Document:

Exhibit
4.14

 

EXECUTION COPY

 

STOCK PURCHASE AGREEMENT

 

dated as of 

 

February 8, 2007

 

by and between

 

MAUI ACQUISITION CORPORATION

 

and

 

HOUCHENS INDUSTRIES, INC.

 

relating to the purchase and sale

 

of

 

100 percent of the Issued and Outstanding Capital Stock

 

of

 

CBHC, INC.

 

ALLEN & OVERY

 

Allen & Overy LLP

 

 

CONTENTS

 

	
  Section

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Page

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  Definitions

  	
   

  	
  1

  	
   

  
	
   

  	
   

  	
  1.1

  	
   

  	
  Definitions

  	
   

  	
  1

  	
   

  
	
  2.

  	
   

  	
  Purchase and Sale

  	
   

  	
  9 

  	
   

  
	
   

  	
   

  	
  2.1

  	
   

  	
  Purchase and Sale

  	
   

  	
  9 

  	
   

  
	
   

  	
   

  	
  2.2

  	
   

  	
  Closing

  	
   

  	
  9

  	
   

  
	
   

  	
   

  	
  2.3

  	
   

  	
  Closing Deliveries

  	
   

  	
  9

  	
   

  
	
   

  	
   

  	
  2.4

  	
   

  	
  Calculation of Closing Date
  Amount

  	
   

  	
  10

  	
   

  
	
   

  	
   

  	
  2.5

  	
   

  	
  Closing Balance Sheet

  	
   

  	
  10

  	
   

  
	
   

  	
   

  	
  2.6

  	
   

  	
  Adjustment of Purchase Price

  	
   

  	
  11

  	
   

  
	
   

  	
   

  	
  2.7

  	
   

  	
  Purchase Price Allocation

  	
   

  	
  11

  	
   

  
	
   

  	
   

  	
  2.8

  	
   

  	
  Section 338(h)(10) Election

  	
   

  	
  12

  	
   

  
	
  3.

  	
   

  	
  Representations and Warranties
  Regarding Seller

  	
   

  	
  12

  	
   

  
	
   

  	
   

  	
  3.1

  	
   

  	
  Organization

  	
   

  	
  12

  	
   

  
	
   

  	
   

  	
  3.2

  	
   

  	
  Authority; Execution and
  Delivery; Enforceability

  	
   

  	
  12

  	
   

  
	
   

  	
   

  	
  3.3

  	
   

  	
  No Conflicts; Consents

  	
   

  	
  13

  	
   

  
	
   

  	
   

  	
  3.4

  	
   

  	
  Litigation

  	
   

  	
  13

  	
   

  
	
   

  	
   

  	
  3.5

  	
   

  	
  Compliance with Applicable
  Law

  	
   

  	
  13

  	
   

  
	
   

  	
   

  	
  3.6

  	
   

  	
  The Shares

  	
   

  	
  13

  	
   

  
	
   

  	
   

  	
  3.7

  	
   

  	
  Brokers

  	
   

  	
  14

  	
   

  
	
  4.

  	
   

  	
  Representations and Warranties
  Regarding Company and its Subsidiary

  	
   

  	
  14

  	
   

  
	
   

  	
   

  	
  4.1

  	
   

  	
  Organization; Power and
  Qualification

  	
   

  	
  14

  	
   

  
	
   

  	
   

  	
  4.2

  	
   

  	
  No Conflicts; Consents

  	
   

  	
  14

  	
   

  
	
   

  	
   

  	
  4.3

  	
   

  	
  Capitalization

  	
   

  	
  15

  	
   

  
	
   

  	
   

  	
  4.4

  	
   

  	
  Financial Statements

  	
   

  	
  15

  	
   

  
	
   

  	
   

  	
  4.5

  	
   

  	
  No Undisclosed Liabilities;
  No Off-Balance Sheet Transactions

  	
   

  	
  16

  	
   

  
	
   

  	
   

  	
  4.6

  	
   

  	
  Inventory

  	
   

  	
  16

  	
   

  
	
   

  	
   

  	
  4.7

  	
   

  	
  Accounts Receivable

  	
   

  	
  16

  	
   

  
	
   

  	
   

  	
  4.8

  	
   

  	
  Assets Other than Real
  Property Interests

  	
   

  	
  16

  	
   

  
	
   

  	
   

  	
  4.9

  	
   

  	
  Real Properties

  	
   

  	
  17

  	
   

  
	
   

  	
   

  	
  4.10

  	
   

  	
  Intellectual Property

  	
   

  	
  18

  	
   

  
	
   

  	
   

  	
  4.11

  	
   

  	
  Absence of Certain Changes

  	
   

  	
  19

  	
   

  
	
   

  	
   

  	
  4.12

  	
   

  	
  Material Contracts

  	
   

  	
  20

  	
   

  
	
   

  	
   

  	
  4.13

  	
   

  	
  Litigation

  	
   

  	
  22

  	
   

  
	
   

  	
   

  	
  4.14

  	
   

  	
  Compliance
  with Laws and Orders; Governmental Authorizations

  	
   

  	
  22

  	
   

  
	
   

  	
   

  	
  4.15

  	
   

  	
  Insurance
  Policies

  	
   

  	
  23

  	
   

  
	
   

  	
   

  	
  4.16

  	
   

  	
  Customers
  and Suppliers

  	
   

  	
  23

  	
   

  
	
   

  	
   

  	
  4.17

  	
   

  	
  Tobacco
  Matters

  	
   

  	
  23

  	
   

  
	
   

  	
   

  	
  4.18

  	
   

  	
  Employees

  	
   

  	
  24

  	
   

  
	
   

  	
   

  	
  4.19

  	
   

  	
  Labor
  Relations; Compliance

  	
   

  	
  24

  	
   

  
	
   

  	
   

  	
  4.20

  	
   

  	
  Employee
  Benefit Plans

  	
   

  	
  25

  	
   

  
	
   

  	
   

  	
  4.21

  	
   

  	
  Environmental
  Matters

  	
   

  	
  26

  	
   

  
	
   

  	
   

  	
  4.22

  	
   

  	
  Brokers

  	
   

  	
  27

  	
   

  
	
   

  	
   

  	
  4.23

  	
   

  	
  Certain
  Payments

  	
   

  	
  27

  	
   

  
	
   

  	
   

  	
  4.24

  	
   

  	
  Books and
  Records

  	
   

  	
  28

  	
   

  
	
   

  	
   

  	
  4.25

  	
   

  	
  Related
  Party Transactions

  	
   

  	
  28

  	
   

  
	
   

  	
   

  	
  4.26

  	
   

  	
  Disclosure

  	
   

  	
  28

  	
   

  

 

ii

 

	
  5.

  	
   

  	
  Representations
  and Warranties Regarding Purchaser

  	
   

  	
  28

  	
   

  
	
   

  	
   

  	
  5.1

  	
   

  	
  Organization

  	
   

  	
  28

  	
   

  
	
   

  	
   

  	
  5.2

  	
   

  	
  Authority;
  Execution and Delivery; Enforceability

  	
   

  	
  28

  	
   

  
	
   

  	
   

  	
  5.3

  	
   

  	
  No
  Conflicts; Consents

  	
   

  	
  29

  	
   

  
	
   

  	
   

  	
  5.4

  	
   

  	
  Litigation

  	
   

  	
  29

  	
   

  
	
   

  	
   

  	
  5.5

  	
   

  	
  Compliance
  with Applicable Law

  	
   

  	
  29

  	
   

  
	
   

  	
   

  	
  5.6

  	
   

  	
  Availability
  of Funds

  	
   

  	
  29

  	
   

  
	
   

  	
   

  	
  5.7

  	
   

  	
  Purchase for
  Investment

  	
   

  	
  29

  	
   

  
	
   

  	
   

  	
  5.8

  	
   

  	
  Brokers

  	
   

  	
  29

  	
   

  
	
  6.

  	
   

  	
  Additional
  Agreements

  	
   

  	
  30

  	
   

  
	
   

  	
   

  	
  6.1

  	
   

  	
  Covenants
  Relating to Conduct of Business

  	
   

  	
  30

  	
   

  
	
   

  	
   

  	
  6.2

  	
   

  	
  Stockholders
  Meeting; Voting of Seller Common Stock in Seller ESOP

  	
   

  	
  32

  	
   

  
	
   

  	
   

  	
  6.3

  	
   

  	
  No
  Solicitation

  	
   

  	
  32

  	
   

  
	
   

  	
   

  	
  6.4

  	
   

  	
  Access to Information

  	
   

  	
  33

  	
   

  
	
   

  	
   

  	
  6.5

  	
   

  	
  Confidentiality

  	
   

  	
  33

  	
   

  
	
   

  	
   

  	
  6.6

  	
   

  	
  Reasonable Best Efforts

  	
   

  	
  34

  	
   

  
	
   

  	
   

  	
  6.7

  	
   

  	
  Supplemental
  Disclosure

  	
   

  	
  35

  	
   

  
	
   

  	
   

  	
  6.8

  	
   

  	
  Post-Closing
  Cooperation

  	
   

  	
  35

  	
   

  
	
   

  	
   

  	
  6.9

  	
   

  	
  Publicity

  	
   

  	
  35

  	
   

  
	
   

  	
   

  	
  6.10

  	
   

  	
  Records

  	
   

  	
  35

  	
   

  
	
   

  	
   

  	
  6.11

  	
   

  	
  Certain Licenses and
  Permits

  	
   

  	
  36

  	
   

  
	
   

  	
   

  	
  6.12

  	
   

  	
  Further
  Assurances

  	
   

  	
  36

  	
   

  
	
   

  	
   

  	
  6.13

  	
   

  	
  Refinancing
  of Indebtedness

  	
   

  	
  36

  	
   

  
	
   

  	
   

  	
  6.14

  	
   

  	
  Declaration
  of Dividend

  	
   

  	
  36

  	
   

  
	
   

  	
   

  	
  6.15

  	
   

  	
  Solvency

  	
   

  	
  36

  	
   

  
	
  7.

  	
   

  	
  Employee
  Benefit Plan Matters

  	
   

  	
  37

  	
   

  
	
   

  	
   

  	
  7.1

  	
   

  	
  Past Service Credit

  	
   

  	
  37

  	
   

  
	
   

  	
   

  	
  7.2

  	
   

  	
  Continuation
  of Compensation and Benefits

  	
   

  	
  37

  	
   

  
	
   

  	
   

  	
  7.3

  	
   

  	
  Waiver of
  Limitations; Preexisting Conditions; Co-payments and Deductibles

  	
   

  	
  37

  	
   

  
	
   

  	
   

  	
  7.4

  	
   

  	
  Accrued
  Vacation, Holiday and Sick Pay

  	
   

  	
  37

  	
   

  
	
   

  	
   

  	
  7.5

  	
   

  	
  Seller
  ESOP

  	
   

  	
  37

  	
   

  
	
  8.

  	
   

  	
  Tax
  Matters

  	
   

  	
  38

  	
   

  
	
   

  	
   

  	
  8.1

  	
   

  	
  Tax Representations

  	
   

  	
  38

  	
   

  
	
   

  	
   

  	
  8.2

  	
   

  	
  Tax
  Covenants

  	
   

  	
  39

  	
   

  
	
   

  	
   

  	
  8.3

  	
   

  	
  Tax
  Sharing

  	
   

  	
  41

  	
   

  
	
   

  	
   

  	
  8.4

  	
   

  	
  Cooperation on
  Tax Matters

  	
   

  	
  41

  	
   

  
	
   

  	
   

  	
  8.5

  	
   

  	
  Indemnification
  by Seller

  	
   

  	
  41

  	
   

  
	
  9.

  	
   

  	
  Conditions Precedent

  	
   

  	
  43

  	
   

  
	
   

  	
   

  	
  9.1

  	
   

  	
  Conditions
  to Each Party’s Obligation

  	
   

  	
  43

  	
   

  
	
   

  	
   

  	
  9.2

  	
   

  	
  Conditions
  to Obligation of Purchaser

  	
   

  	
  43

  	
   

  
	
   

  	
   

  	
  9.3

  	
   

  	
  Conditions
  to Obligation of Seller

  	
   

  	
  44

  	
   

  
	
   

  	
   

  	
  9.4

  	
   

  	
  Frustration
  of Closing Conditions

  	
   

  	
  44

  	
   

  
	
  10.

  	
   

  	
  Termination

  	
   

  	
  44

  	
   

  
	
   

  	
   

  	
  10.1

  	
   

  	
  Termination

  	
   

  	
  44

  	
   

  
	
   

  	
   

  	
  10.2

  	
   

  	
  Termination Fee

  	
   

  	
  45

  	
   

  
	
   

  	
   

  	
  10.3

  	
   

  	
  Effect of
  Termination

  	
   

  	
  45

  	
   

  
	
  11.

  	
   

  	
  Survival; Indemnification

  	
   

  	
  46

  	
   

  
	
   

  	
   

  	
  11.1

  	
   

  	
  Survival

  	
   

  	
  46

  	
   

  
	
   

  	
   

  	
  11.2

  	
   

  	
  Indemnification

  	
   

  	
  46

  	
   

  
	
   

  	
   

  	
  11.3

  	
   

  	
  Third Party Claims

  	
   

  	
  47

  	
   

  

 

iii

 

	
   

  	
   

  	
  11.4

  	
   

  	
  Procedures

  	
   

  	
  48

  	
   

  
	
   

  	
   

  	
  11.5

  	
   

  	
  Assignment of Claims

  	
   

  	
  48

  	
   

  
	
   

  	
   

  	
  11.6

  	
   

  	
  Exclusivity

  	
   

  	
  48

  	
   

  
	
  12.

  	
   

  	
  Miscellaneous

  	
   

  	
  49

  	
   

  
	
   

  	
   

  	
  12.1

  	
   

  	
  Notices

  	
   

  	
  49

  	
   

  
	
   

  	
   

  	
  12.2

  	
   

  	
  Amendments and
  Waivers

  	
   

  	
  50

  	
   

  
	
   

  	
   

  	
  12.3

  	
   

  	
  Expenses

  	
   

  	
  50

  	
   

  
	
   

  	
   

  	
  12.4

  	
   

  	
  Successors and
  Assigns

  	
   

  	
  50

  	
   

  
	
   

  	
   

  	
  12.5

  	
   

  	
  Governing
  Law

  	
   

  	
  51

  	
   

  
	
   

  	
   

  	
  12.6

  	
   

  	
  Consent to
  Jurisdiction

  	
   

  	
  51

  	
   

  
	
   

  	
   

  	
  12.7

  	
   

  	
  WAIVER OF JURY TRIAL

  	
   

  	
  51

  	
   

  
	
   

  	
   

  	
  12.8

  	
   

  	
  Counterparts;
  Third Party Beneficiaries

  	
   

  	
  51

  	
   

  
	
   

  	
   

  	
  12.9

  	
   

  	
  Severability

  	
   

  	
  52

  	
   

  
	
   

  	
   

  	
  12.10

  	
   

  	
  Entire Agreement

  	
   

  	
  52

  	
   

  
	
   

  	
   

  	
  12.11

  	
   

  	
  Headings
  and Captions; Exhibits and Schedules

  	
   

  	
  52

  	
   

  
	
   

  	
   

  	
  12.12

  	
   

  	
  Disclosure
  Schedules

  	
   

  	
  52

  	
   

  
	
   

  	
   

  	
  12.13

  	
   

  	
  Equitable Relief

  	
   

  	
  52

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT A

  	
  —

  	
  Form of Parent Guarantee

  	
   

  	
   

  	
   

  
	
  EXHIBIT B

  	
  —

  	
  Form of Support Agreement

  	
   

  	
   

  	
   

  
	
  EXHIBIT C

  	
  —

  	
  Agreed Accounting Principles

  	
   

  	
   

  	
   

  
	
  EXHIBIT D

  	
  —

  	
  Form of Opinion of Wyatt Tarrant
  & Combs LLP

  	
   

  	
   

  	
   

  

 

iv

 

STOCK PURCHASE AGREEMENT dated as of February 8, 2007 (this Agreement) by and between MAUI
ACQUISITION CORPORATION, a corporation formed under Laws of the
State of Delaware (Purchaser),
and HOUCHENS INDUSTRIES,
INC., a corporation formed under the Laws of the Commonwealth of
Kentucky (Seller).

 

WITNESSETH:

 

WHEREAS:

 

(1)                                 Seller owns all of the issued and outstanding
capital stock of CBHC, Inc., a corporation incorporated under the Laws of the
Commonwealth of Kentucky (Company),
which issued and outstanding capital stock consists solely of
the Shares;

 

(2)                                 Purchaser desires to purchase the Shares from
Seller, and Seller desires to sell the Shares to Purchaser, upon the terms and
subject to the conditions set forth in this Agreement;

 

(3)                                 Concurrently with the execution and delivery
of this Agreement, and as a condition to Seller’s willingness to enter into
this Agreement, Imperial Tobacco Group PLC, a public limited company organized
under the Laws of England & Wales and indirect parent of Purchaser (Parent), has agreed to fully and
unconditionally guarantee the performance by Purchaser of its obligations under
this Agreement (the Parent Guarantee), substantially
in the form attached as Exhibit A; and

 

(4)                                 Concurrently with the execution and delivery
of this Agreement, and as a condition to Purchaser’s willingness to enter into
this Agreement, the ESOP Committee of the Seller ESOP (the ESOP Committee)  has entered into an
agreement with Purchaser substantially in the form attached as Exhibit B
(the Support Agreement)  pursuant
to which, among other things, the ESOP Committee has agreed to take all lawful
actions to cause the ESOP Trustees to vote all unallocated shares of Seller
Common Stock held in the Seller ESOP together with all allocated shares of
Seller Common Stock with respect to which the ESOP Trustees do not receive
direction as to how such should be voted at the Stockholders Meeting in favor
of approval of the Transactions.

 

NOW, THEREFORE, the Parties agree as follows:

 

1.                                      DEFINITIONS

 

1.1                               Definitions

 

(a)                                  The following terms, as used in this
Agreement, have the following meanings:

 

Adjusted 2006 MSA Payment Amount means the actual payments to be made by
Company and its Subsidiary pursuant to the MSA for the calendar year 2006, minus Seventeen Million Sixty-Six Thousand
Seven Hundred and Fifty-Eight U.S. Dollars (U.S.$17,066,758).

 

Adjusted Purchase Price means the Purchase Price plus the Stockholders’ Equity Adjustment
Amount plus the MSA Adjustment
Amount.

 

Adjustment Amount means (i) the amount by which the Adjusted Purchase Price exceeds the
Closing Date Amount, in which case the Adjustment Amount shall be a positive
number, or (ii) the amount by which the Closing Date Amount exceeds the
Adjusted Purchase Price, in which case the Adjustment Amount shall be a
negative number.

 

1

 

Affected
Employee means each individual who is employed by Company or
its Subsidiary on the Closing Date, including any such individuals on approved
leave of absence (including maternity and paternity leave, vacation, sick
leave, short-term or long-term disability, military leave, jury duty and death
leave).

 

Affiliate means, with respect to any Person, any other Person (i) directly or
indirectly controlling such first Person, (ii) directly or indirectly
controlled by such first Person or (iii) under common control with such first
Person.

 

Agreed Accounting Principles means the accounting principles set forth on Exhibit
C.

 

Balance Sheet Date means September 30, 2006.

 

Business Day means any day except a Saturday, Sunday or any day on which banks are
not generally open for business in New York, New York or London, England.

 

Closing Date means the date of the Closing.

 

Closing Date Amount means the Purchase Price plus the
Estimated Closing Stockholders’ Equity Adjustment Amount plus the Estimated MSA Adjustment Amount.

 

Closing Stockholders’ Equity means the consolidated stockholders’ equity
of Company as of immediately prior to the Effective Time and without giving
effect to the Closing.

 

Closing Stockholders’ Equity Adjustment Amount means the Closing Stockholders’ Equity
Adjustment Amount as shown on the Closing Statement.

 

Code means
the United States Internal Revenue Code of 1986, as amended.

 

Common Stock means the common stock, no par value, of Company.

 

Consent means any approval, consent, authorization, waiver, notice, filing or
exemption to from or with respect to a specified action.

 

Control means, when used with respect to a specified Person, the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by Contract or otherwise.

 

Contract means any contract, agreement, indenture, note, bond, loan, instrument,
lease, conditional sale contract, purchase or sales order, mortgage, license,
franchise, insurance policy, undertaking, commitment or other enforceable
arrangement or agreement, whether written or oral.

 

Disclosure Schedules means the Disclosure Schedules dated the date
of this Agreement (as the same may be supplemented or updated pursuant to Section
6.6) prepared by Seller and delivered to Purchaser and appended to, and
forming a part of, this Agreement.

 

Employee Plan means any employment, severance or similar Contract or arrangement
(whether or not written) or any plan, policy, fund, program or Contract or
arrangement (whether or not written) providing for compensation, bonus,
profit-sharing, stock option, or other stock related rights or other forms of
incentive or deferred compensation, vacation benefits, insurance coverage
(including any self-insured arrangements), health or medical benefits,
disability benefits, workers’ compensation, supplemental unemployment benefits,
severance benefits and post-employment or retirement benefits

 

2

 

(including
compensation, pension, health, medical or life insurance or other benefits)
that (i) is entered into, maintained, administered or contributed to, as the
case may be, by Company or its Subsidiary and covers any current or former
employee, officer or director of Company Subsidiary or (ii) with respect to
which Company or its Subsidiary could have any liability. For the avoidance of
doubt, the term Employee Plan shall
not include the Seller ESOP.

 

Environmental Laws means any and all Laws relating to the environment (including ambient
air, indoor air, water vapor, surface water, groundwater, wetlands, drinking
water supply, land surface or subsurface strata and biota), natural resources,
human and occupational health and safety or Hazardous Substances.

 

ERISA means
the Employee Retirement Income Security Act of 1974, as amended, and the rules
and regulations promulgated thereunder.

 

ERISA Affiliate of any Person means any other Person that, together with such Person,
is, or was at the relevant time, (i) treated as a single employer under
Section 414 of the Code or (ii) a member of the same “controlled group” as the
first entity pursuant to Section 4001(a)(14) of ERISA.

 

ESOP Trustees means Ruell Houchens, Noel Hunt and Jimmie Gipson.

 

Estimated Closing Stockholders’ Equity means an estimate of Closing Stockholders’
Equity as shown on the Estimated Closing Statement.

 

Estimated Closing Stockholders’ Equity Adjustment Amount means an estimate of the Stockholders’ Equity
Adjustment Amount as shown on the Estimated Closing Statement.

 

Estimated MSA Adjustment Amount means an estimate of the MSA Adjustment
Amount as shown on the Estimated Closing Statement.

 

Final Adjustment Amount means the Adjustment Amount (i) as shown on
the Closing Statement delivered pursuant to Section 2.5(a), if no notice
of disagreement with respect thereto is duly delivered pursuant to Section
2.5(b), or (ii) if such a notice of disagreement is delivered (A) as agreed
by Purchaser and Seller pursuant to Section 2.5(c) or (B) in the absence
of such agreement, as shown in the Independent Accountants’ calculation
delivered pursuant to Section 2.5(c).

 

Final Adjusted Purchase Price means the Adjusted Purchase Price (i) as
shown on the Closing Statement delivered pursuant to Section 2.5(a), if
no notice of disagreement with respect thereto is duly delivered pursuant to Section
2.5(b), or (ii) if such a notice of disagreement is delivered, (A) as agreed
by Purchaser and Seller pursuant to Section 2.5(c) or (B) in the absence
of such agreement, as shown in the Independent Accountants’ calculation
delivered pursuant to Section 2.5(c); provided
that in no event shall the Final Adjusted Purchase Price be less
than Purchaser’s calculation of Adjusted Purchase Price as shown on the Closing
Statement delivered pursuant to Section 2.5(a) or more than Seller’s
calculation of the Adjusted Purchase Price delivered pursuant to Section
2.5(b).

 

Final Determination shall mean (i) any final determination of liability in respect of a Tax
that, under applicable Law, is not subject to further appeal, review or
modification through proceedings or otherwise (including the expiration of a
statute of limitations or a period for the filing of claims for refunds,
amended returns or appeals from adverse determinations), including a “determination”
as defined in Section 1313(a) of the Code or execution of an Internal Revenue
Service Form 870AD or (ii) the payment of Tax by Purchaser, Seller or any of
its Affiliates, whichever is responsible for payment of such Tax under
applicable Law, with respect to any item disallowed or adjusted by a Taxing
Authority,

 

3

 

provided that such responsible Party determines that no action should be taken
to recoup such payment and the other Party agrees.

 

GAAP means
generally accepted accounting principles in the United States of America
consistently applied, as in effect on the date of this Agreement.

 

Governmental Authority means any court, government or political
subdivision or department thereof, any governmental or regulatory body, board,
bureau, arbitrator or alternative dispute resolution body, administrative
agency or commission, securities exchange or other governmental agency or
instrumentality of competent jurisdiction.

 

Governmental Authorization means any approval, Consent, license, permit,
waiver, registration or other authorization issued, granted, given or otherwise
made available by or under the authority of any Governmental Authority or
pursuant to any applicable Law.

 

Guarantee means, as to any Person, (i) any obligation, contingent or otherwise,
of such person guaranteeing or having the economic effect of guaranteeing any
Indebtedness or other obligation payable or performable by another person (the “primary
obligor”) in any manner, whether directly or indirectly, and including any
obligation of such person, direct or indirect, (A) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or
other obligation, (B) to purchase or lease property, securities or services for
the purpose of assuring the obligee in respect of such Indebtedness or other
obligation of the payment or performance of such Indebtedness or other
obligation, (C) to maintain working capital, equity capital or any other
financial statement condition or liquidity or level of income or cash flow of
the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation or (D) entered into for the purpose of
assuring in any other manner the obligee in respect of such Indebtedness or
other obligation of the payment or performance thereof or to protect such
obligee against loss in respect thereof (in whole or in part), or (ii) any Lien
on any assets of such person securing any Indebtedness or other obligation of
any other person, whether or not such Indebtedness or other obligation is
assumed by such person. The amount of any Guarantee shall be deemed to be an
amount equal to the stated or determinable amount of the related primary
obligation, or portion thereof, in respect of which such Guarantee is made or,
if not stated or determinable, the maximum reasonably anticipated liability in
respect thereof as determined by the guaranteeing person in good faith.

 

Hazardous Substances means any waste, emission, material or
substance (including gases, liquids and solids) that is prohibited, limited or
regulated in any way pursuant to any Environmental Law, including asbestos,
asbestos-containing materials, radon gas, urea formaldehyde foam insulation,
polychlorinated biphenyls, radioactive materials and oil or petroleum products
and by-products.

 

Health Claims means any claims that smoking cigarettes marketed by Company or its
Subsidiary is less injurious to human health than smoking other cigarette
brands.

 

HSR Act means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder.

 

Indebtedness means all (i) obligations for borrowed money (including reimbursement
and all other direct or contingent obligations with respect to surety bonds,
letters of credit and bankers’ acceptances, whether or not matured), (ii)
obligations evidenced by notes, bonds, debentures or similar instruments or to
pay the deferred purchase price of property or services, (iii) indebtedness
created or arising under any conditional sale or secured by any Lien on any
property or asset owned or held by Company or its Subsidiary, whether or not
such indebtedness shall have been assumed by Company or its Subsidiary or is
limited in recourse, (iv) obligations under leases that have been or should be,
in accordance with

 

4

 

GAAP,
recorded as capital leases of Company or its Subsidiary, (v) all interest rate
and currency swaps, collars and similar Contracts or hedging devices under
which payments are obligated to be made by Company or its Subsidiary and (vi)
all Guarantees by Company or its Subsidiary in respect of any of the foregoing;
provided, however, that
Indebtedness shall not be deemed to include trade payables and expenses
incurred in the ordinary course of business consistent with past practice or
expenses incurred in connection with the Transactions.

 

Intellectual Property Right means any trademark, service mark (including
any symbols or logos related thereto), trade name (including all associated
goodwill), domain names, mask work and other semiconductor chip rights,
invention, patent, trade secret, copyright, know-how (including any
registrations or applications for registration of any of the foregoing) or any
other similar type of proprietary intellectual property right, including moral
rights.

 

knowledge of Seller, Seller’s knowledge or any other similar knowledge qualification
in this Agreement means the actual knowledge of any of Jimmie Gipson, Spencer
Coates, John Poling, Julie Simmons, Tim Livesay, Gary Ebert, Joe Pierce and
Quinten Marquette, together with such other knowledge any of such individuals
could reasonably have been expected to have obtained following due inquiry.

 

Law means
any international, foreign, national, federal, state, provincial or local (or
other political subdivision) statute, law (including common law), ordinance,
Order, rule, regulation or binding requirement of any Governmental Authority.

 

Lien means,
with respect to any property or asset, any mortgage, lien, pledge, charge,
security interest, encumbrance, title defect, easement, tenancy, right-of-way,
license, use restriction, claim, hypothecation, assignment, preemptive right,
option, right of first refusal, right of first offer, right of consent,
restrictive covenant or other right, title or interest of any third party, in
any such case relating to such property or asset.

 

Material Adverse Effect means a material adverse effect on the
business, results of operations or condition (financial or otherwise) of
Company and its Subsidiary, taken as a whole, except for any effects, changes,
events, circumstances or states of fact to the extent resulting from (i)
changes in U.S. or international economic, regulatory or political conditions
generally, (ii) acts of terrorism or war (whether or not pending, threatened or
declared), (iii) changes in the U.S. tobacco industry generally, including as a
result of marketplace actions taken by tobacco industry participants other than
Company and its Subsidiary, (iv) acts or omissions of, or circumstances
affecting, Purchaser and its Affiliates or (v) the execution and delivery of
this Agreement or the announcement of the Transactions, and, in the cases of
clauses (i) and (ii), that does not disproportionately adversely affect Company
and its Subsidiary relative to other similarly situated businesses.

 

MSA means
the Tobacco Master Settlement Agreement, dated November 28, 1998, as amended,
among 46 of the United States, certain territories of the United States and
certain tobacco companies.

 

MSA Adjustment Amount means (i) the amount by which One Hundred
Five Million Three Hundred Eighty-Two Thousand U.S. Dollars (U.S.$105,382,000)
exceeds one-half of the Adjusted 2006 MSA Payment Amount, in which case the MSA
Adjustment Amount shall be a positive number, or (ii) the amount by which
one-half of the Adjusted 2006 MSA Payment Amount exceeds One Hundred Five
Million Three Hundred Eighty-Two Thousand U.S. Dollars (U.S.$105,382,000), in
which case the MSA Adjustment Amount shall be a negative number.

 

Multiemployer Plan means each employee benefit plan that is a multiemployer plan, as defined
in Section 3(37) of ERISA.

 

5

 

Order means
any award, decision, injunction, judgment, order, ruling, subpoena or verdict
entered, issued, made or rendered by any court, administrative agency or other
Governmental Authority or any arbitrator.

 

Parties means Seller and Purchaser, with each being a Party.

 

Person means an individual, corporation, partnership, limited liability
company, association, trust or other entity or organization, including a
Governmental Authority.

 

Post-Closing Tax Period means any Tax period beginning after the
Closing Date, and, with respect to a Tax period that begins on or before the
Closing Date and ends thereafter, the portion of such Tax period beginning
after the Closing Date.

 

Pre-Closing Tax Period means any Tax period ending on or before the
Closing Date, and, with respect to a Tax period that begins on or before the
Closing Date and ends thereafter, the portion of such Tax period ending on and
including the Closing Date.

 

Proceedings means any claim, action, arbitration, audit, hearing, investigation,
notice of violation, litigation or suit (whether civil, criminal,
administrative, investigative or informal) commenced, brought, conducted or
heard by or before, or otherwise involving, any Governmental Authority or
arbitrator.

 

Qualifying Statutes means the “qualifying statutes” that are enacted by the respective
states of the United States and the District of Columbia that are participants
in the MSA, which statutes are substantially in the form of the model statute
attached to the MSA as Exhibit T, as may be amended from time to time, and all
statutes, regulations and rules enacted in connection with such “qualifying
statutes”, including such statutes, regulations and rules providing for
contraband treatment of cigarettes for non-compliance.

 

Seller Common Stock means the common stock, no par value, of Seller.

 

Seller ESOP means the Seller employee stock ownership plan.

 

Seller Stockholder Approval means the approval of the Transactions by
holders of a majority of the outstanding shares of Seller Common Stock.

 

Share means
one share of Common Stock and Shares means
all issued and outstanding shares of Common Stock.

 

Stockholders’ Equity Adjustment Amount means (i) the amount by which the Closing
Stockholders’ Equity exceeds the Target Stockholders’ Equity, in which case the
Stockholders’ Equity Adjustment Amount shall be a positive number or (ii) the
amount by which the Target Stockholders’ Equity exceeds the Closing
Stockholders’ Equity, in which case the Stockholders’ Equity Adjustment Amount
shall be a negative number.

 

Straddle Period means any Tax period that begins before and ends after the Closing
Date.

 

Subsidiary of any Person means another Person, an amount of the voting securities,
other voting ownership or voting partnership interests of which is sufficient
to elect at least a majority of its Board of Directors or other governing body
(or, if there are no such voting interests, 50 percent or more of the equity
interests of which) is owned directly or indirectly by such first Person or by
another Subsidiary of such first Person.

 

6

 

Target Stockholders’ Equity means Four Hundred Fourteen Million Six
Hundred Seventy Thousand U.S. Dollars (U.S.$414,670,000), which amount
represents the consolidated stockholders’ equity of Company as of September 30,
2006 plus Thirty Million U.S.
Dollars (U.S.$30 million).

 

Tax means
any tax, governmental fee or other like assessment or charge of any kind
whatsoever (including, but not limited to, withholding on amounts paid to or by
any Person), together with any interest, penalty, addition to tax or additional
amount imposed by any Taxing Authority, and including excise, customs and
similar duties on tobacco and tobacco products.

 

Tax Asset means any net operating loss, net capital loss, investment tax credit,
foreign tax credit, charitable deduction or any other credit or tax attribute
that could be carried forward or back to reduce Taxes (including deductions and
credits related to alternative minimum Taxes).

 

Taxing Authority means any Governmental Authority responsible for the imposition of any
Tax.

 

Title IV Plan means an Employee Plan subject to Title IV of ERISA or Section 412 or
4971 of the Code, other than any Multiemployer Plan.

 

Tobacco Laws means all Laws related to (i) the development, manufacture,
advertising, marketing, distribution or sale of or (ii) warnings regarding,
cigarettes and other tobacco products, including the Qualifying Statutes.

 

Transactions means the purchase and sale of the Shares and the other transactions
contemplated by this Agreement.

 

UCC means the
Uniform Commercial Code of the State of New York.

 

(b)                                 Each of the following terms is defined in the
Section set forth opposite such term:

 

	
  Term

  	
   

  	
  Section

  
	
  Accounts Receivable

  	
   

  	
  4.7

  
	
  Agreement

  	
   

  	
  Preamble

  
	
  Alternative Proposal

  	
   

  	
  6.3(a)

  
	
  Allocation Principles

  	
   

  	
  2.7

  
	
  Audited Balance Sheet

  	
   

  	
  4.4

  
	
  Audited Financial
  Statements

  	
   

  	
  4.4

  
	
  Claim

  	
   

  	
  11.3(a)

  
	
  Closing

  	
   

  	
  2.2

  
	
  Closing Balance Sheet

  	
   

  	
  2.5(a)

  
	
  Closing Statement

  	
   

  	
  2.5(a)

  
	
  Company

  	
   

  	
  Recitals

  
	
  Company Contracts

  	
   

  	
  4.12(a)

  
	
  Company Intellectual
  Property Rights

  	
   

  	
  4.10(a)

  
	
  Company Real Property

  	
   

  	
  4.9(a)

  
	
  Confidentiality Agreement

  	
   

  	
  6.5(a)

  
	
  Damages

  	
   

  	
  11.2(a)

  
	
  DOJ

  	
   

  	
  6.6(b)

  
	
  Effective Time

  	
   

  	
  2.2

  
	
  Encumbrances

  	
   

  	
  3.6

  
	
  ESOP Committee

  	
   

  	
  Recitals

  
	
  ESOP Materials

  	
   

  	
  6.2

  
	
  Estimated Closing
  Statement

  	
   

  	
  2.4

  

 

7

 

	
  Term

  	
   

  	
  Section

  
	
  Final Allocation

  	
   

  	
  2.7

  
	
  FTC

  	
   

  	
  6.6(b)

  
	
  HSR Filing

  	
   

  	
  6.6(a)

  
	
  Indemnified Party

  	
   

  	
  11.3(a)

  
	
  Indemnifying Party

  	
   

  	
  11.3(a)

  
	
  Independent Accountants

  	
   

  	
  2.5(c)

  
	
  Initial Allocation

  	
   

  	
  2.7

  
	
  Interim Balance Sheet

  	
   

  	
  4.4

  
	
  Interim Financial
  Statements

  	
   

  	
  4.4

  
	
  Inventory

  	
   

  	
  4.6

  
	
  Leased Real Property

  	
   

  	
  4.9(a)

  
	
  Leases

  	
   

  	
  4.9(c)

  
	
  Multiple Employer Plan

  	
   

  	
  4.20(g)

  
	
  Objection Notice

  	
   

  	
  2.7

  
	
  Other Plans

  	
   

  	
  4.20(a)

  
	
  Owned Real Property

  	
   

  	
  4.9(a)

  
	
  Parent

  	
   

  	
  Recitals

  
	
  Parent Guarantee

  	
   

  	
  Recitals

  
	
  Permitted Liens

  	
   

  	
  4.8(a)

  
	
  Potential Contributor

  	
   

  	
  11.5

  
	
  Prime Rate

  	
   

  	
  2.6(b)

  
	
  Proposed Allocation

  	
   

  	
  2.7

  
	
  Purchase Price

  	
   

  	
  2.1

  
	
  Purchaser

  	
   

  	
  Preamble

  
	
  Purchaser Welfare Plans

  	
   

  	
  7.3

  
	
  Records

  	
   

  	
  6.10

  
	
  Requested Information

  	
   

  	
  6.6(a)

  
	
  Representatives

  	
   

  	
  6.3(a)

  
	
  Returns

  	
   

  	
  8.1(a)

  
	
  Section 338(h)(10)
  Election

  	
   

  	
  2.8

  
	
  Seller

  	
   

  	
  Preamble

  
	
  Seller’s Financial Advisor

  	
   

  	
  3.7

  
	
  Stockholders Meeting

  	
   

  	
  6.2

  
	
  Superior Proposal

  	
   

  	
  6.3(b)

  
	
  Support Agreement

  	
   

  	
  Recitals

  
	
  Tax Benefit

  	
   

  	
  8.5(c)

  
	
  Tax Proceeding

  	
   

  	
  8.5(e)

  
	
  Third Party Claim

  	
   

  	
  11.3(b)

  
	
  Voting Company Debt

  	
   

  	
  4.3(a)

  

 

(c)                                 Except as otherwise provided or if the
context requires otherwise, whenever used in this Agreement (i) any noun or
pronoun shall be deemed to include the plural and the singular (including as
may apply to any definition contained in this Agreement), (ii) the terms “include”
and “including” shall be deemed to be followed by the phrase “without
limitation” and (iii) the word “or” shall be inclusive and not exclusive.

 

8

 

2.                                      PURCHASE AND SALE

 

2.1                               Purchase and Sale

 

Upon
the terms and subject to the conditions of this Agreement, at the Closing,
Seller shall sell to Purchaser, and Purchaser shall purchase from Seller, the
Shares. The purchase price for the Shares shall be One Billion Three Hundred
Eighty-Six Million Eight Hundred Forty-Three Thousand U.S. Dollars
(U.S.$1,386,843,000) (the Purchase Price). The Purchase Price shall be paid as
provided in Section 2.3 and shall be subject to adjustment as provided
in Section 2.5.

 

2.2                               Closing

 

The
closing (the Closing)  of
the Transactions shall take place at the offices of Allen & Overy LLP, 1221
Avenue of the Americas, New York, New York 10020, as soon as reasonably
practicable, but in no event later than five (5) Business Days following the
satisfaction (or, to the extent permitted, the waiver) of all conditions
precedent to the obligations of the Parties set forth in Article 9
(other than those conditions that by their nature are to be satisfied at the
Closing, but subject to the satisfaction or waiver of those conditions), or at
such other time and date as shall be agreed between Seller and Purchaser. The
Closing shall be deemed to be effective as of 11:59 p.m. New York City time on
the Closing Date (the Effective Time).

 

2.3                               Closing Deliveries

 

At
the Closing:

 

(a)                                 Purchaser shall deliver to Seller the Closing
Date Amount in U.S. dollars by wire transfer of immediately available funds to
an account of Seller as shall have been designated by Seller to Purchaser not
later than five (5) Business Days prior to the Closing (or if not so
designated, then by certified or official bank check payable to the order of
Seller in such amount) and Seller shall deliver to Purchaser a duly executed
receipt for such amount.

 

(b)                                Purchaser shall deliver to Seller a certificate duly executed on behalf
of Purchaser as described in Sections 9.3(a) and 9.3(b).

 

(c)                                 Seller shall deliver to Purchaser a
certificate or certificates for the Shares, duly endorsed in blank for transfer
or accompanied by stock powers duly endorsed in blank for transfer, with any
required transfer stamps affixed thereto.

 

(d)                                Seller shall deliver to Purchaser a certificate duly executed on behalf
of Seller as described in Sections 9.2(a) and 9.2(b).

 

(e)                                 Seller shall deliver to Purchaser a
certificate duly executed on behalf of Seller as described in Section 9.2(d).

 

(f)                                   Seller shall deliver to Purchaser the legal
opinion as described in Section 9.2(e).

 

(g)                                Seller shall deliver or cause to be delivered to Purchaser the
resignations, effective as of the Effective Time, of Spencer Coates and each
director of Company or its Subsidiary.

 

(h)                                Each Party shall deliver to the other Party such other certificates and
documents as such other Party may reasonably request in connection with the
Closing.

 

9

 

2.4                               Calculation of Closing Date
Amount

 

At
least five (5) Business Days prior to the Closing, Seller shall prepare and
deliver to Purchaser a statement (the Estimated
Closing Statement)  setting forth in reasonable detail
(a) an estimated consolidated balance sheet of Company as of immediately prior
to the Effective Time and without giving effect to the Closing, which shall
include a calculation of the Estimated Stockholders’ Equity and the Estimated
Closing Stockholders’ Equity Adjustment Amount, (b) a calculation of the
Estimated MSA Adjustment Amount and (c) based on the information described in
clauses (a) and (b), a calculation of the Closing Date Amount. The Estimated
Closing Statement shall (i) be prepared by Seller in good faith in accordance
with the Agreed Accounting Principles with the intention of fairly presenting,
in all material respects, the consolidated financial position of Company as of
immediately prior to the Effective Time and without giving effect to the
Closing or the declaration or payment of the dividend contemplated by Section
6.14, the Estimated MSA Adjustment Amount and the Closing Date Amount and
(ii) include line items substantially consistent with those on the Audited
Balance Sheet and the other information described in clauses (b) and (c) of
this Section 2.4.

 

2.5                               Closing Balance Sheet

 

(a)                                  As promptly as practicable, but no later than
ninety (90) days after the Closing Date, Purchaser shall cause to be prepared
and delivered to Seller a statement (the Closing
Statement)  setting forth in reasonable detail
(i) a consolidated balance sheet of Company as of immediately prior to the
Effective Time and without giving effect to the Closing (the Closing Balance Sheet), which shall include a calculation
of the Closing Stockholders’ Equity, (ii) a calculation of the MSA Adjustment
Amount and (iii) based on the information described in clauses (i) and (ii), a
calculation of the Adjusted Purchase Price and the Adjustment Amount. The
Closing Statement shall (A) be prepared by Purchaser in good faith in
accordance with the Agreed Accounting Principles, (B) fairly present, in all
material respects, the consolidated financial position of Company as of
immediately prior to the Effective Time and without giving effect to the
Closing or the declaration or payment of the dividend contemplated by Section
6.14, the MSA Adjustment Amount and the Adjusted Purchase Price and (C)
include line items substantially consistent with those on the Audited Balance
Sheet and the other information described in clauses (ii) and (iii) of this Section
2.5(a).

 

(b)                                 If Seller disagrees with Purchaser’s
calculation of the Adjusted Purchase Price and the Adjustment Amount as set
forth on the Closing Statement delivered pursuant to Section 2.5(a),
Seller may, within thirty (30) days after delivery of the Closing Statement
delivered pursuant to Section 2.5(a), deliver a notice to Purchaser
stating such disagreement and setting forth Seller’s calculation of the
Adjusted Purchase Price and the Adjustment Amount, together with a detailed
description of the nature of and basis for each of the disagreements. Seller
may dispute items reflected on the Closing Statement only on the basis that
such amounts were not determined in conformity with the provisions of this
Agreement or the Agreed Accounting Principles or contain arithmetic error. Any
such notice of disagreement shall specify those items or amounts as to which
Seller disagrees, and Seller shall be deemed to have agreed with all other
items and amounts contained in the Closing Statement and the calculation of the
Adjusted Purchase Price and the Adjustment Amount delivered pursuant to Section 2.5(a).

 

(c)                                  If a notice of disagreement shall be duly
delivered pursuant to Section 2.5(b), Purchaser and Seller shall, during
the fifteen (15) days following such delivery, use their best efforts to reach
agreement on the disputed items or amounts in order to determine, as may be
required, the Adjusted Purchase Price and the Adjustment Amount; provided that the Adjusted Purchase Price
shall not be less than that shown in Purchaser’s calculations delivered
pursuant to Section 2.5(a) or more than that shown in Seller’s calculation
delivered pursuant to Section 2.5(b). If, during such period, Purchaser
and Seller are unable to reach such agreement, they shall promptly thereafter
cause Deloitte & Touche LLP or such other

 

10

 

independent
accountants of internationally recognized standing as Purchaser and Seller may
mutually agree (the Independent Accountants), promptly to review this Agreement
and the disputed items or amounts for the purpose of calculating the Adjusted
Purchase Price and the Adjustment Amount. In making such calculation, the
Independent Accountants shall consider only those items or amounts on the
Closing Statement delivered pursuant to Section 2.5(a) that have been
disputed by Seller pursuant to Section 2.5(b). Such Independent
Accountants shall, as promptly as practicable but in any event within thirty
(30) days, deliver to Purchaser and Seller a report setting forth such
calculation. Such report shall be final and binding upon Purchaser and Seller.
The cost of such review and report shall be borne by Purchaser and Seller in
proportion to the relative differences between the Adjusted Purchase Price that
would have resulted from their respective calculations thereof.

 

(d)                                 Purchaser and Seller agree that they will,
and agree to cause their respective independent accountants and Company and its
Subsidiary to, cooperate and assist in the preparation of the Closing Statement
and the calculation of the Adjusted Purchase Price and the Adjustment Amount
and in the conduct of the reviews referred to in this Section 2.5,
including making available during normal business hours, to the extent
necessary, books, records, work papers and personnel.

 

2.6          Adjustment of Purchase Price

 

(a)                                  Subject to Section 2.6(c), (i) if the
Final Adjustment Amount is a positive number, Purchaser shall pay to Seller, as
an adjustment to the Purchase Price and in the manner and with interest as
provided in Section 2.6(b), such Final Adjustment Amount (provided, however, that in no event shall
such amount exceed One Billion U.S. Dollars (U.S.$1,000,000,000)) or (ii) if
the Final Adjustment Amount is a negative number, Seller shall pay to
Purchaser, as an adjustment to the Purchase Price and in the manner and with
interest as provided in Section 2.6(b), the absolute value of such Final
Adjustment Amount.

 

(b)                                 Any payment pursuant to Section 2.6(a)
shall be made within five (5) Business Days after the Final Adjustment Amount
has been determined (i) if such payment is to be made by Purchaser to Seller to
an account of Seller as shall have been designated by Seller to Purchaser not
later than two (2) Business Days after the Final Adjustment Amount has been
determined (or if not so designated, then by certified or official bank check
payable to the order of Seller in such amount) or (ii) if such payment is to be
made by Seller to Purchaser to an account of Purchaser as shall have been
designated by Purchaser to Seller not later than two (2) Business Days after
the Final Adjustment Amount has been determined (or if not so designated, then
by certified or official bank check payable to the order of Purchaser in such
amount). The amount of any payment to be made pursuant to this Section 2.6
shall bear interest from and including the Closing Date to but excluding the
date of payment at a rate per annum equal to the Prime Rate as published in the
Wall Street Journal, Eastern Edition (the Prime
Rate) in effect from
time to time during the period from the Closing Date to the date of payment.
Such interest shall be payable at the same time as the payment to which it
relates and shall be calculated daily on the basis of a year of 365 days and
the actual number of days elapsed.

 

(c)                                  Notwithstanding the foregoing provisions of
this Section 2.6, no adjustment to the Purchase Price pursuant to this Section
2.6 shall be made unless the amount of such adjustment would exceed One Million
U.S. Dollars (U.S.$1,000,000), and, if the adjustment would exceed One Million
U.S. Dollars (U.S.$1,000,000), then the full amount of the adjustment shall be
made.

 

2.7                               Purchase Price Allocation

 

In
order to meet certain of Seller’s regulatory and Tax filing deadlines,
Purchaser shall deliver to Seller within thirty (30) days after Closing an
initial proposed allocation of the Purchase Price and other relevant items
among the assets of Company and its Subsidiary (the Initial Allocation) in
a manner

 

11

 

consistent
with Section 1060 of the Code and the Treasury regulations thereunder (the Allocation Principles). Seller acknowledges and agrees that
the Initial Allocation is an estimate only, which is being prepared for Seller’s
benefit, and that the Proposed Allocation may include material differences from
such Initial Allocation. Purchaser shall deliver to Seller within ninety (90)
days after Closing a proposed allocation of the Purchase Price and other
relevant items among the assets of Company and its Subsidiary in a manner
consistent with the Allocation Principles (the Proposed Allocation). If
Seller does not deliver a written notice to Purchaser within thirty (30) days
of receipt of the Proposed Allocation specifying in reasonable detail the
nature of any objection it may have to the Proposed Allocation (an Objection Notice), the Proposed Allocation shall be the final allocation of the
Purchase Price (the Final Allocation). If Seller does deliver an Objection
Notice, Purchaser and Seller shall attempt to resolve any differences
identified in the Objection Notice within fifteen (15) days in a manner
consistent with the Allocation Principles, and, if they are able to resolve all
such differences, the allocation agreed shall be the Final Allocation. If
Purchaser and Seller are unable to resolve all such differences, any remaining
disagreed items shall be submitted to the Independent Accountants for
resolution within fifteen (15) days in a manner consistent with the Allocation
Principles. The allocation resulting from the decision of the Independent
Accountants shall be the Final Allocation. Any allocation that becomes the
Final Allocation pursuant to this Section 2.7 shall be final and binding
as between Seller, Purchaser and their Affiliates and none of Seller, Purchaser
or any of their Affiliates shall take any position on any Tax Return that is
inconsistent with the Final Allocation. The fees and expenses of the
Independent Accountants shall be borne by Purchaser and Seller in proportion to
the relative differences between their respective calculations of the
allocation and the Final Allocation selected by the Independent Accountants.

 

2.8                               Section 338(h)(10) Election

 

At
the request of Purchaser, Seller shall join with Purchaser in making an
election under Section 338(h)(10) of the Code and/or any analogous provision of
state, local or non-U.S. Law (each such election, a Section 338(h)(10) Election) with respect to the purchase and sale of the Shares under this
Agreement. Seller shall include any income, gain, loss, deduction or other Tax
item resulting from a Section 338(h)(10) Election on its Returns to the extent
required by applicable Law. Each of Seller and Purchaser agrees to characterize
the purchase and sale of Shares for all Tax purposes in a manner consistent
with the Section 338(h)(10) Election.

 

3.                                      REPRESENTATIONS AND WARRANTIES
REGARDING SELLER

 

Seller
represents and warrants to Purchaser that, as of the date of this Agreement and
as of the Closing Date, and except as set forth in the corresponding Section of
the Disclosure Schedules:

 

3.1                               Organization

 

Seller
is duly incorporated, validly existing and in good standing under the Laws of
the Commonwealth of Kentucky, has the requisite power and authority to own,
operate and lease its properties and to carry on its business as it is now
being conducted. Seller is duly qualified to do business in each jurisdiction
in which the nature of its business or the properties owned, operated or leased
by it makes such qualification necessary, except where any such failures to be
so qualified would not, individually or in the aggregate, materially adversely
affect the ability of Seller to perform its obligations under this Agreement.

 

3.2                               Authority; Execution and
Delivery; Enforceability

 

Seller
has all necessary corporate power and authority to enter into this Agreement
and, subject to receipt of the Seller Stockholder Approval, to perform its
obligations under this Agreement and to

 

12

 

complete
the Transactions. Other than receipt of the Seller Stockholder Approval, the
execution, delivery and performance by Seller of this Agreement and the
completion of the Transactions have been duly authorized and all necessary
corporate proceedings on the part of Seller have been taken. This Agreement has
been duly executed and delivered by Seller, and assuming the due authorization,
execution and delivery by each other party, constitutes a legal, valid and
binding obligation of Seller, enforceable in accordance with its terms.

 

3.3                               No Conflicts; Consents

 

(a)                                  The execution, delivery and performance of
this Agreement by Seller do not, and the completion of the Transactions will
not, (i) conflict with or violate the articles of incorporation, bylaws or
other organizational document of Seller, (ii) conflict with or violate any
applicable Law or Order applicable to Seller or (iii) breach or constitute a
default (or an event that with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in any loss of any benefit under, or
the creation of a Lien on any of Seller’s assets pursuant to, any Contract or
other instrument or obligation to which Seller is a party, except in the case
of this clause (iii) as would not, individually or in the aggregate, materially
adversely affect the ability of Seller to perform its obligations under this
Agreement.

 

(b)                                 Other than compliance with and any filings
required under the HSR Act, the execution, delivery and performance by Seller
of this Agreement do not, and the completion of the Transactions will not,
require any Governmental Authorization to be obtained by Seller or any filing
with any Governmental Authority to be made by Seller.

 

3.4                               Litigation

 

There
are not any (a) Proceedings pending or, to the knowledge of Seller, threatened
against or affecting Seller or any of its Affiliates or (b) investigations by
any Governmental Authority that are pending or, to the knowledge of Seller,
threatened against or affecting Seller or any of its Affiliates that, in either
case, would, individually or in the aggregate, materially adversely affect the
ability of Seller to perform its obligations under this Agreement.

 

3.5                               Compliance with Applicable
Law

 

Seller
has complied with and is in compliance with all applicable Laws, except for
instances of noncompliance as would not, individually or in the aggregate,
materially adversely affect the ability of Seller to perform its obligations
under this Agreement.

 

3.6                               The Shares

 

Seller
owns the Shares free of any “adverse claim” (within the meaning of Section
8-102(1) of the UCC). Without limitation of the foregoing, (a) the Shares are
not subject to any Liens, claims, charges, mortgages, security interests,
pledges, reversions or other property interests in favor of Persons other than
Purchaser and (b) the Shares are not subject to, and Seller is not party to or
otherwise bound by, any options, voting proxies, other voting arrangements,
arrangements to sell, assign or transfer, preemptive, subscription, call, put
or other similar rights relating to the Shares that purport to (i) prohibit
Seller from transferring the Shares to Purchaser as contemplated by this
Agreement or (ii) affect the Shares or Purchaser after such transfer (such
rights described in clauses (a) and (b), Encumbrances).

 

13

 

3.7                               Brokers

 

Except
for Lehman Brothers, Inc. (Seller’s Financial Advisor), no
Person has or will have, as a result of the Transactions, any right, interest
or valid claim against or upon any party for any commission, fee or other
compensation as a finder or broker because of any act or omission by Seller or
any of its representatives.

 

4.                                      REPRESENTATIONS AND
WARRANTIES REGARDING COMPANY AND ITS SUBSIDIARY

 

Seller
represents and warrants to Purchaser that, as of the date of this Agreement and
as of the Closing Date, and except as set forth in the corresponding Section of
the Disclosure Schedules:

 

4.1                               Organization; Power and
Qualification

 

(a)                                 Each of Company and its Subsidiary has been
duly incorporated, is validly existing and is in good standing under the Laws
of the Commonwealth of Kentucky and has all corporate power and authority to
enable it to own, operate, lease or otherwise hold the properties and assets
now owned, operated, leased or otherwise held by it and to carry on its
businesses as they have been and are presently conducted. Each of Company and
its Subsidiary is duly qualified and in good standing to do business as a
foreign corporation in each jurisdiction in which the conduct or nature of its
business or the ownership, operation, leasing or holding of its properties
makes such licensing or qualification necessary, except such jurisdictions
where the failure to be so qualified, licensed or in good standing,
individually or in the aggregate, has not had and would not reasonably be
expected to have a Material Adverse Effect. Section 4.1(a) of the
Disclosure Schedules lists the jurisdictions in which each of Company and its
Subsidiary is so qualified.

 

(b)                                Company has delivered to Purchaser true and complete copies of the
articles of incorporation and bylaws, each as amended to date, of each of
Company and its Subsidiary. Section 4.1(b) of the Disclosure Schedules
lists the names, addresses and titles of the directors and officers of each of
Company and its Subsidiary.

 

4.2                               No Conflicts; Consents

 

(a)                                 The execution and delivery by Seller of this
Agreement do not and the completion of the Transactions, will not conflict
with, or result in any material violation of or material default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any material obligation or to any
material loss of a benefit under, or to any material increased, additional,
accelerated or guaranteed rights or entitlements of any Person under, or result
in the creation of any material Lien or Encumbrance upon any of the properties
or assets of Company or its Subsidiary under, any provision of (i) the articles
of incorporation or bylaws of Company or its Subsidiary, (ii) any material
Contract to which Company or its Subsidiary is a party or by which any of their
respective material properties or assets is bound or (iii) any material Order
or Law applicable to Company or its Subsidiary or their respective properties or
assets.

 

(b)                                Other than compliance with and any filings required under the HSR Act,
no Governmental Authorization is required to be obtained or made and no filing
with any Governmental Authority is required, in each case, by or with respect
to Company or its Subsidiary in connection with (i) the execution, delivery and
performance of this Agreement or the completion of the Transactions or (ii) the
ownership by Purchaser of Company following the Closing.

 

14

 

4.3                               Capitalization

 

(a)                                 The authorized capital stock of Company
consists of 1,000 shares of Common Stock, of which 100 shares, constituting the
Shares, are issued and outstanding. Except for the Shares, there are no shares
of capital stock or other equity securities of Company issued, reserved for
issuance, held by Company as treasury stock or outstanding. Section 4.3(a)  of the Disclosure Schedules lists, for the
Company’s Subsidiary, the amount and classification of its authorized capital
stock, the amount and classification of its outstanding capital stock and the
record and beneficial owners thereof. The Shares are duly authorized, validly
issued, fully paid and nonassessable and not subject to or issued in violation
of any purchase option, warrant, call option, right of first refusal,
preemptive right, subscription right or any similar right under any provision
of the Kentucky Business Corporation Act, the articles of incorporation or
bylaws of Company or any Contract to which Company or Seller is a party or
otherwise bound. Company has good and valid title to all the outstanding shares
of capital stock of its Subsidiary, free and clear of all Encumbrances. All the
outstanding shares of capital stock of Company’s Subsidiary have been duly
authorized and validly issued and are fully paid and nonassessable. There are
not any bonds, debentures, notes or other Indebtedness of Company having the
right to vote (or convertible into, or exchangeable for, securities having the
right to vote) on any matters on which holders of Shares may vote (Voting
Company Debt). Except as set forth above, there are not any
options, warrants, rights, convertible or exchangeable securities, “phantom”
stock rights, stock appreciation rights, stock-based performance units,
commitments, Contracts, arrangements or undertakings of any kind to which
Company or its Subsidiary is a party or by which any of them is bound (i)
obligating Company or its Subsidiary to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock or other equity
interests in, or any security convertible or exercisable for or exchangeable
into any capital stock of or other equity interest in, Company or of its
Subsidiary or any Voting Company Debt, (ii) obligating Company or its Subsidiary
to issue, grant, extend or enter into any such option, warrant, call, right,
security, commitment, Contract, arrangement or undertaking or (iii) that give
any Person the right to receive any economic benefit or right similar to or
derived from the economic benefits and rights accruing to holders of Shares.
There are not any outstanding contractual obligations of Company or its
Subsidiary to repurchase, redeem or otherwise acquire any shares of capital
stock of Company.

 

(b)                                Except for its interests in its Subsidiary, which is listed in Section
4.3(b) of the Disclosure Schedules, Company does not own, directly or
indirectly, any capital stock, membership interest, partnership interest, joint
venture interest or other equity interest in any Person.

 

4.4                               Financial Statements

 

Section
4.4 of the Disclosure
Schedules contains true, correct and complete copies of (i) an audited
consolidated balance sheet of Company, as of the Balance Sheet Date (the Audited Balance Sheet) and the related audited consolidated
statements of income and cash flows for the fiscal year ended as of the Balance
Sheet Date (collectively with the Audited Balance Sheet, the Audited Financial Statements) and (ii) the unaudited consolidated
balance sheet as of December 31, 2006 (the Interim
Balance Sheet) and
the related unaudited consolidated statements of income and cash flows of
Company for the three months ended December 31, 2006 (collectively with the
Interim Balance Sheet, the Interim Financial
Statements). Each of
the Audited Financial Statements and the Interim Financial Statements has been
prepared by Company in accordance with GAAP consistently applied and presents
fairly, in all material respects, as applicable, the consolidated financial
position, results of operations and cash flows of Company as at the dates and
for the periods indicated, subject, in the case of the Interim Financial
Statements, to normal year-end adjustments and the absence of footnotes.

 

15

 

4.5                               No Undisclosed Liabilities;
No Off-Balance Sheet Transactions

 

(a)                                 To the knowledge of Seller, there are no
liabilities or obligations of Company or its Subsidiary of any kind or nature
whatsoever (whether known or unknown and whether absolute, accrued, contingent
or otherwise), other than (a) liabilities reserved against on the Audited
Balance Sheet, (b) liabilities arising under this Agreement, (c) liabilities
incurred in the ordinary course of business consistent with past practice since
the Balance Sheet Date, other than any uninsured obligation or liability or
liability resulting from any Proceeding, or (d) immaterial contractual and
other liabilities arising in the ordinary course of business consistent with
past practice that are not required by GAAP to be reflected on a consolidated
balance sheet.

 

(b)                                To the knowledge of Seller, neither Company nor its Subsidiary is a
party to, or has any commitment to become a party to, any joint venture,
partnership or similar contract or arrangement, including any special purpose
or limited purpose entity or Person, or any other off-balance sheet
arrangement, where the result, purpose or effect is to avoid inclusion of any
material liabilities of Company or its Subsidiary on a consolidated balance
sheet prepared in accordance with GAAP.

 

4.6                               Inventory

 

To
the knowledge of Seller, all inventory of Company and its Subsidiary that is
reflected on the Interim Balance Sheet or the accounting records of Company and
its Subsidiary (the Inventory)
consists of raw materials and supplies, manufactured and purchased products,
goods in process and finished goods, all of which is merchantable and fit for
the purpose for which it was procured or manufactured, and none of which is
slow-moving, obsolete, damaged or defective, subject only to such reserves as
are set forth on the Interim Balance Sheet.

 

4.7                               Accounts Receivable

 

To
the knowledge of Seller, (a) all accounts receivable of Company and its
Subsidiary that are reflected on the Interim Balance Sheet or the accounting
records of Company and its Subsidiary (the Accounts Receivable)
represent or will represent valid obligations arising from sales actually made
or services actually performed by Company or its Subsidiary, (b) the Accounts
Receivable are current and collectible net of the reserves shown on the Interim
Balance Sheet or on the accounting records of Company and its Subsidiary (which
reserves are adequate and calculated in accordance with GAAP), and (c) subject
to such reserves, there is no material contest, claim or right of set-off under
any Contract with any obligor of an Account Receivable relating to the amount
or validity of such Account Receivable.

 

4.8                               Assets Other than Real
Property Interests

 

(a)                                  Company and its Subsidiary have good and
marketable title to, or valid and sufficient leaseholds in, all material assets
(x) necessary or used for the conduct of its business as currently conducted
and (y) reflected on the Interim Balance Sheet or thereafter acquired, other
than those disposed of since the date of the Interim Balance Sheet in the
ordinary course of business consistent with past practice and not in violation
of this Agreement, in each case free and clear of all Liens, except:

 

(i)                                    mechanics’, materialmen’s, carriers’, workmen’s,
repairmen’s or other like Liens arising from or incurred in the ordinary course
of business consistent with past practice, Liens arising under original
purchase price conditional sales contracts and equipment leases with third
parties entered into in the ordinary course of business consistent with past
practice and Liens for Taxes that are not due and payable or that may
thereafter be paid without penalty;

 

16

 

(ii)                                Liens that secure Indebtedness that is reflected as a liability on the
Interim Balance Sheet or Liens the existence of which are referred to in the
notes to the Interim Balance Sheet; and

 

(iii)                             other imperfections of title or Encumbrances, if any, that,
individually or in the aggregate, do not materially impair, and would not be
expected to materially impair, the continued ownership, use and operation of
the assets to which they relate in the conduct of the business of Company and
Subsidiary as presently conducted (the Liens described in clauses (i), (ii) and
(iii) above, together with the Liens referred to in clauses (i) through (iv) of
Section 4.9(a), are referred to collectively as Permitted Liens).

 

(b)                                 To the knowledge of Seller, (i) the assets
reflected in the Financial Statements comprise all assets and services required
for the continued conduct by Purchaser of the business of Company and its
Subsidiary as now being conducted, (ii) such assets, taken as a whole,
constitute all properties and assets relating to or used or held for use in
connection with the business of Company and its Subsidiary during the past
twelve months (except assets disposed of or replaced by equivalent or superior
assets, in each case in the ordinary course of business consistent with past
practice), (iii) there are no assets or properties used in the operation of the
business of Company and its Subsidiary and owned by any Person other than
Company or its Subsidiary that will not be leased or licensed to Purchaser
under valid, current leases or license arrangements, (iv) the assets of Company
and its Subsidiary are in all material respects adequate for the purposes for
which such assets are currently used or are held for use, and are in reasonably
good repair and operating condition (subject to normal wear and tear) and (v)
there are no facts or conditions affecting such assets that could, individually
or in the aggregate, interfere in any material respect with the use, occupancy
or operation thereof as currently used, occupied or operated, or their adequacy
for such use.

 

4.9                                 Real Properties

 

(a)                                  Section 4.9 of the Disclosure Schedules lists all real property and interests in
real property owned in fee by Company or its Subsidiary (individually, Owned Real Property). Section 4.9 of the Disclosure Schedules also lists all
real property and interests in real property leased by Company or its
Subsidiary as a lessee (individually, Leased  Real Property). Company or its Subsidiary has marketable fee title to all Owned
Real Property and valid title to the leasehold estates in all Leased Real
Property (Owned Real Property or Leased Real Property being sometimes referred
to, individually, as Company Real Property), in each case free and clear of all
Liens, except:

 

(i)                                    Liens that secure Indebtedness that is
reflected on the Interim Balance Sheet;

 

(ii)                                 leases, subleases and similar agreements
relating to Company Real Property disclosed in Section 4.9 of the
Disclosure Schedules;

 

(iii)                             zoning, building and other generally applicable land use restrictions;
and

 

(iv)                             Liens that have been placed by a third party on the fee title of real
property constituting Leased Real Property or property over which Company or
its Subsidiary has easement rights, and subordination or similar agreements
relating thereto.

 

(b)                                 Seller has made available to Purchaser, in
each case to the knowledge of Seller in the possession of Seller, Company or
its Subsidiary, (i) a copy of each deed by which Company or its Subsidiary
acquired title to or its interest in Owned Real Property, (ii) a copy of all
title insurance policies and most recent surveys Company or its Subsidiary has
for such Owned Real Property and (iii) a copy of all certificates of occupancy
for improvements on such Owned Real Property and a copy of any zoning or land
use variance granted with respect to such Owned Real Property.

 

17

 

(c)                                 Seller has made available to Purchaser true
and complete copies of all leases and subleases (including all amendments or
modifications thereof, all side letters or other instruments affecting the
obligations of any party thereunder, and all assignments or subleases relating
thereto) of the Leased Real Property under which Company or its Subsidiary is a
lessee, sublessee or sublessor (Leases). To the
knowledge of Seller, (i) all such Leases are in full force and effect and are
enforceable in accordance with their respective terms and the lessee under each
Lease is now in possession of the applicable Leased Property and, to the
knowledge of Seller, no third party has any possessory rights thereto, (ii) no
notices of default under any such Lease have been sent or received by Company
or its Subsidiary and neither Company nor its Subsidiary has any knowledge of
any fact or circumstance that, with the giving of notice or the expiration of
time (or both), would constitute a material default under any such Lease, (iii)
there is no pending or, threatened Proceeding that might interfere with the
quiet enjoyment by Company or its Subsidiary of any Leased Property, (iv)
Company has exercised within the time prescribed in each Lease any option
provided therein to extend or renew the term thereof and (v) the Leased
Property either is not subject to any Lien that has priority over any Lease,
or, if it is subject to any such Lien, the holder of such Lien has entered into
a customary nondisturbance agreement in favor of Company or its Subsidiary
pursuant to which the Lease is protected against being extinguished or
terminated by reason of any foreclosure or other acquisition of title by such
holder.

 

(d)                                To the knowledge of Seller, the Company Real Properties and all
buildings, structures, improvements and fixtures located on, under, over or
within the Company Real Properties consist of or have sufficient land, parking
areas or parking rights, access to public roads and sidewalks and other
improvements to permit the continued use of such facilities in the manner and
for the purposes to which they are presently devoted.

 

(e)                                 To the knowledge of Seller, neither Company
nor its Subsidiary has received any written notice from any Governmental
Authority asserting any material violation or alleged material violation of
applicable Laws with respect to any Company Real Property.

 

(f)                                   To the knowledge of Seller, (i) Company and
its Subsidiary hold all material Governmental Authorizations necessary for the
current use, occupancy and operation of each Company Real Property, (ii) all
such Governmental Authorizations have been validly issued by the appropriate
Governmental Authority and are in full force and effect, (iii) the Transactions
will not violate or invalidate any such Governmental Authorization, (iv)
Company and its Subsidiary have fully complied with any and all conditions and
requirements of all such Governmental Authorizations and (v) no default or
violation, or matter, fact or circumstance that with the lapse of time or
giving of notice, or both, would become a default or violation, has occurred in
the due observance of, or compliance with, any such Governmental Authorization.

 

4.10        Intellectual Property

 

(a)                                  Section 4.10(a) of the Disclosure Schedules lists all
material Intellectual Property Rights owned, filed, used or held for use by or
assigned or licensed to Company or its Subsidiary (Company Intellectual Property Rights).
With respect to all Company Intellectual Property that is registered or
subject to an application for registration, Section 4.10(a) of the
Disclosure Schedules lists all jurisdictions in which such Company Intellectual
Property is registered or registrations have been applied for and all
registration and application numbers. Section 4.10(a) of the Disclosure
Schedules further lists any Company Intellectual Property Rights jointly owned
with any third party, identifying such joint owner and listing any material
agreements relating thereto.

 

(b)                                 Section 4.10(b) of the Disclosure Schedules lists all
material licenses, sublicenses and other Contracts with respect to Company
Intellectual Property Rights to which Company or its Subsidiary is a party. To

 

18

 

the
knowledge of Seller, the licenses listed in Section 4.10(b) of the
Disclosure Schedules are in full force and effect, Company and its Subsidiary
are not in default under any such license and no Person that is a party to any
such license has exercised any termination rights or provided notice with
respect to any breach of or violation with respect to such license.

 

(c)                                 To the knowledge of Seller, (i) all Company
Intellectual Property Rights have been duly registered, filed with or issued by
the appropriate Governmental Authority where such registration, filing or
issuance is necessary or appropriate for the conduct of the business of Company
or its Subsidiary as presently conducted and (ii) Company and its Subsidiary
have taken all actions necessary to protect and maintain the Company
Intellectual Property Rights, including by duly maintaining the filings,
registrations and applications for the Company Intellectual Property Rights,
which filings, registrations and applications are valid and enforceable in all
material respects and have not been cancelled, abandoned or expired.

 

(d)                                To the knowledge of Seller, (i) Company or its Subsidiary is the sole
and exclusive owner of, free and clear of all Liens, or has the right to use
pursuant to a written license in full force and effect, and Company and its
Subsidiary have the right to use, execute, reproduce, display, perform, modify,
enhance, distribute, prepare derivative works of and sublicense, without
payment to any other Person, all Company Intellectual Property and the completion
of the Transactions will not conflict with, alter or impair any such rights,
(ii) no Person is violating, infringing or misappropriating any Intellectual
Property owned or used by Company or its Subsidiary, (iii) no Company
Intellectual Property Right is subject to any outstanding Order or Contract
restricting the use thereof by Company or restricting the licensing thereof by
Company or its Subsidiary to any Person and (iv) all Company Intellectual
Property Rights are valid and enforceable.

 

(e)                                 To the knowledge of Seller, (i) the conduct
of the businesses of Company and its Subsidiary does not violate,
misappropriate, conflict with or infringe upon the Intellectual Property Rights
of any other Person, (ii) no material Proceedings are pending or threatened
against Company or its Subsidiary by any Person with respect to the ownership,
validity, enforceability, effectiveness or use in the business of Company and
its Subsidiary of any Intellectual Property, (iii) none of Seller, Company or
its Subsidiary has received any written or oral communication alleging that
Company or its Subsidiary violated, infringed or misappropriated any rights
relating to Intellectual Property Rights of any Person and (iv) no claims with
respect to any Company Intellectual Property are currently pending or, to the
knowledge of Seller, are threatened by any Person.

 

(f)                                   To the knowledge of Seller, the Company
Intellectual Property Rights are sufficient and adequate to conduct the
businesses of Company and its Subsidiary as they are currently conducted in all
material respects.

 

(g)                                To the knowledge of Seller, neither Company nor its Subsidiary is and
will as a result of the completion of the Transactions be in violation of any
licenses, sublicenses and other Contracts with respect to Intellectual Property
Rights.

 

(h)                                To the knowledge of Seller, Company and its
Subsidiary have taken reasonable steps to protect their respective rights in,
and the secrecy and confidentiality of, confidential information and trade
secrets.

 

(i)                                    Section 4.10(i) of the Disclosure Schedules lists all
material software owned by Company and its Subsidiary.

 

4.11                        Absence of Certain Changes

 

Since
the Balance Sheet Date, except as contemplated by this Agreement, (a) the
businesses of Company and its Subsidiary has been conducted in the ordinary
course consistent with past practices, (b) neither

 

19

 

Company
nor its Subsidiary has taken any action that, if such had been taken after the
date of this Agreement, would have been prohibited by Section 6.1(a),
(c) there has not been any damage, destruction or other casualty loss (whether
or not covered by insurance) affecting any material asset of Company or its
Subsidiary or (d) there has not been any event, occurrence or development
(whether described in one or more sections of this Article 4 or
otherwise) that, individually or in the aggregate, has had or that could
reasonably be expected to have a Material Adverse Effect.

 

4.12                        Material Contracts

 

(a)                                  Except as contemplated by this Agreement, to
the knowledge of Seller, neither Company nor its Subsidiary is a party to or
bound by any:

 

	
  (i)

  	
  employment agreement or
  employment contract with any officer or director of Company or its Subsidiary
  that has an annual base salary in excess of U.S.$150,000;

  
	
   

  	
   

  
	
  (ii)

  	
  collective bargaining
  agreement or other contract with any labor organization, union or
  association;

  
	
   

  	
   

  
	
  (iii)

  	
  covenant not to compete or
  other covenant restricting the development, manufacture, marketing or
  distribution of the products and services of Company or its Subsidiary;

  
	
   

  	
   

  
	
  (iv)

  	
  Contract with (A) Seller
  or any affiliate of Seller (other than Company or its Subsidiary) or (B) any
  current or former officer, director or employee of Company or its Subsidiary,
  Seller or any of its Affiliates;

  
	
   

  	
   

  
	
  (v)

  	
  lease, sublease or similar
  Contract with any Person under which Company or its Subsidiary is a lessor or
  sublessor of, or makes available for use to any Person, (A) any Company Real
  Property or (B) any portion of any premises otherwise occupied by Company or
  its Subsidiary;

  
	
   

  	
   

  
	
  (vi)

  	
  lease, sublease or similar
  Contract with any Person under which (A) Company or its Subsidiary is lessee
  of, or holds or uses, any machinery, equipment, vehicle or other tangible
  personal property owned by any Person other than Company or its Subsidiary or
  (B) Company or its Subsidiary is a lessor or sub-lessor of, or makes
  available for use by any Person, any tangible personal property owned or
  leased by Company or its Subsidiary, in any such case that has an aggregate
  future liability or receivable, as the case may be, in excess of U.S.$500,000
  and is not terminable by Company or its Subsidiary by notice of not more than
  sixty (60) days for a cost of less than U.S.$100,000;

  
	
   

  	
   

  
	
  (vii)

  	
  (A) continuing Contract
  for the future purchase of materials, supplies or equipment (other than
  purchase contracts and orders for inventory in the ordinary course of
  business consistent with past practice), (B) management, service, consulting
  or other similar Contract or (C) advertising agreement or arrangement, in any
  such case, that has an aggregate future liability to any Person in excess of
  U.S.$500,000 and is not terminable by Company or its Subsidiary by notice of
  not more than sixty (60) days for a cost of less than U.S.$100,000;

  
	
   

  	
   

  
	
  (viii)

  	
  material license,
  sublicense, option or other agreement relating in whole or in part to Company
  Intellectual Property (including any license or other agreement under which
  Company or its Subsidiary is licensee or licensor of any Intellectual
  Property);

  
	
   

  	
   

  
	
  (ix)

  	
  Contract with respect to
  any Indebtedness or any Guarantee;

  

 

20

 

	
  (x)

  	
  Contract under which
  Company or its Subsidiary has, directly or indirectly, made any advance,
  loan, extension of credit or capital contribution to, or other investment in,
  any Person (other than extensions of trade credit in the ordinary course of
  business consistent with past practice), in any such case, that,
  individually, is in excess of U.S.$500,000;

  
	
   

  	
   

  
	
  (xi)

  	
  Contract providing for
  indemnification of any Person with respect to liabilities relating to any
  current or former business of Company or its Subsidiary or any predecessor
  thereto;

  
	
   

  	
   

  
	
  (xii)

  	
  Contract not made in the
  ordinary course of business consistent with past practice;

  
	
   

  	
   

  
	
  (xiii)

  	
  Contract (including a
  purchase order) involving payment by Company or its Subsidiary of more than
  U.S.$750,000 or extending for a term more than one hundred eighty (180) days
  from the date of this Agreement (unless terminable without payment or penalty
  upon no more than sixty (60) days’ notice), other than purchase orders
  entered into in the ordinary course of business consistent with past practice
  after the date of this Agreement and not in violation of this Agreement;

  
	
   

  	
   

  
	
  (xiv)

  	
  Contract (including a
  sales order), involving the obligation of Company or its Subsidiary to
  deliver products or services for payment of more than U.S.$750,000 or
  extending for a term more than one hundred eighty (180) days from the date of
  this Agreement (unless terminable without payment or penalty upon no more
  than sixty (60) days’ notice), other than sales orders entered into in the ordinary
  course of business consistent with past practice after the date of this
  Agreement and not in violation of this Agreement;

  
	
   

  	
   

  
	
  (xv)

  	
  Contract for the sale of
  any asset of Company or its Subsidiary (other than inventory sales in the
  ordinary course of business consistent with past practice) or the grant of
  any preferential rights to purchase any such asset or requiring the consent
  of any party to the transfer thereof, other than any such Contract entered
  into in the ordinary course of business consistent with past practice after
  the date of this Agreement and not in violation of this Agreement;

  
	
   

  	
   

  
	
  (xvi)

  	
  Contract with by or from
  any Governmental Authority;

  
	
   

  	
   

  
	
  (xvii)

  	
  currency exchange,
  interest rate exchange, commodity exchange, derivative or similar Contract;

  
	
   

  	
   

  
	
  (xviii)

  	
  Contract for any joint
  venture, partnership or similar arrangement;

  
	
   

  	
   

  
	
  (xix)

  	
  Contract providing for the
  services of any dealer, distributor, sales representative, franchisee or
  similar representative involving the payment or receipt over the life of such
  Contract in excess of U.S.$250,000 by Company or its Subsidiary;

  
	
   

  	
   

  
	
  (xx)

  	
  Contract providing for the
  provision of advertising services (other than printing expenses in connection
  with printing or manufacture of point-of-sale advertising materials) and
  involving the payment or receipt over the life of such Contract in excess of
  U.S.$50,000 by Company or its Subsidiary; or

  
	
   

  	
   

  
	
  (xxi)

  	
  Contract other than as set
  forth above to which Company or a Subsidiary is a party or by which it or any
  of its assets or businesses is bound or subject that is material to the
  business of Company and its Subsidiary or the use or operation of their
  assets

  

 

Section
4.12(a) of the
Disclosure Schedules lists each Contract required to be set forth thereon (the Company Contracts), including the parties thereto.

 

21

 

(b)                                To the knowledge of Seller, (i) all Company Contracts are valid,
binding and in full force and effect and are enforceable by Company or its
Subsidiary in accordance with their terms, (ii) no Company Contract contains
any “change of control” or similar provision that would be triggered by the
completion of the Transactions, (iii) Company and its Subsidiary have performed
in all material respects all obligations required to be performed by them to
date under Company Contracts, and are not (with or without the lapse of time or
the giving of notice, or both) in breach or default in any material respect
thereunder and no other party to any Company Contract is (with or without the
lapse of time or the giving of notice, or both) in breach or default in any
material respect thereunder and (iv) neither Company nor its Subsidiary has
received any notice of the intention of any party to terminate any Company
Contract or to accelerate or modify in a manner materially adverse to Company
or its Subsidiary any of Company’s or its Subsidiary’s obligations or rights
under any Company Contract. Complete and correct copies of all Company
Contracts, together with all modifications and amendments thereto, have been
made available to Purchaser.

 

4.13                        Litigation

 

Section
4.13 of the
Disclosure Schedule lists each material pending or, to the knowledge of Seller,
threatened Proceeding, or claim with respect to which Company or its Subsidiary
has been contacted in writing by counsel for the plaintiff or claimant, against
or affecting Company or its Subsidiary or any of their assets, properties,
operations or businesses. Neither Company nor its Subsidiary is a party or
subject to or in default in any material respect under any Order. There is not
any material Proceeding or claim by Company or its Subsidiary pending, or that
Company or its Subsidiary intends to initiate, against any other Person. To the
knowledge of Seller, there are no facts, circumstances or conditions that could
reasonably be expected to form the basis of a Proceeding or claim against or
affecting Company or its Subsidiary or any of their assets, properties,
operations or businesses that could reasonably be expected to have a Material
Adverse Effect.

 

4.14                        Compliance with Laws and
Orders; Governmental Authorizations

 

(a)                                 Company and its Subsidiary are and have been
in full compliance in all material respects with all applicable Laws relating
to the conduct or operation of their respective business or the ownership or
use of any of their respective assets. To the knowledge of Seller, no event has
occurred or circumstance exists that (with or without notice or lapse of time
or both) (i) would constitute or result in a material violation by Company or
its Subsidiary of, or a failure on the part of Company or its Subsidiary to
comply in any material respect with, any applicable Law, (ii) may give rise to
any obligation on the part of Company or its Subsidiary to undertake, or to
bear all or any portion of the cost of, any material remedial action of any
nature and (iii) neither Company nor its Subsidiary has received any notice or
other communication (whether oral or written) from any Governmental Authority
or any other Person regarding (A) any actual, alleged, possible, or potential
material violation of, or failure to comply in any material respect with, any
applicable Law, or (B) any actual, alleged, possible, or potential obligation
on the part of Company or its Subsidiary to undertake, or to bear all or any
portion of the cost of, any material remedial action of any nature.

 

(b)                                Section 4.14(b) of the Disclosure Schedules lists each
material Governmental Authorization that is held by Company or its Subsidiary
or that otherwise relates to the business of, or to any of the assets owned or
used by, Company or its Subsidiary. Each Governmental Authorization listed or
required to be listed in Section 4.14(b) of the Disclosure Schedules is
valid and in full force and effect.

 

(c)                                 Each of Company and its Subsidiary is and has
been, in full compliance in all material respects with all of the terms and
requirements of each Governmental Authorization identified or required to be
identified in Section 4.14(b) of the Disclosure Schedules. To the
knowledge of Seller, no event has occurred or

 

22

 

circumstance
exists that may (with or without notice or lapse of time or both) (i)
constitute or result directly or indirectly in a material violation of or a
failure to comply in any material respect with any term or requirement of any
Governmental Authorization listed or required to be listed in Section
4.14(b) of the Disclosure Schedules, or (ii) result directly or indirectly
in the revocation, withdrawal, suspension, cancellation, or termination of, or
any modification to, any Governmental Authorization listed or required to be
listed in Section 4.14(b) of the Disclosure Schedules. Neither Company
nor its Subsidiary has received any notice or other communication (whether oral
or written) from any Governmental Authority or any other Person regarding (A)
any actual, alleged, possible, or potential material violation of or failure to
comply in any material respect with any term or requirement of any Governmental
Authorization or (B) any actual, proposed, possible, or potential revocation,
withdrawal, suspension, cancellation, termination of, or modification to any
Governmental Authorization listed or required to be listed in Section
4.14(b)  of the Disclosure
Schedules. All applications required to have been filed for the renewal of the
Governmental Authorizations listed or required to be listed in Section
4.14(b) of the Disclosure Schedules have been duly filed on a timely basis
with the appropriate Governmental Authorities, and all other filings required
to have been made with respect to such Governmental Authorizations have been
duly made on a timely basis with the appropriate Governmental Authorities.

 

(d)                                To the knowledge of Seller, the Governmental Authorizations listed in Section
4.14(b) of the Disclosure Schedules collectively constitute all of the
Governmental Authorizations necessary to permit Company and its Subsidiary to
lawfully conduct and operate their respective businesses in all material respects
in the manner they currently conduct and operate such businesses and to permit
Company and its Subsidiary to own and use their respective assets in all
material respects in the manner in which they currently own and use such
assets.

 

4.15                        Insurance Policies

 

Section
4.15 of the
Disclosure Schedule lists, to the knowledge of Seller, the insurance policies
maintained with respect to Company and its Subsidiary and their respective
assets and properties. All such policies are in full force and effect, all
premiums due and payable thereon have been paid, and no notice of cancellation
or termination has been received with respect to any such policy that has not
been replaced on substantially similar terms prior to the date of such
cancellation or termination.

 

4.16                        Customers and Suppliers

 

Section
4.16 of the
Disclosure Schedules lists, to the knowledge of Seller, (a) the ten (10)
largest customers of Company and its Subsidiary, taken as a whole, and the
aggregate amount of revenues received by Company and its Subsidiary from such
customers and (b) the ten (10) largest suppliers of Company and its Subsidiary,
taken as a whole, and the aggregate amount paid by Company and its Subsidiary
to such suppliers, in each case, during the two (2) most recent fiscal years.
To the knowledge of Seller, (i) no customer or supplier that is not listed on Section
4.16 of the Disclosure Schedules accounted for in excess of three percent
(3%) of the revenues or purchases of Company and its Subsidiary, taken as a
whole, in the two (2) most recent fiscal years and (ii) no customer or supplier
listed in Section 4.16 of the Disclosure Schedules has cancelled or
otherwise terminated its relationship with Company or its Subsidiary or
materially decreased or limited it purchases from or sales to Company or its
Subsidiary.

 

4.17                        Tobacco Matters

 

(a)                                 To the knowledge of Seller, (i) the
Governmental Authorizations listed in Section 4.17 of the Disclosure
Schedules constitute all Governmental Authorizations that are required under
any Tobacco Laws necessary to permit Company and its Subsidiary to conduct
their respective businesses, as currently

 

23

 

conducted
in all material respects and (ii) the Governmental Authorizations listed in Section
4.17 of the Disclosure Schedules are in full force and effect in all
material respects.

 

(b)                                To the knowledge of Seller, (i) no written notices of any violation or
alleged violation of any Tobacco Law relating to the operations or properties
of Company or its Subsidiary have been received by Company or its Subsidiary,
(ii) Company and its Subsidiary are in compliance with all Tobacco Laws, (iii)
there are no Orders outstanding, or any material Proceedings or investigations
pending or threatened, against Company or its Subsidiary and (iv) there are no
disputes involving Company or its Subsidiary, relating to compliance with any
Tobacco Laws.

 

(c)                                 To the knowledge of Seller, there is no
pending or threatened Proceeding or claim with respect to which Company or its
Subsidiary has been contacted in writing by counsel for the plaintiff or
claimant, against or affecting Company or its Subsidiary or any of their
assets, properties, operations or businesses that relates to the alleged health
effects of tobacco products or the reimbursement of costs of health care for
such alleged effects.

 

(d)                                To the knowledge of Seller, neither Company nor its Subsidiary has (i)
made any written Health Claims in or on any packaging, label, marketing or
promotional materials used or held for use by Company or its Subsidiary in
marketing cigarettes, (ii) made any public statement that would reasonably be
considered to materially adversely affect its position in any pending
Proceeding that relates to the alleged health effects of tobacco products,
(iii) conducted any research and development activities into the alleged health
effects of tobacco products, (iv) ever belonged to the Tobacco Institute, Inc.,
the Council for Tobacco Research-U.S.A. or the Center for Indoor Air Research,
Inc.) or (v) publicly advertised its products (other than at the point-of-sale,
in wholesale trade journals and in company signage).

 

(e)                                 To the knowledge of Seller, the products
designed, manufactured, distributed, marketed or sold by Company and its
Subsidiary, the components thereof (including additives) and the manner of
their production, distribution, supply, marketing, advertising and sale comply
with all Tobacco Laws and the MSA.

 

(f)                                   There has not been any product recall
conducted with respect to any product designed, manufactured or sold by Company
or its Subsidiary.

 

4.18                        Employees

 

Section
4.18 of the
Disclosure Schedules lists, to the knowledge of Seller, the names of all
current directors, officers and employees (with base compensation in excess of
U.S.$150,000 in 2006) of Company and its Subsidiary, as well as the following
information for each such officer or employee: name; date of hire; job title;
and salary, bonus, commission, equity compensation, profit sharing and any
other remuneration paid or awarded in 2006.

 

4.19                        Labor Relations; Compliance

 

Neither
Company nor its Subsidiary is a party to any collective bargaining or other
labor Contract. To the knowledge of Seller, (a) no labor organization or group
of employees of Company or its Subsidiary has made any demand for recognition
or certification, and there are no representation or certification proceedings
or petitions seeking a representation proceeding presently pending or
threatened to be brought or filed with the National Labor Relations Board or
any other labor relations tribunal or authority, (b) there are no organizing
activities, strikes, work stoppages, slowdowns, lockouts, arbitrations or
grievances, or other labor disputes pending or threatened against or involving
Company or its Subsidiary and (c) Company and its Subsidiary are in compliance
in all material respects with all

 

24

 

applicable
Laws respecting employment and employment practices, terms and conditions of
employment, wages and hours and occupational safety and health.

 

4.20                        Employee Benefit Plans

 

(a)                                 Section 4.20(a) of the Disclosure Schedules lists each
material Employee Plan and each other employee benefit plan within the meaning
of Section 3(3) of ERISA in which employees of Company and its Subsidiary
participate (each, an Other Plan). Seller has delivered to Purchaser
true, correct and complete copies of each Employee Plan and each Other Plan
(and, if applicable, related trust agreements), current summary plan
descriptions (if any), any modifications or amendments thereto, together with
the most recent annual report (Form 5500 including, if applicable, Schedule B
thereto) and the most recent actuarial valuation report prepared in connection
with any Employee Plan or Other Plan. Each Employee Plan is sponsored and
maintained solely by Company or its Subsidiary. Section 4.20(a) of the
Disclosure Schedules identifies each Employee Plan and each Other Plan that is
(i) maintained in connection with any trust described in Section 501(c)(9) of
the Code or (ii) intended to be qualified under Section 401(a) of the Code.

 

(b)                                To the knowledge of Seller, neither Company, its Subsidiary nor any
ERISA Affiliate of Company nor any predecessor thereof sponsors, maintains or
contributes to, or has in the past sponsored, maintained or contributed to, or
has any current or contingent liabilities under any plan subject to Title IV of
ERISA.

 

(c)                                 To the knowledge of Seller, neither Company,
its Subsidiary nor any ERISA Affiliate of Company has (i) engaged in, or is a
successor or parent corporation to any entity that has engaged in, a
transaction described in Section 4069, 4204 or 4212(c) of ERISA that could
become a liability of Company, its Subsidiary or Purchaser or any of their
respective ERISA Affiliates.

 

(d)                                To the knowledge of Seller, each Employee Plan that is intended to be a
tax-qualified plan has been the subject of a favorable notification letter from
the Internal Revenue Service on which such Employee Plan may rely that such
Employee Plan and related trust is qualified and exempt from federal income
Taxes under Sections 401(a) and 501(a), respectively, of the Code; no such
notification letter has been revoked, and revocation has not been threatened;
no event has occurred and no circumstances exist that would adversely affect
the tax-qualification of such Employee Plan; and such Employee Plan has not
been amended since the effective date of its most recent notification letter in
any respect that might adversely affect its qualification, materially increase
its cost or require security under Section 307 of ERISA. Company has delivered
to Purchaser a copy of the most recent notification letter received with
respect to each Employee Plan for which such a letter has been issued, as well
as a copy of any pending application for a determination letter. Company also
has provided to Purchaser a list of all Employee Plan amendments as to which a
favorable determination letter has not yet been received.

 

(e)                                 No employee or former employee of Company or
its Subsidiary will become entitled to any bonus, retirement, severance, job
security or similar benefit or enhanced or accelerated such benefit as a result
of the Transactions.

 

(f)                                   To the knowledge of Seller, there is no
Contract, plan or arrangement, written or otherwise, covering any employee or
former employee of Company or its Subsidiary that, individually or
collectively, as a result of the Transactions, could give rise to the payment
of any amount that would not be deductible by Company or its Subsidiary under
Section 280G of the Code.

 

(g)                                None of the Employee Plans is (i) a plan that has two (2) or more
contributing sponsors at least two (2) of which are not under common control,
within the meaning of Section 4063 of ERISA (a Multiple Employer Plan)
or (ii) a Multiemployer Plan. To the knowledge of Seller, neither
Company, its

 

25

 

Subsidiary
nor any ERISA Affiliate of Company has at any time during the last six years,
contributed to or been obligated to contribute to any Multiemployer Plan or
Multiple Employer Plan.

 

(h)                                To the knowledge of Seller, neither Company nor its Subsidiary has any
current or projected liability in respect of postretirement health or life
insurance benefits for retired, former or current employees of Company or its
Subsidiary, except as required to avoid excise tax under Section 4980B of the
Code.

 

(i)                                    To the knowledge of Seller, neither Company,
its Subsidiary nor any other Person, including any fiduciary, has engaged in
any “prohibited transaction” (as defined in Section 4975 of the Code or Section
406 of ERISA) that could subject any of the Employee Plans or their related
trusts, Company, its Subsidiary or any Person that Company or its Subsidiary
has an obligation to indemnify, to any material tax or penalty imposed under
Section 4975 of the Code or Section 502 of ERISA.

 

(j)                                    To the knowledge of Seller, there are no
pending or threatened Proceedings or claims (other than routine claims in the
ordinary course of the Employee Plan) that have been asserted or instituted,
and, to the knowledge of Seller, no set of circumstances exists that could
reasonably be expected to give rise to a material Proceeding or claim, against
any Employee Plan, any fiduciaries thereof with respect to their duties to any
such Employee Plan or the assets of any of the trusts under any of such plans
that could result in any liability of Company or its Subsidiary to the Pension
Benefit Guaranty Corporation, the Department of Treasury, the Department of Labor,
any Employee Plan, any participant in any Employee Plan or any other party.

 

(k)                                 To the knowledge of Seller, each Employee
Plan that is a “nonqualified deferred compensation plan” (as defined under
Section 409A(d)(1) of the Code) has been operated and administered in good
faith compliance with Section 409A since January 1, 2005 and has not been
modified since October 2, 2004. Any amounts paid or payable pursuant to each
Employee Plan that is a “nonqualified deferred compensation plan” (as defined
under Section 409A(d)(1) of the Code) is not, or would not be, prior to payment
to a service provider (within the meaning of IRS Notice 2005-1) of such
amounts, includible in the gross income of a service recipient (within the
meaning of IRS Notice 2005-1) and will not be subject to material interest or
the additional tax imposed by Section 409A(a)(1)(B) of the Code. To the
knowledge of Seller, all bonus, incentive, profit sharing or other payments
paid by Company and its Subsidiary are paid within 2-1/2 months after the end
of the taxable year in which the relevant services required for the payment
were performed and will not be considered a “nonqualified deferred compensation
plan” (as defined under Section 409A(d)(1) of the Code).

 

(l)                                    To the knowledge of Seller, except as would
not be material to Company and its Subsidiary taken as a whole, each individual
who renders services to Company or its Subsidiary who is classified by Company
and its Subsidiary as having the status of an independent contractor or other
non-employee status for any purpose (including for purposes of taxation and tax
reporting and under Employee Plans) is properly so characterized.

 

4.21                        Environmental Matters

 

(a)                                 To the knowledge of Seller, Company, its
Subsidiary and the Company Real Properties are and have been operated in
compliance in all material respects with all applicable Environmental Laws.

 

(b)                                To the knowledge of Seller, Company and its Subsidiary possess all
material Governmental Authorizations required for their respective business,
operations and the Company Real Properties pursuant to applicable Environmental
Laws, and Company, its Subsidiary and their respective business, operations and
the Company Real Properties are and have been operated in compliance in all
material respects with all such Governmental Authorizations.

 

26

 

(c)                                 To the knowledge of Seller, there are no
pending or threatened, Proceedings against or affecting Company, its Subsidiary
or any of the Company Real Properties that allege a violation of, or liability
or obligation under, any Environmental Law.

 

(d)                                To the knowledge of Seller, none of Company, its Subsidiary and the
Company Real Properties are subject or party to any Orders, or any agreements
with any Person, imposed under or otherwise relating to Environmental Laws, and
neither Company nor its Subsidiary is conducting any investigation or
remediation activities, or required to conduct any such activities, at any
location in connection with any actual or suspected noncompliance with
Environmental Laws or presence of any Hazardous Substances.

 

(e)                                 To the knowledge of Seller, there are no
Hazardous Substances present at any of the Company Real Properties that could
reasonably be expected to require investigation, cleanup or other remediation
activities, and, to the knowledge of Seller, there are no Hazardous Substances
present at any other location in connection with or as the result of activities
of or relating to Company or its Subsidiary or any of their respective
predecessors or any Company Real Properties that could reasonably be expected
to subject Company or its Subsidiary to any liability.

 

(f)                                   To the knowledge of Seller, neither Company
nor its Subsidiary has assumed or retained any liabilities or obligations under
Environmental Laws in connection with any formerly owned or operated
properties, any prior businesses or operations, or any closed, sold or acquired
businesses or operations.

 

(g)                                Seller has delivered to Purchaser true and correct copies of all
written environmental audits, reports, surveys or evaluations in Company’s, its
Subsidiary’s or Seller’s possession relating to the Company Real Properties.

 

(h)                                To the knowledge of Seller, none of the Company Real Properties are
subject to any Lien in favor of any Governmental Authority or other Person for
any liability or obligation imposed under or in connection with any
Environmental Law, including any Lien in connection with any actual or
suspected presence of Hazardous Substances or the restoration, reclamation or
preservation of the environment or natural resources.

 

(i)                                    To the knowledge of Seller, neither Company
nor its Subsidiary has manufactured, sold, distributed, or otherwise used
asbestos or asbestos-containing materials in any products or operations at any
location.

 

(j)                                    To the knowledge of Seller, there are no
facts, circumstances or conditions that could reasonably be expected to form
the basis of a Proceeding under Environmental Laws in connection with Company,
its Subsidiary or their respective predecessors, any Company Real Property or
any properties formerly owned or operated by Company, its Subsidiary or their
respective predecessors, or its predecessors that could reasonably be expected
to have a Material Adverse Effect.

 

4.22                        Brokers

 

Except
for Seller’s Financial Advisor, the fees of which will be paid by Seller, there
is no investment banker, broker, finder or other intermediary that has been
retained by or is authorized to act on behalf of Seller, Company or its
Subsidiary and that might be entitled to any fee or commission in connection
with the Transactions.

 

4.23                        Certain Payments

 

To
the knowledge of Seller, neither Company, its Subsidiary nor any director,
officer, employee or agent of Company or its Subsidiary, nor any Person associated
with or acting for on or behalf of Company or its Subsidiary, has, directly or
indirectly, (a) made any contribution, gift, bribe, rebate, payoff, influence

 

27

 

payment,
kickback or other payment to any Person, public or private, regardless of form,
whether in money, property or services to (i) obtain favorable treatment in
securing business, (ii) to pay for favorable treatment of business secured,
(iii) to obtain special concessions of for special concessions already obtained
or (iv) in violation of any Law or (b) established or maintained any fund or
asset that have not been recorded in the books and records of Company or its
Subsidiary.

 

4.24                        Books and Records

 

The
books of account, minute books, stock record books and other records of Company
and its Subsidiary, all of which have been made available to Purchaser, are to
the knowledge of Seller, true, correct and complete in all material respects,
and have been maintained in accordance with sound business practices. All such
books and records are in the possession of Company or its Subsidiary.

 

4.25                        Related Party Transactions

 

No
Contract between Company or its Subsidiary, on the one hand, and Seller or any
of its Affiliates, on the other hand, shall continue to be in effect after the
Closing.

 

4.26                        Disclosure

 

The
representations and warranties contained in this Article 4 do not
contain any untrue statement of a material fact or omit to state any material
fact necessary to make the statements contained in this Article 4 not
misleading.

 

5.                                      REPRESENTATIONS AND
WARRANTIES REGARDING PURCHASER

 

Purchaser
represents and warrants to Seller that, as of the date of this Agreement and as
of the Closing Date:

 

5.1                               Organization

 

Purchaser
is a corporation duly incorporated, validly existing and in good standing under
the Laws of the State of Delaware, has the requisite power and authority to
own, operate and lease its properties and to carry on its business as it is now
being conducted. Purchaser is duly qualified to do business in each
jurisdiction in which the nature of its business or the properties owned,
operated or leased by it makes such qualification necessary, except where any
such failures to be so qualified would not, individually or in the aggregate,
materially adversely affect the ability of Purchaser to perform its obligations
under this Agreement.

 

5.2                               Authority; Execution and
Delivery; Enforceability

 

Purchaser
has all necessary corporate power and authority to enter into this Agreement
and to perform its obligations under this Agreement and to complete the
Transactions. The execution, delivery and performance by Purchaser of this
Agreement and the completion of the Transactions have been duly authorized and
all necessary corporate proceedings on the part of Purchaser have been taken.
This Agreement has been duly executed and delivered by Purchaser, and assuming
the due authorization, execution and delivery by each other party, constitutes
a legal, valid and binding obligation of Purchaser, enforceable in accordance
with its terms.

 

28

 

5.3                               No Conflicts; Consents

 

(a)                                 The execution, delivery and performance of
this Agreement by Purchaser do not, and the completion of the Transactions will
not, (i) conflict with or violate the certificate of incorporation, bylaws or
other organizational document of Purchaser, (ii) conflict with or violate
any applicable Law or Order applicable to Purchaser or (iii) breach or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in any loss of any
benefit under, or the creation of a Lien on any of Purchaser’s assets pursuant
to, any Contract or other instrument or obligation to which Purchaser is a
party, except in the case of this clause (iii) as would not materially
adversely affect the ability of Purchaser to perform its obligations under this
Agreement.

 

(b)                                Other than compliance with and any filings required under the HSR Act,
the execution, delivery and performance by Purchaser of this Agreement do not,
and the completion of the Transactions will not, require any Governmental
Authorization to be obtained by Purchaser or any filing with any Governmental
Authority to be made by Purchaser.

 

5.4                               Litigation

 

There
are not any (a) Proceedings pending or, to the knowledge of Purchaser,
threatened against or affecting Purchaser or any of its Affiliates or (b)
investigations by any Governmental Authority that are pending or, to the
knowledge of Purchaser, threatened against or affecting Purchaser or any of its
Affiliates that, in either case, would, individually or in the aggregate,
materially adversely affect the ability of Purchaser to perform its obligations
under this Agreement.

 

5.5                               Compliance with Applicable
Law

 

Purchaser
has complied with and is compliance with all applicable Laws, except for
instances of non-compliance as would not, individually or in the aggregate,
materially adversely affect the ability of Purchaser to perform its obligations
under this Agreement.

 

5.6                               Availability of Funds

 

Purchaser
will have as of the Closing sufficient cash available or borrowing facilities
that together are sufficient to enable it to complete the Transactions.

 

5.7                               Purchase for Investment

 

Purchaser
is purchasing the Shares for investment for its own account and not with a view
to, or for sale in connection with, any distribution thereof.

 

5.8                               Brokers

 

Except
for Citigroup, there is no investment banker, broker, finder or other
intermediary that has been retained by or is authorized to act on behalf of
Purchaser or its Affiliates and that might be entitled to any fee or commission
in connection with the Transactions.

 

29

 

6.                                      ADDITIONAL AGREEMENTS

 

6.1                               Covenants Relating to
Conduct of Business

 

(a)                                  Except for matters set forth in Section
6.1(a) of the Disclosure Schedules or otherwise expressly permitted by the
terms of this Agreement, from the date of this Agreement to the Closing, Seller
shall cause the businesses of Company and its Subsidiary to be conducted in the
usual, regular and ordinary course in substantially the same manner as
previously conducted and, to the extent consistent therewith, use reasonable
best efforts to keep intact their respective businesses, keep available the
services of their current employees and preserve their relationships with
customers, suppliers, licensors, licensees, distributors and others with whom
they deal to the end that their respective businesses shall be unimpaired at
the Closing; provided that Seller
shall not be obligated to, directly or indirectly, provide any funds to Company
or its Subsidiary. Seller shall not, and shall not permit Company or its
Subsidiary to, take any action that would, or that could reasonably be expected
to, result in any of the conditions set forth in Article 9 not being
satisfied. In addition (and without limiting the generality of the foregoing),
except as set forth in Section 6.1(a) of the Disclosure Schedules or
otherwise expressly permitted or required by the terms of this Agreement,
Seller shall not permit Company or its Subsidiary to:

 

	
  (i)

  	
  amend its articles of
  incorporation or bylaws;

  
	
   

  	
   

  
	
  (ii)

  	
  redeem or otherwise acquire
  any shares of its capital stock or issue any capital stock or any option,
  warrant or right relating thereto or any securities convertible into or
  exchangeable for any shares of capital stock;

  
	
   

  	
   

  
	
  (iii)

  	
  adopt or amend in any
  material respect any Employee Plan (or any plan that would be an Employee
  Plan if adopted) or enter into, adopt, extend (beyond the Closing Date),
  renew or amend any collective bargaining agreement or other Contract with any
  labor organization, union or association, except in each case as required by
  applicable Law after providing written notice to Purchaser;

  
	
   

  	
   

  
	
  (iv)

  	
  grant to any director,
  executive officer or employee any increase in compensation or benefits,
  except (A) as may be required under existing agreements, (B) for any increases
  for which Seller shall be solely obligated and (C) for increases to employees
  (other than officers) in the ordinary course of business consistent with past
  practice;

  
	
   

  	
   

  
	
  (v)

  	
  hire, or terminate the
  employment of, any employees except in the ordinary course of business
  consistent with past practice;

  
	
   

  	
   

  
	
  (vi)

  	
  incur or assume any
  liabilities, obligations or Indebtedness or Guarantee any such liabilities,
  obligations or Indebtedness, other than in the ordinary course of business
  consistent with past practice;

  
	
   

  	
   

  
	
  (vii)

  	
  other than in the ordinary
  course of business consistent with past practice, permit, allow or suffer any
  of its assets to become subjected to any Lien or Encumbrance of any nature
  whatsoever;

  
	
   

  	
   

  
	
  (viii)

  	
  cancel any material
  Indebtedness (individually or in the aggregate) or waive any claims or rights
  of substantial value;

  
	
   

  	
   

  
	
  (ix)

  	
  pay, loan or advance any
  amount to, or sell, transfer or lease any of its assets to, or enter into any
  agreement or arrangement with, Seller or any of its Affiliates, except for
  (A) transactions among

  

 

30

 

Company
and its Subsidiary, (B) dividends and distributions permitted under clause (ii)
above and (C) intercompany transactions in the ordinary course of business
consistent with past practice;

 

	
  (x)

  	
  settle or compromise (A)
  any pending or threatened Proceeding or claim related to alleged health
  effects from use of tobacco products or the regulation of the production,
  sale or distribution of tobacco products or (B) any other pending or
  threatened Proceeding or claim (1) in which the amount involved is greater
  than U.S.$250,000, (2) that is material to Company and its Subsidiary or (3)
  that relates to the Transactions;

  
	
   

  	
   

  
	
  (xi)

  	
  make any change in any
  method of accounting or accounting practice or policy other than those
  required by GAAP;

  
	
   

  	
   

  
	
  (xii)

  	
  make, change or rescind
  any material Tax election not required by Law, file any amended Tax Return
  not required by Law, enter into any closing agreement relating to Taxes,
  waive or extend the statute of limitations in respect of Taxes (other than
  pursuant to extensions of time to file Tax Returns obtained in the ordinary
  course of business), or settle or compromise any material Tax liability other
  than in the ordinary course of business consistent with past practice, or
  surrender any right or claim for a Tax refund;

  
	
   

  	
   

  
	
  (xiii)

  	
  acquire by merging or
  consolidating with, or by purchasing a substantial portion of the assets of,
  or by any other manner, any business or any corporation, partnership,
  association or other business organization or division thereof or otherwise
  acquire any assets (other than inventory) that are material;

  
	
   

  	
   

  
	
  (xiv)

  	
  make or incur any capital
  expenditure that is not currently approved in writing or budgeted and that,
  individually, is in excess of U.S.$500,000 or make or incur any such
  expenditures that, in the aggregate, are in excess of U.S.$1,000,000;

  
	
   

  	
   

  
	
  (xv)

  	
  sell, lease, license or
  otherwise dispose of any of its material assets, except inventory and
  obsolete or excess equipment sold in the ordinary course of business
  consistent with past practice;

  
	
   

  	
   

  
	
  (xvi)

  	
  enter into any lease of
  real property, except any renewals of existing property in the ordinary
  course of business consistent with past practice;

  
	
   

  	
   

  
	
  (xvii)

  	
  modify, amend, terminate,
  renew or permit the lapse of any lease of, or reciprocal easement agreement,
  operating agreement or other material agreement relating to, Owned Real
  Property or Leased Real Property (except modifications or amendments
  associated with renewals of existing leases); or

  
	
   

  	
   

  
	
  (xviii)

  	
  authorize any of, or
  commit or agree, whether in writing or otherwise, to take or to do any of the
  foregoing actions.

  

 

(b)                                 Seller shall promptly advise Purchaser in
writing of the occurrence of any matter or event that has had or could
reasonably be expected to have a Material Adverse Effect.

 

(c)                                  In connection with the continuing operation
of the businesses of Company and its Subsidiary between the date of this
Agreement and the Closing, Seller shall use its reasonable best efforts to
consult in good faith on a regular and frequent basis with the representatives
of Purchaser to report all material operational developments and the general
status of ongoing operations pursuant to procedures requested by Purchaser or
such representatives. Seller acknowledges that any such consultation shall not

 

31

 

constitute
a waiver by Purchaser of any rights it may have under this Agreement and that
Purchaser shall not have any liability or responsibility for any actions of
Seller or any of its officers or directors with respect to matters that are the
subject of such consultations.

 

(d)                                 Seller shall keep, or cause to be kept, in
full force and effect through the close of business on the Closing Date, all
insurance policies listed in Section 4.15 of the Disclosure Schedules.
As of the Closing, Seller shall assign to Purchaser any and all assignable
rights that Seller may have under such insurance policies covering claims
relating to the period on or prior to the Closing Date.

 

6.2                               Stockholders Meeting; Voting
of Seller Common Stock in Seller ESOP

 

As
soon as reasonably practicable following the date of this Agreement, but in no
event later than March 2, 2007, Seller, acting through its Board of Directors,
shall (a) duly call, give notice of, convene and hold a meeting of its
stockholders for the purpose of obtaining the Seller Stockholder Approval (the Stockholders Meeting), (b) provide the participants in the Seller ESOP with such
information and materials (the ESOP Materials) as may be required in connection
with the Stockholders Meeting by the terms and provisions of the Seller ESOP
and by ERISA and all applicable Laws and (c) (i) include in the notice of such
Stockholders Meeting and the ESOP Materials the recommendation of the Board of
Directors of Seller that the stockholders of Seller vote in favor of and that
each participant in the Seller ESOP direct the ESOP Trustees to vote all shares
of Seller Common Stock allocated to such participant in favor of approval of
the Transactions {provided that
the Board of Directors of Seller may fail to make or may withdraw, modify or
change such recommendation if it shall have determined in good faith, after
consultation with outside and inside counsel to Seller and Seller’s Financial
Advisor, that such action is required in order for the Board of Directors of
Seller to comply with its fiduciary duties under applicable Law) and (ii) take
all lawful actions to solicit and obtain the Seller Stockholder Approval as
contemplated by this Agreement.

 

6.3                               No Solicitation

 

(a)                                  Seller agrees that (i) it and its executive
officers and directors shall not, (ii) its Subsidiary and its executive
officers and directors shall not and (iii) it shall cause its and its
Subsidiary’s agents and representatives (including any investment banker,
attorney or accountant) (Representatives)  to not, (A) directly or indirectly, initiate, solicit,
encourage or facilitate any inquiries or the making of any proposal or offer
with respect to, or that could reasonably expected to lead to, an offer to
purchase, proposal for a merger, consolidation, share exchange, reorganization,
recapitalization, business combination or other similar transaction involving
Company or its Subsidiary or any proposal or offer to acquire in any manner an
equity interest in, or a portion of the businesses or assets of, Company or its
Subsidiary, other than the Transactions (any such proposal or offer being to as
an Alternative Proposal) or (B) directly or indirectly,
engage in any negotiations or discussions concerning, or provide access to its
properties, books, records, employees or any confidential information or data
to, any person in connection with or relating to an Alternative Proposal,
otherwise knowingly encourage or facilitate any effort to make or implement any
Alternative Proposal, execute or enter into any agreement, understanding,
letter of intent or arrangement in connection with or with respect to any
Alternative Proposal or resolve or authorize to do any of the foregoing. Seller
shall take the necessary steps to promptly inform its Representatives and those
of its Subsidiary of Seller’s obligations under this Section 6.3

 

(b)                                 Notwithstanding Section 6.3(a),
nothing contained in this Agreement shall prevent Seller or its Board of Directors
from, prior to receipt of the Seller Stockholder Approval, (i) providing access
to its properties, books and records and providing information or data in
response to a request therefor by a Person that has made an unsolicited bona fide written Alternative Proposal, if
the Board of Directors of Seller receives from the Person so requesting such
information an executed confidentiality agreement on terms 

 

32

 

substantially
similar to those contained in the Confidentiality Agreement (except for such
changes specifically necessary in order for Seller to be able to comply with
its obligations under this Agreement), (ii) engaging in any negotiations or
discussions with any Person who has made an unsolicited bona fide written Alternative Proposal or
(iii) withdrawing, or modifying or, changing or qualifying in any adverse
manner its approval or recommendation of the Transactions (which shall be
permitted only to the extent permitted by Section 6.2(a)); provided, in the case of clauses (i) and
(ii) above, the Board of Directors of Seller shall have determined in good
faith, after consultation with its outside and inside legal counsel and Seller’s
Financial Advisor that such actions would reasonably be expected to result in
an Alternative Proposal, which (A) is reasonably capable of being completed
expeditiously, taking into account legal, financial, regulatory, timing and
similar aspects of the Alternative Proposal and the identity and
characteristics of the Person making the Alternative Proposal, including the
likelihood of such Person obtaining financing, (B) would not be subject to
greater conditionality than that contained in this Agreement and (C) would, if
completed, result in a transaction more favorable to Seller from a financial
point of view than the Transactions, taking into account any changes proposed
to be made to this Agreement by Purchaser (any such more favorable Alternative
Proposal (which must also involve not less than all of the equity, assets,
revenues or earnings of Company) being referred to in this Agreement as a Superior Proposal).

 

(c)                                  Except as set forth in Section 6.3(c)
of the Disclosure Schedules, Seller acknowledges that it has not conducted any
activities, discussions or negotiations with any Persons with respect to any
Alternative Proposal within the year preceding the date of this Agreement.
Seller shall also promptly notify Purchaser (and in any event within 24 hours)
of the receipt of any Alternative Proposal, which notice shall include the
identity of the Person making such Alternative Proposal and the material terms
thereof. Seller shall thereafter keep Purchaser informed on a current basis of
any changes in the status or terms of any such Alternative Proposal, including
whether such Alternative Proposal has been withdrawn or rejected. Seller also
agrees to provide Purchaser any information that it provides to any Person
under this Section 6.3 at substantially the same time as it provides it
to such other Person and that it will promptly request any Person that has
heretofore executed a confidentiality agreement in connection with the
consideration of a transaction involving Company or its Subsidiary to return or
destroy all confidential information furnished prior to the execution of this
Agreement to or for the benefit of such Person by or on behalf of Seller or its
Affiliates.

 

6.4                               Access to Information

 

Seller
shall, and shall cause Company and its Subsidiary to, afford to Purchaser and
its accountants, counsel and other representatives reasonable access, upon
reasonable notice during normal business hours during the period prior to the
Closing, to any and all of the properties, assets, books, contracts,
commitments, Tax Returns, records and other documents of Company and its
Subsidiary, and, during such period shall furnish promptly to Purchaser any
information concerning Company and its Subsidiary as Purchaser may request; provided, however, that such access does
not reasonably disrupt the normal operations of Company and its Subsidiary.

 

6.5                               Confidentiality

 

(a)                                  Purchaser acknowledges that the information
being provided to it in connection with the Transactions is subject to the
terms of a confidentiality agreement between Purchaser and Seller, dated
December 13, 2006 (the Confidentiality Agreement),
the terms of which are incorporated into this Agreement by reference. Effective
upon, and only upon, the Closing, the Confidentiality Agreement shall terminate
with respect to information relating solely to Company and its Subsidiary; provided, however, that Purchaser
acknowledges that any and all other information provided to it by Seller shall
remain subject to the terms and conditions of the Confidentiality Agreement
after the Closing Date.

 

33

 

(b)                                 Seller shall keep confidential, and cause its
Affiliates and its and their officers, directors, employees and advisors to
keep confidential, all information relating to Company and its Subsidiary.
Purchaser shall be free to use and disclose all or any of such proprietary
information and trade secrets that (i) were already in Purchaser’s possession
at the time of disclosure to Purchaser, (ii) are a matter of public knowledge,
(iii) have been or are hereafter published other than through Purchaser or (iv)
are lawfully obtained by Purchaser from a third Person without restrictions of
confidentiality.

 

(c)                                  Seller hereby assigns, effective at the
Closing, to Purchaser its rights under all confidentiality agreements entered
into by Seller with any Person in connection with the proposed sale of Company
to the extent such rights relate to Company and its Subsidiary. Copies of such
confidentiality agreements shall be provided to Purchaser on the Closing Date.

 

6.6                               Reasonable Best Efforts

 

(a)                                  On the terms and subject to the conditions of
this Agreement, each Party shall use its reasonable best efforts to cause the
Closing to occur, including taking all actions necessary to comply promptly
with all legal requirements that may be imposed on it or any of its Affiliates
with respect to the Closing.

 

(b)                                 Each of Seller and Purchaser shall as
promptly as possible, but in no event later than February 16, 2007, file with
the United States Federal Trade Commission (the FTC)
and the United States Department of Justice (the DOJ)
the notification and report form required for the Transactions pursuant to the
HSR Act (HSR Filing). Any supplemental information requested by
the FTC or DOJ in connection with any such HSR Filing (Requested Information) shall
also be provided as promptly as practicable. Seller and Purchase shall request
early termination of waiting period under the HSR Act relating to the
Transactions by so indicating in the HSR Filing. Any such HSR Filing and provision
of Requested Information shall be in substantial compliance with the
requirements of the HSR Act. Each of Seller and Purchaser shall furnish to the
other such necessary information and reasonable assistance as the other may
request in connection with its preparation of any such HSR Filing or the
provision of any Requested Information. Seller and Purchaser shall keep each
other apprised of the status of any communications with, and any inquiries or
requests for additional information from, the FTC or the DOJ. Each Party shall
use its reasonable best efforts to obtain clearance required under the HSR Act
for the completion of the Transactions.

 

(c)                                  Each of Seller and Purchaser shall (i) as
promptly as practicable make all filings with any Governmental Authority
required by it under any antitrust Laws (other than the HSR Act) with respect
to the Transactions and (ii) comply at the earliest practical date with any
request for supplemental information received from any Governmental Authority
in respect of such filings or the Transactions. Each of Seller and Purchaser
shall furnish to the other such necessary information and reasonable assistance
as the other may request in connection with its preparation of any such filings
or supplemental information. Seller and Purchaser shall keep each other
apprised of the status of any communications with, and any inquiries or
requests for additional information from, any Governmental Authority in respect
of such filings or the Transactions. Each Party shall use its reasonable best
efforts to obtain any clearance required under any antitrust Laws for the
completion of the Transactions.

 

(d)                                 Prior to the Closing and as may be reasonably
requested thereafter, each Party shall, and shall cause its Affiliates to, use
its reasonable best efforts to obtain, and to cooperate in obtaining, all
consents from third parties necessary or appropriate to permit the completion
of the Transactions; provided, however, that
the Parties shall not be required to pay or commit to pay any amount to (or
incur any obligation in favor of) any Person from whom any such consent may be
required (other than nominal filing or application fees).

 

34

 

6.7                               Supplemental Disclosure

 

Seller
shall have the continuing right and obligation until the Closing promptly to
supplement or amend the Disclosure Schedules with respect to any matter
hereafter that comes to the knowledge of Seller that, if existing or known at
the date of this Agreement, would have been required to be set forth or
described in the Disclosure Schedules; provided,
however, that no supplement or amendment to the Disclosure Schedules
relating to matters arising prior to the date of this Agreement shall be
considered as an exception to any representation or warranty for purposes of
determining whether Purchaser is entitled to indemnification under Article
11 for breach thereof (it being understood and agreed that any such
supplement or amendment to the Disclosure Schedules relating to matters arising
after the date of this Agreement shall be considered as an exception to any
representation or warranty for purposes of determining whether Purchaser is
entitled to indemnification under Article 11 for breach thereof).

 

6.8                               Post-Closing Cooperation

 

(a)                                  Seller and Purchaser shall cooperate with
each other, and shall cause their officers, employees, agents, auditors and
representatives to cooperate with each other, for a period of sixty (60) days
after the Closing to ensure the orderly transition of Company and its
Subsidiary from Seller to Purchaser and to minimize any disruption to Company
and its Subsidiary and the other respective businesses of Seller and Purchaser
that might result from the Transactions. After the Closing, upon reasonable
written notice, Seller and Purchaser shall furnish or cause to be furnished to
each other and their Affiliates and their respective employees, counsel,
auditors and representatives access, during normal business hours, to such
information and assistance relating to Company and its Subsidiary (to the
extent within the control of such Party) as is reasonably necessary for
financial reporting and accounting matters.

 

(b)                                 Each Party shall reimburse the other for
reasonable out-of-pocket costs and expenses incurred in assisting the other
pursuant to this Section 6.8. Neither Party shall be required by this Section
6.8 to take any action that would unreasonably interfere with the conduct
of its business or unreasonably disrupt its normal operations (or, in the case
of Purchaser, those of Company or its Subsidiary). Any information relating to
Company and its Subsidiary received by Seller pursuant to this Section 6.8
shall be subject to Section 6.5(b).

 

6.9                               Publicity

 

From
the date of this Agreement through the Closing Date, no public release or
announcement concerning this Agreement or the Transactions shall be issued by
either Party without the prior consent of the other Party (which consent shall
not be unreasonably withheld), except as such release or announcement may be
required by Law or the rules or regulations of any United States or foreign
securities exchange, in which case the Party required to make the release or
announcement shall allow the other Party reasonable time to comment on such
release or announcement in advance of such issuance; provided, however, that (a) each of Seller and Purchaser may
make internal announcements to their respective employees that are consistent
with the Parties’ prior public disclosures regarding the Transactions after
reasonable prior notice to and consultation with the other Party and (b) Seller
may make such communications to the participants to in the Seller ESOP as are
necessary to obtain the Seller Stockholder Approval (copies of which shall be
provided to Purchaser reasonably in advance of distribution).

 

6.10                        Records

 

On
the Closing Date, Seller shall deliver or cause to be delivered to Purchaser
all material agreements, documents, books, records and files (collectively, Records),  if any, in the
possession of Seller relating to

 

35

 

the
business and operations of Company or its Subsidiary to the extent not then in
the possession of Company and its Subsidiary, subject to the following
exceptions:

 

(a)                                  Purchaser recognizes that certain Records may
contain incidental information relating to Company and its Subsidiary or may
relate primarily to Subsidiaries, divisions or businesses of Seller other than
Company and its Subsidiary, and that Seller may retain such Records and shall
provide copies of the relevant portions thereof to Purchaser; and

 

(b)                                 Seller may retain any Tax Returns, and
Purchaser shall be provided with copies of such Tax Returns that relate to
Company’s and its Subsidiary’s separate Tax Returns or separate Tax liability.

 

6.11                        Certain Licenses and Permits

 

Seller
agrees that all permits that are held in the name of any employee, officer,
director, stockholder, agent or otherwise on behalf of Company or its
Subsidiary shall be duly and validly transferred to Company or its Subsidiary
without consideration prior to the Closing and that the warranties,
representations, covenants and conditions contained in this Agreement shall
apply to the same as if held by Company or its Subsidiary as of the date of
this Agreement.

 

6.12                        Further Assurances

 

From
time to time, as and when reasonably requested by either Party, the other Party
shall execute and deliver, or cause to be executed and delivered, all such
documents and instruments and shall take, or cause to be taken, all such
further or other actions, as such other Party may reasonably deem necessary or
desirable to complete the Transactions.

 

6.13                        Refinancing of Indebtedness

 

Seller
shall, and shall cause Company and its Subsidiary, to take all actions as may
be necessary to permit Purchaser to, and shall cooperate with Purchaser to,
cause any outstanding borrowings (including any letters of credit) under
Company’s credit facility to be repaid or prepaid with funds as may be arranged
by Purchaser, as the case may be, including by providing any required
prepayment or similar notices, and any and all Liens on any assets or
properties of Company or its Subsidiary relating to such borrowings to be
released, in each case, at and as of the Closing.

 

6.14                        Declaration of Dividend

 

Prior
to Closing and subject to applicable Law, Seller shall cause Company and its
Subsidiary to declare a dividend in accordance with the Kentucky Business
Corporation Act on the Shares (or the shares of its Subsidiary, as the case may
be) in such amounts and such forms as may be reasonably requested by Purchaser
not fewer than ten (10) Business Days prior to Closing, which dividends shall
be settled at and as of Closing, by payment by Purchaser to Seller of the
Purchase Price.

 

6.15                        Solvency

 

At
and as of the Closing, Purchaser shall adequately capitalize Company and its
Subsidiary such that immediately following the Closing each shall be able to
pay its debts as same become due in the usual course of business.

 

36

 

7.                                      EMPLOYEE BENEFIT PLAN
MATTERS

 

7.1                               Past Service Credit

 

On
and after the Closing Date, Purchaser shall give the Affected Employees credit
for service with Seller, Company, its Subsidiary and ERISA Affiliates under any
employee benefit plans or arrangements maintained by Purchaser for purposes of
eligibility to participate and vesting of benefits, but not for purposes of
benefit accrual under any pension or retirement plans or arrangements.

 

7.2                               Continuation of Compensation
and Benefits

 

Until
the first anniversary of the Closing Date, Purchaser shall, or shall cause its
Subsidiaries to, provide (a) each Affected Employee with salary and bonus
opportunities that are no less favorable to such Affected Employee than those
in effect immediately prior to the Closing Date and (b) Affected Employees with
employee benefit plans and arrangements (other than salary and bonus
opportunities, other than equity or equity-based programs, including the Seller
ESOP) that are, except as otherwise specifically provided in this Section
7.2, substantially similar in the aggregate to those provided to the Affected
Employees immediately prior to the Closing Date.

 

7.3                               Waiver of Limitations;
Preexisting Conditions; Co-payments and Deductibles

 

Purchaser
shall (a) waive all limitations as to preexisting conditions, exclusions and
waiting periods with respect to participation and coverage requirements
applicable to the Affected Employees under any welfare benefit plans of
Purchaser and its Subsidiary (Purchaser Welfare Plans) in which
the Affected Employees and their dependents may be eligible to participate
after the Closing Date to the extent waived under the applicable corresponding
Employee Plan immediately prior to the Closing Date and (b) provide each
Affected Employee with credit for any co-payments and deductibles paid prior to
the Closing Date in the calendar year in which the Closing Date occurs (or, if
later, in the calendar year in which Affected Employees and their dependents
commence participation in the applicable Purchaser Welfare Plan) for purposes
of satisfying any applicable deductible or out-of-pocket requirements under any
Purchaser Welfare Plans in which the Affected Employees are eligible to
participate after the Closing Date.

 

7.4                               Accrued Vacation, Holiday
and Sick Pay

 

Purchaser
shall honor all vacation days, holiday and sick pay accrued by each Affected
Employee as of the Closing Date.

 

7.5                               Seller ESOP

 

(a)                                  At or prior to the Closing, Seller shall
amend the Seller ESOP such that (i) Affected Employees will be provided with a
one time opportunity to elect to receive a distribution of their entire vested
account balance in a single lump sum of cash during a sixty (60) day period
commencing on or about May 20, 2008, based on the value of Seller Common Stock
as of September 29, 2007 and (ii) Affected Employees who do not elect to
receive their entire vested account balance in a single lump sum of cash during
this sixty (60) day period will be eligible to receive their distributions in
accordance with the rules applying to other participants in the Seller ESOP who
terminate employment.

 

(b)                                 Promptly after the completion of (i) the
allocation of employer contributions and earnings for the Seller ESOP plan year
ending September 29, 2007, (ii) the audit of the Seller ESOP for the Seller
ESOP plan year ending September 29, 2007 and (iii) the independent appraisal of
the Seller ESOP as of September 29, 2007, all of which are anticipated to be
completed by approximately the end of May, 2008, Seller

 

37

 

shall
provide to Purchaser the following information for each Affected Employee who
is a participant in the Seller ESOP and is less than one hundred percent (100%)
vested in his/her Seller ESOP account as of September 29, 2007:  (A) a schedule listing the value of the Seller
ESOP account balances as of September 29, 2007 for each such Affected Employee,
and (B) the Seller ESOP vesting percentage as of September 29, 2007 for each
such Affected Employee.

 

8.                                      TAX MATTERS

 

8.1                               Tax Representations

 

Seller
represents and warrants to Purchaser that, as of the date of this Agreement and
as of the Closing Date:

 

	
  (a)

  	
  all Tax returns,
  statements, reports and forms (collectively, the Returns) that
  are required to be filed with any Taxing Authority on or before the Closing
  Date with respect to any Pre-Closing Tax Period by, or with respect to,
  Company and its Subsidiary have been, or will be, timely filed with the
  appropriate Taxing Authority on or before the Closing Date;

  
	
   

  	
   

  
	
  (b)

  	
  Company and its Subsidiary
  have timely paid all Taxes shown as due and payable on the Returns that have
  been filed;

  
	
   

  	
   

  
	
  (c)

  	
  the Returns that have been
  filed are true, correct and complete in all material respects;

  
	
   

  	
   

  
	
  (d)

  	
  the charges, accruals and
  reserves for Taxes in respect of Company and its Subsidiary reflected on the
  books of Company and its Subsidiary are adequate to cover tax liabilities
  accruing through the end of the last period for which Company and its
  Subsidiary ordinarily record items on their books;

  
	
   

  	
   

  
	
  (e)

  	
  there is no Proceeding or
  audit now proposed or pending against or with respect to Company or its
  Subsidiary in respect of any Tax;

  
	
   

  	
   

  
	
  (f)

  	
  neither Company nor its
  Subsidiary will be required to include any item of income in, or exclude any
  item of deduction from, taxable income for any Post-Closing Tax Period as a
  result of any (i) change in method of accounting for a Pre-Closing Tax Period
  under Section 481 of the Code (or any corresponding or similar provision of
  state, local or non-U.S. income Tax Law), (ii) “closing agreement” as
  described in Section 7121 of the Code (or any corresponding or similar
  provision of state, local or non-U.S. income Tax Law), (iii) installment sale
  or open transaction disposition made on or prior to the Closing Date, (iv)
  prepaid amount received on or prior to the Closing Date, or (v) deferred
  intercompany gain or excess loss account described in Section 1502 of the
  Code (or any corresponding or similar provision of state, local or non-U.S.
  Law;

  
	
   

  	
   

  
	
  (g)

  	
  each of Company and its
  Subsidiary has been a validly electing S corporation or qualifying subchapter
  S subsidiary within the meaning of Section 1361 and 1362 of the Code at all
  times during its existence;

  
	
   

  	
   

  
	
  (h)

  	
  neither Company nor its
  Subsidiary shall be liable for any Tax under Section 1374 of the Code in
  connection with the deemed sale of Company’s and its Subsidiary’s assets
  pursuant to Treas. Reg. Section 1.1361-5(b);

  
	
   

  	
   

  
	
  (i)

  	
  neither Company nor its
  Subsidiary, in the past ten (10) years, acquired assets from another
  corporation in a transaction in which Company’s or its Subsidiary’s tax basis
  of the acquired

  

 

38

 

	
   

  	
  assets was determined, in
  whole or in part, by reference to the Tax basis of the acquired assets (or
  any other property) in the hands of the transferor;

  
	
   

  	
   

  
	
  (j)

  	
  neither Company nor its
  Subsidiary has been party to, or a material advisor to, any reportable
  transaction within the meaning of Treas. Reg. Sec. 1.6011-4 or any
  predecessor provision;

  
	
   

  	
   

  
	
  (k)

  	
  neither Company nor its
  Subsidiary has waived any statute of limitations in respect of Taxes or
  agreed to any extension of time with respect to a Tax assessment or
  deficiency, which waiver or extension is currently in effect;

  
	
   

  	
   

  
	
  (1)

  	
  there are no Liens for
  Taxes (other than for Taxes not yet due and payable) upon any of the assets
  of Company or its Subsidiary;

  
	
   

  	
   

  
	
  (m)

  	
  all Taxes that Company or
  its Subsidiary have been or are required by Law to withhold or to collect for
  payment have been duly withheld and collected, and have been paid over to the
  appropriate Taxing Authority or accrued, reserved against and entered on the
  books and records of Company or its Subsidiary;

  
	
   

  	
   

  
	
  (n)

  	
  neither Company nor its
  Subsidiary has granted to any person any power of attorney that is currently
  in force with respect to any Tax matter relating to Company or its
  Subsidiary;

  
	
   

  	
   

  
	
  (o)

  	
  neither Company nor its
  Subsidiary is a party to, bound by, or obligated under, any Tax sharing
  agreement pursuant to which it will have any obligation to make any payments to
  any person after the Closing; and

  
	
   

  	
   

  
	
  (p)

  	
  neither Company nor its
  Subsidiary is a “United States real property holding corporation,” as defined
  in Section 897(c)(2) of the Code.

  

 

8.2                               Tax Covenants

 

(a)                                 Purchaser covenants that it will not cause or
(in the case of clause (ii) and (iii)) permit Company, its Subsidiary or any
Affiliate of Purchaser to make or change any Tax election for the Pre-Closing
Tax Period, amend any Return for the Pre-Closing Tax Period or take any Tax
position on any Return for the Pre-Closing Tax Period that results in any
increased Tax liability or reduction of any Tax Asset of Company or its
Subsidiary in respect of any Pre-Closing Tax Period. Purchaser agrees that
(except to the extent appropriate to reflect the relative fault of Seller, on
the one hand, and Purchaser, on the other hand) Seller is to have no liability
for any Tax resulting from any action, referred to in the preceding sentence,
of Company, its Subsidiary, Purchaser or any Affiliate of Purchaser, and agrees
to indemnify and hold harmless Seller and its Affiliates against (i) any such
Tax (together with any interest, penalty, addition to Tax or additional
amount), (ii) any liabilities, costs, expense (including reasonable expenses of
investigation and attorney’s fees and expenses), losses, damages, assessments,
settlements or judgments arising out of or incident to the imposition,
assessment or assertion of any such Tax, and (iii) any Tax or damages incurred
or suffered by Seller or any of its Affiliates, arising out of a breach of any
other covenant or agreement contained in this Article 8, but only to the
extent appropriate to reflect the relative fault of Purchaser, on the one hand,
and Seller, on the other hand. Notwithstanding the foregoing, Purchaser shall
not indemnify and hold harmless Seller and its Affiliates against any liability
for Taxes to the extent attributable (under a relative fault standard) to a
breach by Seller or its Affiliates under this Agreement. Seller agrees to give
prompt notice to Purchaser of the assertion of any claim, or the commencement
of any action or proceeding, in respect of which indemnity may be sought under
this Section 8.2(a). Purchaser

 

39

 

may
participate in any such suit, action or proceeding at its own expense and the
Parties shall cooperate in the defense or prosecution thereof.

 

(b)                                Purchaser shall promptly pay or cause to be paid to Seller all refunds
of Taxes (except for refunds relating to Taxes reflected on the Closing Balance
Sheet and except for refunds resulting from a carryback to the Pre-Closing Tax
Period of any loss, credit or deduction arising in the Post-Closing Tax Period,
all of which refund shall be for the account of Purchaser and shall be paid by
Seller to Purchaser or its Affiliates reasonably promptly after receipt thereof
by Seller or its Affiliates) and interest thereon received by Purchaser, any
Affiliate of Purchaser or Company or its Subsidiary attributable to Taxes paid
by Seller or Company or its Subsidiary (or any predecessor of Affiliate of
Seller) with respect to any Pre-Closing Tax Period.

 

(c)                                  All transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees (including any penalties and
interest and costs and expenses relating to such Taxes) incurred in connection
with the Transactions (including any real property transfer Tax and any similar
Tax) shall be borne by the Party required by Law to pay such Taxes and fees.

 

(d)                                 All Returns required to be filed by Seller
after the Closing Date with respect to Company or its Subsidiary with respect
to any Pre-Closing Tax Period will be filed by Seller when due (taking into
account any extension of a required filing date). Any such Return shall be
prepared in a manner consistent with past practice and without a change of any
election or any accounting method and shall be submitted by Seller to Purchaser
(together with schedules, statements and, to the extent requested by Purchaser,
supporting documentation) at least forty-five (45) days prior to the due date
(including extensions) of such Return. Purchaser shall have the right to review
all work papers and procedures used to prepare any such Return. If Purchaser,
within ten (10) Business Days after delivery of such Return, notifies Seller in
writing that it objects to any items in such Return, the disputed items shall
be resolved (within a reasonable time, taking into account the deadline for
filing such Return) by a nationally recognized independent accounting firm
chosen and mutually acceptable to both Purchaser and Seller. Upon resolution of
all such items, the relevant Return shall be adjusted to reflect such
resolution and shall be binding upon the Parties without further adjustment.
The costs, fees and expenses of such accounting firm shall be borne equally by
Purchaser and Seller. Seller shall not file any amended Return with respect to
Company or its Subsidiary without the prior written consent of Purchaser.

 

(e)                                 Purchaser shall prepare, or cause to be
prepared, Returns required to be filed by Company or its Subsidiary with
respect to any Post-Closing Tax Period. Purchaser shall timely file or cause to
be timely filed, all such Returns. Any such Return shall be prepared in a
manner consistent with past practice and without a change of any election or
any accounting method and shall be submitted by Purchaser to Seller (together
with schedules, statements and, to the extent requested by Seller, supporting
documentation) at least forty-five (45) days prior to the due date (including
extensions) of such Return. Seller shall have the right to review all work
papers and procedures used to prepare any such Return. If Seller, within ten
(10) Business Days after delivery of any such Return, notifies Purchaser in
writing that it objects to any items in such Return, the disputed items shall
be resolved (within a reasonable time, taking into account the deadline for
filing such Return) by a nationally recognized independent accounting firm
chosen and mutually acceptable to both Purchaser and Seller. Upon resolution of
all such items, the relevant Return shall be adjusted to reflect such
resolution and shall be binding upon the Parties without further adjustment.
The costs, fees and expenses of such accounting firm shall be borne equally by
Purchaser and Seller.

 

40

 

8.3                               Tax Sharing

 

Neither
Company nor its Subsidiary is a party to any Tax sharing agreement. This
Agreement shall be the sole Tax sharing agreement relating to Company and its
Subsidiary for all Pre-Closing Tax Periods.

 

8.4                               Cooperation on Tax Matters

 

Purchaser
and Seller agree to furnish or cause to be furnished to each other, upon
request, as promptly as practicable, such information (including access to
books and records) and assistance relating to Company and its Subsidiary as is
reasonably necessary for the filing of any return (including any report
required pursuant to Section 6043 of the Code and all Treasury Regulations
promulgated thereunder), for the preparation for any audit, and for the
prosecution or defense of any claim, suit or proceeding relating to any
proposed adjustment. Purchaser and Seller agree to retain or cause to be
retained all books and records pertinent to Company and its Subsidiary until
the applicable period for assessment under applicable Law (giving effect to any
and all extensions or waivers) has expired, and to abide by or cause the
abidance with all record retention agreements entered into with any Taxing
Authority. Purchaser agrees to cause Company and its Subsidiary to give Seller
reasonable notice prior to transferring, discarding or destroying any such
books and records relating to Tax matters and, if Seller so requests, Company
and its Subsidiary shall allow Seller to take possession of such books and records.
Purchaser and Seller shall cooperate with each other in the conduct of any
audit or other proceedings involving Company or its Subsidiary for any Tax
purposes and each shall execute and deliver such powers of attorney and other
documents as are necessary to carry out the intent of this Section 8.4.

 

8.5                               Indemnification by Seller

 

(a)                                  Seller hereby indemnifies Purchaser from and
against and agrees to hold it harmless from any (i) Tax of Company or its
Subsidiary relating to a Pre-Closing Tax Period, (ii) Tax imposed upon or
relating to Seller for any period, including any such Tax for which Company of
its Subsidiary may be liable under Treasury Regulation Section 1.1502-6 (or any
corresponding or similar provision of state, local or non-U.S. Law), as a transferee
or successor, by contract or otherwise, (iii) Tax resulting from a breach of
any representation or warranty contained in Section 8.1, (iv) Tax for
which Seller is responsible pursuant to Section 8.2(d), (v) any Tax or
Damages incurred or suffered by Purchaser or any of its Affiliates (including
Company or its Subsidiary) arising out of a breach of any covenant or agreement
contained in this Article 8 (but only to the extent appropriate to
reflect the relative fault of Purchaser, on the one hand, and Seller, on the
other hand), and (vi) liabilities, costs, expenses (including reasonable
expenses of investigation and attorneys’ fees and expenses), arising out of or
incident to the imposition, assessment or assertion of any such foregoing Tax,
including those incurred in the contest in good faith in appropriate
proceedings relating to the imposition, assessment or assertion of any such
Tax, in each case incurred or suffered by Purchaser, any of its Affiliates or,
effective upon the Closing, Company and its Subsidiary; provided, however, that Seller shall have
no liability for the payment of any loss attributable to or resulting from any
action described in Section 8.2(a) (except to the extent appropriate to
reflect the relative fault of Seller and Purchaser).

 

(b)                                 For purposes of this Section 8.5, in
the case of any Taxes that are imposed on a periodic basis and are payable for
a Taxable period that includes (but does not end on) the Closing Date, the
portion of such Tax related to the portion of such Taxable period ending on the
Closing Date shall (i) in the case of any Taxes other than Taxes based upon or
related to income, be deemed to be the amount of such Tax for the entire
Taxable period multiplied by a fraction the numerator of which is the number of
days in the Taxable period ending on the Closing Date and the denominator of
which is the number of days in the entire Taxable period and (ii) in the case
of any Tax based upon or related to income be deemed equal to the amount that
would be payable if the relevant Taxable period ended on the Closing Date under
an

 

41

 

interim
closing of the books. Any credits relating to a Taxable period that begins
before and ends after the Closing Date shall be taken into account as though
the relevant Taxable period ended on the Closing Date. All determinations
necessary to give effect to the foregoing allocations shall be made in a manner
consistent with prior practices of Company and its Subsidiary.

 

(c)                                  If Seller’s indemnification obligation under
this Section 8.5 arises in respect of an adjustment that makes allowable
to Purchaser, any of its Affiliates or, effective upon the Closing, Company or
its Subsidiary any deduction, amortization, exclusion from income or other
allowance (a Tax Benefit) that would not, but for such
adjustment, be allowable, and Purchaser reasonably expects that such Tax
Benefit could be actually realized in cash within two (2) years of the Final
Determination with respect to the Tax giving rise to Seller’s indemnification
obligation, then any payment by Seller to Purchaser shall be an amount equal to
(i) the amount otherwise due but for this subsection (c), minus (ii) the present value of the Tax
Benefit multiplied by the federal or state, as the case may be, corporate Tax
rate reasonably expected by Purchaser to apply (taking into account the
deductibility of any such Taxes) at the time such Tax Benefit is expected to be
actually realized. The present value referred to in the preceding sentence shall
be determined using a discount rate equal to the federal underpayment rate in
effect at the time the relevant adjustment is made and assuming that the Tax
Benefit will be actually realized in cash at the earliest date or dates
reasonably expected by Purchaser.

 

(d)                                 Any payment by Seller pursuant to this Section
8.5 shall be made in immediately available funds not later than two (2)
Business Days before the date payment of the Taxes to which such payment
relates is due, or, if no Tax is payable, within fifteen (15) days after
receipt by Seller of written notice from Purchaser stating that any loss has
been paid by Purchaser, any of its Affiliates or, effective upon the Closing,
Company and the amount thereof and of the indemnity payment requested.

 

(e)                                  If any claim or demand for Taxes in respect
of which indemnity may be sought pursuant to this Section 8.5 is
asserted in writing against Purchaser, any of its Affiliates or, effective upon
the Closing, Company or its Subsidiary, Purchaser shall notify Seller of such
claim or demand within ten (10) days of receipt thereof, or such earlier time
that would allow Seller to timely respond to such claim or demand, and shall
give Seller such information with respect thereto as Seller may reasonably
request. Seller may, at its own expense, participate in and, upon timely notice
to Purchaser, assume and control the conduct of any audit or examination by, or
contest or litigation against, any Taxing Authority (a Tax Proceeding) (i) relating solely to a taxable period ending on or before the
Closing Date or (ii) relating to any Straddle Period in which the claim of the
applicable Taxing Authority in connection with such Tax Proceeding for which
Seller would be liable under this Agreement exceeds the claim of the applicable
Taxing Authority in connection with such Tax Proceeding for which Purchaser
would be liable under this Agreement; provided,
however, that Seller shall (A) provide Purchaser with a timely and
reasonably detailed account of each stage of such Tax Proceeding, (B) consult
with Purchaser before taking any significant action in connection with such Tax
Proceeding, (C) consult with Purchaser and offer Purchaser an opportunity to
comment before submitting any written materials prepared or furnished in connection
with such Tax Proceeding, (D) defend such Tax Proceeding diligently and in good
faith as if the taxpayer whose Return is at issue were the only party in
interest in connection with such Tax Proceeding and (E) not settle, compromise
or abandon any such Tax Proceeding without obtaining the prior written consent
of Purchaser if such settlement, compromise or abandonment could have an adverse
impact on Purchaser, Company or its Subsidiary. Purchaser shall have the right
to control any other Tax Proceeding.

 

(f)                                    Any claim that may be brought by Purchaser
against Seller pursuant to provisions of this Section 8.5 shall
terminate sixty (60) days after the applicable statute of limitations for any
such claims terminates.

 

42

9.                                      CONDITIONS PRECEDENT

 

9.1                               Conditions to Each Party’s
Obligation

 

The
obligations of each of Purchaser and Seller to complete the Closing is subject
to the satisfaction or waiver on or prior to the Closing of the following
conditions:

 

(a)                                 The Seller Stockholder Approval shall have
been received.

 

(b)                                Any applicable waiting period under the HSR Act relating to the
Transactions shall have expired or been terminated.

 

(c)                                 No applicable Law or Order enacted, entered,
promulgated, enforced or issued by any Governmental Authority or other legal
restraint or prohibition preventing the completion of the Transactions shall be
in effect.

 

(d)                                There shall not be pending or threatened before any Governmental
Authority any Proceeding challenging or seeking to restrain or prohibit the
Transactions or seeking to obtain from Purchaser or any of its Affiliates any
material damages in connection therewith.

 

9.2                               Conditions to Obligation of
Purchaser

 

The
obligations of Purchaser to complete the Closing is subject to the satisfaction
or waiver on or prior to the Closing of the following conditions:

 

(a)                                 The representations and warranties of Seller
in this Agreement shall be true and correct as of the Closing Date as though
made as of such time, except to the extent such representations and warranties
expressly relate to an earlier date (in which case such representations and
warranties shall be true and correct on and as of such earlier date), in each
case except for breaches as to matters that, individually or in the aggregate,
could not be expected to have a Material Adverse Effect. Purchaser shall have
received a certificate signed by an authorized officer of Seller to such
effect.

 

(b)                                Seller shall have performed or complied in all material respects with
all obligations and covenants required by this Agreement to be performed or
complied with by Seller by the time of the Closing, and Purchaser shall have
received a certificate signed by an authorized officer of Seller to such
effect.

 

(c)                                 From the date of this Agreement to the
Closing, there has not been any event, occurrence or development that,
individually or in the aggregate, has had or that could reasonably be expected
to have, a Material Adverse Effect.

 

(d)                                Seller shall have delivered to Purchaser at the Closing a certificate,
in form and substance satisfactory to Purchaser, certifying that the
Transactions are exempt from withholding pursuant to the Foreign Investment in
Real Property Tax Act.

 

(e)                                 Purchaser shall have received the opinion of
Wyatt, Tarrant & Combs, LLP, counsel to Seller, substantially in the form
of Exhibit D.

 

(f)                                   Purchaser shall not have received any
communication from the National Association of Attorneys General, any
representative thereof or any other Governmental Authority that would
reasonably cause Purchaser to believe that the completion of the Transactions
will affect the

 

43

 

status
of the Company’s Subsidiary as a “subsequent participating manufacturer” under,
or otherwise materially affect the rights, liabilities and obligations of
Company’s Subsidiary under, the MSA.

 

9.3                               Conditions to Obligation of
Seller

 

The
obligation of Seller to sell is subject to the satisfaction (or waiver by
Seller) on or prior to the Closing Date of the following conditions:

 

(a)                                 The representations and warranties of
Purchaser made in this Agreement shall be true and correct as of the Closing
Date as though made as of such time, except to the extent such representations
and warranties expressly relate to an earlier date (in which case such
representations and warranties qualified as to materiality shall be true and
correct on and as of such earlier date). Seller shall have received a
certificate signed by an authorized officer of Purchaser to such effect.

 

(b)                                Purchaser shall have performed or complied in all material respects
with all obligations and covenants required by this Agreement to be performed
or complied with by Purchaser by the time of the Closing, and Seller shall have
received a certificate signed by an authorized officer of Purchaser to such
effect.

 

9.4                               Frustration of Closing
Conditions

 

Neither
Purchaser nor Seller may rely on the failure of any condition set forth in this
Article 9 to be satisfied if such failure was caused by such Party’s
failure to act in good faith or to use its reasonable best efforts to cause the
Closing to occur, as required by Section 6.5.

 

10.                               TERMINATION

 

10.1                        Termination

 

(a)                                  This Agreement may be terminated at any time
prior to the Closing:

 

	
  (i)

  	
  by mutual written
  agreement of Seller and Purchaser;

  
	
   

  	
   

  
	
  (ii)

  	
  by Seller or Purchaser, if
  the Closing does not occur on or prior to May 31, 2007; provided, however, that the right to
  terminate this Agreement under this Section l0.l(a)(ii) shall not be
  available to any Party whose failure to fulfill any obligation under this
  Agreement shall have been the cause of, or shall have resulted in, the
  failure of the Closing to occur on or prior to such date;

  
	
   

  	
   

  
	
  (iii)

  	
  by Seller or Purchaser, if
  the Seller Stockholder Approval shall not have been received at the
  Stockholders Meeting;

  
	
   

  	
   

  
	
  (iv)

  	
  by Seller, if any of the
  conditions set forth in Sections 9.1 or 9.3  shall
  have become incapable of fulfillment, and shall not have been waived by
  Seller;

  
	
   

  	
   

  
	
  (v)

  	
  by Purchaser, if any of
  the conditions set forth in Sections 9.1 or 9.2  shall
  have become incapable of fulfillment and shall not have been waived by
  Purchaser;

  
	
   

  	
   

  
	
  (vi)

  	
  by Purchaser, if the
  Stockholders Meeting (including any adjournment thereof) is not held on or
  prior to March 2, 2007;

  

 

44

 

	
  (vii)

  	
  by Purchaser, if the Board
  of Directors shall withdraw, modify or qualify its recommendation that the
  stockholders of Seller vote in favor of the Transactions; or

  
	
   

  	
   

  
	
  (viii)

  	
  by either Purchaser or
  Seller in the event that any Governmental Authority shall have issued an
  Order or taken any other action restraining, enjoining or otherwise
  prohibiting the Transactions and such Order or other action shall have become
  final and nonappealable;

  

 

provided, however, that the Party seeking termination pursuant to Sections 10.1(a)(iv),
(v) or (viii) is not then in material breach of any of its
representations, warranties, covenants or agreements contained in this
Agreement.

 

(b)                                In the event of termination by Seller or Purchaser pursuant to this Section
10.1, written notice thereof
shall forthwith be given to the other Party and the Transactions shall be
terminated, without further action by either Party.

 

10.2                        Termination Fee

 

If
this Agreement is terminated pursuant to Section 10.1(a)(iii), 10.1(a)(vi)
or l0.l(a)(vii), then (a)(i) Seller shall pay Twenty Million U.S.
Dollars (U.S.$20,000,000) to Purchaser and reimburse Purchaser and its
Affiliates for all charges and expenses incurred in connection with this
Agreement and the transactions contemplated by this Agreement up to a maximum
amount of Five Million U.S. Dollars (U.S.$5,000,000), as promptly as reasonably
practicable, and in no event more than two (2) Business Days after the date of
such termination payable by wire transfer of immediately available funds to
such account or accounts as Purchaser may designate and (ii) Purchaser’s
obligations under the ninth paragraph of the Confidentiality Agreement
(relating to non-solicitation of employees) shall terminate and be without
further force or effect and (b) if, within eighteen (18) months following such
termination of this Agreement, Seller shall complete any Alternative Proposal,
Seller shall pay Purchaser an additional Fifty-Five Million U.S. Dollars
(U.S.$55,000,000), as promptly as reasonably practicable, and in no event more
than two (2) Business Days after the date of completion of such Alternative
Proposal payable by wire transfer of immediately available funds to such
account or accounts as Purchaser may designate. Seller acknowledges that the
agreements contained in this Section 10.2 are an integral part of the
Transactions and that, without these agreements, Purchaser would not enter into
this Agreement. Accordingly, if Seller fails promptly to pay any amount due
pursuant to this Section 10.2 and, in order to obtain such payment,
Purchaser commences a suit which results in a judgment against Seller for the
fee set forth in this Section 10.2, Seller shall pay to Purchaser its
costs and expenses (including reasonable attorneys’ fees and expenses) in
connection with such suit, together with interest on the amount of the fee at
the Prime Rate in effect on the date such payment was required to be made. The
payment of the fees contemplated by this Section 10.2 shall be in
addition to, and not in limitation of, any other remedies or damages to which
Purchaser shall be entitled in equity or law as a result of any willful breach
by Seller of its covenants under this Agreement.

 

10.3                        Effect of Termination

 

If
this Agreement is terminated as provided in Section 10.1, this Agreement
shall become null and void and of no further force and effect, except for the
provisions of Sections 10.2, 12.3, 12.5, 12.6, 12.7
and 12.12. Nothing in this Section 10.3 shall be deemed to
release any Party from any liability for any breach by such Party of the terms
and provisions of this Agreement prior to such termination or to impair the
right of any party to compel specific performance by any other Party of its
obligations under this Agreement.

 

45

 

11.                               SURVIVAL; INDEMNIFICATION

 

11.1                        Survival

 

(a)                                  The representations and warranties of the
Parties contained in this Agreement or in any certificate or other writing
delivered pursuant to this Agreement or in connection with this Agreement shall
survive the Closing until the date that is eighteen months following the
Closing Date; provided that the
representations and warranties contained in Sections 3.1, 3.2, 3.6,
4.1, 4.2,  4.3,  5.1  and 5.2  shall
survive indefinitely. Notwithstanding the preceding sentence, any
representation or warranty in respect of which indemnity may be sought under
this Agreement shall survive the time at which it would otherwise terminate
pursuant to the preceding sentence, if the Party seeking indemnification with
respect thereto has delivered notice of an indemnification claim for breach of
such representation or warranty (in accordance with the provisions of this Article
11) to the Party against whom such indemnity may be sought prior to such
time. Subject to the preceding sentence, after the termination of a
representation and warranty in accordance with this Section 11.1(a), no
Party shall have any indemnification obligation under this Article 11
with respect to such representation and warranty.

 

(b)                                 The obligations of the Parties under this
Agreement that by their terms contemplate performance after the Closing
(including those set forth in this Article 11) shall survive the Closing
Date until the performance thereof.

 

11.2                        Indemnification

 

(a)                                  Seller hereby indemnifies Purchaser and its
Affiliates (including Company and its Subsidiary) from and against and agrees
to hold each of them harmless from any and all damage, loss, liability and
expense (including reasonable expenses of investigation and attorneys’ fees and
expenses in connection with any Proceeding) (Damages)  incurred or suffered by Purchaser
or any of its Affiliates arising out of any breach of representation, warranty
or covenant made or to be performed by Seller pursuant to this Agreement (other
than pursuant to Article 8 and without giving any effect to any
qualification as to “material”, “in all material respects” or “Material Adverse
Effect” therein); provided that
(i) Seller shall not be liable under this Section 11.2(a) unless the
aggregate amount of Damages with respect to all matters covered by this Section
11.2(a) exceeds Seven Million Five Hundred Thousand U.S. Dollars
(U.S.$7,500,000) (and then only to the extent of such excess) and (ii) Seller’s
maximum liability under this Section 11.2(a) shall not exceed One
Hundred Seventy-Five Million U.S. Dollars (U.S.$175,000,000); provided, however, that the limitations
set forth in the immediately preceding proviso shall not apply to any
indemnification obligation of Seller in respect of Damages incurred or suffered
by Purchaser or any of its Affiliates arising out of any breach of
representation or warranty contained in Sections 3.1,  3.2, 3.6, 4.1, 4.2 or 4.3
or arising out of any breach of any covenant made or to be performed by
Seller pursuant to this Agreement.

 

(b)                                 Purchaser hereby indemnifies Seller and its
Affiliates from and against and agrees to hold each of them harmless from any
and all Damages incurred or suffered by Seller or any of its Affiliates arising
out of any breach of representation, warranty or covenant made or to be
performed by Purchaser pursuant to this Agreement (other than pursuant to Article
8 and without giving any effect to any qualification as to “material” or “in
all material respects” therein); provided that
(i) Purchaser shall not be liable under this Section 11.2(b) unless the
aggregate amount of Damages with respect to all matters covered by this Section
11.2(b) exceeds Seven Million Five Hundred Thousand U.S. Dollars
(U.S.$7,500,000) (but then only to the extent of such excess) and (ii)
Purchaser’s maximum liability under this Section 11.2(b) shall not
exceed One Hundred Seventy-Five Million U.S. Dollars (U.S.$175,000,000); provided, however, that the limitations
set forth in the immediately preceding proviso shall not apply to any
indemnification obligation of Purchaser in respect of Damages incurred or
suffered by Seller or any of its Affiliates

 

46

 

arising
out of any breach of representation or warranty contained in Sections 5.1
or 5.2 or arising out of any breach of any
covenant made or to be performed by Purchaser pursuant to this Agreement.

 

(c)                                  This Section 11.2 shall not apply to
indemnification for Taxes, which shall be governed by Article 8.

 

11.3                        Third Party Claims

 

(a)                                  The Party seeking indemnification under Section
11.2 (the Indemnified Party) agrees to give reasonably prompt
notice to the Party against whom indemnity is sought (the Indemnifying Party) of the assertion of any claim, or the commencement of any
Proceeding (Claim) in respect of which indemnity may be sought
under Section 11.2 and to provide the Indemnifying Party such
information with respect thereto that the Indemnifying Party may reasonably
request. The failure to so notify the Indemnifying Party shall not relieve the
Indemnifying Party of any of its obligations under this Agreement, except to
the extent that the Indemnifying Party demonstrates that such failure shall
have actually materially adversely prejudiced the Indemnifying Party.

 

(b)                                 The Indemnifying Party shall be entitled to
participate in the defense of any Claim asserted by any third party (Third
Party Claim)  and,
unless the Indemnifying Party is also a party to such Proceeding and the
Indemnified Party determines that joint representation would be inappropriate
and subject to the limitations set forth in this Section 11.3, shall be
entitled to control and appoint lead counsel for such defense, which counsel
must be reasonably satisfactory to the Indemnified Party, in each case at its
expense. Within ten (10) days following the receipt of notice by the
Indemnifying Party of any Third Party Claim, the Indemnifying Party shall
provide notice to the Indemnified Party of its election to assume control of the
defense of such Third Party Claim in accordance with the provisions of this Section
11.3. Notwithstanding the foregoing, if an Indemnified Party reasonably
determines that there is a reasonable probability that a Third Party Claim may
adversely affect it or its Affiliates other than as a result of monetary
damages for which it would be entitled to indemnification under this Article
11, the Indemnified Party may, by notice to the Indemnifying Party, assume
the exclusive right to defend, compromise or settle such Third Party Claim.

 

(c)                                  If the Indemnifying Party shall assume the
control of the defense of any Third Party Claim in accordance with the
provisions of this Section 11.3, (i) it will be conclusively established
for purposes of this Agreement that such Third Party Claim are within the scope
of and subject to indemnification under this Article 11, (ii) the
Indemnifying Party shall obtain the prior written consent of the Indemnified
Party before entering into any settlement of such Third Party Claim, if (A) the
settlement does not fully, completely and unconditionally release the
Indemnified Party from all liabilities and obligations with respect to such
Third Party Claim, (B) the settlement contains any admission of liability or
wrongdoing on the part of the Indemnified Party or (C) the settlement imposes
any injunctive or other equitable relief against the Indemnified Party and
(iii) the Indemnified Party shall be entitled to participate in the defense
of such Third Party Claim and to employ separate counsel of its choice for such
purpose at its own expense; provided,
however, that the Indemnified Party shall have the right to employ,
at the Indemnifying Party’s expense, one counsel of its choice in each
applicable jurisdiction (if more than one jurisdiction is involved) to
represent the Indemnified Party if, in the Indemnified Party’s reasonable judgment,
there exists an actual or potential conflict of interest between the
Indemnified Party and the Indemnifying Party or if the Indemnifying Party (A)
elects not to defend, compromise or settle a Third-Party Claim, (B) fails to
notify the Indemnified Party within the required time period of its election as
provided in Section 11.3(b),  or
(C) having timely elected to defend a Third-Party Claim, fails, in the reasonable
judgment of the Indemnified Party, after at least ten (10) days’ notice to the
Indemnifying Party, to adequately prosecute or pursue such defense, and in each
such case the Indemnified Party may defend such Third-Party Claim on behalf of
and for the account and risk of the Indemnifying Party.

 

47

 

(d)                                Each party shall cooperate, and cause their respective Affiliates to
cooperate, in the defense or prosecution of any Third Party Claim and shall
furnish or cause to be furnished such records, information and testimony, and
attend such conferences, discovery proceedings, hearings, trials or appeals, as
may be reasonably requested in connection therewith.

 

(e)                                 Any indemnification required by Section
11.2  shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense as and when bills are received or Damages are incurred.

 

(f)                                   Each party hereby consents to the
non-exclusive jurisdiction of any court in which a Third Party Claim is brought
against any Indemnified Person for purposes of any claim that such Indemnified
Person may have under this Agreement with respect to such Third Party Claim or
the matters alleged thereby and agree that process with respect to such a claim
may be served on such party with respect to such claim anywhere in the world.

 

(g)                                The above provisions of Section 11.3 shall not apply to
indemnification for Taxes, which shall be governed by Article 8.

 

11.4                        Procedures

 

In
the event any Indemnified Party should have a claim against any Indemnifying
Party under Section 11.2 that does not involve a Third Party Claim being
asserted against or sought to be collected from such Indemnified Party, the
Indemnified Party shall deliver notice of such claim with reasonable promptness
to the Indemnifying Party. The failure to so notify the Indemnifying Party
shall not relieve the Indemnifying Party of any of its obligations under this
Agreement, except to the extent that the Indemnifying Party demonstrates that such
failure shall have materially adversely prejudiced the Indemnifying Party. If
the Indemnifying Party does not notify the Indemnified Party within thirty (30)
days following its receipt of such notice that the Indemnifying Party disputes
its liability to the Indemnified Party under Section 11.2, such claim
specified by the indemnified party in such notice shall be conclusively deemed
a liability of the Indemnifying Party under Section 11.2 and the
Indemnifying Party shall pay the amount of such liability to the Indemnified
Party on demand or, in the case of any notice in which the amount of the claim
(or any portion thereof) is estimated, on such later date when the amount of
such claim (or such portion thereof) becomes finally determined. If the Indemnifying
Party has timely disputed its liability with respect to such claim, the
Indemnifying Party and the Indemnified Party shall proceed in good faith to
negotiate a resolution of such dispute and, it not resolved through
negotiations, such dispute shall be resolved by litigation in accordance with Sections
12.6 and 12.7.

 

11.5                        Assignment of Claims

 

If
the Indemnified Party receives any payment from an Indemnifying Party in
respect of any Damages pursuant to Section 11.2 and the Indemnified
Party could have recovered all or a part of such Damages from a third party (a Potential Contributor)  based
on the underlying claim asserted against the Indemnifying Party, the
Indemnified Party shall assign such of its rights to proceed against the
Potential Contributor as are necessary to permit the Indemnifying Party to
recover from the Potential Contributor the amount of such payment.

 

11.6                        Exclusivity

 

Except
with respect to any claims for common law fraud or willful or intentional
misrepresentation, after the Closing, Section 11.2 will provide the
exclusive monetary remedy for any claim arising as a result of or in connection
with any breach of any representation, warranty or covenant contained in this
Agreement. For the avoidance of doubt, Seller shall have no liability to
Purchaser or its Affiliates for Damages arising from or relating to any alleged
health effects of tobacco products of Company or its

 

48

 

Subsidiary
other than under Section 11.2 for any claim arising as a result of or in
connection with any breach of any representation or warranty set forth in Section
4.17.

 

12.                               MISCELLANEOUS

 

12.1                        Notices

 

All
notices, requests, claims, demands and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
delivered by hand, sent by facsimile or sent, postage prepaid, return receipt
requested, by registered, certified or express mail or overnight courier
service and shall be deemed given when so delivered by hand or facsimile (if
received prior to 5 p.m. in the place of receipt and such day is a Business Day
in the place of receipt, otherwise, any such notice, request or communication
shall be deemed not to have been received until the next succeeding Business
Day in the place of receipt), or if mailed, three days after mailing (one
Business Day in the case of express mail or overnight courier service), the
respective Parties at the following addresses (or at such other address for a
Party as shall be specified in a notice given in accordance with this Section
12.1):

 

if
to Purchaser, to:

 

Maui
Acquisition Corporation 

c/o
Imperial Tobacco Group 

PO
Box 244 

Upton
Road 

Bristol
BS99 7UJ 

United
Kingdom 

Attention:
Ken Hill

Conrad
Tate

Adrian
Welsh 

Telephone:
+44 (0)117 963 6633 

Facsimile:
+44 (0)117 966 7405

 

with
copies to:

 

Allen
& Overy LLP 

One
Bishops Square 

London
El 6AO 

United
Kingdom 

Attention:
Jeremy Parr

Telephone:
+44 (0)20 3088 0000 

Facsimile:
+44 (0)20 3088 0088

 

and

 

Allen
& Overy LLP 

1221
Avenue of the Americas 

New
York, New York 10020 

Attention:
Michael Gilligan 

Telephone:
(212) 610-6300 

Facsimile:
(212) 610-6399

 

49

 

if
to Seller, to:

 

Houchens
Industries, Inc.

700
Church Street

Bowling
Green, Kentucky 42101-9009

Attention:
President

Telephone:
(270) 843-3252

Facsimile:
(270)780-2893

 

with
a copy to:

 

Wyatt,
Tarrant & Combs, LLP 

2800
PNC Plaza 

Louisville,
Kentucky 40202 

Attention:
Franklin K. Jelsma 

Telephone:
(502) 589-5235 

Facsimile:
(502) 589-0309

 

12.2                        Amendments and Waivers

 

(a)                                 Any provision of this Agreement may be
amended or waived if, but only if, such amendment or waiver is in writing and
is signed, in the case of an amendment, by each Party, or in the case of a
waiver, by the Party against whom the waiver is to be effective.

 

(b)                                Any waiver of any term or condition of this Agreement shall not be
construed as a waiver of any subsequent breach, or a subsequent waiver of the
same term or condition or a waiver of any other term or condition, of this
Agreement. The failure of either Party to assert any of its rights hereunder
shall not constitute a waiver of any of such rights. No failure or delay by
either Party in exercising any right, power or privilege under this Agreement
shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies provided in this
Agreement shall be cumulative and not exclusive of any rights or remedies
provided by Law.

 

12.3                        Expenses

 

All
costs and expenses (including fees and disbursement of its counsel, accountants
and other advisors) incurred in connection with the preparation, negotiation,
execution, delivery or performance of this Agreement and the completion of the
Transactions shall be paid by the Party incurring such cost or expense; provided, however, that all expenses
incurred by Company or its Subsidiary in connection with this Agreement shall
be borne by Seller or paid prior to the Closing. Notwithstanding the foregoing,
a Party in breach of this Agreement shall, on demand, indemnify and hold
harmless the other Party for and against all reasonable out-of-pocket expenses,
including legal fees, incurred by such other Party by reason of the enforcement
and protection of its rights under this Agreement. The payment of such expenses
is in addition to any other relief to which such other Party may be entitled.

 

12.4                        Successors and Assigns

 

The
provisions of this Agreement shall be binding upon and inure to the benefit of
the Parties and their respective successors and permitted assigns; provided that neither Party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of the other Party. Notwithstanding the
foregoing, (a) Purchaser may assign its right to purchase the Shares to a
Subsidiary or an affiliate of Purchaser without the prior written consent of
Seller, and (b) Purchaser may assign its rights under this Agreement by way of
security and such secured party may assign such rights

 

50

 

by
way of exercise of remedies; provided,
however, that no assignment shall limit or affect the assignor’s
obligations hereunder. Any attempted assignment in violation of this Section
12.4 shall be void.

 

12.5                        Governing Law

 

This
Agreement (and any claims or disputes arising out of or related to this
Agreement or to the Transactions or to the inducement of either Party to enter
into this Agreement, whether for breach of contract, tortious conduct or
otherwise and whether predicated on common law, statute or otherwise) shall in
all respects be governed by and construed in accordance with the Laws of the
State of New York, including all matters of construction, validity and
performance, in each case without reference to any conflict of law rules that
might lead to the application of the Laws of any other jurisdiction. Each Party
further agrees that the Laws of the State of New York bear a reasonable
relationship to this Agreement and irrevocably and unconditionally waives,
pursuant to Section 5-1401 of the New York General Obligations Law, any
objection to the application of the Laws of the State of New York to any
action, suit or proceeding arising out of this Agreement or the Transactions
and further irrevocably and unconditionally waives and agrees not to plead or
claim that any such action, suit or proceeding should not be governed by the
Laws of the State of New York.

 

12.6                        Consent to Jurisdiction

 

Each
Party irrevocably and unconditionally submits to the exclusive jurisdiction of
the United States District Court for the Southern District of New York, or if
such federal court is unavailable, state courts located in New York County, for
the purposes of any suit, action or other proceeding arising out of this
Agreement or the Transactions. Each Party hereby waives formal service of
process and agrees that service of any process, summons, notice or document by
U.S. registered mail to such Party’s respective address set forth above shall
be effective service of process for any action, suit or proceeding in New York
with respect to any matters to which it has submitted to jurisdiction in this Section
12.6. Each Party irrevocably and unconditionally waives, pursuant to the
provisions of Section 5-1402 of the New York General Obligations Law, any
objection to the laying of venue of any action, suit or proceeding arising out
of this Agreement or the Transactions in such courts and hereby and thereby
further irrevocably and unconditionally waives and agrees not to plead or claim
in any such court that any such action, suit or proceeding brought in any such
court has been brought in an inconvenient forum.

 

12.7                        WAIVER OF JURY TRIAL

 

EACH
PARTY HEREBY EXPRESSLY AND IRREVOCABLY WAIVES TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY
ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR
OTHERWISE) DIRECTLY OR INDIRECTLY RELATING TO ANY DISPUTE ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS. Each Party (i)
certifies that no representative, agent or attorney of the other Party has
represented, expressly or otherwise, that such other Party would not, in the
event of litigation, seek to enforce the foregoing waiver and (ii) acknowledges
that it and the other Party have been induced to enter into this Agreement by,
among other things, the mutual waivers and certifications in this Section
12.7.

 

12.8                        Counterparts; Third Party
Beneficiaries

 

This
Agreement may be signed in any number of counterparts (including by facsimile
signature), each of which shall be an original, with the same effect as if the
signatures were upon the same instrument. This Agreement shall become effective
when each Party shall have received a counterpart of this Agreement signed by
each other Party. This Agreement is for the sole benefit of the Parties and
their successors and

 

51

 

permitted
assigns and nothing express or implied in this Agreement is intended or shall
be construed to confer upon any Person other than the Parties any legal or
equitable rights or remedies under this Agreement.

 

12.9                        Severability

 

If
any provision of this Agreement (or any portion thereof) or the application of
any such provision (or any portion thereof) to any Person or circumstance shall
be held invalid, illegal or unenforceable in any respect by a court of
competent jurisdiction, such invalidity, illegality or unenforceability shall
not affect any other provision of this Agreement (or the remaining portion
thereof) or the application of such provision to any other Person or
circumstances.

 

12.10                 Entire Agreement

 

This
Agreement constitutes the entire agreement and understanding between the
Parties with respect to the subject matter of this Agreement and supersedes all
prior agreements and understandings, both oral and written, between Purchaser
and Seller with respect to the subject matter of this Agreement, including the
letter agreement dated January 4, 2007. The Exhibits and Schedules are an
integral part of this Agreement and are incorporated by reference into this
Agreement for all purposes.

 

12.11                 Headings and Captions;
Exhibits and Schedules

 

The
headings and captions in this Agreement and in the table of contents are
included for convenience of reference only and shall be ignored in the
construction or interpretation of this Agreement. All Exhibits and Schedules
annexed to or referred to in this Agreement are incorporated in and made a part
of this Agreement as if set forth in full. Any capitalized terms used in any
Schedule or Exhibit but not otherwise defined therein, shall have the meaning
as defined in this Agreement. All references to Sections, Articles or Exhibits
contained in this Agreement shall be to Sections, Articles or Exhibits of or to
this Agreement unless otherwise stated.

 

12.12                 Disclosure Schedules

 

Disclosure
of any fact, matter or item in any Section of the Disclosure Schedules in connection
with a particular Section of this Agreement shall be deemed to have been
disclosed with respect to another Section of this Agreement if, and only if,
such disclosure is sufficient such that the relevance of such disclosure to
such other Section of this Agreement would be reasonably apparent to a reader
of such disclosure.

 

12.13                 Equitable Relief

 

The
Parties agree that any of them may pursue equitable relief in the form of a
temporary restraining order or injunction, or such other equitable relief as
may be otherwise contemplated by this Agreement.

 

[SIGNATURE PAGE FOLLOWS]

 

52

 

IN
WITNESS WHEREOF, the
Parties have caused this Agreement to be duly executed by their respective
authorized officers as of the day and year first above written.

 

	
   

  	
  MAUI ACQUISITION CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ KENNETH HILL

  	
   

  
	
   

  	
   

  	
  Name: KENNETH HILL

  
	
   

  	
   

  	
  Title: PRESIDENT

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HOUCHENS INDUSTRIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Jimmie Gipson

  	
   

  
	
   

  	
   

  	
  Name: Jimmie Gipson

  
	
   

  	
   

  	
  Title: President and CEO

  

 

 

[SIGNATURE
PAGE TO STOCK PURCHASE AGREEMENT, DATED AS OF FEBRUARY 8, 2007]

 

 

EXHIBIT A

 

FORM OF PARENT GUARANTEE

 

IMPERIAL TOBACCO GROUP PLC, a public limited company organized under the
laws of England & Wales (Parent)  irrevocably
guarantees each and every representation, warranty, covenant, agreement and
other obligation of Maui Acquisition Corporation, a Delaware corporation (Purchaser), and any of its permitted assigns,
under the Stock Purchase Agreement, dated as of February 8, 2007 (the Agreement), by and between
Purchaser and Houchens Industries, Inc., a Kentucky corporation (Seller), and the full and timely
performance of Purchaser’s obligations under the provisions of the Agreement.
This is a guarantee of payment and performance, and not of collection, and
Parent acknowledges and agrees that this guarantee is full and unconditional,
and no release or extinguishment of Purchaser’s obligations or liabilities
(other than in accordance with the terms of the foregoing Agreement), whether
by decree in any bankruptcy proceeding or otherwise, shall affect the
continuing validity and enforceability of this guarantee, as well as any
provision requiring or contemplating performance by Purchaser.

 

Parent hereby waives, for
the benefit of Seller, (1) any right to require Seller, as a condition of
payment or performance by Parent, to proceed against Purchaser or pursue any
other remedy whatsoever and (2) to the fullest extent permitted by law, any
defenses or benefits that may be derived from or afforded by law that limit the
liability of or exonerate guarantors or sureties, except to the extent that any
such defense is available to Purchaser.

 

Without limiting in any way
the foregoing guarantee, Parent covenants and agrees to take all actions to
enable Purchaser to adhere to each provision of the Agreement that requires an
act or omission on the part of Parent.

 

The provisions of Article
12 of the Agreement are incorporated herein, mutatis mutandis, except that notices and other
communications hereunder to Parent shall be delivered to:

 

Imperial
Tobacco Group PLC

PO
Box 244

Upton
Road

Bristol
BS99 7UJ

United
Kingdom

Telephone
Number: +44 (0)117 963 6636

Facsimile
Number:   +44 (0)117 966 7405

 

Attention:
Ken Hill

Conrad
Tate 

Adrian
Welsh

 

Parent understands that
Seller is relying on this guarantee in entering into the Agreement and may
enforce this guarantee as if Parent were a party to the Agreement.

 

[SIGNATURE PAGE FOLLOWS]

 

A-1

 

IN WITNESS WHEREOF, Parent has duly executed this Guarantee as of this 8th day
of February, 2007.

 

	
   

  	
  IMPERIAL
  TOBACCO GROUP PLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name: 

  
	
   

  	
   

  	
  Title: 

  

 

[SIGNATURE PAGE TO GUARANTEE, DATED AS OF FEBRUARY 8,
2007]

 

A-2

 

EXHIBIT B

 

FORM OF SUPPORT AGREEMENT

 

February
8, 2007

 

Maui Acquisition Corporation

c/o Imperial Tobacco Group 

PO Box 244 

Upton Road 

Bristol BS99 7UJ 

United Kingdom

 

Ladies and Gentlemen:

 

The undersigned, who
collectively constitute all members of the ESOP Committee of the Houchens
Industries, Inc. Employee Stock Ownership Plan (the ESOP) understands
that Houchens Industries, Inc., a Kentucky corporation (Seller)  and Maui Acquisition Corporation, a
Delaware corporation (Purchaser),
propose to enter into a Stock Purchase Agreement, dated as of
February 8, 2007 (the Stock Purchase
Agreement), providing
for, among other things, the sale and purchase of all of the issued and
outstanding capital stock of CBHC, Inc., a Kentucky corporation. Capitalized
terms used without definition in this letter agreement shall have the meanings
ascribed thereto in the Stock Purchase Agreement.

 

The undersigned are entering
into this letter agreement in consideration of, and as a condition to,
Purchaser’s willingness to enter into the Stock Purchase Agreement and to
consummate the transactions contemplated thereby (the Transactions).

 

The undersigned hereby agree
as follows:

 

1.                                      In connection with every meeting of the
stockholders of Seller called, and at every postponement or adjournment
thereof, and in connection with every action or approval by written consent of
the stockholders of Seller, the undersigned agree to take all lawful actions to
cause the trustee of the Seller ESOP to vote all unallocated shares of Seller
Common Stock held in the Seller ESOP together with all allocated shares of
Seller Common Stock with respect to which the ESOP Trustees do not receive
direction from the relevant ESOP participant as to how such should be voted at
the Stockholders Meeting (a) in favor of approval of the Transactions and (b)
against (i) any proposal made in opposition to the Transactions or in
competition or inconsistent with the Transactions, (ii) any Alternative
Proposal and (iii) any action or agreement that would result in a breach of any
representation, warranty, covenant or agreement or any other obligation of
Seller under the Stock Purchase Agreement. Notwithstanding the foregoing, the
undersigned may fail to take such actions (or refrain from taking such actions)
if they shall have determined in good faith, after consultation with outside
and inside counsel to Seller and Seller’s Financial Advisor, that such action
is required in order for the undersigned to comply with their fiduciary duties
under applicable Law.

 

2.                                      The undersigned represent and warrant that
they have all necessary power and authority to enter into this letter
agreement, and that this letter agreement is the legal, valid and binding
agreement of the undersigned and is enforceable against the undersigned in accordance
with its terms.

 

B-1

 

3.                                      This letter agreement shall terminate upon
the termination of the Stock Purchase Agreement in accordance with its terms.

 

4.                                      This agreement shall be governed by, and
construed in accordance with, the laws of the Commonwealth of Kentucky, without
giving effect to principles of conflict of laws.

 

5.                                      The undersigned recognize and acknowledge
that a breach by them of any covenants or agreements contained in this letter
agreement will cause Purchaser to sustain damages for which it would not have
an adequate remedy at law for money damages, and therefore the undersigned
agree that in the event of any such breach, Purchaser shall be entitled to
specific performance of such covenants and agreements and injunctive and other
equitable relief in addition to any other remedy to which it may be entitled,
at law or in equity; provided, however, that
the undersigned shall incur no personal liability whatsoever to Purchaser in
connection with this letter agreement.

 

6.                                      The effectiveness of this letter agreement
shall be conditioned upon the execution and delivery of the Stock Purchase
Agreement by each of the parties thereto.

 

[SIGNATURE PAGE FOLLOWS]

 

B-2

 

Please confirm that the
foregoing correctly states the understanding between us and you by signing and
returning to us a counterpart hereof.

 

	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Ruell Houchens

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Noel Hunt

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Jimmie Gipson

  
	
   

  
	
  Confirmed
  as of the date

  
	
  first
  above written:

  
	
   

  
	
  MAUI
  ACQUISITION CORPORATION

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

[SIGNATURE
PAGE TO SUPPORT AGREEMENT, DATED AS OF FEBRUARY 8, 2007]

 

B-3

 

EXHIBIT C

 

AGREED ACCOUNTING PRINCIPLES

 

This schedule includes
significant accounting policies and procedures to be used in determining the
Closing Statement. Generally, it is expected that the Closing Statement will be
determined in conformity with (a) the accounting principles specified below,
(b) with respect to any matters not addressed below, such matters shall be
determined using the same accounting principles, policies, procedures and
methods as were employed in connection with the preparation of the Company’s
Audited Financial Statement and (c) with respect to any matters not addressed
by (a) or (b) above, such matters shall be in a manner consistent with US GAAP
as in effect on September 30, 2006.

 

1.                                      Estimates. The preparation of financial statements in
conformity with accounting principles generally accepted in the United States
of America requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. For significant estimates including but not
limited to estimates described below, Purchaser has reviewed the Company’s methodology
and assumptions for making such estimates as of the Balance Sheet Date and
believes such methodologies and assumptions are reasonable. Further, Purchaser
agrees that the same methodology and assumptions will be used in making
estimates as of the Closing Date.

 

2.                                      Revenue Recognition. Revenues from the sale of the Company’s
products will be generally recognized as products are delivered to customers.
The Company’s policy has and will continue to be to invoice customers and
recognize sales revenue the day following the day a customer’s order is
shipped; and, in most cases, the products are shipped to and received by
customers a day after receiving the order.

 

3.                                      Accounts Receivable. Accounts receivable will be stated at the
amount billed to customers. The Company will provide an allowance for doubtful
accounts, which is based upon a review of outstanding receivables and
historical collection information. Domestic customers primarily participate in
the Company’s EFT program with terms available of two, seven and 10 days.
Government account terms are 12 days. Accounts past due more than 28 days will
be considered delinquent. Delinquent receivables will be written off based on
individual credit evaluation and specific circumstances of the customer.

 

4.                                      Inventory Pricing. Inventories will be stated at the lower of
cost (first-in, first-out method) or market. The Company currently does not
have a reserve for obsolete inventory as management does not believe any
reserve would be material. This policy will continue in preparing the closing
financial statements.

 

5.                                      Property and Equipment. The Company will capitalize property and
equipment with a cost greater than or equal to $10,000. Property and equipment
will be depreciated over the estimated useful life of each asset. Annual
depreciation is computed using the straight-line method. Management does not
currently believe any of the property and equipment is impaired.

 

6.                                      Parts Inventory. Parts inventory will be stated at its
original cost. The Company currently does not have a reserve for obsolete parts
inventory as management does not believe any reserve would be material.

 

7.                                      Deferred Financing Costs. Deferred financing costs will be amortized on
a straight-line basis over the life of the related debt. For purposes of determining
the Closing Statement, deferred financing costs will not be written off due to
any impairment that may result from the Closing.

 

C-1

 

8.                                      Goodwill and Brand
Trademarks. For purposes of
determining the Closing Statement, no evaluation for impairment will be
performed and no impairment will be deemed to exist. As a result, no adjustment
will be made to the amounts reflected as of the Balance Sheet Date related to
Goodwill and Brand Trademarks.

 

9.                                      Promotional Programs. The Company accrues costs associated with
promotional programs used to create product awareness in the marketplace. These
programs include buydowns, coupons and volume rebates. Costs associated with
these promotional programs will be included in accrued expenses based on
estimated carton sales, whether the customer is a retailer or wholesaler and an
estimated percentage or rebate earned that will be paid to the retailer or
wholesaler.

 

10.                                Sales Returns and
Allowances. An estimated
allowance for returned product is recorded when the Company’s products are
sold. The allowance is based on the rolling twelve months sales level
multiplied by the Company’s estimated return rate. The amount is calculated net
of the benefit from refund of related federal excise taxes.

 

11.                                MSA Liability. The Company uses estimates to determine the
MSA liability and related expense on a monthly basis. These estimates are based
on published information regarding market share of the various participants in
the cigarette industry, the estimated change in the overall industry market
share for the year in question, the expected consumer price index change as
measured by the MSA requirements, and other factors that affect the MSA
liability allocation.

 

C-2

 

EXHIBIT D

 

FORM OF OPINION OF WYATT TARRANT & COMBS LLP

 

March
[    ], 2007

 

Maui Acquisition Corporation

c/o Imperial Tobacco Group 

PO Box 244 

Upton Road 

Bristol BS99 7UJ 

United Kingdom

 

Ladies and Gentlemen:

 

We have acted as counsel to
Houchens Industries, Inc., a Kentucky corporation (“Houchens”), in connection
with the Stock Purchase Agreement dated as of February 8, 2007 (the “Stock
Purchase Agreement”) between Maui Acquisition Corporation (“Purchaser”) and
Houchens relating to the purchase by Purchaser from Houchens of all of the
issued and outstanding stock (the “CBHC Stock”) of CBHC, Inc., a Kentucky
corporation (“CBHC”), and related documents. We are providing this opinion (“Opinion”)
to Purchaser at the request of Houchens and pursuant to Section 9.2(e) of the
Stock Purchase Agreement.

 

In connection with this
Opinion, we have reviewed (i) the Asset Purchase Agreement dated as of July 24,
1996 among Brown & Williamson Tobacco Corporation (“B&W”), Commonwealth
Brands, Inc. (“Commonwealth”) and Commonwealth Tobacco, LLC (“Tobacco”), as
amended by the Agreement at Closing dated November 1, 1996 among the same
parties (the “B&W Agreement”) pursuant to which B&W (a) sold to Tobacco
certain brands of cigarettes and assets related thereto, (b) granted to Tobacco
certain rights to indemnification against certain third party claims (such
rights to indemnification, as defined in Section 10 of the B&W Agreement,
are hereinafter referred to as the “Indemnification Rights”), and (c) consented
to the assignment by Tobacco to Commonwealth of its rights under the B&W
Agreement, including the Indemnification Rights; and (ii) the Share Exchange
Agreement (formerly designated as Stock Purchase Agreement) dated as of July 19,
2001 (the “CBHC Agreement”) among CBHC, Brad M. Kelley and Frank Kelley as
Custodian under the Uniform Transfers to Minors Act, pursuant to which CBHC
acquired all of the issued and outstanding stock of Commonwealth (the “Commonwealth
Stock”) from the owners thereof. The transactions described in the preceding
clauses (i) and (ii) are hereinafter referred to as the “Prior Transactions.”
The agreements, documents and instruments evidencing the Prior Transactions are
hereinafter referred to as the “Prior Transaction Agreements.”

 

For the purpose of rendering
this Opinion, we have examined such questions of law as we have deemed
appropriate. As to certain questions of fact, we have relied without
independent investigation (unless expressly otherwise indicated herein) on, and
we have assumed the accuracy and validity of, statements and certificates of
certain officers and directors of Houchens and certificates of certain public
officials. However, except for the documents described above we have not,
unless expressly otherwise indicated herein, reviewed any other documents or
conducted any other examination of any public records, and this Opinion is
limited accordingly.

 

For the purpose of rendering
this Opinion, we have assumed that (i) the copy of each Prior Transaction
Agreement that we have examined in connection with the preparation of this
Opinion is authentic, complete and conforms to the original, (ii) all required
consents to the execution, delivery and performance of each Prior

 

D-1

 

Transaction Agreement were
obtained, (iii) all signatures contained in each Prior Transaction Agreement
are genuine, (iv) each of the Prior Transactions was consummated in accordance
with the applicable Prior Transaction Agreement, (v) each Prior Transaction
Agreement constitutes the legal, valid and binding obligations of the parties
thereto, enforceable in accordance with its terms, (vi) no action has been
taken which amends, modifies or revokes any of the Prior Transaction Documents,
(vii) after the completion of the transaction contemplated by the Stock
Purchase Agreement, Purchaser will continue to own the CBHC Stock and CBHC will
continue to own the Commonwealth Stock, (viii) any action seeking a judicial
determination with respect to the Indemnification Rights would be filed in a
Kentucky court, and (ix) a Kentucky court, in any such action, would (a) hold,
in accordance with Section 25 of the B&W Agreement, that the B&W
Agreement shall be governed by and construed in accordance with Kentucky law,
without regard to the principles of conflict of laws, and (b) enforce the
B&W Agreement in accordance with its terms.

 

Based upon the foregoing,
and subject to the assumptions, qualifications and limitations set forth
herein, we are of the opinion that the acquisition of the CBHC Stock by
Purchaser in accordance with the terms of the Stock Purchase Agreement will not
alter or impair Commonwealth’s right to enforce the Indemnification Rights
against B&W in accordance with, and subject to the conditions set forth in,
Section 10 of the B&W Agreement.

 

We call your attention to
the fact that the acquisition of the Commonwealth Stock by CBHC under the CBHC
Agreement resulted in the occurrence of a Change in Control or Bankruptcy Event
(“Event”) as defined in Section 10 of the B&W Agreement. However, Section
10(f) of the B&W Agreement provides that the occurrence of an Event only
relieves B&W of the obligation, but not the right, to defend or to continue
the defense of any and all Third Party Claims, as defined in the B&W
Agreement, of the type described in Section 10(c)(iii) of the B&W
Agreement. Notwithstanding the occurrence of such Event, Commonwealth remains
entitled to indemnification from B&W with respect to Third Party Claims of the
type described in Sections 10(a)(ii) and (iii) of the B&W Agreement.

 

The foregoing opinions are
subject to and expressly limited by the following qualifications and
limitations, in addition to those previously set forth:

 

A.                                   This Opinion is limited to the law, excluding
the principles of conflict of laws, of the State of Kentucky, and we do not
express any opinion concerning any other law.

 

B.                                     This Opinion is furnished for the benefit of
Purchaser only, in connection with the execution and delivery of the Stock
Purchase Agreement only, and may not be relied upon by any other person or
entity, or in any other context, without our prior written consent. We
expressly disclaim any responsibility for advising you of any change occurring
hereafter in circumstances concerning the matters which are the subject of this
Opinion, including any changes in the law or in factual matters occurring after
the date of this Opinion.

 

Very truly yours,

 

 

WYATT, TARRANT & COMBS,
LLP

 

D-2Exhibit
4.15

 

CONFORMED COPY

 

AGREEMENT

 

8 FEBRUARY 2007

(as amended by a side letter between the Obligors’ Agent

and the Facility Agent dated 4 July 2007)

 

US$1,900,000,000

 

CREDIT FACILITIES

 

for

 

IMPERIAL TOBACCO
FINANCE PLC

IMPERIAL TOBACCO FINANCE (2) PLC

IMPERIAL TOBACCO ENTERPRISE FINANCE LIMITED

as Borrowers

 

and

 

IMPERIAL TOBACCO
GROUP PLC

IMPERIAL TOBACCO LIMITED

as Guarantors

 

with

 

CITIGROUP GLOBAL
MARKETS LIMITED

THE ROYAL BANK OF SCOTLAND PLC

as Mandated Lead Arrangers

 

THE ROYAL BANK OF
SCOTLAND PLC

as Issuing Bank

 

and

 

THE ROYAL BANK OF
SCOTLAND PLC

as Facility Agent

 

 

 

Allen & Overy LLP

 

 

CONTENTS

 

	
  Clause

  	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
  1.

  	
   

  	
  Interpretation

  	
   

  	
  1

  
	
  2.

  	
   

  	
  Facilities

  	
   

  	
  14

  
	
  3.

  	
   

  	
  Purpose

  	
   

  	
  15

  
	
  4.

  	
   

  	
  Conditions Precedent and Certain Funds

  	
   

  	
  15

  
	
  5.

  	
   

  	
  Utilisation - Loans

  	
   

  	
  17

  
	
  6.

  	
   

  	
  Utilisation – Letters of Credit

  	
   

  	
  18

  
	
  7.

  	
   

  	
  Letters of Credit

  	
   

  	
  20

  
	
  8.

  	
   

  	
  Extension of Original Maturity Date

  	
   

  	
  23

  
	
  9.

  	
   

  	
  Repayment

  	
   

  	
  23

  
	
  10.

  	
   

  	
  Prepayment and Cancellation

  	
   

  	
  23

  
	
  11.

  	
   

  	
  Interest

  	
   

  	
  26

  
	
  12.

  	
   

  	
  Terms

  	
   

  	
  28

  
	
  13.

  	
   

  	
  Market Disruption

  	
   

  	
  29

  
	
  14.

  	
   

  	
  Taxes

  	
   

  	
  30

  
	
  15.

  	
   

  	
  Increased Costs

  	
   

  	
  33

  
	
  16.

  	
   

  	
  Mitigation

  	
   

  	
  34

  
	
  17.

  	
   

  	
  Payments

  	
   

  	
  35

  
	
  18.

  	
   

  	
  Guarantee and Indemnity

  	
   

  	
  37

  
	
  19.

  	
   

  	
  Representations

  	
   

  	
  39

  
	
  20.

  	
   

  	
  Undertakings

  	
   

  	
  41

  
	
  21.

  	
   

  	
  Financial Covenants

  	
   

  	
  47

  
	
  22.

  	
   

  	
  Default

  	
   

  	
  47

  
	
  23.

  	
   

  	
  The Administrative Parties

  	
   

  	
  51

  
	
  24.

  	
   

  	
  Evidence and Calculations

  	
   

  	
  55

  
	
  25.

  	
   

  	
  Fees

  	
   

  	
  55

  
	
  26.

  	
   

  	
  Indemnities and Break Costs

  	
   

  	
  56

  
	
  27.

  	
   

  	
  Expenses

  	
   

  	
  58

  
	
  28.

  	
   

  	
  Amendments and Waivers

  	
   

  	
  58

  
	
  29.

  	
   

  	
  Changes to the Parties

  	
   

  	
  59

  
	
  30.

  	
   

  	
  Disclosure of Information

  	
   

  	
  63

  
	
  31.

  	
   

  	
  Set-off

  	
   

  	
  63

  
	
  32.

  	
   

  	
  Pro rata sharing

  	
   

  	
  63

  
	
  33.

  	
   

  	
  Severability

  	
   

  	
  65

  
	
  34.

  	
   

  	
  Counterparts

  	
   

  	
  65

  
	
  35.

  	
   

  	
  Notices

  	
   

  	
  65

  
	
  36.

  	
   

  	
  Language

  	
   

  	
  67

  
	
  37.

  	
   

  	
  Governing Law

  	
   

  	
  67

  
	
  38.

  	
   

  	
  Jurisdiction

  	
   

  	
  67

  
	
  39.

  	
   

  	
  Waiver of Trial by Jury

  	
   

  	
  68

  

 

 

	
  Schedule

  	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
  1.

  	
   

  	
  Commitments

  	
   

  	
  3

  
	
  2.

  	
   

  	
  Conditions
  Precedent Documents

  	
   

  	
  3

  
	
   

  	
   

  	
  Part 1

  	
  To be
  delivered before First Request

  	
   

  	
  3

  
	
   

  	
   

  	
  Part 2

  	
  For an Additional
  Guarantor

  	
   

  	
  3

  
	
  3.

  	
   

  	
  Form of Notices

  	
   

  	
  3

  
	
   

  	
   

  	
  Part 1

  	
  Form of Request

  	
   

  	
  3

  
	
   

  	
   

  	
  Part 2

  	
  Form of
  Guarantor Accession Agreement

  	
   

  	
  3

  
	
  4.

  	
   

  	
  Calculation of
  the Mandatory Cost

  	
   

  	
  3

  
	
  5.

  	
   

  	
  Form of Transfer
  Certificate

  	
   

  	
  3

  
	
  6.

  	
   

  	
  Form of
  Compliance Certificate

  	
   

  	
  3

  
	
  7.

  	
   

  	
  Form of Resignation
  Request

  	
   

  	
  3

  
	
  8.

  	
   

  	
  Form of Letter of Credit

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Signatories

  	
   

  	
   

  	
   

  	
  3

  

 

 

THIS
AGREEMENT is dated 8 February 2007

 

BETWEEN:

 

(1)           IMPERIAL TOBACCO FINANCE
PLC (registered number 03214426) (Imperial
Finance), IMPERIAL TOBACCO FINANCE
(2) PLC (registered number 05667337) (Imperial
Finance 2)  and IMPERIAL TOBACCO ENTERPRISE FINANCE LIMITED (registered
number 04856478) (the Borrowers);

 

(2)           IMPERIAL TOBACCO GROUP PLC
(registered number 3236483) (Imperial) and IMPERIAL TOBACCO LIMITED (registered number 01860181)
(together, the Original  Guarantors);

 

(3)           CITIGROUP GLOBAL MARKETS
LIMITED and THE ROYAL BANK OF
SCOTLAND PLC as mandated lead arrangers (the Mandated
Lead Arrangers);

 

(4)           CITIBANK, N.A., LONDON
BRANCH, THE ROYAL BANK OF
SCOTLAND FINANCE (IRELAND) and THE ROYAL BANK OF SCOTLAND
PLC as original lenders (the Original Lenders);

 

(5)           THE
ROYAL BANK OF SCOTLAND PLC as issuing bank (in this
capacity the Issuing Bank); and

 

(6)           THE
ROYAL BANK OF SCOTLAND PLC as facility agent (in this
capacity, the Facility Agent).

 

IT IS
AGREED as follows:

 

1.             INTERPRETATION

 

1.1          Definitions

 

In this
Agreement:

 

Acquisition means the
acquisition by Maui Acquisition Corporation of the Target Shares.

 

Acquisition Agreement means
the stock purchase agreement in respect of the Target Shares entered into
between, amongst others, Maui Acquisition Corporation and Houchens Industries,
Inc..

 

Acquisition Costs means all fees,
costs, expenses, stamp, registration or transfer Taxes incurred by (or required
to be paid by) any member of the Group in connection with the Acquisition.

 

Additional Guarantor
means a member of the Group which becomes a Guarantor after the date of this
Agreement.

 

Administrative Party
means a Mandated Lead Arranger, the Issuing Bank or the Facility Agent.

 

Affiliate means a
Subsidiary or a Holding Company of a person, or any other Subsidiary of that
Holding Company.

 

Availability Period means:

 

(a)           for a Loan, the
period from and including the date of this Agreement to and including the date
falling 120 days after the date of this Agreement; and

 

1

 

(b)           for a Letter of
Credit, the period from and including the date of this Agreement to and
including the date falling one month prior to the Final Maturity Date.

 

Basel II Framework means the
framework for measuring the capital adequacy of banks in the form set out in
the paper entitled “International Convergence of Capital Measurement and
Capital Standards, a Revised Framework” issued by the Basel Committee on
Banking Supervision in June 2004.

 

Bonds means the
following:

 

	
  Amount (in millions)

  	
   

  	
  Maturity

  	
   

  	
  Issuer

  	
   

  
	
  $600

  	
   

  	
  1 April 2009

  	
   

  	
  Imperial
  Tobacco Overseas B.V.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  €1,500

  	
   

  	
  6 June 2007

  	
   

  	
  Imperial
  Tobacco Finance PLC

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  £350

  	
   

  	
  13 June 2012

  	
   

  	
  Imperial
  Tobacco Finance PLC

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  €1,200

  	
   

  	
  22 November
  2013

  	
   

  	
  Imperial
  Tobacco Finance PLC

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  £450

  	
   

  	
  22 November
  2016

  	
   

  	
  Imperial
  Tobacco Finance PLC

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  £200

  	
   

  	
  4 December
  2018

  	
   

  	
  Imperial
  Tobacco Finance PLC

  	
   

  

 

Bond Documents means the
agreements and documents to which the Issuer or Imperial Finance are a party
governing the terms of the Bonds or their issue.

 

Break Costs means the amount
(if any) which a Lender is entitled to receive under this Agreement as
compensation if any part of a Loan or overdue amount is prepaid.

 

Business Day means a day
(other than a Saturday or a Sunday) on which banks are open for general
business in London and New York.

 

Clean-up Period means the period
from the first Utilisation Date to the date falling 45 days thereafter.

 

CNR means the Centre
for Non-Residents of HM Revenue & Customs of the U.K.

 

Commitment means:

 

(a)           for an Original
Lender, the amount set out opposite its name in Schedule 1 (Commitments) under
the heading “Commitments” and the amount of any other Commitment, as so
designated, it acquires; and

 

(b)           for any other
Lender, the amount of any Commitment, as so designated, as it acquires,

 

to the extent not cancelled, transferred or reduced
under this Agreement.

 

Compliance Certificate
means a certificate substantially in the form of Schedule 6 (Form of Compliance
Certificate) setting out, among other things, calculations of the financial
covenants.

 

2

 

Confidentiality Undertaking
means a confidentiality undertaking substantially in the form recommended by
the Loan Market Association or such other form agreed between the Obligors’
Agent and the Facility Agent.

 

Consolidated Cash and Cash Equivalents
means, at any time:

 

(a)           cash in hand or
on deposit;

 

(b)           bonds, notes or
open market commercial paper:

 

(i)            which mature
within one year after the relevant date of calculation; and

 

(ii)           which have a
credit rating of either A-1 by Standard & Poor’s or Fitch or P-1 by
Moody’s, or, if no rating is available in respect of such commercial paper or
the indebtedness arising in respect thereof, the issuer of which has, in
respect of its long-term debt obligations, an equivalent rating;

 

(c)           Sterling bills of
exchange eligible for rediscount at the Bank of England and accepted by an
acceptable bank;

 

(d)           securities issued
in money market funds where:

 

(i)            those securities
are acquired on terms that they will be acquired or re-acquired by a third
party within one year or not more than three months after demand; and

 

(ii)           the relevant
third party has a short term credit rating of A-1 by Standard & Poor’s or
Fitch or P-1 by Moody’s or, if no short term rating is available in respect of
that third party, an equivalent rating in respect of its long term debt
obligations; or

 

(e)           any other
instrument, security or investment approved by the Majority Lenders,

 

in each case, to
which any member of the Group is beneficially entitled at that time.

 

Consolidated EBITDA means in
relation to the Group for a Measurement Period the consolidated profits on
ordinary activities before taxation for that Measurement Period:

 

(a)           after adding back
Consolidated Net Interest Payable;

 

(b)           before taking into
account any impact from the post-employment benefits charged under IAS 19,
comprising service cost, interest cost, expected return on plan assets, past
service costs and the effect of any settlement or curtailment;

 

(c)           before taking
into account any amount attributable to minority interests;

 

(d)           after adding back
depreciation and amortisation;

 

(e)           before taking
into account any items which are represented by:

 

(i)            profits or losses
on the sale or termination of an operation;

 

(ii)           costs of a
fundamental reorganisation or restructuring having a material effect on the
nature and focus of the reporting entity’s operations; and

 

3

 

(iii)          profits or losses
on the disposal of fixed assets or any of the items which fall within paragraph
20 of Financial Reporting Standard No. 3,

 

which Imperial
disclosed in the audited consolidated accounts of the Group for the relevant
financial year as items;

 

(f)            before taking
into account any increase or decrease in the fair value of any financial
instrument and any change in the surplus or deficit of any pension scheme
operated by a member of the Group, which in either case is reported through the
income statement; and

 

(g)           after adding back
an amount equal to any Restructuring Costs,

 

and, for the
purposes of Clause 21.2 (Gearing) only, including the Proforma EBITDA of
any business or company acquired during a Measurement Period for the part of
the Measurement Period falling before the effective date of that acquisition.

 

Consolidated Interest Payable
means in relation to a Measurement Period all interest charges, periodic
financing charges and charges in the nature of interest, including acceptance
commission, commitment fee, guarantee fee, fronting fee and the interest
element of rental payments or payments under finance or capital leases
(whether, in each case, paid, payable or capitalised), incurred by the Group in
effecting, servicing or maintaining Consolidated Total Borrowings during that
Measurement Period but excluding such charges, commission, fees and payments
incurred under (a) the Offer Equity Bridge Facilities and (b) the Offer
Facilities.

 

Consolidated Net Interest Payable
means Consolidated Interest Payable less all financing charges and interest
charges received or receivable by the Group during the relevant Measurement
Period.

 

Consolidated Total Borrowings
means, at any time, the aggregate principal amount of the Financial
Indebtedness of the Group falling within paragraphs (a), (b) or (c) of the
definition of that term plus the capital element of all rental payments under
finance or capital leases entered into by any member of the Group but excluding
any Financial Indebtedness under the Offer Facilities or the Offer Equity
Bridge Facilities.

 

Consolidated Total Net Borrowings
means at any time Consolidated Total Borrowings less Consolidated Cash and Cash
Equivalents.

 

Credit
means a Loan or a Letter of Credit.

 

Default means an Event
of Default or an event which, with the giving of notice, lapse of time,
determination of materiality or fulfilment or any other applicable condition
(or any combination of the foregoing), in each case as specified in
Clause 22 (Default), would constitute an Event of Default.

 

Environmental Law means any
applicable law in any jurisdiction in which any member of the Group conducts
business which imposes obligations upon such Group member relating to the
pollution or protection of the environment or harm to or the protection of
human health or the health of animals or plants.

 

Euro and e means the single currency
of the Participating Member States.

 

Event of Default means an event
or circumstance specified as such in Clause 22 (Default).

 

Extension Option means the option
of the Obligors’ Agent to request the Lenders provide the Facility for the Extension
Period in accordance with Clause 8 (Extension of Original Maturity Date).

 

4

 

Extension Period means a period
from the Original Maturity Date to the date falling 365 days after the Original
Maturity Date.

 

Facility means the credit
facility made available under this Agreement.

 

Facility Office means the
office(s) notified by a Lender to the Facility Agent:

 

(a)           on or before the
date it becomes a Lender; or

 

(b)           by not less than
five Business Days’ notice,

 

as the office(s)
through which it will perform its obligations under this Agreement.

 

Fee Letter means any letter
entered into by reference to this Agreement between one or more Administrative
Parties and the Obligors’ Agent setting out the amount of certain fees referred
to in this Agreement.

 

Final Maturity Date means the
Original Maturity Date or, if extended in accordance with the Extension Option,
the date falling 365 days after the Original Maturity Date.

 

Finance Document means:

 

(a)           this Agreement;

 

(b)           a Fee Letter;

 

(c)           a Transfer
Certificate;

 

(d)           the Syndication
Letter; or

 

(e)           any other
document designated as such by the Facility Agent and the Obligors’ Agent.

 

Finance Party means a Lender
or an Administrative Party.

 

Financial Indebtedness means
any indebtedness (other than indebtedness owed by one member of the Group to
another member of the Group) in respect of:

 

(a)           moneys borrowed
or raised;

 

(b)           any debenture,
bond, note, loan stock, commercial paper or similar instrument;

 

(c)           any acceptance
credit, bill-discounting, note purchase or other similar facility;

 

(d)           any
counter-indemnity obligation in respect of any guarantee, bond, documentary
letter of credit or other similar instrument issued by a bank or financial
institution;

 

(e)           any finance
lease;

 

(f)            any receivables
purchase, factoring or discounting arrangement under which there is recourse in
whole or in part to any member of the Group;

 

(g)           any currency
swap, or interest rate swap, cap or collar arrangement, option or any other derivative
instrument;

 

5

 

(h)           any arrangement
entered into primarily as a method of raising finance pursuant to which any
asset sold or otherwise disposed of by that person is or may be leased to or
re-acquired by a member of the Group (whether following the exercise of an
option or otherwise); or

 

(i)            any guarantee,
indemnity or other legally binding assurance against financial loss in respect
of the indebtedness of any person arising under an obligation falling within
(a) to (h) above.

 

Fitch means Fitch
Ratings Ltd or any successor to its ratings business.

 

Group means Imperial
and its Subsidiaries for the time being.

 

Guarantor means an
Original Guarantor or an Additional Guarantor.

 

Guarantor  Accession  Agreement means
a letter, substantially in the form of Part 2 of Schedule 3 (Form of Notices),
with such amendments as the Facility Agent may approve or reasonably require.

 

Holding Company means a holding
company within the meaning of section 736 of the Companies Act 1985.

 

IAS 19 means
International Accounting Standard 19 (1998) (Employee
Benefits) issued by the International Accounting Standards Board and
effective at 1 January 1999 (as amended and revised from time to time).

 

Increased Cost means:

 

(a)           an additional or
increased cost;

 

(b)           a reduction in
the rate of return under a Finance Document or on the overall capital of a
Finance Party or any of its Affiliates; or

 

(c)           a reduction of an
amount due and payable under any Finance Document,

 

which is incurred or suffered by a Finance Party or
any of its Affiliates but only to the extent attributable to that Finance Party
having entered into any Finance Document or funding or performing its
obligations under any Finance Document.

 

Issuer means Imperial
Tobacco Overseas B.V.

 

Lender means:

 

(a)           an Original
Lender; or

 

(b)           any person which
becomes a Lender after the date of this Agreement.

 

Letter of Credit
means a letter of credit substantially in the form of Schedule 8 (Form of
Letter of Credit) or in any other form agreed by the Issuing Bank (acting
reasonably) and the Obligors’ Agent.

 

LIBOR means, for a
Term of any Loan or overdue amount:

 

(a)           the applicable
Screen Rate; or

 

(b)           if no Screen Rate
is available for the relevant currency or Term of that Loan or overdue amount,
the arithmetic mean (rounded upward to four decimal places) of the rates, as

 

6

 

supplied to the Facility Agent at its request,
quoted by the Reference Banks to leading banks in the London interbank market,

 

in each case, as
of 11.00 a.m. on the Rate Fixing Day for the offering of deposits in the
currency of that Loan or overdue amount for a period comparable to that Term.

 

Litigation Report means (together):

 

(a)           the Form 20-F filed by Imperial
with the Securities and Exchange Commission on 2 February 2007; and

 

(b)           the report dated on or
around 7 February 2007 entitled “Hawaii — Report on Maui Product Liability
Litigation”.

 

Loan means, unless
otherwise stated in this Agreement, the principal amount of each borrowing
under this Agreement or the principal amount outstanding of that borrowing.

 

Majority Lenders means, at any
time, Lenders:

 

(a)           whose share in
the outstanding Credits and whose undrawn Commitments then aggregate 66 2/3% or
more of the aggregate of all the outstanding Credits and the undrawn
Commitments of all the Lenders;

 

(b)           if there is no
Credit then outstanding, whose undrawn Commitments then aggregate 66 2/3% or
more of the Total Commitments; or

 

(c)           if there is no
Credit then outstanding and the Total Commitments have been reduced to zero,
whose Commitments aggregated 66 2/3% or more of the Total Commitments
immediately before that reduction.

 

Mandatory Cost means the cost
of complying with certain regulatory requirements, expressed as a percentage
rate per annum and calculated by the Facility Agent under Schedule 4
(Calculation of the Mandatory Cost).

 

Margin means, subject
to Clause 11.3 (Margin Step-up), the percentage rate per annum as follows:

 

(a)           from (and
including) the date of this Agreement to (and including) the date falling six
months after the date of this Agreement, 0.15 per cent. per annum;

 

(b)           from (but
excluding) the date falling six months after the date of this Agreement to (and
including) the Original Maturity Date, 0.225 per cent. per annum; and

 

(c)           if a Borrower
exercises the Extension Option, from (but excluding) the Original Maturity Date
to (and including) the date falling 365 days after the Original Maturity Date,
0.30 per cent. per annum.

 

Material Adverse Effect
means a material adverse effect on the ability of the Obligors (taken as a
whole and taking into account resources of the Group which would be available
to the Obligors) to perform their obligations under the Finance Documents.

 

Material Company means:

 

(a)           an Obligor;

 

7

 

(b)           a Principal
Subsidiary;

 

(c)           Tobaccor S.A.;
and

 

(d)           John Player &
Sons Limited.

 

Maturity Date means the last
day of the Term for a Credit.

 

Measurement Period means a period
of 12 months ending on the last day of a financial year or half-year of
Imperial.

 

Moody’s means Moody’s
Investors Service Limited or any successor to its rating business.

 

Net Proceeds means an amount
equal to the proceeds received by any member of the Group net of fees, costs,
expenses and taxes incurred by members of the Group.

 

Obligor means a Borrower
or a Guarantor.

 

Obligors’ Agent means Imperial
Finance.

 

Offer Equity Bridge Facilities
means any equity bridge facilities agreement to be entered into by, amongst
others, Imperial and Imperial Tobacco Limited relating to the offer for shares
in Tiger.

 

Offer Facilities means any
facilities agreement to be entered into by, amongst others, Imperial Finance,
Imperial Tobacco Enterprise Finance Limited, Imperial and Imperial Tobacco
Limited relating to the offer for shares in Tiger.

 

Original Financial Statements
means the audited consolidated financial statements of the Group for the year
ended 30 September 2006.

 

Original Maturity Date
means the date falling 364 days after the date of this Agreement.

 

Participating Member State
means a member state of the European Communities that adopts or has adopted the
Euro as its lawful currency under the legislation of the European Community for
Economic Monetary Union.

 

Party means a party to
this Agreement.

 

Principal Subsidiary
means:

 

(a)           any Subsidiary of
Imperial whose net assets or pre-tax profit, at any time after the date of this
Agreement, equal or exceed five per cent. (5%) of the consolidated net assets or
adjusted consolidated pre-tax profit of the Group at that time, and for the
purposes of the above:

 

(i)            the consolidated
net assets of the Group shall be the consolidated net assets of the Group
ascertained by reference to the latest audited published consolidated accounts
of the Group;

 

(ii)           the adjusted
consolidated pre-tax profit of the Group shall be the aggregate of:

 

(A)          the consolidated
pre-tax profit of the Group ascertained by reference to the latest audited
published consolidated accounts of the Group; and

 

8

 

(B)           the consolidated
pre-tax profit (the pre-acquisition profit)
of any Subsidiary which became a member of the Group during the period for
which the latest audited published consolidated accounts of the Group were
prepared (an acquired subsidiary) for the part
of that period which falls before the effective date of such acquisition
calculated in accordance with approved accounting standards used in the
preparation of the latest audited published accounts of the Group;

 

(iii)          the net assets of
any Subsidiary shall be the net assets of that Subsidiary calculated in
accordance with approved accounting standards used in the preparation of the
latest audited published accounts of the Group; and

 

(iv)          the pre-tax
profit of any Subsidiary shall be the pre-taxation profit of that Subsidiary
calculated in accordance with approved accounting standards used in the
preparation of the latest audited published accounts of the Group plus, in the
case of any acquired subsidiary, an amount equal to any pre-acquisition,
pre-tax profit,

 

and for the
purposes of the above, net assets in
respect of the Group or any such Subsidiary means the fixed assets and current
assets of the Group or that Subsidiary (as the case may be); and

 

(b)           a Subsidiary of
Imperial to which has been transferred (whether by one transaction or a series
of transactions, related or not) the whole or substantially the whole of the
assets of a Subsidiary which immediately prior to those transactions was a
Principal Subsidiary.

 

Proforma EBITDA means in
relation to a business or company, the proforma consolidated profits on
ordinary activities before taxation of that business or company, adjusted in
accordance with paragraphs (a) to (f) (inclusive) of the definition of
Consolidated EBITDA, applied mutatis mutandis to
that business or company.

 

Pro rata Share means:

 

(a)           for the purpose
of determining a Lender’s share in a utilisation of the Facility, the
proportion which its undrawn Commitment under that Facility bears to all the
undrawn Commitments under that Facility; and

 

(b)           for any other
purpose on a particular date:

 

(i)            the proportion
which a Lender’s share of the Credits (if any) bears to all the Credits;

 

(ii)           if there are no
Credits outstanding on that date, the proportion which its Commitment bears to
the Total Commitments on that date; or

 

(iii)          if the Total
Commitments have been cancelled, the proportion which its Commitments bore to
the Total Commitments immediately before being cancelled.

 

PTR Scheme means the
Provisional Treaty Relief Scheme operated by CNR and includes any modifications
or republications thereof from time to time.

 

Qualifying Lender means a Lender
which is:

 

(a)           a U.K. Lender;

 

(b)           a Treaty Lender;
or

 

9

 

(c)           a U.K. Non-Bank
Lender.

 

Rate Fixing Day means the second
Business Day before the first day of a Term for a Loan, or such other day as
the Facility Agent determines is generally treated as the rate fixing day by
market practice in the relevant interbank market.

 

Reference  Bank means each of HSBC Bank PLC, Citibank, N.A., London
Branch and The Royal Bank of Scotland plc and any other bank or financial
institution appointed as such by the Facility Agent following consultation with
the Obligors’ Agent.

 

Repeating
Representations means
the representations which are deemed to be repeated under Clause 19.14
(Times for making Representations).

 

Request means a request
for a Loan and/or a Letter of Credit, substantially in the form of Part 1 of
Schedule 3 (Form of Notices).

 

Reservations means:

 

(a)           the principles
that enforceability may be limited by the laws of administration, liquidation,
insolvency, reorganisation, suretyship or similar laws of general application
affecting creditors’ rights; and

 

(b)           any other general
principles of law referred to in any legal opinion delivered in connection with
the Finance Documents and any qualifications to which any such opinion is
subject.

 

Resignation Request means a letter
substantially in the form of Schedule 7 (Form of Resignation Request).

 

Restructuring Costs means all
non-recurring costs, charges or expenses, including, inter alia,
redundancy and consultancy costs charged to the consolidated profit and loss
account of the Group in connection with the restructuring of the Group or any
of its assets following, and as a result of, an acquisition or investment.

 

Screen Rate means the
British Bankers Association Interest Settlement Rate (if any) for US Dollars
and relevant Term displayed on the appropriate page of the Reuters screen
selected by the Facility Agent. If the relevant page is replaced or the service
ceases to be available, the Facility Agent may (with the agreement of the
Obligors’ Agent) specify another page or service displaying the appropriate
rate.

 

Security Interest means any
mortgage, pledge, lien, charge, assignment, hypothecation or security interest
securing any obligation of any person, or any other agreement or arrangement
having a similar effect, in each case created with the intention of conferring
a security interest.

 

Standard & Poor’s
means Standard & Poor’s Rating Services, a division of The McGraw-Hill
Companies Inc. or any successor to its rating business.

 

Sterling and £ means the lawful currency for the time being of the U.K.

 

Subsidiary means a
subsidiary within the meaning of section 736 of the Companies Act 1985.

 

Syndication Letter means the
syndication letter dated on or about the date of this Agreement between the
Mandated Lead Arrangers and the Obligors’ Agent.

 

Target
means
CBHC, Inc..

 

10

 

Target Shares means all of the
issued shares (of whatever class) in the capital of the Target together with
all related rights.

 

Tax means any tax,
levy, impost, duty or other charge or withholding of a similar nature
(including any related penalty or interest).

 

Tax Confirmation means a
confirmation by a U.K. Non-Bank Lender that the person beneficially entitled to
payments made to that Lender in respect of an advance under a Finance Document
is either:

 

(a)           a company
resident in the U.K., or a partnership each member of which is a company
resident in the U.K., for U.K. tax purposes; or

 

(b)           a company not so
resident in the U.K. which carries on a trade in the U.K. through a permanent
establishment and those payments in respect of that advance fall to be brought
into account in computing the chargeable profits of that company for the
purposes of section 11(2) of the Income and Corporations Taxes Act, 1988.

 

Tax Credit means a credit
against any Tax or any relief or remission for Tax (or its repayment).

 

Tax Deduction means a
deduction or withholding for or on account of Tax from a payment under a
Finance Document.

 

Tax Payment means a payment
made by an Obligor to a Finance Party in any way relating to a Tax Deduction or
under any indemnity given by that Obligor in respect of Tax under any Finance
Document.

 

Term means each
period determined under this Agreement:

 

(a)           by
reference to which interest on a Credit or an overdue amount is calculated; and

 

(b)           for
which the Issuing Bank may be under a liability under a Letter of Credit.

 

Tiger means
Altadis, S.A.

 

Tobacco
Master Settlement Agreement means the tobacco master
settlement agreement dated 28 November 1998 (as amended from time to time)
among 46 of the United States, certain territories of the United States and
certain tobacco companies.

 

Total Commitments means the
aggregate of the Commitments of all the Lenders, being the total amount
identified as such in Schedule 1 (Commitments) at the date of this Agreement.

 

Transfer Certificate
means a certificate, substantially in the form of Schedule 5 (Form of Transfer
Certificate), with such amendments as the Facility Agent may approve or
reasonably require, or any other form agreed between the Facility Agent and the
Obligors’ Agent.

 

Transfer Date means, in
respect of a Transfer Certificate, the later of:

 

(a)           the proposed
Transfer Date specified in that Transfer Certificate; and

 

(b)           the date on which
the Facility Agent executes that Transfer Certificate.

 

Treaty Lender means a Lender
which is, on the date a payment of interest falls due under this Agreement:

 

11

 

(a)           resident (as
defined in the appropriate double taxation agreement) in a country with which
the U.K. has a double taxation agreement and which is entitled to a complete
exemption under that double taxation agreement from U.K. taxation on interest;
and

 

(b)           does not carry on
a business in the U.K. through a permanent establishment with which the payment
is effectively connected,

 

and for this
purpose double  taxation
agreement means any convention or
agreement between the government of the U.K. and any other government for the
avoidance of double taxation and the prevention of fiscal evasion with respect
to taxes on income and capital gains.

 

U.K. means the United
Kingdom of Great Britain and Northern Ireland.

 

U.K. Lender means a Lender
which is within the charge to U.K. corporation tax in respect of, and
beneficially entitled to, a payment of interest on a Loan made by a person that
was a bank for the purposes of section 349 of the Income and Corporation Taxes
Act 1988 (as currently defined in section 840A of the Income and Corporation
Taxes Act 1988) at the time the Loan was made.

 

U.K. Non-Bank Lender
means a Lender which is neither a U.K. Lender nor a Treaty Lender and which is:

 

(a)           a company
resident in the U.K. for U.K. tax purposes;

 

(b)           a partnership
each member of which is a company resident in the U.K., for U.K. tax purposes;
or

 

(c)           a company not so
resident in the U.K. which carries on a trade in the U.K. through a permanent
establishment and which brings into account payments made to it under this
Agreement in computing its chargeable profits for the purposes of section 11(2)
of the Income and Corporations Taxes Act, 1988,

 

and which has
given a Tax Confirmation to the Obligors’ Agent and the Facility Agent.

 

United  States means the United States of America.

 

U.S. Dollars and $ means the lawful currency for the time being of the
United States.

 

Utilisation  Date means each date on which the Facility is utilised.

 

1.2          Construction

 

(a)           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)           assets
includes present and future properties, revenues and rights of every
description;

 

(iii)          an authorisation includes an authorisation, consent, approval,
resolution, licence, exemption, filing, registration or notarisation;

 

(iv)          disposal
means a sale, transfer, grant, lease or other disposal, whether voluntary or
involuntary, and dispose will be construed
accordingly;

 

12

 

(v)           indebtedness
includes any obligation (whether incurred as principal or as surety) for the
payment or repayment of money;

 

(vi)          know your customer
requirements are the identification checks that a Finance
Party reasonably requests in order to meet its obligations under any applicable
law or regulation to identify a person who is (or is to become) its customer;

 

(vii)         a person includes any individual, company, corporation,
unincorporated association or body (including a partnership, trust, joint
venture or consortium), government, state, agency, organisation or other entity
whether or not having separate legal personality;

 

(viii)        a regulation includes any regulation, rule, official
directive, request or guideline (whether or not having the force of law but, if
not having the force of law, being of a type with which any person to which it
applies is accustomed to comply) of any governmental, inter-governmental or
supranational body, agency, department or regulatory, self-regulatory or other
authority or organisation;

 

(ix)           a currency is a
reference to the lawful currency for the time being of the relevant country;

 

(x)            a Default being outstanding means that it has not been remedied or waived;

 

(xi)           a provision of
law is a reference to that provision as extended, applied, amended or
re-enacted and includes any subordinate legislation;

 

(xii)          a Clause, a
Subclause or a Schedule is a reference to a clause or subclause of, or a
schedule to, this Agreement;

 

(xiii)         a person includes
its successors in title, permitted assigns and permitted transferees;

 

(xiv)        a Finance
Document or another document is a reference to that Finance Document or other
document as amended; and

 

(xv)         a time of day is
a reference to London time.

 

(b)           Unless the
contrary intention appears, a reference to a month
or months is a reference to a period
starting on one day in a calendar month and ending on the numerically
corresponding day in the next calendar month or the calendar month in which it
is to end, except that:

 

(i)            if the
numerically corresponding day is not a Business Day, the period will end on the
next Business Day in that month (if there is one) or the preceding Business Day
(if there is not);

 

(ii)           if there is no
numerically corresponding day in that month, that period will end on the last
Business Day in that month; and

 

(iii)          notwithstanding
paragraph (i) above, a period which commences on the last Business Day of a
month will end on the last Business Day in the next month or the calendar month
in which it is to end, as appropriate.

 

(c)           (i)            Unless expressly provided to
the contrary in a Finance Document, a person who is not a party to a Finance
Document may not enforce any of its terms under the Contracts (Rights of Third
Parties) Act 1999; and

 

13

 

(ii)           notwithstanding
any term of any Finance Document, the consent of any third party is not
required for any variation (including any release or compromise of any
liability) or termination of that Finance Document.

 

(d)           Unless the
contrary intention appears:

 

(i)            a reference to a
Party will not include that Party if it has ceased to be a Party under this
Agreement;

 

(ii)           a word or
expression used in any other Finance Document or in any notice given in
connection with any Finance Document has the same meaning in that Finance
Document or notice as in this Agreement; and

 

(iii)          any obligation of
an Obligor under the Finance Documents which is not a payment obligation
remains in force for so long as any payment obligation of an Obligor is or may
be outstanding under the Finance Documents.

 

(e)           The headings in
this Agreement do not affect its interpretation.

 

2.             FACILITIES

 

2.1          Term
Loan Facility

 

Subject to the
terms of this Agreement, the Lenders make available to the Borrowers a term
loan facility in an aggregate amount equal to the Total Commitments.

 

2.2          Letters
of Credit

 

The Facility
includes an option for the Borrowers to request the Issuing Bank to issue
Letters of Credit counter-indemnified by the Lenders in aggregate amount equal
to $20,000,000 of the Total Commitments.

 

2.3          Nature
of a Finance Party’s rights and obligations

 

Unless otherwise
agreed by all the Finance Parties:

 

(a)           the obligations of a Finance
Party under the Finance Documents are several;

 

(b)           failure by a Finance Party
to perform its obligations does not affect the obligations of any other Party
under the Finance Documents;

 

(c)           no Finance Party is
responsible for the obligations of any other Finance Party under the Finance
Documents;

 

(d)           the rights of a Finance
Party under the Finance Documents are separate and independent rights;

 

(e)           a debt arising under the
Finance Documents to a Finance Party is a separate and independent debt; and

 

(f)            a Finance Party may, except
as otherwise stated in the Finance Documents, separately enforce those rights.

 

14

 

3.             PURPOSE

 

3.1          Loan
proceeds

 

Each Loan may
only be used in or towards:

 

(a)           the payment of the purchase
price for all the Target Shares under the Acquisition Agreement;

 

(b)           the Acquisition Costs;

 

(c)           refinancing Financial
Indebtedness of the Target and its Subsidiaries including, without limitation,
any letters of credit issued for their account and any Financial Indebtedness
owed to the Seller (as defined in the Acquisition Agreement);

 

(d)           any purchase price
adjustment payments to be made under the Acquisition Agreement; and

 

(e)           after the completion of the
Acquisition in accordance with the Acquisition Agreement, general corporate
purposes (including, without limitation, making any Tobacco Master Settlement
Agreement payments).

 

3.2          Letters
of Credit

 

Each Letter of
Credit may only be issued for general corporate purposes of the Group.

 

3.3          No
obligation to monitor

 

No Finance Party
is bound to monitor or verify the utilisation of the Facility.

 

4.             CONDITIONS PRECEDENT AND CERTAIN
FUNDS

 

4.1          Definitions

 

In this
Subclause:

 

Major Breach means a breach
of:

 

(a)           Clause 20.10
(Negative pledge);

 

(b)           Clause 20.12
(Disposals); or

 

(c)           Clause 20.17
(Acquisition of Target Shares).

 

Major Default means any of the
following Events of Default but only so far as they relate to an Obligor:

 

(a)           Clause 22.2
(Non-payment);

 

(b)           Clause 22.3
(Breach of other obligations) but only in so far as it relates to a Major
Breach;

 

(c)           Clause 22.5
(Misrepresentation) but only in so far as it relates to a Major Representation;

 

(d)           Clause 22.7
(Insolvency), Clause 22.8 (Winding up), Clause 22.9 (Creditors’ process) or
Clause 22.14 (Cessation of Business); or

 

15

 

(e)           Clause 22.12
(Unlawfulness) and Clause 22.13 (Repudiation) except to the extent the Event of
Default results from any matter specifically referred to in any legal opinion
referred to in paragraph (b) of the definition of Reservations.

 

Major Representation means
any of the following representations contained in this Agreement but only so
far as they relate to an Obligor:

 

(a)           Clause 19.2
(Status);

 

(b)           Clause 19.3
(Power and authority) but only if this would be reasonably likely to materially
and adversely affect the interests of the Finance Parties, and for this purpose
no misrepresentation shall be deemed to occur if the only circumstances giving
rise to the misrepresentation are those specifically referred to in any legal
opinions referred to in paragraph (b) of the definition of Reservations);

 

(c)           Clause 19.4 (Legal
validity); or

 

(d)           Clause 19.5
(Non-conflict) (other than subparagraph (c) of that clause).

 

4.2          Conditions
precedent to first utilisation of the Facility

 

The Facility may
not be utilised until the Facility Agent has notified the Obligors’ Agent and
the Lenders that it has received all of the documents and evidence set out in
Part 1 of Schedule 2 (Conditions Precedent Documents) in form and substance
satisfactory to the Facility Agent (acting reasonably). The Facility Agent must
give this notification to the Obligors’ Agent and the Lenders promptly upon
being so satisfied.

 

4.3          Further
conditions precedent

 

The obligations
of each Lender to participate in any Loan are subject to the further conditions
precedent that on both the date of the Request and the Utilisation Date for
that Loan:

 

(a)           the Repeating
Representations are correct in all respects; and

 

(b)           no Default is outstanding or
would result from the Loan.

 

4.4          Limitations

 

Unless the
Facility Agent agrees pursuant to Clause 12.3 (Other adjustments) or
otherwise, a Request may not be made (or, if made, shall not be regarded as
having been validly made) if, as a result, there would be more than:

 

(a)           four Loans outstanding; and

 

(b)           10 Letters of Credit
outstanding.

 

4.5          Certain
Funds

 

(a)           Notwithstanding
any term of this Agreement, during the Availability Period for a Loan and in
respect of any Credit for the purposes set out in paragraphs (a)-(c)
(inclusive) of Clause 3.1 (Loan proceeds) no Lender is entitled to:

 

(i)            refuse to
participate in or make available any such Credit;

 

16

 

(ii)           cancel its
Commitment;

 

(iii)          exercise any
right of rescission or similar right or remedy which it may have in relation to
any such Credit; or

 

(iv)          accelerate or
cause repayment of any such Credit,

 

except as
provided below in this Subclause.

 

(b)           Paragraph (a)
does not apply if the entitlement arises because:

 

(i)            the Obligors’
Agent has not delivered or procured the delivery of all of the documents
required under Clause 4.2 (Conditions precedent to first utilisation of
the Facility) and the delivery of any such documents has not been waived by the
Facility Agent;

 

(ii)           a Major
Representation is not correct or will not be correct immediately after any such
Credit is made;

 

(iii)          a Major Default
is outstanding or will result from the making of any such Credit; or

 

(iv)          it is unlawful
for the Lender to perform any of its obligations under the Finance Documents.

 

(c)           Nothing in this
Subclause will affect the rights of any Finance Party in respect of any
outstanding Default upon expiry of the Availability Period in respect of a
Loan, irrespective of whether that Default occurred during the Availability
Period in respect of a Loan or not.

 

5.             UTILISATION - LOANS

 

5.1          Giving
of Requests

 

(a)           A Borrower may
borrow a Loan by giving to the Facility Agent a duly completed Request.

 

(b)           Unless the
Facility Agent otherwise agrees, the latest time for receipt by the Facility
Agent of a duly completed Request is 11.00 a.m. one Business Day before the
Rate Fixing Day for the proposed borrowing.

 

(c)           Each such Request
is irrevocable.

 

5.2          Completion
of Requests

 

A Request for a
Loan will not be regarded as having been duly completed unless:

 

(a)           it identifies the Borrower;

 

(b)           the Utilisation Date is a
Business Day falling within the relevant Availability Period;

 

(c)           the amount of the Loan
requested is:

 

(i)            a minimum of $5,000,000 and
an integral multiple of 1,000,000 units of that currency;

 

(ii)           the maximum undrawn amount
available under the Facility on the proposed Utilisation Date; or

 

17

 

(iii)          such other amount as the
Facility Agent may agree;

 

(d)           the proposed currency and
Term comply with this Agreement; and

 

(e)           the payment instructions
comply with Clause 17.1 (Place of Payments).

 

5.3          Advance
of Loan

 

(a)           The Facility
Agent must promptly notify each Lender of the details of the requested Loan and
the amount of its share in that Loan.

 

(b)           The amount of
each Lender’s share of a Loan will be its Pro rata Share on the proposed
Utilisation Date.

 

(c)           No Lender is
obliged to participate in a Loan if as a result:

 

(i)            its share in the
Credits would exceed its Commitment; or

 

(ii)           the aggregate
amount of all Credits would exceed the Total Commitments.

 

(d)           If the conditions
set out in this Agreement have been met, each Lender must make its share in the
Loan available to the Facility Agent for the relevant Borrower on the
Utilisation Date.

 

6.             UTILISATION – LETTERS OF CREDIT

 

6.1          Giving
of Requests

 

(a)           A Borrower may
request a Letter of Credit to be issued by giving to the Facility Agent a duly
completed Request.

 

(b)           Unless the
Facility Agent otherwise agrees, the latest time for receipt by the Facility
Agent of a duly completed Request is 11.00 a.m. five Business Days before the
proposed Utilisation Date.

 

(c)           Each Request is
irrevocable.

 

6.2          Completion
of Requests

 

A Request for a
Letter of Credit will not be regarded as being duly completed unless:

 

(a)           it identifies the Borrower;

 

(b)           it specifies that it is for
a Letter of Credit;

 

(c)           the Utilisation Date is a
Business Day falling within the relevant Availability Period;

 

(d)           the amount of the Letter of
Credit requested is:

 

(i)            a minimum amount of $50,000;

 

(ii)           the maximum undrawn amount
available for Letters of Credit under the Facility on the proposed Utilisation
Date; or

 

(iii)          such other amount as the
Facility Agent may agree;

 

(e)           the form of the Letter of
Credit is attached; and

 

18

 

(f)            the delivery instructions
for the Letter of Credit are specified.

 

6.3          Issue
of the Letter of Credit

 

(a)           The Facility
Agent must promptly notify the Issuing Bank and each Lender of the details of
the requested Letter of Credit and the amount of its share of that Letter of
Credit.

 

(b)           The amount of
each Lender’s share in a Letter of Credit will be its Pro rata Share on the
proposed Utilisation Date.

 

(c)           If the conditions
set out in this Agreement have been met, the Issuing Bank must issue the Letter
of Credit on the Utilisation Date.

 

6.4          Extension
of a Letter of Credit

 

(a)           A Borrower may
request that a Letter of Credit issued on its behalf is extended by delivery to
the Facility Agent of a notice (an LC Extension Notice)
specifying the new proposed Maturity Date (the LC Proposed
Maturity Date). Any LC Extension Notice must be served not less than
three Business Days before the Maturity Date of that Letter of Credit.

 

(b)           The Facility
Agent must promptly notify the Issuing Bank and each Lender of the details of
the extension requested in the LC Extension Notice of the Letter of Credit and
the amount of its share of that Letter of Credit.

 

(c)           The terms of each
extended Letter of Credit will remain the same as before the extension, except
that:

 

(i)            its amount may be
reduced; and

 

(ii)           its Maturity Date
will be the LC Proposed Maturity Date.

 

(d)           If the conditions
set out in this Clause 6.4 (Extension of a Letter of Credit) and Clause 6.5
(Conditions precedent) have been met, the Issuing Bank must extend the Letter
of Credit in the manner requested.

 

6.5          Conditions
precedent

 

(a)           The Issuing Bank
is not obliged to issue or extend any Letter of Credit if as a result:

 

(i)            a Lender’s share
in the Credits would exceed its Commitment; or

 

(ii)           the Credits would
exceed the Total Commitments.

 

(b)           The Issuing Bank
is not obliged to issue or extend any Letter of Credit if either on the date of
the Request or date of the Extension Notice or the Utilisation Date or
extension date:

 

(i)            the Repeating
Representations are not correct in all material respects; and/or

 

(ii)           a Default or in
the case of an extension, an Event of Default is outstanding or would result
from the issue or extension of that Letter of Credit.

 

(c)           The Issuing Bank
has no duty to enquire of any person whether or not any of the conditions
precedent set out in this Subclause have been met. The Issuing Bank may assume
that those conditions have been met unless it is expressly notified to the
contrary by the Facility Agent. The

 

19

 

Issuing Bank will have no
liability to any person for issuing a Letter of Credit based on any such
assumption.

 

7.             LETTERS OF CREDIT

 

7.1          General

 

(a)           A Letter of
Credit is repaid or prepaid
to the extent that:

 

(i)            a Borrower
provides cash cover for that Letter of Credit;

 

(ii)           the maximum
amount payable under the Letter of Credit is reduced or cancelled in accordance
with its terms; or

 

(iii)          the Letter of
Credit has been returned to the Facility Agent by way of cancellation or the
relevant Issuing Bank is otherwise satisfied that it has no further liability
under that Letter of Credit or that its liability thereunder has been
permanently reduced.

 

The amount by
which a Letter of Credit is repaid or prepaid under sub-paragraphs (i) and (ii)
above is the amount of the relevant cash cover, reduction or cancellation.

 

(b)           If a Letter of
Credit or any amount outstanding under a Letter of Credit becomes immediately
payable under this Agreement, the Borrower that requested the issue of that
Letter of Credit must repay or prepay that amount immediately.

 

(c)           Cash cover is
provided for a Letter of Credit if a Borrower pays an amount in the currency of
the Letter of Credit to an interest-bearing account with a Finance Party in
London in the name of the Borrower and the following conditions are met:

 

(i)            the account is
with the Facility Agent or the Issuing Bank (if, subject as provided below, the
cash cover is to be provided for all the Lenders) or with a Lender (if the cash
cover is to be provided for that Lender);

 

(ii)           until no amount
is or may be outstanding under that Letter of Credit, withdrawals from the
account may only be made:

 

(A)          to pay the
Finance Party for which the cash cover is provided under this Clause or any
amounts due to them under Clause 7.5 (Indemnities); or

 

(B)           if no Default is
outstanding, by the relevant Borrower, to the extent the balance in the account
exceeds the Issuing Banks share of the outstanding amount of the Letter of
Credit; and

 

(iii)          if requested by the
Facility Agent, the Borrower has executed and delivered a security document
over that account, in form and substance satisfactory to the Facility Agent or
the Finance Party (in either case, acting reasonably) for which the cash cover
is provided, creating a first ranking security interest over that account.

 

References to
cash cover exclude any interest accrued on that cash cover.

 

(d)           The outstanding or principal
amount of a Letter of Credit at any time is the maximum amount that is or may
be payable by the relevant Borrower in respect of that Letter of Credit at that
time.

 

(e)           The amount of
cash cover will be ignored in calculating the undrawn Commitment of each
Lender.

 

20

 

(f)            Any amount
standing to the credit of an account maintained by the Borrower under paragraph
(c) above will bear interest at a normal market rate for deposits of a similar
duration, currency and amount.

 

7.2          Fees
in respect of Letters of Credit

 

(a)           Each Borrower
must pay to the Issuing Bank a fronting fee in respect of each Letter of Credit
requested by it in the manner agreed in the Fee Letter between the Issuing Bank
and the Obligors’ Agent.

 

(b)           Each Borrower
must pay to the Facility Agent for each Lender a letter of credit fee computed
at the rate equal to the then applicable Margin on the outstanding amount of
each Letter of Credit requested by it for the period from the issue of that
Letter of Credit until its Maturity Date. This fee will be distributed
according to each Lender’s Pro rata Share, adjusted to reflect any assignment
or transfer to or by that Lender.

 

(c)           Accrued letter of
credit fee is payable quarterly in arrear (or any shorter period that ends on
the Maturity Date for that Letter of Credit) on the last day of the relevant
quarter (or the Maturity Date for that Letter of Credit, if applicable) and the
date falling five Business Days after the date on which the Obligors’ Agent
receives from the Facility Agent an invoice for such amount. Accrued letter of
credit fee is also payable to the Facility Agent on the cancelled amount of any
Lender’s Commitment at the time the cancellation is effective if that
Commitment is cancelled in full and its participation in the Letters of Credit
is prepaid or repaid in full on the later of the date on which such
cancellation becomes effective and the date falling five Business Days after
the date on which the Obligors’ Agent receives from the Facility Agent an
invoice for such amount.

 

(d)           If a Borrower
provides cash cover for any part of a Letter of Credit, then:

 

(i)            the fronting fee
payable to the Issuing Bank and the letter of credit fee payable for the
account of each Lender in respect of any part of a Letter of Credit which is
the subject of cash cover will continue to be payable until the expiry of that
Letter of Credit; but

 

(ii)           that Borrower
will be entitled to withdraw the interest accrued on the amount of the cash
cover to pay those fees.

 

7.3          Claims
under a Letter of Credit

 

(a)           Each Borrower
irrevocably and unconditionally authorises the Issuing Bank to pay any claim
made or purported to be made under a Letter of Credit requested by it and which
appears on its face to be in order (a claim).

 

(b)           Each Borrower
that requested the issue of a Letter of Credit must promptly pay to the
Facility Agent for the Issuing Bank upon receipt of a written demand an amount
equal to the amount of any claim.

 

(c)           Each Borrower
acknowledges that the Issuing Bank:

 

(i)            is not obliged to
carry out any investigation or seek any confirmation from any other person
before paying a claim; and

 

(ii)           deals in
documents only and will not be concerned with the legality of a claim or any
underlying transaction or any available set-off, counterclaim or other defence
of any person.

 

(d)           The obligations
of a Borrower under this Clause will not be affected by:

 

21

 

(i)            the sufficiency,
accuracy or genuineness of any claim or any other document; or

 

(ii)           any incapacity
of, or limitation on the powers of, any person signing a claim or other
document.

 

7.4          Indemnities

 

(a)           Each Borrower
must immediately on demand indemnify the Issuing Bank against any loss or
liability which the Issuing Bank incurs under or in connection with any Letter
of Credit requested by it, except to the extent that the loss or liability is
directly caused by the gross negligence or wilful misconduct of the Issuing
Bank.

 

(b)           Each Lender must
immediately on demand indemnify the Issuing Bank against its share of any loss
or liability which the Issuing Bank incurs under or in connection with any
Letter of Credit and which has not been paid for by an Obligor, except to the
extent that the loss or liability is directly caused by the gross negligence or
wilful misconduct of the Issuing Bank.

 

(c)           A Lender’s share
of the liability or loss referred to in paragraph (b) above will be its Pro
rata Share on the Utilisation Date of the relevant Letter of Credit, adjusted
to reflect any subsequent assignment or transfer under this Agreement.

 

(d)           The relevant Borrower
must immediately on demand reimburse any Lender for any payment it makes to the
Issuing Bank under this Subclause.

 

(e)           The obligations
of each Borrower and each Lender under this Clause are continuing obligations
and will extend to the ultimate balance of all sums payable by that Borrower or
that Lender under or in connection with any Letter of Credit, regardless of any
intermediate payment or discharge in whole or in part.

 

(f)            The obligations
of any Lender under this Clause will not be affected by any act, omission or
thing which, but for this provision, would reduce, release or prejudice any of
its obligations under this Clause (whether or not known to it or any other
person). This includes:

 

(i)            any time or
waiver granted to, or composition with, any person;

 

(ii)           any release of
any person under the terms of any composition or arrangement;

 

(iii)          the taking,
variation, compromise, exchange, renewal or release of, or refusal or neglect
to perfect, take up or enforce, any rights against, or security over assets of,
any person;

 

(iv)          any
non-presentation or non-observance of any formality or other requirement in
respect of any instrument or any failure to realise the full value of any
security;

 

(v)           any incapacity or
lack of power, authority or legal personality of or dissolution or change in
the members or status of any person;

 

(vi)          any amendment
(however fundamental) of a Finance Document, any Letter of Credit or any other
document or security;

 

(vii)         any
unenforceability, illegality or invalidity of any obligation of any person
under any Finance Document, any Letter of Credit or any other document or
security; or

 

(viii)        any insolvency or
similar proceedings.

 

22

 

7.5          Rights
of contribution

 

No Borrower will
be entitled to any right of contribution or indemnity from any Finance Party in
respect of any payment it may make under this Clause.

 

8.             EXTENSION OF ORIGINAL MATURITY DATE

 

(a)           The Obligors’
Agent may request that the Original Maturity Date be extended for the Extension Period by giving notice (an Extension Notice) to the Facility Agent no more than 60 days
and not less than 30 days before the Original Maturity Date. Any such Extension
Notice is irrevocable.

 

(b)           If an Extension
Notice is delivered to the Facility Agent, the Facility Agent must promptly
forward a copy of any Extension Notice to the Lenders.

 

(c)           If on the date of
receipt of an Extension Notice:

 

(i)            the Repeating
Representations are correct in all respects; and

 

(ii)           there is no Default
outstanding,

 

the Original Maturity Date will be extended to the
date falling 365 days after the Original Maturity Date.

 

(d)           Only one
Extension Notice may be given.

 

9.             REPAYMENT

 

9.1          Repayment
of Loans

 

(a)           Each Borrower
must repay the Loans in full on the Final Maturity Date.

 

(b)           Any amounts
repaid under paragraph (a) above may not be re-borrowed.

 

9.2          Repayment
of Letters of Credit

 

(a)           Each Borrower
must repay each Letter of Credit issued on its behalf in full on the earlier of
(i) its Maturity Date and (ii) the Final Maturity Date.

 

(b)           Subject to the
other terms of this Agreement, any amounts repaid under paragraph (a) above
(other than a repayment by way of cash cover pursuant to Clause 7.1(a)(i)
(Letters of Credit)) may be re-utilised.

 

10.          PREPAYMENT AND CANCELLATION

 

10.1        Mandatory
prepayment - illegality

 

(a)           A Lender must
notify the Obligors’ Agent promptly if it becomes aware that it is unlawful in
any jurisdiction for that Lender to perform any of its obligations under a
Finance Document or to fund or maintain its share in any Credit.

 

(b)           After
notification under paragraph (a) above:

 

(i)            each Borrower
must repay or prepay the share of that Lender in each Credit utilised by it on
the date specified in paragraph (c) below; and

 

23

 

(ii)           the Commitments
of that Lender will be immediately cancelled.

 

(c)           The date for
repayment or prepayment of a Lender’s share in a Credit will be:

 

(i)            ten Business Days
following receipt by the Obligors’ Agent of notice from the Lender under
paragraph (a) above; or

 

(ii)           if earlier, the
latest date allowed by the relevant law.

 

10.2        Mandatory
Prepayment - disposal

 

(a)           The Obligors’
Agent must promptly notify the Facility Agent of a disposal by the Group of all
or substantially all of the assets of the Group.

 

(b)           On any such
disposal referred to in paragraph (a) above:

 

(i)            each Borrower
must immediately repay or prepay each Credit utilised by it; and

 

(ii)           the Total
Commitments will be immediately cancelled.

 

10.3        Mandatory
prepayment - change of control

 

(a)           The Obligors’
Agent must promptly notify the Facility Agent if it becomes aware of any person
or group of associated persons (being persons acting in concert (within the
meaning set out in the City Code on Takeovers and Mergers) and/or any connected
persons (as defined in the Income and Corporation Taxes Act of 1988) of those
persons) acquiring the right to exercise more than 50% of the votes exercisable
at a general meeting of Imperial.

 

(b)           Unless otherwise
agreed by the Lenders, on any such acquisition referred to in paragraph (a)
above:

 

(i)            each Borrower
must immediately repay each Credit utilised by it; and

 

(ii)           the Total
Commitments will be immediately cancelled.

 

10.4        Mandatory
prepayment – relevant issuance

 

(a)           In this
subclause:

 

relevant issuance means the issue,
sale or public offering of any debt securities by any member of the Group
excluding:

 

(i)           any issue of
Financial Indebtedness in respect of monies borrowed or raised by any member of
the Group under any local or bilateral facilities with any bank or financial
institution or syndicate of banks or financial institutions or any facilities
in respect of monies borrowed or raised by any member of the Group under
facilities arranged on a syndicated or club deal basis with up to three banks
or financial institutions;

 

(ii)          any drawings
under any syndicated, local or bilateral facilities with any bank or financial
institution or syndicate of banks or financial institutions entered into by any
member of the Group prior to the date of this Agreement;

 

(iii)          any Financial Indebtedness
incurred under the Finance Documents;

 

24

 

(iv)          any Financial Indebtedness
owed by a member of the Group to another member of the Group; and

 

(v)          any Financial
Indebtedness that arises under or in respect of any derivative transaction
entered into by any member of the Group for protection against or to benefit
from fluctuations in any rate, price, index or credit rating entered into in
the ordinary course of business.

 

(b)           The Borrowers
must apply an amount equal to the Net Proceeds of any relevant issuance towards
prepaying the Credits.

 

(c)           Any
prepayment under this Subclause must be made promptly following the date upon
which the Net Proceeds of the relevant issuance are received by any member of
the Group.

 

10.5        Voluntary
prepayment

 

(a)           The Obligors’
Agent may, by giving not less than five Business Days’ prior notice to the
Facility Agent, prepay any Credit at any time in whole or in part.

 

(b)           A prepayment of
part of a Credit must be in a minimum amount of $10,000,000 and integral
multiples of $5,000,000 or, if less, the outstanding amount of that Credit.

 

10.6        Automatic
cancellation

 

(a)           Save as set out
in paragraph (b) below the Commitments of each Lender will be automatically
cancelled at the close of business on the last day of the Availability Period
in respect of Loans.

 

(b)           The Commitments
of each Lender in respect of $20,000,000 relating to Letters of Credit will be
automatically cancelled at the close of business on the last day of the
Availability Period in respect of Letters of Credit.

 

10.7        Voluntary
cancellation

 

(a)           The Obligors’
Agent may, by giving not less than five Business Days’ prior notice to the
Facility Agent, cancel the Total Commitments in whole or in part.

 

(b)           Partial
cancellation of the Total Commitments must be in a minimum amount of
$10,000,000  and an integral multiple of
$5,000,000 or, if less, the undrawn amount of the relevant Commitment.

 

(c)           Any cancellation
in part of the Commitments under a Facility will be applied against the
Commitments of each Lender under the Facility pro rata.

 

(d)           The Obligors’
Agent must ensure that if, following any voluntary cancellation of the
Commitments under the Facility, the outstanding Loans under the Facility would
exceed the relevant Commitment, an amount of the Loans under the Facility equal
to the excess shall be prepaid.

 

10.8        Involuntary
prepayment and cancellation

 

(a)           If a Borrower is,
or will be, required to pay to a Lender a Tax Payment or an Increased Cost, the
Obligors’ Agent may, while the requirement continues, give notice to the
Facility Agent requesting prepayment and cancellation in respect of that
Lender.

 

(b)           After
notification under paragraph (a) above and subject to clause 29.6 (Replacement
of Lenders):

 

25

 

(i)            each Borrower
must repay or prepay that Lender’s share in each Credit utilised by it on the
date specified in paragraph (c) below; and

 

(ii)           the Commitments
of that Lender will be immediately cancelled.

 

(c)           The date for
repayment or prepayment of a Lender’s share in a Credit will be the last day of
the current Term for that Credit or, if earlier, the date specified by the
Obligors’ Agent in its notification.

 

10.9        Re-borrowing
of Credits

 

Any voluntary
prepayment of a Letter of Credit (other than a prepayment or repayment by way
of cash cover pursuant to Clause 7.1(a)(i)(Letters of Credit)) may be
re-utilised on the terms of this Agreement. Any mandatory or involuntary
prepayment of a Credit may not be re-borrowed.

 

10.10      Miscellaneous
provisions

 

(a)           Any notice of
prepayment and/or cancellation under this Agreement is irrevocable and must
specify the relevant date(s) and the affected Credits and Commitments. The
Facility Agent must notify the Lenders promptly of receipt of any such notice.

 

(b)           All prepayments
under this Agreement must be made with accrued interest on the amount prepaid. No
premium or penalty is payable in respect of any prepayment except for Break
Costs.

 

(c)           The Majority
Lenders may agree a shorter notice period for a voluntary prepayment or a
voluntary cancellation.

 

(d)           No prepayment or
cancellation is allowed except in accordance with the express terms of this
Agreement.

 

(e)           Except to the
extent expressly set out in this Agreement, no amount of the Total Commitments
cancelled under this Agreement may subsequently be reinstated.

 

10.11      Application
of amounts in cancellation or prepayment

 

(a)           Any cancellation
in whole or in part or voluntary prepayment in whole or in part, will be
applied in accordance with the instructions of the Obligors’ Agent.

 

(b)           Except as set out
in this Clause 10, if any amount is mandatorily prepaid under this
Agreement (other than, for the avoidance of doubt, pursuant to
Clause 10.7(d) (Voluntary cancellation)) the amount prepaid will be
applied pro rata against the participations of
the Lenders in such Credits as the Obligors’ Agent has directed.

 

11.          INTEREST

 

11.1        Calculation
of interest

 

The rate of
interest on each Loan for each Term is the percentage rate per annum equal to
the aggregate of the applicable:

 

(a)           Margin;

 

(b)           LIBOR; and

 

(c)           Mandatory Cost.

 

26

 

11.2        Payment
of interest

 

Except where it
is provided to the contrary in this Agreement, each Borrower must pay accrued
interest on each Loan made to it on the last day of each Term and also, if the
Term is longer than six months, on the dates falling at six-monthly intervals
after the first day of that Term.

 

11.3        Margin
Step-up

 

(a)           For so long as:

 

(i)            Imperial Finance
is in default of its obligations under this Agreement to provide a Compliance
Certificate; or

 

(ii)           an Event of
Default is outstanding,

 

the Margin will
be one per cent. above the then applicable Margin.

 

(b)           On the date on
which either:

 

(i)            Standard &
Poor’s publishes a long term credit rating for Imperial equal to or lower than
BB+; or

 

(ii)           Moody’s publishes
a long term credit rating for Imperial equal to or lower than Ba1,

 

the applicable
Margin will be increased to a rate which is one per cent. (1.00%) per annum
above the rate which would otherwise have been payable.

 

(c)           The increase in
applicable Margin under paragraph (a) above shall remain in effect until the first
date thereafter on which both:

 

(i)            Standard &
Poor’s has published a long term credit rating for Imperial equal to or higher
than BBB-; and

 

(ii)           Moody’s has
published a long term credit rating for Imperial equal to or higher than Baa3,

 

on which date any
such increase will cease to apply.

 

(d)           The maximum
increase in the applicable Margin under paragraph (a) above will be one per
cent. (1.00%) per annum.

 

(e)           If either
Standard & Poor’s or Moody’s ceases to assign a long term credit rating to
Imperial, Imperial shall use all reasonable efforts to obtain a substitute long
term credit rating from Fitch or another statistical rating agency acceptable
to the Facility Agent.

 

(f)            Following any
substitution under paragraph (e) above, references in this Clause 11.3 to
Moody’s or Standard & Poor’s or the credit ratings of Moody’s or Standard
& Poor’s shall be to such substitute rating agency or the equivalent credit
ratings of that substitute rating agency as the case may be.

 

11.4        Interest
on overdue amounts

 

(a)           If an Obligor
fails to pay any amount payable by it under the Finance Documents, it must
immediately on demand by the Facility Agent pay interest on the overdue amount
from its due date up to the date of actual payment, both before, on and after
judgment.

 

27

 

(b)           Interest on an
overdue amount is payable at a rate determined by the Facility Agent to be one
per cent. (1.00%) per annum above the rate which would have been payable if the
overdue amount had, during the period of non-payment, constituted a Loan in the
currency of the overdue amount. For this purpose, the Facility Agent may
(acting reasonably):

 

(i)            select successive
Terms of any duration of up to three months; and

 

(ii)           determine the
appropriate Rate Fixing Day for that Term.

 

(c)           Notwithstanding
paragraph (b) above, if the overdue amount is a principal amount of a Loan and
becomes due and payable prior to the last day of its current Term, then:

 

(i)            the first Term
for that overdue amount will be the unexpired portion of that Term; and

 

(ii)           the rate of
interest on the overdue amount for that first Term will be one per cent.
(1.00%) per annum above the rate then payable on that Loan.

 

After the expiry
of the first Term for that overdue amount, the rate on the overdue amount will
be calculated in accordance with paragraph (b) above.

 

(d)           The default rate
will be determined on each Business Day or on the Rate Fixing Day, as
appropriate.

 

(e)           Interest (if
unpaid) on an overdue amount will be compounded with that overdue amount at the
end of each of its Terms but will remain immediately due and payable.

 

11.5        Notification
of rates of interest

 

The Facility
Agent must promptly notify each relevant Party of the determination of a rate
of interest under this Agreement.

 

12.          TERMS

 

12.1        Selection

 

(a)           Each Loan has one
Term only.

 

(b)           A Borrower must
select the Term for a Loan in the relevant Request.

 

(c)           Subject to the
following provisions of this Clause 12, each Term for a Loan will be one,
two, three or six months or, any other period agreed by the Obligors’ Agent and
the Lenders.

 

(d)           Notwithstanding
paragraph (c) above, in order to facilitate the repayment or prepayment in
whole or in part of the Facilities, each Term for a Loan may also be any other
period of less than one months duration to be selected by the Obligors’ Agent.

 

12.2        No
overrunning the Final Maturity Date

 

If a Term would
otherwise overrun the Final Maturity Date it will be shortened so that it ends
on the relevant Final Maturity Date.

 

12.3        Other
adjustments

 

The Facility
Agent and the Obligors’ Agent may enter into such other arrangements as they
may agree for the adjustment of Terms and the consolidation and/or splitting of
Loans.

 

28

 

12.4        Notification

 

The Facility
Agent must notify the Obligors’ Agent and the Lenders of the duration of each
Term promptly after ascertaining its duration.

 

13.          MARKET DISRUPTION

 

13.1        Failure
of a Reference Bank to supply a rate

 

If LIBOR is to be
calculated by reference to the Reference Banks but a Reference Bank does not
supply a rate by 12.00 noon London time on a Rate Fixing Day, the applicable
LIBOR will, subject as provided below, be calculated on the basis of the rates
of the remaining Reference Banks.

 

13.2        Market
disruption

 

(a)           In this
Clause 13, each of the following events is a market
disruption event:

 

(i)            LIBOR is to be
calculated by reference to the Reference Banks but no, or only one, Reference
Bank supplies a rate by 12.00 noon London time on the Rate Fixing Day; or

 

(ii)           the Facility
Agent receives by close of business on the Rate Fixing Day notification from
Lenders whose shares in the relevant Loan exceed 30% of that Loan that the cost
to them of obtaining matching deposits in the relevant interbank market is in
excess of LIBOR for the relevant Term.

 

(b)           The Facility
Agent must promptly notify the Obligors’ Agent and the Lenders of the
occurrence of a market disruption event.

 

(c)           After
notification under paragraph (b) above, the rate of interest on each Lender’s
share in the affected Loan for the relevant Term will be the aggregate of the
applicable:

 

(i)            Margin;

 

(ii)           rate notified to
the Facility Agent by that Lender as soon as practicable, and in any event
before interest is due to be paid in respect of that Term, to be that which
expresses as a percentage rate per annum the cost to that Lender of funding its
share in that Loan from whatever source it may reasonably select; and

 

(iii)          Mandatory Cost.

 

13.3        Alternative
basis of interest or funding

 

(a)           If a market
disruption event occurs and the Facility Agent or the Obligors’ Agent so
requires, the Obligors’ Agent and the Facility Agent must enter into
negotiations for a period of not more than 30 days with a view to agreeing an
alternative basis for determining the rate of interest and/or funding for the
affected Loan and any future Loan.

 

(b)           Any alternative
basis agreed will be, with the prior consent of all the Lenders, binding on all
the Parties.

 

29

 

14.          TAXES

 

14.1        Tax
gross-up

 

(a)           Each Obligor must
make all payments to be made by it under the Finance Documents without any Tax
Deduction, unless a Tax Deduction is required by law.

 

(b)           If:

 

(i)            a Lender is not,
or ceases to be, a Qualifying Lender; or

 

(ii)           an Obligor or a
Lender is aware that an Obligor must make a Tax Deduction (or that there is a
change in the rate or the basis of a Tax Deduction),

 

it must promptly
notify the Facility Agent. The Facility Agent must then promptly notify the
affected Parties.

 

(c)           Except as
provided below, if a Tax Deduction is required by law to be made by an Obligor
or the Facility Agent, the amount of the payment due from the Obligor will be
increased to an amount which (after making the Tax Deduction) leaves an amount
equal to the payment which would have been due if no Tax Deduction had been
required.

 

(d)           Except as
provided below, an Obligor is not required to make an increased payment under
paragraph (c) above for a Tax Deduction in respect of Tax imposed or levied
by the U.K. or any taxing authority of or in the U.K. to a Lender that is not,
or has ceased to be, a Qualifying Lender in respect of that payment in excess
of the amount that the Obligor would have had to pay had the Lender been, or
not ceased to be, a Qualifying Lender.

 

(e)           Paragraph (d)
above will not apply if the Lender has ceased to be a Qualifying Lender by
reason of any change after the date it became a Lender under this Agreement in
(or in the interpretation, administration, or application of) any law or double
taxation agreement or any published practice or concession of any relevant
taxing authority.

 

(f)            An Obligor is not
required to make an increased payment to a Lender under paragraph (c) above for
a Tax Deduction in respect of Tax imposed or levied by the U.K. or any taxing
authority of or in the U.K. if that Lender is a Treaty Lender and the Obligor
making the payment is able to demonstrate that the Tax Deduction would not have
been required if the Lender had complied with its obligations under paragraph
(i) below.

 

(g)           If an Obligor is
required to make a Tax Deduction, that Obligor must make the minimum Tax
Deduction required and must make any payment required in connection with that
Tax Deduction within the time allowed by law.

 

(h)           Within 30 days of
making either a Tax Deduction or a payment required in connection with a Tax
Deduction, the Obligor making that Tax Deduction or payment must deliver to the
Facility Agent for the relevant Finance Party evidence that the Tax Deduction
has been made or (as applicable) the appropriate payment has been paid to the
relevant taxing authority.

 

(i)            A Treaty Lender
and each Obligor which makes a payment to which that Treaty Lender is entitled
shall co-operate and use their reasonable endeavours in completing any
procedural formalities necessary for that Obligor to obtain authorisation to
make that payment without a Tax Deduction and to claim re-imbursement of any
Tax paid prior to obtaining that authorisation.

 

30

 

(j)            An Obligor is not
required to make an increased payment to a U.K. Non-Bank Lender under paragraph
(c) above if HM Revenue & Customs has given (and not revoked) a direction
in respect of that U.K. Non-Bank Lender under section 349C of the Income and
Corporation Taxes Act 1988 (as that provision has effect on the date on which
the relevant U.K. Non-Bank Lender became a party to this Agreement) and the
relevant Obligor has notified the relevant U.K. Non-Bank Lender of the precise
terms of that notice.

 

(k)           A U.K. Non-Bank
Lender must as soon as reasonably practicable notify the Obligors’ Agent and
the Facility Agent of any change to its status that may affect the Tax
Confirmation made by that U.K. Non-Bank Lender.

 

(l)            Each Original
Lender hereby confirms that it is not a U.K. Non-Bank Lender.

 

(m)          A U.K. Non-Bank
Lender which is not an Original Lender shall give a Tax Confirmation in the
Transfer Certificate which it executes on becoming a Party.

 

14.2        Tax
indemnity

 

(a)           Except as
provided below, the Obligors’ Agent must indemnify a Finance Party against any
loss or liability which that Finance Party (in its absolute discretion)
determines will be or has been suffered (directly or indirectly) by that
Finance Party for or on account of Tax in relation to a payment received or
receivable (or any payment deemed to be received or receivable) under a Finance
Document.

 

(b)           Paragraph (a)
above does not apply to any Tax assessed on a Finance Party under the laws of
the jurisdiction in which:

 

(i)            that Finance
Party is incorporated or, if different, the jurisdiction (or jurisdictions) in
which that Finance Party is treated as resident for tax purposes or has a
permanent establishment; or

 

(ii)           that Finance
Party’s Facility Office is located in respect of amounts received or receivable
in that jurisdiction,

 

if that Tax is
imposed on or calculated by reference to the net income, gains or profits
received or receivable by that Finance Party, however, any payment deemed to be
received or receivable, including any amount treated as income but not actually
received by the Finance Party, such as a Tax Deduction, will not be treated as
net income received or receivable for this purpose.

 

(c)           Paragraph (a)
above does not apply to the extent that a loss or liability:

 

(i)            is compensated
for by an increased payment under Clause 14.1(c) (Tax gross-up); or

 

(ii)           would have been
compensated for by an increased payment under Clause 14.1(c) (Tax
gross-up) but was not so compensated because an exclusion set out in Clauses 14.1(d),
(f) or (j) (Tax gross-up) applied.

 

(d)           A Finance Party
making, or intending to make, a claim under Clause 14.1(a) (Tax gross-up)
above must promptly notify the Obligors’ Agent in reasonable detail of the
event which will give, or has given, rise to the claim.

 

14.3        Tax
Credit

 

If an Obligor
makes a Tax Payment and the relevant Finance Party determines that:

 

31

 

(a)           a Tax Credit is attributable
to that Tax Payment; and

 

(b)           it has used and retained
that Tax Credit,

 

the Finance Party
must pay an amount to the Obligor which that Finance Party determines will
leave it (after that payment) in the same after-tax position as it would have
been in if the Tax Payment had not been made by the Obligor.

 

14.4        Stamp
taxes

 

The Obligors’
Agent must pay and indemnify each Finance Party against any stamp duty,
registration or other similar Tax payable:

 

(a)           in the U.K. or any
jurisdiction in which any Obligor is incorporated or resident for tax purposes
in connection with the entry into or performance of any Finance Document,
except for any such Tax payable in connection with the entry into a Transfer
Certificate; or

 

(b)           in any jurisdiction in
connection with the enforcement of any Finance Document.

 

14.5        Value
added taxes

 

(a)           Any amount
(including costs and expenses) payable under a Finance Document by an Obligor
is exclusive of any value added tax (or any other Tax of a similar nature)
which might be chargeable in connection with that amount. If any such Tax is chargeable,
the Obligor must pay to the Finance Party (in addition to and at the same time
as paying that amount) an amount equal to the amount of that Tax.

 

(b)           The
obligation of any Obligor under paragraph (a) above will be reduced to the
extent that the Finance Party is entitled to repayment or a credit in respect
of the relevant Tax.

 

14.6        Provisional
Treaty Relief Scheme

 

(a)           Each Treaty
Lender on and after the date it becomes Party:

 

(i)            irrevocably
appoints the Facility Agent to act as syndicate manager under, and authorises
the Facility Agent to operate, and take any action necessary or desirable
under, the PTR Scheme in connection with the Facility;

 

(ii)           shall co-operate
with the Facility Agent in completing any procedural formalities necessary under
the PTR Scheme, and shall promptly supply to the Facility Agent such
information as the Facility Agent may request in connection with the operation
of the PTR Scheme;

 

(iii)          without limiting
the liability of any Obligor under this Agreement, shall, within five Business
Days of demand, indemnify the Facility Agent for any liability or loss incurred
by the Facility Agent as a result of the Facility Agent acting as syndicate
manager under the PTR Scheme in connection with the Treaty Lender’s
participation in any Credit (except to the extent that the liability or loss
arises directly from the Facility Agent’s gross negligence or wilful
misconduct); and

 

(iv)          shall, within
five Business Days of demand, indemnify each Obligor for any Tax which such
Obligor becomes liable to pay in respect of any payments made to such Treaty
Lender arising as a result of any incorrect information supplied by such Treaty
Lender under paragraph (ii) above which results in a provisional authority
issued by HM Revenue & Customs under the PTR Scheme being withdrawn.

 

32

 

(b)           Each Obligor
acknowledges that it is fully aware of its contingent obligations under the PTR
Scheme and shall:

 

(i)            promptly supply
to the Facility Agent such information as the Facility Agent may request in
connection with the operation of the PTR Scheme; and

 

(ii)           act in accordance
with any provisional notice issued by HM Revenue & Customs under the PTR
Scheme.

 

(c)           The Facility
Agent agrees to provide, as soon as reasonably practicable, a copy of any
provisional authority issued to it under the PTR Scheme in connection with any
Credit to those Obligors specified in such provisional authority.

 

(d)           All Parties
acknowledge that the Facility Agent:

 

(i)            is entitled to rely
completely upon information provided to it in connection with paragraphs (a)
and (b) above;

 

(ii)           is not obliged to
undertake any enquiry into the accuracy of such information, nor into the
status of the Treaty Lender or, as the case may be, Obligor providing such
information; and

 

(iii)          shall have no
liability to any person for the accuracy of any information it submits in
connection with paragraph (a)(i) above.

 

15.          INCREASED COSTS

 

15.1        Increased
Costs

 

Except as
provided below in this Clause 15, the Obligors’ Agent must pay to a
Finance Party the amount of any Increased Cost incurred by that Finance Party
or any of its Affiliates as a result of:

 

(a)           the introduction of, or any
change in, or any change in the interpretation or application of, any law or
regulation; or

 

(b)           compliance with any law or
regulation,

 

made after the
date of this Agreement.

 

15.2        Exceptions

 

The Obligors’
Agent need not make any payment for an Increased Cost to the extent that the
Increased Cost is:

 

(a)           compensated for under
another Clause or would have been but for an exception to that Clause;

 

(b)           a tax on the overall net
income of a Finance Party or any of its Affiliates;

 

(c)           attributable to a Finance
Party or its Affiliate wilfully failing to comply with any law or regulation;

 

(d)           attributable to the period,
if any, starting 90 days after any officer of the relevant Finance Party
involved with the Facility became aware of that Increased Cost but before the
Obligors’ Agent is notified by the Finance Party of the Increased Cost under
this Clause 15;

 

33

 

(e)           attributable to the
negligence or wilful misconduct of a Finance Party or its Affiliate; or

 

(f)            attributable only to the
implementation or application of or compliance with the Basel II Framework (or
any other law or regulation which implements that framework) including any
change to the risk-weighting of any Loan (or the risk-weighting of any other
exposure to an Obligor under this Agreement which occurs as a result of any
change in the financial position or prospects of a Borrower) which results in
any change to any internal or external credit rating of an Obligor.

 

15.3        Claims

 

(a)           A Finance Party
intending to make a claim for an Increased Cost must notify the Obligors’ Agent
promptly of the circumstances giving rise to, and the amount of, the claim.

 

(b)           Any notification
must include in reasonable detail the reasons for, and a calculation of, the
Increased Cost.

 

16.          MITIGATION

 

16.1        Mitigation

 

(a)           Each Finance
Party must, in consultation with the Obligors’ Agent, take all reasonable steps
to mitigate any circumstances which arise and which result or would result in:

 

(i)            any Tax Payment
or Increased Cost being payable to that Finance Party;

 

(ii)           that Finance
Party being able to exercise any right of prepayment and/or cancellation under
this Agreement by reason of any illegality; or

 

(iii)          that Finance
Party incurring any Mandatory Cost,

 

including
transferring its rights and obligations under the Finance Documents to an
Affiliate or changing its Facility Office.

 

(b)           The Obligors’
Agent must indemnify each Finance Party for all costs and expenses reasonably
incurred by that Finance Party as a result of any step taken by it under
paragraph (a) above.

 

(c)           A Finance Party
is not obliged to take any step under paragraph (a) above if, in the opinion of
that Finance Party (acting reasonably), to do so might be prejudicial to it.

 

16.2        Conduct
of business by a Finance Party

 

No term of this
Agreement will:

 

(a)           interfere with the right of
any Finance Party to arrange its affairs (Tax or otherwise) in whatever manner
it thinks fit;

 

(b)           oblige any Finance Party to
investigate or claim any credit, relief, remission or repayment available to it
in respect of Tax or the extent, order and manner of any claim; or

 

(c)           oblige any Finance Party to
disclose any information relating to its affairs (Tax or otherwise) or any
computation in respect of Tax.

 

34

 

17.          PAYMENTS

 

17.1        Place
of Payments

 

Unless a Finance
Document specifies that payments under it are to be made in another manner, all
payments by a Party (other than the Facility Agent) under the Finance Documents
must be made to the Facility Agent to its account at such office or bank in New
York as it may notify to that Party by written notice for this purpose by not
less than five Business Days’ prior notice.

 

17.2        Funds

 

Payments under
the Finance Documents to the Facility Agent must be made for value on the due
date at such times and in such funds as the Facility Agent may specify to the
Party concerned as being customary at the time for the settlement of
transactions in the relevant currency in the place for payment.

 

17.3        Distribution

 

(a)           Each payment
received by the Facility Agent under the Finance Documents for another Party
must, except as provided below, be made available by the Facility Agent to that
Party by payment (as soon as practicable after receipt) to its account with
such office or bank in New York as it may notify to the Facility Agent for this
purpose by not less than five Business Days’ prior notice.

 

(b)           The Facility
Agent may apply any amount received by it for an Obligor in or towards payment
(as soon as practicable after receipt) of any amount due from that Obligor
under the Finance Documents or in or towards the purchase of any amount of any
currency to be so applied.

 

(c)           Where a sum is
paid to the Facility Agent under this Agreement for another Party, the Facility
Agent is not obliged to pay that sum to that Party until it has established
that it has actually received it. However, the Facility Agent may assume that
the sum has been paid to it, and, in reliance on that assumption, make
available to that Party a corresponding amount. If it transpires that the sum has
not been received by the Facility Agent, that Party must immediately on demand
by the Facility Agent refund any corresponding amount made available to it
together with interest on that amount from the date of payment to the date of
receipt by the Facility Agent at a rate calculated by the Facility Agent to
reflect its cost of funds.

 

17.4        Currency

 

(a)           Unless a Finance
Document specifies that payments under it are to be made in a different manner,
the currency of each amount payable under the Finance Documents is determined
under this Clause.

 

(b)           Interest is
payable in the currency in which the relevant amount in respect of which it is
payable is denominated.

 

(c)           A repayment or
prepayment of any principal amount is payable in the currency in which that principal
amount is denominated on its due date.

 

(d)           Amounts payable
in respect of Taxes, fees, costs and expenses are payable in the currency in
which they are incurred.

 

(e)           Each other amount
payable under the Finance Documents is payable in U.S. Dollars.

 

35

 

17.5        No
set-off or counterclaim

 

All payments made
by an Obligor under the Finance Documents must be made without set-off or
counterclaim.

 

17.6        Business
Days

 

(a)           If a payment
under the Finance Documents is due on a day which is not a Business Day, the
due date for that payment will instead be the next Business Day in the same
calendar month (if there is one) or the preceding Business Day (if there is
not) or whatever day the Facility Agent determines is market practice.

 

(b)           During any
extension of the due date for payment of any principal under this Agreement
interest is payable on that principal at the rate payable on the original due
date.

 

17.7        Partial
payments

 

(a)           If any
Administrative Party receives a payment insufficient to discharge all the
amounts then due and payable by the Obligors under the Finance Documents, the
Administrative Party must apply that payment towards the obligations of the
Obligors under the Finance Documents in the following order:

 

(i)            first, in
or towards payment pro rata of any
unpaid fees, costs and expenses of the Administrative Parties under the Finance
Documents;

 

(ii)           secondly, in
or towards payment pro rata of any
accrued interest or fee (including fronting fees and guarantee fees) due but
unpaid under this Agreement;

 

(iii)          thirdly, in
or towards payment pro rata of any
other principal amount due but unpaid under this Agreement; and

 

(iv)          fourthly, in
or towards payment pro rata of any
other sum due but unpaid under the Finance Documents.

 

(b)           The Facility
Agent must, if so directed by all the Lenders, vary the order set out in
paragraphs (a)(ii) to (iv) above.

 

(c)           This
Clause 17.7 will override any appropriation made by an Obligor.

 

17.8        Timing
of payments

 

If a Finance
Document does not provide for when a particular payment is due, that payment
will be due within three Business Days of demand by the relevant Finance Party.

 

17.9        Good
discharge

 

Without prejudice
to any other term of this Agreement, any payment by an Obligor to the Facility
Agent in accordance with this Clause 17 for a Lender constitutes a
discharge of its obligations to that Lender in respect of that payment. Accordingly,
no Obligor is liable to the Lender if the Facility Agent fails for any reason to
make the corresponding payment to that Lender.

 

36

 

18.          GUARANTEE AND INDEMNITY

 

18.1        Guarantee
and indemnity

 

Each Guarantor
jointly and severally irrevocably and unconditionally:

 

(a)           guarantees to each Finance
Party punctual performance by each Borrower of all its obligations under the
Finance Documents;

 

(b)           undertakes with each Finance
Party that, whenever a Borrower does not pay any amount when due under any
Finance Document, that Guarantor shall immediately on demand by the Facility
Agent pay that amount as if it were the principal obligor; and

 

(c)           indemnifies each Finance
Party immediately on demand against any loss or liability suffered by that
Finance Party if any obligation guaranteed by it is or becomes unenforceable,
invalid or illegal; the amount of the loss or liability under this indemnity
will be equal to the amount the Finance Party would otherwise have been
entitled to recover.

 

18.2        Continuing
guarantee

 

This guarantee is
a continuing guarantee and will extend to the ultimate balance of all sums
payable by any Borrower under the Finance Documents, regardless of any
intermediate payment or discharge in whole or in part.

 

18.3        Reinstatement

 

(a)           If any discharge
(whether in respect of the obligations of an Obligor or any security for those
obligations or otherwise) or arrangement is made in whole or in part on the
faith of any payment, security or other disposition which is avoided or must be
restored on insolvency, liquidation or otherwise without limitation, the
liability of each Guarantor under this Clause 18 will continue as if the
discharge or arrangement had not occurred.

 

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

 

18.4        Waiver
of defences

 

The obligations
of each Guarantor under this Clause 18 will not be affected by any act,
omission or thing which, but for this provision, would reduce, release or
prejudice any of its obligations under this Clause 18 (whether or not
known to it or any Finance Party). This includes:

 

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

 

(b)           any release of any person
under the terms of any composition or arrangement;

 

(c)           the taking, variation,
compromise, exchange, renewal or release of, or refusal or neglect to perfect,
take up or enforce, any rights against, or security over assets of, any person;

 

(d)           any non-presentation or
non-observance of any formality or other requirement in respect of any
instrument or any failure to realise the full value of any security;

 

(e)           any incapacity or lack of
power, authority or legal personality of or dissolution or change in the
members or status of any person;

 

37

 

(f)            any amendment (however
fundamental) of a Finance Document or any other document or security; or

 

(g)           any unenforceability,
illegality, invalidity or non-provability of any obligation of any person under
any Finance Document or any other document or security.

 

18.5        Immediate
recourse

 

Each Guarantor
waives any right it may have of first requiring any Finance Party (or any
trustee or agent on its behalf) to proceed against or enforce any other right
or security or claim payment from any person before claiming from it under this
Clause 18.

 

18.6        Appropriations

 

Until all amounts
which may be or become payable by the Obligors under the Finance Documents have
been irrevocably paid in full, each Finance Party (or any trustee or agent on
its behalf) may:

 

(a)           without affecting the
liability of any Guarantor under this Clause 18:

 

(i)            refrain from applying or
enforcing any other moneys, security or rights held or received by that Finance
Party (or any trustee or agent on its behalf) in respect of those amounts; or

 

(ii)           apply and enforce them in
such manner and order as it sees fit (whether against those amounts or
otherwise); and

 

(b)           hold in an interest-bearing
suspense account any moneys received from any Guarantor or on account of that
Guarantor’s liability under this Clause 18.

 

18.7        Non-competition

 

Unless:

 

(a)           all amounts which may be or
become payable by the Obligors under the Finance Documents have been
irrevocably paid in full; or

 

(b)           the Facility Agent otherwise
directs,

 

no Guarantor
will, after a claim has been made or by virtue of any payment or performance by
it under this Clause 18:

 

(i)            be subrogated to
any rights, security or moneys held, received or receivable by any Finance
Party (or any trustee or agent on its behalf);

 

(ii)           be entitled to
any right of contribution or indemnity in respect of any payment made or moneys
received on account of its liability under this Clause 18;

 

(iii)          claim, rank,
prove or vote as a creditor of any Borrower or its estate in competition with
any Finance Party (or any trustee or agent on its behalf); or

 

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

 

38

 

Each Guarantor
must hold in trust for and immediately pay or transfer to the Facility Agent
for the Finance Parties any payment or distribution or benefit of security
received by it contrary to this Clause 18 or in accordance with any
directions given by the Facility Agent under this Clause 18.

 

18.8        Additional
security

 

This guarantee is
in addition to and is not in any way prejudiced by any other security now or
subsequently held by any Finance Party.

 

18.9        Limitation

 

This guarantee
does not apply to any liability to the extent it would result in this guarantee
constituting unlawful financial assistance within the meaning of Section 151 of
the Companies Act 1985.

 

19.          REPRESENTATIONS

 

19.1        Representations

 

Imperial makes
the representations and warranties set out in this Clause 19 to each
Finance Party on the date of this Agreement.

 

19.2        Status

 

Each Obligor is a
limited liability company, duly incorporated and validly existing under the
laws of England and Wales.

 

19.3        Powers
and authority

 

Each Obligor has
the power to enter into and perform, and has taken all necessary action to
authorise the entry into, performance and delivery of, the Finance Documents to
which it is or will be a party and the transactions contemplated by those
Finance Documents.

 

19.4        Legal
validity

 

Subject to the
Reservations, each Finance Document to which an Obligor is or will be a party
constitutes, or when executed in accordance with its terms will constitute its
legal, valid, binding and enforceable obligation in accordance with its terms.

 

19.5        Non-conflict

 

The entry into
and performance by each Obligor of, and the transactions contemplated by, the
Finance Documents does not and will not conflict with:

 

(a)           any law or regulation or
judicial order applicable to it; or

 

(b)           its memorandum or articles
of association; or

 

(c)           any document which is
binding upon any member of the Group or any of their assets.

 

19.6        No
default

 

(a)           No Default has
occurred and remains unremedied or unwaived.

 

39

 

(b)           No other event or
circumstance is outstanding which constitutes a default under any other
agreement or instrument which is binding on a member of the Group or to which
their assets are subject which has or could reasonably be expected to have a
Material Adverse Effect.

 

19.7        Authorisations

 

All
authorisations required by the Obligors in connection with the entry into,
performance, validity, enforceability and admissibility into evidence of, and
the transactions contemplated by, the Finance Documents have been obtained or
effected and are in full force and effect.

 

19.8        Information

 

To the best of
the knowledge, information and belief of Imperial, all factual written
information provided by or on behalf of Imperial to the Mandated Lead Arrangers
in connection with the Facilities was, at the time the same was provided, true
and accurate in all material respects.

 

19.9        Accounts

 

The Original
Financial Statements:

 

(a)           were prepared in accordance
with approved accounting standards in the U.K.; and

 

(b)           in conjunction with the
notes, gave a true and fair view of the financial condition of the Group as at
the date to which they were drawn up and the results of the Group’s operations
during the relevant financial period,

 

and as at the
date of this Agreement, there has been no material adverse change in the
consolidated financial condition of the Group since the date to which those
accounts were drawn up.

 

19.10      Litigation

 

Save as disclosed
in the Litigation Report, no litigation, arbitration or administrative
proceedings against any member of the Group are either current or, to the best
of its knowledge and belief, threatened or pending which, if adversely
determined, could reasonably be expected to have, a Material Adverse Effect.

 

19.11      Security
Interest

 

The execution of
this Agreement, and the exercise by the Obligors of their rights or performance
of their obligations under this Agreement, will not result in the existence of,
or oblige any member of the Group to create, any Security Interest over all or
any part of its present or future assets which would not be permitted to be
created pursuant to Clause 20.10 (Negative pledge).

 

19.12      Pari
passu ranking

 

Under the laws of
England and Wales in force at the date of this Agreement, the claims of the
Finance Parties against the Obligors under the Finance Documents will rank pari passu with the claims of all other unsecured and
unsubordinated creditors of that Obligor, except for obligations which are
mandatorily preferred by law applying to companies generally.

 

19.13      Environmental
Compliance

 

Each member of
the Group has complied in all respects with all Environmental Law save to the
extent that non-compliance could reasonably be expected not to have a Material
Adverse Effect.

 

40

 

19.14      Times
for making Representations

 

(a)           The
representations set out in this Clause are made by Imperial on the date of this
Agreement.

 

(b)           With the
exception of those matters set out in Clauses 19.6 (No default) to 19.13
(Environmental Compliance) inclusive, each representation set out in this
Clause is deemed to be repeated by Imperial on the date of each Request and the
first day of each Term, in each case with reference to the facts and
circumstances then existing.

 

20.          UNDERTAKINGS

 

20.1        Duration

 

The undertakings
in this Clause remain in force from the date of this Agreement for so long as
any amount is or may be outstanding under this Agreement.

 

20.2        Financial
Information

 

(a)           Imperial must:

 

(i)            as soon as the
same become available, but in any event within 180 days after the end of each
of its financial years, deliver to the Facility Agent the audited consolidated
accounts of the Group for that financial year;

 

(ii)           as soon as the
same become available, but in any event within 90 days after the end of the
first half of each of its financial years, deliver to the Facility Agent the
half yearly financial statements of the Group for that period required to be
sent to the holders of Imperial’s listed shares pursuant to the Stock Exchange
Publication “Admission of Securities to Listing”, or any equivalent statement
or report required to be so delivered by any replacement or successor
publication dealing with the information obligations of listed companies;

 

(iii)          as soon as the
same become available but in any event within either 30 days of the same being
filed at Companies House or within 180 days of the end of each of its financial
years whichever is the earlier, deliver to the Facility Agent the audited
accounts of each Borrower for each financial year; and

 

(iv)          Imperial shall
ensure that each set of accounts referred to in paragraphs (i), (ii) and (iii)
above (except as may be stated in the notes):

 

(A)          are prepared in
accordance with approved accounting standards in the U.K. or such other
accounting standards as agreed in accordance with paragraph (b)(i) below;

 

(B)           in the case of
the accounts referred to in paragraphs (i) and (iii) above, give a true and
fair view of the financial condition of the Group or, as the case may be, each
Borrower as at the date to which they were drawn up and the results of the
Group’s or, as the case may be, each Borrower’s operations during the relevant
financial year; and

 

(C)           in the case of
the accounts referred to in paragraph (ii) above, fairly represents the
financial condition of the Group during the period to which it relates.

 

(b)           Imperial must:

 

41

 

(i)            notify the
Facility Agent of any change to the basis on which its audited consolidated
financial statements are prepared and any change to its financial year end;

 

(ii)           if requested by
the Facility Agent, supply to the Facility Agent:

 

(A)          a full
description of any change notified under paragraph (i) above; and

 

(B)           sufficient
information to enable the Finance Parties to make a proper comparison between
the financial position shown by the set of financial statements prepared on the
changed basis and its most recent audited consolidated financial statements
delivered to the Facility Agent under this Agreement;

 

(iii)          if requested by
the Facility Agent (and, if requested by Imperial, the Facility Agent must)
enter into discussions for a period of not more than 30 days with a view to
agreeing any amendments required to be made to this Agreement to place Imperial
and the Lenders in the same position as they would have been in if the change
had not happened. Any agreement between Imperial and the Facility Agent will
be, with the prior consent of the Majority Lenders, binding on all the Parties;
and

 

(iv)          if no agreement
is reached under paragraph (iii) above on the required amendments to this
Agreement, ensure that its auditors or another firm of accountants certify
those amendments and the certificate of the auditors or another firm of
accountants will be, in the absence of manifest error, binding on all the
Parties. In preparing the report the auditors or another firm of accountants
will act as independent experts and not as auditors.

 

20.3        Information
- Miscellaneous

 

Imperial shall:

 

(a)           supply to the Facility Agent
all documents despatched by it to its shareholders generally (or any class of
them) or its creditors generally (or any class of them) within two Business
Days of the same being despatched;

 

(b)           supply to the Facility Agent
promptly on demand by the Facility Agent, such further information in the
possession or control of any member of the Group regarding its financial
condition and operations, as it may reasonably request; and

 

(c)           promptly upon becoming aware
of them, supply to the Facility Agent the details of any litigation,
arbitration or administrative proceedings which are commenced against any
member of the Group and which are or are reasonably likely to be determined
adversely to it and which, if so adversely determined, would have a Material
Adverse Effect.

 

20.4        Notification
of Default

 

Imperial shall
notify the Facility Agent of any Default (and the steps, if any, being taken to
remedy it) promptly upon it becoming aware of such occurrence.

 

20.5        Know
your customer requirements

 

(a)           Subject to
paragraph (b) below, each Obligor must as soon as reasonably practicable on the
request of any Finance Party supply to that Finance Party any documentation or
other evidence which is reasonably requested by that Finance Party (whether for
itself, on behalf of any Finance Party or any prospective new Lender) to enable
a Finance Party or prospective new Lender to carry out and be satisfied with
the results of all applicable know your customer requirements.

 

42

 

(b)           An Obligor is
only required to supply any information under paragraph (a) above, if the
necessary information is not already available to the relevant Finance Party
and the requirement arises as a result of:

 

(i)            the introduction
of or any change in (or in the interpretation, administration or application
of) any law or regulation made after the date of this Agreement;

 

(ii)           any change in the
status of an Obligor after the date of this Agreement; or

 

(iii)          a proposed
assignment or transfer by a Lender of any of its rights and/or obligations
under this Agreement to a person that is not a Lender before that assignment or
transfer.

 

(c)           Each Lender must
promptly on the request of the Facility Agent supply to the Facility Agent any
documentation or other evidence which is reasonably required by the Facility
Agent to carry out and be satisfied with the results of all applicable know
your customer requirements.

 

20.6        Compliance
Certificates

 

Imperial Finance
shall promptly supply to the Facility Agent (in sufficient copies for all the
Lenders, if the Facility Agent so requests):

 

(a)           with each set of financial
statements of the Group delivered to it under Clauses 20.2(a)(i) and (ii)
(Financial Information) above for a Measurement Period of the Group ending on
or after 31 March 2007, a Compliance Certificate signed by one of its directors
or senior officers and a list of the Principal Subsidiaries as at the date of
those accounts; and

 

(b)           if the Facility Agent so
requests, a certificate signed by one of its directors or senior officers on
its behalf certifying that no Default is outstanding or, if a Default is
outstanding, specifying the Default and the steps (if any) being taken to
remedy it.

 

20.7        Authorisations

 

Each Obligor
shall promptly:

 

(a)           obtain, maintain and comply
with the terms of; and

 

(b)           supply certified copies to
the Facility Agent of,

 

any authorisation
required under any law or regulation to enable it to perform its obligations
under the Finance Documents, and to ensure the validity, enforceability and the
admissibility in evidence in England and Wales of each Finance Document.

 

20.8        Compliance
with laws

 

Imperial shall,
and shall procure that each member of the Group shall, comply in all respects
with all laws (including, without limitation, Environmental Law) to which it is
subject, if failure so to comply has or could reasonably be expected to have a
Material Adverse Effect.

 

20.9        Pari
passu  ranking

 

Each Obligor
shall procure that its payment obligations under the Finance Documents do and
will rank at least pari passu with
all its other present and future unsecured and unsubordinated liabilities,
except for liabilities which are mandatorily preferred by law applying to
companies generally.

 

43

 

20.10      Negative
pledge

 

(a)           Imperial shall
not, and shall procure that no other member of the Group will, create or permit
to subsist any Security Interest on any of its present or future assets.

 

(b)           Paragraph (a)
above does not apply to the following Security Interests:

 

(i)            any lien arising
solely by operation of law;

 

(ii)           any Security
Interest existing on or over the assets of any company at the time it becomes a
member of the Group after the date of this Agreement, but only if:

 

(A)          the Security
Interest (and the indebtedness secured thereby) was not created in
contemplation of the company becoming a member of the Group; and

 

(B)           the maximum
principal amount of the indebtedness secured by the Security Interest is not subsequently
increased;

 

(iii)          any Security
Interest existing on or over an asset acquired by a member of the Group after
the date of this Agreement, but only if:

 

(A)          the Security
Interest (and the indebtedness secured thereby) was not created in contemplation
of the acquisition; and

 

(B)           the maximum
principal amount of the indebtedness secured by the Security Interest is not
subsequently increased;

 

(iv)          any Security
Interest over any fixed asset acquired by a member of the Group after the date
of this Agreement as security for, or for indebtedness incurred to finance or
refinance (within six months of the acquisition), all or part of the
consideration for the acquisition of that fixed asset;

 

(v)           any Security
Interest arising over accounts with banks and financial institutions as a
result of netting and set-off arrangements existing and/or arising from time to
time with those banks and financial institutions which have extended or extend
cash management facilities to any member of the Group;

 

(vi)          any Security
Interest over goods purchased by a member of the Group in the ordinary course
of its trade arising in favour of the relevant supplier by virtue of the
supplier’s retention of title clause and which secures only the purchase price
of the goods;

 

(vii)         any security
granted by a member of the Group (other than an Obligor) in favour of another
member of the Group;

 

(viii)        any Security
Interest over cash or credit balances on any account arising from the customary
general business conditions of any credit institution with whom any member of
the Group maintains a banking relationship in the ordinary course of its
business; and

 

(ix)           any Security
Interest (other than any Security Interests permitted by paragraphs (i) to
(viii) above) securing indebtedness not exceeding in aggregate £100,000,000 (or
equivalent).

 

(c)           If any Obligor
creates or permits to subsist any Security Interest on any of its assets
contrary to paragraph (a) above but subject to paragraph (b) above all the
obligations of the Obligors under this

 

44

 

Agreement shall automatically and immediately be
secured upon the same assets, ranking at least pari passu
with the other obligations secured on those assets.

 

20.11      Restrictions
on Guarantees

 

Imperial shall
procure that no other member of the Group (other than Imperial) will guarantee
(which for the purposes of this Clause 20.11 includes an indemnity or
other form of assurance against financial loss) any indebtedness of the
Borrowers unless the obligations of the Borrowers under this Agreement are
similarly guaranteed, save when such guarantee is given by a member of the
Group in connection with netting and set-off arrangements under cash management
facilities existing and/or arising from time to time in the ordinary course of
its banking arrangements and extended to members of the Group by a bank or
financial institution.

 

20.12      Disposals

 

Imperial shall not, and shall procure that no other
member of the Group shall, either in a single transaction or in a series of
transactions, whether related or not, and whether voluntarily or involuntarily,
sell, transfer, grant or lease, or otherwise dispose of all or substantially
all of the assets of the Group.

 

20.13      Merger

 

No Obligor shall enter into any amalgamation,
demerger, merger or corporate reconstruction without the prior approval of the
Majority Lenders.

 

20.14      Change
of Business

 

Imperial shall
procure that no substantial change is made to the general nature of the
business of the Group from that carried on at the date of this Agreement.

 

20.15      Financial
Indebtedness

 

(a)           Imperial shall
procure that the aggregate principal amount of outstanding Financial
Indebtedness of the Group does not exceed £150,000,000 (or equivalent).

 

(b)           Paragraph (a)
above does not apply to any Financial Indebtedness:

 

(i)            of the Obligors;

 

(ii)           under the Bond
Documents;

 

(iii)          incurred by the
Issuer under any issue of securities in the debt capital markets the Net
Proceeds of which are lent directly or indirectly by the Issuer to an Obligor;

 

(iv)          incurred by a
member of the Group arising in connection with a guarantee, bonding or other
similar document or instrument issued to any relevant agency or authority for
the purpose of providing a guarantee or assurance for the payment of Tax which
is or may become due from any member of the Group in the ordinary course of its
business; and

 

(v)           constituting
debit balances on accounts maintained with banks or financial institutions up
to the amount of any credit balance of any member of the Group on any account
where there is a legal arrangement permitting those balances to be offset.

 

45

 

20.16      The
Issuer

 

Imperial shall
procure that the Issuer will not:

 

(a)           carry on any trade or
business;

 

(b)           own any material assets; or

 

(c)           incur any material
liabilities,

 

other than:

 

(i)            the incurrence of
any liabilities under or in connection with the Bond Documents or in respect of
any other indebtedness permitted under Clause 20.15 (Financial Indebtedness);

 

(ii)           any receivable
owed to the Issuer by Imperial Finance resulting from a loan referred to in
Clause 20.15(b)(iii) (Financial Indebtedness) and any liability for Tax
incurred by the Issuer in respect of interest on any such loan; and

 

(iii)          any amount held
in cash by the Issuer pending application in servicing the indebtedness
referred to in paragraph (i) above.

 

20.17      Acquisition
of Target Shares

 

The Obligors’
Agent shall:

 

(a)           promptly supply to the
Facility Agent:

 

(i)            copies of all documents,
certificates, notices or announcements issued by Imperial to Imperial’s
shareholders in relation to the Acquisition;

 

(ii)           any information relating to
any breach of, default under or waiver or consent in relation to the
Acquisition Agreement where such breach, default, waiver or consent would have
a material adverse effect on the business, assets or condition of the Group
(which for these purposes includes the Target and its Subsidiaries) taken as a
whole; and

 

(iii)          any other information
relating to the progress of the Acquisition as the Facility Agent may
reasonably request,

 

in each case
except to the extent the Obligors’ Agent is prevented from doing so by any law
or regulation or confidentially undertaking binding on it; and

 

(b)           comply in all material
respects with:

 

(i)           all applicable laws and
regulations binding on it and relevant in the context of the  Acquisition; and

 

(ii)          the Acquisition Agreement
where failure to so comply would have a material adverse effect on the
business, assets or condition of the Group (which for these purposes includes
the Target and its Subsidiaries) taken as a whole.

 

46

 

21.          FINANCIAL COVENANTS

 

21.1        Interpretation

 

Except as
provided to the contrary in this Agreement, an accounting term used in this
Clause is to be construed in accordance with the principles applied in
connection with the Original Financial Statements.

 

21.2        Gearing

 

Imperial shall
ensure that the ratio of Consolidated Total Net Borrowings at the end of each
Measurement Period ending on or after 1 March 2007 to Consolidated EBITDA for
that Measurement Period does not exceed 4.00:1.

 

21.3        Interest
cover

 

Imperial shall
ensure that the ratio of Consolidated EBITDA to Consolidated Net Interest
Payable for each Measurement Period ending on or after 1 March 2007 is not less
than 4.00:1.

 

22.          DEFAULT

 

22.1        Events
of Default

 

Each of the
events and circumstances set out in this Clause 22 is an Event of Default.

 

22.2        Non-payment

 

An Obligor does
not pay on the due date any amount payable by it under the Finance Documents at
the time, in the currency and in the manner specified in the Finance Documents
and (if caused by technical or administrative error) the failure to pay is not
remedied within five Business Days of the due date.

 

22.3        Breach
of Financial Covenant

 

(a)           Imperial is in
breach of its obligations under Clause 21.3 (Interest cover).

 

(b)           Imperial is in breach
of its obligations under Clause 21.2 (Gearing), unless it would not
otherwise be in breach of its obligations under that clause if for the purposes
of calculating the ratio of Consolidated Total Net Borrowings to Consolidated
EBITDA, Consolidated Total Net Borrowings had been calculated using the
currency translation criteria applied to continuing businesses in the latest
profit and loss account of the Group delivered under Clause 20.2
(Financial Information) in respect of the relevant Measurement Period which
means applying the average of the foreign exchange rates specified as the daily
rate of foreign exchange transactions between each relevant currency (other
than Sterling) and Sterling on the Reuters screen WMR spot 16 for each business
day of that Measurement Period of the Group, except that:

 

(i)            if the Reuters
screen WMR spot 16 is not available on any day, the next day on which the
Reuters screen WMR spot 16 is available will be used in applying the average of
the foreign exchange rates; and

 

(ii)           if the Reuters
screen WMR spot 16 is replaced or the service ceases to be available (for more
than 10 consecutive days), the Facility Agent (after consultation with the
Obligors’ Agent and the Lenders) may specify another page or service displaying
the appropriate rate.

 

47

 

Imperial shall
supply to the Facility Agent details of the currency translation criteria
applied for the purpose of this clause together with each Compliance
Certificate under Clause 20.6 (Compliance Certificates).

 

22.4        Other
breaches

 

An Obligor fails
duly to perform or comply with any obligation expressed to be assumed by it in
the Finance Documents (other than any referred to in Clause 22.2
(Non-payment) or Clause 22.3 (Breach of Financial Covenant)) and the
default (if capable of remedy) is not remedied within thirty days after the
Facility Agent has given notice of the default to the relevant Obligor.

 

22.5        Misrepresentation

 

Any
representation or statement made by Imperial in this Agreement, any request or
any information provided pursuant to Clause 20.3 (Information -
Miscellaneous) is or proves to have been incorrect or misleading when made or
(if applicable) repeated and, where the circumstances making such representation
or statements incorrect or misleading are capable of being altered so that such
representation or statement is correct or not misleading, such circumstances
are not so altered within 30 days of the Facility Agent notifying Imperial of
such representations or statement being incorrect or misleading.

 

22.6        Cross-default

 

(a)           Any Financial
Indebtedness of a member of the Group is not paid when due or within any
originally applicable grace period.

 

(b)           Any Financial
Indebtedness of a member of the Group is declared to be or otherwise becomes
due and payable prior to its specified maturity by reason of a default or an
event of default (howsoever described).

 

(c)           Any creditor of a
member of the Group becomes entitled to declare any Financial Indebtedness of
all or any of the members of the Group due and payable prior to its specified
maturity as a result of a default or an event of default (howsoever described).

 

(d)           No Event of
Default will occur under paragraphs (a), (b) or (c) above if:

 

(i)            the aggregate
amount of the Financial Indebtedness concerned is Euro 35,000,000 (or
equivalent) or less; or

 

(ii)           (A)          the default or
event of default concerned arises immediately or promptly upon and directly or
indirectly as a result of an acquisition of the business or shares of another
company made by a member of the Group;

 

(B)           the Group has
financial resources available to it that are sufficient to refinance the
aggregate amount of such Financial Indebtedness without breaching the terms of
this Agreement; and

 

(C)           if applicable,
such Financial Indebtedness is repaid within 10 Business Days after becoming
due or being declared due and payable prior to its specified maturity (subject
to any originally applicable grace period).

 

22.7        Insolvency

 

A Material
Company:

 

48

 

(a)           is unable to pay its debts
as they fall due; or

 

(b)           commences negotiations with
any one or more of its creditors with a view to the general readjustment or
rescheduling of its indebtedness; or

 

(c)           makes a general assignment
for the benefit of, or a composition with, its creditors.

 

22.8        Winding
up

 

A Material
Company takes any corporate action or other steps are taken or legal
proceedings are started for its winding-up, dissolution or reconstruction or
for the appointment of a receiver, administrative receiver, administrator or
similar officer of it or of all or any part (having an aggregate value of at
least Euro 35,000,000 (or equivalent)) of its assets or under Title 11 of the
United States of America Code entitled Bankruptcy (or any successor thereto) as
amended, except if, in any such case:

 

(a)           the Majority Lenders give
their consent; or

 

(b)           in the case of a Material
Company other than Imperial, for the purposes of a reorganisation or
reconstruction which is and remains on a solvent basis; or

 

(c)           it comprises action taken by
a creditor in the course of legal proceedings which can be demonstrated to be
an abuse of the process of the court or otherwise be frivolous or vexatious and
which are being contested in good faith by the relevant Material Company with a
reasonable prospect of success.

 

22.9        Creditors’
process

 

Any attachment,
sequestration, distress or execution affects all or any part (such part having
an aggregate value of at least Euro 35,000,000 (or equivalent)) of the assets
of a Material Company and is not discharged within 30 days.

 

22.10      Guarantee

 

Any guarantee
given pursuant to Clause 18 (Guarantee and Indemnity) is not effective, or
is alleged by the relevant Guarantor to be ineffective, for any reason.

 

22.11      Ownership
of the Obligors

 

Each Obligor (other than Imperial) is not or ceases
to be a direct or indirect wholly owned Subsidiary of Imperial.

 

22.12      Unlawfulness

 

It is or becomes
unlawful for an Obligor to perform any of its obligations under the Finance
Documents which obligations could reasonably be considered to be material to
the interests of the Finance Parties under the Finance Documents.

 

22.13      Repudiation

 

An Obligor
repudiates a Finance Document or evidences an intention to repudiate a Finance
Document.

 

49

 

22.14      Cessation
of Business

 

A Material Company ceases or threatens to cease all
or the substantial part of its business except that a Material Company will not
be treated as having ceased to carry on all or the substantial part of its
business by reason of any disposal on arm’s length terms which is otherwise
permitted under the terms of this Agreement.

 

22.15      Litigation

 

(a)           Any litigation,
arbitration or administrative proceedings or governmental or regulatory
investigations, proceedings or disputes are commenced against a Material
Company which are or are reasonably likely to be determined adversely to it and
which, if so adversely determined, would have a Material Adverse Effect unless
such litigation, arbitration, proceeding, investigation or dispute is being
contested by such Material Company in good faith and a legal opinion is
delivered to the Facility Agent in form and substance acceptable to the Lenders
confirming that such Material Company has a reasonable prospect of success in
relation to that litigation.

 

(b)           Any litigation,
arbitration or administration proceedings or government or regulatory
investigations, proceedings or disputes are finally determined and such determination
has a Material Adverse Effect.

 

22.16      Acceleration

 

On and at any
time after the occurrence of an Event of Default which is then continuing, the
Facility Agent may, and shall if instructed to do so by the Majority Lenders,
by notice to the Obligors’ Agent:

 

(a)           cancel the Facility; and/or

 

(b)           declare that all the Loans,
together with accrued interest and all other amounts accrued under this
Agreement, be immediately due and payable, whereupon they shall become
immediately due and payable; and/or

 

(c)           demand that all Loans be
payable on demand, whereupon they shall immediately become payable on demand by
the Facility Agent on the instructions of the Majority Lenders; and/or

 

(d)           declare that full cash cover
in respect of each Letter of Credit is immediately due and payable.

 

22.17      Clean-up
Period

 

Notwithstanding
any other terms of this Agreement any event or circumstance which is in
existence on the first Utilisation Date and which would constitute a Default or
Event of Default will be deemed not to constitute a Default or Event of Default
during the Clean-up Period to the extent that:

 

(a)           such Event of Default
results from a default under or in respect of the existing Financial
Indebtedness of the Target caused by a change of control occurring as a result
of the Acquisition; or

 

(b)           such event or circumstance:

 

(i)            relates solely to the Target
and its Subsidiaries; and

 

(ii)           have not been procured,
solicited or approved by any member of the Group (which for these purposes
shall not include the Target and its Subsidiaries).

 

50

 

23.          THE ADMINISTRATIVE PARTIES

 

23.1        Appointment
and duties of the Facility Agent

 

(a)           Each Finance
Party (other than the Facility Agent) irrevocably appoints the Facility Agent
to act as its agent under the Finance Documents.

 

(b)           Each Finance
Party irrevocably authorises the Facility Agent to:

 

(i)            perform the
duties and to exercise the rights, powers and discretions that are specifically
given to it under the Finance Documents, together with any other incidental
rights, powers and discretions; and

 

(ii)           execute each
Finance Document expressed to be executed by the Facility Agent.

 

(c)           The Facility
Agent has only those duties which are expressly specified in the Finance Documents.
Those duties are solely of a mechanical and administrative nature.

 

23.2        Role
of the Mandated Lead Arrangers

 

Except as
specifically provided in the Finance Documents, no Mandated Lead Arranger has
any obligations of any kind to any other Party in connection with any Finance
Document.

 

23.3        No
fiduciary duties

 

Except as
specifically provided in a Finance Document, nothing in the Finance Documents
makes an Administrative Party a trustee or fiduciary for any other Party or any
other person. No Administrative Party need hold in trust any moneys paid to it
for a Party or be liable to account for interest on those moneys.

 

23.4        Individual
position of an Administrative Party

 

(a)           If it is also a
Lender, each Administrative Party has the same rights and powers under the
Finance Documents as any other Lender and may exercise those rights and powers
as though it were not an Administrative Party.

 

(b)           Each
Administrative Party may:

 

(i)            carry on any
business with any Obligor or its related entities (including acting as an agent
or a trustee for any other financing); and

 

(ii)           retain any
profits or remuneration it receives under the Finance Documents or in relation
to any other business it carries on with any Obligor or its related entities.

 

23.5        Reliance

 

The Facility
Agent may:

 

(a)           rely on any notice or
document believed by it to be genuine and correct and to have been signed by,
or with the authority of, the proper person;

 

(b)           rely on any statement made
by any person regarding any matters which may reasonably be assumed to be
within his knowledge or within his power to verify;

 

51

 

(c)           engage, pay for and rely on
professional advisers selected by it (including those representing a Party
other than the Facility Agent); and

 

(d)           act under the Finance
Documents through its personnel and agents.

 

23.6        Majority
Lenders’ instructions

 

(a)           The Facility
Agent is fully protected if it acts on the instructions of the Majority Lenders
in the exercise of any right, power or discretion or any matter not expressly
provided for in the Finance Documents. Any such instructions given by the
Majority Lenders will be binding on all the Lenders. In the absence of
instructions, the Facility Agent may act as it considers to be in the best
interests of all the Lenders.

 

(b)           The Facility
Agent is not authorised to act on behalf of a Lender (without first obtaining
that Lender’s consent) in any legal or arbitration proceedings in connection
with any Finance Document.

 

(c)           The Facility
Agent may require the receipt of security satisfactory to it, whether by way of
payment in advance or otherwise, against any liability or loss which it may
incur in complying with the instructions of the Majority Lenders.

 

23.7        Responsibility

 

(a)           No Administrative
Party is responsible to any other Finance Party for the adequacy, accuracy or
completeness of:

 

(i)            any Finance
Document or any other document; or

 

(ii)           any statement or
information (whether written or oral) made in or supplied in connection with
any Finance Document.

 

(b)           Without affecting
the responsibility of any Obligor for information supplied by it or on its
behalf in connection with any Finance Document, each Lender confirms that it:

 

(i)            has made, and
will continue to make, its own independent appraisal of all risks arising under
or in connection with the Finance Documents (including the financial condition
and affairs of each Obligor and its related entities and the nature and extent
of any recourse against any Party or its assets); and

 

(ii)           has not relied
exclusively on any information provided to it by any Administrative Party in
connection with any Finance Document.

 

23.8        Exclusion
of liability

 

(a)           The Facility
Agent is not liable or responsible to any other Finance Party for any action
taken or not taken by it in connection with any Finance Document, unless
directly caused by its gross negligence or wilful misconduct.

 

(b)           No Party may take
any proceedings against any officer, employee or agent of the Facility Agent in
respect of any claim it might have against the Facility Agent or in respect of
any act or omission of any kind by that officer, employee or agent in
connection with any Finance Document. Any officer, employee or agent of the
Facility Agent may rely on this Clause 23.8 and enforce its terms under
the Contracts (Rights of Third Parties) Act 1999.

 

52

 

(c)           (i)            Nothing in this
Agreement will oblige any Administrative Party to satisfy any know your
customer requirement in relation to the identity of any person on behalf of any
Finance Party.

 

(ii)           Each Finance
Party confirms to each Administrative Party that it is solely responsible for
any know your customer requirements it is required to carry out and that it may
not rely on any statement in relation to those requirements made by any other
person.

 

23.9        Default

 

(a)           The Facility
Agent is not obliged to monitor or enquire whether a Default has occurred. The
Facility Agent is not deemed to have knowledge of the occurrence of a Default.

 

(b)           If the Facility
Agent:

 

(i)            receives notice
from a Party referring to this Agreement, describing a Default and stating that
the event is a Default; or

 

(ii)           is aware of the
non-payment of any principal or interest or any fee payable to a Lender under
this Agreement,

 

it must promptly
notify the Lenders.

 

23.10      Information

 

(a)           The Facility
Agent must promptly forward to the person concerned the original or a copy of
any document which is delivered to it by a Party for that person.

 

(b)           Except where a
Finance Document specifically provides otherwise, the Facility Agent is not
obliged to review or check the adequacy, accuracy or completeness of any
document it forwards to another Party.

 

(c)           Except as
provided above, the Facility Agent has no duty:

 

(i)            either initially
or on a continuing basis to provide any Lender with any credit or other
information concerning the risks arising under or in connection with the
Finance Documents (including any information relating to the financial
condition or affairs of any Obligor or its related entities or the nature or
extent of recourse against any Party or its assets) whether coming into its
possession before, on or after the date of this Agreement; or

 

(ii)           unless
specifically requested to do so by a Lender in accordance with a Finance
Document, to request any certificate or other document from any Obligor.

 

(d)           In acting as the
Facility Agent, the agency division of the Facility Agent is treated as a
separate entity from its other divisions and departments. Any information
acquired by the Facility Agent which, in its opinion, is acquired by it
otherwise than in its capacity as the Facility Agent may be treated as
confidential by the Facility Agent and will not be treated as information
possessed by that Agent in its capacity as such.

 

(e)           The Facility
Agent is not obliged to disclose to any person any confidential information
supplied to it by a member of the Group solely for the purpose of evaluating
whether any waiver or amendment is required to any term of the Finance
Documents.

 

53

 

(f)            Each Obligor
irrevocably authorises the Facility Agent to disclose to the other Finance
Parties any information which, in its opinion, is received by it in its
capacity as the Facility Agent.

 

23.11      Indemnities

 

(a)           Without limiting
the liability of any Obligor under the Finance Documents, each Lender must
indemnify the Facility Agent for that Lender’s Pro rata Share of any loss or
liability incurred by it in acting as the Facility Agent, except to the extent
that the loss or liability is caused by the Facility Agent’s gross negligence
or wilful misconduct.

 

(b)           The Facility
Agent may deduct from any amount received by it for a Lender any amount due to
it from that Lender under a Finance Document but unpaid.

 

23.12      Compliance

 

The Facility
Agent may refrain from doing anything (including disclosing any information)
which might, in its opinion, constitute a breach of any law or regulation or be
otherwise actionable at the suit of any person, and may do anything which, in
its opinion, is necessary or desirable to comply with any law or regulation.

 

23.13      Resignation
of the Facility Agent

 

(a)           The Facility
Agent may resign and appoint any of its Affiliates as a successor Facility
Agent by giving notice to the Lenders and the Obligors’ Agent.

 

(b)           Alternatively,
the Facility Agent may resign by giving notice to the Lenders and the Obligors’
Agent, in which case the Majority Lenders may appoint a successor Facility
Agent.

 

(c)           If no successor
Facility Agent has been appointed under paragraph (b) above within 30 days
after notice of resignation was given, the Facility Agent may appoint a
successor Facility Agent.

 

(d)           The person(s)
appointing a successor Facility Agent must, if practicable, consult with the
Obligors’ Agent prior to the appointment. Any successor Facility Agent must
have an office in the U.K. and must be capable of performing it’s obligations
under this Agreement.

 

(e)           The resignation
of the Facility Agent and the appointment of any successor Facility Agent will
both become effective only when the successor Facility Agent notifies all the
Parties that it accepts its appointment. On giving the notification, the
successor Facility Agent will succeed to the position of the Facility Agent which
it succeeds and the term Facility  Agent will mean the successor Facility Agent.

 

(f)            The retiring
Facility Agent must, at its own cost, make available to the successor Facility
Agent such documents and records and provide such assistance as the successor
Facility Agent may reasonably request for the purposes of performing its
functions as Facility Agent under the Finance Documents.

 

(g)           Upon its
resignation becoming effective, this Clause will continue to benefit the
retiring Facility Agent in respect of any action taken or not taken by it in
connection with the Finance Documents while it was a Facility Agent, and,
subject to paragraph (f) above, it will have no further obligations under any
Finance Document.

 

(h)           The Majority
Lenders may, by notice to the Facility Agent, require it to resign under
paragraph (b) above.

 

54

 

23.14      Relationship
with Lenders

 

(a)           The Facility
Agent may treat each Lender as a Lender, entitled to payments under this
Agreement and as acting through its Facility Office(s) until it has received
not less than five Business Days’ prior notice from that Lender to the
contrary.

 

(b)           The Facility
Agent may at any time, and must if requested to do so by the Majority Lenders,
convene a meeting of the Lenders.

 

(c)           The Facility
Agent must keep a register of all the Parties and supply any other Party with a
copy of the register on request. The register will include each Lender’s
Facility Office(s) and contact details for the purposes of this Agreement.

 

23.15      Facility
Agents’ management time

 

If the Facility
Agent requires, any amount payable to the Facility Agent by any Party under any
indemnity or in respect of any costs or expenses incurred by the Facility Agent
under the Finance Documents after the date of this Agreement may include the
cost of using its management time or other resources and will be calculated on
the basis of such reasonable daily or hourly rates as the Facility Agent may
notify to the relevant Party. This is in addition to any amount in respect of
fees or expenses paid or payable to the Facility Agent under any other term of
the Finance Documents.

 

23.16      Notice
period

 

Where this
Agreement specifies a minimum period of notice to be given to the Facility
Agent, the Facility Agent may, at its discretion, accept a shorter notice
period.

 

24.          EVIDENCE AND CALCULATIONS

 

24.1        Accounts

 

Accounts
maintained by a Finance Party in connection with this Agreement are prima facie
evidence of the matters to which they relate for the purpose of any litigation
or arbitration proceedings.

 

24.2        Certificates
and determinations

 

Any certification
or determination by a Finance Party of a rate or amount under the Finance
Documents will be, in the absence of manifest error, conclusive evidence of the
matters to which it relates.

 

24.3        Calculations

 

Any interest or
fee accruing under this Agreement accrues from day to day and is calculated on
the basis of the actual number of days elapsed and a year of 360 or 365 days or
otherwise, depending on what the Facility Agent determines is market practice.

 

25.          FEES

 

25.1        Agent’s
fee

 

The Obligors’
Agent must pay to the Facility Agent for its own account an agency fee in the
amount set out in and in the manner agreed in the Fee Letter between the
Facility Agent and the Obligors’ Agent.

 

55

 

25.2        Arrangement
fee

 

The Obligors’
Agent must pay to the Facility Agent for the account of the Mandated Lead
Arrangers an arrangement fee in the amount set out in and in the manner agreed
in the Fee Letter between the Mandated Lead Arrangers and the Obligors’ Agent.

 

25.3        Commitment
fee

 

(a)           The Obligors’
Agent must pay in respect of the Facilities a commitment fee computed at the
rate per annum equal to 0.10 per cent. on the undrawn, uncancelled amount of
each Lender’s Commitment.

 

(b)           Accrued
commitment fee is payable to the Facility Agent:

 

(i)            in respect of the
Availability Period relating to Loans on the later of the last day of that
Availability Period or the date falling five Business Days after the date on
which the Obligors’ Agent receives from the Facility Agent an invoice for such
amount; and

 

(ii)           thereafter,
quarterly in arrear on the later of the last day of the relevant quarter or the
date falling five Business Days after the date on which the Obligors’ Agent
receives from the Facility Agent an invoice for such amount.

 

25.4        Extension
Fee

 

(a)           If a Borrower
exercises the Extension Option the relevant Borrower will pay to the Facility
Agent for the account of the Lenders on the later of the Original Maturity Date
or the date falling five Business Days after the date on which the Obligors’
Agent receives from the Facility Agent an invoice for such amount an extension
fee equal to 0.05 per cent. of the Commitments extended on that date.

 

(b)           Fees payable
under paragraph (a) above are payable in U.S. Dollars.

 

25.5        VAT

 

Any fee referred to in this Clause 25 is
exclusive of any value added tax or any other tax which might be chargeable in
connection with that fee. If any value added tax or other tax is so chargeable,
it shall be paid by the Obligors’ Agent or Imperial Finance or Imperial Finance
2 (as applicable) at the same time as it pays the relevant fee.

 

26.          INDEMNITIES AND BREAK COSTS

 

26.1        Currency
indemnity

 

(a)           The Obligors’
Agent must, as an independent obligation, indemnify each Finance Party against
any loss or liability which that Finance Party incurs as a consequence of:

 

(i)            that Finance
Party receiving an amount in respect of an Obligor’s liability under the
Finance Documents; or

 

(ii)           that liability
being converted into a claim, proof, judgment or order,

 

in a currency
other than the currency in which the amount is expressed to be payable under
the relevant Finance Document.

 

56

 

(b)           Unless otherwise
required by law, each Obligor waives any right it may have in any jurisdiction
to pay any amount under the Finance Documents in a currency other than that in
which it is expressed to be payable.

 

26.2        Other
indemnities

 

(a)           The Obligors’
Agent must indemnify each Finance Party against any cost, loss or liability
which that Finance Party incurs as a consequence of:

 

(i)            the occurrence of
any Event of Default;

 

(ii)           any failure by an
Obligor to pay any amount due under a Finance Document on its due date,
including any resulting from any distribution or redistribution of any amount
among the Lenders under this Agreement;

 

(iii)          (other than by
reason of negligence or default by that Finance Party) a Credit not being made
after a Request has been delivered for that Credit; or

 

(iv)          a Credit (or part
of a Credit) not being prepaid in accordance with a notice of prepayment.

 

The liability of
the Obligors’ Agent in each case includes any loss or expense on account of
funds borrowed, contracted for or utilised to fund any amount payable under any
Finance Document, any amount repaid or prepaid or any Credit.

 

(b)           The Obligors’
Agent must indemnify the Facility Agent against any cost, loss or liability
incurred by the Facility Agent as a result of:

 

(i)            investigating any
event which the Facility Agent reasonably believes to be a Default; or

 

(ii)           acting or relying
on any notice which the Facility Agent reasonably believes to be genuine,
correct and appropriately authorised.

 

26.3        Break
Costs

 

(a)           The Obligors’
Agent must pay to each Lender its Break Costs.

 

(b)           Break Costs are
the amount (if any) determined by the relevant Lender by which:

 

(i)            the interest
which that Lender would have received for the period from the date of receipt
of any part of its share in a Loan or an overdue amount to the last day of the
applicable Term for that Loan or overdue amount if the principal or overdue
amount received had been paid on the last day of that Term;

 

exceeds

 

(ii)           the amount which
that Lender would be able to obtain by placing an amount equal to the amount
received by it on deposit with a leading bank in the appropriate interbank
market for a period starting on the Business Day following receipt and ending
on the last day of the applicable Term.

 

(c)           Each Lender must
supply to the Facility Agent for the Obligors’ Agent details of the amount of
any Break Costs claimed by it under this Clause 26.3.

 

57

 

27.          EXPENSES

 

27.1        Initial
costs

 

The Obligors’
Agent must pay to each Administrative Party the amount of all reasonable costs
and expenses (including reasonable legal fees) properly incurred by it in
connection with the negotiation, preparation, printing, execution and
syndication of the Finance Documents provided such costs and expenses do not
exceed the amounts agreed by the Obligors’ Agent and the Mandated Lead
Arrangers on or before the date of this Agreement.

 

27.2        Subsequent
costs

 

The Obligors’
Agent must pay to the Facility Agent the amount of all reasonable costs and
expenses (including reasonable legal fees) properly incurred by it in
connection with:

 

(a)           the negotiation,
preparation, printing and execution of any Finance Document (other than a
Transfer Certificate) executed after the date of this Agreement; and

 

(b)           any amendment, waiver or
consent requested by or on behalf of an Obligor or specifically allowed by this
Agreement.

 

27.3        Enforcement
costs

 

The Obligors’
Agent must pay to each Finance Party the amount of all costs and expenses
(including legal fees) incurred by it in connection with the enforcement of, or
the preservation of any rights under, any Finance Document.

 

28.          AMENDMENTS AND WAIVERS

 

28.1        Procedure

 

(a)           Except as
provided in this Clause 28, any term of the Finance Documents may be
amended or waived with the agreement of the Obligors’ Agent and the Majority
Lenders. The Facility Agent may effect, on behalf of any Finance Party, an
amendment or waiver allowed under this Clause 28.

 

(b)           The Facility
Agent must promptly notify the other Parties of any amendment or waiver
effected by it under paragraph (a) above. Any such amendment or waiver is
binding on all the Parties.

 

28.2        Exceptions

 

(a)           An amendment or
waiver which relates to:

 

(i)            the definition of
Majority  Lenders
in Clause 1.1 (Definitions);

 

(ii)           an extension of
the date of payment of any amount to a Lender under the Finance Documents
except for any extension pursuant to the Extension Option;

 

(iii)          a reduction in
the Margin or a reduction in the amount of any payment of principal, interest,
fee or other amount payable to a Lender under the Finance Documents;

 

(iv)          an increase in,
or an extension of, a Commitment or the Total Commitments except in accordance
with the terms of this Agreement;

 

(v)           a release of a
Borrower or a Guarantor;

 

58

 

(vi)          a term of a
Finance Document which expressly requires the consent of each Lender;

 

(vii)         the right of a
Lender to assign or transfer its rights or obligations under the Finance
Documents; or

 

(viii)        this
Clause 28.2,

 

may only be made
with the consent of all the Lenders.

 

(b)           An amendment or
waiver which relates to the rights or obligations of an Administrative Party
may only be made with the consent of that Administrative Party.

 

28.3        Change
of currency

 

If a change in
any currency of a country occurs (including where there is more than one
currency or currency unit recognised at the same time as the lawful currency of
a country), the Finance Documents will be amended to the extent the Facility
Agent (acting reasonably and after consultation with the Obligors’ Agent)
determines is necessary to reflect the change.

 

28.4        Waivers
and remedies cumulative

 

The rights of
each Finance Party under the Finance Documents:

 

(a)           may be exercised as often as
necessary;

 

(b)           are cumulative and not
exclusive of its rights under the general law; and

 

(c)           may be waived only in
writing and specifically.

 

Delay in
exercising or non-exercise of any right is not a waiver of that right.

 

29.          CHANGES TO THE PARTIES

 

29.1        Assignments
and transfers by Obligors

 

No Obligor may
assign or transfer any of its rights and obligations under the Finance
Documents without the prior consent of all the Lenders.

 

29.2        Assignments
and transfers by Lenders

 

(a)           A Lender (the Existing  Lender) may,
subject to the following provisions of this Clause 29.2, Clause 29.3
(Assignments and transfers – Issuing Bank) and the terms of the Syndication
Letter, at any time assign or transfer (including by way of novation) any of its
rights and obligations under this Agreement to any other person (a New  Lender).

 

(b)           The written
consent of the Obligors’ Agent is required for any assignment or transfer. The
consent of the Obligors’ Agent must not be unreasonably withheld or delayed in
the case of a proposed Lender whose published long term credit rating is equal
to or higher than BBB in the case of Standard & Poor’s and/or Baa2 in the
case of Moody’s.

 

(c)           The Obligors’
Agent will, in the case of a transfer of rights and obligations in respect of
the Facility, be deemed to have given its consent five Business Days after the
Obligors’ Agent is given notice of the request unless it is expressly refused
by the Obligors’ Agent within that time.

 

59

 

(d)           Unless the
Obligors’ Agent and the Facility Agent, acting reasonably, otherwise agree, a
transfer of part of a Commitment under this Agreement by the Existing Lender
must not result in that Existing Lender or the New Lender having a Commitment in
any Facility of less than $50,000,000 (the Minimum Commitment Amount).
Any transfer of part of a Commitment held by The Royal Bank of Scotland plc or
The Royal Bank of Scotland Finance (Ireland) must not result in the total
Commitment of The Royal Bank of Scotland plc and The Royal Bank of Scotland
Finance (Ireland) when taken together falling below the Minimum Commitment
Amount.

 

(e)           The Facility
Agent is not obliged to execute a Transfer Certificate or approve any
confirmation in accordance with paragraph (f)(ii) below until it has completed
all know your customer requirements to its satisfaction. The Facility Agent
must complete all know your customer requirements expeditiously and must
promptly notify the Existing Lender and the New Lender if there are any such
requirements.

 

(f)            A transfer of
obligations will be effective only if either:

 

(i)            the obligations
are novated in accordance with the following provisions of this Clause 29;
or

 

(ii)           the New Lender
confirms to the Facility Agent and the Obligors’ Agent in form and substance
satisfactory to the Facility Agent and Obligors’ Agent that it is bound by the
terms of this Agreement as a Lender. On the transfer becoming effective in this
manner the Existing Lender will be released from its obligations under this
Agreement to the extent that they are transferred to the New Lender.

 

(g)           Unless the
Facility Agent otherwise agrees, the New Lender must pay to the Facility Agent
for its own account, on or before the date any assignment or transfer occurs, a
fee of $2,000.

 

(h)           Any reference in
this Agreement to a Lender includes a New Lender but excludes a Lender if no
amount is or may be owed to or by it under this Agreement.

 

29.3        Assignments
and transfers – Issuing Bank

 

The consent of
the Issuing Bank (not to be unreasonably withheld or delayed) is required for
any assignment or transfer of any Lenders rights and obligations under this
Agreement.

 

29.4        Procedure
for transfer by way of novations

 

(a)           A novation is
effected if:

 

(i)            the Existing
Lender and the New Lender deliver to the Facility Agent a duly completed
Transfer Certificate; and

 

(ii)           the Facility
Agent executes it.

 

Subject to
Clause 29.2(e) (Assignments and transfers by Lenders), the Facility Agent
must execute as soon as reasonably practicable a Transfer Certificate delivered
to it and which appears on its face to be in order.

 

(b)           Each Party (other
than the Existing Lender and the New Lender) irrevocably authorises the
Facility Agent to execute any duly completed Transfer Certificate on its behalf.

 

(c)           On the Transfer
Date:

 

60

 

(i)            the New Lender
will assume the rights and obligations of the Existing Lender expressed to be
the subject of the novation in the Transfer Certificate in substitution for the
Existing Lender; and

 

(ii)           the Existing
Lender will be released from those obligations and cease to have those rights.

 

(d)           The Facility
Agent must, as soon as practicable after it has executed a Transfer
Certificate, send to the Obligors’ Agent a copy of that Transfer Certificate.

 

29.5        Limitation
of responsibility of Existing Lender

 

(a)           Unless expressly
agreed to the contrary, an Existing Lender is not responsible to a New Lender
for the legality, validity, adequacy, accuracy, completeness or performance of:

 

(i)            any Finance
Document or any other document; or

 

(ii)           any statement or
information (whether written or oral) made in or supplied in connection with
any Finance Document,

 

and any
representations or warranties implied by law are excluded.

 

(b)           Each New Lender
confirms to the Existing Lender and the other Finance Parties that it:

 

(i)            has made, and
will continue to make, its own independent appraisal of all risks arising under
or in connection with the Finance Documents (including the financial condition
and affairs of each Obligor and its related entities and the nature and extent
of any recourse against any Party or its assets) in connection with its
participation in this Agreement; and

 

(ii)           has not relied
exclusively on any information supplied to it by the Existing Lender in
connection with any Finance Document.

 

(c)           Nothing in any
Finance Document requires an Existing Lender to:

 

(i)            accept a
re-transfer from a New Lender of any of the rights and obligations assigned or
transferred under this Clause 29; or

 

(ii)           support any
losses incurred by the New Lender by reason of the non-performance by either
Obligor of its obligations under any Finance Document or otherwise.

 

29.6        Costs
resulting from change of Lender or Facility Office

 

If:

 

(a)           a Lender assigns or
transfers any of its rights and obligations under the Finance Documents or
changes its Facility Office; and

 

(b)           as a result of circumstances
existing at the date the assignment, transfer or change occurs, an Obligor
would be obliged to pay a Tax Payment or an Increased Cost,

 

the Obligor need
only pay that Tax Payment or Increased Cost to the same extent that it would
have been obliged to if no assignment, transfer or change had occurred.

 

61

 

29.7        Additional
Guarantors

 

(a)           If Imperial
wishes one of its directly or indirectly wholly-owned Subsidiaries to become an
Additional Guarantor then it may deliver to the Facility Agent the relevant
documents and evidence listed in Part 2 of Schedule 2 (Conditions Precedent
Documents).

 

(b)          The Obligors’ Agent shall,
by not less than 10 Business Days’ prior written notice to the Facility Agent,
notify the Facility Agent (which shall promptly notify the Lenders) of its
intention to request that one of its Subsidiaries becomes an Additional
Guarantor pursuant to this Clause 29.7.

 

(c)           If the accession
of an Additional Guarantor requires any Finance Party to carry out know your
customer requirements in circumstances where the necessary information is not
already available to it, the Obligors’ Agent must as soon as reasonably
practicable on request by any Finance Party supply to that Finance Party any
documentation or other evidence which is reasonably requested by that Finance
Party (whether for itself, on behalf of any Finance Party or any prospective
new Lender) to enable a Finance Party or prospective new Lender to carry out
and be satisfied with the results of all applicable know your customer
requirements. Each Finance Party must complete all know your customer
requirements in relation to an Additional Guarantor expeditiously and must
promptly notify the Existing Lender and the Additional Guarantor if there are
any such requirements.

 

(d)           The relevant
Subsidiary will become an Additional Guarantor when the Facility Agent notifies
the other Finance Parties and Imperial that it has received all of the
documents and evidence referred to in paragraph (a) above. The Facility Agent
must give this notification as soon as practicable.

 

29.8        Resignation
of the Guarantor

 

(a)           The Obligors’
Agent may request that a Guarantor ceases to be a Guarantor by giving to the
Facility Agent a duly completed Resignation Request.

 

(b)           The Facility
Agent must accept a Resignation Request and notify the Obligors’ Agent and the
Lenders of its acceptance if:

 

(i)            the Lenders have
consented to the Resignation Request;

 

(ii)           it is not aware
that a Default is outstanding or would result from the acceptance of the
Resignation Request; and

 

(iii)          no amount owed by
that Guarantor under this Agreement is still outstanding.

 

(c)           The Guarantor
will cease to be a Guarantor when the Facility Agent gives the notification
referred to in paragraph (b) above.

 

(d)           A Guarantor may
also cease to be a Guarantor in any other manner approved by the Lenders.

 

29.9        Changes
to the Reference Banks

 

If a Reference
Bank (or, if a Reference Bank is not a Lender, the Lender of which it is an
Affiliate) ceases to be a Lender, the Facility Agent must (in consultation with
the Obligors’ Agent) appoint another Lender or an Affiliate of a Lender to
replace that Reference Bank.

 

62

 

30.          DISCLOSURE OF INFORMATION

 

(a)           Each Finance
Party must keep confidential any information supplied to it by or on behalf of
any Obligor in connection with the Finance Documents. However, a Finance Party
is entitled to disclose information:

 

(i)            which is publicly
available, other than as a result of a breach by that Finance Party of this
Clause 30;

 

(ii)           in connection
with any legal or arbitration proceedings;

 

(iii)          if required to do
so under any law or regulation;

 

(iv)          to a
governmental, banking, taxation or other regulatory authority;

 

(v)           to its
professional advisers;

 

(vi)          to the extent
allowed under paragraph (b) below; or

 

(vii)         with the prior
written agreement of the relevant Obligor.

 

(b)           A Finance Party
may disclose to an Affiliate or any person with whom it may enter, or has
entered into, any kind of transfer or other agreement permitted under this
Agreement (a proposed recipient):

 

(i)            a copy of any
Finance Document; and

 

(ii)           any information
which that Finance Party has acquired under or in connection with any Finance
Document.

 

However, before a
proposed recipient may receive any confidential information, it must enter into
a Confidentiality Undertaking.

 

(c)           This Clause
supersedes any previous confidentiality undertaking given by a Finance Party in
connection with this Agreement prior to it becoming a Party.

 

31.          SET-OFF

 

Following the
occurrence of an Event of Default which remains outstanding, a Finance Party
may combine, consolidate or merge all or any accounts of an Obligor with, or
liabilities to, that Finance Party and may set off any matured obligation owed
by an Obligor under this Agreement against an obligation (whether or not
matured) owed by the relevant Finance Party to that Obligor, regardless of the
place or payment, booking branch or currency of either obligations. If the
obligations are in different currencies, the Finance Party may convert either
obligation at a market rate of exchange in its usual course of business for the
purpose of the set-off.

 

32.          PRO RATA SHARING

 

32.1        Redistribution

 

If any amount
owing by an Obligor under this Agreement to a Lender (the recovering
Lender) is discharged by payment,
set-off or any other manner other than through the Facility Agent under this
Agreement (a recovery), then:

 

63

 

(a)           the recovering Lender must,
within three Business Days, supply details of the recovery to the Facility
Agent;

 

(b)           the Facility Agent must
calculate whether the recovery is in excess of the amount which the recovering
Lender would have received if the recovery had been received and distributed by
the Facility Agent under this Agreement; and

 

(c)           the recovering Lender must
pay to the Facility Agent an amount equal to the excess (the redistribution).

 

32.2        Effect
of redistribution

 

(a)           The Facility
Agent must treat a redistribution as if it were a payment by the relevant
Obligor under this Agreement and distribute it among the Lenders, other than
the recovering Lender, accordingly.

 

(b)           When the Facility
Agent makes a distribution under paragraph (a) above, the recovering Lender
will be subrogated to the rights of the Finance Parties which have shared in
that redistribution.

 

(c)           If and to the
extent that the recovering Lender is not able to rely on any rights of subrogation
under paragraph (b) above, the relevant Obligor will owe the recovering Lender
a debt which is equal to the redistribution, immediately payable and of the
type originally discharged.

 

(d)           If:

 

(i)            a recovering
Lender must subsequently return a recovery, or an amount measured by reference
to a recovery, to an Obligor; and

 

(ii)           the recovering
Lender has paid a redistribution in relation to that recovery,

 

each Finance
Party must reimburse the recovering Lender all or the appropriate portion of
the redistribution paid to that Finance Party, together with interest for the
period while it held the re-distribution. In this event, the subrogation in
paragraph (b) above will operate in reverse to the extent of the reimbursement.

 

32.3        Exceptions

 

Notwithstanding
any other term of this Clause, a recovering Lender need not pay a
redistribution to the extent that:

 

(a)           it would not, after the
payment, have a valid claim against the relevant Obligor in the amount of the
redistribution; or

 

(b)           it would be sharing with
another Finance Party any amount which the recovering Lender has received or
recovered as a result of legal or arbitration proceedings, where:

 

(i)            the recovering Lender
notified the Facility Agent of those proceedings; and

 

(ii)           the other Finance Party had
an opportunity to participate in those proceedings but did not do so or did not
take separate legal or arbitration proceedings as soon as reasonably
practicable after receiving notice of them.

 

64

 

33.          SEVERABILITY

 

If a term of a
Finance Document is or becomes illegal, invalid or unenforceable in any
jurisdiction, that shall not affect:

 

(a)           the legality, validity or
enforceability in that jurisdiction of any other term of the Finance Documents;
or

 

(b)           the legality, validity or
enforceability in other jurisdictions of that or any other term of the Finance
Documents.

 

34.          COUNTERPARTS

 

Each Finance
Document may be executed in any number of counterparts. This has the same
effect as if the signatures on the counterparts were on a single copy of the
Finance Document.

 

35.          NOTICES

 

In writing

 

(a)           Any communication in
connection with a Finance Document must be in writing and, unless otherwise
stated, may be given:

 

(i)            in person, by post or fax;
or

 

(ii)           if between the Facility
Agent and a Lender and the Facility Agent and the Lender agree, by e-mail or
other electronic communication.

 

(b)           For the purpose of the
Finance Documents, an electronic communication will be treated as being in
writing.

 

(c)           Unless it is agreed to the
contrary, any consent or agreement required under a Finance Document must be
given in writing.

 

35.2        Contact
details

 

(a)           Except as
provided below, the contact details of each Party for all communications in
connection with the Finance Documents are those notified by that Party for this
purpose to the Facility Agent on or before the date it becomes a Party.

 

(b)           The contact
details of the Obligors’ Agent, Imperial Finance 2 and Imperial for this
purpose are:

 

	
   

  	
  Address:

  	
  PO Box 244

  
	
   

  	
   

  	
  Upton Road

  
	
   

  	
   

  	
  Bristol BS99 7UJ

  
	
   

  	
   

  	
   

  
	
   

  	
  Fax number:

  	
  0117 966 7957

  
	
   

  	
   

  	
   

  
	
   

  	
  Attention:

  	
  John Jones

  

 

(c)           The contact
details of the Facility Agent for this purpose are:

 

(i)            for operational
duties (such as drawdown, interest rate fixing, interest/fee calculations and payments):

 

65

 

	
   

  	
  Address:

  	
  Level 3

  
	
   

  	
   

  	
  21⁄2 Devonshire
  Square

  
	
   

  	
   

  	
  London

  
	
   

  	
   

  	
  EC2M 4XJ

  
	
   

  	
   

  	
   

  
	
   

  	
  Fax number:

  	
  +44 (0)20 7615
  7673

  
	
   

  	
   

  	
   

  
	
   

  	
  Attention:

  	
  Loans
  Administration/LAU

  

 

(ii)           for
non-operational matters (such as documentation covenant compliance, amendments
and waivers):

 

	
   

  	
  Address:

  	
  Level 5

  
	
   

  	
   

  	
  135 Bishopsgate

  
	
   

  	
   

  	
  London

  
	
   

  	
   

  	
  EC2M 3UR

  
	
   

  	
   

  	
   

  
	
   

  	
  Fax number:

  	
  +44 (0)20 7085 4564

  
	
   

  	
   

  	
   

  
	
   

  	
  Attention:

  	
  Mark Harrison, Director Syndicated Loans Agency

  
	
   

  	
   

  	
   

  
	
   

  	
  Email:

  	
  mark.harrison@rbos.com

  

 

(d)           Any Party may
change its contact details by giving five Business Days’ notice to the Facility
Agent or (in the case of the Facility Agent) to the other Parties.

 

(e)           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.

 

35.3        Effectiveness

 

(a)           Except as
provided below, any communication in connection with a Finance Document will be
deemed to be given as follows:

 

(i)            if delivered in
person, at the time of delivery;

 

(ii)           if posted, five
days after being deposited in the post, postage prepaid, in a correctly
addressed envelope; and

 

(iii)          if by fax, when
received in legible form.

 

(b)           A communication
given under paragraph (a) above but received on a non-working day or after
business hours in the place of receipt will only be deemed to be given at 9.00
a.m. on the next working day in that place.

 

(c)           A communication
to the Facility Agent will only be effective on actual receipt by it.

 

35.4        Obligors

 

(a)           All formal
communications under the Finance Documents to or from an Obligor must be sent
through the Facility Agent.

 

(b)           All formal
communications under the Finance Documents to or from an Obligor (other than
the Obligors’ Agent) must be sent through the Obligors’ Agent.

 

66

 

(c)           Each Obligor
(other than the Obligors’ Agent) irrevocably appoints the Obligors’ Agent to
act as its agent and irrevocably authorises the Obligors’ Agent to:

 

(i)            give and receive
all communications under the Finance Documents;

 

(ii)           supply all
information concerning itself to any Finance Party; and

 

(iii)          sign all
documents under or in connection with the Finance Documents.

 

(d)           Any communication
given to the Obligors’ Agent in connection with a Finance Document will be
deemed to have been given also to each other Obligor.

 

(e)           The Facility
Agent may assume that any communication made by the Obligors’ Agent is made
with the consent of each other Obligor.

 

35.5        Personal
Liability

 

If an individual
signs a certificate on behalf of a Party and the certificate proves to be
incorrect, the individual will incur no personal liability as a result, unless
the individual acted fraudulently or recklessly in giving the certificate. In
this case any liability of the individual will be determined in accordance with
applicable law.

 

36.          LANGUAGE

 

(a)           Any notice given
in connection with a Finance Document must be in English.

 

(b)           Any other
document provided in connection with a Finance Document must be:

 

(i)            in English; or

 

(ii)           (unless the
Facility Agent otherwise agrees) accompanied by a certified English translation.
In this case, the English translation prevails unless the document is a
statutory or other official document.

 

37.          GOVERNING LAW

 

This Agreement is
governed by English law.

 

38.          JURISDICTION

 

(a)           The English
courts have exclusive jurisdiction to settle any dispute in connection with any
Finance Document.

 

(b)           The English
courts are the most appropriate and convenient courts to settle any such
dispute and each Obligor waives objection to those courts on the grounds of
inconvenient forum or otherwise in relation to proceedings in connection with
any Finance Document.

 

(c)           This Clause is
for the benefit of the Finance Parties only. To the extent allowed by law, a
Finance Party may take:

 

(i)            proceedings in
any other court; and

 

(ii)           concurrent
proceedings in any number of jurisdictions.

 

67

 

39.          WAIVER OF TRIAL BY JURY

 

EACH PARTY WAIVES
ANY RIGHT IT MAY HAVE TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION IN
CONNECTION WITH ANY FINANCE DOCUMENT OR ANY TRANSACTION CONTEMPLATED BY ANY
FINANCE DOCUMENT. THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO TRIAL BY
THE COURT.

 

THIS
AGREEMENT has been entered into on the date stated at the
beginning of this Agreement.

 

68

 

SCHEDULE 1

 

COMMITMENTS

 

	
  Name of
  Original Lender

  	
   

  	
  Commitments

  	
   

  
	
   

  	
   

  	
  (US$)

  	
   

  
	
  Citibank, N.A., London Branch

  	
   

  	
  950,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  The Royal Bank of Scotland Finance (Ireland)

  	
   

  	
  300,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  The Royal Bank of Scotland plc

  	
   

  	
  650,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
  1,900,000,000

  	
   

  

 

69

 

SCHEDULE 2

 

CONDITIONS PRECEDENT DOCUMENTS

 

PART 1

 

TO BE DELIVERED BEFORE FIRST REQUEST

 

1.             Obligors

 

(a)           A
copy of the constitutional documents of each Obligor.

 

(b)           A
resolution of the board of directors of each Obligor approving the terms of,
and the transactions contemplated by, this Agreement.

 

(c)           A
specimen of the signature of each person authorised on behalf of each Obligor
to execute or witness the execution of any Finance Document or to sign or send
any Request, document or notice in connection with any Finance Document.

 

2.             Legal opinions

 

A legal opinion
of Clifford Chance LLP, legal advisers to the Mandated Lead Arrangers and the
Facility Agent substantially in the form distributed to the Lenders prior to
the date of this Agreement, addressed to the Finance Parties.

 

3.             Miscellaneous

 

(a)           A
copy of the Litigation Report.

 

(b)           A
copy of the Original Financial Statements.

 

 

70

 

PART 2

 

FOR AN ADDITIONAL GUARANTOR

 

Additional Guarantors

 

1.             A
Guarantor Accession Agreement, duly executed by the Obligors’ Agent and the
Additional Guarantor.

 

2.             A
copy of the constitutional documents of the Additional Guarantor.

 

3.             A
copy of a resolution of the board of directors of the Additional Guarantor
approving the terms of, and the transactions contemplated by, the Guarantor
Accession Agreement.

 

4.             A
specimen of the signature of each person authorised on behalf of the Additional
Guarantor to execute or witness the execution of any Finance Document.

 

5.             In
the case of an Additional Guarantor incorporated in the U.K., a copy of a
resolution, signed by all (or any lower percentage agreed by the Facility
Agent) of the holders of its issued or allotted shares, approving the terms of,
and the transactions contemplated by, the Guarantor Accession Agreement.

 

6.             A
certificate of an authorised signatory of the Additional Guarantor certifying
that each copy document specified in Part 2 of this Schedule is correct,
complete and in full force and effect as at a date no earlier than the date of
the Guarantor Accession Agreement.

 

7.             If
available, a copy of the latest audited accounts of the Additional Guarantor.

 

8.             For
any Additional Guarantor which is not incorporated under the laws of England
and Wales, evidence that its agent under the Finance Documents for service of
process in England has accepted its appointment.

 

Legal opinions

 

1.             A
legal opinion of legal advisers in England and Wales addressed to the Finance
Parties.

 

2.             If
the Additional Guarantor is incorporated in a jurisdiction other than England
and Wales, a legal opinion from legal advisers in that jurisdiction, addressed
to the Finance Parties.

 

71

 

SCHEDULE 3

 

FORM OF NOTICES

 

PART 1

 

FORM OF REQUEST

 

To:          [l] as
Facility Agent

 

From:      [               ]

 

Date:       [               ]

 

[IMPERIAL TOBACCO FINANCE PLC/IMPERIAL TOBACCO
ENTERPRISE FINANCE LIMITED/IMPERIAL TOBACCO FINANCE (2) PLC] – US$1,900,000,000

Credit Agreement dated [l] 2007

(the Agreement)

 

1.             We
refer to the Agreement. This is a Request.

 

2.             We
wish to [borrow a Loan]/[arrange for a Letter of Credit to be issued] on the
following terms:

 

(a)           Borrower:                          [               ]

 

(b)           Utilisation
Date:                [               ]

 

(c)           Amount/currency:             [               ]

 

(d)           Term:                                 [               ]

 

(e)           [Maturity
Date [if Letter of Credit]:         [         ]

 

(f)            [Beneficiary
[if Letter of Credit]:             [         ]

 

3.             Our
[payment/delivery] instructions are:       [         ].

 

4.             We
confirm that each condition precedent under the Agreement which must be
satisfied on the date of this Request is so satisfied.

 

5.             [We
attach a copy of the proposed Letter of Credit.]

 

6.             This
Request is irrevocable.

 

 

[               ]

 

By:

 

72

 

PART 2

 

FORM OF GUARANTOR ACCESSION AGREEMENT

 

To:          [l] as
Facility Agent

 

From:      Imperial Tobacco
Finance PLC and [Proposed Guarantor]

 

Date:       [               ]

 

IMPERIAL
TOBACCO FINANCE PLC - US$1,900,000,000

Credit Agreement dated [l] 2007

(the Agreement)

 

1.             We
refer to the Agreement. This is a Guarantor Accession Agreement.

 

2.             [Name
of company] of [address/registered office] agrees to become an Additional
Guarantor and to be bound by the terms of the Agreement as an Additional
Guarantor.

 

3.             This Guarantor
Accession Agreement is a Finance Document.

 

4.             This Guarantor
Accession Agreement is governed by English law.

 

 

IMPERIAL
TOBACCO FINANCE PLC

 

By:

 

 

[PROPOSED GUARANTOR]

 

73

 

Schedule
4

 

Calculation of
the Mandatory Cost

 

1.             General

 

(a)           The Mandatory Cost is to
compensate a Lender for the cost of compliance with:

 

(i)            the requirements of the Bank
of England and/or the Financial Services Authority (or, in either case, any
other authority which replaces any of its functions); or

 

(ii)           the requirements of the
European Central Bank.

 

(b)           The Mandatory Cost is
expressed as a percentage rate per annum.

 

(c)           The Mandatory Cost is the
weighted average (weighted in proportion to the percentage share of each Lender
in the relevant Loan) of the rates for the Lenders calculated by the Facility
Agent in accordance with this Schedule on the first day of a Term (or as soon
as possible after then).

 

(d)           The Facility Agent must
distribute each amount of Mandatory Cost among the Lenders on the basis of the
rate for each Lender.

 

(e)           Any determination by the
Facility Agent pursuant to this Schedule will be, in the absence of manifest
error, conclusive and binding on all the Parties.

 

2.             For a Lender lending from a
Facility Office in the U.K.

 

(a)           The relevant rate for a
Lender lending from a Facility Office in the U.K. is calculated in accordance
with the following formulae:

 

for a Loan in Sterling:

 

 

for any other Loan:

 

 

where on the day of application of the formula:

 

A             is the percentage of that
Lender's eligible liabilities (in excess of any stated minimum) which the Bank
of England requires it to hold on a non-interest-bearing deposit account in
accordance with its cash ratio requirements;

 

B             is the percentage rate of
LIBOR and, if a Loan is due and payable but unpaid by a Borrower, the
additional rate of interest specified in Clause 11.4 (Interest on overdue
amounts), for the relevant Term;

 

C             is the percentage (if any)
of that Lender's eligible liabilities which the Bank of England requires it to
place as an interest bearing special deposit;

 

74

 

D             is the percentage rate per
annum payable by the Bank of England on interest bearing special deposits; and

 

E              is calculated by the
Facility Agent as being the average of the rates of charge under the fees rules
supplied by the Reference Banks to the Facility Agent under paragraph (d)
below and expressed in pounds per £1 million.

 

(b)           For the purposes of this
paragraph 2:

 

(i)            eligible liabilities and
special deposit(s) have the meanings
given to them at the time of application of the formula pursuant to the Bank of
England Act 1988 or (as appropriate) by the Bank of England;

 

(ii)           fees rules
means the then current rules on periodic fees in the Supervision Manual of the
FSA Handbook or any other law or regulation as may then be in force for the
payment of fees for the acceptance of deposits; 

 

(iii)          fee tariffs
means the fee tariffs specified in the fees rules under fee-block Category A1
(Deposit acceptors) (ignoring any minimum fee or zero rated fee required
pursuant to the fees rules but applying any applicable discount rate); and

 

(iv)          tariff base has
the meaning given to it in, and will be calculated in accordance with, the fees
rules.

 

(c)           (i)            In the
application of the formulae, A, B, C and D are included as figures and not as
percentages, e.g. if A = 0.5% and B = 15%, AB is calculated as 0.5 x 15. A
negative result obtained by subtracting D from B is taken as zero.

 

(ii)           Each rate calculated in
accordance with a formula is, if necessary, rounded upward to four decimal
places.

 

(d)           If
requested by the Facility Agent, each Reference Bank must, as soon as
practicable after publication by the Financial Services Authority, supply to
the Facility Agent the rate of charge payable by that Reference Bank to the
Financial Services Authority under the fees rules for that financial year of
the Financial Services Authority (calculated by that Reference Bank as being
the average of the fee tariffs applicable to that Reference Bank for that
financial year) and expressed in pounds per £1 million of the tariff base of
that Reference Bank.

 

(e)           Each
Lender must supply to the Facility Agent the information required by it to make
a calculation of the rate for that Lender. In particular, each Lender must
supply the following information on or prior to the date on which it becomes a
Lender:

 

(i)            the jurisdiction of its
Facility Office; and

 

(ii)           any other information that
the Facility Agent reasonably requires for that purpose.

 

Each Lender must promptly notify the Facility Agent of any change to
the information supplied to it under this paragraph.

 

(f)            The percentages of each
Lender for the purposes of A and C above and the rates of charge of each
Reference Bank for the purpose of E above are determined by the Facility Agent
based upon the information supplied to it under paragraphs (d) and (e) above. Unless
a Lender notifies the Facility Agent to the contrary, the Facility Agent may
assume that the Lender's obligations in respect of cash ratio deposits and
special deposits are the same as those of a typical bank from its jurisdiction
of incorporation with a Facility Office in the U.K.

 

75

 

(g)           The Facility Agent has no
liability to any Party if its calculation over or under compensates any Lender.
The Facility Agent is entitled to assume that the information provided by any
Lender or Reference Bank under this Schedule is true and correct in all
respects.

 

3.             For a Lender
lending from a Facility Office in a Participating Member State

 

(a)           The
relevant rate for a Lender lending from a Facility Office in a Participating
Member State is the percentage rate per annum notified by that Lender to the
Facility Agent. This percentage rate per annum must be certified by that Lender
in its notice to the Facility Agent as its reasonable determination of the cost
(expressed as a percentage of that Lender's share in all Loans made from that
Facility Office) of complying with the minimum reserve requirements of the
European Central Bank in respect of Loans made from that Facility Office.

 

(b)           If a Lender fails to specify
a rate under paragraph (a) above, the Facility Agent will assume that the Lender
has not incurred any such cost.

 

4.             Changes

 

(a)           The Facility Agent may,
after consultation with the Obligors' Agent and the Lenders, determine and
notify all the Parties of any amendment to this Schedule which is required to
reflect:

 

(i)            any change in law or
regulation; or

 

(ii)           any requirement imposed by
the Bank of England, the Financial Services Authority or the European Central
Bank (or, in any case, any successor authority).

 

(b)           If the Facility Agent, after
consultation with the Obligors' Agent, determines that the Mandatory Cost for a
Lender lending from a Facility Office in the U.K. can be calculated by
reference to a screen, the Facility Agent may notify all the Parties of any
amendment to this Agreement which is required to reflect this.

 

76

 

Schedule 5

 

Form of Transfer
Certificate

 

To:          [•] as
Facility Agent

 

From:      [The Existing
Lender] (the Existing Lender) and [the New
Lender] (the New Lender)

 

Date:       [               ]

 

IMPERIAL
TOBACCO FINANCE PLC - US$1,900,000,000

Credit Agreement dated [•] 2007

(the Agreement)

 

1.             We
refer to the Agreement. This is a Transfer Certificate.

 

2.             The
Existing Lender transfers by novation to the New Lender the Existing Lender's
rights and obligations referred to in the Schedule below in accordance with the
terms of the Agreement.

 

3.             The
proposed Transfer Date is
[               ].

 

4.             The
administrative details of the New Lender for the purposes of the Agreement are
set out in the Schedule.

 

5.             [The
Lender is a U.K. Non-Bank Lender.]  

 

6.             This
Transfer Certificate is governed by English law.

 

THE
SCHEDULE

 

Rights
and obligations to be transferred by novation

[insert relevant details,
including applicable Commitment (or part)]

 

Administrative
details of the New Lender

[insert details of Facility
Office, address for notices and payment details etc.]

 

	
  [EXISTING LENDER]

  	
  [NEW LENDER]

  
	
   

  	
   

  
	
  By:

  	
  By:

  
	
   

  	
   

  
	
  The Transfer Date is confirmed by the Facility Agent as
  [               ].

  
	
   

  	
   

  
	
  [FACILITY AGENT]

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  

 

(1)           Include if
applicable.

 

77

 

Schedule 6

 

Form of
Compliance Certificate

 

To:          [•] as
Facility Agent

 

From:      Imperial Tobacco
Finance PLC

 

Date:       [               ]

 

IMPERIAL
TOBACCO FINANCE PLC - U.S.$1,900,000,000

Credit Agreement dated [•] 2007

(the Agreement)

 

1.             We
refer to the Agreement. This is a Compliance Certificate.

 

2.             We confirm that as at
[insert relevant testing date]:

 

(a)           Consolidated EBITDA was
[               ]
[(including Proforma EBITDA of
[               ]
in connection with the acquisition of
[               ])](2)
and Consolidated Total Net Borrowings were
[               ]
and therefore, the ratio of Consolidated Total Net Borrowings to Consolidated
EBITDA was
[               ];
and

 

(b)           Consolidated EBITDA
[(excluding Proforma EBITDA) was
[               ]]
and Consolidated Net Interest Payable was
[               ]
therefore, the ratio of Consolidated EBITDA to Consolidated Net Interest
Payable was [     ] to 1.

 

3.             We
set out below calculations establishing the figures in paragraph 2 above:

 

[               ].

 

4.             We
confirm that the following companies were Principal Subsidiaries at [insert
relevant testing date]: 

 

[               ].

 

5.             [We
confirm that no Default is outstanding as at [insert relevant testing
date].](3)

 

 

IMPERIAL
TOBACCO FINANCE PLC

 

By:

 

 

(2)           Include only for
any Measurement Period which includes the effective date of any acquisition or
investment.

(3)           This
statement need only be made if requested by the Facility Agent pursuant to
Clause Error! Reference source not
found. (Compliance Certificates). If this statement has
been requested by the Facility Agent but cannot be made, the certificate should
identify any Default that is outstanding and the steps, if any, being taken to
remedy it.

 

78

 

Schedule 7

 

Form of
Resignation Request

 

To:          [•] as
Facility Agent

 

From:      Imperial Tobacco
Finance PLC

 

Date:       [               ]

 

IMPERIAL
TOBACCO FINANCE PLC - US$1,900,000,000

Credit Agreement dated [•] 2007

(the Agreement)

 

1.             We
refer to the Agreement. This is a Resignation Request.

 

2.             We
request that [resigning Guarantor] be released from its obligations as a
Guarantor under the Agreement.

 

3.             We
confirm that no Default is outstanding or would result from the acceptance of
this Resignation Request.

 

4.             We
confirm that as at the date of this Resignation Request no amount owed by
[resigning Guarantor] under the Agreement is outstanding.

 

5.             This
Resignation Request is governed by English law.

 

	
  IMPERIAL TOBACCO FINANCE PLC

  	
  [Relevant Guarantor]

  
	
   

  	
   

  
	
  By:

  	
  By:

  
	
   

  	
   

  
	
   

  	
   

  
	
  The Facility Agent confirms that this resignation takes effect on
  [               ].

  
	
   

  	
   

  
	
  [FACILITY AGENT]

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  
			

 

79

 

Schedule 8

 

Form of Letter of Credit

 

To:          [Beneficiary]

(the Beneficiary)

 

[DATE]

 

Dear Sir,

 

Irrevocable
Standby Letter of Credit no.
[          ]

 

At the request of
[                    ],
The Royal Bank of Scotland plc (the Issuing Bank)
issues this irrevocable standby letter of credit (Letter of
Credit) in your favour on the following terms:

 

1.             Definitions

 

In this Letter of Credit:

 

Business Day means a day
(other than a Saturday or a Sunday) on which banks are open for general
business in [London].

 

Demand means a demand
for a payment under this Letter of Credit in the form of the schedule to this
Letter of Credit.

 

Expiry Date means
[                         ].

 

Total L/C Amount means
[                         ].

 

2.             Issuing Bank's
agreement

 

(a)           The Beneficiary may request
a drawing [or drawings] under this Letter of Credit by giving to the Issuing
Bank a duly completed Demand. A Demand may not be given after the Expiry Date.

 

(b)           Subject to the terms of this
Letter of Credit, the Issuing Bank unconditionally and irrevocably undertakes
to the Beneficiary that, within [10] Business Days of receipt by it of a Demand
validly presented under this Letter of Credit, it must pay to the Beneficiary
the amount which is demanded for payment in that Demand.

 

(c)           The Issuing Bank will not be
obliged to make a payment under this Letter of Credit if as a result the
aggregate of all payments made by it under this Letter of Credit would exceed
the Total L/C Amount.

 

3.             Expiry

 

(a)           On
[           ] p.m.
([London] time) on the Expiry Date the obligations of the Issuing Bank under
this Letter of Credit will cease with no further liability on the part of the
Issuing Bank except for any Demand validly presented under the Letter of Credit
that remains unpaid.

 

80

 

(b)           The Issuing Bank will be
released from its obligations under this Letter of Credit on the date prior to
the Expiry Date (if any) notified by the Beneficiary to the Issuing Bank as the
date upon which the obligations of the Issuing Bank under this Letter of Credit
are released.

 

(c)           When the Issuing Bank is no
longer under any obligation under this Letter of Credit, the Beneficiary must
return the original of this Letter of Credit to the Issuing Bank.

 

4.             Payments

 

All payments under this Letter of Credit must be made in
[           ] and for
value on the due date to the account of the Beneficiary specified in the
Demand.

 

5.             Delivery of
Demand

 

Each Demand must be in writing, and may be given in person, by post,
fax or any other electronic communication and must be received by the Issuing
Bank at its address as follows:

 

[

 

]

 

For the purpose of this Letter of Credit, electronic communication will
be treated as being in writing.

 

6.             Assignment

 

The Beneficiary's rights under this Letter of Credit may not be
assigned or transferred.

 

7.             ISP

 

Except to the extent it is inconsistent with the express terms of this
Letter of Credit, this Letter of Credit is subject to the International Standby
Practices 1998 (International Chamber of Commerce Publication No. 590).

 

8.             Governing Law

 

This Letter of Credit is governed by English law.

 

9.             Jurisdiction

 

The English courts have exclusive jurisdiction to settle any dispute in
connection with this Letter of Credit.

 

Yours faithfully,

 

 

THE ROYAL BANK OF
SCOTLAND PLC

 

By:

 

81

 

SCHEDULE

 

FORM
OF DEMAND

 

To:          The Royal Bank of
Scotland plc

 

[DATE]

 

Dear Sirs

 

Irrevocable
Standby Letter of Credit no. [           ] issued in favour of [BENEFICIARY] (the Letter of
Credit)

 

We refer to the
Letter of Credit. Terms defined in the Letter of Credit have the same meaning
when used in this Demand.

 

1.             We
certify that the sum of
[          ] is due [and has
remained unpaid for at least [    ] Business Days under [set
out underlying contract or agreement]]. We therefore demand payment of the sum
of [          ].

 

2.             Payment
should be made to the following account:

 

Name:

 

Account Number:

 

Bank:

 

3.             The
date of this Demand is not later than the Expiry Date.

 

Yours faithfully

 

 

	
  (Authorised Signatory)

  	
   

  	
  (Authorised Signatory)

  

 

 

For

[BENEFICIARY]

 

82

 

Signatories

 

Borrowers

 

IMPERIAL
TOBACCO FINANCE PLC

 

By:          JOHN JONES

 

 

IMPERIAL
TOBACCO FINANCE (2) PLC

 

By:          JOHN JONES

 

 

IMPERIAL
TOBACCO ENTERPRISE FINANCE LIMITED

 

By:          JOHN JONES

 

 

Original
Guarantors

 

IMPERIAL
TOBACCO GROUP PLC

 

By:          JOHN JONES

 

 

IMPERIAL
TOBACCO LIMITED

 

By:          JOHN JONES

 

 

Mandated
Lead Arrangers

 

CITIGROUP GLOBAL MARKETS LIMITED

 

By:          PAUL
GIBBS

 

 

THE ROYAL BANK OF SCOTLAND PLC

 

By:          VICTORIA
READ

 

83

 

The
Lenders

 

CITIBANK,
N.A., LONDON BRANCH

 

By:          PAUL
GIBBS

 

 

THE
ROYAL BANK OF SCOTLAND FINANCE (IRELAND)

 

By:          GER PRENDERGAST                       FERGUS
O'DONNELL

 

 

THE
ROYAL BANK OF SCOTLAND PLC

 

By:          IAN ROBERTSON

 

 

 

Issuing
Bank

 

THE
ROYAL BANK OF SCOTLAND PLC

 

By:          IAN ROBERTSON

 

 

 

Facility
Agent

 

THE
ROYAL BANK OF SCOTLAND PLC

 

By:          MARK HARRISON

 

84

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00133-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00133-of-00352.parquet"}]]