2005
	 
	 	 
	QUEST

	 	78/891,393

5/24/2006
	 
	 	 

32

 

	 	 	 
	 	 	APPLICATION NUMBER /
	MARK	 	APPLICATION DATE
	V (Service Mark)

	 	78/409,580

4/28/2004
	
	 	 
	 
	 	 

Trademark Licenses:

None.

Trade Secret Licenses:

None.

33

 

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/ Francis G. Wall
 

	 	 
	 
	Name:

	 	Francis G. Wall	 	 
	 
	Title:

	 	Vice President	 	 

(Signature Page to Security Agreement — Vector Tobacco Inc.)

 

 

	 	 	 	 	 
	Collateral Agent	 	 
	 
	 	 	 	 
	U.S. BANK NATIONAL ASSOCIATION	 	 
	as Collateral Agent	 	 
	 
	 	 	 	 
	By:

	 	/s/ Richard Prokosch
 

	 	 
	 
	Name:

	 	Richard Prokosch	 	 
	 
	Title:

	 	Vice President	 	 

(Signature Page to Security Agreement — Vector Tobacco Inc.)

 

 

EXHIBIT 1

Form of Patent Security Agreement

(see attached)

 

 

FORM OF

PATENT SECURITY AND PLEDGE AGREEMENT

     This PATENT SECURITY AND PLEDGE AGREEMENT, dated as of [ • ], 2007 (as may be amended,
restated, supplemented or otherwise modified from time to time, this “Agreement”), is made
by [     ], a [       ] 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
[ • ], 2007 (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 August [ • ], 2007, 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, without limitation, certain Intellectual Property of the
Grantor to the Collateral Agent for the ratable benefit of the Noteholders, and have 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, each Grantor hereby grants to the Collateral Agent, for the
benefit of the Collateral Agent and the ratable benefit of the Noteholders, a continuing security
interest in and first priority lien on all of such Grantor’s rights, title and interests in all
Patents and Patent Licenses, including the Patents and Patent Licenses referred to on Schedule
A hereto, in each case whether now or hereafter existing or arising or in which such Grantor
now has or hereafter owns, acquires or develops an interest and wherever located (collectively, the
“Patent Collateral”).

     2.2 Assignment of Patents upon Default. Each 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 such Grantor an assignment of Patents and Patent Licenses that
constitute Patent Collateral in substantially the form of Exhibit 1 hereto (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, each
Grantor hereby authorizes the Collateral Agent to complete, execute and record with the PTO an
Assignment of Patents on behalf of such 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, each Grantor grants, assigns,
transfers, conveys and sets over to the Collateral Agent, for the benefit of the Noteholders, such
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 any Grantor to the Collateral Agent or its
nominee in lieu of foreclosure).

     2.4 Supplemental to Security Agreement. Pursuant to the Security Agreement the
Grantor has granted to the Collateral Agent, for the benefit of the Noteholders, a continuing
security interest in and first 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.
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. Any and all rights and interests of the Collateral Agent in and to
the Patent Collateral (and any and all obligations of the Grantors with respect to the Patent
Collateral) provided herein, or arising hereunder or in connection herewith, shall only supplement
and be cumulative and in addition to the rights and interests of the Collateral Agent (and the
obligations of the Grantors) in, to or with respect to the Collateral (including the Patent
Collateral) provided in or arising under or in connection with the Security Agreement and shall not
be in derogation thereof.

 

 

3.

AFTER-ACQUIRED PATENTS

     3.1 After-acquired Patents. If, after the execution of this Agreement and before the
end of the Secured Period, any Grantor shall obtain any right, title or interest in or to any new
patentable inventions or become entitled to the benefit of any Patents or Patent Licenses for any
reissue, division, or continuation, of any Patent, the provisions of this Agreement shall
automatically apply thereto and such Grantor shall promptly provide to the Collateral Agent notice
thereof in writing and execute and deliver to the Collateral Agent such documents or instruments as
the Collateral Agent may reasonably request further to implement, preserve or evidence the
Collateral Agent’s interest therein.

     3.2 Amendment to Schedule. The Grantor authorizes the Collateral Agent to modify this
Agreement and the Assignments of Patents, without the necessity of such 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 or Patent Licenses 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 Collateral Agent, the other Noteholders 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, this Patent Security and Pledge Agreement has been 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	 
	 
	 	 	 	 	 	 	 	 

 

 

Schedule A

to the Patent Security and Pledge Agreement

Pending U.S. Patent Applications of Grantor

	 	 	 	 	 
	Serial No.	 	Filing Date	 	Title
	 
	 	 	 	 

 

 

EXHIBIT 1

ASSIGNMENT OF PATENTS

     WHEREAS,                     , a                      organized and existing under the laws of the
State of                     , having a place of business at                      (the
“Assignor”), has adopted and used and is using the patents (the “Patents”)
identified on the Annex hereto, and is the owner of such Patents; and

     WHEREAS, [COLLATERAL AGENT], having a place of business at [ADDRESS] (the “Assignee”),
is desirous of acquiring the Patents;

     WHEREAS, the Assignor and the Assignee have entered into that certain Patent Collateral
Security and Pledge Agreement, dated as of [                    ] ___, 20[                    ] (as may be amended,
Patent Collateral Agreement”). Capitalized terms used and not defined herein have the
meanings given such terms in the Patent Collateral Agreement;

     NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged,
the Assignor does hereby assign, sell and transfer unto the Assignee all right, title and interest
in and to the Patents, together with (i) the Issued Patents and Patent Applications identified on
the Annex attached hereto and incorporated herein by reference, (ii) the goodwill of the business
symbolized by and associated with the Patents, and (iii) the right to sue and recover for, and the
right to profits or damages due or accrued arising out of or in connection with, any and all past,
present or future infringements of or damage or injury to the Patents or such associated goodwill.

     This Assignment of Patents is intended to and shall take effect at such time as the Assignee
shall complete this instrument by signing its acceptance of this Assignment of Patents below.

     IN WITNESS WHEREOF, the Assignor, by its duly authorized officer, has executed this
assignment, , on this ___ day of ___, 20___.

	 	 	 	 	 
	 	[                                        ]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

     The foregoing assignment of the Patents by the Assignor to the Assignee is hereby accepted as
of the ___ day of                     , 20___.

 

 

	 	 	 	 	 
	 	[COLLATERAL AGENT]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

COMMONWEALTH OR STATE OF                                                               )

) ss.

COUNTY OF                                                                                                

     On this the ___ day of                     , 20___, before me appeared                     , the person who signed this
instrument, who acknowledged that (s)he is the                      of                                         , and that being
duly authorized (s)he signed such instrument as a free act on behalf of
                                                            .

	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 

Notary Public
	 	 
	 

	 	[Seal]	 	 	 	 	 	 
	 

	 	 	 	 	 	My commission expires:	 	 

 

 

ANNEX

U.S. PATENT REGISTRATIONS AND APPLICATIONS

	 	 	 	 	 	 	 
	 	 	App. No.      	 	Patent No.	 	 
	Title	 	Filing Date	 	Issue Date	 	Security Interest
	 
	 	 	 	 	 	 

 

 

EXHIBIT 2

Form of Trademark Security Agreement

(see attached)

 

 

FORM OF

TRADEMARK SECURITY AND PLEDGE AGREEMENT

     This TRADEMARK SECURITY AND PLEDGE AGREEMENT, dated as of August [ • ], 2007 (as may be
amended, restated, supplemented or otherwise modified from time to time, this “Agreement”),
is made by [      ], a [      ] 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 August
[ • ], 2007 (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 August [ • ], 2007, 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, without limitation, certain Intellectual Property of the
Grantor to the Collateral Agent for the ratable benefit of the Noteholders, and have 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 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.

     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 pledges and grants to the Collateral Agent,
for the benefit of the Collateral Agent and the ratable benefit of the Noteholders, a continuing
security interest in and first priority lien on all of such Grantor’s rights, title and interests
in all Trademarks, Trademark Licenses, Trade Secrets and Trade Secret Licenses, including the
Trademarks, Trademark Licenses and Trade Secret Licenses 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 such Grantor now has or hereafter owns, acquires or
develops an interest and wherever located (collectively, the “Trademark Collateral”).

     2.2 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 such Grantor an assignment of Trademarks that constitute
Trademark Collateral in the form attached as Annex 1 hereto (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 such 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 Trademark Collateral provided in Section 2.1, the Grantor grants, assigns,
transfers, conveys and sets over to the Collateral Agent, for the benefit of the Noteholders, such
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).

     2.4 Supplemental to Security Agreement. Pursuant to the Security Agreement the
Grantor has granted to the Collateral Agent, for the benefit of the Noteholders, a continuing
security interest in and first 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.
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. Any and all rights and interests of the Collateral Agent in and
to the Trademark Collateral (and any and all obligations of the Grantor with respect to the
Trademark Collateral) provided herein, or arising hereunder or in connection herewith, shall only
supplement and be cumulative and in addition to the rights and interests of the Collateral Agent
(and the obligations of the Grantor) in, to or with respect to the Collateral (including the
Trademark Collateral) provided in or arising under or in connection with the Security Agreement and
shall not be in derogation thereof.

3.

AFTER-ACQUIRED TRADEMARKS

     3.1 After-acquired Trademarks. If, after the execution of the Agreement and before
the end of the Security Period, the Grantor shall obtain any right, title or interest in or to any
other or new Trademarks, Trademark Licenses, Trade Secrets or Trade Secret Licenses or become
entitled to the benefit of any Trademarks, Trademark Licenses, Trade Secrets or Trade Secret
Licenses, the provisions of this Agreement shall automatically apply thereto and such Grantor shall
promptly provide to the Collateral Agent notice thereof in writing and execute and deliver to the
Collateral Agent such documents or instruments as the Collateral Agent may reasonably request
further to implement, preserve or evidence the Collateral Agent’s interest therein.

 

 

     3.2 Amendment to Schedule. The Grantor authorizes the Collateral Agent to modify this
Agreement and the Assignments of Trademarks, without the necessity of such 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, Trademark Licenses, Trade Secrets or Trade Secret
Licenses that become part of the Trademark 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 Trademark Collateral, that other law shall apply solely to the matters of
perfection, priority or enforcement to which it is mandatorily applicable.

5.

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 Collateral Agent, the Noteholders 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, this Trademark Security and Pledge Agreement has been 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:  	 	 

 

 

ANNEX 1

ASSIGNMENT OF TRADEMARKS

     WHEREAS,                                         , a                                          organized and existing under the laws of the
State of                                         , having a place of business at                                          (the
“Assignor”), has adopted and used and is using the trademarks (the “Trademarks”)
identified on the Annex hereto, and is the owner of such Patents; and

     WHEREAS, [COLLATERAL AGENT], having a place of business at [ADDRESS] (the “Assignee”),
is desirous of acquiring the Patents;

     WHEREAS, the Assignor and the Assignee have entered into that certain Trademark Security and
Pledge Agreement, dated as of [                    ] ___, 20[___] (as may be amended, Trademark
Collateral Agreement”). Capitalized terms used and not defined herein have the meanings given
such terms in the Trademark Collateral Agreement;

     NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged,
the Assignor does hereby assign, sell and transfer unto the Assignee all right, title and interest
in and to the Patents, together with (i) the Trademarks, Trademark Licenses and Trade Secret
Licenses identified on the Annex attached hereto and incorporated herein by reference, (ii) the
goodwill of the business symbolized by and associated with the Trademarks, and (iii) the right to
sue and recover for, and the right to profits or damages due or accrued arising out of or in
connection with, any and all past, present or future infringements of or damage or injury to the
Trademarks or such associated goodwill.

     This Assignment of Trademarks is intended to and shall take effect at such time as the
Assignee shall complete this instrument by signing its acceptance of this Assignment of Trademarks
below.

 

 

     IN WITNESS WHEREOF, the Assignor, by its duly authorized officer, has executed this
assignment, on this ___ day of                     , 20___.

	 	 	 	 	 
	 	[                                        ]

 	 
	 	By:  	 	 
	 	 	      Name:  	 	 
	 	 	      Title:  	 	 
	 

     The foregoing assignment of the Trademarks by the Assignor to the Assignee is hereby accepted
as of the ___ day of                     , 20___.

 

 

	 	 	 	 	 
	 	[COLLATERAL AGENT]

 	 
	 	By:  	 	 
	 	 	      Name:  	 	 
	 	 	      Title:  	 	 
	 

COMMONWEALTH OR STATE OF                                         )

                                                                                      ) ss.

COUNTY OF                                                                                 

     On this the ___ day of                     , 20___, before me appeared                     , the person who signed this
instrument, who acknowledged that (s)he is the                      of                                         , and that being
duly authorized (s)he signed such instrument as a free act on behalf of
                                                            .

	 	 	 	 	 	 	 
	 

	 	 
	 	 

Notary Public
	 	 
	 

	 	[Seal]	 	 	 	 
	 

	 	 	 	My commission expires:	 	 

 

 

Schedule A

to the Trademark Security and Pledge Agreement

(to be completed by the Grantor)

Grantor: [                      ]

United States Trademark Registrations of Grantor

	 	 	 	 	 	 	 	 	 
	 	 	Registration No./	 	 	Registration Date/	 
	Trademark	 	Application No.	 	 	Application Date	 
	 
	 	 	 	 	 	 	 	 

 

 

EXHIBIT 3

Form of Copyright Security Agreement

(see attached)

 

 

FORM OF COPYRIGHT SECURITY AGREEMENT

          This Copyright Security Agreement, dated as of [•], 2007 (as amended, restated, amended
and restated or otherwise modified, this “Agreement”), is made by [                      ], a [         ] [corporation] [limited liability company] (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 August
[•], 2007 (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 August [•], 2007, 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, without limitation, certain Intellectual Property of the
Grantor to the Collateral Agent for the ratable benefit of the Noteholders, and have 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:

          SECTION 1. Defined Terms. Unless otherwise defined herein, terms defined in the
Security Agreement and used herein have the meaning given to them in the Security Agreement.

     “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.

          SECTION 2.

4

 

     2.1 Grant of Security Interest in Copyright Collateral. Each Grantor hereby pledges
and grants to Collateral Agent, for the benefit of the Noteholders, a security interest in all of
such Grantor’s right, title and interest in, to and under the Copyrights and Copyright Licenses,
including the Copyrights and Copyright Licenses referred to on Schedule I hereto, whether
presently existing or hereafter created or acquired (collectively, the “Copyright
Collateral”).

     2.2 Assignment of Copyrights upon Default. Each 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 such Grantor an assignment of Copyrights and Copyright
Licenses that constitute Copyright Collateral in substantially the form of Annex 1 hereto
(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, each Grantor hereby authorizes the Collateral Agent to complete, execute and record with
the United States Copyright Office an Assignment of Copyrights on behalf of such 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.

     SECTION 3. Security Agreement. The security interest granted pursuant to this
Agreement is granted in conjunction with the security interest granted to the Collateral Agent for
the Noteholders pursuant to the Security Agreement and Grantors hereby acknowledge and affirm that
the rights and remedies of the Collateral Agent with respect to the security interest in the
Copyright Collateral made and 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 the event that any provision of this Agreement is deemed to conflict with the Security
Agreement, the provisions of the Security Agreement shall control.

     SECTION 4. After-Acquired Copyrights. If, after the execution of the Agreement and
before the end of the Security Period, the Grantor shall obtain any right, title or interest in or
to any other or new Copyrights or Copyright Licenses or become entitled to the benefit of any
Copyrights or Copyright Licenses, the provisions of this Agreement shall automatically apply
thereto and such Grantor shall promptly provide to the Collateral Agent notice thereof in writing
and execute and deliver to the Collateral Agent such documents or instruments as the Collateral
Agent may reasonably request further to implement, preserve or evidence the Collateral Agent’s
interest therein.

     SECTION 5. MISCELLANEOUS

     5.1 Applicable Law. 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

5

 

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.

     5.2 Amendment to Schedule. The Grantor authorizes the Collateral Agent to modify this
Agreement, without the necessity of such Grantor’s further approval or signature, by amending
Schedule A hereto and the Annex to each Assignment of Copyrights to include any future or other
Copyrights or Copyright Licenses that become part of the Copyright Collateral under Section 2 or
Section 4.

     SECTION 6. 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.

[Remainder of page intentionally left blank]

6

 

     IN WITNESS WHEREOF, each 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

 

 

ANNEX 1

ASSIGNMENT OF COPYRIGHTS

     WHEREAS,                                         , a                      
                    organized and existing under the laws of the
State of                                         , having a place of business at                                          (the
“Assignor”), has adopted and used and is using the copyrights (the “Copyrights”)
identified on the Annex hereto, and is the owner of such Copyrights; and

     WHEREAS, [COLLATERAL AGENT], having a place of business at [ADDRESS] (the “Assignee”),
is desirous of acquiring the Copyrights;

     WHEREAS, the Assignor and the Assignee have entered into that certain Copyright Security
Agreement, dated as of [                    ] ___, 20[___] (as may be amended, Copyright Security
Agreement”). Capitalized terms used and not defined herein have the meanings given such terms
in the Copyright Security Agreement;

     NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged,
the Assignor does hereby assign, sell and transfer unto the Assignee all right, title and interest
in and to the Copyrights and Copyright Licenses, including the Copyrights and Copyright Licenses
identified on the Annex attached hereto and incorporated herein by reference.

     This Assignment of Copyrights is intended to and shall take effect at such time as the
Assignee shall complete this instrument by signing its acceptance of this Assignment of Copyrights
below.

     IN WITNESS WHEREOF, the Assignor, by its duly authorized officer, has executed this
assignment, , on this ___ day of                     , 20___.

	 	 	 	 	 
	 	[                                                            ]

 	 
	 	By:  	 	 
	 	 	      Name:  	      	 
	 	 	      Title:  	      	 
	 

     The foregoing assignment of the Copyrights by the Assignor to the Assignee is hereby accepted
as of the ___ day of                     , 20___.

 

 

	 	 	 	 	 
	 	[COLLATERAL AGENT]

 	 
	 	By:  	 	 
	 	 	      Name:  	       	 
	 	 	      Title:  	      	 
	 

COMMONWEALTH OR STATE OF                                         )

                                                                                 ) ss.

COUNTY OF                                                                      
          

     On this the ___ day of                     , 20___, before me appeared                     , the person who signed this
instrument, who acknowledged that (s)he is the                      of                                         , and that being
duly authorized (s)he signed such instrument as a free act on behalf of
                                                            .

	 	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	Notary Public
	 

	 	[Seal]	 	 
	 

	 	 	 	My commission expires:EX-4.4 Security Agreement (Liggett and Maple)

 

Exhibit 4.4

SECURITY AGREEMENT

DATED August 16, 2007

between

EACH OF THE GRANTORS PARTY HERETO

and

U.S. BANK NATIONAL ASSOCIATION

as Collateral Agent

 

 

CONTENTS

	 	 	 	 	 	 	 
	Clause	 	 	 	Page
	1.

	 	Interpretation
	 	 	1	 
	2.

	 	Secured liabilities
	 	 	6	 
	3.

	 	Creation of security
	 	 	6	 
	4.

	 	Perfection and further assurances
	 	 	7	 
	5.

	 	Representations and warranties
	 	 	9	 
	6.

	 	Undertakings
	 	 	13	 
	7.

	 	When security becomes enforceable
	 	 	16	 
	8.

	 	Enforcement of security
	 	 	16	 
	9.

	 	Application of proceeds
	 	 	20	 
	10.

	 	Expenses and indemnity
	 	 	20	 
	11.

	 	Evidence and calculations
	 	 	21	 
	12.

	 	Changes to the parties
	 	 	21	 
	13.

	 	Miscellaneous
	 	 	22	 
	14.

	 	Severability
	 	 	22	 
	15.

	 	Release
	 	 	23	 
	16.

	 	Notices
	 	 	23	 
	17.

	 	Governing law
	 	 	24	 
	18.

	 	Enforcement
	 	 	24	 
	 

	 	SCHEDULE 1 COMMERCIAL TORT
CLAIMS
	 	 	27	 
	 

	 	SCHEDULE 2 INTELLECTUAL
PROPERTY
	 	 	28	 
	 

	 	SIGNATORIES
	 	 	35	 
	 
	 	 	 	 	 	 
	 

	 	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	 	 	 	 

i

 

THIS AGREEMENT is dated August 16, 2007

BETWEEN:

	(1)	 	LIGGETT GROUP LLC, a Delaware limited liability company, and 100 MAPLE LLC, a Delaware
limited liability company, as grantors (each a Grantor and, collectively, the Grantors); 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 Grantors enter into this Agreement in connection with the Indenture dated August 16, 2007 (the
Indenture) by and among Vector Group Ltd. (Vector Group), the Guarantors party thereto and U.S.
Bank National Association, as trustee (the Trustee) under the Indenture. Pursuant to the
Indenture, Vector Group is issuing Notes and the Grantors are guaranteeing the Notes as provided in
the Indenture. The Grantors now wish to secure their obligations under the Indenture by entering
into this Agreement.

IT IS AGREED as follows:

1. INTERPRETATION

1.1 Definitions

In this Agreement:

ABL Debt has the meaning given to that term in the Intercreditor Agreement.

Affiliate means, with respect to a specified Person, any Person that, directly or
indirectly, through one or more intermediaries, controls, is controlled by, or is under
common control with, the specified Person.

The term Collateral means all personal property, wherever located, in which any Grantor now
has or later acquires any right, title or interest, including all:

	 	(a)	 	accounts;
	 
	 	(b)	 	goods (including equipment, inventory and fixtures);
	 
	 	(c)	 	health-care-insurance receivables;
	 
	 	(d)	 	instruments (including promissory notes);
	 
	 	(e)	 	documents;
	 
	 	(f)	 	letter-of-credit rights;

1

 

	 	(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;

and to the extent not listed above as original 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 a Grantor in any Affiliate of such 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 under applicable
federal law, (v) any aircraft or aircraft engines, (vi) any deposit accounts, (vii) any cash
and (viii) any investment property.

Copyright Licenses shall mean any and all agreements, licenses and covenants providing for
the granting of any right in or to Copyrights or otherwise providing for a covenant not to
sue (whether a Grantor is licensee or licensor thereunder) including, without limitation,
each agreement referred to in Schedule 2 under the heading “Copyright Licenses” (as
such schedule may be amended or supplemented from time to time).

Copyrights shall mean all United States copyrights (including Community designs), including
but not limited to copyrights in software and all rights in and to databases, and all Mask
Works (as defined under 17 U.S.C. 901 of the U.S. Copyright Act), whether registered or
unregistered, moral rights, reversionary interests, termination rights, and, with respect to
any and all of the foregoing: (a) all registrations and applications therefor including,
without limitation, 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), (b) all extensions and renewals thereof, (c) all rights to sue for past,
present and future infringements thereof, and (d) all proceeds of the foregoing, including,
without limitation, licenses, royalties, income, payments, claims, damages and proceeds of
suit.

Event of Default means an event specified as such in Clause 8.1 (Events of
Default).

Finance Documents means the Indenture, all Notes issued from time to time under the
Indenture, the Purchase Agreement, the Registration Rights Agreement, this Agreement and all
other pledges, security agreements, control agreements and all other agreements and
documents entered into the connection with the transactions contemplated by the Indenture.

2

 

First Priority Debt has the meaning given to that term in the Intercreditor Agreement.

Guarantors means the Grantors and the other guarantors under the Indenture.

Intellectual Property shall mean, collectively, the Copyrights, the Copyright Licenses, the
Patents, the Patent Licenses, the Trademarks, the Trademark Licenses, the Trade Secrets, and
the Trade Secret Licenses.

Intellectual Property Licenses shall mean, collectively, the Copyright Licenses, Patent
Licenses, Trademark Licenses and Trade Secret Licenses.

Intercreditor Agreement means that the Intercreditor and Lien Subordination Agreement dated
August 16, 2007 between Wachovia Bank, National Association and the Collateral Agent and
Liggett Group LLC.

Lien means any security interest, lien, mortgage, pledge, encumbrance, charge, assignment,
hypothecation, adverse claim, claim, or restriction on assignment, transfer or pledge or any
other arrangement having the effect of conferring security.

Note means any note issued from time to time under the Indenture, including any exchange
notes.

Noteholder means any Person which from time to time is the holder of a Note.

Obligors means Vector Group and the Guarantors.

Patent Licenses shall mean all agreements, licenses and covenants providing for the granting
of any right in or to Patents or otherwise providing for a covenant not to sue (whether a
Grantor is licensee or licensor thereunder) including, without limitation, each agreement
referred to in Schedule 2 under the heading “Patent Licenses” (as such schedule may
be amended or supplemented from time to time).

Patents shall mean all United States patents and certificates of invention, or similar
industrial property rights, and applications for any of the foregoing, including, but not
limited to: (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), (b) all reissues, divisions, continuations, continuations-in-part,
extensions, renewals, and reexaminations thereof, (c) all inventions and improvements
described therein, (d) all rights to sue for past, present and future infringements thereof,
(e) all licenses, claims, damages, and proceeds of suit arising therefrom, and (f) all
proceeds of the foregoing, including, without limitation, licenses, royalties, income,
payments, claims, damages, and proceeds of suit.

Person means any individual, partnership, limited liability company, joint venture,
corporation, trust, unincorporated organization, government or any department or agency
thereof or any entity similar to any of the foregoing.

Priority Liens means the Liens securing the First Priority Debt.

3

 

Relevant State means the state under whose laws a Grantor is incorporated or organized.

Secured Liabilities means each liability and obligation specified in Clause 2
(Secured Liabilities).

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. The Security Period will be extended to take into
account any extension or reinstatement of this Agreement under Clause 3.2(b)
(General). Furthermore, if the Collateral Agent considers that an amount paid to it or a
Noteholder under a Finance Document is capable of being avoided or otherwise set aside on
the bankruptcy, liquidation, insolvency or administration of the payer or otherwise then
that amount will not be considered to have been irrevocably paid for the purposes of this
Agreement.

Trademark Licenses shall mean any and all agreements, licenses and covenants providing for
the granting of any right in or to Trademarks or otherwise providing for a covenant not to
sue or permitting co-existence (whether a Grantor is licensee or licensor thereunder)
including, without limitation, each agreement required to be listed in Schedule 2
under the heading “Trademark Licenses” (as such schedule may be amended or supplemented from
time to time).

Trademarks shall mean 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, other source or business identifiers, designs
and general intangibles of a like nature, all registrations and applications for any of the
foregoing including, but not limited to: (a) the registrations and applications referred to
in Schedule 2 under the heading “Trademarks” (as such schedule may be amended or
supplemented from time to time), (b) all extensions or renewals of any of the foregoing, (c)
all of the goodwill of the business connected with the use of and symbolized by the
foregoing, (d) the right to sue for past, present and future infringement or dilution of any
of the foregoing or for any injury to goodwill, and (e) all proceeds of the foregoing,
including, without limitation, licenses, royalties, income, payments, claims, damages, and
proceeds of suit.

Trade Secret Licenses shall mean any and all agreements providing for the granting of any
right in or to Trade Secrets (whether a Grantor is licensee or licensor thereunder)
including, without limitation, each agreement referred to in Schedule 2 under the
heading “Trade Secret Licenses” (as such schedule may be amended or supplemented from time
to time).

Trade Secrets shall mean all trade secrets and all other confidential or proprietary
information and know-how whether or not such Trade Secret has been reduced to a writing or
other tangible form, including all documents and things embodying, incorporating, or
referring in any way to such Trade Secret, including but not limited to:

4

 

(a) the right to sue for past, present and future misappropriation or other violation of any
Trade Secret, and (b) all proceeds of the foregoing, including, without limitation,
licenses, royalties, income, payments, claims, damages, and proceeds of suit.

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 a Grantor.
	 
	 	(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 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

5

 

	 	(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 any Grantor to any Noteholder 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 Financing 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 an amount which arises after a petition is filed by, or against, any
Obligor under the US Bankruptcy Code of 1978 even if the obligations do not accrue
because of the automatic stay under Section 362 of the US Bankruptcy Code of 1978 or
otherwise.

3. CREATION OF 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 Grantors, jointly and
severally, grant to the Collateral Agent for the benefit of the Noteholders a continuing
security interest in the Collateral.

3.2 General

	 	(a)	 	All the Security created under this Agreement:

6

 

	 	(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 Grantors to the maximum extent
permitted by the fraudulent transfer laws.

4. PERFECTION AND FURTHER ASSURANCES

4.1 General perfection

Each Grantor must take, at its own expense, promptly, and in any event within any applicable
time limit:

	 	(a)	 	whatever action is necessary or reasonably desirable; and
	 
	 	(b)	 	any action which the Collateral Agent may reasonably require,

to ensure that this Security is as of the date 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 Collateral, subject to no
Liens other then Liens securing the ABL Debt and subject in priority to no Liens other than
Priority Liens, in all relevant jurisdictions, securing payment and performance of the
Secured Liabilities.

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 think expedient.

4.2 Filing of financing statements

	 	(a)	 	Each Grantor authorizes the Collateral Agent to prepare and file, at such
Grantor’s expense:

	 	(i)	 	financing statements describing the Collateral;

7

 

	 	(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, each Grantor must provide the Collateral Agent with an official report from
the Secretary of State of such Grantor’s Relevant State indicating that the Collateral
Agent’s security interest in the Collateral provided by such Grantor incorporated or
organized under the laws of such Relevant State is prior to all other security
interests or other interests reflected in the report other than Liens securing the ABL
Debt.

4.3 Intellectual Property Recording Requirements

	 	(a)	 	In the case of any Collateral consisting of U.S. Patents and Patent Licenses in
respect of U.S. Patents for which any Grantor is the licensee, such 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 and Patent Licenses 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 and Trademark
Licenses in respect of U.S. Trademarks for which any Grantor is the licensee, such
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 and Trademark Licenses 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 and
Copyright Licenses in respect of U.S. Copyrights for which any Grantor is the licensee,
such Grantor 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 Copyright and Copyright Licenses is in appropriate form for
recordation with the U.S. Copyright Office with respect to the security interest of the
Collateral Agent.

4.4 Further assurances

	 	(a)	 	The Grantors must take, at their own expense, promptly, and in any event within
any applicable time limit, whatever action the Collateral Agent may reasonably require
for:

	 	(i)	 	creating, attaching, perfecting and protecting, and maintaining
the priority of, any security interest intended to be created by this
Agreement;

8

 

	 	(ii)	 	facilitating the enforcement of this 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.

This includes the execution and delivery of any transfer, assignment or other agreement or
document, whether to the Collateral Agent or its nominee, which the Collateral Agent may
think expedient.

	 	(b)	 	Each Grantor irrevocably constitutes and appoints the Collateral Agent, with
full power of substitution, as such Grantor’s true and lawful attorney-in-fact, in such
Grantor’s name or in the Collateral Agent’s name or otherwise, and at such Grantor’s
expense, to take any of the actions referred to in paragraph (a) above without notice
to or the consent of such Grantor. This power of attorney is a power coupled with an
interest and cannot be revoked. Each Grantor 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 each Grantor to the
Collateral Agent and each Noteholder.

5.2 The Grantors

	 	(a)	 	It is organized under the laws of the state indicated in the preamble to this
Agreement.
	 
	 	(b)	 	In the case of Liggett Group LLC:

	 	(i)	 	Its exact legal name, as it appears in the public records of
its jurisdiction 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, since its date of organization,
December 13, 2005.
	 
	 	(ii)	 	Its organizational identification number, as issued by its
jurisdiction of organization is 2232980.

	 	(c)	 	In the case of 100 Maple LLC:

	 	(i)	 	Its exact legal name, as it appears in the public records of
its jurisdiction organization, is as stated in the preamble to this Agreement.
It has not changed its name, whether by amendment of its organizational
documents,

9

 

	 	 	 	reorganization, merger or otherwise, since its date of organization, May 3,
1999.

	 	(ii)	 	Its organizational identification number, as issued by its
jurisdiction of organization is 3037646.

	 	(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.

5.3 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 Liens securing the ABL Debt;
	 
	 	(iii)	 	it has not agreed or committed to sell, assign, pledge,
transfer, license, lease or encumber 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 or Liens securing the ABL
Debt.

	 	(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.

5.4 No liability

	 	(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.

10

 

5.5 Consideration and solvency

	 	(a)	 	Terms used in this Clause 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.
	 
	 	(c)	 	To the best of its knowledge, the Collateral Agent and the Noteholders 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 Intellectual Property

	 	(a)	 	It 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 owns or has the valid right to use and,
where such Grantor does so, sublicense others to use, all other Intellectual Property
used in or necessary to conduct its business, free and clear of all Liens, claims,
encumbrances and licenses, except for Liens securing the ABL Debt and the licenses set
forth on Schedule 2 (as such schedule may be amended or supplemented from time
to time).
	 
	 	(b)	 	All Intellectual Property is subsisting and has not been adjudged invalid or
unenforceable, in whole or in part, nor, in the case of Patents, is any of the
Intellectual Property the subject of a reexamination proceeding, and such 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 in full force and effect.
	 
	 	(c)	 	All Intellectual Property is valid and enforceable; no holding, decision,
ruling, or judgment has been rendered in any action or proceeding before any court or
administrative authority challenging the validity or scope of, such Grantor’s right
to register, or such Grantor’s rights to own or use, any Intellectual Property and

11

 

	 	 	 	no such action or proceeding is pending or, to the best of such Grantor’s knowledge,
threatened.
	 
	 	(d)	 	All registrations and applications for Copyright registrations, Patents and
Trademark registrations are standing in the name of such Grantor, and none of the
Trademarks, Patents, Copyrights or Trade Secrets has been licensed by any Grantor to
any Affiliate or third party, except as disclosed in Schedule 2 (as such
schedule may be amended or supplemented from time to time), and all exclusive Copyright
Licenses have been properly recorded in the U.S. Copyright Office.
	 
	 	(e)	 	Such Grantor has not made a previous assignment, sale, transfer, exclusive
license or agreement constituting a present or future assignment, sale, transfer,
exclusive license or agreement of any Intellectual Property that has not been
terminated or released.
	 
	 	(f)	 	Such Grantor has been using appropriate statutory notice of registration in
connection with its use of registered Trademarks, proper marking practices in
connection with the use of Patents, and appropriate notice of copyright in connection
with the publication of Copyrights.
	 
	 	(g)	 	Such Grantor uses adequate 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 Trademark Collateral and has taken all action
necessary to insure that all licensees of the Trademark Collateral owned by such
Grantor use such adequate standards of quality.
	 
	 	(h)	 	The conduct of such 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; no claim has been made that the use of
any Intellectual Property owned or used by such Grantor (or any of its respective
licensees) infringes upon, misappropriates or otherwise violates the asserted rights of
any other Person, and no demand that such Grantor enter into a license or co-existence
agreement has been made but not resolved.
	 
	 	(i)	 	To the best of such Grantor’s knowledge, no other Person is infringing upon,
misappropriating or otherwise violating any rights in any Intellectual Property owned,
licensed or used by such Grantor, or any of its respective licensees.
	 
	 	(j)	 	No settlement or consents, covenants not to sue, co-existence agreements,
non-assertion assurances, or releases have been entered into by such Grantor or binds
such Grantor in a manner that could adversely affect such Grantor’s rights to own,
license or use any Intellectual Property.

5.7 Times for making representations and warranties

	 	(a)	 	The representations and warranties set out in this Agreement (including in this
Clause) are made on the date of this Agreement.

12

 

	 	(b)	 	Unless a representation and warranty is expressed to be given at a specific
date, all representations and warranties under this Agreement are deemed to be repeated
by the Grantors 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 Grantors contained in this Agreement
or made by any Grantor in any certificate, notice or report delivered under this
Agreement will survive each issuance of Notes, the repayment of the Notes, and any
transfer or assignment of the Notes.

6. UNDERTAKINGS

6.1 Undertakings

The Grantors agree to be bound by the covenants set out in this Clause.

6.2 The Grantors

	 	(a)	 	Except as permitted under the Indenture, each Grantor must 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)	 	No Grantor may change the jurisdiction of its organization without providing
the Collateral Agent with at least 30 days’ prior written notice.
	 
	 	(c)	 	No Grantor may change its name without providing the Collateral Agent with at
least 30 days’ prior written notice.
	 
	 	(d)	 	Each Grantor must keep at its address indicated in Clause 16 (Notices)
its corporate records and all records, documents and instruments constituting, relating
to or evidencing Collateral.
	 
	 	(e)	 	Each Grantor will permit the Collateral Agent and its agents and
representatives, 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 such Grantor’s officers and employees.
	 
	 	(f)	 	At the Collateral Agent’s request, the Grantors must provide the Collateral
Agent with any information concerning the Collateral that the Collateral Agent may
reasonably request.

6.3 The Collateral

13

 

	 	(a)	 	Except as expressly permitted by the Indenture or this Agreement, the Grantors:

	 	(i)	 	must maintain sole legal and beneficial ownership of the
Collateral;
	 
	 	(ii)	 	must not permit any Collateral to be subject to any Lien other
than the Collateral Agent’s security interest and Liens securing the ABL Debt
and must at all times warrant and defend the Collateral Agent’s security
interest in the Collateral against all other Liens (other than Priority Liens)
and claimants;
	 
	 	(iii)	 	must 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;
	 
	 	(iv)	 	must not waive, amend or terminate, in whole or in part, any
accessory or ancillary right or other right in respect of any Collateral; and
	 
	 	(v)	 	must not take any action which would result in a reduction in
the value of any Collateral.

	 	(b)	 	The Grantors must pay when due (and in any case before any penalties are
assessed or any Lien is imposed on any Collateral) all taxes, assessments and charges
imposed on or in respect of Collateral and all claims against the Collateral, including
claims for labor, materials and supplies.
	 
	 	(c)	 	In any suit, legal action, arbitration or other proceeding involving the
Collateral or the Collateral Agent’s security interest, the Grantors must 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 on any
Collateral.

6.4 Intellectual Property

	 	(a)	 	It shall not do any act or omit to do any act whereby any of the Intellectual
Property which is material to the business of such Grantor or which is of material
value 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.
	 
	 	(b)	 	It shall not, with respect to any Trademarks, 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 such Grantor shall
take all steps necessary to insure that licensees of such Trademarks use such
consistent standards of quality.
	 
	 	(c)	 	It shall, within thirty (30) days of the creation or acquisition or exclusive
license of any Copyrightable work which is material to the business of such Grantor or
otherwise of material value, apply to register the Copyright and, in the case of an

14

 

	 	 	 	exclusive Copyright License, record such license, in the United States Copyright
Office.

	 	(d)	 	It shall promptly notify the Collateral Agent if it knows or has reason to know
that any item of Intellectual Property material to its business may become (i)
abandoned or dedicated to the public or placed in the public domain, (ii) invalid or
unenforceable, (iii) subject to any adverse determination or development (including the
institution of proceedings) in any action or proceeding in the United States Patent and
Trademark Office, the United States Copyright Office or (iv) be the subject of any
reversion or termination rights.
	 
	 	(e)	 	It shall take all reasonable steps in the United States Patent and Trademark
Office, the United States Copyright Office to pursue any application and maintain any
registration of each Trademark, Patent, and Copyright owned by or exclusively licensed
to such Grantor which is now or shall become included in the Intellectual Property
including, but not limited to, those items on Schedule 2 (as such may be
amended or supplemented from time to time).
	 
	 	(f)	 	It shall hereafter use best efforts so as not to permit the inclusion in any
contract to which it hereafter becomes a party of any provision that could or might in
any way materially impair or prevent the creation of a security interest in, or the
assignment of, such Grantor’s rights and interests in any property included within the
definitions of any Intellectual Property acquired under such contracts.
	 
	 	(g)	 	In the event that any Intellectual Property owned by or exclusively licensed to
the Grantor is infringed, misappropriated, or diluted by a third party, such Grantor
shall promptly take all reasonable actions to stop such infringement, misappropriation,
or dilution and protect its rights in such Intellectual Property including, but not
limited to, the initiation of a suit for injunctive relief and to recover damages.
	 
	 	(h)	 	It shall take all steps reasonably necessary to protect the secrecy of all
Trade Secrets, including, without limitation, entering into confidentiality agreements
with employees and consultants and labeling and restricting access to secret
information and documents.
	 
	 	(i)	 	It shall use proper statutory notice in connection with its use of any of the
Intellectual Property.
	 
	 	(j)	 	It shall continue to collect, at its own expense, all amounts due or to become
due to such Grantor in respect of the Intellectual Property or any portion thereof. In
connection with such collections, such Grantor may take (and, at the Collateral Agent’s
reasonable direction, shall take) such action as such Grantor or the Collateral Agent
may deem reasonably necessary or advisable to enforce collection of such amounts.
Notwithstanding the foregoing, the Collateral Agent shall have the right at any time,
to notify, or require such Grantor to notify, any

15

 

	 	 	 	obligors with respect to any such amounts of the existence of the security interest
created hereby.

6.5 Notices

	 	(a)	 	The Grantors must 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 any Grantor or any
Collateral which could reasonably be expected to impair the Collateral Agent’s
security interest or the Collateral Agent’s rights under this Agreement or
result in the imposition of a Lien 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, must include:

	 	(i)	 	reasonable details about the event; and
	 
	 	(ii)	 	the Grantors’ proposed course of action.

Delivery of a notice under this Clause does not affect any Grantor’s obligations to comply
with any other term of this Agreement.

7. WHEN SECURITY BECOMES ENFORCEABLE

This Security may be enforced by the Collateral Agent at any time after an Event of Default
has occurred.

8. ENFORCEMENT OF SECURITY

8.1 Events of Default

Each of the events set out in this Subclause is an Event of Default.

	 	(a)	 	Any Grantor fails to comply with Clause 6.3(a) (The Collateral);
	 
	 	(b)	 	Any Grantor fails to comply with any other term of this Agreement or any
Control Agreement unless the non-compliance:

	 	(i)	 	is capable of remedy; and
	 
	 	(ii)	 	is remedied within 14 days of the Collateral Agent giving
notice to such Grantor;

16

 

	 	(c)	 	A representation or warranty made or repeated in this Agreement or any Control
Agreement, is untrue or incorrect in any material aspect when made or deemed to be
repeated;
	 
	 	(d)	 	Any attachment, execution or levy is made in respect of any part of the
Collateral; or
	 
	 	(e)	 	An “Event of Default” (as that term is defined in the Indenture) occurs.

8.2 General

	 	(a)	 	After this Security has become enforceable, the Collateral Agent may
immediately, in its absolute discretion but subject to the Intercreditor Agreement,
exercise any right under:

	 	(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)	 	This 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;

17

 

	 	(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:

	 	(a)	 	if an Event of Default occurs and is continuing, the Grantors must hold all
funds and other property received or collected in respect of the Collateral in trust
for the Collateral Agent, and must keep these funds and this other property segregated
from all other funds and property so as to be capable of identification;
	 
	 	(b)	 	the Grantors must 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, no
Grantor may settle, compromise, adjust, discount or release any claim in respect of
Collateral, and no Grantor may accept any returns of merchandise other than in the
ordinary course of business.

8.4 Collateral Agent’s rights upon default

	 	(a)	 	Each Grantor irrevocably constitutes and appoints the Collateral Agent, with
full power of substitution, as such Grantor’s true and lawful attorney-in-fact, in such
Grantor’s name or in the Collateral Agent’s name or otherwise, and at such 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 such Grantor. This power of attorney is a power
coupled with an interest and cannot be revoked. Each Grantor ratifies and confirms all
actions taken by the Collateral Agent or its agents under this power of attorney.
	 
	 	(b)	 	The Grantors agree 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,

18

 

	 	 	 	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 Grantors bear 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 Grantors or their
respective successors and assigns.
	 
	 	(h)	 	The Grantors agree 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.
	 
	 	(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 any Grantor in any item of Collateral will:

	 	(i)	 	operate to divest such Grantor permanently and all persons
claiming under or through such Grantor of that right, title, or interest, and
	 
	 	(ii)	 	be a perpetual bar, both at law and in equity, to any claims by
such Grantor or any person claiming under or through such Grantor

with respect to that item of Collateral.

8.5 No marshaling

	 	(a)	 	The Collateral Agent need not, and the Grantors irrevocably waive and agree
that they will 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 any 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 Grantors.

19

 

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 hereof 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, to the extent
assignable, an irrevocable, non-exclusive license to use, assign, license or sublicense any
of the Intellectual Property now owned or hereafter acquired by such 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 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 must 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 Grantors or any other Person
entitled to it under applicable law.

This Clause is subject to the prior payment of First Priority Debt in accordance with the
terms of the Intercreditor Agreement and 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 Grantors, and the preceding sentence shall not
be deemed or interpreted as a waiver or modification of Clause 6.3(a) (The
Collateral).

10. EXPENSES AND INDEMNITY

	 	(a)	 	The Grantors must pay promptly on demand to the Collateral Agent all 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. This includes:

	 	(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

20

 

	 	(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 Grantors must indemnify and keep indemnified the Collateral Agent, the
Noteholders 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) which 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;
	 
	 	(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 Grantors will 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 any Grantor under this indemnity.
	 
	 	(d)	 	The obligations of the Grantors under this Clause 10 (Expenses and
Indemnity) are joint and several.
	 
	 	(e)	 	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 are conclusive
evidence of the existence and the amount of the Secured Liabilities.

12. CHANGES TO THE PARTIES

12.1 Grantors

21

 

The Grantors may not assign, delegate or transfer any of their respective 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 Grantors 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
Grantors 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.

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

22

 

	 	(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, the Collateral Agent must, at the request and cost of the
Grantors, take whatever action is necessary to release 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 or by fax.

16.2 Contact details

	 	(a)	 	The contact details of the Grantors for this purpose are:

	 	 	 	 	 
	 	 	Liggett Group LLC
	 

	 	Address:
	 	100 Maple Lane
	 

	 	 	 	Mebane, NC 27302
	 

	 	Fax:
	 	(919) 990-3505
	 

	 	Attention:
	 	John R. Long
	 
	 	 	 	 
	 	 	100 Maple LLC
	 

	 	Address:
	 	100 S. E. Second Street
	 

	 	 	 	32nd Floor
	 

	 	 	 	Miami, FL 33131
	 

	 	Fax:
	 	(919) 990-3505
	 

	 	Attention:
	 	John R. Long

23

 

	 	(b)	 	The contact details of the Collateral Agent for this purpose are:

	 	 	 	 	 
	 	 	U.S. Bank National Association
	 

	 	Address:
	 	60 Livingston Avenue
	 

	 	 	 	EP-MN-WS3C
	 

	 	 	 	St. Paul, MN 55107-2292
	 

	 	Fax:
	 	(651) 495-8097
	 

	 	Attention:
	 	Richard Prokosch

	 	(c)	 	Any party may change its contact details by giving five Business Days’ notice
to the other parties.
	 
	 	(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 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 Grantors, the Collateral Agent and the
Noteholders 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 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

24

 

	 	(a)	 	Each of the Parties agree 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 any 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

	 	(a)	 	Liggett Group LLC irrevocably appoints CT Corporation System, 111 8th Avenue,
13th Floor, New York, New York 10011 as its agent for service of process in relation to
proceedings before any courts located in the State of New York in connection with this
Agreement. 100 Maple LLC irrevocably appoints The Corporation Trust Company,
Corporation Trust Center, 1209 Orange Street, Wilmington, DE 19801 as its agent for
service of process in relation to proceedings before any courts located in the State of
New York in connection with this Agreement.
	 
	 	(b)	 	Each Grantor agrees to maintain an agent for service of process in the State of
New York until the end of the Security Period.
	 
	 	(c)	 	Each Grantor agrees that failure by a process agent to notify such Grantor of
the process will not invalidate the proceedings concerned.
	 
	 	(d)	 	Each Grantor consents to the service of process relating to any proceedings by
a notice given in accordance with Clause 16 (Notices) above.
	 
	 	(e)	 	If the appointment of any person mentioned in paragraph (a) above ceases to be
effective, any affected Grantor must immediately appoint a further person in the State
of New York to accept service of process on its behalf in the State of New York, and,
if such Grantor does not appoint a process agent within 15 days, the Grantor authorizes
the Collateral Agent to appoint a process agent for such Grantor.

25

 

	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 GRANTORS 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.

26

 

SCHEDULE 1

COMMERCIAL TORT CLAIMS

NONE.

27

 

SCHEDULE 2

INTELLECTUAL PROPERTY

COPYRIGHTS:

Registrations

Liggett Group LLC — None.

100 Maple LLC — None.

Applications

Liggett Group LLC  — None.

100 Maple LLC  — None.

COPYRIGHT LICENSES:

Liggett Group LLC — None.

100 Maple LLC — None.

PATENTS:

Registrations

Liggett Group LLC — None.

100 Maple LLC — None.

Applications

Liggett Group LLC — None.

100 Maple LLC — None.

PATENT LICENSES:

Liggett Group LLC — None.

100 Maple LLC — None.

TRADEMARKS:

Registrations

100 Maple LLC — None.

28

 

	 	 	 
	Liggett Group LLC
	 	 	REGISTRATION NUMBER /
	MARK	 	REGISTRATION DATE
	BALANCE
	 	978016
	 
	 	2/5/1974
	 
	 	 
	BECAUSE YOU’RE A WOMAN
	 	3,024,191
	 
	 	12/6/2005
	 
	 	 
	BRONSON
	 	1821601
	 
	 	2/15/1994
	 
	 	 
	CANYON
	 	2010445
	 
	 	10/22/1996
	 
	 	 
	CLASS A & Design
	 	1576705
	(Colors Blue & Gold)
	 	1/9/1990
	 
	 	 
	CLASS A & Design
	 	1576706
	(Red, Gold, & Blue)
	 	1/9/1990
	 
	 	 
	CLASS A & Design
	 	1576707
	(Colors Green, Gold & Blue)
	 	1/9/1990
	 
	 	 
	DEVON
	 	743290
	 
	 	1/8/1963
	 
	 	 
	DORADO
	 	739917
	 
	 	10/30/1962
	 
	 	 
	DORSET
	 	863406
	 
	 	1/14/1969
	 
	 	 
	DUKE
	 	652970
	 
	 	10/15/1957
	 
	 	 
	DUKE OF DURHAM
	 	652971
	 
	 	10/15/1957
	 
	 	 
	EPIC
	 	1029542
	 
	 	1/6/1976
	 
	 	 
	EVE
	 	872454
	 
	 	4/8/1969

29

 

	 	 	 
	Liggett Group LLC
	 	 	REGISTRATION NUMBER /
	MARK	 	REGISTRATION DATE
	EVE & Design
	 	1550482
	 
	 	8/1/1989
	 
	 	 
	FM
	 	734059
	 
	 	7/10/1962
	 
	 	 
	FRONTIER
	 	897238
	 
	 	8/25/1970
	 
	 	 
	GENERATION
	 	1084223
	 
	 	1/31/1978
	 
	 	 
	GOLD LEAF
	 	1233860
	 
	 	4/5/1983
	 
	 	 
	GOLD LEAF & Design
	 	1564954
	 
	 	11/7/1989
	 
	 	 
	GRAND PRIX
	 	1453454
	 
	 	8/18/1987
	 
	 	 
	JADE Holographic Label
	 	2730207
	 
	 	6/24/2003
	 
	 	 
	KING OF LOW PRICE
	 	2722518
	 
	 	6/3/2003
	 
	 	 
	KINGSPORT & Design
	 	1863305
	 
	 	11/15/1994
	 
	 	 
	Liggett Group Inc. design logo
	 	2815517
	(black/white)
	 	2/17/2004
	 
	 	 
	LIGET
	 	745060
	 
	 	1/12/1963
	 
	 	 
	LIGGETT GROUP
	 	2023349
	 
	 	12/17/1996

30

 

	 	 	 
	Liggett Group LLC
	 	 	REGISTRATION NUMBER /
	MARK	 	REGISTRATION DATE
	LIGGETT SELECT
	 	2961769
	 
	 	6/14/2005
	 
	 	 
	LOWEST PRICE FIGHTER
	 	3,259,428
	 
	 	7/03/2007
	 
	 	 
	LYRIC
	 	741833
	 
	 	12/11/1962
	 
	 	 
	M & Design
	 	3,108,068
	 
	 	6/20/2006
	 
	 	 
	MONTEGO
	 	1900071
	 
	 	6/13/1995
	 
	 	 
	OASIS
	 	658448
	 
	 	2/18/1958
	 
	 	 
	OASIS & Design
	 	657653
	 
	 	1/28/1958
	 
	 	 
	OASIS & Design
	 	664863
	 
	 	7/22/1958
	 
	 	 
	PARKWAY
	 	739918
	 
	 	10/30/1962
	 
	 	 
	PELHAM
	 	751937
	 
	 	7/2/1963
	 
	 	 
	PREMIUM TASTE THAT RULES
	 	2693292
	 
	 	3/4/2003
	 
	 	 
	PYRAMID
	 	1273822
	 
	 	4/10/1984
	 
	 	 
	Pyramid & Design
	 	1804692
	 
	 	11/16/1993
	 
	 	 

31

 

	 	 	 
	Liggett Group LLC
	 	 	REGISTRATION NUMBER /
	MARK	 	REGISTRATION DATE
	Pyramid & Design
	 	2569345
	 
	 	5/14/2002
	 
	 	 
	Q & Design
	 	1327319
	 
	 	3/26/1985
	 
	 	 
	Q QUALITY BLEND & Design
	 	1344930
	 
	 	6/25/1985
	 
	 	 
	Q QUALITY BLEND & Design Label
	 	1462175
	 
	 	10/20/1987
	 
	 	 
	QUALITY LIGHTS Leaf Design
	 	1434164
	 
	 	3/24/1987
	 
	 	 
	QUOTA
	 	897240
	 
	 	8/25/1970
	 
	 	 
	RENO
	 	1865400
	 
	 	11/29/1994
	 
	 	 
	RESPONSE
	 	1101686
	 
	 	9/5/1978
	 
	 	 
	TASTE OF AMERICA
	 	1802889
	 
	 	11/2/1993
	 
	 	 
	TASTE SHINES THROUGH
	 	2754308
	 
	 	8/19/2003
	 
	 	 
	VIRGINIA BRIGHTS
	 	133272
	 
	 	7/20/1920

32

 

Applications

100 Maple LLC — None.

	 	 	 
	Liggett Group LLC
	 	 	APPLICATION NUMBER /
	MARK	 	APPLICATION DATE
	212
	 	78586445
	 
	 	3/14/2005
	 
	 	 
	919
	 	78586436
	 
	 	3/14/2005
	 
	 	 
	APEX
	 	78559653
	 
	 	2/3/2005
	 
	 	 
	BEN’S BEST
	 	78570662
	 
	 	2/18/2005
	 
	 	 
	CALYPSO
	 	78842980
	 
	 	3/22/2006
	 
	 	 
	CANNON
	 	78586456
	 
	 	3/14/2005
	 
	 	 
	CHASSIS
	 	78559677
	 
	 	2/3/2005
	 
	 	 
	DRAFT
	 	78559754
	 
	 	2/3/2005
	 
	 	 
	DUKE’S
	 	78623173
	 
	 	5/4/2005
	 
	 	 
	DUSTERS
	 	78559758
	 
	 	2/3/2005
	 
	 	 
	FLAGSTAFF
	 	78559768
	 
	 	2/3/2005
	 
	 	 
	GOLD LEAF PACK DESIGN
	 	76679888
	 
	 	7/25/2007
	 
	 	 
	LOWEST LEGAL PRICE FIGHTER
	 	78692955
	 
	 	8/15/2005
	 
	 	 
	LUXURY FOR LESS
	 	76599950
	 
	 	6/30/2004
	 
	 	 
	RUMBLERS
	 	78560166
	 
	 	2/3/2005
	 
	 	 
	SAPPHIRE
	 	78842913
	 
	 	3/22/2006
	 
	 	 
	SANDSTONE
	 	78560180
	 
	 	2/3/2005
	 
	 	 
	STAGHORN
	 	78560192
	 
	 	2/3/2005
	 
	 	 
	STAGHORN Pack Design
	 	78599495
	 
	 	3/31/2005
	 
	 	 
	STARFIRE
	 	78561858
	 
	 	2/7/2005
	 
	 	 
	TRACERS
	 	78561880
	 
	 	2/7/2005
	 
	 	 
	TWENTY-20
	 	78561907
	 
	 	2/7/2005

33

 

	 	 	 
	Liggett Group LLC
	 	 	APPLICATION NUMBER /
	MARK	 	APPLICATION DATE
	TURN 3
	 	78561897
	 
	 	2/7/2005
	 
	 	 
	VENTURO
	 	78561940
	 
	 	2/7/2005
	 
	 	 
	WORLD CUP
	 	78791295
	 
	 	1/13/2006

TRADEMARK LICENSES:

Liggett Group LLC — None.

100 Maple LLC — None.

TRADE SECRET LICENSES:

Liggett Group LLC — None.

100 Maple LLC — None.

34

 

SIGNATORIES

          In Witness Whereof, the Grantors have caused this Security Agreement to be duly
executed by its duly authorized officer as of the day and year first above written.

Grantors

LIGGETT GROUP LLC

	 	 	 	 	 	 	 
	 

	 	By:
	 	           /s/ Ronald J. Bernstein
	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Ronald J. Bernstein	 	 
	 
	 

	 	Title:
	 	Manager/President and Chief Executive Officer	 	 

100 MAPLE LLC

	 	 	 	 	 	 	 
	 

	 	By:
	 	           /s/ Ronald J. Bernstein
	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Ronald J. Bernstein	 	 
	 
	 

	 	Title:
	 	Manager	 	 

(Signature Page to Security Agreement — Liggett Group LLC and 100 Maple LLC)

 

 

	 	 	 	 	 
	Collateral Agent
	 
	 	 	 	 
	U.S. BANK NATIONAL ASSOCIATION
	as Collateral Agent
	 
	 	 	 	 
	By:

	 	           /s/ Richard Prokosch	 	 
	 

	 	 	 	 
	Name:

	 	Richard Prokosch	 	 
	 
	Title:

	 	Vice President	 	 

(Signature Page to Security Agreement — Liggett Group LLC and 100 Maple LLC)

 

 

EXHIBIT 1

Form of Patent Security Agreement

(see attached)

 

 

FORM OF

PATENT SECURITY AND PLEDGE AGREEMENT

          This PATENT SECURITY AND PLEDGE AGREEMENT, dated as of [• ], 2007 (as may be amended,
restated, supplemented or otherwise modified from time to time, this “Agreement”), is made
by [                 ], a [                      ] limited liability company and [                      ], a [          
            ] limited liability company (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 Grantors have guaranteed the Notes issued under the Indenture, dated as of
[• ], 2007 (as amended, supplemented, or otherwise modified from time to time, the
“Indenture”) among Vector Group Ltd. (the “Issuer”), the Grantors 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 each Grantor shall have executed and delivered that certain Security Agreement,
dated as of August [ • ], 2007, 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, each Grantor has granted a security
interest in certain Property, including, without limitation, certain Intellectual Property of such
Grantor to the Collateral Agent for the ratable benefit of the Noteholders, and have 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, each Grantor hereby grants to the Collateral Agent, for the
benefit of the Collateral Agent and the ratable benefit of the Noteholders, a continuing security
interest in and lien on all of such Grantor’s rights, title and interests in all Patents and Patent
Licenses, including the Patents and Patent Licenses referred to on Schedule A hereto, in
each case whether now or hereafter existing or arising or in which such Grantor now has or
hereafter owns, acquires or develops an interest and wherever located (collectively, the
“Patent Collateral”).

          2.2 Assignment of Patents upon Default. Each 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 such Grantor an assignment of Patents and Patent Licenses that
constitute Patent Collateral in substantially the form of Exhibit 1 hereto (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, each
Grantor hereby authorizes the Collateral Agent to complete, execute and record with the PTO an
Assignment of Patents on behalf of such 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, each Grantor grants, assigns,
transfers, conveys and sets over to the Collateral Agent, for the benefit of the Noteholders, such
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 any Grantor to the Collateral Agent or its
nominee in lieu of foreclosure).

          2.4 Supplemental to Security Agreement. Pursuant to the Security Agreement the
Grantor has granted to the Collateral Agent, for the benefit of the Noteholders, 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. 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. Any and all rights and interests of the Collateral Agent in and to the
Patent Collateral (and any and all obligations of the Grantors with respect to the Patent
Collateral) provided herein, or arising hereunder or in connection herewith, shall only supplement
and be cumulative and in addition to the rights and interests of the Collateral Agent (and the
obligations of the Grantors) in, to or with respect to the Collateral (including the Patent
Collateral) provided in or arising under or in connection with the Security Agreement and shall not
be in derogation thereof.

 

 

3.

AFTER-ACQUIRED PATENTS

          3.1 After-acquired Patents. If, after the execution of this Agreement and before the
end of the Secured Period, any Grantor shall obtain any right, title or interest in or to any new
patentable inventions or become entitled to the benefit of any Patents or Patent Licenses for any
reissue, division, or continuation, of any Patent, the provisions of this Agreement shall
automatically apply thereto and such Grantor shall promptly provide to the Collateral Agent notice
thereof in writing and execute and deliver to the Collateral Agent such documents or instruments as
the Collateral Agent may reasonably request further to implement, preserve or evidence the
Collateral Agent’s interest therein.

          3.2 Amendment to Schedule. The Grantor authorizes the Collateral Agent to modify this
Agreement and the Assignments of Patents, without the necessity of such 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 or Patent Licenses 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 Collateral Agent, the other Noteholders 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, this Patent Security and Pledge Agreement has been 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

 

 

Schedule A

to the Patent Security and Pledge Agreement

Pending U.S. Patent Applications of Grantor

	 	 	 	 	 	 
	Serial No.	 	Filing Date	 	 	Title

 

 

EXHIBIT 1

ASSIGNMENT OF PATENTS

     WHEREAS,
_________, a _________ organized and existing under the laws of the
State of ___, having a place of business at _________(the
“Assignor”), has adopted and used and is using the patents (the “Patents”)
identified on the Annex hereto, and is the owner of such Patents; and

     WHEREAS, [COLLATERAL AGENT], having a place of business at [ADDRESS] (the “Assignee”),
is desirous of acquiring the Patents;

     WHEREAS, the Assignor and the Assignee have entered into that certain Patent Collateral
Security and Pledge Agreement, dated as of [___] ___, 20[___] (as may be amended,
Patent Collateral Agreement”). Capitalized terms used and not defined herein have the
meanings given such terms in the Patent Collateral Agreement;

     NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged,
the Assignor does hereby assign, sell and transfer unto the Assignee all right, title and interest
in and to the Patents, together with (i) the Issued Patents and Patent Applications identified on
the Annex attached hereto and incorporated herein by reference, (ii) the goodwill of the business
symbolized by and associated with the Patents, and (iii) the right to sue and recover for, and the
right to profits or damages due or accrued arising out of or in connection with, any and all past,
present or future infringements of or damage or injury to the Patents or such associated goodwill.

     This Assignment of Patents is intended to and shall take effect at such time as the Assignee
shall complete this instrument by signing its acceptance of this Assignment of Patents below.

     IN WITNESS WHEREOF, the Assignor, by its duly authorized officer, has executed this
assignment, , on this ___ day of ___, 20___.

	 	 	 	 	 
	 	 	[_______________]
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 	 	Title:

     The foregoing assignment of the Patents by the Assignor to the Assignee is hereby accepted as
of the ___ day of ___, 20___.

 

 

	 	 	 	 	 
	 	 	[COLLATERAL AGENT]
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 	 	Title:

	 	 	 	 	 	 	 	 	 
	COMMONWEALTH OR STATE OF	 	 	)	 	 	 
	 

	 	
 
	 	 	 	 
	 
	 	 	 	 	) ss.
	 
	COUNTY OF

	 	 	 	 	 
	 
	 	 	 	 	 	 

     On
this the ___ day of ___, 20___, before me appeared ___, the person who signed this
instrument, who acknowledged that (s)he is the ___ of ___, and that being
duly authorized (s)he signed such instrument as a free act on behalf of
___.

	 	 	 
	 	 	 
	 

	 	 
	 

	 	Notary Public
	[Seal]
	 	 
	 

	 	My commission expires:

 

 

ANNEX

U.S. PATENT REGISTRATIONS AND APPLICATIONS

	 	 	 	 	 	 	 
	 	 	App. No.	 	Patent No.	 	 
	Title	 	Filing Date	 	Issue Date	 	Security Interest

 

 

EXHIBIT 2

Form of Trademark Security Agreement

(see attached)

 

 

FORM OF

TRADEMARK SECURITY AND PLEDGE AGREEMENT

     This TRADEMARK SECURITY AND PLEDGE AGREEMENT, dated as of August [•], 2007 (as may be
amended, restated, supplemented or otherwise modified from time to time, this “Agreement”),
is made by [          ], a [          ] limited liability company and [          ], a [          ]
limited liability company (the “Grantors”) 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 Grantors have guaranteed the Notes issued under the Indenture, dated as of August
[•], 2007 (as amended, supplemented, or otherwise modified from time to time, the
“Indenture”) among Vector Group Ltd. (the “Issuer”), the Grantors 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 Grantors shall have executed and delivered that certain Security Agreement,
dated as of August [•], 2007, 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 Grantors have granted a security
interest in certain Property, including, without limitation, certain Intellectual Property of the
Grantors to the Collateral Agent for the ratable benefit of the Noteholders, and have 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 Grantors agree 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 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.

     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, each Grantor hereby pledges and grants to the Collateral Agent,
for the benefit of the Collateral Agent and the ratable benefit of the Noteholders, a continuing
security interest in and lien on all of such Grantor’s rights, title and interests in all
Trademarks, Trademark Licenses, Trade Secrets and Trade Secret Licenses, including the Trademarks,
Trademark Licenses and Trade Secret Licenses 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 such Grantor now has or hereafter owns, acquires or develops an
interest and wherever located (collectively, the “Trademark Collateral”).

     2.2 Assignment of Trademarks upon Default. Each 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 such Grantor an assignment of Trademarks that constitute
Trademark Collateral in substantially the form of Annex 1 hereto (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 such 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 Trademark Collateral provided in Section 2.1, each Grantor grants, assigns,
transfers, conveys and sets over to the Collateral Agent, for the benefit of the Noteholders, such
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).

     2.4 Supplemental to Security Agreement. Pursuant to the Security Agreement each
Grantor has granted to the Collateral Agent, for the benefit of the Noteholders, 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. 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. Any and all rights and interests of the Collateral Agent in and
to the Trademark Collateral (and any and all obligations of any Grantor with respect to the
Trademark Collateral) provided herein, or arising hereunder or in connection herewith, shall only
supplement and be cumulative and in addition to the rights and interests of the Collateral Agent
(and the obligations of any Grantor) in, to or with respect to the Collateral (including the
Trademark Collateral) provided in or arising under or in connection with the Security Agreement and
shall not be in derogation thereof.

3.

AFTER-ACQUIRED TRADEMARKS, ETC.

     3.1 After-acquired Trademarks. If, after the execution of the Agreement and before
the end of the Security Period, any Grantor shall obtain any right, title or interest in or to any
other or new Trademarks, Trademark Licenses, Trade Secrets or Trade Secret Licenses or become
entitled to the benefit of any Trademarks, Trademark Licenses, Trade Secrets or Trade Secret
Licenses, the provisions of this Agreement shall automatically apply thereto and such Grantor shall
promptly provide to the Collateral Agent notice thereof in writing and execute and deliver to the
Collateral Agent such documents or instruments as the Collateral Agent may reasonably request
further to implement, preserve or evidence the Collateral Agent’s interest therein.

 

 

     3.2 Amendment to Schedule. The Grantor authorizes the Collateral Agent to modify this
Agreement and the Assignments of Trademarks, without the necessity of such 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, Trademark Licenses, Trade Secrets or Trade Secret
Licenses that become part of the Trademark 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 Trademark Collateral, that other law shall apply solely to the matters of
perfection, priority or enforcement to which it is mandatorily applicable.

5.

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 Collateral Agent, the Noteholders 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, this Trademark Security and Pledge Agreement has been executed and
delivered by its duly authorized officer as of the day and year first above written.

	 	 	 	 	 
	 	 	[                                        ], as Grantor
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 	 	Title:
	 
	 	 	 	 
	 	 	[                                        ], as Grantor
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 	 	Title:
	 
	 	 	 	 
	 	 	U.S. Bank National Association, as Collateral
Agent
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 	 	Title:

 

 

ANNEX 1

ASSIGNMENT OF TRADEMARKS

     WHEREAS,
___, a ___ organized and existing under the laws of the
State of ___, having a place of business at
___ (the
“Assignor”), has adopted and used and is using the trademarks (the “Trademarks”)
identified on the Annex hereto, and is the owner of such Patents; and

     WHEREAS, [COLLATERAL AGENT], having a place of business at [ADDRESS] (the “Assignee”),
is desirous of acquiring the Patents;

     WHEREAS, the Assignor and the Assignee have entered into that certain Trademark Security and
Pledge Agreement, dated as of [___] ___, 20[___] (as may be amended, Trademark
Collateral Agreement”). Capitalized terms used and not defined herein have the meanings given
such terms in the Trademark Collateral Agreement;

     NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged,
the Assignor does hereby assign, sell and transfer unto the Assignee all right, title and interest
in and to the Patents, together with (i) the Trademarks, Trademark Licenses and Trade Secret
Licenses identified on the Annex attached hereto and incorporated herein by reference, (ii) the
goodwill of the business symbolized by and associated with the Trademarks, and (iii) the right to
sue and recover for, and the right to profits or damages due or accrued arising out of or in
connection with, any and all past, present or future infringements of or damage or injury to the
Trademarks or such associated goodwill.

     This Assignment of Trademarks is intended to and shall take effect at such time as the
Assignee shall complete this instrument by signing its acceptance of this Assignment of Trademarks
below.

     IN WITNESS WHEREOF, the Assignor, by its duly authorized officer, has executed this
assignment, , on this ___ day of ___, 20___.

	 	 	 	 	 
	 	 	[__________________________]
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 	 	Title:

     The foregoing assignment of the Trademarks by the Assignor to the Assignee is hereby accepted
as of the ___ day of ___, 20___.

 

 

	 	 	 	 	 
	 	 	[COLLATERAL AGENT]
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 	 	Title:

	 	 	 	 	 	 	 	 	 
	COMMONWEALTH OR STATE OF	 	 	)	 	 	 
	 

	 	
 
	 	 	 	 
	 
	 	 	 	 	) ss.
	 
	COUNTY OF

	 	 	 	 	 
	 
	 	 	 	 	 	 

     On
this the ___ day of ___, 20___, before me appeared ___, the person who signed this
instrument, who acknowledged that (s)he is the ___ of ___, and that being
duly authorized (s)he signed such instrument as a free act on behalf of
___.

	 	 	 
	 

	 	 
	 

	 	 
	 

	 	Notary Public
	     [Seal]
	 	 
	 

	 	My commission expires:

 

 

Schedule A

to the Trademark Security and Pledge Agreement

(to be completed by the Grantor)

Grantor: [                    ]

United States Trademark Registrations of [          ]

	 	 	 	 	 	 
	 	 	Registration No./	 	 	Registration Date/
	Trademark	 	Application No.	 	 	Application Date

 

 

Grantor: [                                        ]

United States Trademark Registrations of [          ]

	 	 	 	 	 	 
	 	 	Registration No./	 	 	Registration Date/
	Trademark	 	Application No.	 	 	Application Date

 

 

EXHIBIT 3

Form of Copyright Security Agreement

(see attached)

 

 

FORM OF COPYRIGHT SECURITY AGREEMENT

     This Copyright Security Agreement, dated as of [•], 2007 (as amended, restated, amended
and restated or otherwise modified, this “Agreement”), is made by [          ],
a [          ] [corporation] [limited liability company] (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 August
[•], 2007 (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 August [•], 2007, 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, without limitation, certain Intellectual Property of the
Grantor to the Collateral Agent for the ratable benefit of the Noteholders, and have 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:

          SECTION 1. Defined Terms. Unless otherwise defined herein, terms defined in the
Security Agreement and used herein have the meaning given to them in the Security Agreement.

     “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.

5

 

          SECTION 2.

          2.1 Grant of Security Interest in Copyright Collateral. Each Grantor hereby pledges
and grants to Collateral Agent, for the benefit of the Noteholders, a security interest in all of
such Grantor’s right, title and interest in, to and under the Copyrights and Copyright Licenses,
including the Copyrights and Copyright Licenses referred to on Schedule I hereto, whether
presently existing or hereafter created or acquired (collectively, the “Copyright
Collateral”).

          2.2 Assignment of Copyrights upon Default. Each 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 such Grantor an assignment of Copyrights and Copyright
Licenses that constitute Copyright Collateral in substantially the form of Annex 1 hereto
(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, each Grantor hereby authorizes the Collateral Agent to complete, execute and record with
the United States Copyright Office an Assignment of Copyrights on behalf of such 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.

          SECTION 3. Security Agreement. The security interest granted pursuant to this
Agreement is granted in conjunction with the security interest granted to the Collateral Agent for
the Noteholders pursuant to the Security Agreement and Grantors hereby acknowledge and affirm that
the rights and remedies of the Collateral Agent with respect to the security interest in the
Copyright Collateral made and 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 the event that any provision of this Agreement is deemed to conflict with the Security
Agreement, the provisions of the Security Agreement shall control.

          SECTION 4. After-Acquired Copyrights. If, after the execution of
the Agreement and before the end of the Security Period, the Grantor shall obtain any right, title
or interest in or to any other or new Copyrights or Copyright Licenses or become entitled to the
benefit of any Copyrights or Copyright Licenses, the provisions of this Agreement shall
automatically apply thereto and such Grantor shall promptly provide to the Collateral Agent notice
thereof in writing and execute and deliver to the Collateral Agent such documents or instruments as
the Collateral Agent may reasonably request further to implement, preserve or evidence the
Collateral Agent’s interest therein.

          SECTION 5. MISCELLANEOUS

          5.1 Applicable Law. 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

6

 

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.

          5.2 Amendment to Schedule. The Grantor authorizes the Collateral Agent to modify this
Agreement, without the necessity of such Grantor’s further approval or signature, by amending
Schedule A hereto and the Annex to each Assignment of Copyrights to include any future or other
Copyrights or Copyright Licenses that become part of the Copyright Collateral under Section 2 or
Section 4.

          SECTION 6. 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.

[Remainder of page intentionally left blank]

7

 

     IN WITNESS WHEREOF, each 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

 

ANNEX 1

ASSIGNMENT OF COPYRIGHTS

     WHEREAS,
___, a ___ organized and existing under the laws of the
State of ___, having a place of business at
___ (the
“Assignor”), has adopted and used and is using the copyrights (the “Copyrights”)
identified on the Annex hereto, and is the owner of such Copyrights; and

     WHEREAS, [COLLATERAL AGENT], having a place of business at [ADDRESS] (the “Assignee”),
is desirous of acquiring the Copyrights;

     WHEREAS, the Assignor and the Assignee have entered into that certain Copyright Security
Agreement, dated as of [___] ___, 20[___] (as may be amended, Copyright Security
Agreement”). Capitalized terms used and not defined herein have the meanings given such terms
in the Copyright Security Agreement;

     NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged,
the Assignor does hereby assign, sell and transfer unto the Assignee all right, title and interest
in and to the Copyrights and Copyright Licenses, including the Copyrights and Copyright Licenses
identified on the Annex attached hereto and incorporated herein by reference.

     This Assignment of Copyrights is intended to and shall take effect at such time as the
Assignee shall complete this instrument by signing its acceptance of this Assignment of Copyrights
below.

     IN WITNESS WHEREOF, the Assignor, by its duly authorized officer, has executed this
assignment, , on this ___ day of ___, 20___.

	 	 	 	 	 
	 	 	[__________________________]
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 	 	Title:

 

     The foregoing assignment of the Copyrights by the Assignor to the Assignee is hereby accepted
as of the ___ day of ___, 20___.

	 	 	 	 	 
	 	 	[COLLATERAL AGENT]
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 	 	Title:

	 	 	 	 	 	 	 	 	 
	COMMONWEALTH OR STATE OF	 	 	)	 	 	 
	 
	 	
 
	 	 	 	 
	 
	 	 	 	 	) ss.
	 
	COUNTY OF

	 	 	 	 	 
	 
	 	 	 	 	 	 

     On
this the ___ day of ___, 20___, before me appeared ___, the person who signed this
instrument, who acknowledged that (s)he is the ___ of ___, and that being
duly authorized (s)he signed such instrument as a free act on behalf of
___.

	 	 	 
	 

	 	 
	 

	 	 
	 

	 	Notary Public
	     [Seal]
	 	 
	 

	 	My commission expires:

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