Document:

EX-4.1 Indenture

 

Exhibit 4.1

VECTOR GROUP LTD.

AND EACH OF THE GUARANTORS PARTY HERETO

11% SENIOR SECURED NOTES DUE 2015

 

INDENTURE

Dated as of August 16, 2007

U.S. BANK NATIONAL ASSOCIATION

as Trustee and as Collateral Agent

 

 

 

CROSS-REFERENCE TABLE*

	 	 	 
	Trust Indenture	 	 
	Act Section	 	Indenture Section
	310(a)(1)
	 	7.10
	(a)(2)
	 	7.10
	(a)(3)
	 	N.A.
	(a)(4)
	 	N.A.
	(a)(5)
	 	7.10
	(b)
	 	7.10
	(c)
	 	N.A.
	311(a)
	 	7.11
	(b)
	 	7.11
	(c)
	 	N.A.
	312(a)
	 	2.05
	(b)
	 	13.03
	(c)
	 	13.03
	313(a)
	 	7.06
	(b)(1)
	 	N.A.
	(b)(2)
	 	7.06; 7.07
	(c)
	 	7.06; 13.02
	(d)
	 	7.06
	314(a)
	 	4.03; 13.02; 13.05
	(b)
	 	10.08
	(c)(1)
	 	13.04
	(c)(2)
	 	13.04
	(c)(3)
	 	N.A.
	(d)
	 	10.05; 10.09; 10.10
	(e)
	 	13.05
	(f)
	 	N.A.
	315(a)
	 	7.01
	(b)
	 	7.05; 13.02
	(c)
	 	7.01
	(d)
	 	7.01
	(e)
	 	6.11
	316(a) (last sentence)
	 	2.09
	(a)(1)(A)
	 	6.05
	(a)(1)(B)
	 	6.04
	(a)(2)
	 	N.A.
	(b)
	 	6.07
	(c)
	 	2.12
	317(a)(1)
	 	6.08
	(a)(2)
	 	6.09
	(b)
	 	2.04
	318(a)
	 	13.01
	(b)
	 	N.A.
	(c)
	 	13.01

 

			
	 	 	N.A. means not applicable.
	 
	*	 	This Cross Reference Table is not part of the Indenture.

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page
	 

	 	ARTICLE 1

DEFINITIONS AND INCORPORATION

BY REFERENCE	 	 	 	 
	 
	 	 	 	 	 	 
	Section 1.01

	 	Definitions
	 	 	1	 
	Section 1.02

	 	Other Definitions
	 	 	22	 
	Section 1.03

	 	Incorporation by Reference of Trust Indenture Act
	 	 	22	 
	Section 1.04

	 	Rules of Construction
	 	 	22	 
	 
	 	 	 	 	 	 
	 

	 	ARTICLE 2

THE NOTES	 	 	 	 
	 
	 	 	 	 	 	 
	Section 2.01

	 	Form and Dating
	 	 	23	 
	Section 2.02

	 	Execution and Authentication
	 	 	23	 
	Section 2.03

	 	Registrar and Paying Agent
	 	 	24	 
	Section 2.04

	 	Paying Agent to Hold Money in Trust
	 	 	24	 
	Section 2.05

	 	Holder Lists
	 	 	24	 
	Section 2.06

	 	Transfer and Exchange
	 	 	25	 
	Section 2.07

	 	Replacement Notes
	 	 	36	 
	Section 2.08

	 	Outstanding Notes
	 	 	37	 
	Section 2.09

	 	Treasury Notes
	 	 	37	 
	Section 2.10

	 	Temporary Notes
	 	 	37	 
	Section 2.11

	 	Cancellation
	 	 	37	 
	Section 2.12

	 	Defaulted Interest
	 	 	38	 
	 
	 	 	 	 	 	 
	 

	 	ARTICLE 3

REDEMPTION AND PREPAYMENT	 	 	 	 
	 
	 	 	 	 	 	 
	Section 3.01

	 	Notices to Trustee
	 	 	38	 
	Section 3.02

	 	Selection of Notes to Be Redeemed or Purchased
	 	 	38	 
	Section 3.03

	 	Notice of Redemption
	 	 	39	 
	Section 3.04

	 	Effect of Notice of Redemption
	 	 	39	 
	Section 3.05

	 	Deposit of Redemption or Purchase Price
	 	 	40	 
	Section 3.06

	 	Notes Redeemed or Purchased in Part
	 	 	40	 
	Section 3.07

	 	Optional Redemption
	 	 	40	 
	Section 3.08

	 	Mandatory Redemption
	 	 	41	 
	Section 3.09

	 	Offer to Purchase by Application of Excess Proceeds
	 	 	41	 
	 
	 	 	 	 	 	 
	 

	 	ARTICLE 4

COVENANTS	 	 	 	 
	 
	 	 	 	 	 	 
	Section 4.01

	 	Payment of Notes
	 	 	43	 
	Section 4.02

	 	Maintenance of Office or Agency
	 	 	43	 
	Section 4.03

	 	Reports
	 	 	44	 
	Section 4.04

	 	Compliance Certificate
	 	 	45	 
	Section 4.05

	 	Taxes
	 	 	45	 
	Section 4.06

	 	Stay, Extension and Usury Laws
	 	 	45	 
	Section 4.07

	 	Restricted Payments
	 	 	46	 
	Section 4.08

	 	Dividend and Other Payment Restrictions Affecting Subsidiaries
	 	 	47	 
	Section 4.09

	 	Incurrence of Indebtedness and Issuance of Preferred Stock
	 	 	49	 
	Section 4.10

	 	Asset Sales
	 	 	52	 

 

 

	 	 	 	 	 	 	 
	 	 	 	 	Page
	Section 4.11

	 	Transactions with Affiliates
	 	 	53	 
	Section 4.12

	 	Liens
	 	 	55	 
	Section 4.13

	 	Corporate Existence
	 	 	55	 
	Section 4.14

	 	Offer to Repurchase Upon Change of Control
	 	 	55	 
	Section 4.15

	 	Limitation on Sale and Leaseback Transactions
	 	 	57	 
	Section 4.16

	 	Payments for Consent
	 	 	57	 
	Section 4.17

	 	Additional Note Guarantees
	 	 	57	 
	Section 4.18

	 	Unrestricted Subsidiaries
	 	 	57	 
	 
	 	 	 	 	 	 
	 

	 	ARTICLE 5

SUCCESSORS	 	 	 	 
	 
	 	 	 	 	 	 
	Section 5.01

	 	Merger, Consolidation, or Sale of Assets
	 	 	58	 
	Section 5.02

	 	Successor Corporation Substituted
	 	 	59	 
	 
	 	 	 	 	 	 
	 

	 	ARTICLE 6

DEFAULTS AND REMEDIES	 	 	 	 
	 
	 	 	 	 	 	 
	Section 6.01

	 	Events of Default
	 	 	59	 
	Section 6.02

	 	Acceleration
	 	 	61	 
	Section 6.03

	 	Other Remedies
	 	 	62	 
	Section 6.04

	 	Waiver of Past Defaults
	 	 	62	 
	Section 6.05

	 	Control by Majority
	 	 	62	 
	Section 6.06

	 	Limitation on Suits
	 	 	62	 
	Section 6.07

	 	Rights of Holders of Notes to Receive Payment
	 	 	63	 
	Section 6.08

	 	Collection Suit by Trustee
	 	 	63	 
	Section 6.09

	 	Trustee May File Proofs of Claim
	 	 	63	 
	Section 6.10

	 	Priorities
	 	 	64	 
	Section 6.11

	 	Undertaking for Costs
	 	 	64	 
	 
	 	 	 	 	 	 
	 

	 	ARTICLE 7

TRUSTEE	 	 	 	 
	 
	 	 	 	 	 	 
	Section 7.01

	 	Duties of Trustee
	 	 	64	 
	Section 7.02

	 	Rights of Trustee
	 	 	65	 
	Section 7.03

	 	Individual Rights of Trustee
	 	 	66	 
	Section 7.04

	 	Trustee’s Disclaimer
	 	 	67	 
	Section 7.05

	 	Notice of Defaults
	 	 	67	 
	Section 7.06

	 	Reports by Trustee to Holders of the Notes
	 	 	67	 
	Section 7.07

	 	Compensation and Indemnity
	 	 	67	 
	Section 7.08

	 	Replacement of Trustee
	 	 	68	 
	Section 7.09

	 	Successor Trustee by Merger, etc
	 	 	69	 
	Section 7.10

	 	Eligibility; Disqualification
	 	 	69	 
	Section 7.11

	 	Preferential Collection of Claims Against Company
	 	 	69	 
	 
	 	 	 	 	 	 
	 

	 	ARTICLE 8

LEGAL DEFEASANCE AND COVENANT DEFEASANCE	 	 	 	 
	 
	 	 	 	 	 	 
	Section 8.01

	 	Option to Effect Legal Defeasance or Covenant Defeasance
	 	 	69	 
	Section 8.02

	 	Legal Defeasance and Discharge
	 	 	70	 
	Section 8.03

	 	Covenant Defeasance
	 	 	70	 
	Section 8.04

	 	Conditions to Legal or Covenant Defeasance
	 	 	71	 
	Section 8.05

	 	Deposited Money and Government Securities to be Held in Trust;
Other Miscellaneous Provisions
	 	 	72	 
	Section 8.06

	 	Repayment to Company
	 	 	72	 

 

 

	 	 	 	 	 	 	 
	 	 	 	 	Page
	Section 8.07

	 	Reinstatement
	 	 	73	 
	 
	 	 	 	 	 	 
	 

	 	ARTICLE 9

AMENDMENT, SUPPLEMENT AND WAIVER	 	 	 	 
	 
	 	 	 	 	 	 
	Section 9.01

	 	Without Consent of Holders of Notes
	 	 	73	 
	Section 9.02

	 	With Consent of Holders of Notes
	 	 	74	 
	Section 9.03

	 	Compliance with Trust Indenture Act
	 	 	75	 
	Section 9.04

	 	Revocation and Effect of Consents
	 	 	75	 
	Section 9.05

	 	Notation on or Exchange of Notes
	 	 	76	 
	Section 9.06

	 	Trustee to Sign Amendments, etc
	 	 	76	 
	 
	 	 	 	 	 	 
	 

	 	ARTICLE 10

COLLATERAL AND SECURITY	 	 	 	 
	 
	 	 	 	 	 	 
	Section 10.01

	 	Security
	 	 	76	 
	Section 10.02

	 	Equal and Ratable Sharing of Collateral by Holders of Parity
Lien Debt
	 	 	76	 
	Section 10.03

	 	Release of Liens in Respect of Note Guarantees
	 	 	76	 
	Section 10.04

	 	Relative Rights
	 	 	77	 
	Section 10.05

	 	Further Assurances, Compliance with Trust Indenture Act
	 	 	78	 
	Section 10.06

	 	Collateral Agent
	 	 	79	 
	Section 10.07

	 	Authorization of Actions to Be Taken
	 	 	80	 
	Section 10.08

	 	Recording and Opinions
	 	 	80	 
	Section 10.09

	 	Certificates of the Company
	 	 	81	 
	Section 10.10

	 	Certificates of the Trustee
	 	 	82	 
	Section 10.11

	 	Environmental Indemnity
	 	 	82	 
	 
	 	 	 	 	 	 
	 

	 	ARTICLE 11

NOTE GUARANTEES	 	 	 	 
	 
	 	 	 	 	 	 
	Section 11.01

	 	Guarantee
	 	 	82	 
	Section 11.02

	 	Limitation on Guarantor Liability
	 	 	83	 
	Section 11.03

	 	Execution and Delivery of Note Guarantee
	 	 	84	 
	Section 11.04

	 	Guarantors May Consolidate, etc., on Certain Terms
	 	 	84	 
	Section 11.05

	 	Releases
	 	 	85	 
	 
	 	 	 	 	 	 
	 

	 	ARTICLE 12

SATISFACTION AND DISCHARGE	 	 	 	 
	 
	 	 	 	 	 	 
	Section 12.01

	 	Satisfaction and Discharge
	 	 	86	 
	Section 12.02

	 	Application of Trust Money
	 	 	86	 
	 
	 	 	 	 	 	 
	 

	 	ARTICLE 13

MISCELLANEOUS	 	 	 	 
	 
	 	 	 	 	 	 
	Section 13.01

	 	Trust Indenture Act Controls
	 	 	87	 
	Section 13.02

	 	Notices
	 	 	87	 
	Section 13.03

	 	Communication by Holders of Notes with Other Holders of Notes
	 	 	88	 
	Section 13.04

	 	Certificate and Opinion as to Conditions Precedent
	 	 	88	 
	Section 13.05

	 	Statements Required in Certificate or Opinion
	 	 	89	 
	Section 13.06

	 	Rules by Trustee and Agents
	 	 	89	 
	Section 13.07

	 	No Personal Liability of Directors, Officers, Employees
and Stockholders
	 	 	89	 
	Section 13.08

	 	Governing Law
	 	 	89	 
	Section 13.09

	 	No Adverse Interpretation of Other Agreements
	 	 	89	 
	Section 13.10

	 	Successors
	 	 	90	 
	Section 13.11

	 	Severability
	 	 	90	 

 

 

	 	 	 	 	 	 	 
	 	 	 	 	Page
	Section 13.12

	 	Counterpart Originals
	 	 	90	 
	Section 13.13

	 	Table of Contents, Headings, etc
	 	 	90	 
	 
	 	 	 	 	 	 
	 

	 	EXHIBITS	 	 	 	 
	 
	 	 	 	 	 	 
	Exhibit A

	 	FORM OF NOTE	 	 	 	 
	Exhibit B

	 	FORM OF CERTIFICATE OF TRANSFER	 	 	 	 
	Exhibit C

	 	FORM OF CERTIFICATE OF EXCHANGE	 	 	 	 
	Exhibit D

	 	FORM OF CERTIFICATE OF ACQUIRING INSTITUTIONAL ACCREDITED

INVESTOR	 	 	 	 
	Exhibit E

	 	FORM OF NOTATION OF GUARANTEE	 	 	 	 
	Exhibit F

	 	FORM OF SUPPLEMENTAL INDENTURE	 	 	 	 

 

 

     INDENTURE dated as of August 16, 2007 among Vector Group Ltd., a Delaware corporation,
the Guarantors (as defined) and U.S. Bank National Association as Trustee (as defined) and as
Collateral Agent (as defined).

     The Company, the Guarantors and the Trustee agree as follows for the benefit of each other and
for the equal and ratable benefit of the Holders (as defined) of the 11% Senior Secured Notes due
2015 (the “Notes”):

ARTICLE 1

DEFINITIONS AND INCORPORATION

BY REFERENCE

Section 1.01 Definitions.

     “100 Maple LLC” means 100 Maple LLC, a Delaware limited liability company.

     “144A Global Note” means a Global Note substantially in the form of Exhibit A hereto bearing
the Global Note Legend and the Private Placement Legend and deposited with or on behalf of, and
registered in the name of, the Depositary or its nominee that will be issued in a denomination
equal to the outstanding principal amount of the Notes sold in reliance on Rule 144A.

     “ABL Documents” has the meaning set forth in the Intercreditor Agreement.

     “ABL Lender” has the meaning set forth in the Intercreditor Agreement.

     “Accelerated Note Conversion” means the conversion in advance of the scheduled conversion by
their terms of any convertible debt securities issued by the Company that are held by Affiliates of
the Company, in exchange for the payment by the Company to such Affiliates of accrued interest and
additional Equity Interests in the Company (other than Disqualified Stock).

     “Acquired Debt” means, with respect to any specified Person:

     (1) Indebtedness of any other Person existing at the time such other Person is merged
with or into such specified Person or became a Guarantor, whether or not such Indebtedness
is incurred in connection with, or in contemplation of, such other Person merging with or
into such specified Person or becoming a Guarantor; and

     (2) Indebtedness secured by a Lien encumbering any asset acquired by such specified
Person.

     “Additional Notes” means additional Notes (other than the Initial Notes) issued under this
Indenture in accordance with Sections 2.02 and 4.09 hereof, as part of the same series as the
Initial Notes.

     “Affiliate” of any specified Person means any other Person directly or indirectly controlling
or controlled by or under direct or indirect common control with such specified Person. For
purposes of this definition, “control,” as used with respect to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the management or policies
of such Person, whether through the ownership of voting securities, by agreement or otherwise;
provided that beneficial ownership of 10% or more of the Voting Stock of a Person will be deemed to
be control. For purposes of this definition, the terms “controlling,” “controlled by” and “under
common control with” have correlative meanings.

1

 

     “Agent” means any Registrar, co-registrar, Paying Agent or additional paying agent.

     “Applicable Premium” means, with respect to any Note on any redemption date, as determined by
the Company, the greater of:

     (1) 1.0% of the principal amount of the Note; or

     (2) the excess of: (a) the present value at the redemption date of (i) the redemption
price of the Note at August 15, 2011, (such redemption price being set forth in the table
appearing in Section 3.07 hereof) plus (ii) all required interest payments due on the Note
through August 15, 2011, (excluding accrued but unpaid interest to the applicable redemption
date), computed using a discount rate equal to the Treasury Rate as of such redemption date
plus 50 basis points; over (b) the principal amount of the Note, if greater.

     “Applicable Procedures” means, with respect to any transfer or exchange of or for beneficial
interests in any Global Note, the rules and procedures of the Depositary, Euroclear and Clearstream
that apply to such transfer or exchange.

     “Asset Sale” means:

     (1) the sale, lease, conveyance or other disposition of any assets or rights; provided
that the sale, lease, conveyance or other disposition of all or substantially all of the
assets of the Company and the Guarantors taken as a whole will be governed by the provisions
of Section 4.14 and or the provisions of Section 5.01 and not by the provisions of Section
4.10; and

     (2) the issuance or sale of Equity Interests in any of the Guarantors.

     Notwithstanding the preceding, none of the following items will be deemed to be an Asset Sale:

     (1) any single transaction or series of related transactions that involves assets
having a Fair Market Value of less than $3.0 million;

     (2) a transfer of assets between or among the Company and the Guarantors;

     (3) an issuance of Equity Interests by a Guarantor to the Company or to another
Guarantor;

     (4) the sale, lease, sublease, license, sublicense, conveyance or other disposition of
products, services, inventory, or accounts receivable and related assets (including
participations therein) in the ordinary course of business, including leases with respect to
facilities that are temporarily not in use or pending their disposition, and any sale or
other disposition of damaged, worn-out or obsolete assets in the ordinary course of business
or any other property that is uneconomic or no longer useful to the conduct of the business
of the Company or the Guarantors;

     (5) the sale or other disposition of cash or Cash Equivalents or Investments that are
Permitted Investments;

     (6) a Restricted Payment that does not violate the provisions of Section 4.07 or a
Permitted Investment.

2

 

     (7) the licensing of intellectual property to third Persons on customary terms as
determined in good faith by the Board of Directors of the Company;

     (8) to the extent allowable under Section 1031 of the Internal Revenue Code of 1986,
any exchange of like property (excluding any boot thereon) for use in the business of the
Company or its Subsidiaries;

     (9) transfers of property subject to casualty or condemnation proceedings; and

     (10) the granting of Permitted Liens.

     “Attributable Debt” in respect of a sale and leaseback transaction means, at the time of
determination, the present value of the obligation of the lessee for net rental payments during the
remaining term of the lease included in such sale and leaseback transaction including any period
for which such lease has been extended or may, at the option of the lessor, be extended. Such
present value shall be calculated using a discount rate equal to the rate of interest implicit in
such transaction, determined in accordance with GAAP; provided, however, that if such sale and
leaseback transaction results in a Capital Lease Obligation, the amount of Indebtedness represented
thereby will be determined in accordance with the definition of “Capital Lease Obligation.”

     “Bankruptcy Law” means Title 11, U.S. Code or any similar federal or state law for the relief
of debtors.

     “Beneficial Owner” has the meaning set forth in Rule 13d-3 and Rule 13d-5 under the Exchange
Act, except that in calculating the beneficial ownership of any particular “person” (as that term
is used in Section 13(d)(3) of the Exchange Act), such “person” will be deemed to have beneficial
ownership of all securities that such “person” has the right to acquire by conversion or exercise
of other securities, whether such right is currently exercisable or is exercisable only after the
passage of time. The terms “Beneficially Owns” and “Beneficially Owned” have a corresponding
meaning.

     “Board of Directors” means:

     (1) with respect to a corporation, the board of directors of the corporation or any
committee thereof duly authorized to act on behalf of such board;

     (2) with respect to a partnership, the Board of Directors of the general partner of the
partnership;

     (3) with respect to a limited liability company, the managing member or members or any
controlling committee of managing members thereof; and;

     (4) with respect to any other Person, the board or committee of such Person serving a
similar function.

     “Broker-Dealer” has the meaning set forth in the Registration Rights Agreement.

     “Business Day” means any day other than a Legal Holiday.

     “Capital Lease Obligation” means, at the time any determination is to be made, the amount of
the liability in respect of a capital lease that would at that time be required to be capitalized
on a balance sheet prepared in accordance with GAAP, and the Stated Maturity thereof shall be the
date of the last

3

 

payment of rent or any other amount due under such lease prior to the first date upon which
such lease may be prepaid by the lessee without payment of a penalty.

     “Capital Stock” means:

     (1) in the case of a corporation, corporate stock;

     (2) in the case of an association or business entity, any and all shares, interests,
participations, rights or other equivalents (however designated) of corporate stock;

     (3) in the case of a partnership or limited liability company, partnership interests
(whether general or limited) or membership interests; and

     (4) any other interest or participation that confers on a Person the right to receive a
share of the profits and losses of, or distributions of assets of, the issuing Person, but
excluding from all of the foregoing any debt securities convertible into Capital Stock,
whether or not such debt securities include any right of participation with Capital Stock.

     “Cash Equivalents” means:

     (1) United States dollars and, solely for purposes of the definition of “Permitted
Investments,” any national currency of any other country in which the Company or its
Guarantors do business;

     (2) securities issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality of the United States government (provided that
the full faith and credit of the United States is pledged in support of those securities)
having maturities of not more than one year from the date of acquisition;

     (3) certificates of deposit, time deposits and eurodollar time deposits with maturities
of one year or less from the date of acquisition, bankers’ acceptances with maturities not
exceeding one year and overnight bank deposits, in each case, with any domestic commercial
bank or commercial banking institution that is a member of the Federal Reserve System having
capital and surplus in excess of $500.0 million and a Thomson Bank Watch Rating of “B” or
better;

     (4) repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clauses (2) and (3) above or (7) below entered into
with any financial institution meeting the qualifications specified in clause (3) above or
(7) below;

     (5) commercial paper having one of the two highest ratings obtainable from Moody’s or
S&P and, in each case, maturing within one year after the date of acquisition;

     (6) money market funds at least 95% of the assets of which constitute Cash Equivalents
of the kinds described in clauses (1) through (5) of this definition; and

     (7) marketable general obligations issued by any state of the United States or any
political subdivision of any such state or any public instrumentality thereof maturing
within one year of the date of acquisition and at the time of acquisition having one of the
two highest ratings obtainable from S&P or Moody’s.

4

 

     “Change of Control” means the occurrence of any of the following:

     (1) any sale, transfer, lease, conveyance or other disposition (in one transaction or a
series of related transactions) of all or substantially all of the Company’s property or
assets to any person or group of related persons (other than to any of the Company’s wholly
owned subsidiaries) as defined as Sections 13(d) and 14(d) of the Exchange Act, including
any group acting for the purpose of acquiring, holding, voting or disposing of securities
within the meaning of Rule 13d-5(b)(1) under the Exchange Act, other than any sale,
transfer, lease, conveyance or other disposition in which (x) persons who, directly or
indirectly, are beneficial owners (as defined in Rule 13d-3 under the Exchange Act) of the
Company’s Voting Stock immediately prior to such transaction, beneficially own, directly or
indirectly, immediately after such transaction at least a majority of the total voting power
of the outstanding Voting Stock of the corporation or entity purchasing such properties or
assets in such sale, lease, conveyance or other disposition and (y) persons who, directly or
indirectly, are beneficial owners of the Company’s Voting Stock immediately prior to such
transaction, beneficially own, directly or indirectly, immediately
after such transaction shares of common stock of the corporation or entity purchasing such properties or assets in
such sale, lease, conveyance or other disposition in a proportion that does not, on the
whole, materially differ from such ownership immediately prior to the transaction;

     (2) the adoption of a plan relating to the liquidation or dissolution of the Company;

     (3) if any “person” or “group” (as these terms are used for purposes of Sections 13(d)
and 14(d) of the Exchange Act) (other than Bennett S. LeBow or his immediate family, any
beneficiary of the estate of Bennett S. Lebow or his immediate family or any trust or
partnership controlled by any of the foregoing (the “LeBow Persons”)) is or shall become the
“beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of 50% of the aggregate ordinary voting power represented by the Company’s
issued and outstanding stock;

     (4) if at any time Bennett S. LeBow and/or any LeBow Person is or shall become the
“beneficial owner” (as defined in Rule 13d-3 under the Exchange Act) either individually or
collectively, directly or indirectly, of 65% of the aggregate ordinary voting power
represented by the Company’s issued and outstanding Voting Stock; or

     (5) the Company consolidates with, or merges with or into, another person or any person
consolidates with, or merges with or into, the Company, other than any consolidation or
merger in which (x) persons who, directly or indirectly, are beneficial owners (as defined
in Rule 13d-3 under the Exchange Act) of the Company’s Voting Stock immediately prior to
such transaction, beneficially own, directly or indirectly, immediately after such
transaction at least a majority of the voting power of the outstanding Voting Stock of the
continuing or surviving corporation or entity and (y) persons who, directly or indirectly,
are beneficial owners of the Company’s Voting Stock immediately prior to such transaction
beneficially own, directly or indirectly, immediately after such transaction shares of
common stock of the continuing or surviving corporation or entity in a proportion that does
not, on the whole, materially differ from such ownership immediately prior to the
transaction.

     “Clearstream” means Clearstream Banking, S.A.

     “Collateral” means the Pledged Securities and the properties and assets at any time owned or
acquired by any of the Pledgors as provided in the Collateral Documents and this Indenture other
than the Excluded Assets and except:

5

 

     (1) any properties and assets in which the Collateral Agent is required to release its
Liens pursuant to the provisions of the Intercreditor Agreement; and

     (2) any properties and assets that no longer secure the Note Guarantees or any
Obligations in respect thereof pursuant to the provisions of Section 10.03 hereof,

provided that, if such Liens are required to be released as a result of the sale, transfer or other
disposition of any properties or assets of any of the Guarantors, such assets or properties will
cease to be excluded from the Collateral if any of the Guarantors thereafter acquires or reacquires
such assets or properties.

     “Collateral Agent” means U.S. Bank National Association, in its capacity as collateral agent
under this Indenture, the Intercreditor Agreement and the Collateral Documents, together with its
successors in such capacity.

     “Collateral Documents” means all security agreements, pledge agreements, collateral
assignments, mortgages, deeds of trust, collateral agency agreements or other grants or transfers
for security executed and delivered by any Guarantor creating (or purporting to create) a Parity
Lien upon Collateral in favor of the Collateral Agent, in each case, as amended, modified, renewed,
restated or replaced, in whole or in part, from time to time.

     “Company” means Vector Group Ltd. and any and all successors thereto.

     “Consolidated EBITDA” means for any period the Consolidated Net Income of the Company for such
period, after giving pro forma effect to any Investment or acquisition or disposition of a business
permitted under the Indenture as if such acquisition or disposition occurred on the first day of
the relevant period, in accordance with Regulation S-X, plus, without duplication:

     (1) provision for taxes based on income or profits or capital, including, without
limitation, state, city and county income, franchise and similar taxes, foreign withholding
taxes and foreign unreimbursed value added taxes of the Company and the Guarantors for such
period, to the extent that such provision for taxes was deducted in computing such
Consolidated Net Income; plus

     (2) the Fixed Charges of the Company and the Guarantors (including amortization of
deferred financing fees and changes in fair value of derivatives embedded within convertible
debt) for such period, to the extent that such Fixed Charges were deducted in computing such
Consolidated Net Income; plus

     (3) depreciation, amortization (including amortization of intangibles but excluding
amortization of prepaid cash expenses that were paid in a prior period) and other non-cash
expenses (excluding any such non-cash expense to the extent that it represents an accrual of
or reserve for cash expenses in any future period or amortization of a prepaid cash expense
that was paid in a prior period) of the Company and the Guarantors for such period to the
extent that such depreciation, amortization and other non-cash expenses were deducted in
computing such Consolidated Net Income; plus

     (4) any other non-cash charges (including impairment charges, write-offs of assets and
the impact of purchase accounting but excluding any such charge that represents an accrual
or reserve for a cash expenditure for a future period), to the extent that such non-cash
charges were deducted in computing such Consolidated Net Income; plus

6

 

     (5) any one-time, non-recurring expenses or charges related to any Equity Offering,
Permitted Investment, acquisition, recapitalization or incurrence of Indebtedness permitted
to be incurred under this Indenture (including a refinancing thereof), whether or not
consummated, in each case to the extent such expenses or charges were deducted in computing
Consolidated Net Income; minus

     (6) non-cash items increasing such Consolidated Net Income for such period, other than
(a) the accrual of revenue in the ordinary course of business and (b) reversals of prior
accruals or reserves for non-cash items previously excluded from the definition of
Consolidated EBITDA pursuant to clause (3) above,

in each case, on a consolidated basis and determined in accordance with GAAP.

     “Consolidated Net Income” means for any period the aggregate of the Net Income of the Company
and the Guarantors for such period, on a consolidated basis, determined in accordance with GAAP;
provided that:

     (1) the Net Income (but not loss) of any Person that is not a Guarantor or that is
accounted for by the equity method of accounting will be included only to the extent of the
amount of dividends or similar distributions paid in cash to the Company or a Guarantor;

     (2) the Net Income of any Guarantor will be excluded to the extent that the declaration
or payment of dividends or similar distributions by that Guarantor of that Net Income is not
at the date of determination permitted without any prior governmental approval (that has not
been obtained) or, directly or indirectly, by operation of the terms of its charter or any
agreement or instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Guarantor or its stockholders (except to the extent of the amount of
dividends or similar distributions paid in cash to the Company or a Guarantor during such
period);

     (3) the cumulative effect of a change in accounting principles will be excluded;

     (4) any restructuring charge or reserve to the extent that such expenses or charges
were deducted in computing such Consolidated Net Income, including any restructuring costs
incurred in connection with acquisitions after the date of issuance of the Notes and costs
related to the closure and/or consolidation of facilities or work force reduction and
severance and relocation costs incurred in connection therewith, will be excluded;

     (5) any unrealized gains and losses due solely to fluctuations in currency values, the
value of Investment Securities or the value of Long Term Investments, and the related tax
effects according to GAAP will be excluded;

     (6) non-cash compensation recorded from grants of stock appreciation or similar rights,
stock options, restricted stock or other rights will be excluded;

     (7) after-tax gains and losses attributable to discontinued operations will be
excluded;

     (8) the after-tax effect of extraordinary, non-recurring or unusual gains or losses
(less all fees and expenses relating thereto) or expenses, severance costs and curtailments
or modifications or terminations to pension and post-retirement benefit plans will be
excluded;

7

 

     (9) any impairment charge or asset write-off, in each case pursuant to GAAP and the
amortization of intangibles arising pursuant to GAAP will be excluded; and

     (10) any deferred financing costs written off and premiums paid in connection with any
early extinguishment of Indebtedness will be excluded.

     “Core Investments” means investments, whether as a long or short position, in equity, debt or
derivative securities, including, without limitation, puts, options, warrants or calls, of any
Person, including hedge funds, private equity funds or other investment entities, in the ordinary
course of the Company’s or any Guarantor’s business, but excluding any investment in (i) any
Unrestricted Subsidiary of the Company, or (ii) any joint venture to which the Company, any
Guarantor or any Unrestricted Subsidiary is a party.

     “Corporate Trust Office of the Trustee” will be at the address of the Trustee specified in
Section 13.02 hereof or such other address as to which the Trustee may give notice to the Company.

     “Credit Facilities” means, one or more debt facilities (including, without limitation, the
Liggett Credit Agreement) or commercial paper facilities, in each case, with banks or other
institutional lenders providing for revolving credit loans, term loans, receivables financing
(including through the sale of receivables to such lenders or to special purpose entities formed to
borrow from such lenders against such receivables) or letters of credit, in each case, as amended,
restated, modified, renewed, refunded, replaced (whether upon or after termination or otherwise) or
refinanced (including by means of sales of debt securities to institutional investors) in whole or
in part from time to time.

     “Custodian” means the Trustee, as custodian with respect to the Notes in global form, or any
successor entity thereto.

     “Default” means any event that is, or with the passage of time or the giving of notice or both
would be, an Event of Default.

     “Definitive Note” means a certificated Note registered in the name of the Holder thereof and
issued in accordance with Section 2.06 hereof, substantially in the form of Exhibit A hereto except
that such Note shall not bear the Global Note Legend and shall not have the “Schedule of Exchanges
of Interests in the Global Note” attached thereto.

     “Depositary” means, with respect to the Notes issuable or issued in whole or in part in global
form, the Person specified in Section 2.03 hereof as the Depositary with respect to the Notes, and
any and all successors thereto appointed as depositary hereunder and having become such pursuant to
the applicable provision of this Indenture.

     “Disqualified Stock” means any Capital Stock that, by its terms (or by the terms of any
security into which it is convertible, or for which it is exchangeable, in each case, at the option
of the holder of the Capital Stock), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the
holder of the Capital Stock, in whole or in part, on or prior to the date that is 91 days after the
date on which the Notes mature. Notwithstanding the preceding sentence, any Capital Stock that
would constitute Disqualified Stock solely because the holders of the Capital Stock have the right
to require the Company to repurchase such Capital Stock upon the occurrence of a change of control
or an asset sale will not constitute Disqualified Stock if the terms of such Capital Stock provide
that the Company may not repurchase or redeem any such Capital Stock pursuant to such provisions
unless such repurchase or redemption complies with Section 4.07 hereof. The amount of Disqualified
Stock deemed to be outstanding at any time for

8

 

purposes of this Indenture will be the maximum amount that the Company and the Guarantors may
become obligated to pay upon the maturity of, or pursuant to any mandatory redemption provisions
of, such Disqualified Stock, exclusive of accrued dividends.

     “Domestic Subsidiary” means any Subsidiary of the Company that was formed under the laws of
the United States or any state of the United States or the District of Columbia or that guarantees
or otherwise provides direct credit support for any Indebtedness of the Company.

     “Environmental Claim” means any investigation, notice, notice of violation, claim, action,
suit, proceeding, demand, abatement order or other order or directive (conditional or otherwise),
by any Governmental Authority or any other Person, arising (i) pursuant to or in connection with
any actual or alleged violation of any Environmental Law; (ii) in connection with any Hazardous
Material or any actual or alleged Hazardous Materials Activity; or (iii) in connection with any
actual or alleged damage, injury, threat or harm to health, safety, natural resources or the
environment.

     “Environmental Laws” means any and all current or future foreign or domestic, federal or state
(or any subdivision of either of them), statutes, ordinances, orders, rules, regulations,
judgments, Governmental Authorizations, or any other requirements of Governmental Authorities
relating to (i) environmental matters, including those relating to any Hazardous Materials
Activity; (ii) the generation, use, storage, transportation or disposal of Hazardous Materials; or
(iii) occupational safety and health, industrial hygiene, land use or the protection of human,
plant or animal health or welfare, in any manner applicable to the Company or any of the Guarantors
or any Facility.

     “Equity Interests” means Capital Stock and all warrants, options or other rights to acquire
Capital Stock (but excluding any debt security that is convertible into, or exchangeable for,
Capital Stock).

     “Equity Offering” means any public or private sale of common stock or Preferred Stock of the
Company (excluding Disqualified Stock) or contribution to the capital of the Company, other than:

     (1) public offerings with respect to any such Person’s common stock registered on Form
S-8; and

     (2) issuances to the Company or any Subsidiary of the Company.

     “Euroclear” means Euroclear Bank, S.A./N.V., as operator of the Euroclear system.

     “Eve” means Eve Holdings Inc., a Delaware corporation.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended.

     “Exchange Notes” means the Notes issued in the Exchange Offer pursuant to Section 2.06(f)
hereof.

     “Exchange Offer” has the meaning set forth in the Registration Rights Agreement.

     “Exchange Offer Registration Statement” has the meaning set forth in the Registration Rights
Agreement.

     “Excluded Assets” means real property, other than the Mebane Facility and any real property
that has a fair market value in excess of $5.0 million; equipment subject to purchase money or
other financing; investment property or securities, including securities of affiliates, other than
the Pledged Securities; cash

9

 

and deposit accounts; foreign intellectual property and all intent-to-use trademark
applications; aircraft, aircraft engines and motor vehicles; leasehold interests in real property;
chattel paper; instruments; and documents, each as defined under the UCC .

     “Existing Indebtedness” means Indebtedness of the Company and the Guarantors (other than
Indebtedness under the Liggett Credit Agreement) in existence on the date of this Indenture, until
such amounts are repaid.

     “Facility” means any real property (including all buildings, fixtures or other improvements
located thereon) now, hereafter or heretofore owned, leased, operated or used by the Company or any
of the Guarantors or any of their respective predecessors or Affiliates.

     “Fair Market Value” means the value that would be paid by a willing buyer to an unaffiliated
willing seller in a transaction not involving distress or necessity of either party, determined in
good faith by the Board of Directors of the Company (unless otherwise provided in this Indenture).

     “First Priority Debt” has the meaning set forth in the Intercreditor Agreement as in effect on
the date of this Indenture.

     “First Priority Lien” means a Lien to the extent it secures First Priority Debt.

     “Fixed Charges” means, with respect to the Company and the Guarantors for any period, the sum,
without duplication, of:

     (1) the consolidated interest expense of the Company and the Guarantors for such
period, whether paid or accrued, including, without limitation, amortization of debt
issuance costs, beneficial conversion features, derivatives embedded within convertible debt
and original issue discount, non-cash interest payments, the interest component of any
deferred payment obligations, the interest component of all payments associated with Capital
Lease Obligations, imputed interest with respect to Attributable Debt, commissions,
discounts and other fees and charges incurred in respect of letter of credit or bankers’
acceptance financings, and net of the effect of all payments made or received pursuant to
Hedging Obligations in respect of interest rates; plus

     (2) the consolidated interest expense of the Company and the Guarantors that was
capitalized during such period; plus

     (3) any interest on Indebtedness of another Person that is guaranteed by the Company or
any of the Guarantors or secured by a Lien on assets of the Company or any of the
Guarantors, whether or not such Guarantee or Lien is called upon; plus

     (4) the product of (a) all dividends, whether paid or accrued and whether or not in
cash, on any series of preferred stock of the Company or any of the Guarantors, other than
dividends on Equity Interests payable solely in Equity Interests of the Company (other than
Disqualified Stock) or to the Company or a Guarantor, times (b) a fraction, the numerator of
which is one and the denominator of which is one minus the then current combined federal,
state and local statutory tax rate of such Person, expressed as a decimal, in each case,
determined on a consolidated basis in accordance with GAAP.

     “GAAP” means generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of Certified Public

10

 

Accountants and statements and pronouncements of the Financial Accounting Standards Board or
in such other statements by such other entity as have been approved by a significant segment of the
accounting profession, which are in effect on the date of this Indenture.

     “Global Note Legend” means the legend set forth in Section 2.06(g)(2) hereof, which is
required to be placed on all Global Notes issued under this Indenture.

     “Global Notes” means, individually and collectively, each of the Restricted Global Notes and
the Unrestricted Global Notes deposited with or on behalf of and registered in the name of the
Depository or its nominee, substantially in the form of Exhibit A hereto and that bears the Global
Note Legend and that has the “Schedule of Exchanges of Interests in the Global Note” attached
thereto, issued in accordance with Section 2.01, 2.06(b)(3), 2.06(b)(4), 2.06(d)(2) or 2.06(f)
hereof.

     “Government Securities” means direct obligations of, or obligations guaranteed by, the United
States of America, and the payment for which the United States pledges its full faith and credit.

     “Guarantee” means a guarantee other than by endorsement of negotiable instruments for
collection in the ordinary course of business, direct or indirect, in any manner including, without
limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements
in respect thereof, of all or any part of any Indebtedness (whether arising by virtue of
partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or
services, to take or pay or to maintain financial statement conditions or otherwise).

     “Guarantors” means each of:

     (1) the Liggett Guarantors;

     (2) the Domestic Subsidiaries of the Company on the date of this Indenture, other than
the New Valley Subsidiaries; and

     (3) any other Subsidiary of the Company that executes a Note Guarantee in accordance
with the provisions of this Indenture,

and their respective successors and assigns, in each case, until the Note Guarantee of such Person
has been released in accordance with the provisions of this Indenture.

     “Hazardous Materials” means any chemical, material or substance, exposure to which is
prohibited, limited or regulated by any Governmental Authority or which reasonably could be
expected to pose a hazard to the health and safety of the owners, occupants or any Persons in the
vicinity of any Facility or to the indoor or outdoor environment.

     “Hazardous Materials Activity” means any past, current, proposed or threatened activity, event
or occurrence involving any Hazardous Materials, including the use, manufacture, possession,
storage, holding, presence, existence, location, release, threatened release, discharge, placement,
generation, transportation, processing, construction, treatment, abatement, removal, remediation,
disposal, disposition or handling of any Hazardous Materials, and any corrective action or response
action with respect to any of the foregoing.

     “Hedging Obligations” means, with respect to any specified Person, the obligations of such
Person under:

11

 

     (1) interest rate swap agreements (whether from fixed to floating or from floating to
fixed), interest rate cap agreements and interest rate collar agreements;

     (2) other agreements or arrangements designed to manage interest rates or interest rate
risk; and

     (3) other agreements or arrangements designed to protect such Person against
fluctuations in currency exchange rates or commodity prices.

     “Holder” means a Person in whose name a Note is registered.

     “IAI Global Note” means a Global Note substantially in the form of Exhibit A hereto bearing
the Global Note Legend and the Private Placement Legend and deposited with or on behalf of and
registered in the name of the Depositary or its nominee that will be issued in a denomination equal
to the outstanding principal amount of the Notes sold to Institutional Accredited Investors.

     “Indebtedness” means, with respect to any specified Person, any indebtedness of such Person
(excluding accrued expenses and trade payables), whether or not contingent:

     (1) in respect of borrowed money;

     (2) evidenced by bonds, notes, debentures or similar instruments or letters of credit
(or reimbursement agreements in respect thereof);

     (3) in respect of banker’s acceptances;

     (4) representing Capital Lease Obligations or Attributable Debt in respect of sale and
leaseback transactions;

     (5) representing the balance deferred and unpaid of the purchase price of any property
or services due more than six months after such property is acquired or such services are
completed, except any such balance that constitutes an accrued expense or trade payable
arising in the ordinary course of business and not overdue by more than 90 days; or

     (6) representing any Hedging Obligations,

if and to the extent any of the preceding items (other than letters of credit, Attributable Debt
and Hedging Obligations) would appear as a liability upon a balance sheet of the specified Person
prepared in accordance with GAAP. In addition, the term “Indebtedness” includes all Indebtedness
of others secured by a Lien on any asset of the specified Person (whether or not such Indebtedness
is assumed by the specified Person) and, to the extent not otherwise included, the Guarantee by the
specified Person of any Indebtedness of any other Person.

     “Indemnified Liabilities” means, collectively, any and all liabilities, obligations, losses,
damages (including natural resource damages), penalties, claims (including Environmental Claims),
costs (including the costs of any investigation, study, sampling, testing, abatement, cleanup,
removal, remediation or other response action necessary to remove, remediate, clean up or abate any
Hazardous Materials Activity), expenses and disbursements of any kind or nature whatsoever
(including the reasonable fees and disbursements of counsel for Indemnitees in connection with any
investigative, administrative or judicial proceeding commenced or threatened by any Person, and any
fees or expenses incurred by Indemnitees in enforcing this indemnity), whether direct, indirect or
consequential and

12

 

whether based on Environmental Laws, on common law or equitable cause or on contract or
otherwise, that may be imposed on, incurred by, or asserted against any such Indemnitee, in any
manner relating to or arising out of any Environmental Claim or any Hazardous Materials Activity
relating to or arising from, directly or indirectly, any past or present activity, operation, land
ownership, or practice of the Company or any of the Guarantors.

     “Indenture” means this Indenture, as amended or supplemented from time to time.

     “Indirect Participant” means a Person who holds a beneficial interest in a Global Note through
a Participant.

     “Initial Notes” means the first $165 million aggregate principal amount of Notes issued under
this Indenture on the date hereof.

     “Initial Purchaser” means Jeffries & Company, Inc.

     “Institutional Accredited Investor” means an institution that is an “accredited investor” as
defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act who is not also a QIB.

     “Intercreditor Agreement” means the Intercreditor and Lien Subordination Agreement dated
August 16, 2007, by and among Wachovia Bank, National Association, as ABL Lender, U.S. Bank
National Association, as Collateral Agent, Liggett Group LLC, as borrower and 100 Maple LLC, as
Loan Party.

     “Investments” means, with respect to any Person, all direct or indirect investments by such
Person in other Persons (including Affiliates) in the forms of loans (including Guarantees or other
obligations), advances or capital contributions (excluding commission, travel and similar advances
to officers and employees made in the ordinary course of business), purchases or other acquisitions
for consideration of Indebtedness, Equity Interests or other securities, together with all items
that are or would be classified as investments on a balance sheet prepared in accordance with GAAP.
Except as otherwise provided in this Indenture, the amount of an Investment will be determined at
the time the Investment is made and without giving effect to subsequent changes in value.

     “Investment Securities” means investment securities classified as such under GAAP.

     “Legal Holiday” means a Saturday, a Sunday or a day on which banking institutions in the City
of New York or at a place of payment are authorized by law, regulation or executive order to remain
closed. If a payment date is a Legal Holiday at a place of payment, payment may be made at that
place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue on such
payment for the intervening period.

     “Letter of Transmittal” means the letter of transmittal to be prepared by the Company and sent
to all Holders of the Notes for use by such Holders in connection with the Exchange Offer.

     “Leverage Ratio” means the ratio of (i) the sum of (A) the aggregate outstanding amount of
Indebtedness of the Company and the Guarantors as of the last day of the most recently ended fiscal
quarter for which financial statements are internally available as of the date of calculation on a
combined consolidated basis in accordance with GAAP, less cash, cash equivalents, the Fair Market
Value of Investment Securities and the Fair Market Value of Long Term Investments of the Company
and the Guarantors, plus (B) the aggregate outstanding amount of Indebtedness incurred in
connection with margining of Core Investments (to the extent not included in Indebtedness under
clause (i)(A) above),

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plus (C) the aggregate liquidation preference of all outstanding Disqualified Stock of the
Company as of the last day of such fiscal quarter to (ii) the aggregate Consolidated EBITDA of the
Company for the last four full fiscal quarters for which financial statements are internally
available ending on or prior to the date of determination. Notwithstanding the foregoing, to the
extent that Douglas Elliman Realty LLC, or any successor thereto, is classified on the Company’s or
any Guarantor’s balance sheet as a Long Term Investment, then the book value, rather than the Fair
Market Value, of such Long Term Investment will be used for purposes of the foregoing calculation.

     “Lien” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest
or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise
perfected under applicable law, including any conditional sale or other title retention agreement,
any lease in the nature thereof, any option or other agreement to sell or give a security interest
in and any filing of or agreement to give any financing statement under the Uniform Commercial Code
(or equivalent statutes) of any jurisdiction.

     “Liggett Credit Agreement” means that certain Amended and Restated Loan and Security
Agreement, dated as of April 14, 2004, as amended, by and between Wachovia Bank, National
Association, successor by merger to Congress Financial Corporation, Liggett Group LLC, as successor
to Liggett Group, Inc., and 100 Maple LLC providing for revolving credit borrowings and term loans,
including any related notes, Guarantees, collateral documents, instruments and agreements executed
in connection therewith, and, in each case, as amended, restated, modified, renewed, refunded,
replaced (whether upon or after termination or otherwise) or refinanced (including by means of
sales of debt securities to institutional investors) in whole or in part from time to time.

     “Liggett Group LLC” means Liggett Group LLC, a Delaware limited liability company.

     “Liggett Guarantors” means each of Liggett Group LLC and 100 Maple LLC.

     “Liquidated Damages” means all liquidated damages then owing pursuant to the Registration
Rights Agreement.

     “Long-Term Investments” means long-term investments classified as such under GAAP.

     “Mebane Facility” means that certain real property located in Mebane, North Carolina and owned
by 100 Maple LLC.

     “Moody’s” means Moody’s Investor Service, Inc.

     “Net Income” means, with respect to any specified Person, the net income (loss) of such
Person, determined in accordance with GAAP and before any reduction in respect of preferred stock
dividends, excluding, however:

     (1) any gain or loss, together with all fees and expenses related thereto and any
related provision for taxes on such gain or loss, realized in connection with:

     (a) any Asset Sale; or

     (b) the disposition of any securities or Investments by such Person or any of
the Guarantors or the extinguishment of any Indebtedness of such Person or any of
the Guarantors; and

14

 

     (2) any extraordinary gain or loss, together with any related provision for taxes on
such extraordinary gain or loss.

     “Net Proceeds” means means the aggregate cash proceeds received by the Company or any of the
Guarantors in respect of any Asset Sale (including, without limitation, any cash received upon the
sale or other disposition of any non-cash consideration received in any Asset Sale), net of the
direct costs relating to such Asset Sale, including, without limitation, legal, accounting and
investment banking fees, and sales commissions, and any relocation expenses incurred as a result of
the Asset Sale, taxes paid or payable as a result of the Asset Sale, in each case, after taking
into account any available tax credits or deductions and any tax sharing arrangements, and amounts
required to be applied to the repayment of Indebtedness, other than Indebtedness under a Credit
Facility, secured by a Lien on the asset or assets that were the subject of such Asset Sale and any
reserve for adjustment in respect of the sale price of such asset or assets established in
accordance with GAAP.

     “New Valley Subsidiaries” means New Valley LLC, a Delaware limited liability company, and its
Subsidiaries.

     “Non-U.S. Person” means a Person who is not a U.S. Person.

     “Note Guarantee” means the Guarantee by each Guarantor of the Company’s obligations under this
Indenture and the Notes, executed pursuant to the provisions of this Indenture.

     “Noteholder Documents” means this Indenture, the Notes, the Note Guarantees, and the
Collateral Documents, in each case as amended, supplemented or otherwise modified from time to time
as provided thereby.

     “Notes” has the meaning set forth in the preamble to this Indenture. The Initial Notes and
the Additional Notes shall be treated as a single class for all purposes under this Indenture, and
unless the context otherwise requires, all references to the Notes shall include the Initial Notes
and any Additional Notes.

     “Obligations” means any principal (including reimbursement obligations with respect to letters
of credit whether or not drawn), interest (including, to the extent legally permitted, all interest
accrued thereon after the commencement of any insolvency or liquidation proceeding at the rate,
including any applicable post-default rate, even if such interest is not enforceable, allowable or
allowed as a claim in such proceeding), premium (if any), fees, indemnifications, reimbursements,
expenses and other liabilities payable under the documentation governing any Indebtedness.

     “Officer” means, with respect to any Person, the Chairman of the Board, the Chief Executive
Officer, the President, the Chief Operating Officer, the Chief Financial Officer, the Treasurer,
any Assistant Treasurer, the Controller, the Secretary, any Assistant Secretary or any Vice
President of such Person.

     “Officers’ Certificate” means a certificate signed by the Chairman of the Board, the President
or any Vice President, and by the Chief Financial Officer, the Treasurer, an Assistant Treasurer,
the Secretary or an Assistant Secretary, of the Company, that meets the requirements of Section
13.05 hereof. One of the officers signing an Officers’ Certificate given pursuant to Section 4.04
shall be the principal executive, financial or accounting officer of the Company.

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     “Opinion of Counsel” means an opinion from legal counsel who is reasonably acceptable to the
Trustee, that meets the requirements of Section 13.05 hereof. The counsel may be an employee of or
counsel to the Company, any Subsidiary of the Company or the Trustee.

     “Parity Lien” means a Lien granted under a Collateral Document to the Collateral Agent, at any
time, upon any property of any Guarantor providing security to secure Parity Lien Obligations.

     “Parity Lien Debt” means:

     (1) the Initial Notes (including any related Exchange Notes); and

     (2) any other Indebtedness of the Company pursuant to Additional Notes.

     “Parity Lien Obligations” means Parity Lien Debt and all other Obligations in respect thereof.

     “Participant” means, with respect to the Depositary, Euroclear or Clearstream, a Person who
has an account with the Depositary, Euroclear or Clearstream, respectively (and, with respect to
DTC, shall include Euroclear and Clearstream).

     “Permitted Investments” means:

     (1) any Investment in the Company or in a Guarantor;

     (2) any Investment in Cash Equivalents;

     (3) any Investment by the Company or any Guarantor in a Person, if as a result of such
Investment:

     (a) such Person becomes a Guarantor; or

     (b) such Person is merged, consolidated or amalgamated with or into, or
transfers or conveys substantially all of its assets to, or is liquidated into, the
Company or a Guarantor;

     (4) any Investment made as a result of the receipt of non-cash consideration from an
Asset Sale that was made pursuant to and in compliance with Section 4.10 hereof.

     (5) any acquisition of assets or Capital Stock solely in exchange for the issuance of
Equity Interests (other than Disqualified Stock) of the Company;

     (6) any Investments received in compromise or resolution of (A) obligations of trade
creditors or customers that were incurred in the ordinary course of business of the Company
or any Guarantor, including pursuant to any plan of reorganization or similar arrangement
upon the bankruptcy or insolvency of any trade creditor or customer; or (B) litigation,
arbitration or other disputes with Persons who are not Affiliates;

     (7) loans or advances to employees made in the ordinary course of business of the
Company or any Guarantor in an aggregate principal amount not to exceed $1.0 million at any
one time outstanding;

     (8) repurchases of the Notes;

16

 

     (9) any Investment by the Company or any Guarantor in Core Investments;

     (10) Investments represented by Hedging Obligations;

     (11) Investments consisting of purchases and acquisitions of inventory, supplies,
material or equipment in the ordinary course of business or consistent with past practice;

     (12) other Investments in any Person having an aggregate Fair Market Value (measured on
the date each such Investment was made and without giving effect to subsequent changes in
value), when taken together with all other Investments made pursuant to this clause (12)
that are at the time outstanding, not to exceed $10.0 million.

     “Permitted Liens” means:

     (1) Liens in favor of the ABL Lender securing First Priority Debt;

     (2) Liens held by the Collateral Agent equally and ratably securing the Initial Notes
and all future Parity Lien Debt and other Parity Lien Obligations;

     (3) Liens in favor of the Company or the Guarantors;

     (4) Liens on property of a Person existing at the time such Person is merged with or
into or consolidated with the Company or any Guarantor; provided that such Liens were in
existence prior to the contemplation of such merger or consolidation and do not extend to
any assets other than those of the Person merged into or consolidated with the Company or
the Guarantor;

     (5) Liens on property (including Capital Stock) existing at the time of acquisition of
the property by the Company or any Guarantor; provided that such Liens were in existence
prior to, and not incurred in contemplation of, such acquisition;

     (6) Liens to secure the performance of statutory obligations (including obligations
under worker’s compensation, unemployment insurance or similar legislation), surety or
appeal bonds, performance bonds or other obligations of a like nature incurred in the
ordinary course of business, as well as obligations under the trade contracts and leases
(exclusive of obligations for the payment of borrowed money) and cash deposits in connection
with acquisitions otherwise permitted under this Indenture;

     (7) Liens existing on the date of this Indenture;

     (8) Liens for taxes, assessments or governmental charges or claims that are not yet
delinquent or that are being contested in good faith by appropriate proceedings promptly
instituted and diligently concluded; provided that any reserve or other appropriate
provision as is required in conformity with GAAP has been made therefor;

     (9) Liens imposed by law, such as carriers’, warehousemen’s, landlords’ and mechanics’
Liens, in each case, incurred in the ordinary course of business;

     (10) survey exceptions, easements or reservations of, or rights of others for,
licenses, rights-of-way, sewers, electric lines, telegraph and telephone lines and other
similar purposes, or zoning or other restrictions as to the use of real property that were
not incurred in connection with

17

 

Indebtedness and that do not in the aggregate materially adversely affect the value of
said properties or materially impair their use in the operation of the business of such
Person;

     (11) Liens created for the benefit of (or to secure) the Notes (or the Note
Guarantees);

     (12) Liens to secure any Permitted Refinancing Indebtedness permitted to be incurred
under this Indenture; provided, however, that:

     (a) the new Lien shall be limited to all or part of the same property and
assets that secured or, under the written agreements pursuant to which the original
Lien arose, could secure the original Lien (plus improvements and accessions to,
such property or proceeds or distributions thereof); and

     (b) the Indebtedness secured by the new Lien is not increased to any amount
greater than the sum of (x) the outstanding principal amount, or, if greater,
committed amount, of the Permitted Refinancing Indebtedness and (y) an amount
necessary to pay any fees and expenses, including premiums, related to such renewal,
refunding, refinancing, replacement, defeasance or discharge;

     (13) Liens to secure Indebtedness (including Capital Lease Obligations) permitted by
Section 4.09(b)(10) hereof covering only the assets acquired with or financed by such
Indebtedness;

     (14) Liens arising by reason of any judgment, decree or order not giving rise to an
Event of Default so long as such Lien is adequately bonded and any appropriate legal
proceedings which may have been duly initiated for the review of such judgment shall not
have been finally terminated or the period within such proceedings may be initiated shall
not have expired; and

     (15) Liens to secure obligations permitted by Section 4.09(b)(14) hereof.

     “Permitted Prior Liens” means:

     (1) Liens described in clause (1) of the definition of “Permitted Liens;”

     (2) Liens described in clauses (4), (5) (7) or (13) of the definition of “Permitted
Liens;” and

     (3) Permitted Liens that arise by operation of law and are not voluntarily granted, to
the extent entitled by law to priority over the Liens created by the Collateral Documents.

     “Permitted Refinancing Indebtedness” means any Indebtedness of the Company or any Guarantor
issued in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace,
defease or discharge other Indebtedness of the Company or any Guarantor (other than intercompany
Indebtedness); provided that:

     (1) the principal amount (or accreted value, if applicable) of such Permitted
Refinancing Indebtedness does not exceed the principal amount (or accreted value, if
applicable) of the Indebtedness renewed, refunded, refinanced, replaced, defeased or
discharged (plus all accrued interest on the Indebtedness and the amount of all fees and
expenses, including premiums, incurred in connection therewith);

18

 

     (2) such Permitted Refinancing Indebtedness has a final maturity date later than the
final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than
the Weighted Average Life to Maturity of, the Indebtedness being renewed, refunded,
refinanced, replaced, defeased or discharged;

     (3) if the Indebtedness being renewed, refunded, refinanced, replaced, defeased or
discharged is subordinated in right of payment to the Notes, such Permitted Refinancing
Indebtedness has a final maturity date later than the final maturity date of, and is
subordinated in right of payment to, the Notes on terms at least as favorable to the holders
of Notes as those contained in the documentation governing the Indebtedness being renewed,
refunded, refinanced, replaced, defeased or discharged; and

     (4) such Indebtedness is incurred either by the Company or by the Guarantor who is the
obligor on the Indebtedness being renewed, refunded, refinanced, replaced, defeased or
discharged.

     “Person” means any individual, corporation, partnership, joint venture, association,
joint-stock company, trust, unincorporated organization, limited liability company or government or
other entity.

     “Pledged Securities” means all of the Capital Stock of each of Liggett Group LLC and Vector
Tobacco.

     “Pledgor” means each of the Liggett Guarantors and Vector Tobacco and any successor thereto
who is required to assume their obligations under the indenture or the Collateral Documents.

     “Private Placement Legend” means the legend set forth in Section 2.06(g)(1) hereof to be
placed on all Notes issued under this Indenture except where otherwise permitted by the provisions
of this Indenture.

     “QIB” means a “qualified institutional buyer” as defined in Rule 144A.

     “Registration Rights Agreement” means the Registration Rights Agreement, dated as of August
16, 2007, among the Company, the Guarantors party thereto and the Initial Purchaser, as such
agreement may be amended, modified or supplemented from time to time and, with respect to any
Additional Notes, one or more registration rights agreements among the Company, the Guarantors and
the other parties thereto, as such agreement(s) may be amended, modified or supplemented from time
to time, relating to rights given by the Company to the purchasers of Additional Notes to register
such Additional Notes under the Securities Act.

     “Regulation S” means Regulation S promulgated under the Securities Act.

     “Regulation S Global Note” means a Global Note substantially in the form of Exhibit A hereto
bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of
and registered in the name of the Depositary or its nominee, issued in a denomination equal to the
outstanding principal amount of the Notes sold in reliance on Rule 903 of Regulation S.

     “Responsible Officer,” when used with respect to the Trustee, means any officer within the
Corporate Trust Administration of the Trustee (or any successor group of the Trustee) or any other
officer of the Trustee customarily performing functions similar to those performed by any of the
above designated officers and also means, with respect to a particular corporate trust matter, any
other officer to whom such matter is referred because of his knowledge of and familiarity with the
particular subject.

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     “Restricted Definitive Note” means a Definitive Note bearing the Private Placement Legend.

     “Restricted Global Note” means a Global Note bearing the Private Placement Legend.

     “Restricted Investment” means an Investment other than a Permitted Investment.

     “Restricted Period” means the 40-day distribution compliance period as defined in Regulation
S. 

     “Rule 144” means Rule 144 promulgated under the Securities Act.

     “Rule 144A” means Rule 144A promulgated under the Securities Act.

     “Rule 903” means Rule 903 promulgated under the Securities Act.

     “Rule 904” means Rule 904 promulgated under the Securities Act.

     “S&P” means Standard & Poor’s Ratings Group.

     “Sale of Collateral” means any Asset Sale involving a sale or other disposition of Collateral.

     “SEC” means the Securities and Exchange Commission.

     “Secured Indebtedness” means all Indebtedness of the Company and the Guarantors that is
secured by Liens on any of their assets, including, but not limited to, Indebtedness pursuant to
the Liggett Credit Agreement

     “Secured Leverage Ratio” means the ratio calculated in accordance with the definition herein
of “Leverage Ratio” except that “Secured Indebtedness” shall be substituted for all occurrences of
“Indebtedness” in such definition.

     “Securities Act” means the Securities Act of 1933, as amended.

     “Shelf Registration Statement” means the Shelf Registration Statement as defined in the
Registration Rights Agreement.

     “Significant Subsidiary” means any Subsidiary that would be a “significant subsidiary” as
defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as
such Regulation is in effect on the date of this Indenture.

     “Stated Maturity” means, with respect to any installment of interest or principal on any
series of Indebtedness, the date on which the payment of interest or principal was scheduled to be
paid in the documentation governing such Indebtedness as of the date of this Indenture, and will
not include any contingent obligations to repay, redeem or repurchase any such interest or
principal prior to the date originally scheduled for the payment thereof.

     “Subsidiary” means, with respect to any specified Person:

     (1) any corporation, association or other business entity of which more than 50% of the
total voting power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency and after giving effect to any voting agreement or stockholders’ agreement
that effectively transfers voting power) to vote in the election of directors, managers or
trustees of the corporation, association or other business entity is at the time owned or
controlled, directly or

20

 

indirectly, by that Person or one or more of the other Subsidiaries of that Person (or
a combination thereof); and

     (2) any partnership (a) the sole general partner or the managing general partner of
which is such Person or a Subsidiary of such Person or (b) the only general partners of
which are that Person or one or more Subsidiaries of that Person (or any combination
thereof).

     “TIA” means the Trust Indenture Act of 1939, as amended (15 U.S.C. §§ 77aaa-77bbbb).

     “Treasury Rate” means, as of any redemption date, the yield to maturity as of such redemption
date of United States Treasury securities with a constant maturity (as compiled and published in
the most recent Federal Reserve Statistical Release H.15 (519) that has become publicly available
at least two Business Days prior to the redemption date (or, if such Statistical Release is no
longer published, any publicly available source of similar market data)) most nearly equal to the
period from the redemption date to August 15, 2011; provided, however, that if the period from the
redemption date to August 15, 2011 is less than one year, the weekly average yield on actually
traded United States Treasury securities adjusted to a constant maturity of one year will be used.

     “Trustee” means U.S. Bank National Association until a successor replaces it in accordance
with the applicable provisions of this Indenture and thereafter means the successor serving
hereunder.

     “Unrestricted Definitive Note” means a Definitive Note that does not bear and is not required
to bear the Private Placement Legend.

     “Unrestricted Global Note” means a Global Note that does not bear and is not required to bear
the Private Placement Legend.

     “Unrestricted Subsidiary” means any Subsidiary of the Company other than any Subsidiary that
is a Guarantor and any other Subsidiary owning or operating the business currently operated by
Liggett Group LLC.

     “U.S. Person” means a U.S. Person as defined in Rule 902(k) promulgated under the Securities
Act.

     “Vector Tobacco” means Vector Tobacco Inc., a Virginia corporation.

     “VGR Holding” means VGR Holding LLC, a Delaware limited liability company.

     “Voting Stock” of any specified Person as of any date means the Capital Stock of such Person
that is at the time entitled to vote in the election of the Board of Directors of such Person.

     “Weighted Average Life to Maturity” means, when applied to any Indebtedness at any date, the
number of years obtained by dividing:

     (1) the sum of the products obtained by multiplying (a) the amount of each then
remaining installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect of the Indebtedness, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between such date
and the making of such payment; by

     (2) the then outstanding principal amount of such Indebtedness.

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Section 1.02 Other Definitions.

	 	 	 	 	 
	 	 	Defined in	 
	Term	 	Section	 
	 
	“Affiliate Transaction”
	 	 	4.11	 
	“Asset Sale Offer”
	 	 	3.09	 
	“Authentication Order”
	 	 	2.02	 
	“Change of Control Offer”
	 	 	4.14	 
	“Change of Control Payment”
	 	 	4.14	 
	“Change of Control Payment Date”
	 	 	4.14	 
	“Covenant Defeasance”
	 	 	8.03	 
	“DTC”
	 	 	2.03	 
	“Event of Default”
	 	 	6.01	 
	“Excess Proceeds”
	 	 	4.10	 
	“incur”
	 	 	4.09	 
	“Legal Defeasance”
	 	 	8.02	 
	“Offer Amount”
	 	 	3.09	 
	“Offer Period”
	 	 	3.09	 
	“Paying Agent”
	 	 	2.03	 
	“Permitted Debt”
	 	 	4.09	 
	“Payment Default”
	 	 	6.01	 
	“Purchase Date”
	 	 	3.09	 
	“Registrar”
	 	 	2.03	 
	“Restricted Payments”
	 	 	4.07	 

Section 1.03 Incorporation by Reference of Trust Indenture Act.

     Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by
reference in and made a part of this Indenture.

     The following TIA terms used in this Indenture have the following meanings:

     “indenture securities” means the Notes;

     “indenture security Holder” means a Holder of a Note;

     “indenture to be qualified” means this Indenture;

     “indenture trustee” or “institutional trustee” means the Trustee; and

     “obligor” on the Notes and the Note Guarantees means the Company and the Guarantors,
respectively, and any successor obligor upon the Notes and the Note Guarantees, respectively.

     All other terms used in this Indenture that are defined by the TIA, defined by TIA reference
to another statute or defined by SEC rule under the TIA have the meanings so assigned to them.

Section 1.04 Rules of Construction.

     Unless the context otherwise requires:

     (1) a term has the meaning assigned to it;

22

 

     (2) an accounting term not otherwise defined has the meaning assigned to it in
accordance with GAAP;

     (3) “or” is not exclusive;

     (4) words in the singular include the plural, and in the plural include the singular;

     (5) “will” shall be interpreted to express a command;

     (6) provisions apply to successive events and transactions; and

     (7) references to sections of or rules under the Securities Act will be deemed to
include substitute, replacement of successor sections or rules adopted by the SEC from time
to time.

ARTICLE 2

THE NOTES

Section 2.01 Form and Dating.

     (a) General. The Notes and the Trustee’s certificate of authentication will be substantially
in the form of Exhibit A hereto. The Notes may have notations, legends or endorsements required by
law, stock exchange rule or usage. Each Note will be dated the date of its authentication. The
Notes shall be in denominations of $1,000 and integral multiples of $1,000 in excess of $1,000.

     The terms and provisions contained in the Notes will constitute, and are hereby expressly
made, a part of this Indenture and the Company, the Guarantors and the Trustee, by their execution
and delivery of this Indenture, expressly agree to such terms and provisions and to be bound
thereby. However, to the extent any provision of any Note conflicts with the express provisions of
this Indenture, the provisions of this Indenture shall govern and be controlling.

     (b) Global Notes. Notes issued in global form will be substantially in the form of Exhibit A
hereto (including the Global Note Legend thereon and the “Schedule of Exchanges of Interests in the
Global Note” attached thereto). Notes issued in definitive form will be substantially in the form
of Exhibit A hereto (but without the Global Note Legend thereon and without the “Schedule of
Exchanges of Interests in the Global Note” attached thereto). Each Global Note will represent such
of the outstanding Notes as will be specified therein and each shall provide that it represents the
aggregate principal amount of outstanding Notes from time to time endorsed thereon and that the
aggregate principal amount of outstanding Notes represented thereby may from time to time be
reduced or increased, as appropriate, to reflect exchanges and redemptions. Any endorsement of a
Global Note to reflect the amount of any increase or decrease in the aggregate principal amount of
outstanding Notes represented thereby will be made by the Trustee or the Custodian, at the
direction of the Trustee, in accordance with instructions given by the Holder thereof as required
by Section 2.06 hereof.

Section 2.02 Execution and Authentication.

     At least one Officer must sign the Notes for the Company by manual or facsimile signature.

     If an Officer whose signature is on a Note no longer holds that office at the time a Note is
authenticated, the Note will nevertheless be valid.

23

 

     A Note will not be valid until authenticated by the manual signature of the Trustee. The
signature will be conclusive evidence that the Note has been authenticated under this Indenture.

     The Trustee will, upon receipt of a written order of the Company stating the CUSIP number,
principal amount, name of Holder and date of authentication for each Note, signed by two Officers
(an “Authentication Order”), authenticate Notes for original issue that may be validly issued under
this Indenture, including any Additional Notes. The aggregate principal amount of Notes
outstanding at any time may not exceed the aggregate principal amount of Notes authorized for
issuance by the Company pursuant to one or more Authentication Orders, except as provided in
Section 2.07 hereof.

     The Trustee may appoint an authenticating agent acceptable to the Company to authenticate
Notes. An authenticating agent may authenticate Notes whenever the Trustee may do so. Each
reference in this Indenture to authentication by the Trustee includes authentication by such agent.
An authenticating agent has the same rights as an Agent to deal with Holders or an Affiliate of
the Company.

Section 2.03 Registrar and Paying Agent.

     The Company will maintain an office or agency where Notes may be presented for registration of
transfer or for exchange (“Registrar”) and an office or agency where Notes may be presented for
payment (“Paying Agent”). The Registrar will keep a register of the Notes and of their transfer
and exchange. The Company may appoint one or more co-registrars and one or more additional paying
agents. The term “Registrar” includes any co-registrar and the term “Paying Agent” includes any
additional paying agent. The Company may change any Paying Agent or Registrar without notice to
any Holder. The Company will notify the Trustee in writing of the name and address of any Agent
not a party to this Indenture. If the Company fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Company or any of its Subsidiaries
may act as Paying Agent or Registrar.

     The Company initially appoints The Depository Trust Company (“DTC”) to act as Depositary with
respect to the Global Notes.

     The Company initially appoints the Trustee to act as the Registrar and Paying Agent and to act
as Custodian with respect to the Global Notes.

Section 2.04 Paying Agent to Hold Money in Trust.

     The Company will require each Paying Agent other than the Trustee to agree in writing that the
Paying Agent will hold in trust for the benefit of Holders or the Trustee all money held by the
Paying Agent for the payment of principal, premium or Liquidated Damages, if any, or interest on
the Notes, and will notify the Trustee of any default by the Company in making any such payment.
While any such default continues, the Trustee may require a Paying Agent to pay all money held by
it to the Trustee. The Company at any time may require a Paying Agent to pay all money held by it
to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) will have no further liability for the money. If the Company or a Subsidiary acts as
Paying Agent, it will segregate and hold in a separate trust fund for the benefit of the Holders
all money held by it as Paying Agent. Upon any bankruptcy or reorganization proceedings relating
to the Company, the Trustee will serve as Paying Agent for the Notes.

Section 2.05 Holder Lists.

     The Trustee will preserve in as current a form as is reasonably practicable the most recent
list available to it of the names and addresses of all Holders and shall otherwise comply with TIA
§ 312(a). If

24

 

the Trustee is not the Registrar, the Company will furnish to the Trustee at least seven
Business Days before each interest payment date and at such other times as the Trustee may request
in writing, a list in such form and as of such date as the Trustee may reasonably require of the
names and addresses of the Holders of Notes and the Company shall otherwise comply with TIA §
312(a).

Section 2.06 Transfer and Exchange.

     (a) Transfer and Exchange of Global Notes. A Global Note may not be transferred except as a
whole by the Depositary to a nominee of the Depositary, by a nominee of the Depositary to the
Depositary or to another nominee of the Depositary, or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary. All Global Notes will be exchanged
by the Company for Definitive Notes if:

     (1) the Company delivers to the Trustee notice from the Depositary that it is unwilling
or unable to continue to act as Depositary or that it is no longer a clearing agency
registered under the Exchange Act and, in either case, a successor Depositary is not
appointed by the Company within 120 days after the date of such notice from the Depositary;

     (2) the Company in its sole discretion determines that the Global Notes (in whole but
not in part) should be exchanged for Definitive Notes and delivers a written notice to such
effect to the Trustee or

     (3) there has occurred and is continuing a Default or Event of Default with respect to
the Notes.

     Upon the occurrence of either of the preceding events in (1) or (2) above, Definitive Notes
shall be issued in such names as the Depositary shall instruct the Trustee. Global Notes also may
be exchanged or replaced, in whole or in part, as provided in Sections 2.07 and 2.10 hereof. Every
Note authenticated and delivered in exchange for, or in lieu of, a Global Note or any portion
thereof, pursuant to this Section 2.06 or Section 2.07 or 2.10 hereof, shall be authenticated and
delivered in the form of, and shall be, a Global Note. A Global Note may not be exchanged for
another Note other than as provided in this Section 2.06(a), however, beneficial interests in a
Global Note may be transferred and exchanged as provided in Section 2.06(b), (c) or (f) hereof.

     (b) Transfer and Exchange of Beneficial Interests in the Global Notes. The transfer and
exchange of beneficial interests in the Global Notes will be effected through the Depositary, in
accordance with the provisions of this Indenture and the Applicable Procedures. Beneficial
interests in the Restricted Global Notes will be subject to restrictions on transfer comparable to
those set forth herein to the extent required by the Securities Act. Transfers of beneficial
interests in the Global Notes also will require compliance with either subparagraph (1) or (2)
below, as applicable, as well as one or more of the other following subparagraphs, as applicable:

     (1) Transfer of Beneficial Interests in the Same Global Note. Beneficial interests in
any Restricted Global Note may be transferred to Persons who take delivery thereof in the
form of a beneficial interest in the same Restricted Global Note in accordance with the
transfer restrictions set forth in the Private Placement Legend; provided, however, that
prior to the expiration of the Restricted Period, transfers of beneficial interests in the
Regulation S Global Note may not be made to a U.S. Person or for the account or benefit of a
U.S. Person (other than an Initial Purchaser). Beneficial interests in any Unrestricted
Global Note may be transferred to Persons who take delivery thereof in the form of a
beneficial interest in an Unrestricted Global

25

 

Note. No written orders or instructions shall be required to be delivered to the
Registrar to effect the transfers described in this Section 2.06(b)(1).

     (2) All Other Transfers and Exchanges of Beneficial Interests in Global Notes. In
connection with all transfers and exchanges of beneficial interests that are not subject to
Section 2.06(b)(1) above, the transferor of such beneficial interest must deliver to the
Registrar either:

     (A) both:

     (i) a written order from a Participant or an Indirect Participant given
to the Depositary in accordance with the Applicable Procedures directing the
Depositary to credit or cause to be credited a beneficial interest in
another Global Note in an amount equal to the beneficial interest to be
transferred or exchanged; and

     (ii) instructions given in accordance with the Applicable Procedures
containing information regarding the Participant account to be credited with
such increase; or

     (B) both:

     (i) a written order from a Participant or an Indirect Participant given
to the Depositary in accordance with the Applicable Procedures directing the
Depositary to cause to be issued a Definitive Note in an amount equal to the
beneficial interest to be transferred or exchanged; and

     (ii) instructions given by the Depositary to the Registrar containing
information regarding the Person in whose name such Definitive Note shall be
registered to effect the transfer or exchange referred to in (1) above;

Upon consummation of an Exchange Offer by the Company in accordance with Section 2.06(f) hereof,
the requirements of this Section 2.06(b)(2) shall be deemed to have been satisfied upon receipt by
the Registrar of the instructions contained in the Letter of Transmittal delivered by the Holder of
such beneficial interests in the Restricted Global Notes. Upon satisfaction of all of the
requirements for transfer or exchange of beneficial interests in Global Notes contained in this
Indenture and the Notes or otherwise applicable under the Securities Act, the Trustee shall adjust
the principal amount of the relevant Global Note(s) pursuant to Section 2.06(h) hereof.

     (3) Transfer of Beneficial Interests to Another Restricted Global Note. A beneficial
interest in any Restricted Global Note may be transferred to a Person who takes delivery
thereof in the form of a beneficial interest in another Restricted Global Note if the
transfer complies with the requirements of Section 2.06(b)(2) above and the Registrar
receives the following:

     (A) if the transferee will take delivery in the form of a beneficial interest
in the 144A Global Note, then the transferor must deliver a certificate in the form
of Exhibit B hereto, including the certifications in item (1) thereof;

     (B) if the transferee will take delivery in the form of a beneficial interest
in the Regulation S Global Note, then the transferor must deliver a certificate in
the form of Exhibit B hereto, including the certifications in item (2) thereof; and

26

 

     (C) if the transferee will take delivery in the form of a beneficial interest
in the IAI Global Note, then the transferor must deliver a certificate in the form
of Exhibit B hereto, including the certifications, certificates and Opinion of
Counsel required by item (3) thereof, if applicable.

     (4) Transfer and Exchange of Beneficial Interests in a Restricted Global Note for
Beneficial Interests in an Unrestricted Global Note. A beneficial interest in any
Restricted Global Note may be exchanged by any holder thereof for a beneficial interest in
an Unrestricted Global Note or transferred to a Person who takes delivery thereof in the
form of a beneficial interest in an Unrestricted Global Note if the exchange or transfer
complies with the requirements of Section 2.06(b)(2) above and:

     (A) such exchange or transfer is effected pursuant to the Exchange Offer in
accordance with the Registration Rights Agreement and the holder of the beneficial
interest to be transferred, in the case of an exchange, or the transferee, in the
case of a transfer, certifies in the applicable Letter of Transmittal that it is not
(i) a Broker-Dealer, (ii) a Person participating in the distribution of the Exchange
Notes or (iii) a Person who is an affiliate (as defined in Rule 144) of the Company;

     (B) such transfer is effected pursuant to the Shelf Registration Statement in
accordance with the Registration Rights Agreement;

     (C) such transfer is effected by a Broker-Dealer pursuant to the Exchange Offer
Registration Statement in accordance with the Registration Rights Agreement; or

     (D) the Registrar receives the following:

     (i) if the holder of such beneficial interest in a Restricted Global
Note proposes to exchange such beneficial interest for a beneficial interest
in an Unrestricted Global Note, a certificate from such holder in the form
of Exhibit C hereto, including the certifications in item (1)(a) thereof; or

     (ii) if the holder of such beneficial interest in a Restricted Global
Note proposes to transfer such beneficial interest to a Person who shall
take delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note, a certificate from such holder in the form of
Exhibit B hereto, including the certifications in item (4) thereof;

and, in each such case set forth in this subparagraph (D), if the Registrar so
requests or if the Applicable Procedures so require, an Opinion of Counsel in form
reasonably acceptable to the Registrar to the effect that such exchange or transfer
is in compliance with the Securities Act and that the restrictions on transfer
contained herein and in the Private Placement Legend are no longer required in order
to maintain compliance with the Securities Act.

     If any such transfer is effected pursuant to subparagraph (B) or (D) above at a time when an
Unrestricted Global Note has not yet been issued, the Company shall issue and, upon receipt of an
Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate one or
more Unrestricted Global Notes in an aggregate principal amount equal to the aggregate principal
amount of beneficial interests transferred pursuant to subparagraph (B) or (D) above.

27

 

     Beneficial interests in an Unrestricted Global Note cannot be exchanged for, or transferred to
Persons who take delivery thereof in the form of, a beneficial interest in a Restricted Global
Note.

     (c) Transfer or Exchange of Beneficial Interests for Definitive Notes.

     (1) Beneficial Interests in Restricted Global Notes to Restricted Definitive Notes. If
any holder of a beneficial interest in a Restricted Global Note proposes to exchange such
beneficial interest for a Restricted Definitive Note or to transfer such beneficial interest
to a Person who takes delivery thereof in the form of a Restricted Definitive Note, then,
upon receipt by the Registrar of the following documentation:

     (A) if the holder of such beneficial interest in a Restricted Global Note
proposes to exchange such beneficial interest for a Restricted Definitive Note, a
certificate from such holder in the form of Exhibit C hereto, including the
certifications in item (2)(a) thereof;

     (B) if such beneficial interest is being transferred to a QIB in accordance
with Rule 144A, a certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (1) thereof;

     (C) if such beneficial interest is being transferred to a Non-U.S. Person in an
offshore transaction in accordance with Rule 903 or Rule 904, a certificate to the
effect set forth in Exhibit B hereto, including the certifications in item (2)
thereof;

     (D) if such beneficial interest is being transferred pursuant to an exemption
from the registration requirements of the Securities Act in accordance with Rule
144, a certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(a) thereof;

     (E) if such beneficial interest is being transferred to an Institutional
Accredited Investor in reliance on an exemption from the registration requirements
of the Securities Act other than those listed in subparagraphs (B) through (D)
above, a certificate to the effect set forth in Exhibit B hereto, including the
certifications, certificates and Opinion of Counsel required by item (3) thereof, if
applicable;

     (F) if such beneficial interest is being transferred to the Company or any of
its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(b) thereof; or

     (G) if such beneficial interest is being transferred pursuant to an effective
registration statement under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item (3)(c) thereof,

the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced
accordingly pursuant to Section 2.06(h) hereof, and the Company shall execute and the Trustee shall
authenticate and deliver to the Person designated in the instructions a Definitive Note in the
appropriate principal amount. Any Definitive Note issued in exchange for a beneficial interest in
a Restricted Global Note pursuant to this Section 2.06(c) shall be registered in such name or names
and in such authorized denomination or denominations as the holder of such beneficial interest
shall instruct the Registrar through instructions from the Depositary and the Participant or
Indirect Participant. The Trustee shall deliver such Definitive Notes to the Persons in whose
names such Notes are so registered. Any Definitive

28

 

Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this
Section 2.06(c)(1) shall bear the Private Placement Legend and shall be subject to all restrictions
on transfer contained therein.

     (2) Beneficial Interests in Restricted Global Notes to Unrestricted Definitive Notes.
A holder of a beneficial interest in a Restricted Global Note may exchange such beneficial
interest for an Unrestricted Definitive Note or may transfer such beneficial interest to a
Person who takes delivery thereof in the form of an Unrestricted Definitive Note only if:

     (A) such exchange or transfer is effected pursuant to the Exchange Offer in
accordance with the Registration Rights Agreement and the holder of such beneficial
interest, in the case of an exchange, or the transferee, in the case of a transfer,
certifies in the applicable Letter of Transmittal that it is not (i) a
Broker-Dealer, (ii) a Person participating in the distribution of the Exchange Notes
or (iii) a Person who is an affiliate (as defined in Rule 144) of the Company;

     (B) such transfer is effected pursuant to the Shelf Registration Statement in
accordance with the Registration Rights Agreement;

     (C) such transfer is effected by a Broker-Dealer pursuant to the Exchange Offer
Registration Statement in accordance with the Registration Rights Agreement; or

     (D) the Registrar receives the following:

     (i) if the holder of such beneficial interest in a Restricted Global
Note proposes to exchange such beneficial interest for an Unrestricted
Definitive Note, a certificate from such holder in the form of Exhibit C
hereto, including the certifications in item (1)(b) thereof; or

     (ii) if the holder of such beneficial interest in a Restricted Global
Note proposes to transfer such beneficial interest to a Person who shall
take delivery thereof in the form of an Unrestricted Definitive Note, a
certificate from such holder in the form of Exhibit B hereto, including the
certifications in item (4) thereof;

and, in each such case set forth in this subparagraph (D), if the Registrar so
requests or if the Applicable Procedures so require, an Opinion of Counsel in form
reasonably acceptable to the Registrar to the effect that such exchange or transfer
is in compliance with the Securities Act and that the restrictions on transfer
contained herein and in the Private Placement Legend are no longer required in order
to maintain compliance with the Securities Act.

     (3) Beneficial Interests in Unrestricted Global Notes to Unrestricted Definitive Notes.
If any holder of a beneficial interest in an Unrestricted Global Note proposes to exchange
such beneficial interest for a Definitive Note or to transfer such beneficial interest to a
Person who takes delivery thereof in the form of a Definitive Note, then, upon satisfaction
of the conditions set forth in Section 2.06(b)(2) hereof, the Trustee will cause the
aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant
to Section 2.06(h) hereof, and the Company will execute and the Trustee will authenticate
and deliver to the Person designated in the instructions a Definitive Note in the
appropriate principal amount. Any Definitive Note issued in exchange for a beneficial
interest pursuant to this Section 2.06(c)(3)

29

 

will be registered in such name or names and in such authorized denomination or
denominations as the holder of such beneficial interest requests through instructions to the
Registrar from or through the Depositary and the Participant or Indirect Participant. The
Trustee will deliver such Definitive Notes to the Persons in whose names such Notes are so
registered. Any Definitive Note issued in exchange for a beneficial interest pursuant to
this Section 2.06(c)(3) will not bear the Private Placement Legend.

     (d) Transfer and Exchange of Definitive Notes for Beneficial Interests.

     (1) Restricted Definitive Notes to Beneficial Interests in Restricted Global Notes. If
any Holder of a Restricted Definitive Note proposes to exchange such Note for a beneficial
interest in a Restricted Global Note or to transfer such Restricted Definitive Notes to a
Person who takes delivery thereof in the form of a beneficial interest in a Restricted
Global Note, then, upon receipt by the Registrar of the following documentation:

     (A) if the Holder of such Restricted Definitive Note proposes to exchange such
Note for a beneficial interest in a Restricted Global Note, a certificate from such
Holder in the form of Exhibit C hereto, including the certifications in item (2)(b)
thereof;

     (B) if such Restricted Definitive Note is being transferred to a QIB in
accordance with Rule 144A, a certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (1) thereof;

     (C) if such Restricted Definitive Note is being transferred to a Non-U.S.
Person in an offshore transaction in accordance with Rule 903 or Rule 904, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (2) thereof;

     (D) if such Restricted Definitive Note is being transferred pursuant to an
exemption from the registration requirements of the Securities Act in accordance
with Rule 144, a certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (3)(a) thereof;

     (E) if such Restricted Definitive Note is being transferred to an Institutional
Accredited Investor in reliance on an exemption from the registration requirements
of the Securities Act other than those listed in subparagraphs (B) through (D)
above, a certificate to the effect set forth in Exhibit B hereto, including the
certifications, certificates and Opinion of Counsel required by item (3) thereof, if
applicable;

     (F) if such Restricted Definitive Note is being transferred to the Company or
any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(b) thereof; or

     (G) if such Restricted Definitive Note is being transferred pursuant to an
effective registration statement under the Securities Act, a certificate to the
effect set forth in Exhibit B hereto, including the certifications in item (3)(c)
thereof,

the Trustee will cancel the Restricted Definitive Note, increase or cause to be
increased the aggregate principal amount of, in the case of clause (A) above, the
appropriate Restricted Global Note, in the case of clause (B) above, the 144A Global
Note, in the case of clause (C) above, the Regulation S Global Note, and in all
other cases, the IAI Global Note.

30

 

     (2) Restricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes.
A Holder of a Restricted Definitive Note may exchange such Note for a beneficial interest in
an Unrestricted Global Note or transfer such Restricted Definitive Note to a Person who
takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note
only if:

     (A) such exchange or transfer is effected pursuant to the Exchange Offer in
accordance with the Registration Rights Agreement and the Holder, in the case of an
exchange, or the transferee, in the case of a transfer, certifies in the applicable
Letter of Transmittal that it is not (i) a Broker-Dealer, (ii) a Person
participating in the distribution of the Exchange Notes or (iii) a Person who is an
affiliate (as defined in Rule 144) of the Company;

     (B) such transfer is effected pursuant to the Shelf Registration Statement in
accordance with the Registration Rights Agreement;

     (C) such transfer is effected by a Broker-Dealer pursuant to the Exchange Offer
Registration Statement in accordance with the Registration Rights Agreement; or

     (D) the Registrar receives the following:

     (i) if the Holder of such Definitive Notes proposes to exchange such
Notes for a beneficial interest in the Unrestricted Global Note, a
certificate from such Holder in the form of Exhibit C hereto, including the
certifications in item (1)(c) thereof; or

     (ii) if the Holder of such Definitive Notes proposes to transfer such
Notes to a Person who shall take delivery thereof in the form of a
beneficial interest in the Unrestricted Global Note, a certificate from such
Holder in the form of Exhibit B hereto, including the certifications in item
(4) thereof;

and, in each such case set forth in this subparagraph (D), if the Registrar so
requests or if the Applicable Procedures so require, an Opinion of Counsel in form
reasonably acceptable to the Registrar to the effect that such exchange or transfer
is in compliance with the Securities Act and that the restrictions on transfer
contained herein and in the Private Placement Legend are no longer required in order
to maintain compliance with the Securities Act.

     Upon satisfaction of the conditions of any of the subparagraphs in this Section
2.06(d)(2), the Trustee will cancel the Definitive Notes and increase or cause to be
increased the aggregate principal amount of the Unrestricted Global Note.

     (3) Unrestricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes.
A Holder of an Unrestricted Definitive Note may exchange such Note for a beneficial
interest in an Unrestricted Global Note or transfer such Definitive Notes to a Person who
takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note
at any time. Upon receipt of a request for such an exchange or transfer, the Trustee will
cancel the applicable Unrestricted Definitive Note and increase or cause to be increased the
aggregate principal amount of one of the Unrestricted Global Notes.

     If any such exchange or transfer from a Definitive Note to a beneficial interest is
effected pursuant to subparagraphs (2)(B), (2)(D) or (3) above at a time when an
Unrestricted Global Note

31

 

has not yet been issued, the Company will issue and, upon receipt of an Authentication
Order in accordance with Section 2.02 hereof, the Trustee will authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of
Definitive Notes so transferred.

     (e) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon request by a Holder
of Definitive Notes and such Holder’s compliance with the provisions of this Section 2.06(e), the
Registrar will register the transfer or exchange of Definitive Notes. Prior to such registration
of transfer or exchange, the requesting Holder must present or surrender to the Registrar the
Definitive Notes duly endorsed or accompanied by a written instruction of transfer in form
satisfactory to the Registrar duly executed by such Holder or by its attorney, duly authorized in
writing. In addition, the requesting Holder must provide any additional certifications, documents
and information, as applicable, required pursuant to the following provisions of this Section
2.06(e).

     (1) Restricted Definitive Notes to Restricted Definitive Notes. Any Restricted
Definitive Note may be transferred to and registered in the name of Persons who take
delivery thereof in the form of a Restricted Definitive Note if the Registrar receives the
following:

     (A) if the transfer will be made pursuant to Rule 144A, then the transferor
must deliver a certificate in the form of Exhibit B hereto, including the
certifications in item (1) thereof;

     (B) if the transfer will be made pursuant to Rule 903 or Rule 904, then the
transferor must deliver a certificate in the form of Exhibit B hereto, including the
certifications in item (2) thereof; and

     (C) if the transfer will be made pursuant to any other exemption from the
registration requirements of the Securities Act, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by item (3) thereof, if applicable.

     (2) Restricted Definitive Notes to Unrestricted Definitive Notes. Any Restricted
Definitive Note may be exchanged by the Holder thereof for an Unrestricted Definitive Note
or transferred to a Person or Persons who take delivery thereof in the form of an
Unrestricted Definitive Note if:

     (A) such exchange or transfer is effected pursuant to the Exchange Offer in
accordance with the Registration Rights Agreement and the Holder, in the case of an
exchange, or the transferee, in the case of a transfer, certifies in the applicable
Letter of Transmittal that it is not (i) a Broker-Dealer, (ii) a Person
participating in the distribution of the Exchange Notes or (iii) a Person who is an
affiliate (as defined in Rule 144) of the Company;

     (B) any such transfer is effected pursuant to the Shelf Registration Statement
in accordance with the Registration Rights Agreement;

     (C) any such transfer is effected by a Broker-Dealer pursuant to the Exchange
Offer Registration Statement in accordance with the Registration Rights Agreement;
or

     (D) the Registrar receives the following:

32

 

     (i) if the Holder of such Restricted Definitive Notes proposes to
exchange such Notes for an Unrestricted Definitive Note, a certificate from
such Holder in the form of Exhibit C hereto, including the certifications in
item (1)(d) thereof; or

     (ii) if the Holder of such Restricted Definitive Notes proposes to
transfer such Notes to a Person who shall take delivery thereof in the form
of an Unrestricted Definitive Note, a certificate from such Holder in the
form of Exhibit B hereto, including the certifications in item (4) thereof;

and, in each such case set forth in this subparagraph (D), if the Registrar so
requests, an Opinion of Counsel in form reasonably acceptable to the Registrar to
the effect that such exchange or transfer is in compliance with the Securities Act
and that the restrictions on transfer contained herein and in the Private Placement
Legend are no longer required in order to maintain compliance with the Securities
Act.

     (3) Unrestricted Definitive Notes to Unrestricted Definitive Notes. A Holder of
Unrestricted Definitive Notes may transfer such Notes to a Person who takes delivery thereof
in the form of an Unrestricted Definitive Note. Upon receipt of a request to register such
a transfer, the Registrar shall register the Unrestricted Definitive Notes pursuant to the
instructions from the Holder thereof.

     (f) Exchange Offer. Upon the occurrence of the Exchange Offer in accordance with the
Registration Rights Agreement, the Company will issue and, upon receipt of an Authentication Order
in accordance with Section 2.02 hereof, the Trustee will authenticate:

     (1) one or more Unrestricted Global Notes in an aggregate principal amount equal to the
principal amount of the beneficial interests in the Restricted Global Notes accepted for
exchange in the Exchange Offer by Persons that certify in the applicable Letters of
Transmittal that (A) they are not Broker-Dealers, (B) they are not participating in a
distribution of the Exchange Notes and (C) they are not affiliates (as defined in Rule 144)
of the Company; and

     (2) Unrestricted Definitive Notes in an aggregate principal amount equal to the
principal amount of the Restricted Definitive Notes accepted for exchange in the Exchange
Offer by Persons that certify in the applicable Letters of Transmittal that (A) they are not
Broker-Dealers, (B) they are not participating in a distribution of the Exchange Notes and
(C) they are not affiliates (as defined in Rule 144) of the Company.

     Concurrently with the issuance of such Notes, the Trustee will cause the aggregate principal
amount of the applicable Restricted Global Notes to be reduced accordingly, and the Company will
execute and the Trustee will authenticate and deliver to the Persons designated by the Holders of
Definitive Notes so accepted Unrestricted Definitive Notes in the appropriate principal amount.

     (g) Legends. The following legends will appear on the face of all Global Notes and Definitive
Notes issued under this Indenture unless specifically stated otherwise in the applicable provisions
of this Indenture.

     (1) Private Placement Legend.

33

 

     (A) Except as permitted by subparagraph (B) below, each Global Note and each
Definitive Note (and all Notes issued in exchange therefor or substitution thereof)
shall bear the legend in substantially the following form:

THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND THIS
SECURITY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE
SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE
HEREOF REPRESENTS THAT IT IS (1) A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT), (2) NOT A U.S. PERSON AND IS ACQUIRING ITS NOTE IN AN “OFFSHORE TRANSACTION”
PURSUANT TO RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, OR (3) AN INSTITUTIONAL “ACCREDITED
INVESTOR” WITHIN THE MEANING OF SUBPARAGRAPH (a) (1), (2), (3) OR (7) OF RULE 501 UNDER THE
SECURITIES ACT.

THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF VECTOR GROUP LTD. THAT (A) PRIOR TO THE
EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THIS SECURITY UNDER RULE 144(K) UNDER THE
SECURITIES ACT (OR ANY SUCCESSOR PROVISION), THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED ONLY TO (I) VECTOR GROUP LTD. OR ANY SUBSIDIARY THEREOF, (II) TO A PERSON
WHOM THE SELLER REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (III) PURSUANT TO
AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE), (IV) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED
STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (V) TO AN INSTITUTIONAL
“ACCREDITED INVESTOR” WITHIN THE MEANING OF SUBPARAGRAPH (a) (1), (2), (3) OR (7) OF RULE 501 UNDER
THE SECURITIES ACT THAT IS ACQUIRING THIS SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH
AN INSTITUTIONAL “ACCREDITED INVESTOR,” FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR
OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, (VI)
PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
OR (VII) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
PURCHASER OF THIS SECURITY OF THE RESALE RESTRICTIONS REFERRED TO IN CLAUSE (A) ABOVE. THIS LEGEND
WILL BE REMOVED UPON THE EARLIER OF THE TRANSFER OF THIS SECURITY PURSUANT TO CLAUSE (A) (VII)
ABOVE OR UPON ANY TRANSFER OF THIS SECURITY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY
SUCCESSOR PROVISION). THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO
REGISTER THE TRANSFER OF THIS SECURITY IN VIOLATION OF THE FOREGOING RESTRICTION.

     (B) Notwithstanding the foregoing, any Global Note or Definitive Note issued
pursuant to subparagraphs (b)(4), (c)(2), (c)(3), (d)(2), (d)(3), (e)(2), (e)(3) or
(f)

34

 

of this Section 2.06 (and all Notes issued in exchange therefor or substitution
thereof) will not bear the Private Placement Legend.

     (2) Global Note Legend. Each Global Note will bear a legend in substantially the
following form:

“THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR
ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO
ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (1) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS
MAY BE REQUIRED PURSUANT TO SECTION 2.06 OF THE INDENTURE, (2) THIS GLOBAL NOTE MAY BE EXCHANGED IN
WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (3) THIS GLOBAL NOTE MAY BE
DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (4) THIS
GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF VECTOR
GROUP LTD.

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, THIS NOTE MAY
NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A
NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (“DTC”), TO THE COMPANY OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE &
CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.”

     (h) Cancellation and/or Adjustment of Global Notes. At such time as all beneficial interests
in a particular Global Note have been exchanged for Definitive Notes or a particular Global Note
has been redeemed, repurchased or canceled in whole and not in part, each such Global Note will be
returned to or retained and canceled by the Trustee in accordance with Section 2.11 hereof. At any
time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for or
transferred to a Person who will take delivery thereof in the form of a beneficial interest in
another Global Note or for Definitive Notes, the principal amount of Notes represented by such
Global Note will be reduced accordingly and an endorsement will be made on such Global Note by the
Trustee or by the Depositary at the direction of the Trustee to reflect such reduction; and if the
beneficial interest is being exchanged for or transferred to a Person who will take delivery
thereof in the form of a beneficial interest in another Global Note, such other Global Note will be
increased accordingly and an endorsement will be made on such Global Note by the Trustee or by the
Depositary at the direction of the Trustee to reflect such increase.

     (i) General Provisions Relating to Transfers and Exchanges.

     (1) To permit registrations of transfers and exchanges, the Company will execute and
the Trustee will authenticate Global Notes and Definitive Notes upon receipt of an
Authentication Order in accordance with Section 2.02 hereof or at the Registrar’s request.

35

 

     (2) No service charge will be made to a Holder of a beneficial interest in a Global
Note or to a Holder of a Definitive Note for any registration of transfer or exchange, but
the Company may require payment of a sum sufficient to cover any transfer tax or similar
governmental charge payable in connection therewith (other than any such transfer taxes or
similar governmental charge payable upon exchange or transfer pursuant to Sections 2.10,
3.06, 3.09, 4.10, 4.14 and 9.05 hereof).

     (3) The Registrar will not be required to register the transfer of or exchange of any
Note selected for redemption in whole or in part, except the unredeemed portion of any Note
being redeemed in part.

     (4) All Global Notes and Definitive Notes issued upon any registration of transfer or
exchange of Global Notes or Definitive Notes will be the valid obligations of the Company,
evidencing the same debt, and entitled to the same benefits under this Indenture, as the
Global Notes or Definitive Notes surrendered upon such registration of transfer or exchange.

     (5) Neither the Registrar nor the Company will be required:

     (A) to issue, to register the transfer of or to exchange any Notes during a
period beginning at the opening of business 15 days before the day of any selection
of Notes for redemption under Section 3.02 hereof and ending at the close of
business on the day of selection;

     (B) to register the transfer of or to exchange any Note selected for redemption
in whole or in part, except the unredeemed portion of any Note being redeemed in
part; or

     (C) to register the transfer of or to exchange a Note between a record date and
the next succeeding interest payment date.

     (6) Prior to due presentment for the registration of a transfer of any Note, the
Trustee, any Agent and the Company may deem and treat the Person in whose name any Note is
registered as the absolute owner of such Note for the purpose of receiving payment of
principal of and interest on such Notes and for all other purposes, and none of the Trustee,
any Agent or the Company shall be affected by notice to the contrary.

     (7) The Trustee will authenticate Global Notes and Definitive Notes in accordance with
the provisions of Section 2.02 hereof.

     (8) All certifications, certificates and Opinions of Counsel required to be submitted
to the Registrar pursuant to this Section 2.06 to effect a registration of transfer or
exchange may be submitted by facsimile.

Section 2.07 Replacement Notes.

     If any mutilated Note is surrendered to the Trustee or the Company and the Trustee receives
evidence to its satisfaction of the destruction, loss or theft of any Note, the Company will issue
and the Trustee, upon receipt of an Authentication Order, will authenticate a replacement Note if
the Trustee’s requirements are met. If required by the Trustee or the Company, an indemnity bond
must be supplied by the Holder that is sufficient in the judgment of the Trustee and the Company to
protect the Company, the Trustee, any Agent and any authenticating agent from any loss, liability
or expense that any of them may

36

 

suffer if a Note is replaced and subsequently presented or claimed for payment. The Company
may charge for its expenses in replacing a Note.

     Every replacement Note is an additional obligation of the Company and will be entitled to all
of the benefits of this Indenture equally and proportionately with all other Notes duly issued
hereunder.

Section 2.08 Outstanding Notes.

     The Notes outstanding at any time are all the Notes authenticated by the Trustee except for
those canceled by it, those delivered to it for cancellation, those reductions in the interest in a
Global Note effected by the Trustee in accordance with the provisions hereof, and those described
in this Section 2.08 as not outstanding. Except as set forth in Section 2.09 hereof, a Note does
not cease to be outstanding because the Company or an Affiliate of the Company holds the Note;
however, Notes held by the Company or a Subsidiary of the Company shall not be deemed to be
outstanding for purposes of Section 3.07(a) hereof.

     If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be outstanding unless the
Trustee receives proof satisfactory to it that the replaced Note is held by a protected purchaser.

     If the principal amount of any Note is considered paid under Section 4.01 hereof, it ceases to
be outstanding and interest on it ceases to accrue.

     If the Paying Agent (other than the Company, a Subsidiary or an Affiliate of any thereof)
holds, on a redemption date or maturity date, money sufficient to pay Notes payable on that date,
then on and after that date such Notes will be deemed to be no longer outstanding and will cease to
accrue interest.

Section 2.09 Treasury Notes.

     In determining whether the Holders of the required principal amount of Notes have concurred in
any direction, waiver or consent, Notes owned by the Company or any Guarantor, or by any Person
directly or indirectly controlling or controlled by or under direct or indirect common control with
the Company or any Guarantor, will be considered as though not outstanding, except that for the
purposes of determining whether the Trustee will be protected in relying on any such direction,
waiver or consent, only Notes that the Trustee knows are so owned will be so disregarded.

Section 2.10 Temporary Notes.

     Until certificates representing Notes are ready for delivery, the Company may prepare and the
Trustee, upon receipt of an Authentication Order, will authenticate temporary Notes. Temporary
Notes will be substantially in the form of certificated Notes but may have variations that the
Company considers appropriate for temporary Notes and as may be reasonably acceptable to the
Trustee. Without unreasonable delay, the Company will prepare and the Trustee will authenticate
definitive Notes in exchange for temporary Notes.

     Holders of temporary Notes will be entitled to all of the benefits of this Indenture.

Section 2.11 Cancellation.

     The Company at any time may deliver Notes to the Trustee for cancellation. The Registrar and
Paying Agent will forward to the Trustee any Notes surrendered to them for registration of
transfer, exchange or payment. The Trustee and no one else will cancel all Notes surrendered for
registration of

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transfer, exchange, payment, replacement or cancellation and will destroy canceled Notes
(subject to the record retention requirement of the Exchange Act). Certification of the
destruction of all canceled Notes will be delivered to the Company. The Company may not issue new
Notes to replace Notes that it has paid or that have been delivered to the Trustee for
cancellation.

Section 2.12 Defaulted Interest.

     If the Company defaults in a payment of interest on the Notes, it will pay the defaulted
interest in any lawful manner plus, to the extent lawful, interest payable on the defaulted
interest, to the Persons who are Holders on a subsequent special record date, in each case at the
rate provided in the Notes and in Section 4.01 hereof. The Company will notify the Trustee in
writing of the amount of defaulted interest proposed to be paid on each Note and the date of the
proposed payment. The Company will fix or cause to be fixed each such special record date and
payment date; provided that no such special record date may be less than 10 days prior to the
related payment date for such defaulted interest. At least 15 days before the special record date,
the Company (or, upon the written request of the Company, the Trustee in the name and at the
expense of the Company) will mail or cause to be mailed to Holders a notice that states the special
record date, the related payment date and the amount of such interest to be paid.

ARTICLE 3

REDEMPTION AND PREPAYMENT

Section 3.01 Notices to Trustee.

     If the Company elects to redeem Notes pursuant to the optional redemption provisions of
Section 3.07 hereof, it must furnish to the Trustee, at least 30 days but not more than 60 days
before a redemption date, an Officers’ Certificate setting forth:

     (1) the clause of this Indenture pursuant to which the redemption shall occur;

     (2) the redemption date;

     (3) the principal amount of Notes to be redeemed; and

     (4) the redemption price.

Section 3.02 Selection of Notes to Be Redeemed or Purchased.

     If less than all of the Notes are to be redeemed or purchased in an offer to purchase at any
time, the Trustee will select Notes for redemption or purchase on a pro rata basis unless otherwise
required by law or applicable stock exchange requirements.

     In the event of partial redemption or purchase by lot, the particular Notes to be redeemed or
purchased will be selected, unless otherwise provided herein, not less than 30 nor more than 60
days prior to the redemption or purchase date by the Trustee from the outstanding Notes not
previously called for redemption or purchase.

     The Trustee will promptly notify the Company in writing of the Notes selected for redemption
or purchase and, in the case of any Note selected for partial redemption or purchase, the principal
amount thereof to be redeemed or purchased. Notes and portions of Notes selected will be in
amounts of $1,000 or whole multiples of $1,000; except that if all of the Notes of a Holder are to
be redeemed or purchased, the entire outstanding amount of Notes held by such Holder, even if not a
multiple of $1,000, shall be

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redeemed or purchased. Except as provided in the preceding sentence, provisions of this
Indenture that apply to Notes called for redemption or purchase also apply to portions of Notes
called for redemption or purchase.

Section 3.03 Notice of Redemption.

     Subject to the provisions of Section 3.09 hereof, at least 30 days but not more than 60 days
before a redemption date, the Company will mail or cause to be mailed, by first class mail, a
notice of redemption to each Holder whose Notes are to be redeemed at its registered address,
except that redemption notices may be mailed more than 60 days prior to a redemption date if the
notice is issued in connection with a defeasance of the Notes or a satisfaction and discharge of
this Indenture pursuant to Articles 8 or 12 hereof.

     The notice will identify the Notes to be redeemed and will state:

     (1) the redemption date;

     (2) the redemption price;

     (3) if any Note is being redeemed in part, the portion of the principal amount of such
Note to be redeemed and that, after the redemption date upon surrender of such Note, a new
Note or Notes in principal amount equal to the unredeemed portion will be issued upon
cancellation of the original Note;

     (4) the name and address of the Paying Agent;

     (5) that Notes called for redemption must be surrendered to the Paying Agent to collect
the redemption price;

     (6) that, unless the Company defaults in making such redemption payment, interest on
Notes called for redemption ceases to accrue on and after the redemption date;

     (7) the paragraph of the Notes and/or Section of this Indenture pursuant to which the
Notes called for redemption are being redeemed; and

     (8) that no representation is made as to the correctness or accuracy of the CUSIP
number, if any, listed in such notice or printed on the Notes.

     At the Company’s request, the Trustee will give the notice of redemption in the Company’s name
and at its expense; provided, however, that the Company has delivered to the Trustee, at least 45
days prior to the redemption date, an Officers’ Certificate requesting that the Trustee give such
notice and a complete form of Notice setting forth the information to be stated in such notice as
provided in the preceding paragraph.

Section 3.04 Effect of Notice of Redemption.

     Once notice of redemption is mailed in accordance with Section 3.03 hereof, Notes called for
redemption become irrevocably due and payable on the redemption date at the redemption price. A
notice of redemption may not be conditional.

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Section 3.05 Deposit of Redemption or Purchase Price.

     One Business Day prior to the redemption or purchase date, the Company will deposit with the
Trustee or with the Paying Agent money sufficient to pay the redemption or purchase price of and
accrued interest and Liquidated Damages, if any,on all Notes to be redeemed or purchased on that
date. The Trustee or the Paying Agent will promptly return to the Company any money deposited with
the Trustee or the Paying Agent by the Company in excess of the amounts necessary to pay the
redemption or purchase price of, and accrued interest and Liquidated Damages, if any, on, all Notes
to be redeemed or purchased.

     If the Company complies with the provisions of the preceding paragraph, on and after the
redemption or purchase date, interest will cease to accrue on the Notes or the portions of Notes
called for redemption or purchase. If a Note is redeemed or purchased on or after an interest
record date but on or prior to the related interest payment date, then any accrued and unpaid
interest shall be paid to the Person in whose name such Note was registered at the close of
business on such record date. If any Note called for redemption or purchase is not so paid upon
surrender for redemption or purchase because of the failure of the Company to comply with the
preceding paragraph, interest shall be paid on the unpaid principal, from the redemption or
purchase date until such principal is paid, and to the extent lawful on any interest not paid on
such unpaid principal, in each case at the rate provided in the Notes and in Section 4.01 hereof.

Section 3.06 Notes Redeemed or Purchased in Part.

     Upon surrender of a Note that is redeemed or purchased in part, the Company will issue and,
upon receipt of an Authentication Order, the Trustee will authenticate for the Holder at the
expense of the Company a new Note equal in principal amount to the unredeemed or unpurchased
portion of the Note surrendered.

Section 3.07 Optional Redemption.

     (a) At any time prior to August 15, 2010, the Company may on any one or more occasions redeem
up to 35% of the aggregate principal amount of Notes issued under this Indenture at a redemption
price of 111% of the principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, to the redemption date, with the net cash proceeds of a sale of common Equity
Interests (other than Disqualified Stock) of the Company; provided that:

     (1) at least 65% of the aggregate principal amount of Notes originally issued under
this Indenture (excluding Notes held by the Company and its Subsidiaries) remains
outstanding immediately after the occurrence of such redemption; and

     (2) the redemption occurs within 90 days of the date of the closing of such sale of
Equity Interests.

     (b) At any time prior to August 15, 2011, the Company may also redeem all or a part of the
Notes, upon not less than 30 nor more than 60 days’ prior notice mailed by first-class mail to each
Holder’s registered address, at a redemption price equal to 100% of the principal amount of Notes
redeemed plus the Applicable Premium as of, and accrued and unpaid interest and Liquidated Damages,
if any, to the applicable date of redemption, subject to the rights of Holders on the relevant
record date to receive interest due on the relevant interest payment date.

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     (c) Except pursuant to Sections 3.07(a) and (b) hereof, the Notes will not be redeemable at
the Company’s option prior to August 15, 2011.

     (d) On or after August 15, 2011, the Company may redeem all or a part of the Notes upon not
less than 30 nor more than 60 days’ notice, at the redemption prices (expressed as percentages of
principal amount) set forth below plus accrued and unpaid interest and Liquidated Damages, if any,
on the Notes redeemed to the applicable redemption date, if redeemed during the twelve-month period
beginning on August 15 of the years indicated below, subject to the rights of Holders on the
relevant record date to receive interest on the relevant interest payment date:

	 	 	 	 	 
	Year	 	Percentage	 
	2011
	 	 	105.500	%
	2012
	 	 	103.667	%
	2013
	 	 	101.833	%
	2014 and thereafter
	 	 	100.000	%

     Unless the Company defaults in the payment of the redemption price, interest will cease to
accrue on the Notes or portions thereof called for redemption on the applicable redemption date.

     (e) Any redemption pursuant to this Section 3.07 shall be made pursuant to the provisions of
Sections 3.01 through 3.06 hereof.

Section 3.08 Mandatory Redemption.

     The Company is not required to make mandatory redemption or sinking fund payments with respect
to the Notes. The Company may at any time and from time to time purchase notes in the open market
or otherwise provided any such purchase does not otherwise violate the provisions of this
Indenture.

Section 3.09 Offer to Purchase by Application of Excess Proceeds.

     In the event that, pursuant to Section 4.10 hereof, the Company is required to commence an
offer to all Holders to purchase Notes (an “Asset Sale Offer”), it will follow the procedures
specified below.

     The Asset Sale Offer shall be made to all Holders and all holders of other Indebtedness that
is pari passu with the Notes containing provisions similar to those set forth in this Indenture
with respect to offers to purchase or redeem with the proceeds of sales of assets. The Asset Sale
Offer will remain open for a period of at least 20 Business Days following its commencement and not
more than 30 Business Days, except to the extent that a longer period is required by applicable law
(the “Offer Period”). No later than three Business Days after the termination of the Offer Period
(the “Purchase Date”), the Company will apply all Excess Proceeds (the “Offer Amount”) to the
purchase of Notes and such other pari passu Indebtedness (on a pro rata basis, if applicable) or,
if less than the Offer Amount has been tendered, all Notes and other Indebtedness tendered in
response to the Asset Sale Offer. Payment for any Notes so purchased will be made in the same
manner as interest payments are made.

     If the Purchase Date is on or after an interest record date and on or before the related
interest payment date, any accrued and unpaid interest and Liquidated Damages, if any, will be paid
to the Person in whose name a Note is registered at the close of business on such record date, and
no additional interest will be payable to Holders who tender Notes pursuant to the Asset Sale
Offer.

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     Upon the commencement of an Asset Sale Offer, the Company will send, by first class mail, a
notice to the Trustee and each of the Holders, with a copy to the Trustee. The notice will contain
all instructions and materials necessary to enable such Holders to tender Notes pursuant to the
Asset Sale Offer. The notice, which will govern the terms of the Asset Sale Offer, will state:

     (1) that the Asset Sale Offer is being made pursuant to this Section 3.09 and Section
4.10 hereof and the length of time the Asset Sale Offer will remain open;

     (2) the Offer Amount, the purchase price and the Purchase Date;

     (3) that any Note not tendered or accepted for payment will continue to accrue
interest;

     (4) that, unless the Company defaults in making such payment, any Note accepted for
payment pursuant to the Asset Sale Offer will cease to accrue interest after the Purchase
Date;

     (5) that Holders electing to have a Note purchased pursuant to an Asset Sale Offer may
elect to have Notes purchased in integral multiples of $1,000 only;

     (6) that Holders electing to have Notes purchased pursuant to any Asset Sale Offer will
be required to surrender the Note, with the form entitled “Option of Holder to Elect
Purchase” attached to the Notes completed, or transfer by book-entry transfer, to the
Company, a Depositary, if appointed by the Company, or a Paying Agent at the address
specified in the notice at least three days before the Purchase Date;

     (7) that Holders will be entitled to withdraw their election if the Company, the
Depositary or the Paying Agent, as the case may be, receives, not later than the expiration
of the Offer Period, a telegram, telex, facsimile transmission or letter setting forth the
name of the Holder, the principal amount of the Note the Holder delivered for purchase and a
statement that such Holder is withdrawing his election to have such Note purchased;

     (8) that, if the aggregate principal amount of Notes and other pari passu Indebtedness
surrendered by holders thereof exceeds the Offer Amount, the Company will select the Notes
and other pari passu Indebtedness to be purchased on a pro rata basis based on the principal
amount of Notes and such other pari passu Indebtedness surrendered (with such adjustments as
may be deemed appropriate by the Company so that only Notes in denominations of $1,000, or
integral multiples thereof, will be purchased); and

     (9) that Holders whose Notes were purchased only in part will be issued new Notes equal
in principal amount to the unpurchased portion of the Notes surrendered (or transferred by
book-entry transfer).

     On or before the Purchase Date, the Company will, to the extent lawful, accept for payment, on
a pro rata basis to the extent necessary, the Offer Amount of Notes or portions thereof tendered
pursuant to the Asset Sale Offer, or if less than the Offer Amount has been tendered, all Notes
tendered, and will deliver or cause to be delivered to the Trustee the Notes properly accepted
together with an Officers’ Certificate stating that such Notes or portions thereof were accepted
for payment by the Company in accordance with the terms of this Section 3.09. The Company, the
Depositary or the Paying Agent, as the case may be, will promptly (but in any case not later than
five days after the Purchase Date) mail or deliver to each tendering Holder an amount equal to the
purchase price of the Notes tendered by such Holder and accepted by the Company for purchase, and
the Company will promptly issue a new Note,

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and the Trustee, upon written request from the Company, will authenticate and mail or deliver
(or cause to be transferred by book entry) such new Note to such Holder, in a principal amount
equal to any unpurchased portion of the Note surrendered. Any Note not so accepted shall be
promptly mailed or delivered by the Company to the Holder thereof. The Company will publicly
announce the results of the Asset Sale Offer on the Purchase Date.

     Other than as specifically provided in this Section 3.09, any purchase pursuant to this
Section 3.09 shall be made pursuant to the provisions of Sections 3.01 through 3.06 hereof.

ARTICLE 4

COVENANTS

Section 4.01 Payment of Notes.

     The Company will pay or cause to be paid the principal of, premium, if any, and interest and
Liquidated Damages, if any, on, the Notes on the dates and in the manner provided in the Notes.
Principal, premium, if any, and interest and Liquidated Damages, if any will be considered paid on
the date due if the Paying Agent, if other than the Company or a Subsidiary thereof, holds as of
10:00 a.m. Eastern Time on the due date money deposited by the Company in immediately available
funds and designated for and sufficient to pay all principal, premium, if any, and interest then
due. The Company will pay all Liquidated Damages, if any, in the same manner on the dates and in
the amounts set forth in the Registration Rights Agreement.

     The Company will pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal at the rate equal to 1% per annum in excess of the then
applicable interest rate on the Notes to the extent lawful; it will pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of
interest and Liquidated Damages (without regard to any applicable grace period) at the same rate to
the extent lawful.

Section 4.02 Maintenance of Office or Agency.

     The Company will maintain in the Borough of Manhattan, the City of New York, an office or
agency (which may be an office of the Trustee or an affiliate of the Trustee, Registrar or
co-registrar) where Notes may be surrendered for registration of transfer or for exchange and where
notices and demands to or upon the Company in respect of the Notes and this Indenture may be
served. The Company will give prompt written notice to the Trustee of the location, and any change
in the location, of such office or agency. If at any time the Company fails to maintain any such
required office or agency or fails to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office
of the Trustee.

     The Company may also from time to time designate one or more other offices or agencies where
the Notes may be presented or surrendered for any or all such purposes and may from time to time
rescind such designations; provided, however, that no such designation or rescission will in any
manner relieve the Company of its obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York for such purposes. The Company will give prompt written notice to
the Trustee of any such designation or rescission and of any change in the location of any such
other office or agency.

     The Company hereby designates the Corporate Trust Office of the Trustee as one such office or
agency of the Company in accordance with Section 2.03 hereof.

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Section 4.03 Reports.

     (a) Whether or not required by the rules and regulations of the SEC, so long as any Notes are
outstanding, the Company will furnish to the Holders of Notes or cause the Trustee to furnish to
the Holders of Notes, within the time periods specified in the SEC’s rules and regulations (or
within five Business Days thereof if the Company is subject to the periodic reporting requirements
of the Exchange Act):

     (1) all quarterly and annual reports that would be required to be filed with the SEC on
Forms 10-Q and 10-K if the Company were required to file reports; and

     (2) all current reports that would be required to be filed with the SEC on Form 8-K if
the Company were required to file such reports.

     All such reports will be prepared in all material respects in accordance with all of the rules
and regulations applicable to such reports. Each annual report on Form 10-K will include a report
on the Company’s consolidated financial statements by the Company’s certified independent
accountants. In addition, the Company will file a copy of each of the reports referred to in
clauses (1) and (2) above with the SEC for public availability within the time periods specified in
the rules and regulations applicable to such reports (unless the SEC will not accept such a filing)
and will post the reports on its website within those time periods. The Company will at all times
comply with TIA § 314(a).

     If, at any time, the Company is no longer subject to the periodic reporting requirements of
the Exchange Act for any reason, the Company will nevertheless continue filing the reports
specified in the preceding paragraph with the SEC within the time periods in the SEC’s rules and
regulations unless the SEC will not accept such a filing. The Company will not take any action for
the purpose of causing the SEC not to accept any such filings. If, notwithstanding the foregoing,
the SEC will not accept the Company’s filings for any reason, the Company will post the reports
referred to in the preceding paragraph on its website within the time periods that would apply if
the Company were required to file those reports with the SEC.

     (b) To the extent required by the SEC, the quarterly and annual financial information required
by paragraph (a) of this Section 4.03 will include a reasonably detailed presentation, either on
the face of the financial statements or in the footnotes thereto, and in Management’s Discussion
and Analysis of Financial Condition and Results of Operations, of the financial condition and
results of operations of the Company and the Guarantors separate from the financial condition and
results of operations of the Unrestricted Subsidiaries of the Company.

     (c) For so long as any Notes remain outstanding, if at any time the Company and the Guarantors
are not required to file with the SEC the reports required by paragraphs (a) and (b) of this
Section 4.03, the Company and the Guarantors will furnish to the Holders and to securities analysts
and prospective investors, upon their request, the information required to be delivered pursuant to
Rule 144A(d)(4) under the Securities Act.

     (d) Delivery of such reports, information and documents to the Trustee is for informational
purposes only and the Trustee’s receipt of such shall not constitute constructive notice of any
information contained therein or determinable from information contained therein, including the
Company’s compliance with any of its covenants hereunder (as to which the Trustee is entitled to
rely exclusively on Officer’s Certificates). The Trustee is under no duty to examine such reports,
information or documents to ensure compliance with the provisions of this Indenture or to ascertain
the correctness or otherwise of

44

 

the information or the statements contained therein. The Trustee is entitled to assume such
compliance and correctness unless a Responsible Officer of the Trustee is informed otherwise.

Section 4.04 Compliance Certificate.

     (a) The Company and each Guarantor (to the extent that such Guarantor is so required under the
TIA) shall deliver to the Trustee, within 90 days after the end of each fiscal year, an Officers’
Certificate stating that a review of the activities of the Company and its Subsidiaries during the
preceding fiscal year has been made under the supervision of the signing Officers with a view to
determining whether the Company has kept, observed, performed and fulfilled its obligations under
this Indenture and the Collateral Documents, and further stating, as to each such Officer signing
such certificate, that to the best of his or her knowledge the Company has kept, observed,
performed and fulfilled each and every covenant contained in this Indenture Collateral Documents
and is not in default in the performance or observance of any of the terms, provisions and
conditions of this Indenture or Collateral Documents (or, if a Default or Event of Default has
occurred, describing all such Defaults or Events of Default of which he or she may have knowledge
and what action the Company is taking or proposes to take with respect thereto) and that to the
best of his or her knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest, if any, on the Notes is prohibited or if such
event has occurred, a description of the event and what action the Company is taking or proposes to
take with respect thereto.

     (b) So long as any of the Notes are outstanding, the Company will deliver to the Trustee,
forthwith upon any Officer becoming aware of any Default or Event of Default, an Officers’
Certificate specifying such Default or Event of Default and what action the Company is taking or
proposes to take with respect thereto.

     (c) Except with respect to receipt of Note payments when due and any Default or Event of
Default information contained in the Officers’ Certificate delivered to it pursuant to Section
4.04, the Trustee shall have no duty to review, ascertain or confirm the Company’s compliance with,
or the breach of, any representation, warranty or covenant made in this Indenture.

Section 4.05 Taxes.

     The Company will pay, and will cause each of its Subsidiaries to pay, prior to delinquency,
all material taxes, assessments, and governmental levies except such as are contested in good faith
and by appropriate proceedings or where the failure to effect such payment is not adverse in any
material respect to the Holders of the Notes.

Section 4.06 Stay, Extension and Usury Laws.

     The Company and each of the Guarantors covenants (to the extent that it may lawfully do so)
that it will not at any time insist upon, plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the performance of this Indenture; and the
Company and each of the Guarantors (to the extent that it may lawfully do so) hereby expressly
waives all benefit or advantage of any such law, and covenants that it will not, by resort to any
such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but
will suffer and permit the execution of every such power as though no such law has been enacted.

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Section 4.07 Restricted Payments.

     (a) Neither the Company nor any Guarantor will, directly or indirectly:

     (1) declare or pay any dividend or make any other payment or distribution on account of
the Company’s or such Guarantor’s Equity Interests (including, without limitation, any
payment in connection with any merger or consolidation involving the Company or any
Guarantor) or to the direct or indirect holders of the Company’s or any such Guarantor’s
Equity Interests in their capacity as such (other than dividends or distributions payable in
Equity Interests (other than Disqualified Stock) of the Company and other than dividends or
any other payments or distributions payable to the Company or a Guarantor);

     (2) purchase, redeem or otherwise acquire or retire for value (including, without
limitation, in connection with any merger or consolidation involving the Company) any Equity
Interests of the Company;

     (3) make any payment on or with respect to, or purchase, redeem, defease or otherwise
acquire or retire for value any Indebtedness of the Company or any Guarantor that is
contractually subordinated to the Notes or to any Note Guarantee (excluding any intercompany
Indebtedness between or among the Company and any of the Guarantors), except a payment of
interest or principal at the Stated Maturity thereof; or

     (4) make any Restricted Investment

(all such payments and other actions set forth in these clauses (1) through (4) above being
collectively referred to as “Restricted Payments”),

unless at the time of such Restricted Payment, the Company’s Consolidated EBITDA for the most
recently ended four full fiscal quarters for which internal financial statements are available is
no less than $50.0 million, provided that the Company shall not be permitted to make any
distribution or dividend of any Equity Interests in, or non-cash assets of, any Guarantor.

     (b) The provisions of Section 4.07(a) will not prohibit:

     (1) the payment of any dividend or other distribution or the consummation of any
irrevocable redemption within 60 days after the date of declaration of the dividend or other
distribution or giving of the redemption notice, as the case may be, if at the date of
declaration or notice, the dividend or other distribution or redemption payment would have
complied with the provisions of this Indenture;

     (2) so long as no Default has occurred and is continuing or would be caused thereby,
the making of any Restricted Payment in exchange for, or out of the net cash proceeds of the
substantially concurrent sale (other than to a Subsidiary of the Company) of, Equity
Interests of the Company (other than Disqualified Stock) or from the substantially
concurrent contribution of common equity capital to the Company;

     (3) so long as no Default has occurred and is continuing or would be caused thereby,
the repurchase, redemption, defeasance or other acquisition or retirement for value of
Indebtedness of the Company or any Guarantor that is contractually subordinated to the Notes
or to any Note Guarantee with the net cash proceeds from a substantially concurrent
incurrence of Permitted Refinancing Indebtedness;

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     (4) the payment of any dividend (or, in the case of any partnership or limited
liability company, any similar distribution) by a Guarantor to the holders of its Equity
Interests on a pro rata basis;

     (5) the repurchase of Equity Interests deemed to occur upon the exercise of stock
options, warrants or other convertible or exchangeable securities to the extent such Equity
Interests represent a portion of the exercise price of those stock options, warrants or
other convertible or exchangeable securities;

     (6) so long as no Default has occurred and is continuing or would be caused thereby,
the declaration and payment of regularly scheduled or accrued dividends to holders of any
class or series of Disqualified Stock of the Company or any Guarantor issued on or after the
date of this Indenture in accordance with the Leverage Ratio and Secured Leverage Ratio
tests described in Section 4.09 hereof; and

     (7) the distribution of the Equity Interests of Eve to the Company in order to
contribute such Equity Interests to Vector Tobacco, provided that Eve shall remain a
Guarantor.

     The amount of all Restricted Payments (other than cash) will be the Fair Market Value on the
date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued
by the Company or such Guarantor, as the case may be, pursuant to the Restricted Payment. The Fair
Market Value of any assets or securities that are required to be valued by this Section 4.07 will
be determined by the Board of Directors of the Company whose resolution with respect thereto will
be delivered to the Trustee. The Board of Directors’ determination must be based upon an opinion
or appraisal issued by an accounting, appraisal or investment banking firm of national standing if
the Fair Market Value exceeds $10.0 million.

Section 4.08 Dividend and Other Payment Restrictions Affecting Subsidiaries.

     (a) Neither the Company nor any Guarantor will, directly or indirectly, create or permit to
exist or become effective any consensual encumbrance or restriction on the ability of any Guarantor
to:

     (1) pay dividends or make any other distributions on its Capital Stock to the Company
or any Guarantor, or with respect to any other interest or participation in, or measured by,
its profits, or pay any Indebtedness owed to the Company or any Guarantor;

     (2) make loans or advances to the Company or any of the Guarantors; or

     (3) sell, lease or transfer any of its properties or assets to the Company or any
Guarantor.

     (b) The restrictions in Section 4.08(a) hereof will not apply to encumbrances or restrictions
existing under or by reason of:

     (1) agreements governing Existing Indebtedness and Credit Facilities as in effect on
the date of this Indenture and any amendments, restatements, modifications, renewals,
supplements, refundings, replacements or refinancings of those agreements; provided that the
amendments, restatements, modifications, renewals, supplements, refundings, replacements or
refinancings are not materially more restrictive, taken as a whole, with respect to such
dividend and other payment restrictions than those contained in those agreements on the date
of this Indenture;

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     (2) this Indenture, the Notes, the Note Guarantees and the Collateral Documents;

     (3) applicable law, rule, regulation or order;

     (4) any instrument governing Indebtedness or Capital Stock of a Person acquired by the
Company or any of the Guarantors as in effect at the time of such acquisition (except to the
extent such Indebtedness or Capital Stock was incurred in connection with or in
contemplation of such acquisition), which encumbrance or restriction is not applicable to
any Person, or the properties or assets of any Person, other than the Person, or the
property or assets of the Person, so acquired; provided that, in the case of Indebtedness,
such Indebtedness was permitted by the terms of this Indenture to be incurred;

     (5) customary non-assignment provisions in contracts, leases and licenses entered into
in the ordinary course of business or that restrict the subletting, assignment or transfer
of any property or asset that is subject to a lease, license or similar contract;

     (6) purchase money obligations for property acquired in the ordinary course of business
and Capital Lease Obligations that impose restrictions on the property purchased or leased
of the nature described in clause (3) of Section 4.08(a) hereof;

     (7) any agreement for the sale or other disposition of a Guarantor that restricts
distributions by that Guarantor pending the sale or other disposition;

     (8) Permitted Refinancing Indebtedness; provided that the encumbrances and restrictions
contained in the agreements governing such Permitted Refinancing Indebtedness are not
materially more restrictive, taken as a whole, than those contained in the agreements
governing the Indebtedness being refinanced as determined in good faith by the Board of
Directors of the Company;

     (9) Liens permitted to be incurred under the provisions of Section 4.12 hereof that
limit the right of the debtor to dispose of the assets subject to such Liens;

     (10) provisions limiting the disposition or distribution of assets or property in joint
venture agreements, asset sale agreements, sale-leaseback agreements, stock sale agreements
and other similar agreements entered into with the approval of the Company’s Board of
Directors, which limitation is applicable only to the assets that are the subject of such
agreements;

     (11) restrictions on cash or other deposits or net worth imposed by customers under
contracts entered into in the ordinary course of business;

     (12) provisions limiting the disposition or distribution of assets in joint venture
agreements entered into (i) in the ordinary course of business or (ii) with the approval of
the Company’s or the Guarantor’s Board of Directors or chief financial officer, which
limitation or prohibition is applicable only to the assets that are the subject of such
agreements;

     (13) net worth provisions in leases and other agreements entered into by the Company or
any Guarantor in the ordinary course of business; or

     (14) agreements governing Indebtedness permitted to be incurred pursuant to Section
4.09 hereof; provided, that the Board of Directors of the Company determines in good faith
(such determination to be evidenced by a resolution of the Board of Directors) that such
encumbrances

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and restrictions are not materially more restrictive, taken as a whole, than those in
agreements in the Liggett Credit Agreement (as in effect on the date of the indenture) and
would not reasonably be expected to impair the ability of the Company to make payments of
interest and scheduled payments of principal on the Notes, in each case as and when due, or
to impair any Guarantor’s ability to honor its Note Guarantee.

Section 4.09 Incurrence of Indebtedness and Issuance of Preferred Stock.

     (a) Neither the Company nor any Guarantor will, directly or indirectly, create, incur, issue,
assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise,
with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Company
will not issue any Disqualified Stock and none of the Guarantors will issue any shares of preferred
stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or
issue Disqualified Stock, and the Guarantors may incur Indebtedness (including Acquired Debt) or
issue preferred stock, if the Leverage Ratio and the Secured Leverage Ratio for the Company’s most
recently ended four full fiscal quarters for which internal financial statements are available
immediately preceding the date on which such additional Indebtedness is incurred or such
Disqualified Stock or preferred stock is issued, as the case may be, would have been no greater
than 3.0 to 1.0 in respect of the Leverage Ratio and 1.5 to 1.0 in respect of the Secured Leverage
Ratio, determined on a pro forma basis (including a pro forma application of the net proceeds
therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or
preferred stock had been issued, as the case may be, at the beginning of such four quarter period.

     (b) The provisions of Section 4.09(a) hereof will not prohibit the incurrence of any of the
following items of Indebtedness (collectively, “Permitted Debt”):

     (1) the incurrence by the Company and any of the Guarantors of additional Indebtedness
and letters of credit under Credit Facilities in an aggregate principal amount at any one
time outstanding under this clause (1) (with letters of credit being deemed to have a
principal amount equal to the maximum potential liability of the Company and the Guarantors
thereunder) not to exceed $60.0 million less the aggregate amount of all Net Proceeds of
Asset Sales applied by the Company or any of the Guarantors since the date of this Indenture
to repay any term Indebtedness under a Credit Facility or to repay any revolving credit
Indebtedness under a Credit Facility and effect a corresponding commitment reduction
thereunder pursuant to the provisions of the covenant described in Section 4.10 hereof;

     (2) the incurrence by the Company and the Guarantors of the Existing Indebtedness;

     (3) the incurrence by the Company and the Guarantors of Indebtedness represented by the
Notes and the related Note Guarantees to be issued on the date of this Indenture and the
Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration
Rights Agreement;

     (4) the incurrence by the Company or any of the Guarantors of Permitted Refinancing
Indebtedness in exchange for, or the net proceeds of which are used to renew, refund,
refinance, replace, defease or discharge any Indebtedness (other than intercompany
Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a)
hereof or clauses (2), (3) and (4) of this Section 4.09(b);

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     (5) the incurrence by the Company or any of the Guarantors of intercompany Indebtedness
between or among the Company and any of the Guarantors; provided, however, that:

     (A) any subsequent issuance or transfer of Equity Interests that results in any
such Indebtedness being held by a Person other than the Company or a Guarantor and

     (B) any sale or other transfer of any such Indebtedness to a Person that is not
either the Company or a Guarantor,

will be deemed, in each case, to constitute an incurrence of such Indebtedness by the
Company or such Guarantor, as the case may be, that was not permitted by this clause (5);

     (6)
the issuance by any of the Guarantors to the Company or to any of the Guarantors of shares of preferred stock; provided, however, that:

     (A) any subsequent issuance or transfer of Equity Interests that results in any
such preferred stock being held by a Person other than the Company or a Guarantor;
and

     (B) any sale or other transfer of any such preferred stock to a Person that is
not either the Company or a Guarantor,

will be deemed, in each case, to constitute an issuance of such preferred stock by such
Guarantor that was not permitted by this clause (6);

     (7) the guarantee by the Company or any of the Guarantors of Indebtedness of the
Company or a Guarantor that was permitted to be incurred by another provision of this
Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari
passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable,
to the same extent as the Indebtedness guaranteed;

     (8) the incurrence by the Company or any of the Guarantors of Indebtedness in respect
of workers’ compensation claims, self-insurance obligations, bankers’ acceptances,
performance and surety bonds, appeal or other similar bonds in the ordinary course of
business, and in any such case any reimbursement obligations in connection therewith;

     (9) the incurrence by the Company or any of the Guarantors of Indebtedness arising from
the honoring by a bank or other financial institution of a check, draft or similar
instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is
covered within five Business Days;

     (10) the incurrence by the Company or any of the Guarantors of Indebtedness represented
by Capital Lease Obligations, purchase money obligations or other obligations, in each case
incurred for the purpose of financing all or any part of the purchase price, cost or value
of any equipment used in the business of the Company or any of the Guarantors, in an
aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to
renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant
to this clause (10), not to exceed $10.0 million at any time outstanding;

     (11) the incurrence by the Company or any of the Guarantors of Hedging Obligations;

50

 

     (12) Indebtedness of the Company or any of the Guarantors to the extent the net
proceeds thereof are promptly deposited to defease or satisfy and discharge all outstanding
Notes in full as provided in Articles 8 and 12 hereof;

     (13) obligations of the Company and any of the Guarantors arising from agreements of
the Company or a Guarantor providing for indemnification, adjustment of purchase price or
similar obligations, in each case incurred or assumed in connection with the disposition of
any business, assets or a Subsidiary of the Company in accordance with the terms of this
Indenture, other than Guarantees by the Company or any Guarantor of Indebtedness incurred by
any Person acquiring all or any portion of such business, assets or a Subsidiary of the
Company for the purpose of financing such acquisition; provided, however, that the maximum
aggregate liability in respect of all such obligations shall not exceed the gross proceeds,
including the fair market value as determined in good faith by the Board of Directors of the
Company of non-cash proceeds (the fair market value of such non-cash proceeds being measured
at the time received and without giving effect to any subsequent changes in value), actually
received by the Company and the Guarantors in connection with such disposition; or

     (14) obligations of the Company and any of the Guarantors arising from the entering
into, maintaining or disposing of, Core Investments, including, without limitation,
purchasing of any Core Investment on margin, any capital call obligations, make-well
arrangements, hedging obligations of any nature or any obligations regarding a short
position in any of such Core Investments.

     The Company will not incur, and will not permit any Guarantor to incur, any Indebtedness
(including Permitted Debt) that is contractually subordinated in right of payment to any other
Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually
subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially
identical terms; provided, however, that no Indebtedness will be deemed to be contractually
subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being
unsecured or by virtue of being secured on a first or junior Lien basis.

     For purposes of determining compliance with this Section 4.09, in the event that an item of
Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in
clauses (1) through (14) above, or is entitled to be incurred pursuant to Section 4.09(a) hereof,
the Company will be permitted to classify such item of Indebtedness on the date of its incurrence,
or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with
this Section 4.09. Indebtedness under Credit Facilities outstanding on the date on which Notes are
first issued and authenticated under the indenture will initially be deemed to have been incurred
on such date in reliance on the exception provided by clause (1) of the definition of Permitted
Debt. Indebtedness permitted by this covenant need not be permitted by reference to one provision
permitting such Indebtedness but may be permitted in part by one such provision and in part by one
or more other provisions of this Section 4.09 permitting such Indebtedness. The accrual of
interest, the accretion or amortization of original issue discount, the payment of interest on any
Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of
preferred stock as Indebtedness due to a change in accounting principles, and the payment of
dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified
Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock
for purposes of this Section 4.09. Notwithstanding any other provision of this Section 4.09, the
maximum amount of Indebtedness that the Company or any Guarantor may incur pursuant to this Section
4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or
currency values.

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     (c) The amount of any Indebtedness outstanding as of any date will be:

     (1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with
original issue discount;

     (2) the principal amount of the Indebtedness, in the case of any other Indebtedness;
and

     (3) in respect of Indebtedness of another Person secured by a Lien on the assets of the
specified Person, the lesser of:

     (A) the Fair Market Value of such assets at the date of determination; and

     (B) the amount of the Indebtedness of the other Person.

Section 4.10 Asset Sales.

     Except as set forth in the second paragraph below, neither the Company nor any Guarantor will
consummate an Asset Sale unless:

     (1) the Company or the Guarantor, as the case may be, receives consideration at the
time of the Asset Sale at least equal to the Fair Market Value of the assets or Equity
Interests issued or sold or otherwise disposed of; and

     (2) at least 75% of the consideration received in the Asset Sale by the Company or such
Guarantor is in the form of cash. For purposes of this provision, each of the following
will be deemed to be cash:

     (A) any liabilities, as shown on the Company’s most recent consolidated balance
sheet, of the Company or any Guarantor (other than contingent liabilities and
liabilities that are by their terms subordinated to the Notes or any Note Guarantee)
that are assumed by the transferee of any such assets pursuant to a customary
novation agreement that releases the Company or such Guarantor from further
liability;

     (B) any securities, notes or other obligations received by the Company or any
such Guarantor from such transferee that are, subject to ordinary settlement
periods, converted by the Company or such Guarantor into cash within 90 days of such
Asset Sale, to the extent of the cash received in that conversion; and

     (C) any stock or assets of the kind referred to in clauses (2) or (4) of the
next paragraph of this Section 4.10.

     Within 365 days after the receipt of any Net Proceeds from an Asset Sale, other than a Sale of
Collateral, the Company (or the applicable Guarantor, as the case may be) may apply such Net
Proceeds at its option:

     (1) to repay Indebtedness and other Obligations under the Liggett Credit Agreement and
correspondingly reduce commitments with respect thereto;

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     (2) to acquire all or substantially all of the assets of, or any Capital Stock of,
another business, if, after giving effect to any such acquisition of Capital Stock, the
business is or becomes a Guarantor;

     (3) to make a capital expenditure; or

     (4) to acquire other assets that are not classified as current assets under GAAP and
that are used or useful in the conduct of the Company’s or any Guarantor’s business.

     Notwithstanding the above, the Company may consummate any Asset Sale with respect to assets
other than Equity Interests in, or assets of, any Guarantor without complying with the provisions
of this Section 4.10.

     Within 365 days after the receipt of any Net Proceeds from an Asset Sale that constitutes a
Sale of Collateral, the Guarantor that owned those assets may apply those Net Proceeds to purchase
other long-term assets that would constitute Collateral or to repay First Priority Debt and, if
such First Priority Debt is revolving credit Indebtedness, to correspondingly reduce commitments
with respect thereto.

     Pending the final application of any Net Proceeds, the Company may temporarily reduce
revolving credit borrowings or otherwise invest the Net Proceeds in any manner that is not
prohibited by this Indenture.

     Any Net Proceeds from Asset Sales that are not applied or invested as provided in the second
and fourth paragraphs of this Section 4.10 will constitute “Excess Proceeds.” When the aggregate
amount of Excess Proceeds exceeds $10.0 million, within five days thereof, the Company will make an
Asset Sale Offer to all holders of Parity Lien Debt and all holders of other Indebtedness that is
pari passu with the Notes containing provisions similar to those set forth in this Indenture with
respect to offers to purchase or redeem with the proceeds of sales of assets to purchase the
maximum principal amount of Parity Lien Debt and such other pari passu Indebtedness that may be
purchased out of the Excess Proceeds. The offer price in any Asset Sale Offer will be equal to
percentages corresponding to the applicable optional redemption price in effect on the repurchase
date, and for periods prior to August 15, 2011, the first optional redemption price of the
principal amount plus accrued and unpaid interest and Liquidated Damages, if any, to the date of
purchase, and will be payable in cash. If any Excess Proceeds remain after consummation of an
Asset Sale Offer, the Company may use those Excess Proceeds for any purpose not otherwise
prohibited by this Indenture. If the aggregate principal amount of Parity Lien Debt and other pari
passu Indebtedness tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds, the
Trustee will select the Parity Lien Debt and other pari passu Indebtedness to be purchased on a pro
rata basis. Upon completion of each Asset Sale Offer, the amount of Excess Proceeds will be reset
at zero.

     The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any
other securities laws and regulations thereunder to the extent such laws and regulations are
applicable in connection with each repurchase of Notes pursuant to an Asset Sale Offer. To the
extent that the provisions of any securities laws or regulations conflict with the provisions of
Section 3.09 hereof or this Section 4.10, the Company will comply with the applicable securities
laws and regulations and will not be deemed to have breached its obligations under Section 3.09
hereof or this Section 4.10 by virtue of such compliance.

Section 4.11 Transactions with Affiliates.

     (a) Except as provided in Section 4.11(c), neither the Company nor any Guarantor will make any
payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or

53

 

purchase any property or assets from, or enter into or make or amend any transaction,
contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any
Affiliate of the Company (each an “Affiliate Transaction”), unless:

     (1) the Affiliate Transaction is on terms that are no less favorable to the Company or
the relevant Restricted Subsidiary than those that would have been obtained in a comparable
transaction by the Company or such Restricted Subsidiary with an unrelated Person; and

     (2) the Company delivers to the Trustee:

     (A) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $3.0 million, a
resolution of the Board of Directors of the Company set forth in an Officers’
Certificate certifying that such Affiliate Transaction complies with clause (1) of
this Section 4.11(a) and that such Affiliate Transaction has been approved by a
majority of the disinterested members, if any, of the Board of Directors of the
Company; and

     (B) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $10.0 million, an
opinion as to the fairness to the Company or such Subsidiary of such Affiliate
Transaction from a financial point of view issued by an accounting, appraisal or
investment banking firm of national standing.

     (b) The following items will not be deemed to be Affiliate Transactions and, therefore, will
not be subject to the provisions of Section 4.11(a) hereof:

     (1) any consulting or employment agreement or arrangement, employee benefit plan,
officer indemnification agreement or any similar arrangement entered into by the Company or
any of the Guarantors and payments pursuant thereto;

     (2) transactions between or among the Company and/or the Guarantors;

     (3) transactions with a Person (other than an Unrestricted Subsidiary of the Company)
that is an Affiliate of the Company solely because the Company owns, directly or through a
Guarantor, an Equity Interest in, or controls, such Person;

     (4) payment of reasonable directors’ fees (including the issuance of restricted stock)
to directors of the Company and other reasonable compensation, benefits and indemnities paid
or provided by the Company to the directors of the Company in their capacities as directors;

     (5) any sale, grant, award or issuance of Equity Interests (other than Disqualified
Stock) of the Company, including the exercise of options and warrants, to Affiliates,
officers, directors or employees of the Company;

     (6) Restricted Payments that do not violate Section 4.07 hereof;

     (7) loans or advances to employees in the ordinary course of business not to exceed
$1.0 million in the aggregate at any one time outstanding;

     (8) Permitted Investments; and

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     (9) Accelerated Note Conversions.

     (c) If on the date of any Affiliate Transaction (other than an Affiliate Transaction between
any of the Liggett Guarantors and any Affiliate of the Company other than the Company or another
Guarantor) the Company’s Consolidated EBITDA for the most recently ended four full fiscal quarters
for which internal financial statements are available is no less than $50.0 million, the provisions
of Section 4.11(a) shall not apply to the consummation of such Affiliate Transaction.

Section 4.12 Liens.

     Neither the Company nor any Guarantor will directly or indirectly create, incur, assume or
suffer to exist any Lien of any kind on any asset now owned or hereafter acquired, except Permitted
Liens.

Section 4.13 Corporate Existence.

     Subject to Article 5 hereof, the Company shall do or cause to be done all things necessary to
preserve and keep in full force and effect:

     (1) its corporate existence, and the corporate, partnership or other existence of each
of its Subsidiaries, in accordance with the respective organizational documents (as the same
may be amended from time to time) of the Company or any such Subsidiary; and

     (2) the rights (charter and statutory), licenses and franchises of the Company and its
Subsidiaries; provided, however, that the Company shall not be required to preserve any such
right, license or franchise, or the corporate, partnership or other existence of any of its
Subsidiaries, if the Board of Directors shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company and its Subsidiaries, taken
as a whole, and that the loss thereof is not adverse in any material respect to the Holders
of the Notes.

Section 4.14 Offer to Repurchase Upon Change of Control.

     (a) Upon the occurrence of a Change of Control, each Holder of Notes will have the right to
require the Company to make an offer (a “Change of Control Offer”) to repurchase all or any part
(equal to $1,000 or an integral multiple of $1,000) of that Holder’s Notes at a purchase price in
cash equal to 101% of the aggregate principal amount of Notes repurchased plus accrued and unpaid
interest and Liquidated Damages, if any, on the Notes repurchased to the date of purchase, subject
to the rights of Holders on the relevant record date to receive interest due on the relevant
interest payment date (the “Change of Control Payment”). Within thirty days following any Change of
Control, the Company will mail a notice to each Holder describing the transaction or transactions
that constitute the Change of Control and stating:

     (1) that the Change of Control Offer is being made pursuant to this Section 4.14 and
that all Notes tendered will be accepted for payment;

     (2) the purchase price and the purchase date, which shall be no earlier than 30 days
and no later than 60 days from the date such notice is mailed (the “Change of Control
Payment Date”);

     (3) that any Note not tendered will continue to accrue interest;

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     (4) that, unless the Company defaults in the payment of the Change of Control Payment,
all Notes accepted for payment pursuant to the Change of Control Offer will cease to accrue
interest after the Change of Control Payment Date;

     (5) that Holders electing to have any Notes purchased pursuant to a Change of Control
Offer will be required to surrender the Notes, with the form entitled “Option of Holder to
Elect Purchase” attached to the Notes completed, or transfer by book-entry transfer, to the
Paying Agent at the address specified in the notice prior to the close of business on the
third Business Day preceding the Change of Control Payment Date;

     (6) that Holders will be entitled to withdraw their election if the Paying Agent
receives, not later than the close of business on the second Business Day preceding the
Change of Control Payment Date, a telegram, telex, facsimile transmission or letter setting
forth the name of the Holder, the principal amount of Notes delivered for purchase, and a
statement that such Holder is withdrawing his election to have the Notes purchased; and

     (7) that Holders whose Notes are being purchased only in part will be issued new Notes
equal in principal amount to the unpurchased portion of the Notes surrendered, which
unpurchased portion must be equal to $1,000 in principal amount or an integral multiple
thereof.

     The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any
other securities laws and regulations thereunder to the extent those laws and regulations are
applicable in connection with the repurchase of the Notes as a result of a Change in Control. To
the extent that the provisions of any securities laws or regulations conflict with the provisions
of Sections 3.09 or 4.14 hereof, the Company will comply with the applicable securities laws and
regulations and will not be deemed to have breached its obligations under Sections 3.09 or 4.14
hereof by virtue of such compliance.

     (b) On the Change of Control Payment Date, the Company will, to the extent lawful:

     (1) accept for payment all Notes or portions of Notes properly tendered pursuant to the
Change of Control Offer;

     (2) deposit with the Paying Agent an amount equal to the Change of Control Payment in
respect of all Notes or portions of Notes properly tendered; and

     (3) deliver or cause to be delivered to the Trustee the Notes properly accepted
together with an Officers’ Certificate stating the aggregate principal amount of Notes or
portions of Notes being purchased by the Company.

     The Paying Agent will promptly mail (but in any case not later than five days after the Change
of Control Payment Date) to each Holder of Notes properly tendered the Change of Control Payment
for such Notes, and the Trustee will promptly authenticate and mail (or cause to be transferred by
book entry) to each Holder a new Note equal in principal amount to any unpurchased portion of the
Notes surrendered, if any. The Company will publicly announce the results of the Change of Control
Offer on or as soon as practicable after the Change of Control Payment Date.

     (c) Notwithstanding anything to the contrary in this Section 4.14, the Company will not be
required to make a Change of Control Offer upon a Change of Control if (1) a third party makes the
Change of Control Offer in the manner, at the times and otherwise in compliance with the
requirements set forth in this Section 4.14 and Section 3.09 hereof and purchases all Notes
properly tendered and not withdrawn under the Change of Control Offer, or (2) notice of redemption
has been given pursuant to

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Section 3.07 hereof, unless and until there is a default in payment of the applicable
redemption price. A Change of Control Offer may be made in advance of a Change of Control,
conditional upon such Change of Control, if a definitive agreement is in place for the Change of
Control at the time of the Change of Control Offer. Notes repurchased pursuant to a Change of
Control Offer will be retired and cancelled.

Section 4.15 Limitation on Sale and Leaseback Transactions.

     Neither the Company nor any Guarantor will enter into any sale and leaseback transaction;
provided that the Company or any Guarantor may enter into a sale and leaseback transaction if:

     (1) the Company or that Guarantor, as applicable, could have (a) incurred Indebtedness
in an amount equal to the Attributable Debt relating to such sale and leaseback transaction
under the Leverage Ratio and Secured Leverage Ratio tests in Section 4.09(a) hereof and (b)
incurred a Lien to secure such Indebtedness pursuant to the provisions of Section 4.12
hereof;

     (2) the gross cash proceeds of that sale and leaseback transaction are at least equal
to the Fair Market Value, as determined in good faith by the Board of Directors of the
Company and set forth in an Officers’ Certificate delivered to the Trustee, of the property
that is the subject of that sale and leaseback transaction; and

     (3) the transfer of assets in that sale and leaseback transaction is permitted by, and
the Company applies the proceeds of such transaction in compliance with, Section 4.10
hereof.

Section 4.16 Payments for Consent.

     Neither the Company nor any Guarantor will, directly or indirectly, pay or cause to be paid
any consideration to or for the benefit of any Holder of Notes for or as an inducement to any
consent, waiver or amendment of any of the terms or provisions of this Indenture, the Collateral
Documents or the Notes unless such consideration is offered to be paid and is paid to all Holders
of the Notes that consent, waive or agree to amend in the time frame set forth in the solicitation
documents relating to such consent, waiver or agreement.

Section 4.17 Additional Note Guarantees.

     If the Company or any of the Guarantors acquires or creates another Domestic Subsidiary after
the date of this Indenture (i) engaged directly or indirectly in the cigarette businesses or (ii)
that is or becomes a borrower, obligor or guarantor under the Liggett Credit Agreement, then that
newly acquired or created Domestic Subsidiary will become a Guarantor and execute a supplemental
indenture and, in the case of (ii), Collateral Documents consistent with those entered into by the
Liggett Guarantors and deliver an opinion of counsel satisfactory to the trustee within 10 Business
Days of the date on which it was acquired or created. The form of such Note Guarantee is attached
as Exhibit E hereto.

Section 4.18 Unrestricted Subsidiaries.

     In no event may the business operated by Liggett Group LLC on the date of this Indenture
be transferred to or held by an Unrestricted Subsidiary.

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ARTICLE 5

SUCCESSORS

Section 5.01 Merger, Consolidation, or Sale of Assets.

     The Company shall not, directly or indirectly: (1) consolidate or merge with or into another
Person (whether or not the Company is the surviving corporation); or (2) sell, assign, transfer,
convey or otherwise dispose of all or substantially all of the properties or assets of the Company
and the Guarantors taken as a whole, in one or more related transactions, to another Person,
unless:

     (1) either:

     (A) the Company is the surviving corporation; or

     (B) the Person formed by or surviving any such consolidation or merger (if
other than the Company) or to which such sale, assignment, transfer, conveyance or
other disposition has been made is (i) a corporation organized or existing under the
laws of the United States, any state of the United States or the District of
Columbia or (ii) a limited partnership or limited liability company organized or
existing under the laws of the United States, any state thereof or the District of
Columbia that has a wholly-owned Subsidiary that is a corporation organized or
existing under the laws of the United States, any state of the United States or the
District of Columbia, which corporation becomes a co-issuer of the Notes pursuant to
a supplemental indenture duly and validly executed by the trustee;

     (2) the Person formed by or surviving any such consolidation or merger (if other than
the Company) or the Person to which such sale, assignment, transfer, conveyance or other
disposition has been made assumes all the obligations of the Company under the Notes, this
Indenture, the Registration Rights Agreement and the Collateral Documents pursuant to
agreements reasonably satisfactory to the Trustee;

     (3) immediately after such transaction, no Default or Event of Default exists; and

     (4) the Company or the Person formed by or surviving any such consolidation or merger
(if other than the Company), or to which such sale, assignment, transfer, conveyance or
other disposition has been made, would, on the date of such transaction after giving pro
forma effect thereto and any related financing transactions as if the same had occurred at
the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Leverage Ratio and Secured Leverage Ratio tests set
forth in Section 4.09(a) hereof.

     In addition, the Company will not, directly or indirectly, lease all or substantially all of
the properties or assets of it and the Guarantors taken as a whole, in one or more related
transactions, to any other Person. This Section 5.01 will not apply to:

     (1) a merger of the Company with an Affiliate solely for the purpose of reincorporating
the Company in another jurisdiction; or

     (2) any consolidation or merger, or any sale, assignment, transfer, conveyance, lease
or other disposition of assets between or among the Company and any of the Guarantors that
are not any of the Liggett Guarantors.

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     Notwithstanding anything to the contrary in this Section 5.01, or any other provisions in this
Indenture (including, without limitation, Section 11.04), the Company shall not consolidate or
merge with or into any of the Liggett Guarantors, nor sell, assign, transfer, convey or otherwise
dispose of all or substantially all of the properties or assets of the Company and the Guarantors
taken as a whole, in one or more transactions, to any of the Liggett Guarantors.

Section 5.02 Successor Corporation Substituted.

     Upon any consolidation or merger, or any sale, assignment, transfer, lease, conveyance or
other disposition of all or substantially all of the properties or assets of the Company in a
transaction that is subject to, and that complies with the provisions of, Section 5.01 hereof, the
successor Person formed by such consolidation or into or with which the Company is merged or to
which such sale, assignment, transfer, lease, conveyance or other disposition is made shall succeed
to, and be substituted for (so that from and after the date of such consolidation, merger, sale,
assignment, transfer, lease, conveyance or other disposition, the provisions of this Indenture
referring to the “Company” shall refer instead to the successor Person and not to the Company), and
may exercise every right and power of the Company under this Indenture with the same effect as if
such successor Person had been named as the Company herein; provided, however, that the predecessor
Company shall not be relieved from the obligation to pay the principal of and interest on the Notes
except in the case of a sale of all of the Company’s assets in a transaction that is subject to,
and that complies with the provisions of, Section 5.01 hereof.

ARTICLE 6

DEFAULTS AND REMEDIES

Section 6.01 Events of Default.

     Each of the following is an “Event of Default”:

     (1) default for 30 days in the payment when due of interest on, or Liquidated Damages,
if any, with respect to, the Notes;

     (2) default in the payment when due (at maturity, upon redemption or otherwise) of the
principal of, or premium, if any, on, the Notes or default in the payment when due of a
change of Control Payment;

     (3) failure by the Company or any of the Guarantors for 30 days after notice to the
Company by the Trustee or the Holders of at least 25% in aggregate principal amount of the
Notes then outstanding voting as a single class to comply with the provisions of Sections
4.07, 4.09 or 4.10 hereof;

     (4) failure by the Company or any of the Guarantors for 60 days after notice to the
Company by the Trustee or the Holders of at least 25% in aggregate principal amount of the
Notes then outstanding voting as a single class to comply with any of the other agreements
in this Indenture or the Collateral Documents;

     (5) default under any mortgage, indenture or instrument under which there may be issued
or by which there may be secured or evidenced any Indebtedness for money borrowed by the
Company or any of the Guarantors (or the payment of which is guaranteed by the Company or
any of the Guarantors), whether such Indebtedness or Guarantee now exists, or is created
after the date of this Indenture, if that default:

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     (A) is caused by a failure to pay principal of, or interest or premium, if any,
on, such Indebtedness prior to the expiration of the grace period provided in such
Indebtedness on the date of such default (a “Payment Default”); or

     (B) results in the acceleration of such Indebtedness prior to its express
maturity,

and, in each case, the principal amount of any such Indebtedness, together with the
principal amount of any other such Indebtedness under which there has been a Payment
Default or the maturity of which has been so accelerated, aggregates $10.0 million
or more and such acceleration is not annulled within 30 days thereof or such Payment
Default continues for 30 days;

     (6) failure by the Company or any of the Guarantors to pay final non-appealable
judgments entered by a court or courts of competent jurisdiction aggregating in excess of
$10.0 million (net of any amounts as to which a reputable and solvent third party insurer
has accepted full coverage), which judgments are not paid, discharged or stayed for a period
of 60 days

     (7) the Company or any of the Guarantors that is a Significant Subsidiary or any group
of Guarantors that, taken together, would constitute a Significant Subsidiary pursuant to or
within the meaning of Bankruptcy Law:

     (A) commences a voluntary case,

     (B) consents to the entry of an order for relief against it in an involuntary
case,

     (C) consents to the appointment of a custodian of it or for all or
substantially all of its property,

     (D) makes a general assignment for the benefit of its creditors, or

     (E) generally is not paying its debts as they become due;

     (8) a court of competent jurisdiction enters an order or decree under any Bankruptcy
Law that:

     (A) is for relief against the Company or any of the Guarantors that is a
Significant Subsidiary or any group of Guarantors that, taken together, would
constitute a Significant Subsidiary in an involuntary case;

     (B) appoints a custodian of the Company or any of the Guarantors that is a
Significant Subsidiary or any group of Guarantors that, taken together, would
constitute a Significant Subsidiary or for all or substantially all of the property
of the Company or any of the Guarantors that is a Significant Subsidiary or any
group of Guarantors that, taken together, would constitute a Significant Subsidiary;
or

     (C) orders the liquidation of the Company or any of the Guarantors that is a
Significant Subsidiary or any group of Guarantors that, taken together, would
constitute a Significant Subsidiary;

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and the order or decree remains unstayed and in effect for 60 consecutive days; or

     (9) breach by the Company or any of the Guarantors of any material representation or
warranty or agreement in the Collateral Documents, and such failure shall continue for a
period of 60 days after written notice to the Company by the Trustee, the Collateral Agent
or the Holders of at least 25% in aggregate principal amount of the notes then outstanding
voting as a single class;

     (10) the repudiation by the Company or any of the Guarantors of any of its obligations
under the Collateral Documents or the unenforceability of the Collateral Documents against
the Company or any of the Guarantors for any reason;

     (11) except as permitted by this Indenture, any Note Guarantee is held in any judicial
proceeding to be unenforceable or invalid or ceases for any reason to be in full force and
effect, or any Guarantor, or any Person acting on behalf of any Guarantor, denies or
disaffirms its obligations under its Note Guarantee.

Section 6.02 Acceleration.

     In the case of an Event of Default specified in clause (7) or (8) of Section 6.01 hereof, with
respect to the Company, any Guarantor that is a Significant Subsidiary or any group of Guarantors
that, taken together, would constitute a Significant Subsidiary, all outstanding Notes will become
due and payable immediately without further action or notice. If any other Event of Default occurs
and is continuing, the Trustee or the Holders of at least 25% in aggregate principal amount of the
then outstanding Notes may declare all the Notes to be due and payable immediately.

     Upon any such declaration, the Notes shall become due and payable immediately.

     The Holders of a majority in aggregate principal amount of the then outstanding Notes by
written notice to the Trustee may, on behalf of all of the Holders, rescind an acceleration and its
consequences, if the rescission would not conflict with any judgment or decree and if all existing
Events of Default (except nonpayment of principal, interest or premium or Liquidated Damages, if
any, that has become due solely because of the acceleration) have been cured or waived.

     If an Event of Default occurs on or after August 15, 2011 by reason of any willful action (or
inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding
payment of the premium that the Company would have had to pay if the Company then had elected to
redeem the Notes pursuant to Section 3.07 hereof, then, upon acceleration of the Notes, an
equivalent premium shall also become and be immediately due and payable, to the extent permitted by
law, anything in this Indenture or in the Notes to the contrary notwithstanding. If an Event of
Default occurs prior to August 15, 2011 by reason of any willful action (or inaction) taken (or not
taken) by or on behalf of the Company with the intention of avoiding the prohibition on redemption
of the Notes prior to such date, then, upon acceleration of the Notes, an additional premium shall
also become and be immediately due and payable, to the extent permitted by law, in an amount, for
each of the years beginning on August 15 of the years set forth below, as set forth below
(expressed as a percentage of the principal amount of the Notes on the date of payment that would
otherwise be due but for the provisions of this sentence):

	 	 	 	 	 
	Year	 	Percentage	 
	2007
	 	 	11.000	%
	2008
	 	 	9.625	%
	2009
	 	 	8.250	%
	2010
	 	 	6.875	%

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Section 6.03 Other Remedies.

     If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy
to collect the payment of principal, premium and Liquidated Damages, if any, and interest on the
Notes or to enforce the performance of any provision of the Notes or this Indenture.

     The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not
produce any of them in the proceeding. A delay or omission by the Trustee or any Holder of a Note
in exercising any right or remedy accruing upon an Event of Default shall not impair the right or
remedy or constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.

Section 6.04 Waiver of Past Defaults.

     Holders of not less than a majority in aggregate principal amount of the then outstanding
Notes by notice to the Trustee may on behalf of the Holders of all of the Notes waive an existing
Default or Event of Default and its consequences hereunder, except a continuing Default or Event of
Default in the payment of the principal of, premium and Liquidated Damages, if any, or interest on,
the Notes (including in connection with an offer to purchase); provided, however, that the Holders
of a majority in aggregate principal amount of the then outstanding Notes may rescind an
acceleration and its consequences, including any related payment default that resulted from such
acceleration. Upon any such waiver, such Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no
such waiver shall extend to any subsequent or other Default or impair any right consequent thereon.

Section 6.05 Control by Majority.

     Holders of a majority in aggregate principal amount of the then outstanding Notes may direct
the time, method and place of conducting any proceeding for exercising any remedy available to the
Trustee or exercising any trust or power conferred on it. However, the Trustee may refuse to
follow any direction that conflicts with law or this Indenture that the Trustee determines may be
unduly prejudicial to the rights of other Holders of Notes or that may involve the Trustee in
personal liability, loss or expense that is not adequately indemnified in the reasonable judgment
of the Trustee.

Section 6.06 Limitation on Suits.

     Except to enforce the right to receive payment of principal, premium, if any, or interest or
Liquidated Damages, if any, when due, no Holder may pursue any remedy with respect to this
Indenture or the Notes unless:

     (1) such Holder gives to the Trustee written notice that an Event of Default is
continuing;

     (2) Holders of at least 25% in aggregate principal amount of the then outstanding Notes
make a written request to the Trustee to pursue the remedy;

     (3) such Holder or Holders offer and, if requested, provide to the Trustee security or
indemnity reasonably satisfactory to the Trustee against any loss, liability or expense;

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     (4) the Trustee does not comply with the request within 60 days after receipt of the
request and the offer of security or indemnity; and

     (5) during such 60-day period, Holders of a majority in aggregate principal amount of
the then outstanding Notes do not give the Trustee a direction inconsistent with such
request.

     A Holder of a Note may not use this Indenture to prejudice the rights of another Holder of a
Note or to obtain a preference or priority over another Holder of a Note.

Section 6.07 Rights of Holders of Notes to Receive Payment.

     Notwithstanding any other provision of this Indenture, the right of any Holder of a Note to
receive payment of principal, premium and Liquidated Damages, if any, and interest on the Note, on
or after the respective due dates expressed in the Note (including in connection with an offer to
purchase), or to bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder; provided that a Holder
shall not have the right to institute any such suit for the enforcement of payment if and to the
extent that the institution or prosecution thereof or the entry of judgment therein would, under
applicable law, result in the surrender, impairment, waiver or loss of the Lien of this Indenture
upon any property subject to such Lien.

Section 6.08 Collection Suit by Trustee.

     If an Event of Default specified in Section 6.01(1) or (2) hereof occurs and is continuing,
the Trustee is authorized to recover judgment in its own name and as trustee of an express trust
against the Company for the whole amount of principal of, premium and Liquidated Damages, if any,
and interest remaining unpaid on, the Notes and interest on overdue principal and, to the extent
lawful, interest and such further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel.

Section 6.09 Trustee May File Proofs of Claim.

     The Trustee is authorized to file such proofs of claim and other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and
counsel) and the Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its property and shall be entitled and
empowered to collect, receive and distribute any money or other property payable or deliverable on
any such claims and any custodian in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee, and in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the
reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and
counsel, and any other amounts due the Trustee under Section 7.07 hereof. To the extent that the
payment of any such compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall be secured by a Lien
on, and shall be paid out of, any and all distributions, dividends, money, securities and other
properties that the Holders may be entitled to receive in such proceeding whether in liquidation or
under any plan of reorganization or arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder, or to authorize the Trustee to vote in respect of the claim of any Holder
in any such proceeding.

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Section 6.10 Priorities.

     If the Trustee collects any money pursuant to this Article 6, it shall pay out the money in
the following order:

     First: to the Trustee, its agents and attorneys for amounts due under Section 7.07
hereof, including payment of all compensation, expenses and liabilities incurred, and all
advances made, by the Trustee and the costs and expenses of collection;

     Second: to Holders of Notes for amounts due and unpaid on the Notes for principal,
premium and Liquidated Damages, if any, and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the Notes for principal,
premium and Liquidated Damages, if any and interest, respectively; and

     Third: to the Company or to such party as a court of competent jurisdiction shall
direct.

     The Trustee may fix a record date and payment date for any payment to Holders of Notes
pursuant to this Section 6.10.

Section 6.11 Undertaking for Costs.

     In any suit for the enforcement of any right or remedy under this Indenture or in any suit
against the Trustee for any action taken or omitted by it as a Trustee, a court in its discretion
may require the filing by any party litigant in the suit of an undertaking to pay the costs of the
suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys’
fees, against any party litigant in the suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section 6.11 does not apply to a suit by the
Trustee, a suit by a Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders of more
than 10% in aggregate principal amount of the then outstanding Notes.

ARTICLE 7

TRUSTEE

Section 7.01 Duties of Trustee.

     (a) If an Event of Default has occurred and is continuing, the Trustee will exercise such of
the rights and powers vested in it by this Indenture, and use the same degree of care and skill in
its exercise, as a prudent person would exercise or use under the circumstances in the conduct of
such person’s own affairs.

     (b) Except during the continuance of an Event of Default:

     (1) the duties of the Trustee will be determined solely by the express provisions of
this Indenture and the Trustee need perform only those duties that are specifically set
forth in this Indenture and no others, and no implied covenants or obligations shall be read
into this Indenture against the Trustee; and

     (2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to
the truth of the statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and conforming to the requirements of this
Indenture.

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However, the Trustee will examine the certificates and opinions to determine whether or
not they conform to the requirements of this Indenture.

     (c) The Trustee may not be relieved from liabilities for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:

     (1) this paragraph does not limit the effect of paragraph (b) of this Section 7.01;

     (2) the Trustee will not be liable for any error of judgment made in good faith by a
Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the
pertinent facts; and

     (3) the Trustee will not be liable with respect to any action it takes or omits to take
in good faith in accordance with a direction received by it pursuant to Section 6.05 hereof.

     (d) Whether or not therein expressly so provided, every provision of this Indenture that in
any way relates to the Trustee is subject to paragraphs (a), (b), and (c) of this Section 7.01.

     (e) No provision of this Indenture will require the Trustee to expend or risk its own funds or
incur any loss, liability or expense for which it is not adequately indemnified in the reasonable
judgment of the Trustee. The Trustee will be under no obligation to exercise any of its rights and
powers under this Indenture at the request or direction of any Holders, unless such Holder has
offered to the Trustee security and indemnity satisfactory to it against any loss, liability or
expense.

     (f) The Trustee will not be liable for interest on any money received by it except as the
Trustee may agree in writing with the Company. Money held in trust by the Trustee need not be
segregated from other funds except to the extent required by law.

Section 7.02 Rights of Trustee.

     (a) The Trustee may conclusively rely upon any document believed by it to be genuine and to
have been signed or presented by the proper Person. The Trustee need not investigate any fact or
matter stated in the document.

     (b) Before the Trustee acts or refrains from acting, it may require an Officers’ Certificate
or an Opinion of Counsel or both. The Trustee will not be liable for any action it takes or omits
to take in good faith in reliance on such Officers’ Certificate or Opinion of Counsel. The Trustee
may consult with counsel and the written advice of such counsel or any Opinion of Counsel will be
full and complete authorization and protection from liability in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance thereon.

     (c) The Trustee may act through its attorneys and agents and will not be responsible for the
misconduct or negligence of any agent appointed with due care.

     (d) The Trustee will not be liable for any action it takes or omits to take in good faith that
it believes to be authorized or within the rights or powers conferred upon it by this Indenture.

     (e) Unless otherwise specifically provided in this Indenture, any demand, request, direction
or notice from the Company will be sufficient if signed by an Officer of the Company.

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     (f) The Trustee will be under no obligation to exercise any of the rights or powers vested in
it by this Indenture at the request or direction of any of the Holders unless such Holders have
offered to the Trustee reasonable indemnity or security against the losses, liabilities and
expenses that might be incurred by it in compliance with such request or direction.

     (g) The rights, privileges, protections, immunities and benefits given to the Trustee,
including, without limitation, its rights to be indemnified, are extended to and shall be
enforceable by, the Trustee in each of its capacities hereunder, and each agent, custodian and
other Person employed to act hereunder.

     (h) The Trustee may request that the Company deliver an Officer’s Certificate setting forth
the names of individuals and/or titles of officers authorized at such time to take specified
actions pursuant to this Indenture, which Officers’ Certificate may be signed by any person
authorized to sign an Officers’ Certificate, including any person specified as so authorized in any
such certificate previously delivered and not superseded.

     (i) The permissive rights of the Trustee to do certain things enumerated in this Indenture
shall not be construed as a duty and the Trustee shall not be answerable for other than its
negligence or willful default with respect to such permissive rights.

     (j) The Trustee shall not be bound to make any inquiry or investigation into the facts or
matters stated in any resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, note or other paper or document unless requested in
writing so to do by the holders of a majority in aggregate principal amount of the Notes affected
then outstanding; provided however, that if the payment within a reasonable time to the Trustee of
the costs and expenses or liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not reasonably assured to the Trustee by the
security conferred upon it by the terms of this Indenture, the Trustee may require reasonable
indemnity against such costs, expenses or liabilities as a condition to so proceeding; and the
reasonable expense of such investigation shall be paid by the Company, or, if paid by the Trustee
shall be repaid by the Company upon demand.

     (k) The Trustee shall not be responsible or liable for special, indirect or consequential loss
or damage of any kind whatsoever (including, but not limited to, loss or profit) irrespective of
whether the Trustee has been advised of the likelihood of such loss or damage and regardless of the
form of action.

     (l) The Trustee shall not be required to give any note, bond, or surety in respect of the
execution of the trusts and powers under this Indenture.

     (m) The Trustee shall not be responsible or liable for any failure or delay in the performance
of its obligations under this Indenture arising out of or caused, directly or indirectly, by
circumstances beyond its reasonable control, including without limitation, acts of God;
earthquakes; fire; flood; terrorism; wars and other military disturbances; sabotage; epidemics;
riots; interruptions; loss or malfunction of utilities, computer (hardware or software) or
communication services; accidents; labor disputes; act of civil or military authorities and
governmental action.

Section 7.03 Individual Rights of Trustee.

     The Trustee in its individual or any other capacity may become the owner or pledgee of Notes
and may otherwise deal with the Company or any Affiliate of the Company with the same rights it
would have if it were not Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the SEC for permission to
continue as trustee (if this

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Indenture has been qualified under the TIA) or resign. Any Agent may do the same with like
rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof.

Section 7.04 Trustee’s Disclaimer.

     The Trustee will not be responsible for and makes no representation as to the validity or
adequacy of this Indenture or the Notes, it shall not be accountable for the Company’s use of the
proceeds from the Notes or any money paid to the Company or upon the Company’s direction under any
provision of this Indenture, it will not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it will not be responsible for any
statement or recital herein or any statement in the Notes or any other document in connection with
the sale of the Notes or pursuant to this Indenture other than its certificate of authentication.

Section 7.05 Notice of Defaults.

     If a Default or Event of Default occurs and is continuing and if it is known to the Trustee,
the Trustee will mail to Holders of Notes a notice of the Default or Event of Default within 90
days after it occurs. Except in the case of a Default or Event of Default in payment of principal
of, premium or Liquidated Damages, if any, or interest on, any Note, the Trustee may withhold the
notice if and so long as a committee of its Responsible Officers in good faith determines that
withholding the notice is in the interests of the Holders of the Notes.

Section 7.06 Reports by Trustee to Holders of the Notes.

     (a) Within 60 days after each May 15 beginning with the May 15 following the date of this
Indenture, and for so long as Notes remain outstanding, the Trustee will mail to the Holders of the
Notes a brief report dated as of such reporting date that complies with TIA § 313(a) (but if no
event described in TIA § 313(a) has occurred within the twelve months preceding the reporting date,
no report need be transmitted). The Trustee also will comply with TIA § 313(b)(2). The Trustee
will also transmit by mail all reports as required by TIA § 313(c).

     (b) A copy of each report at the time of its mailing to the Holders of Notes will be mailed by
the Trustee to the Company and filed by the Trustee with the SEC and each stock exchange on which
the Notes are listed in accordance with TIA § 313(d). The Company will promptly notify the Trustee
when the Notes are listed on any stock exchange.

Section 7.07 Compensation and Indemnity.

     (a) The Company will pay to the Trustee from time to time reasonable compensation for its
acceptance of this Indenture and services hereunder. The Trustee’s compensation will not be
limited by any law on compensation of a trustee of an express trust. The Company will reimburse
the Trustee promptly upon request for all reasonable disbursements, advances and expenses incurred
or made by it in addition to the compensation for its services. Such expenses will include the
reasonable compensation, disbursements and expenses of the Trustee’s agents and counsel.

     (b) The Company and the Guarantors will indemnify the Trustee against any and all losses,
liabilities or expenses incurred by it arising out of or in connection with the acceptance or
administration of its duties under this Indenture, including the costs and expenses of enforcing
this Indenture against the Company and the Guarantors (including this Section 7.07) and defending
itself against any claim (whether asserted by the Company, the Guarantors, any Holder or any other
Person) or liability in connection with the exercise or performance of any of its powers or duties
hereunder, except to the extent

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any such loss, liability or expense may be attributable to its negligence or bad faith. The
Trustee will notify the Company promptly of any claim for which it may seek indemnity. Failure by
the Trustee to so notify the Company will not relieve the Company or any of the Guarantors of their
obligations hereunder. The Company or such Guarantor will defend the claim and the Trustee will
cooperate in the defense. The Trustee may have separate counsel and the Company will pay the
reasonable fees and expenses of such counsel. Neither the Company nor any Guarantor need pay for
any settlement made without its consent, which consent will not be unreasonably withheld.

     (c) The obligations of the Company and the Guarantors under this Section 7.07 will survive the
satisfaction and discharge of this Indenture.

     (d) To secure the Company’s and the Guarantors’ payment obligations in this Section 7.07, the
Trustee will have a Lien prior to the Notes on all money or property held or collected by the
Trustee, except that held in trust to pay principal and interest on particular Notes. Such Lien
will survive the satisfaction and discharge of this Indenture.

     (e) When the Trustee incurs expenses or renders services after an Event of Default specified
in Section 6.01(7) or (8) hereof occurs, the expenses and the compensation for the services
(including the fees and expenses of its agents and counsel) are intended to constitute expenses of
administration under any Bankruptcy Law.

     (f) The Trustee will comply with the provisions of TIA § 313(b)(2) to the extent applicable.

Section 7.08 Replacement of Trustee.

     (a) A resignation or removal of the Trustee and appointment of a successor Trustee will become
effective only upon the successor Trustee’s acceptance of appointment as provided in this Section
7.08.

     (b) The Trustee may resign in writing at any time and be discharged from the trust hereby
created by so notifying the Company. The Holders of a majority in aggregate principal amount of
the then outstanding Notes may remove the Trustee by so notifying the Trustee and the Company in
writing. The Company may remove the Trustee if:

     (1) the Trustee fails to comply with Section 7.10 hereof;

     (2) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is
entered with respect to the Trustee under any Bankruptcy Law;

     (3) a custodian or public officer takes charge of the Trustee or its property; or

     (4) the Trustee becomes incapable of acting.

     (c) If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for
any reason, the Company will promptly appoint a successor Trustee. Within one year after the
successor Trustee takes office, the Holders of a majority in aggregate principal amount of the then
outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the
Company.

     (d) If a successor Trustee does not take office within 60 days after the retiring Trustee
resigns or is removed, the retiring Trustee, the Company, or the Holders of at least 10% in
aggregate

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principal amount of the then outstanding Notes may petition any court of competent
jurisdiction for the appointment of a successor Trustee.

     (e) If the Trustee, after written request by any Holder who has been a Holder for at least six
months, fails to comply with Section 7.10 hereof, such Holder may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

     (f) A successor Trustee will deliver a written acceptance of its appointment to the retiring
Trustee and to the Company. Thereupon, the resignation or removal of the retiring Trustee will
become effective, and the successor Trustee will have all the rights, powers and duties of the
Trustee under this Indenture. The successor Trustee will mail a notice of its succession to
Holders. The retiring Trustee will promptly transfer all property held by it as Trustee to the
successor Trustee; provided all sums owing to the Trustee hereunder have been paid and subject to
the Lien provided for in Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant
to this Section 7.08, the Company’s obligations under Section 7.07 hereof will continue for the
benefit of the retiring Trustee.

Section 7.09 Successor Trustee by Merger, etc.

     If the Trustee consolidates, merges or converts into, or transfers all or substantially all of
its corporate trust business to, another corporation, the successor corporation without any further
act will be the successor Trustee.

Section 7.10 Eligibility; Disqualification.

     There will at all times be a Trustee hereunder that is a corporation organized and doing
business under the laws of the United States of America or of any state thereof that is authorized
under such laws to exercise corporate trustee power, that is subject to supervision or examination
by federal or state authorities and that has a combined capital and surplus of at least $100.0
million as set forth in its most recent published annual report of condition.

     This Indenture will always have a Trustee who satisfies the requirements of TIA § 310(a)(1),
(2) and (5). The Trustee is subject to TIA § 310(b).

Section 7.11 Preferential Collection of Claims Against Company.

     The Trustee is subject to TIA § 311(a), excluding any creditor relationship listed in TIA §
311(b). A Trustee who has resigned or been removed shall be subject to TIA § 311(a) to the extent
indicated therein.

ARTICLE 8

LEGAL DEFEASANCE AND COVENANT DEFEASANCE

Section 8.01 Option to Effect Legal Defeasance or Covenant Defeasance.

     The Company may at any time, at the option of its Board of Directors evidenced by a resolution
set forth in an Officers’ Certificate, elect to have either Section 8.02 or 8.03 hereof be applied
to all outstanding Notes upon compliance with the conditions set forth below in this Article 8.

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Section 8.02 Legal Defeasance and Discharge.

     Upon the Company’s exercise under Section 8.01 hereof of the option applicable to this Section
8.02, the Company and each of the Guarantors will, subject to the satisfaction of the conditions
set forth in Section 8.04 hereof, be deemed to have been discharged from their obligations with
respect to all outstanding Notes (including the Note Guarantees) on the date the conditions set
forth below are satisfied (hereinafter, “Legal Defeasance”). For this purpose, Legal Defeasance
means that the Company and the Guarantors will be deemed to have paid and discharged the entire
Indebtedness represented by the outstanding Notes (including the Note Guarantees), which will
thereafter be deemed to be “outstanding” only for the purposes of Section 8.05 hereof and the other
Sections of this Indenture referred to in clauses (1) and (2) below, and to have satisfied all
their other obligations under such Notes, the Note Guarantees and this Indenture (and the Trustee,
on demand of and at the expense of the Company, shall execute proper instruments acknowledging the
same), except for the following provisions which will survive until otherwise terminated or
discharged hereunder:

     (1) the rights of Holders of outstanding Notes to receive payments in respect of the
principal of, or interest or premium and Liquidated Damages, if any, on, such Notes when
such payments are due from the trust referred to in Section 8.04 hereof;

     (2) the Company’s obligations with respect to such Notes under Article 2 and Section
4.02 hereof;

     (3) the rights, powers, trusts, duties and immunities of the Trustee hereunder and the
Company’s and the Guarantors’ obligations in connection therewith; and

     (4) this Article 8.

     Subject to compliance with this Article 8, the Company may exercise its option under this
Section 8.02 notwithstanding the prior exercise of its option under Section 8.03 hereof.

Section 8.03 Covenant Defeasance.

     Upon the Company’s exercise under Section 8.01 hereof of the option applicable to this Section
8.03, the Company and each of the Guarantors will, subject to the satisfaction of the conditions
set forth in Section 8.04 hereof, be released from each of their obligations under the covenants
contained in Sections 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.14, 4.15, 4.16, 4.17 and 4.18 hereof
and clause (4) of Section 5.01 hereof with respect to the outstanding Notes on and after the date
the conditions set forth in Section 8.04 hereof are satisfied (hereinafter, “Covenant Defeasance”),
and the Notes will thereafter be deemed not “outstanding” for the purposes of any direction,
waiver, consent or declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but will continue to be deemed “outstanding” for all other purposes
hereunder (it being understood that such Notes will not be deemed outstanding for accounting
purposes). For this purpose, Covenant Defeasance means that, with respect to the outstanding Notes
and Note Guarantees, the Company and the Guarantors may omit to comply with and will have no
liability in respect of any term, condition or limitation set forth in any such covenant, whether
directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by
reason of any reference in any such covenant to any other provision herein or in any other document
and such omission to comply will not constitute a Default or an Event of Default under Section 6.01
hereof, but, except as specified above, the remainder of this Indenture and such Notes and Note
Guarantees will be unaffected thereby. In addition, upon the Company’s exercise under Section 8.01
hereof of the option applicable to this Section 8.03, subject to the satisfaction of the conditions
set forth in Section 8.04

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hereof, Sections 6.01(3) through 6.01(6) and 6.01(9) through 6.01(11) hereof will not
constitute Events of Default.

Section 8.04 Conditions to Legal or Covenant Defeasance.

     In order to exercise either Legal Defeasance or Covenant Defeasance under either Section 8.02
or 8.03 hereof:

     (1) the Company must irrevocably deposit with the Trustee, in trust, for the benefit of
the Holders, cash in U.S. dollars, non-callable Government Securities, or a combination
thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized
investment bank, appraisal firm, or firm of independent public accountants, to pay the
principal of, premium and Liquidated Damages, if any, and interest on, the outstanding Notes
on the stated date for payment thereof or on the applicable redemption date, as the case may
be, and the Company must specify whether the Notes are being defeased to such stated date
for payment or to a particular redemption date;

     (2) in the case of an election under Section 8.02 hereof, the Company must deliver to
the Trustee an Opinion of Counsel to the Trustee confirming that:

     (A) the Company has received from, or there has been published by, the Internal
Revenue Service a ruling; or

     (B) since the date of this Indenture, there has been a change in the applicable
federal income tax law,

in either case to the effect that, and based thereon such Opinion of Counsel shall
confirm that, the Holders of the outstanding Notes will not recognize income, gain
or loss for federal income tax purposes as a result of such Legal Defeasance and
will be subject to federal income tax on the same amounts, in the same manner and at
the same times as would have been the case if such Legal Defeasance had not
occurred;

     (3) in the case of an election under Section 8.03 hereof, the Company must deliver to
the Trustee an Opinion of Counsel confirming that the Holders of the outstanding Notes will
not recognize income, gain or loss for federal income tax purposes as a result of such
Covenant Defeasance and will be subject to federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such Covenant Defeasance
had not occurred;

     (4) no Default or Event of Default shall have occurred and be continuing on the date of
such deposit (other than a Default or Event of Default resulting from the borrowing of funds
to be applied to such deposit) and the deposit will not result in a breach or violation of,
or constitute a default under, any other instrument to which the Company or any Guarantor is
a party or by which the Company or any Guarantor is bound;

     (5) such Legal Defeasance or Covenant Defeasance will not result in a breach or
violation of, or constitute a default under, any material agreement or instrument (other
than this Indenture) to which the Company or any of its Subsidiaries is a party or by which
the Company or any of its Subsidiaries is bound;

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     (6) the Company must deliver to the Trustee an Officers’ Certificate stating that the
deposit was not made by the Company with the intent of preferring the Holders of Notes over
the other creditors of the Company with the intent of defeating, hindering, delaying or
defrauding any creditors of the Company or others; and

     (7) the Company must deliver to the Trustee an Officers’ Certificate and an Opinion of
Counsel, each stating that all conditions precedent relating to the Legal Defeasance or the
Covenant Defeasance have been complied with.

Section 8.05 Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous
Provisions.

     Subject to Section 8.06 hereof, all money and non-callable Government Securities (including
the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for
purposes of this Section 8.05, the “Trustee”) pursuant to Section 8.04 hereof in respect of the
outstanding Notes will be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or through any Paying
Agent (including the Company acting as Paying Agent) as the Trustee may determine, to the Holders
of such Notes of all sums due and to become due thereon in respect of principal, premium and
Liquidated Damages, if any, and interest, but such money need not be segregated from other funds
except to the extent required by law.

     The Company will pay and indemnify the Trustee against any tax, fee or other charge imposed on
or assessed against the cash or non-callable Government Securities deposited pursuant to Section
8.04 hereof or the principal and interest received in respect thereof other than any such tax, fee
or other charge which by law is for the account of the Holders of the outstanding Notes.

     Notwithstanding anything in this Article 8 to the contrary, the Trustee will deliver or pay to
the Company from time to time upon the request of the Company any money or non-callable Government
Securities held by it as provided in Section 8.04 hereof which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written certification thereof
delivered to the Trustee (which may be the opinion delivered under Section 8.04(1) hereof), are in
excess of the amount thereof that would then be required to be deposited to effect an equivalent
Legal Defeasance or Covenant Defeasance.

Section 8.06 Repayment to Company.

     Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in
trust for the payment of the principal of, premium or Liquidated Damages, if any, or interest on,
any Note and remaining unclaimed for two years after such principal, premium or Liquidated Damages,
if any, or interest has become due and payable shall be paid to the Company on its request or (if
then held by the Company) will be discharged from such trust; and the Holder of such Note will
thereafter be permitted to look only to the Company for payment thereof, and all liability of the
Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as
trustee thereof, will thereupon cease; provided, however, that the Trustee or such Paying Agent,
before being required to make any such repayment, may at the expense of the Company cause to be
published once, in the New York Times and The Wall Street Journal (national edition), notice that
such money remains unclaimed and that, after a date specified therein, which will not be less than
30 days from the date of such notification or publication, any unclaimed balance of such money then
remaining will be repaid to the Company.

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Section 8.07 Reinstatement.

     If the Trustee or Paying Agent is unable to apply any U.S. dollars or non-callable Government
Securities in accordance with Section 8.02 or 8.03 hereof, as the case may be, by reason of any
order or judgment of any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, then the Company’s and the Guarantors’ obligations under this
Indenture and the Notes and the Note Guarantees will be revived and reinstated as though no deposit
had occurred pursuant to Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent
is permitted to apply all such money in accordance with Section 8.02 or 8.03 hereof, as the case
may be; provided, however, that, if the Company makes any payment of principal of, premium or
Liquidated Damages, if any, or interest on, any Note following the reinstatement of its
obligations, the Company will be subrogated to the rights of the Holders of such Notes to receive
such payment from the money held by the Trustee or Paying Agent.

ARTICLE 9

AMENDMENT, SUPPLEMENT AND WAIVER

Section 9.01 Without Consent of Holders of Notes.

     Notwithstanding Section 9.02 of this Indenture, the Company, the Guarantors and the Trustee
may amend or supplement this Indenture, the Collateral Documents, the Notes or the Note Guarantees
without the consent of any Holder of Notes:

     (1) to cure any ambiguity, defect or inconsistency;

     (2) to provide for uncertificated Notes in addition to or in place of certificated
Notes;

     (3) to provide for the assumption of the Company’s or a Guarantor’s obligations to the
Holders of the Notes and Note Guarantees by a successor to the Company or such Guarantor
pursuant to Article 5 or Article 11 hereof;

     (4) to make any change that would provide any additional rights or benefits to the
Holders of the Notes or that does not adversely affect the legal rights hereunder of any
Holder;

     (5) to comply with requirements of the SEC in order to effect or maintain the
qualification of this Indenture under the TIA;

     (6) to conform the text of this Indenture, the Collateral Documents, the Note
Guarantees or the Notes to any provision of the “Description of Notes” section of the
Company’s Offering Circular dated August 8, 2007, relating to the initial offering of the
Notes, to the extent that such provision in that “Description of Notes” was intended to be a
verbatim recitation of a provision of this Indenture, the Collateral Documents, the Note
Guarantees or the Notes;

     (7) to provide for the issuance of Additional Notes in accordance with the limitations
set forth in this Indenture as of the date hereof;

     (8) to allow any Guarantor to execute a supplemental indenture and/or a Note Guarantee
with respect to the Notes; or

     (9) to make, complete or confirm any grant of Collateral permitted or required by this
Indenture or any of the Collateral Documents or any release of Collateral that becomes
effective as set forth in this Indenture or any of the Collateral Documents.

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     Upon the request of the Company accompanied by a resolution of its Board of Directors
authorizing the execution of any such amended or supplemental indenture, and upon receipt by the
Trustee of the documents described in Section 7.02 hereof, the Trustee will join with the Company
and the Guarantors in the execution of any amended or supplemental indenture authorized or
permitted by the terms of this Indenture and to make any further appropriate agreements and
stipulations that may be therein contained, but the Trustee will not be obligated to enter into
such amended or supplemental indenture that affects its own rights, duties or immunities under this
Indenture or otherwise.

Section 9.02 With Consent of Holders of Notes.

     Except as provided below in this Section 9.02, and subject to the Intercreditor Agreement, the
Company and the Trustee may amend or supplement this Indenture (including, without limitation,
Section 3.09, 4.10 and 4.14 hereof), the Collateral Documents or the Notes and the Note Guarantees
with the consent of the Holders of at least a majority in aggregate principal amount of the then
outstanding Notes (including, without limitation, Additional Notes, if any) voting as a single
class (including, without limitation, consents obtained in connection with a tender offer or
exchange offer for, or purchase of, the Notes), and, subject to Sections 6.04 and 6.07 hereof and
subject to the Intercreditor Agreement, any existing Default or Event of Default (other than a
Default or Event of Default in the payment of the principal of, premium or Liquidated Damages, if
any, or interest on, the Notes, except a payment default resulting from an acceleration that has
been rescinded) or compliance with any provision of this Indenture, the Collateral Documents or the
Notes or the Note Guarantees may be waived with the consent of the Holders of a majority in
aggregate principal amount of the then outstanding Notes (including, without limitation, Additional
Notes, if any) voting as a single class (including, without limitation, consents obtained in
connection with a tender offer or exchange offer for, or purchase of, the Notes). None of this
Indenture, the Notes, the Note Guarantees or the Collateral Documents may be amended, modified or
supplemented in any way that would contravene the Intercreditor Agreement. Section 2.08 hereof
shall determine which Notes are considered to be “outstanding” for purposes of this Section 9.02.

     Upon the request of the Company accompanied by a resolution of its Board of Directors
authorizing the execution of any such amended or supplemental indenture, and upon the filing with
the Trustee of evidence satisfactory to the Trustee of the consent of the Holders of Notes as
aforesaid, and upon receipt by the Trustee of the documents described in Section 7.02 hereof, the
Trustee will join with the Company and the Guarantors in the execution of such amended or
supplemental indenture unless such amended or supplemental indenture directly affects the Trustee’s
own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may
in its discretion, but will not be obligated to, enter into such amended or supplemental Indenture.

     It is not be necessary for the consent of the Holders of Notes under this Section 9.02 to
approve the particular form of any proposed amendment, supplement or waiver, but it is sufficient
if such consent approves the substance thereof.

     After an amendment, supplement or waiver under this Section 9.02 becomes effective, the
Company will mail to the Holders of Notes affected thereby a notice briefly describing the
amendment, supplement or waiver. Any failure of the Company to mail such notice, or any defect
therein, will not, however, in any way impair or affect the validity of any such amended or
supplemental indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a
majority in aggregate principal amount of the Notes then outstanding voting as a single class may
waive compliance in a particular instance by the Company with any provision of this Indenture or
the Notes or the Note Guarantees. However, without the consent of each Holder affected or, in the
case of clauses (8) and (9) below only, the consent of at least 95% in aggregate principal amount
of the Notes then outstanding, an amendment, supplement or waiver under this Section 9.02 may not
(with respect to any Notes held by a non-consenting Holder):

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     (1) reduce the principal amount of Notes whose Holders must consent to an amendment,
supplement or waiver;

     (2) reduce the principal of or change the fixed maturity of any Note or alter or waive
any of the provisions with respect to the redemption of the Notes (except as provided above
with respect to Sections 3.09, 4.10 and 4.14 hereof);

     (3) reduce the rate of or change the time for payment of interest, including default
interest, on any Note;

     (4) waive a Default or Event of Default in the payment of principal of, or premium or
Liquidated Damages, if any, or interest on, the Notes (except a rescission of acceleration
of the Notes by the Holders of at least a majority in aggregate principal amount of the then
outstanding Notes and a waiver of the payment default that resulted from such acceleration);

     (5) make any Note payable in money other than that stated in the Notes;

     (6) make any change in the provisions of this Indenture relating to waivers of past
Defaults or the rights of Holders of Notes to receive payments of principal of, or interest
or premium or Liquidated Damages, if any, on, the Notes;

     (7) waive a redemption payment with respect to any Note (other than a payment required
by Sections 3.09, 4.10 or 4.14 hereof);

     (8) release all or substantially all of the Collateral from the Liens securing the Note
Guarantees;

     (9) release any Guarantor from any of its obligations under its Note Guarantee or this
Indenture if the assets or properties of that Guarantor constitute all or substantially all
of the Collateral, except in accordance with the terms of this Indenture and the
Intercreditor Agreement; or

     (10) make any change in the preceding amendment and waiver provisions.

Section 9.03 Compliance with Trust Indenture Act.

     Every amendment or supplement to this Indenture or the Notes will be set forth in an amended
or supplemental indenture that complies with the TIA as then in effect.

Section 9.04 Revocation and Effect of Consents.

     Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a
Note is a continuing consent by the Holder of a Note and every subsequent Holder of a Note or
portion of a Note that evidences the same debt as the consenting Holder’s Note, even if notation of
the consent is not made on any Note. However, any such Holder of a Note or subsequent Holder of a
Note may revoke the consent as to its Note if the Trustee receives written notice of revocation
before the date the amendment, supplement or waiver becomes effective. An amendment, supplement or
waiver becomes effective in accordance with its terms and thereafter binds every Holder.

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Section 9.05 Notation on or Exchange of Notes.

     The Trustee may place an appropriate notation about an amendment, supplement or waiver on any
Note thereafter authenticated. The Company in exchange for all Notes may issue and the Trustee
shall, upon receipt of an Authentication Order, authenticate new Notes that reflect the amendment,
supplement or waiver.

     Failure to make the appropriate notation or issue a new Note will not affect the validity and
effect of such amendment, supplement or waiver.

Section 9.06 Trustee to Sign Amendments, etc.

     The Trustee will sign any amended or supplemental indenture authorized pursuant to this
Article 9 if the amendment or supplement does not adversely affect the rights, duties, liabilities
or immunities of the Trustee. The Company may not sign an amended or supplemental indenture until
the Board of Directors of the Company approves it. In executing any amended or supplemental
indenture, the Trustee will be entitled to receive and (subject to Section 7.01 hereof) will be
fully protected in relying upon, in addition to the documents required by Section 13.04 hereof, an
Officers’ Certificate and an Opinion of Counsel stating that the execution of such amended or
supplemental indenture is authorized or permitted by this Indenture.

ARTICLE 10

COLLATERAL AND SECURITY

Section 10.01 Security.

     The payment of all amounts due under the Note Guarantees of the Pledgors and the performance
of all Obligations of each of the Pledgors to the Holders will be secured, equally and ratably with
any other Parity Lien Obligations of such Pledgors, by Liens on the Collateral of such Pledgors,
subject to Permitted Prior Liens, as provided in the Collateral Documents and the Intercreditor
Agreement. The payment of all amounts due under the Note Guarantee of VGR Holding and the
performance of all Obligations of VGR Holding to the Holders will be secured, equally and ratably
with any other Parity Lien Obligations of VGR Holding, by Liens on the Pledged Securities as
provided in the Collateral Documents. The Collateral Documents shall provide for the grant by the
Pledgors and VGR Holding to the Collateral Agent of security interests in the Collateral securing
their Note Guarantees subject in the case of the Liggett Guarantors to the terms of the
Intercreditor Agreement.

Section 10.02 Equal and Ratable Sharing of Collateral by Holders of Parity Lien Debt.

     All Parity Liens granted at any time by the Pledgors or VGR Holding shall secure, equally and
ratably, all present and future Parity Lien Obligations and all proceeds of all Parity Liens
granted at any time by the Pledgors or VGR Holding shall be allocated and distributed equally and
ratably on account of the Parity Lien Debt and other Parity Lien Obligations.

Section 10.03 Release of Liens in Respect of Note Guarantees.

     Whether prior to or after the First Priority Debt has been paid in full, assets included in
the Collateral may be released from the Liens securing the Note Guarantees under any one or more of
the following circumstances:

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     (a) as to any Collateral that is sold, transferred or otherwise disposed of by a Guarantor to
a Person that is not (either before or after such sale, transfer or disposition) the Company or a
Guarantor in a transaction or other circumstance that complies with the provisions of Section 4.10
hereof and is permitted by the Noteholder Documents and, if the First Priority Debt has not been
paid in full, the ABL Documents; provided that such Liens will not be released if such sale or
disposition is subject to the provisions of Section 5.01 hereof;

     (b) if any Guarantor is released from its Note Guarantee, that Guarantor’s assets will also be
released from the Liens securing the Note Guarantee;

     (c) in whole or in part, with the consent of the Holders of the requisite percentage of Notes
in accordance with Article 9;

     (d) if required in connection with certain foreclosure actions, or the exercise of other
remedies in respect of Collateral, by the ABL Lender in respect of First Priority Debt in
accordance with the terms of the Intercreditor Agreement;

     (e) upon a Legal Defeasance or Covenant Defeasance of the Notes as set forth under Article 8;

     (f) upon satisfaction and discharge of this Indenture as set forth under Article 12; or

     (g) upon payment in full and discharge of all Notes outstanding under this Indenture and all
Obligations that are outstanding, due and payable under this Indenture at the time the Notes are
paid in full and discharged.

Section 10.04 Relative Rights.

     Nothing in the Noteholder Documents or the Intercreditor Agreement shall:

     (a) impair, as between the Company and the Holders, the obligation of the Company, which is
absolute and unconditional, to pay principal of, premium and interest and Liquidated Damages, if
any, on the Notes in accordance with their terms or any other obligation of the Company or any
Guarantor;

     (b) affect the relative rights of Holders as against any other creditors of the Company or any
Guarantor (other than holders of First Priority Liens, Permitted Prior Liens or other Parity
Liens);

     (c) restrict the right of any Holder to sue for payments that are then due and owing (but not
enforce any judgment in respect thereof against any Collateral to the extent specifically
prohibited under the Intercreditor Agreement);

     (d) restrict or prevent any Holder or the Collateral Agent from exercising any of its rights
or remedies upon a Default or Event of Default not specifically restricted or prohibited by the
Intercreditor Agreement; or

     (e) restrict or prevent any Holder or the Collateral Agent from taking any lawful action in an
insolvency or liquidation proceeding not specifically restricted or prohibited by the Intercreditor
Agreement.

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Section 10.05 Further Assurances, Compliance with Trust Indenture Act.

     (a) The Company and each of the Guarantors providing security for their Note Guarantees will
do or cause to be done all acts and things that may be reasonably required, or that the Collateral
Agent from time to time may reasonably request, to assure and confirm that the Collateral Agent
holds, for the benefit of the holders of Parity Lien Obligations, duly created and enforceable and
perfected Parity Liens upon the Collateral (including any categories of property or assets that are
included as Collateral under the Collateral Documents or otherwise become Collateral after the
Notes are issued), in each case, as contemplated by, and with the Lien priority required under, the
Intercreditor Agreement and the Collateral Documents.

     Upon the reasonable request of the Collateral Agent or the Trustee at any time and from time
to time, the Company and each of the applicable Guarantors will promptly execute, acknowledge and
deliver such security documents, instruments, certificates, notices and other documents, and take
such other actions as shall be reasonably required, or that the Collateral Agent may reasonably
request, to create, perfect, protect, assure or enforce the Liens and benefits intended to be
conferred, in each case as contemplated by the Collateral Documents for the benefit of the holders
of Parity Lien Obligations, including any real property acquired by Pledgors in the future that has
a Fair Market Value in excess of $5.0 million.

     The Company and the applicable Guarantors will:

     (1) keep their properties adequately insured at all times by financially sound and
reputable insurers;

     (2) maintain such other insurance, to such extent and against such risks (and with such
deductibles, retentions and exclusions), including fire and other risks insured against by
extended coverage and coverage for acts of terrorism, as is customary with companies in the
same or similar businesses operating in the same or similar locations, including public
liability insurance against claims for personal injury or death or property damage occurring
upon, in, about or in connection with the use of any properties owned, occupied or
controlled by them;

     (3) maintain such other insurance as may be required by law;

     (4) maintain title insurance on all real property Collateral insuring the Collateral
Agent’s Parity Lien on that property, subject only to Permitted Prior Liens and other
exceptions to title approved by the Collateral Agent; and

     (5) maintain such other insurance as may be required by the Collateral Documents.

     Upon the request of the Collateral Agent, the Company and the Guarantors will furnish to the
Collateral Agent full information as to their property and liability insurance carriers. Holders
of Parity Lien Obligations, as a class, will be named as additional insureds, with a waiver of
subrogation, on all insurance policies of the applicable Guarantors and the Collateral Agent will
be named as loss payee, with 30 days’ notice of cancellation or material change, on all property
and casualty insurance policies of the applicable Guarantors.

     (b) The Company shall comply with the provisions of TIA § 314.

     To the extent applicable, the Company shall cause TIA § 313(b), relating to reports, and TIA §
314(d), relating to the release of property or securities subject to the Liens of the Collateral
Documents, to

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be complied with. Any certificate or opinion required by TIA § 314(d) may be made by an
Officer of the Company except in cases where TIA § 314(d) requires that such certificate or opinion
be made by an independent Person, which Person shall be an independent engineer, appraiser or other
expert selected by or reasonably satisfactory to the Trustee. Notwithstanding anything to the
contrary in this paragraph, the Company shall not be required to comply with all or any portion of
TIA § 314(d) if it determines, in good faith based on advice of counsel, that under the terms of
TIA § 314(d) and/or any interpretation or guidance as to the meaning thereof of the SEC and its
staff, including “no action” letters or exemptive orders, all or any portion of TIA § 314(d) is
inapplicable to one or a series of released Collateral.

Section 10.06 Collateral Agent.

     (a) The Company has appointed U.S. Bank National Association to serve as Collateral Agent
under the Intercreditor Agreement and the Collateral Documents, for the benefit of the Holders of
the Notes.

     (b) The Collateral Agent is authorized and empowered to appoint one or more co-collateral
agents as it deems necessary or appropriate.

     (c) The Collateral Agent (directly or through co-trustees, agents or sub-agents) will hold,
and will be entitled to enforce, all Liens on the Collateral.

     (d) The Collateral Agent will be subject to such directions as may be given it by the Trustee
from time to time as required or permitted by this Indenture. Except as directed by the Trustee
and as required or permitted by this Indenture, the Intercreditor Agreement or as directed by the
Holders with the requisite consent of such Holders, the Collateral Agent will not be obligated to:

     (1) act upon directions purported to be delivered to it by any other Person;

     (2) foreclose upon or otherwise enforce any Lien; or

     (3) take any other action whatsoever with regard to any or all of the Collateral
Documents, the Liens created thereby or the Collateral.

     The Company shall do or cause to be done all such acts and things as may be necessary or
proper, or as may be required by the provisions of the Intercreditor Agreement and the Noteholder
Documents, to assure and confirm to the Trustee and the Collateral Agent the security interest in
the Collateral contemplated hereby, by the Intercreditor Agreement, the Noteholder Documents or any
part thereof, as from time to time constituted, so as to render the same available for the security
and benefit of this Indenture and of the Guarantees secured thereby, according to the intent and
purposes herein and therein expressed.

     (e) The Collateral Agent will be accountable only for amounts that it actually receives as a
result of the enforcement of Liens created by the Collateral Documents.

     (f) In acting as Collateral Agent, the Collateral Agent may rely upon and enforce each and all
of the rights, powers, protections, immunities, indemnities and benefits of the Trustee under
Article 7 mutatis mutandis, and, in connection therewith, references to the Trustee shall be deemed
to include the Collateral Agent and references to this Indenture shall be deemed to include the
Collateral Documents.

     (g) Each successor Trustee will become the successor Collateral Agent as and when the
successor Trustee becomes the Trustee.

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Section 10.07 Authorization of Actions to Be Taken.

     (a) Each Holder of Notes, by its acceptance thereof, consents and agrees to the terms of each
Collateral Document, as originally in effect and as amended, supplemented or replaced from time to
time in accordance with its terms or the terms of this Indenture, authorizes and directs the
Trustee and the Collateral Agent to enter into the Collateral Documents, authorizes and empowers
the Trustee and the Collateral Agent to execute and deliver the Intercreditor Agreement, and
authorizes and empowers each of the Trustee and the Collateral Agent to bind the Holders of Notes
as set forth in the Collateral Documents and the Intercreditor Agreement and to perform its
obligations and exercise its rights and powers thereunder.

     (b) The Collateral Agent and the Trustee are authorized and empowered to receive for the
benefit of the Holders any funds collected or distributed under the Collateral Documents or the
Intercreditor Agreement and to make further distributions of such funds to the Holders according to
the provisions of this Indenture.

     (c) Subject to the provisions of Sections 7.01, 7.02 and 10.03 and the terms of the
Intercreditor Agreement, the Trustee may, upon an Event of Default, in its sole discretion and
without the consent of the Holders of Notes, direct, on behalf of the Holders, the Collateral Agent
to take all actions it deems necessary or appropriate in order to:

     (1) foreclose upon or otherwise enforce any or all of the Liens on the Collateral;

     (2) enforce any of the terms of the Collateral Documents or Intercreditor Agreement; or

     (3) collect and receive payment of any and all Obligations of the Pledgors and VGR
Holding.

     The Trustee will have power to (and to instruct the Collateral Agent to) institute and
maintain such suits and proceedings as it may deem expedient to prevent any impairment of the
Collateral by any acts that may be unlawful or in violation of the Collateral Documents, the
Intercreditor Agreement or this Indenture, and such suits and proceedings as the Trustee may deem
expedient to preserve or protect its interests and the interests of the Holders in the Collateral
(including power to (and to instruct the Collateral Agent to) institute and maintain suits or
proceedings to restrain the enforcement of or compliance with any legislative or other governmental
enactment, rule or order that may be unconstitutional or otherwise invalid if the enforcement of,
or compliance with, such enactment, rule or order would impair the security interest hereunder or
be prejudicial to the interests of the Holders, the Trustee or the Collateral Agent).

Section 10.08 Recording and Opinions.

     (a) Promptly after (but in any event not more than 60 days after) the execution and delivery
of this Indenture, or upon the later completion of all necessary filings, to the extent required by
TIA § 314(b)(i), the Company shall furnish to the Trustee an Opinion of Counsel either:

     (1) stating that, in the opinion of such counsel, all action has been taken with
respect to the recording, registering and filing of this Indenture, financing statements or
other instruments necessary to make effective the Liens intended to be created by the
Collateral Documents, and reciting with respect to the security interests in the Collateral,
the details of such action; or

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     (2) stating that, in the opinion of such counsel, no such action is necessary to make
such Liens effective.

     Such Opinion of Counsel may assume the due and proper filing of financing statements and the
due and proper recordation of documents and instruments with federal, state and county officials,
to the extent that such financing statements, documents and instruments have been presented for
filing or recordation, or to the extent that such counsel has reviewed a file stamped copy or a
recorded copy of any such financing statement, document or instrument.

     (b) The Company will furnish to the Collateral Agent and the Trustee within 90 days after the
end of each fiscal year, an Opinion of Counsel, dated as of such date, either:

     (1) (A) stating that, in the opinion of such counsel, action has been taken with
respect to the recording, registering, filing, re-recording, re-registering and re-filing of
this Indenture, financing statements or continuation statements as is necessary to maintain
the Liens of the Collateral Documents and reciting with respect to the security interests in
the Collateral the details of such action or referring to prior Opinions of Counsel in which
such details are given, and (B) stating that, in the opinion of such counsel, based on
relevant laws as in effect on the date of such Opinion of Counsel, all financing statements
and continuation statements have been executed and filed that are necessary as of such date
and during the succeeding 12 months to maintain the Liens of the Collateral Documents and
reciting the details of such actions; or

     (2) stating that, in the opinion of such counsel, no such action is necessary to
maintain such Liens.

     (c) Immediately prior to the issuance of the Exchange Notes and annually thereafter, the
Company will furnish to the Trustee and the Collateral Agent an Opinion of Counsel, in the form
specified in Section 10.09(b) for that opinion, with respect to the effectiveness and perfection of
the Liens intended to be created by the Collateral Documents. The Company will otherwise comply
with the provisions of TIA § 314(b).

Section 10.09 Certificates of the Company.

     The Company will furnish to the Trustee and the Collateral Agent, prior to each proposed
release of Collateral pursuant to the Collateral Documents:

     (1) all documents required by TIA § 314(d);

     (2) an Officers’ Certificate certifying that all terms for release under this Indenture
and any applicable Collateral Documents have been satisfied and specifying (a) the identity
of the Collateral to be released and (b) the applicable provisions of this Indenture and the
Collateral Documents which authorize that release; and

     (3) an Opinion of Counsel which may be rendered by internal counsel to the Company, to
the effect that such accompanying documents constitute all documents required by TIA §
314(d).

     The Trustee and the Collateral Agent may, to the extent permitted by Sections 7.01 and 7.02,
accept as conclusive evidence of compliance with the foregoing provisions the appropriate
statements contained in such documents, Officers’ Certificate and such Opinion of Counsel.

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Section 10.10 Certificates of the Trustee.

     In the event that the Company wishes to release Collateral in accordance with this Indenture
and the Collateral Documents and has delivered the certificates and documents required by this
Indenture and the Collateral Documents and Sections 10.04, 10.09 and 10.10, the Trustee will
determine whether it has received all documentation required by TIA § 314(d) in connection with
such release and, based on such determination and the Opinion of Counsel delivered pursuant to
clause (3) of Section 10.10, will deliver a certificate to the Collateral Agent setting forth such
determination. The Trustee, however, shall have no duty to confirm the legality or validity of
such documents, its sole duty being to certify that it has received such documentation which on
their face conform to Section 314(d) of the TIA.

Section 10.11 Environmental Indemnity

     (a) Each of the Company and the Guarantors jointly and severally agrees to defend (subject to
Indemnitees’ selection of counsel), indemnify, pay and hold harmless the Trustee and each Holder
and each of their respective Affiliates and each and all of the directors, officers, partners,
trustees, employees, attorneys and agents, and (in each case) their respective heirs,
representatives, successors and assigns (each of the foregoing, an “Indemnitee”) from and against
any and all Indemnified Liabilities; provided, no Indemnitee shall be entitled to indemnification
hereunder with respect to any Indemnified Liability to the extent such Indemnified Liability is
found by a final and nonappealable decision of a court of competent jurisdiction to have resulted
directly and primarily from the gross negligence or willful misconduct of such Indemnitee.

     (b) All amounts due under Section 10.11(a) hereof shall be payable not later than 10 days
after written demand therefor.

     (c) To the extent that the undertakings to defend, indemnify, pay and hold harmless set forth
in Section 10.11(a) hereof may be unenforceable in whole or in part because they are violative of
any law or public policy, each of the Company and Guarantors shall contribute the maximum portion
that it is permitted to pay and satisfy under applicable law to the payment and satisfaction of all
Indemnified Liabilities incurred by Indemnitees or any of them.

     (d) Neither the Company nor any Guarantor shall ever assert any claim against any Indemnitee,
on any theory of liability, for any lost profits or special, indirect or consequential damages or
(to the fullest extent lawful) any punitive damages arising out of, in connection with, or as a
result of, this Indenture or any other Noteholder Document or any agreement or instrument or
transaction contemplated hereby or relating in any respect to any Indemnified Liability, and each
of the Company and Guarantors hereby forever waives, releases and agrees not to sue upon any claim
for any such lost profits or special, indirect, consequential or (to the fullest extent lawful)
punitive damages, whether or not accrued and whether or not known or suspected to exist in its
favor.

     (e) The agreements in this Section 10.11 shall survive repayment of the Notes and all other
amounts payable hereunder and the resignation and removal of the Trustee or Collateral Agent.

ARTICLE 11

NOTE GUARANTEES

Section 11.01 Guarantee.

     (a) Subject to this Article 11, each of the Guarantors hereby, jointly and severally,
unconditionally guarantees to each Holder of a Note authenticated and delivered by the Trustee and
to the

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Trustee and its successors and assigns, irrespective of the validity and enforceability of
this Indenture, the Notes or the obligations of the Company hereunder or thereunder, that:

     (1) the principal of, premium and Liquidated Damages, if any, and interest on, the
Notes will be promptly paid in full when due, whether at maturity, by acceleration,
redemption or otherwise, and interest on the overdue principal of and interest on the Notes,
if any, if lawful, and all other obligations of the Company to the Holders or the Trustee
hereunder or thereunder will be promptly paid in full or performed, all in accordance with
the terms hereof and thereof; and

     (2) in case of any extension of time of payment or renewal of any Notes or any of such
other obligations, that same will be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, whether at stated maturity, by
acceleration or otherwise.

     Failing payment when due of any amount so guaranteed or any performance so guaranteed for
whatever reason, the Guarantors will be jointly and severally obligated to pay the same
immediately. Each Guarantor agrees that this is a guarantee of payment and not a guarantee of
collection.

     (b) The Guarantors hereby agree that their obligations hereunder are unconditional,
irrespective of the validity, regularity or enforceability of the Notes or this Indenture, the
absence of any action to enforce the same, any waiver or consent by any Holder of the Notes with
respect to any provisions hereof or thereof, the recovery of any judgment against the Company, any
action to enforce the same or any other circumstance which might otherwise constitute a legal or
equitable discharge or defense of a guarantor. Each Guarantor hereby waives diligence,
presentment, demand of payment, filing of claims with a court in the event of insolvency or
bankruptcy of the Company, any right to require a proceeding first against the Company, protest,
notice and all demands whatsoever and covenant that this Note Guarantee will not be discharged
except by complete performance of the obligations contained in the Notes and this Indenture.

     (c) If any Holder or the Trustee is required by any court or otherwise to return to the
Company, the Guarantors or any custodian, trustee, liquidator or other similar official acting in
relation to either the Company or the Guarantors, any amount paid by either to the Trustee or such
Holder, this Note Guarantee, to the extent theretofore discharged, will be reinstated in full force
and effect.

     (d) Each Guarantor agrees that it will not be entitled to any right of subrogation in relation
to the Holders in respect of any obligations guaranteed hereby until payment in full of all
obligations guaranteed hereby. Each Guarantor further agrees that, as between the Guarantors, on
the one hand, and the Holders and the Trustee, on the other hand, (1) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article 6 hereof for the purposes
of this Note Guarantee, notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed hereby, and (2) in the event of any
declaration of acceleration of such obligations as provided in Article 6 hereof, such obligations
(whether or not due and payable) will forthwith become due and payable by the Guarantors for the
purpose of this Note Guarantee. The Guarantors will have the right to seek contribution from any
non-paying Guarantor so long as the exercise of such right does not impair the rights of the
Holders under the Note Guarantee.

Section 11.02 Limitation on Guarantor Liability.

     Each Guarantor, and by its acceptance of Notes, each Holder, hereby confirms that it is the
intention of all such parties that the Note Guarantee of such Guarantor not constitute a fraudulent
transfer or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the
Uniform

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Fraudulent Transfer Act or any similar federal or state law to the extent applicable to any
Note Guarantee. To effectuate the foregoing intention, the Trustee, the Holders and the Guarantors
hereby irrevocably agree that the obligations of such Guarantor will be limited to the maximum
amount that will, after giving effect to such maximum amount and all other contingent and fixed
liabilities of such Guarantor that are relevant under such laws, and after giving effect to any
collections from, rights to receive contribution from or payments made by or on behalf of any other
Guarantor in respect of the obligations of such other Guarantor under this Article 11, result in
the obligations of such Guarantor under its Note Guarantee not constituting a fraudulent transfer
or conveyance.

Section 11.03 Execution and Delivery of Note Guarantee.

     To evidence its Note Guarantee set forth in Section 11.01 hereof, each Guarantor hereby agrees
that a notation of such Note Guarantee substantially in the form attached as Exhibit E hereto will
be endorsed by an Officer of such Guarantor on each Note authenticated and delivered by the Trustee
and that this Indenture will be executed on behalf of such Guarantor by one of its Officers.

     Each Guarantor hereby agrees that its Note Guarantee set forth in Section 11.01 hereof will
remain in full force and effect notwithstanding any failure to endorse on each Note a notation of
such Note Guarantee.

     If an Officer whose signature is on this Indenture or on the Note Guarantee no longer holds
that office at the time the Trustee authenticates the Note on which a Note Guarantee is endorsed,
the Note Guarantee will be valid nevertheless.

     The delivery of any Note by the Trustee, after the authentication thereof hereunder, will
constitute due delivery of the Note Guarantee set forth in this Indenture on behalf of the
Guarantors.

     In the event that the Company or any of its Restricted Subsidiaries creates or acquires any
Domestic Subsidiary after the date of this Indenture, if required by Section 4.17 hereof, the
Company will cause such Domestic Subsidiary to comply with the provisions of Section 4.17 hereof
and this Article 11, the extent applicable.

Section 11.04 Guarantors May Consolidate, etc., on Certain Terms.

     Except as otherwise provided in Section 11.05 hereof, no Guarantor may sell or otherwise
dispose of all or substantially all of its assets to, or consolidate with or merge with or into
(whether or not such Guarantor is the surviving Person) another Person, other than the Company or
another Guarantor, unless:

     (1) immediately after giving effect to such transaction, no Default or Event of Default
exists; and

     (2) either:

     (A) subject to Section 11.05 hereof, the Person acquiring the property in any
such sale or disposition or the Person formed by or surviving any such consolidation
or merger unconditionally assumes all the obligations of that Guarantor under this
Indenture, the Collateral Documents, its Note Guarantee and the Registration Rights
Agreement on the terms set forth herein or therein, pursuant to a supplemental
indenture and appropriate Collateral Documents in form and substance reasonably
satisfactory to the Trustee; or

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     (B) the Net Proceeds of such sale or other disposition are applied in
accordance with the applicable provisions of this Indenture, including without
limitation, Section 4.10 hereof.

     In case of any such consolidation, merger, sale or conveyance and upon the assumption by the
successor Person, by supplemental indenture, executed and delivered to the Trustee and satisfactory
in form to the Trustee, of the Note Guarantee endorsed upon the Notes and the due and punctual
performance of all of the covenants and conditions of this Indenture to be performed by the
Guarantor, such successor Person will succeed to and be substituted for the Guarantor with the same
effect as if it had been named herein as a Guarantor. Such successor Person thereupon may cause to
be signed any or all of the Note Guarantees to be endorsed upon all of the Notes issuable hereunder
which theretofore shall not have been signed by the Company and delivered to the Trustee. All the
Note Guarantees so issued will in all respects have the same legal rank and benefit under this
Indenture as the Note Guarantees theretofore and thereafter issued in accordance with the terms of
this Indenture as though all of such Note Guarantees had been issued at the date of the execution
hereof.

     Except as set forth in Articles 4 and 5 hereof, and notwithstanding clauses 2(a) and (b)
above, nothing contained in this Indenture or in any of the Notes will prevent any consolidation or
merger of a Guarantor with or into the Company or another Guarantor, or will prevent any sale or
conveyance of the property of a Guarantor as an entirety or substantially as an entirety to the
Company or another Guarantor.

Section 11.05 Releases.

     (a) In the event of any sale or other disposition of all or substantially all of the assets of
any Guarantor, by way of merger, consolidation or otherwise, or a sale or other disposition of all
of the Capital Stock of any Guarantor, in each case provided such sale or disposition does not
violate the provisions of Section 4.10 hereof, and in each case to a Person that is not (either
before or after giving effect to such transactions) the Company or a Guarantor, then such Guarantor
(in the event of a sale or other disposition, by way of merger, consolidation or otherwise, of all
of the Capital Stock of such Guarantor) or the corporation acquiring the property (in the event of
a sale or other disposition of all or substantially all of the assets of such Guarantor) will be
released and relieved of any obligations under its Note Guarantee; provided that the Net Proceeds
of such sale or other disposition are applied in accordance with the applicable provisions of this
Indenture, including without limitation Section 4.10 hereof. Upon delivery by the Company to the
Trustee of an Officers’ Certificate and an Opinion of Counsel to the effect that such sale or other
disposition was made by the Company in accordance with the provisions of this Indenture, including
without limitation Section 4.10 hereof, the Trustee will execute any documents reasonably required
in order to evidence the release of any Guarantor from its obligations under its Note Guarantee.

     (b) Upon Legal Defeasance in accordance with Article 8 hereof or satisfaction and discharge of
this Indenture in accordance with Article 12 hereof, each Guarantor will be released and relieved
of any obligations under its Note Guarantee.

     Any Guarantor not released from its obligations under its Note Guarantee as provided in this
Section 11.05 will remain liable for the full amount of principal of and interest and premium and
Liquidated Damages, if any, on the Notes and for the other obligations of any Guarantor under this
Indenture as provided in this Article 11.

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ARTICLE 12

SATISFACTION AND DISCHARGE

Section 12.01 Satisfaction and Discharge.

     This Indenture will be discharged and will cease to be of further effect as to all Notes
issued hereunder, when:

     (1) either:

     (a) all Notes that have been authenticated, except lost, stolen or destroyed Notes that
have been replaced or paid and Notes for whose payment money has theretofore been deposited
in trust and thereafter repaid to the Company, have been delivered to the Trustee for
cancellation; or

     (b) all Notes that have not been delivered to the Trustee for cancellation have become
due and payable by reason of the mailing of a notice of redemption or otherwise or will
become due and payable within one year and the Company or any Guarantor has irrevocably
deposited or caused to be deposited with the Trustee as trust funds in trust solely for the
benefit of the Holders, cash in U.S. dollars, non-callable Government Securities, or a
combination thereof, in such amounts as will be sufficient, without consideration of any
reinvestment of interest, to pay and discharge the entire Indebtedness on the Notes not
delivered to the Trustee for cancellation for principal, premium and Liquidated Damages, if
any, and accrued interest to the date of maturity or redemption;

     (2) no Default or Event of Default has occurred and is continuing on the date of such
deposit (other than a Default or Event of Default resulting from the borrowing of funds to
be applied to such deposit) and the deposit will not result in a breach or violation of, or
constitute a default under, any other instrument to which the Company or any Guarantor is a
party or by which the Company or any Guarantor is bound;

     (3) the Company or any Guarantor has paid or caused to be paid all sums payable by it
under this Indenture; and

     (4) the Company has delivered irrevocable instructions to the Trustee under this
Indenture to apply the deposited money toward the payment of the Notes at maturity or on the
redemption date, as the case may be.

     In addition, the Company must deliver an Officers’ Certificate and an Opinion of Counsel to
the Trustee stating that all conditions precedent to satisfaction and discharge have been
satisfied.

     Notwithstanding the satisfaction and discharge of this Indenture, if money has been deposited
with the Trustee pursuant to subclause (b) of clause (1) of this Section 12.01, the provisions of
Sections 12.02 and 8.06 hereof will survive. In addition, nothing in this Section 12.01 will be
deemed to discharge those provisions of Section 7.07 hereof, that, by their terms, survive the
satisfaction and discharge of this Indenture.

Section 12.02 Application of Trust Money.

     Subject to the provisions of Section 8.06 hereof, all money deposited with the Trustee
pursuant to Section 12.01 hereof shall be held in trust and applied by it, in accordance with the
provisions of the

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Notes and this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may determine, to the Persons
entitled thereto, of the principal (and premium and Liquidated Damages, if any) and interest for
whose payment such money has been deposited with the Trustee; but such money need not be segregated
from other funds except to the extent required by law.

     If the Trustee or Paying Agent is unable to apply any money or Government Securities in
accordance with Section 12.01 hereof by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting
such application, the Company’s and any Guarantor’s obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to Section 12.01 hereof;
provided that if the Company has made any payment of principal of, premium or Liquidated Damages,
if any, or interest on, any Notes because of the reinstatement of its obligations, the Company
shall be subrogated to the rights of the Holders of such Notes to receive such payment from the
money or Government Securities held by the Trustee or Paying Agent.

ARTICLE 13

MISCELLANEOUS

Section 13.01 Trust Indenture Act Controls.

     If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by
TIA §318(c), the imposed duties will control.

Section 13.02 Notices.

     Any notice or communication by the Company, any Guarantor or the Trustee to the others is duly
given if in writing and delivered in Person or by first class mail (registered or certified, return
receipt requested), facsimile transmission or overnight air courier guaranteeing next day delivery,
to the others’ address:

			
	     	 	If to the Company and/or any Guarantor:

Vector Group Ltd.

100 S.E. 2nd Street, 32nd Floor

Miami, Florida 33131

Attention: Richard J. Lampen and Marc Bell, Esq.

Facsimile No.: (305) 579-8009

With a copy to:

McDermott Will & Emery LLP

340 Madison Avenue

New York, New York 10173

Attention: Stephen E. Older and Lynn M. Roland

Facsimile No.: (212) 547-5444

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	     	 	If to the Trustee:

U.S. Bank National Association

60 Livingston Avenue

EP-MN-WS3C

St. Paul, MN 55107-2292

Attention: Rick Prokosch

Facsimile No.: (651) 495-8097

     The Company, any Guarantor or the Trustee, by notice to the others, may designate additional
or different addresses for subsequent notices or communications.

     All notices and communications (other than those sent to Holders) will be deemed to have been
duly given: at the time delivered by hand, if personally delivered; five Business Days after being
deposited in the mail, postage prepaid, if mailed; when receipt acknowledged, if transmitted by
facsimile; and the next Business Day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery.

     Any notice or communication to a Holder will be mailed by first class mail, certified or
registered, return receipt requested, or by overnight air courier guaranteeing next day delivery to
its address shown on the register kept by the Registrar. Any notice or communication will also be
so mailed to any Person described in TIA § 313(c), to the extent required by the TIA. Failure to
mail a notice or communication to a Holder or any defect in it will not affect its sufficiency with
respect to other Holders.

     If a notice or communication is mailed in the manner provided above within the time
prescribed, it is duly given, whether or not the addressee receives it.

     If the Company mails a notice or communication to Holders, it will mail a copy to the Trustee
and each Agent at the same time.

Section 13.03 Communication by Holders of Notes with Other Holders of Notes.

     Holders may communicate pursuant to TIA § 312(b) with other Holders with respect to their
rights under this Indenture or the Notes. The Company, the Trustee, the Registrar and anyone else
shall have the protection of TIA § 312(c).

Section 13.04 Certificate and Opinion as to Conditions Precedent.

     Upon any request or application by the Company to the Trustee to take any action under this
Indenture, the Company shall furnish to the Trustee:

     (1) an Officers’ Certificate in form and substance reasonably satisfactory to the
Trustee (which must include the statements set forth in Section 13.05 hereof) stating that,
in the opinion of the signers, all conditions precedent and covenants, if any, provided for
in this Indenture relating to the proposed action have been satisfied; and

     (2) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee
(which must include the statements set forth in Section 13.05 hereof) stating that, in the
opinion of such counsel, all such conditions precedent and covenants have been satisfied.

88

 

Section 13.05 Statements Required in Certificate or Opinion.

     Each certificate or opinion with respect to compliance with a condition or covenant provided
for in this Indenture (other than a certificate provided pursuant to TIA § 314(a)(4)) must comply
with the provisions of TIA § 314(e) and must include:

     (1) a statement that the Person making such certificate or opinion has read such
covenant or condition;

     (2) a brief statement as to the nature and scope of the examination or investigation
upon which the statements or opinions contained in such certificate or opinion are based;

     (3) a statement that, in the opinion of such Person, he or she has made such
examination or investigation as is necessary to enable him or her to express an informed
opinion as to whether or not such covenant or condition has been satisfied; and

     (4) a statement as to whether or not, in the opinion of such Person, such condition or
covenant has been satisfied.

Section 13.06 Rules by Trustee and Agents.

     The Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar
or Paying Agent may make reasonable rules and set reasonable requirements for its functions.

Section 13.07 No Personal Liability of Directors, Officers, Employees and Stockholders.

     No past, present or future director, officer, employee, incorporator or stockholder of the
Company or any Guarantor, as such, will have any liability for any obligations of the Company or
the Guarantors under the Notes, this Indenture, the Note Guarantees, the Collateral Documents or
for any claim based on, in respect of, or by reason of, such obligations or their creation. Each
Holder of Notes by accepting a Note waives and releases all such liability. The waiver and release
are part of the consideration for issuance of the Notes. The waiver may not be effective to waive
liabilities under the federal securities laws.

Section 13.08 Governing Law.

     THE INTERNAL LAW OF THE STATE OF NEW YORK WILL GOVERN AND BE USED TO CONSTRUE THIS INDENTURE,
THE NOTES AND THE NOTE GUARANTEES WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF
LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED
THEREBY.

Section 13.09 No Adverse Interpretation of Other Agreements.

     This Indenture may not be used to interpret any other indenture, loan or debt agreement of the
Company or its Subsidiaries or of any other Person. Any such indenture, loan or debt agreement may
not be used to interpret this Indenture.

89

 

Section 13.10 Successors.

     All agreements of the Company in this Indenture and the Notes will bind its successors. All
agreements of the Trustee in this Indenture will bind its successors. All agreements of each
Guarantor in this Indenture will bind its successors, except as otherwise provided in Section 11.05
hereof.

Section 13.11 Severability.

     In case any provision in this Indenture or in the Notes is invalid, illegal or unenforceable,
the validity, legality and enforceability of the remaining provisions will not in any way be
affected or impaired thereby.

Section 13.12 Counterpart Originals.

     The parties may sign any number of copies of this Indenture. Each signed copy will be an
original, but all of them together represent the same agreement.

Section 13.13 Table of Contents, Headings, etc.

     The Table of Contents, Cross-Reference Table and Headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not to be considered a part of
this Indenture and will in no way modify or restrict any of the terms or provisions hereof.

[Signatures on following page]

90

 

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written
above.

	 	 	 	 	 
	 	Very truly yours,

The Company:

VECTOR GROUP LTD.

 	 
	 	By:  	/s/ Richard J. Lampen
 	 
	 	 	Name:  	Richard J. Lampen 	 
	 	 	Title:  	Executive Vice President 	 
	 
	 	Guarantors:

VGR HOLDING LLC

 	 
	 	By:  	/s/ Richard J. Lampen
 	 
	 	 	Name:  	Richard J. Lampen 	 
	 	 	Title:  	Manager 	 
	 
	 	LIGGETT GROUP LLC

 	 
	 	By:  	/s/ Ronald J. Bernstein
 	 
	 	 	Name:  	Ronald J. Bernstein 	 
	 	 	Title:  	Manager 	 
	 
	 	LIGGETT VECTOR BRANDS INC.

 	 
	 	By:  	/s/ Ronald J. Bernstein
 	 
	 	 	Name:  	Ronald J. Bernstein 	 
	 	 	Title:  	President and Chief Executive Officer 	 
	 
	 	VECTOR RESEARCH LLC

 	 
	 	By:  	/s/ Francis G. Wall
 	 
	 	 	Name:  	Francis G. Wall 	 
	 	 	Title:  	Vice President, Treasurer and Chief

Financial Officer 	 

91

 

	 	 	 	 	 

	 	 	 	 	 
	 	VECTOR TOBACCO INC.

 	 
	 	By:  	/s/ Francis G. Wall
 	 
	 	 	Name:  	Francis G. Wall 	 
	 	 	Title:  	Vice President-Finance, Treasurer and

Chief Financial Officer 	 
	 
	 	LIGGETT & MYERS HOLDINGS INC.

 	 
	 	By:  	/s/ Richard J. Lampen
 	 
	 	 	Name:  	Richard J. Lampen 	 
	 	 	Title:  	President 	 
	 
	 	LIGGETT & MYERS INC.

 	 
	 	By:  	/s/ Ronald J. Bernstein
 	 
	 	 	Name:  	Ronald J. Bernstein 	 
	 	 	Title:  	President 	 
	 
	 	100 MAPLE LLC

 	 
	 	By:  	/s/ Ronald J. Bernstein
 	 
	 	 	Name:  	Ronald J. Bernstein 	 
	 	 	Title:  	Manager 	 
	 
	 	V.T. AVIATION LLC

 	 
	 	By:  	/s/ Francis G. Wall
 	 
	 	 	Name:  	Francis G. Wall 	 
	 	 	Title:  	VP of Finance, Treasurer, and Chief

Financial Officer 	 
	 
	 	VGR AVIATION LLC

 	 
	 	By:  	/s/ Francis G. Wall
 	 
	 	 	Name:  	Francis G. Wall 	 
	 	 	Title:  	VP of Finance, CFO, and Treasurer 	 

92

 

	 	 	 	 	 

	 	 	 	 	 
	 	EVE HOLDINGS INC.

 	 
	 	By:  	/s/ Richard J. Lampen
 	 
	 	 	Name:  	Richard J. Lampen 	 
	 	 	Title:  	President 	 

93

 

	 	 	 	 	 
	 	Trustee:

U.S. BANK NATIONAL ASSOCIATION

 	 
	 	By:  	/s/ Richard Prokosch
 	 
	 	 	Name:  	Richard Prokosch 	 
	 	 	Title:  	Vice President 	 
	 

94

 

[Face of Note]

 

CUSIP/CINS                     

11% Senior Secured Notes due 2015

			
	 	 	 
	No.           
	 	$                    

VECTOR GROUP LTD.

promises to pay to [                    ] or registered assigns,

the principal sum of                                                      DOLLARS on August 15, 2015.

Interest Payment Dates: February 15 and August 15

Record Dates: February 1 and August 1

Dated:                     , 200     

	 	 	 	 	 
	 	VECTOR GROUP LTD.

 	 
	 	By:  	/s/
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

This is one of the Notes referred to

in the within-mentioned Indenture:

	 	 	 	 	 
	U.S. BANK NATIONAL ASSOCIATION,

as Trustee

 	 
	By:  	/s/
 	 
	 	 	Authorized Signatory 	 
	 	 	 	 

A-1

 

	 	 	 	 	 

[Back of Note]

11% Senior Secured Notes due 2015

[Insert the Global Note Legend, if applicable pursuant to the provisions of the Indenture]

[Insert the Private Placement Legend, if applicable pursuant to the provisions of the Indenture]

     Capitalized terms used herein have the meanings assigned to them in the Indenture referred to
below unless otherwise indicated.

     (1) Interest. Vector Group Ltd., a Delaware corporation (the “Company”),
promises to pay interest on the principal amount of this Note at 11% per annum from
                              , 20      until maturity and shall pay the Liquidated Damages, if any,
payable pursuant to Section 5 of the Registration Rights Agreement referred to below. The
Company will pay interest and Liquidated Damages, if any, semi-annually in arrears on
February 15 and August 15 of each year, or if any such day is not a Business Day, on the
next succeeding Business Day (each, an “Interest Payment Date”). Interest on the Notes will
accrue from the most recent date to which interest has been paid or, if no interest has been
paid, from the date of issuance; provided that if there is no existing Default in the
payment of interest, and if this Note is authenticated between a record date referred to on
the face hereof and the next succeeding Interest Payment Date, interest shall accrue from
such next succeeding Interest Payment Date; provided further that the first Interest Payment
Date shall be                               , 20     . The Company will pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if
any, from time to time on demand at a rate that is 1% per annum in excess of the rate then
in effect to the extent lawful; it will pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue installments of interest and Liquidated
Damages, if any, (without regard to any applicable grace periods) from time to time on
demand at the same rate to the extent lawful. Interest will be computed on the basis of a
360-day year of twelve 30-day months.

     (2) Method of Payment. The Company will pay interest on the Notes (except
defaulted interest) and Liquidated Damages, if any, to the Persons who are registered
Holders of Notes at the close of business on the February 1 or August 1 next preceding the
Interest Payment Date, even if such Notes are canceled after such record date and on or
before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with
respect to defaulted interest. The Notes will be payable as to principal, premium and
Liquidated Damages, if any, and interest at the office or agency of the Company maintained
for such purpose within or without the City and State of New York, or, at the option of the
Company, payment of interest and Liquidated Damages, if any, may be made by check mailed to
the Holders at their addresses set forth in the register of Holders; provided that payment
by wire transfer of immediately available funds will be required with respect to principal
of and interest, premium and Liquidated Damages, if any, on, all Global Notes and all other
Notes the Holders of which will have provided wire transfer instructions to the Company or
the Paying Agent. Such payment will be in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and private debts.

     (3) Paying Agent and Registrar. Initially, U.S. Bank National Association,
the Trustee under the Indenture, will act as Paying Agent and Registrar. The Company may
change any Paying Agent or Registrar without notice to any Holder. The Company or any of
its Subsidiaries may act in any such capacity.

A-2

 

     (4) Indenture and Collateral.

          (a) The Company issued the Notes under an Indenture dated as of August 16, 2007 (the
“Indenture”) among the Company, the Guarantors and the Trustee. The terms of the Notes
include those stated in the Indenture and those made part of the Indenture by reference to
the TIA. The Notes are subject to all such terms, and Holders are referred to the Indenture
and such Act for a statement of such terms. To the extent any provision of this Note
conflicts with the express provisions of the Indenture, the provisions of the Indenture
shall govern and be controlling. The Indenture does not limit the aggregate principal
amount of Notes that may be issued thereunder.

          (b) The payment of all amounts due under the Note Guarantees of the Pledgors and the
performance of all Obligations of each of the Pledgors to the Holders will be secured,
equally and ratably with any other Parity Lien Obligations of such Pledgors, by Liens on the
Collateral of such Pledgors, subject to Permitted Prior Liens, as provided in the Collateral
Documents and the Intercreditor Agreement. The payment of all amounts due under the Note
Guarantee of VGR Holding and the performance of all Obligations of VGR Holding to the
Holders will be secured, equally and ratably with any other Parity Lien Obligations of VGR
Holding, by Liens on the Pledged Securities as provided in the Collateral Documents. The
Collateral Documents shall provide for the grant by the Pledgors and VGR Holding to the
Collateral Agent of security interests in the Collateral securing their Note Guarantees
subject in the case of the Liggett Guarantors to the terms of the Intercreditor Agreement.

     (5) Optional Redemption.

          (a) At any time prior to August 15, 2010, the Company may on any one or more occasions
redeem up to 35% of the aggregate principal amount of Notes issued under the Indenture at a
redemption price of 111% of the principal amount thereof, plus accrued and unpaid interest
and Liquidated Damages, if any, to the redemption date, with the net cash proceeds of a sale
of common Equity Interests (other than Disqualified Stock) of the Company; provided that:

     (i) at least 65% of the aggregate principal amount of Notes originally
issued under the Indenture (excluding Notes held by the Company and its
Subsidiaries) remains outstanding immediately after the occurrence of such
redemption; and

     (ii) the redemption occurs within 90 days of the date of the closing of
such sale of Equity Interests.

          (b) At any time prior to August 15, 2011, the Company may also redeem all or a part of
the Notes, upon not less than 30 nor more than 60 days’ prior notice mailed by first-class
mail to each Holder’s registered address, at a redemption price equal to 100% of the
principal amount of Notes redeemed plus the Applicable Premium as of, and accrued and unpaid
interest and Liquidated Damages, if any, to the applicable date of redemption, subject to
the rights of Holders on the relevant record date to receive interest due on the relevant
interest payment date.

          (c) Except pursuant to the preceding paragraphs, the Notes will not be redeemable at
the Company’s option prior to August 15, 2011.

          (d) On or after August 15, 2011, the Company may redeem all or a part of the Notes upon
not less than 30 nor more than 60 days’ notice, at the redemption prices (expressed as

A-3

 

percentages of principal amount) set forth below plus accrued and unpaid interest and
Liquidated Damages, if any, on the Notes redeemed to the applicable redemption date, if
redeemed during the twelve-month period beginning on August 15 of the years indicated below,
subject to the rights of Holders on the relevant record date to receive interest on the
relevant interest payment date:

	 	 	 	 	 
	Year     	 	Percentage	 
	2011
	 	 	105.500	%
	2012
	 	 	103.667	%
	2013
	 	 	101.833	%
	2014 and thereafter
	 	 	100.000	%

     Unless the Company defaults in the payment of the redemption price, interest will cease
to accrue on the Notes or portions thereof called for redemption on the applicable
redemption date.

     (6) Mandatory Redemption. The Company is not be required to make mandatory
redemption or sinking fund payments with respect to the Notes.

     (7) Repurchase at the Option of Holder.

          (a) Upon the occurrence of a Change of Control, each Holder of Notes will have the
right to require the Company to make an offer (a “Change of Control Offer”) to repurchase
all or any part (equal to $1,000 or an integral multiple of $1,000) of that Holder’s Notes
at a purchase price in cash equal to 101% of the aggregate principal amount of Notes
repurchased plus accrued and unpaid interest and Liquidated Damages, if any, on the Notes
repurchased to the date of purchase, subject to the rights of Holders on the relevant record
date to receive interest due on the relevant interest payment date (the “Change of Control
Payment”). Within thirty days following any Change of Control, the Company will mail a
notice to each Holder describing the transaction or transactions that constitute the Change
of Control as required by the Indenture.

          (b) If the Company or a Guarantor consummates any Asset Sales, within five days of each
date on which the aggregate amount of Excess Proceeds exceeds $10.0 million, the
Company will commence an offer to all Holders of Notes and all holders of other Indebtedness
that is pari passu with the Notes containing provisions similar to those set forth in the
Indenture with respect to offers to purchase or redeem with the proceeds of sales of assets
(an “Asset Sale Offer”) pursuant to Section3 3.09 and 4.10 of the Indenture to purchase the
maximum principal amount of Notes (including any Additional Notes) and such other pari passu
Indebtedness that may be purchased out of the Excess Proceeds. The offer price in any Asset
Sale Offer will be equal to percentages corresponding to the applicable optional redemption
price in effect on the repurchase date, and for periods prior to August 15, 2011, the first
optional redemption price of the principal amount plus accrued and unpaid interest and
Liquidated Damages, if any, to the date of purchase, and will be payable in cash, in
accordance with the procedures set forth in the Indenture. To the extent that the aggregate
amount of Notes (including any Additional Notes) and other pari passu Indebtedness tendered
pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company (or such
Guarantor) may use such deficiency for any purpose not otherwise prohibited by the
Indenture. If the aggregate principal amount of Notes and other pari passu Indebtedness
tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds, the Trustee shall
select the Notes and such other pari passu Indebtedness to be purchased on a pro rata basis.
Holders of Notes that are the subject of an offer to purchase will receive an Asset Sale
Offer from the Company prior to any related purchase date and may elect to have such Notes

A-4

 

purchased by completing the form entitled “Option of Holder to Elect Purchase” attached
to the Notes.

     (8) Notice of Redemption. Notice of redemption will be mailed at least 30
days but not more than 60 days before the redemption date to each Holder whose Notes are to
be redeemed at its registered address, except that redemption notices may be mailed more
than 60 days prior to a redemption date if the notice is issued in connection with a
defeasance of the Notes or a satisfaction or discharge of the Indenture. Notes in
denominations larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000, unless all of the Notes held by a Holder are to be redeemed.

     (9) Denominations, Transfer, Exchange. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000. The transfer
of Notes may be registered and Notes may be exchanged as provided in the Indenture. The
Registrar and the Trustee may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and the Company may require a Holder to pay any taxes
and fees required by law or permitted by the Indenture. The Company need not exchange or
register the transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, the Company need not
exchange or register the transfer of any Notes for a period of 15 days before a selection of
Notes to be redeemed or during the period between a record date and the corresponding
Interest Payment Date.

     (10) Persons Deemed Owners. The registered Holder of a Note may be treated as
its owner for all purposes.

     (11) Amendment, Supplement and Waiver. Subject to certain exceptions, and
subject to the Intercreditor Agreement, the Indenture, the Notes, the Note Guarantees or the
Collateral Documents may be amended or supplemented with the consent of the Holders of at
least a majority in aggregate principal amount of the then outstanding Notes including
Additional Notes, if any, voting as a single class, and any existing Default or Event of
Default (except a continuing Default or Event of Default in the payment of the principal of,
premium and Liquidated Damages, if any, or interest on, the Notes) or compliance with any
provision of the Indenture, the Notes, the Note Guarantees or the Collateral Documents may
be waived with the consent of the Holders of a majority in aggregate principal amount of the
then outstanding Notes including Additional Notes, if any, voting as a single class.
Without the consent of any Holder of a Note, the Indenture, the Notes, the Note Guarantees
or the Collateral Documents may be amended or supplemented to cure any ambiguity, defect or
inconsistency, to provide for uncertificated Notes in addition to or in place of
certificated Notes, to provide for the assumption of the Company’s or a Guarantor’s
obligations to Holders of the Notes and Note Guarantees in case of a merger or
consolidation, to make any change that would provide any additional rights or benefits to
the Holders of the Notes or that does not adversely affect the legal rights under the
Indenture of any such Holder, to comply with the requirements of the SEC in order to effect
or maintain the qualification of the Indenture under the TIA, to conform the text of the
Indenture, the Notes, the Note Guarantees or the Collateral Documents to any provision of
the “Description of Notes” section of the Company’s Offering Circular dated August 8, 2007,
relating to the initial offering of the Notes, to the extent that such provision in that
“Description of Notes” was intended to be a verbatim recitation of a provision of the
Indenture, the Note Guarantees, the Collateral Documents or the Notes; to provide for the
issuance of Additional Notes in accordance with the limitations set forth in the Indenture;
to allow any Guarantor to execute a supplemental indenture to the Indenture and/or a Note
Guarantee with respect to the Notes, or to make,

A-5

 

complete or confirm any grant of Collateral permitted or required by the Indenture or
any of the Collateral Documents or any release of Collateral that becomes effective as set
forth in the indenture or any of the Collateral Documents. In addition, any amendment or
supplement to, or waiver of, the provisions of the Indenture or any Collateral Document that
has the effect of releasing all or substantially all of the Collateral from the Liens
securing the Note Guarantees or releasing any Guarantor from any of its obligations under
its Note Guarantee or the Indenture if the assets or properties of that Guarantor constitute
all or substantially all of the Collateral, except in accordance with the terms of the
Indenture and the Intercreditor Agreement, will require the consent of the holders of at
least 95% in aggregate principal amount of the Notes then outstanding.

     (12) Defaults and Remedies. Events of Default include: (i) default for 30
days in the payment when due of interest on, or Liquidated Damages, if any, with respect to
the Notes; (ii) default in the payment when due (at maturity, upon redemption or otherwise)
of the principal of, or premium, if any, on, the Notes or default in the payment when due of
a change of Control Payment, (iii) failure by the Company or any of the Guarantors for 30
days after notice to the Company by the Trustee or the Holders of at least 25% in aggregate
principal amount of the Notes then outstanding including Additional Notes, if any, voting as
a single class to comply with the provisions of Sections 4.07, 4.09 or 4.10 hereof; (iv)
failure by the Company or any of the Guarantors for 60 days after notice to the Company by
the trustee or the holders of at least 25% in aggregate principal amount of the Notes then
outstanding including Additional Notes, if any, voting as a single class to comply with any
of the other agreements in the Indenture or the Collateral Documents; (v) default under
certain other agreements relating to Indebtedness of the Company which default arises from
the failure to pay principal, interest or premium on such Indebtedness and such Default
continues for 30 days or results in the acceleration of such Indebtedness prior to its
express maturity and such acceleration is not annulled within 30 days; (vi) certain final
judgments for the payment of money that remain undischarged for a period of 60 days; (vii)
certain events of bankruptcy or insolvency with respect to the Company or any Guarantor that
is a Significant Subsidiary or any group of Guarantors that, taken together, would
constitute a Significant Subsidiary; (viii) the breach for 60 days after notice to the
Company by the Trustee or the Holders of at least 25% in aggregate principal amount of the
Notes then outstanding including Additional Notes, if any, voting as a single class of
certain representations or warranties or agreements in the Collateral Documents; (ix) the
repudiation by the Company or any of the Guarantors of any of its obligations under the
Collateral Documents or the unenforceability of the Collateral Documents against the Company
or any of the Guarantors for any reason; and (x) except as permitted by the Indenture, any
Note Guarantee is held in any judicial proceeding to be unenforceable or invalid or ceases
for any reason to be in full force and effect or any Guarantor or any Person acting on its
behalf denies or disaffirms its obligations under such Guarantor’s Note Guarantee. If any
Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in
aggregate principal amount of the then outstanding Notes may declare all the Notes to be due
and payable immediately. Notwithstanding the foregoing, in the case of an Event of Default
arising from certain events of bankruptcy or insolvency, all outstanding Notes will become
due and payable immediately without further action or notice. Holders may not enforce the
Indenture or the Notes except as provided in the Indenture. Subject to certain limitations,
Holders of a majority in aggregate principal amount of the then outstanding Notes may direct
the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of
the Notes notice of any continuing Default or Event of Default (except a Default or Event of
Default relating to the payment of principal or interest or premium or Liquidated Damages,
if any,) if it determines that withholding notice is in their interest. The Holders of a
majority in aggregate principal amount of the then outstanding Notes by notice to the
Trustee may, on behalf of the Holders of all of the Notes, rescind an acceleration

A-6

 

or waive any existing Default or Event of Default and its consequences under the
Indenture except a continuing Default or Event of Default in the payment of interest or
premium or Liquidated Damages, if any, on, or the principal of, the Notes. The Company is
required to deliver to the Trustee annually a statement regarding compliance with the
Indenture, and the Company is required, upon becoming aware of any Default or Event of
Default, to deliver to the Trustee a statement specifying such Default or Event of Default.

     (13) Trustee Dealings with Company. The Trustee, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services for the
Company or its Affiliates, and may otherwise deal with the Company or its Affiliates, as if
it were not the Trustee.

     (14) No Recourse Against Others. A director, officer, employee, incorporator
or stockholder of the Company or any of the Guarantors, as such, will not have any liability
for any obligations of the Company or the Guarantors under the Notes, the Note Guarantees,
the Collateral Documents or the Indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder by accepting a Note waives and
releases all such liability. The waiver and release are part of the consideration for the
issuance of the Notes.

     (15) Authentication. This Note will not be valid until authenticated by the
manual signature of the Trustee or an authenticating agent.

     (16) Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in
common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).

     (17) Additional Rights of Holders of Restricted Global Notes and Restricted
Definitive Notes. In addition to the rights provided to Holders of Notes under the
Indenture, Holders of Restricted Global Notes and Restricted Definitive Notes will have all
the rights set forth in the Registration Rights Agreement dated as of August 16, 2007, among
the Company, the Guarantors and the other parties named on the signature pages thereof or,
in the case of Additional Notes, Holders of Restricted Global Notes and Restricted
Definitive Notes will have the rights set forth in one or more registration rights
agreements, if any, among the Company, the Guarantors and the other parties thereto,
relating to rights given by the Company and the Guarantors to the purchasers of any
Additional Notes (collectively, the “Registration Rights Agreement”).

     (18) CUSIP Numbers. Pursuant to a recommendation promulgated by the Committee
on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Notes, and the Trustee may use CUSIP numbers in notices of redemption as a
convenience to Holders. No representation is made as to the accuracy of such numbers either
as printed on the Notes or as contained in any notice of redemption, and reliance may be
placed only on the other identification numbers placed thereon.

     (19) GOVERNING LAW. THE INTERNAL LAW OF THE STATE OF NEW YORK WILL GOVERN AND
BE USED TO CONSTRUE THE INDENTURE, THIS NOTE AND THE NOTE GUARANTEES WITHOUT GIVING EFFECT
TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS
OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

A-7

 

     The Company will furnish to any Holder upon written request and without charge a copy of the
Indenture and/or the Registration Rights Agreement. Requests may be made to:

Vector Group Ltd.

100 S.E. 2nd Street, 32nd Floor

Miami, Florida 33131

Attention: Richard J. Lampen and Marc Bell, Esq.

A-8

 

Assignment Form

     To assign this Note, fill in the form below:

			
	(I) or (we) assign and transfer this Note to:	 	

 

(Insert assignee’s legal name)

 

(Insert assignee’s soc. sec. or tax I.D. no.)

 

 

 

 

 

 

 

 

(Print or type assignee’s name, address and zip code)

			
	and irrevocably appoint	 	

 

to transfer this Note on the books of the Company. The agent may substitute another to act for him.

Date:                          

	 	 	 	 	 
	 	 	 
	 	                                              Your Signature:
 	 
	 	(Sign exactly as your name appears on the face of this Note)     	 
	 	 	 
	 

Signature Guarantee*:                                                

	*	 	Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor
acceptable to the Trustee).

A-9

 

Option of Holder to Elect Purchase

     If you want to elect to have this Note purchased by the Company pursuant to Section 4.10 or
4.14 of the Indenture, check the appropriate box below:

o Section 4.10            o Section 4.14

     If you want to elect to have only part of the Note purchased by the Company pursuant to
Section 4.10 or Section 4.14 of the Indenture, state the amount you elect to have purchased:

$                          

Date:                          

	 	 	 	 	 
	 	 	 
	 	                                              Your Signature:
 	 
	 	(Sign exactly as your name appears on the face of this Note)     	 
	 	 	 
	 

     Tax Identification No.:

Signature Guarantee*:                                                

     • Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor
acceptable to the Trustee).

A-10

 

Schedule of Exchanges of Interests in the Global Note *

     The following exchanges of a part of this Global Note for an interest in another Global
Note or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note for
an interest in this Global Note, have been made:

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Principal Amount	 	 
	 	 	Amount of decrease	 	Amount of increase	 	of this Global Note	 	Signature of
	 	 	in Principal Amount	 	in Principal Amount	 	following such	 	authorized officer
	 	 	of	 	of	 	decrease	 	of Trustee or
	Date of Exchange	 	this Global Note	 	this Global Note	 	(or increase)	 	Custodian
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 

	*	 	This schedule should be included only if the Note is issued in global form.

A-11

 

EXHIBIT B

FORM OF CERTIFICATE OF TRANSFER

[Company address block]

[Registrar address block]

     Re: 11% Senior Secured Notes due 2015

     Reference is hereby made to the Indenture, dated as of August 16, 2007 (the “Indenture”),
among Vector Group Ltd., as issuer (the “Company”), the Guarantors party thereto and U.S. Bank
National Association, as trustee. Capitalized terms used but not defined herein shall have the
meanings given to them in the Indenture.

     ________________, (the “Transferor”) owns and proposes to transfer the
Note [ s ] or interest in such Note [ s ] specified in Annex A
hereto, in the principal amount of $_______ in such Note [ s ] or interests
(the “Transfer”), to ________________________ (the “Transferee”), as further specified in Annex
A hereto. In connection with the Transfer, the Transferor hereby certifies that:

[CHECK ALL THAT APPLY]

     1. o Check if Transferee will take delivery of a beneficial interest in the
144A Global Note or a Restricted Definitive Note pursuant to Rule 144A. The Transfer is being
effected pursuant to and in accordance with Rule 144A under the Securities Act of 1933, as amended
(the “Securities Act”), and, accordingly, the Transferor hereby further certifies that the
beneficial interest or Definitive Note is being transferred to a Person that the Transferor
reasonably believes is purchasing the beneficial interest or Definitive Note for its own account,
or for one or more accounts with respect to which such Person exercises sole investment discretion,
and such Person and each such account is a “qualified institutional buyer” within the meaning of
Rule 144A in a transaction meeting the requirements of Rule 144A, and such Transfer is in
compliance with any applicable blue sky securities laws of any state of the United States. Upon
consummation of the proposed Transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the 144A Global Note and/or the Restricted
Definitive Note and in the Indenture and the Securities Act.

     2. o Check if Transferee will take delivery of a beneficial interest in the
Regulation S Global Note or a Restricted Definitive Note pursuant to Regulation S. The
Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the
Securities Act and, accordingly, the Transferor hereby further certifies that (i) the Transfer is
not being made to a Person in the United States and (x) at the time the buy order was originated,
the Transferee was outside the United States or such Transferor and any Person acting on its behalf
reasonably believed and believes that the Transferee was outside the United States or (y) the
transaction was executed in, on or through the facilities of a designated offshore securities
market and neither such Transferor nor any Person acting on its behalf knows that the transaction
was prearranged with a buyer in the United States, (ii) no directed selling efforts have been made
in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S under the
Securities Act; (iii) the transaction is not part of a plan or scheme to evade the registration
requirements of the Securities Act and (iv) if the proposed transfer is being made prior to the
expiration of the Restricted Period, the transfer is not being made to a U.S. Person or for the
account or benefit of a U.S. Person (other than an Initial Purchaser). Upon consummation of the
proposed transfer in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will be subject to the restrictions on Transfer enumerated in the Private Placement Legend printed on the Regulation
S Global Note and/or the Restricted Definitive Note and in the Indenture and the Securities Act.

B-1

 

     3. o Check and complete if Transferee will take delivery of a beneficial interest
in the IAI Global Note or a Restricted Definitive Note pursuant to any provision of the Securities
Act other than Rule 144A or Regulation S. The Transfer is being effected in compliance with
the transfer restrictions applicable to beneficial interests in Restricted Global Notes and
Restricted Definitive Notes and pursuant to and in accordance with the Securities Act and any
applicable blue sky securities laws of any state of the United States, and accordingly the
Transferor hereby further certifies that (check one):

     (a) o such Transfer is being effected pursuant to and in accordance with Rule
144 under the Securities Act;

or

     (b) o such Transfer is being effected to the Company or a subsidiary thereof;

or

     (c) o such Transfer is being effected pursuant to an effective registration
statement under the Securities Act and in compliance with the prospectus delivery
requirements of the Securities Act;

or

     (d) o such Transfer is being effected to an Institutional Accredited Investor
and pursuant to an exemption from the registration requirements of the Securities Act
other than Rule 144A, Rule 144, Rule 903 or Rule 904, and the Transferor hereby further
certifies that it has not engaged in any general solicitation within the meaning of
Regulation D under the Securities Act and the Transfer complies with the transfer
restrictions applicable to beneficial interests in a Restricted Global Note or Restricted
Definitive Notes and the requirements of the exemption claimed, which certification is
supported by (1) a certificate executed by the Transferee in the form of Exhibit D to the
Indenture and (2) if such Transfer is in respect of a principal amount of Notes at the
time of transfer of less than $250,000, an Opinion of Counsel provided by the Transferor
or the Transferee (a copy of which the Transferor has attached to this certification), to
the effect that such Transfer is in compliance with the Securities Act. Upon consummation
of the proposed transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Definitive Note will be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the IAI Global Note and/or the
Restricted Definitive Notes and in the Indenture and the Securities Act.

     4. o Check if Transferee will take delivery of a beneficial interest in an
Unrestricted Global Note or of an Unrestricted Definitive Note.

     (a) o Check if Transfer is pursuant to Rule 144. (i) The Transfer is being effected
pursuant to and in accordance with Rule 144 under the Securities Act and in compliance with the
transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any
state of the United States and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with the Securities Act.
Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on
transfer enumerated in the Private
Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in
the Indenture.

B-2

 

     (b) o Check if Transfer is Pursuant to Regulation S. (i) The Transfer is being
effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and in
compliance with the transfer restrictions contained in the Indenture and any applicable blue sky
securities laws of any state of the United States and (ii) the restrictions on transfer contained
in the Indenture and the Private Placement Legend are not required in order to maintain compliance
with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms
of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject
to the restrictions on transfer enumerated in the Private Placement Legend printed on the
Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.

     (c) o Check if Transfer is Pursuant to Other Exemption. (i) The Transfer is being
effected pursuant to and in compliance with an exemption from the registration requirements of the
Securities Act other than Rule 144, Rule 903 or Rule 904 and in compliance with the transfer
restrictions contained in the Indenture and any applicable blue sky securities laws of any State of
the United States and (ii) the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the Securities Act. Upon
consummation of the proposed Transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will not be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes or
Restricted Definitive Notes and in the Indenture.

     This certificate and the statements contained herein are made for your benefit and the benefit
of the Company.

	 	 	 	 	 
	 	 	 
	 	
 	 
	 	[Insert Name of Transferor]      	 
	 	 	 
	 

	 	 	 	 	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Dated: ______________________

B-3

 

ANNEX A TO CERTIFICATE OF TRANSFER

1. The Transferor owns and proposes to transfer the following:

[CHECK ONE OF (a) OR (b)]

     (a) o a beneficial interest in the:

     (i)
o 144A Global Note (CUSIP
_____________), or

     (ii)
o Regulation S Global Note
(CUSIP _____________), or

     (iii) o IAI Global Note (CUSIP _____________); or

     (b) o a Restricted Definitive Note.

2. After the Transfer the Transferee will hold:

[CHECK ONE]

     (a) o a beneficial interest in the:

     (i)  ̈ 144A Global Note (CUSIP _____________), or

     (ii)  ̈ Regulation S Global Note (CUSIP _____________), or

     (iii)  ̈ IAI Global Note (CUSIP _____________); or

     (iv)  ̈ Unrestricted Global Note (CUSIP _____________); or

     (b)  ̈ a Restricted Definitive Note; or

     (c)  ̈ an Unrestricted Definitive Note,

     in accordance with the terms of the Indenture.

B-4

 

EXHIBIT C

FORM OF CERTIFICATE OF EXCHANGE

[Company address block]

[Registrar address block]

Re: 11% Senior Secured Notes due 2015

(CUSIP ____________)

     Reference is hereby made to the Indenture, dated as of August 16, 2007 (the “Indenture”),
among Vector Group Ltd. as issuer (the “Company”), the Guarantors party thereto and U.S. Bank
National Association as trustee. Capitalized terms used but not defined herein shall have the
meanings given to them in the Indenture.

     __________________________, (the “Owner”) owns and proposes to exchange the
Note [ s ] or interest in such Note [ s ] specified herein, in
the principal amount of $_________ in such Note [ s ] or interests (the
"Exchange”). In connection with the Exchange, the Owner hereby certifies that:

     1. Exchange of Restricted Definitive Notes or Beneficial Interests in a Restricted Global
Note for Unrestricted Definitive Notes or Beneficial Interests in an Unrestricted Global Note

     (a)  ̈ Check if Exchange is from beneficial interest in a Restricted Global Note to
beneficial interest in an Unrestricted Global Note. In connection with the Exchange of the Owner’s
beneficial interest in a Restricted Global Note for a beneficial interest in an Unrestricted Global
Note in an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being
acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in
compliance with the transfer restrictions applicable to the Global Notes and pursuant to and in
accordance with the Securities Act of 1933, as amended (the “Securities Act”), (iii) the
restrictions on transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the beneficial interest
in an Unrestricted Global Note is being acquired in compliance with any applicable blue sky
securities laws of any state of the United States.

     (b)  ̈ Check if Exchange is from beneficial interest in a Restricted Global Note to
Unrestricted Definitive Note. In connection with the Exchange of the Owner’s beneficial interest
in a Restricted Global Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the
Definitive Note is being acquired for the Owner’s own account without transfer, (ii) such Exchange
has been effected in compliance with the transfer restrictions applicable to the Restricted Global
Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the Definitive Note is being acquired in compliance
with any applicable blue sky securities laws of any state of the United States.

     (c)  ̈ Check if Exchange is from Restricted Definitive Note to beneficial interest in an
Unrestricted Global Note. In connection with the Owner’s Exchange of a Restricted Definitive Note
for a beneficial interest in an Unrestricted Global Note, the Owner hereby certifies (i) the
beneficial interest is being acquired for the Owner’s own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions applicable to Restricted
Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions
on transfer contained in the Indenture and the Private Placement Legend are not required in order
to maintain compliance with the Securities Act and

C-1

 

(iv) the beneficial interest is being acquired in compliance with any applicable blue sky
securities laws of any state of the United States.

     (d)  ̈ Check if Exchange is from Restricted Definitive Note to Unrestricted Definitive
Note. In connection with the Owner’s Exchange of a Restricted Definitive Note for an Unrestricted
Definitive Note, the Owner hereby certifies (i) the Unrestricted Definitive Note is being acquired
for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in
accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain compliance with the
Securities Act and (iv) the Unrestricted Definitive Note is being acquired in compliance with any
applicable blue sky securities laws of any state of the United States.

     2. Exchange of Restricted Definitive Notes or Beneficial Interests in Restricted Global
Notes for Restricted Definitive Notes or Beneficial Interests in Restricted Global Notes

     (a)  ̈ Check if Exchange is from beneficial interest in a Restricted Global Note to
Restricted Definitive Note. In connection with the Exchange of the Owner’s beneficial interest in
a Restricted Global Note for a Restricted Definitive Note with an equal principal amount, the Owner
hereby certifies that the Restricted Definitive Note is being acquired for the Owner’s own account
without transfer. Upon consummation of the proposed Exchange in accordance with the terms of the
Indenture, the Restricted Definitive Note issued will continue to be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the Restricted Definitive Note and
in the Indenture and the Securities Act.

     (b)  ̈ Check if Exchange is from Restricted Definitive Note to beneficial interest in a
Restricted Global Note. In connection with the Exchange of the Owner’s Restricted Definitive Note
for a beneficial interest in the [ CHECK ONE ]  ̈ 144A Global Note,  ̈
Regulation S Global Note,  ̈ IAI Global Note with an equal principal amount, the Owner hereby
certifies (i) the beneficial interest is being acquired for the Owner’s own account without
transfer and (ii) such Exchange has been effected in compliance with the transfer restrictions
applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities
Act, and in compliance with any applicable blue sky securities laws of any state of the United
States. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture,
the beneficial interest issued will be subject to the restrictions on transfer enumerated in the
Private Placement Legend printed on the relevant Restricted Global Note and in the Indenture and
the Securities Act.

     This certificate and the statements contained herein are made for your benefit and the benefit
of the Company.

	 	 	 	 	 
	 	 	 
	 	
 	 
	 	[Insert Name of Transferor]      	 
	 	 	 
	 

	 	 	 	 	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Dated: ______________________

C-2

 

EXHIBIT D

FORM OF CERTIFICATE FROM

ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR

[Company address block]

[Registrar address block]

Re: 11% Senior Secured Notes due 2015

     Reference is hereby made to the Indenture, dated as of August 16, 2007 (the “Indenture”),
among Vector Group Ltd. as issuer (the “Company”), the Guarantors party thereto and U.S. Bank
National Association as trustee. Capitalized terms used but not defined herein shall have the
meanings given to them in the Indenture.

     In
connection with our proposed purchase of $_____________ aggregate principal amount of:

          (a)  ̈ a beneficial interest in a Global Note, or

          (b)  ̈ a Definitive Note,

          we confirm that:

          1. We understand that any subsequent transfer of the Notes or any interest therein is subject
to certain restrictions and conditions set forth in the Indenture and the undersigned agrees to be
bound by, and not to resell, pledge or otherwise transfer the Notes or any interest therein except
in compliance with, such restrictions and conditions and the Securities Act of 1933, as amended
(the “Securities Act”).

          2. We understand that the offer and sale of the Notes have not been registered under the
Securities Act, and that the Notes and any interest therein may not be offered or sold except as
permitted in the following sentence. We agree, on our own behalf and on behalf of any accounts for
which we are acting as hereinafter stated, that if we should sell the Notes or any interest
therein, we will do so only (A) to the Company or any subsidiary thereof, (B) in accordance with
Rule 144A under the Securities Act to a “qualified institutional buyer” (as defined therein), (C)
to an institutional “accredited investor” (as defined below) that, prior to such transfer,
furnishes (or has furnished on its behalf by a U.S. broker-dealer) to you and to the Company a
signed letter substantially in the form of this letter and, if such transfer is in respect of a
principal amount of Notes, at the time of transfer of less than $250,000, an Opinion of Counsel in
form reasonably acceptable to the Company to the effect that such transfer is in compliance with
the Securities Act, (D) outside the United States in accordance with Rule 904 of Regulation S under
the Securities Act, (E) pursuant to the provisions of Rule 144(k) under the Securities Act or (F)
pursuant to an effective registration statement under the Securities Act, and we further agree to
provide to any Person purchasing the Definitive Note or beneficial interest in a Global Note from
us in a transaction meeting the requirements of clauses (A) through (E) of this paragraph a notice
advising such purchaser that resales thereof are restricted as stated herein.

          3. We understand that, on any proposed resale of the Notes or beneficial interest therein, we
will be required to furnish to you and the Company such certifications, legal opinions and other
information as you and the Company may reasonably require to confirm that the proposed sale
complies with the foregoing restrictions. We further understand that the Notes purchased by us
will bear a legend to the foregoing effect.

D-1

 

          4. We are an institutional “accredited investor” (as defined in Rule 501(a)(1), (2), (3) or
(7) of Regulation D under the Securities Act) and have such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and risks of our investment in the
Notes, and we and any accounts for which we are acting are each able to bear the economic risk of
our or its investment.

          5. We are acquiring the Notes or beneficial interest therein purchased by us for our own
account or for one or more accounts (each of which is an institutional “accredited investor”) as to
each of which we exercise sole investment discretion.

          You and the Company are entitled to rely upon this letter and are irrevocably authorized to
produce this letter or a copy hereof to any interested party in any administrative or legal
proceedings or official inquiry with respect to the matters covered hereby.

	 	 	 	 	 
	 	 	 
	 	
 	 
	 	[Insert Name of Accredited Investor] 	 
	 	 	 
	 

	 	 	 	 	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Dated: _______________________

D-2

 

EXHIBIT E

[FORM OF NOTATION OF GUARANTEE]

     For value received, each Guarantor (which term includes any successor Person under the
Indenture) has, jointly and severally, unconditionally guaranteed, to the extent set forth in the
Indenture and subject to the provisions in the Indenture dated as of August 16, 2007 (the
"Indenture”) among Vector Group Ltd. (the “Company"), the Guarantors party thereto and U.S. Bank
National Association as trustee (the “Trustee”), (a) the due and punctual payment of the principal
of, premium and Liquidated Damages, if any, and interest on, the Notes, whether at maturity, by
acceleration, redemption or otherwise, the due and punctual payment of interest on overdue
principal of and interest on the Notes, if any, if lawful, and the due and punctual performance of
all other obligations of the Company to the Holders or the Trustee all in accordance with the terms
of the Indenture and (b) in case of any extension of time of payment or renewal of any Notes or any
of such other obligations, that the same will be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration
or otherwise. The obligations of the Guarantors to the Holders of Notes and to the Trustee
pursuant to the Note Guarantee and the Indenture are expressly set forth in Article 11 of the
Indenture and reference is hereby made to the Indenture for the precise terms of the Note
Guarantee. Capitalized terms used but not defined herein have the meanings given to them in the
Indenture.

	 	 	 	 	 
	 	[Name of Guarantor(s)] 

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

E-1

 

EXHIBIT F

[FORM OF SUPPLEMENTAL INDENTURE

TO BE DELIVERED BY SUBSEQUENT GUARANTORS]

     Supplemental Indenture (this “Supplemental Indenture”), dated as of
_____________, 200_____, among _____________ (the “Guaranteeing Subsidiary”), a subsidiary of
Vector Group Ltd. (or its permitted successor), a Delaware corporation (the “Company”), the
Company, the other Guarantors (as defined in the Indenture referred to herein) and
__________________________, as trustee under the Indenture referred to below (the “Trustee”).

WITNESSETH

     WHEREAS, the Company has heretofore executed and delivered to the Trustee an indenture (the
"Indenture”), dated as of August 16, 2007 providing for the issuance of 11% Senior Secured Notes
due 2015 (the “Notes”);

     WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary
shall execute and deliver to the Trustee a supplemental indenture pursuant to which the
Guaranteeing Subsidiary shall unconditionally guarantee all of the Company’s Obligations under the
Notes and the Indenture on the terms and conditions set forth herein (the “Note Guarantee”); and

     WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and
deliver this Supplemental Indenture.

     NOW, THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the Guaranteeing Subsidiary and the
Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes
as follows:

     1. Capitalized Terms. Capitalized terms used herein without definition shall have
the meanings assigned to them in the Indenture.

     2. Agreement to Guarantee. The Guaranteeing Subsidiary hereby agrees to provide an
unconditional Guarantee on the terms and subject to the conditions set forth in the Note Guarantee
and in the Indenture including but not limited to Article 11 thereof.

     4. No Recourse Against Others. No past, present or future director, officer,
employee, incorporator, stockholder or agent of the Guaranteeing Subsidiary, as such, shall have
any liability for any obligations of the Company or any Guaranteeing Subsidiary under the Notes,
any Note Guarantees, the Collateral Documents, the Indenture or this Supplemental Indenture or for
any claim based on, in respect of, or by reason of, such obligations or their creation. Each
Holder of the Notes by accepting a Note waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the Notes. Such waiver may not be effective
to waive liabilities under the federal securities laws and it is the view of the SEC that such a
waiver is against public policy.

     5. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED
TO CONSTRUE THIS SUPPLEMENTAL INDENTURE WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS
OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED
THEREBY.

     6. Counterparts. The parties may sign any number of copies of this Supplemental
Indenture. Each signed copy shall be an original, but all of them together represent the same
agreement.

F-1

 

     7. Effect of Headings. The Section headings herein are for convenience only and
shall not affect the construction hereof.

     8. The Trustee. The Trustee shall not be responsible in any manner whatsoever for or
in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of
the recitals contained herein, all of which recitals are made solely by the Guaranteeing Subsidiary
and the Company.

F-2

 

     IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly
executed and attested, all as of the date first above written.

Dated: _______________, 20___

	 	 	 	 	 
	 	[Guaranteeing Subsidiary] 

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	VECTOR GROUP LTD.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	[Existing Guarantors] 

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	[Trustee], 

as Trustee

 	 
	 	By:  	 	 
	 	 	Authorized Signatory 	 
	 	 	 	 
	 

F-3EX-4.2 Pledge Agreement

 

Exhibit 4.2

PLEDGE AGREEMENT

DATED August 16, 2007

between

VGR HOLDING LLC

and

U.S. BANK NATIONAL ASSOCIATION

as Collateral Agent

 

 

CONTENTS

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

i 

 

	 	 	 	 	 
	Clause	 	Page	 
	8. ENFORCEMENT OF SECURITY
	 	 	12	 
	 
	 	 	 	 
	8.1 Events of Default
	 	 	12	 
	8.2 General
	 	 	13	 
	8.3 Dividend and voting rights
	 	 	14	 
	8.4 Collateral Agent’s rights upon default
	 	 	14	 
	8.5 No Marshaling
	 	 	16	 
	 
	9. APPLICATION OF PROCEEDS
	 	 	16	 
	 
	 	 	 	 
	10. EXPENSES AND INDEMNITY
	 	 	16	 
	 
	 	 	 	 
	11. EVIDENCE AND CALCULATIONS
	 	 	17	 
	 
	 	 	 	 
	12. CHANGES TO THE PARTIES
	 	 	18	 
	 
	 	 	 	 
	12.1 Pledgor
	 	 	18	 
	12.2 Collateral Agent
	 	 	18	 
	12.3 Successors and assigns
	 	 	18	 
	 
	 	 	 	 
	13. MISCELLANEOUS
	 	 	18	 
	 
	 	 	 	 
	13.1 Amendments and waivers
	 	 	18	 
	13.2 Waivers and remedies cumulative
	 	 	18	 
	13.3 Counterparts
	 	 	18	 
	 
	 	 	 	 
	14. SEVERABILITY
	 	 	18	 
	 
	 	 	 	 
	15. RELEASE
	 	 	19	 
	 
	 	 	 	 
	16. NOTICES
	 	 	19	 
	 
	 	 	 	 
	16.1 Notices
	 	 	19	 
	16.2 Contact Details
	 	 	19	 
	16.3 Effectiveness
	 	 	19	 
	 
	 	 	 	 
	17. GOVERNING LAW
	 	 	20	 
	 
	 	 	 	 
	18. ENFORCEMENT
	 	 	20	 
	 
	 	 	 	 
	18.1 Jurisdiction
	 	 	20	 
	18.2 Service of process
	 	 	20	 
	18.3 Complete agreement
	 	 	21	 

ii 

 

	 	 	 	 	 
	Clause	 	Page	 
	18.4 Waiver of Jury Trial
	 	 	21	 
	 
	 	 	 	 
	SCHEDULE 1: Pledged Equity Interests
	 	 	 	 
	 
	 	 	 	 
	SIGNATORIES

	 	 	 	 

iii 

 

THIS AGREEMENT (this Agreement) is dated August 16, 2007

BETWEEN:

1. VGR HOLDING LLC, a Delaware limited liability company, as pledgor (the Pledgor); and

2. U.S. BANK NATIONAL ASSOCIATION, as collateral agent for the Noteholders under the Indenture
described below (in this capacity, the Collateral Agent).

BACKGROUND:

The Pledgor enters into this Agreement in connection with the Indenture dated August 16, 2007 (the
Indenture) by and among Vector Group Ltd. (Vector Group), the Guarantors party thereto and U.S.
Bank National Association, as the trustee (the Trustee) under the Indenture. Pursuant to the
Indenture, Vector Group is issuing Notes and Pledgor is guaranteeing the Notes as provided in the
Indenture. Pledgor now wishes to secure its obligations under the Indenture by entering into this
Agreement.

IT IS AGREED as follows:

	1.	 	INTERPRETATION
	 
	1.1	 	Definitions
	 
	 	 	In this Agreement:
	 
	 	 	Event of Default means an event specified as such in Clause 8.1 (Events of Default).
	 
	 	 	Finance Documents means the Indenture, all Notes issued from time to time under the
Indenture, the Purchase Agreement, the Registration Rights Agreement, this Agreement and all
other pledges, security agreements, control agreements and all other agreements and
documents entered into the connection with the transactions contemplated by the Indenture.
	 
	 	 	Guarantors means the Pledgor and the other guarantors under the Indenture.
	 
	 	 	Issuer means each of Liggett Group and Vector Tobacco.
	 
	 	 	Lien means any security interest, lien, mortgage, pledge, encumbrance, charge, assignment,
hypothecation, adverse claim, claim, or restriction on assignment, transfer or pledge or any
other arrangement having the effect of conferring security.
	 
	 	 	Liggett Group means Liggett Group LLC, a Delaware limited liability company.
	 
	 	 	Note means any note issued from time to time under the Indenture, including any exchange
note.
	 
	 	 	Noteholder means any person which from time to time is the holder of a Note.

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Obligors means Vector Group, the Pledgor and the other Guarantors.

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

Pledged Collateral means:

	 	(a)	 	the Pledged Equity Interests;
	 
	 	(b)	 	all additional shares, securities, and interests in either Issuer, and all
warrants, rights, and options to purchase or receive shares, securities, or interests
in either Issuer, in which the Pledgor at any time has or obtains any interest; and
	 
	 	(c)	 	all dividends, interest, revenues, income, distributions, and proceeds of any
kind, whether cash, instruments, securities, or other property, received by or
distributable to the Pledgor in respect of, or in exchange for, the Pledged Equity
Interests or any other Pledged Collateral.

	 	 	Pledged Equity Interests means all equity interests in the Issuers, which equity interests
are described in Schedule I (Pledged Equity Interests) to this Agreement.
	 
	 	 	Secured Liabilities means each liability and obligation specified in Clause 2
(Secured Liabilities).
	 
	 	 	Security means any security interest created by this Agreement.
	 
	 	 	Security Period means the period beginning on the date of this Agreement and ending on the
date on which all the Secured Liabilities have been indefeasibly, unconditionally and
irrevocably paid and discharged in full. The Security Period will be extended to take into
account any extension or reinstatement of this Agreement under Clause 3.2(b)
(General). Furthermore, if the Collateral Agent considers that an amount paid to it or a
Noteholder under a Finance Document is capable of being avoided or otherwise set aside on
the bankruptcy, liquidation, insolvency or administration of the payer or otherwise then
that amount will not be considered to have been irrevocably paid for the purposes of this
Agreement.
	 
	 	 	UCC means the Uniform Commercial Code as in effect from time to time in the State of New
York.
	 
	 	 	Vector Tobacco means Vector Tobacco Inc., a Virginia corporation.

	 
	1.2	 	Construction

	 	(a)	 	Any term defined in the UCC and not defined in this Agreement has the meaning
given to that term in the UCC.

2

 

	 	(b)	 	Any term defined in the Indenture and not defined in this Agreement or the UCC
has the meaning given to that term in the Indenture.
	 
	 	(c)	 	No reference to proceeds in this Agreement authorizes any sale, transfer or
other disposition of Collateral by the Pledgor.
	 
	 	(d)	 	In this Agreement, unless the contrary intention appears, a reference to:

	 	(i)	 	an amendment includes a supplement, novation, restatement or
re-enactment and amended will be construed accordingly;
	 
	 	(ii)	 	Clause, a Subclause or a Schedule is a reference to a Clause or
Subclause of, or a Schedule to, this Agreement;
	 
	 	(iii)	 	a law is a reference to that law as amended or re-enacted and
to any successor law;
	 
	 	(iv)	 	an agreement is a reference to that agreement as amended;
	 
	 	(v)	 	fraudulent transfer law means any applicable U.S. Bankruptcy
Law or state fraudulent transfer or conveyance statute, and the related case
law;
	 
	 	(vi)	 	law includes any law, statute, regulation, regulatory
requirement, rule, ordinance, ruling, decision, treaty, directive, order,
guideline, regulation, policy, writ, judgment, injunction or request of any
court or other governmental, inter-governmental or supranational body, officer
or official, fiscal or monetary authority, or other ministry or public entity
(and their interpretation, administration and application), whether or not
having the force of law; and

	 	(e)	 	In this Agreement:

	 	(i)	 	includes and including are not limiting;
	 
	 	(ii)	 	or is not exclusive; and
	 
	 	(iii)	 	the headings are for convenience only, do not constitute part
of this Agreement and are not to be used in construing it.

	2.	 	SECURED LIABILITIES
	 
	2.1	 	Secured Liabilities
	 
	 	 	Each obligation and liability whether:

	 	(a)	 	present or future, actual, contingent or unliquidated; or
	 
	 	(b)	 	owed jointly or severally (or in any other capacity whatsoever),

3

 

	 	 	of the Pledgor to any Noteholder under or in connection with each Finance Document is a
Secured Liability.

	2.2	 	Specification of Secured Liabilities
	 
	 	 	The Secured Liabilities include any liability or obligation for:

	 	(a)	 	repayment of the principal of any Note;
	 
	 	(b)	 	payment of interest and any other amount payable under the Finance Documents;
	 
	 	(c)	 	payment and performance of all other obligations and liabilities of any Obligor
under the Finance Documents;
	 
	 	(d)	 	payment of any amount owed under any amendment, modification, renewal,
extension or novation of any of the above obligations; and
	 
	 	(e)	 	payment of an amount which arises after a petition is filed by, or against, any
Obligor under the US Bankruptcy Code of 1978 even if the obligations do not accrue
because of the automatic stay under Section 362 of the US Bankruptcy Code of 1978 or
otherwise.

	3.	 	CREATION OF PLEDGE AND SECURITY
	 
	3.1	 	Security interest
	 
	 	 	As security for the prompt and complete payment and performance of the Secured Liabilities
when due (whether due because of stated maturity, acceleration, mandatory prepayment, or
otherwise) and to induce the Noteholders to purchase the Notes, the Pledgor pledges to the
Collateral Agent for the benefit of the Noteholders, and grants to the Collateral Agent for
the benefit of the Noteholders a continuing security interest in, the Pledged Collateral.
	 
	3.2	 	General

	 	(a)	 	All the Security created under this Agreement:

	 	(i)	 	is continuing security for the irrevocable and indefeasible
payment in full of the Secured Liabilities, regardless of any intermediate
payment or discharge in whole or in part;
	 
	 	(ii)	 	is in addition to, and not in any way prejudiced by, any other
security now or subsequently held by the Collateral Agent.

	 	(b)	 	If, at any time for any reason (including the bankruptcy, insolvency,
receivership, reorganization, dissolution or liquidation of any Obligor or the
appointment of any receiver, intervenor or conservator of, or agent or similar official
for, any Obligor or any of their respective properties), any payment received by the

4

 

	 	 	 	Collateral Agent or any Noteholder in respect of the Secured Liabilities is
rescinded or avoided or must otherwise be restored or returned by the Collateral
Agent or any Noteholder, that payment will not be considered to have been made for
purposes of this Agreement, and this Agreement will continue to be effective or will
be reinstated, if necessary, as if that payment had not been made.
	 
	 	(c)	 	This Agreement is enforceable against the Pledgor to the maximum extent
permitted by the fraudulent transfer laws.

	4.	 	PERFECTION AND FURTHER ASSURANCES
	 
	4.1	 	General perfection
	 
	 	 	The Pledgor must take, at its own expense, promptly, and in any event within any applicable
time limit:

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

	 	 	to ensure that this Security is as of the date of this Agreement, and will continue to be
until the end of the Security Period, a validly created, attached, enforceable and perfected
first priority continuing security interest in the Pledged Collateral, in all relevant
jurisdictions, securing payment and performance of the Secured Liabilities.
	 
	 	 	This includes the giving of any notice, order or direction, the making of any filing or
registration, the passing of any resolution and the execution and delivery of any documents
or agreements which the Collateral Agent may think expedient.
	 
	4.2	 	Delivery of certificates

	 	(a)	 	The Pledgor represents and warrants that it has delivered to the Collateral
Agent (or as directed by the Collateral Agent) in the State of New York all original
certificates and instruments evidencing or representing the Pledged Equity Interests
existing on the date of this Agreement.
	 
	 	(b)	 	The Pledgor must deliver to the Collateral Agent (or as directed by the
Collateral Agent) in the State of New York, promptly upon receipt, all original
certificates and instruments evidencing or representing any Pledged Collateral arising
or acquired by the Pledgor after the date of this Agreement.
	 
	 	(c)	 	All Pledged Collateral delivered under this Agreement will be either:

	 	(i)	 	duly endorsed and in suitable form for transfer by delivery; or
	 
	 	(ii)	 	accompanied by undated instruments of transfer endorsed in
blank, as directed by the Collateral Agent, and in form and substance
reasonably satisfactory to the Collateral Agent.

5

 

	 	(d)	 	Until the end of the Security Period, the Collateral Agent will hold (directly
or through an agent) all certificates, instruments, and stock powers delivered to it.
	 
	 	(e)	 	At any time and from time to time, the Collateral Agent will have the right to
exchange certificates or instruments evidencing or representing Pledged Collateral for
certificates or instruments of smaller or larger denominations.

	4.3	 	Filing of financing statements

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

	 	(i)	 	financing statements describing the Pledged Collateral;
	 
	 	(ii)	 	continuation statements; and
	 
	 	(iii)	 	any amendment in respect of those statements.

	 	(b)	 	Promptly after filing an initial financing statement in respect of the Pledged
Collateral, the Pledgor must provide the Collateral Agent with an official report from
the Secretary of State of the State of Delaware indicating that the Collateral Agent’s
security interest in the Pledged Collateral is prior to all other security interests or
other interests reflected in the report.

	4.4	 	Communication with Issuers
	 
	 	 	The Pledgor authorizes the Collateral Agent at any time and from time to time to communicate
with the Issuers with regard to any matter relating to any Pledged Collateral.
	 
	4.5	 	Further assurances

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

	 	(i)	 	creating, attaching, perfecting and protecting, and maintaining
the priority of, any security interest intended to be created by this
Agreement;
	 
	 	(ii)	 	facilitating the enforcement of this Security or the exercise
of any right, power or discretion exercisable by the Collateral Agent or any of
its delegates or sub-delegates in respect of any of the Pledged Collateral;
	 
	 	(iii)	 	obtaining possession and control of any Pledged Collateral;
and
	 
	 	(iv)	 	facilitating the assignment or transfer of any rights and/or
obligations of the Collateral Agent or any Noteholder under this Agreement.

6

 

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

	 	(b)	 	The Pledgor irrevocably constitutes and appoints the Collateral Agent, with
full power of substitution, as the Pledgor’s true and lawful attorney-in-fact, in the
Pledgor’s name or in the Collateral Agent’s name or otherwise, and at the Pledgor’s
expense, to take any of the actions referred to in paragraph (a) above without notice
to or the consent of the Pledgor. This power of attorney is a power coupled with an
interest and cannot be revoked. The Pledgor ratifies and confirms all actions taken by
the Collateral Agent or its agents under this power of attorney.

	5.	 	REPRESENTATIONS AND WARRANTIES
	 
	5.1	 	Representations and warranties
	 
	 	 	The representations and warranties set out in this Clause are made by the Pledgor to the
Collateral Agent and each Noteholder.
	 
	5.2	 	The Pledgor

	 	(a)	 	It is organized under the laws of the State of Delaware.
	 
	 	(b)	 	Its exact legal name, as it appears in the public records of its jurisdiction
of incorporation or organization, is VGR Holding LLC. It has not changed its name,
whether by amendment of its organizational documents, reorganization, merger or
otherwise, since its date of formation, December 7, 2005.
	 
	 	(c)	 	Its organizational identification number, as issued by its jurisdiction of
organization is 3097262.
	 
	 	(d)	 	It keeps at its address indicated in Clause 17 (Notices) its corporate
records and all records, documents and instruments constituting, relating to or
evidencing Pledged Collateral, except for the Pledged Collateral delivered to the
Collateral Agent in compliance with Clause 4.2 (Delivery of certificates).

	5.3	 	The Pledged Collateral

	 	(a)	 	Liggett Group keeps at its address at 100 Maple Lane, Mebane, North Carolina
27302 and Vector Tobacco keeps at its address at One Park Drive, Suite 150, Post Office
Box 13818, Research Triangle Park, North Carolina 27709 its corporate records, stock
ledger and all records, documents and instruments relating to or evidencing the Pledged
Collateral.
	 
	 	(b)	 	The Pledged Equity Interests have been duly authorized and are validly issued,
fully-paid and non-assessable.

7

 

	 	(c)	 	The Pledged Equity Interests constitute all of the issued and outstanding
equity or ownership interests in the Issuers, and there are no other equity or
ownership interests in the Issuers, options or rights to acquire or subscribe for any
such interests, or securities or instruments convertible into or exchangeable or
exercisable for any such interests.
	 
	 	(d)	 	The Pledged Equity Interests are “securities” under Article 8 of the UCC and
are represented by certificates, all of which have been delivered to the Collateral
Agent.
	 
	 	(e)	 	Except as permitted under the Indenture:

	 	(i)	 	it is the sole legal and beneficial owner of, and has the power
to transfer and grant a security interest in the Pledged Equity Interests and
all other Pledged Collateral now in existence;
	 
	 	(ii)	 	none of the Pledged Collateral is subject to any Lien other
than the Collateral Agent’s security interest;
	 
	 	(iii)	 	it has not agreed or committed to sell, assign, pledge,
transfer, license, lease or encumber any of the Pledged Collateral, or granted
any option, warrant, or right with respect to any of the Pledged Collateral;
and
	 
	 	(iv)	 	no effective mortgage, deed of trust, financing statement,
security agreement or other instrument similar in effect is on file or of
record with respect to any Pledged Collateral, except for those that create,
perfect or evidence the Collateral Agent’s security interest.

	 	(f)	 	No litigation, arbitration or administrative proceedings are current or pending
or, to its knowledge, threatened, involving or affecting the Pledged Collateral, and
none of the Pledged Collateral is subject to any order, writ, injunction, execution or
attachment.
	 
	 	(g)	 	None of the Pledged Collateral constitutes “margin stock” within the meaning of
Regulation U or X issued by the Board of Governors of the United States Federal Reserve
System.

	5.4	 	No liability

	 	(a)	 	Its rights, interests, liabilities and obligations under contractual
obligations that constitute part of the Pledged Collateral are not affected by this
Agreement or the exercise by the Collateral Agent of its rights under this Agreement;
	 
	 	(b)	 	neither the Collateral Agent nor any Noteholder, unless it expressly agrees in
writing, will have any liabilities or obligations under any contractual obligation that
constitutes part of the Pledged Collateral as a result of this Agreement, the exercise
by the Collateral Agent of its rights under this Agreement or otherwise; and

8

 

	 	(c)	 	neither the Collateral Agent nor any Noteholder has or will have any obligation
to collect upon or enforce any contractual obligation or claim that constitutes part of
the Pledged Collateral, or to take any other action with respect to the Pledged
Collateral.

	5.5	 	Consideration and solvency

	 	(a)	 	Terms used in this Subclause have the meanings given to them in, and must be
construed in accordance with, the fraudulent transfer laws.
	 
	 	(b)	 	It will receive valuable direct and indirect benefits as a result of the
transactions financed by the issuance of the Notes and these benefits constitute
“reasonably equivalent value” and “fair consideration” as those terms are used in the
fraudulent transfer laws.
	 
	 	(c)	 	To the best of its knowledge, the Collateral Agent and the Noteholders have
acted in good faith in connection with the transactions contemplated by this Agreement.
	 
	 	(d)	 	The sum of its debts (including its obligations under this Agreement) is less
than the value of its property (calculated at the lesser of fair valuation and present
fair saleable value).
	 
	 	(e)	 	Its capital is not unreasonably small to conduct its business as currently
conducted or as proposed to be conducted.
	 
	 	(f)	 	It has not incurred, does not intend to incur and does not believe it will
incur debts beyond its ability to pay as they mature.
	 
	 	(g)	 	It has not made a transfer or incurred an obligation under this Agreement with
the intent to hinder, delay or defraud any of its present or future creditors.

	5.6	 	Times for making representations and warranties

	 	(a)	 	The representations and warranties set out in this Agreement (including in this
Clause) are made on the date of this Agreement.
	 
	 	(b)	 	Unless a representation and warranty is expressed to be given at a specific
date, all representations and warranties under this Agreement are deemed to be repeated
by the Pledgor on the date of each issuance of Notes with reference to the facts and
circumstances then existing.
	 
	 	(c)	 	When representations and warranties are repeated, they are applied to the
circumstances existing at the time of repetition.
	 
	 	(d)	 	The representations and warranties of the Pledgor contained in this Agreement
or made by the Pledgor in any certificate, notice or report delivered under this
Agreement will survive each issuance of Notes and any transfer or assignment of any
Note.

9

 

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

	 	(a)	 	The Pledgor must preserve its corporate existence and except as permitted by
the Indenture will not, in one transaction or a series of related transactions, merge
into or consolidate with any other entity, or sell all or substantially all of its
assets.
	 
	 	(b)	 	The Pledgor must not change the jurisdiction of its organization without
providing the Collateral Agent with at least 30 days’ prior written notice.
	 
	 	(c)	 	The Pledgor must not change its name without providing the Collateral Agent
with at least 30 days’ prior written notice.
	 
	 	(d)	 	The Pledgor must keep at its address indicated in Clause 17 (Notices)
its corporate records and all records, documents and instruments constituting, relating
to or evidencing Pledged Collateral, except for the Pledged Collateral delivered to the
Collateral Agent in compliance with Clause 4.2 (Delivery of certificates).
	 
	 	(e)	 	The Pledgor permits the Collateral Agent and its agents and representatives,
during normal business hours and upon reasonable notice, to inspect the Pledged
Collateral, to examine and make copies of and abstracts from the records referred to in
paragraph (d) above, and to discuss matters relating to the Pledged Collateral directly
with the Pledgor’s officers and employees.
	 
	 	(f)	 	At the Collateral Agent’s request, the Pledgor must provide the Collateral
Agent with any information concerning the Collateral that the Collateral Agent may
reasonably request.

	6.3	 	The Pledged Collateral

	 	(a)	 	The Pledgor will cause the Issuers to keep and maintain, at their respective
addresses indicated in Clause 5.3(a) (The Pledged Collateral) their respective
corporate records and all records, documents and instruments constituting, relating to,
or evidencing Pledged Collateral. The Pledgor agrees to cause the Issuers to permit
the Collateral Agent and its agents and representatives during normal business hours
and upon reasonable notice, to examine and make copies of and abstracts from the
records and stock ledgers and to discuss matters relating to the Issuers and its
records directly with the Issuers’ officers and employees.
	 
	 	(b)	 	Except as expressly permitted by the Indenture or this Agreement, the Pledgor:

10

 

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

	 	(c)	 	The Pledgor must pay when due (and in any case before any penalties are
assessed or any Lien is imposed on any Pledged Collateral) all taxes, assessments and
charges imposed on or in respect of Pledged Collateral and all claims against the
Pledged Collateral.
	 
	 	(d)	 	In any suit, legal action, arbitration or other proceeding involving the
Pledged Collateral or the Collateral Agent’s security interest, the Pledgor must take
all lawful action to avoid impairment of the Collateral Agent’s security interest or
the Collateral Agent’s rights under this Agreement or the imposition of a Lien on any
of the Pledged Collateral.
	 
	 	(e)	 	The Pledgor will not permit either Issuer to cancel or change the terms of the
Pledged Equity Interests, or authorize, create or issue any additional shares of
capital stock or ownership interests in either Issuer; provided that the Pledgor may
convert Vector Tobacco from a corporation to a limited liability company so long as (1)
the Issuer gives the Collateral Agent at least 30 days prior written notice of such
conversion, (2) the resulting limited liability company is formed under the laws of a
State in the United States, (3) the limited liability company or operating agreement of
the resulting limited liability company expressly provides that all equity interests in
such resulting limited liability company are “securities” under Article 8 of the UCC
and are represented by certificates, (4) contemporaneously with such conversion the
Issuer delivers to the Collateral Agent in New York certificates representing all
membership or other equity or ownership interests in the converted entity, together
with stock powers or the equivalent executed by the Issuer in blank and in form and
substance satisfactory to the Collateral Agent, (5) the Issuer agrees, in documentation
satisfactory to the Collateral Agent in its sole discretion, that such equity interests
are subject to the Collateral Agent’s security interest and to the terms of this
Agreement, (6) an appropriate financing statement or amendment to the existing
financing statement is promptly filed in the

11

 

	 	 	 	appropriate office or offices, so as to perfect and/or continue to perfect the
Collateral Agent’s security interest and (7) the Issuer must have delivered to the
Collateral Agent a legal opinion, from outside counsel satisfactory to the
Collateral Agent and in form and substance satisfactory to the Collateral Agent,
that the Collateral Agent has a perfected first-priority security interest in such
new equity interests. The Pledgor will ensure that at all times the operating
agreement of Liggett Group provides that all equity interests in Liggett Group are
“securities” under Article 8 of the UCC and are represented by certificates. The
Pledgor will not effect or permit any change of control of either Issuer.
	 
	 	(f)	 	The Pledgor will take no action, and will not permit either Issuer to take any
action, that could cause any of the Pledged Collateral to constitute “margin stock”
within the meaning of Regulation U or X issued by the Board of Governors of the United
States Federal Reserve System.

	6.4	 	Notices

	 	(a)	 	The Pledgor must give the Collateral Agent prompt notice of the occurrence of
any of the following events:

	 	(i)	 	any pending or threatened claim, suit, legal action,
arbitration or other proceeding involving or affecting the Pledgor, either
Issuer or any Pledged Collateral which could reasonably be expected to impair
the Collateral Agent’s security interest or, the Collateral Agent’s rights
under this Agreement or result in the imposition of a Lien on any Pledged
Collateral; or
	 
	 	(ii)	 	any representation or warranty contained in this Agreement is
or becomes untrue, incorrect or incomplete in any material respect.

	 	(b)	 	Each notice delivered under this Clause, must include:

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

	 	 	Delivery of a notice under this Clause does not affect the Pledgor’s obligations to comply
with any other term of this Agreement.
	 
	7.	 	WHEN SECURITY BECOMES ENFORCEABLE
	 
	 	 	This Security may be enforced by the Collateral Agent at any time after an Event of Default
has occurred.
	 
	8.	 	ENFORCEMENT OF SECURITY
	 
	8.1	 	Events of Default

12

 

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

	 	(a)	 	The Pledgor does not comply with Clause 6.3(b) (The Pledged
Collateral);
	 
	 	(b)	 	The Pledgor does not comply with any other term of this Agreement unless the
non-compliance:

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

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

8.2 General

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

	 	(i)	 	applicable law; or
	 
	 	(ii)	 	this Agreement,

	 	 	 	to enforce all or any part of the Security in respect of any Pledged Collateral in
any manner or order it sees fit.
	 
	 	(b)	 	This includes:

	 	(i)	 	any rights and remedies available to the Collateral Agent under
applicable law and under the UCC (whether or not the UCC applies to the
affected Pledged Collateral and regardless of whether or not the UCC is the law
of the jurisdiction where the rights or remedies are asserted) as if those
rights and remedies were set forth in this Agreement in full;
	 
	 	(ii)	 	transferring or assigning to, or registering in the name of,
the Collateral Agent or its nominees any of the Pledged Collateral;
	 
	 	(iii)	 	exercising any voting, consent, management and other rights
relating to any Pledged Collateral;
	 
	 	(iv)	 	performing or complying with any contractual obligation that
constitutes part of the Pledged Collateral;

13

 

	 	(v)	 	receiving, endorsing, negotiating, executing and delivering or
collecting upon any check, draft, note, acceptance, instrument, document,
contract, agreement, receipt, release, bill of lading, invoice, endorsement,
assignment, bill of sale, deed, security, share certificate, stock power,
proxy, or instrument of conveyance or transfer constituting or relating to any
Pledged Collateral;
	 
	 	(vi)	 	asserting, instituting, filing, defending, settling,
compromising, adjusting, discounting or releasing any suit, action, claim,
counterclaim, right of set-off or other right or interest relating to any
Pledged Collateral;
	 
	 	(vii)	 	executing and delivering acquittances, receipts and releases
in respect of Pledged Collateral; and
	 
	 	(viii)	 	exercising any other right or remedy available to the Collateral Agent under
the other Finance Documents or any other agreement between the parties.

8.3 Dividend and voting rights

	 	(a)	 	So long as payment of the Secured Liabilities has not been accelerated (whether
automatically or otherwise), the Pledgor will be entitled to exercise all voting and
other consensual rights with respect to the Pledged Collateral for any purpose not
inconsistent with the terms of the Finance Documents and to receive and retain all
dividends and other payments in respect of the Pledged Collateral to the extent
permitted by the Finance Documents.
	 
	 	(b)	 	Upon the acceleration of the payment of the Secured Liabilities (whether
automatically or otherwise), all rights of the Pledgor to exercise voting and other
consensual rights with respect to the Pledged Collateral and to receive dividends and
other payments in respect of the Pledged Collateral will cease, and all these rights
will immediately become vested solely in the Collateral Agent or its nominees, and the
Pledgor grants the Collateral Agent or its nominees the Pledgor’s irrevocable and
unconditional proxy for this purpose. After the acceleration of the payment of the
Secured Liabilities (whether automatically or otherwise), any dividends and other
payments in respect of the Pledged Collateral received by the Pledgor will be held in
trust for the Collateral Agent, and the Pledgor will keep all such amounts separate and
apart from all other funds and property so as to be capable of identification as the
property of the Collateral Agent and will deliver these amounts at such time as the
Collateral Agent may request to the Collateral Agent in the identical form received,
properly endorsed or assigned if required to enable the Collateral Agent to complete
collection.

8.4 Collateral Agent’s rights upon default

	 	(a)	 	The Pledgor irrevocably constitutes and appoints the Collateral Agent, with
full power of substitution, as the Pledgor’s true and lawful attorney-in-fact, in the
Pledgor’s name or in the Collateral Agent’s name or otherwise, and at the

14

 

	 	 	 	Pledgor’s expense, to take any of the actions authorized by this Agreement or
permitted under applicable law upon the occurrence and during the continuation of an
Event of Default, without notice to or the consent of the Pledgor. This power of
attorney is a power coupled with an interest and cannot be revoked. The Pledgor
ratifies and confirms all actions taken by the Collateral Agent or its agents under
this power of attorney.
	 
	 	(b)	 	The Pledgor agrees that 10 days notice shall constitute reasonable notice in
connection with any sale, transfer or other disposition of Pledged Collateral.
	 
	 	(c)	 	The Collateral Agent may comply with any applicable state or federal law
requirements in connection with a disposition of Pledged Collateral and compliance will
not be considered adversely to affect the commercial reasonableness of any sale of
Pledged Collateral.
	 
	 	(d)	 	The grant to the Collateral Agent under this Agreement of any right, power or
remedy does not impose upon the Collateral Agent any duty to exercise that right, power
or remedy. The Collateral Agent will have no obligation to take any steps to preserve
any claim or other right against any person or with respect to any Pledged Collateral.
	 
	 	(e)	 	The Pledgor bears the risk of loss, damage, diminution in value, or destruction
of the Pledged Collateral.
	 
	 	(f)	 	The Collateral Agent will have no responsibility for any act or omission of any
courier, bailee, broker, bank, investment bank or any other person chosen by it with
reasonable care.
	 
	 	(g)	 	The Collateral Agent makes no express or implied representations or warranties
with respect to any Pledged Collateral or other property released to the Pledgor or its
successors and assigns.
	 
	 	(h)	 	The Pledgor agrees that the Collateral Agent will have met its duty of care
under applicable law if it holds, maintains and disposes of Pledged Collateral in the
same manner that it holds, maintains and disposes of property for its own account.
	 
	 	(i)	 	Except as set forth in this Clause or as required under applicable law, the
Collateral Agent will have no duties or obligations under this Agreement or otherwise
with respect to the Pledged Collateral.
	 
	 	(j)	 	The sale, transfer or other disposition under this Agreement of any right,
title, or interest of the Pledgor in any item of Pledged Collateral will:

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

15

 

with respect to that item of Pledged Collateral.

8.5 No Marshaling

	 	(a)	 	The Collateral Agent need not, and the Pledgor irrevocably waives and agrees
that it will not invoke or assert any law requiring the Collateral Agent to:

	 	(i)	 	attempt to satisfy the Secured Liabilities by collecting them
from any other person liable for them; or
	 
	 	(ii)	 	marshal any security or guarantee securing payment or
performance of the Secured Liabilities or any particular asset of the Pledgor.

	 	(b)	 	The Collateral Agent may release, modify or waive any collateral or guarantee
provided by any other person to secure any of the Secured Liabilities, without
affecting the Collateral Agent’s rights against the Pledgor.

	9.	 	APPLICATION OF PROCEEDS
	 
	 	 	Any moneys received in connection with the Pledged Collateral by the Collateral Agent after
this Security has become enforceable must be applied in the following order of priority:

	 	(a)	 	first, in or towards payment of or provision for all costs and expenses
incurred by the Collateral Agent in connection with the enforcement of this Security;
	 
	 	(b)	 	second, in or towards payment of, or provision for, the Secured Liabilities;
and
	 
	 	(c)	 	third, in payment of the surplus (if any) to the Pledgor or any other Person
entitled to it under applicable law.

	 	 	This Clause is subject to the payment of any claims having priority over this Security under
mandatory provisions of applicable law. This Clause does not prejudice the right of any
Noteholder to recover any shortfall from the Pledgor.
	 
	10.	 	EXPENSES AND INDEMNITY

	 	(a)	 	The Pledgor must pay promptly on demand to the Collateral Agent all costs and
expenses incurred by the Collateral Agent, any Noteholder, attorney, manager, delegate,
sub-delegate, agent or other Person appointed by the Collateral Agent under this
Agreement for the purpose of enforcing its rights under this Agreement. This includes:

	 	(i)	 	costs of foreclosure and of any transfer, disposition or sale
of Pledged Collateral;
	 
	 	(ii)	 	costs of maintaining or preserving the Pledged Collateral or
assembling it or preparing it for transfer, disposition or sale;

16

 

	 	(iii)	 	costs of obtaining money damages; and
	 
	 	(iv)	 	fees and expenses of attorneys employed by the Collateral Agent
for any purpose related to this Agreement or the Secured Liabilities, including
consultation, preparation and negotiation of any amendment or restructuring,
drafting documents, sending notices or instituting, prosecuting or defending
litigation or arbitration.

	 	(b)	 	The Pledgor must indemnify and keep indemnified the Collateral Agent, the
Noteholders and their respective affiliates, directors, officers, representatives and
agents from and against all claims, liabilities, obligations, losses, damages,
penalties, judgments, costs and expenses of any kind (including attorney’s fees and
expenses) which may be imposed on, incurred by or asserted against any of them by any
Person (including any Noteholder) in any way relating to or arising out of:

	 	(i)	 	this Agreement;
	 
	 	(ii)	 	the Pledged Collateral;
	 
	 	(iii)	 	the Collateral Agent’s security interest in the Pledged Collateral;
	 
	 	(iv)	 	any Event of Default;
	 
	 	(v)	 	any action taken or omitted by the Collateral Agent under this
Agreement or any exercise or enforcement of rights or remedies under this
Agreement; or
	 
	 	(vi)	 	any transfer sale or other disposition of or any realization on
Pledged Collateral.

	 	(c)	 	The Pledgor will not be liable to an indemnified party to the extent any
liability results from that indemnified party’s gross negligence or willful misconduct.
Payment by an indemnified party will not be a condition precedent to the obligations
of the Pledgor under this indemnity.
	 
	 	(d)	 	This Clause survives the initial issuance of the Notes, the repayment of the
Notes, any novation, transfer or assignment of the Notes and the termination of this
Agreement.

	11.	 	EVIDENCE AND CALCULATIONS
	 
	 	 	In the absence of manifest error, the records of the Collateral Agent are conclusive
evidence of the existence and the amount of the Secured Liabilities.

17

 

	12.	 	CHANGES TO THE PARTIES
	 
	12.1	 	Pledgor
	 
	 	 	The Pledgor may not assign, delegate or transfer any of its rights or obligations under this
Agreement without the consent of the Collateral Agent, and any purported assignment,
delegation or transfer in violation of this provision shall be void and of no effect.
	 
	12.2	 	Collateral Agent
	 
	 	 	The Collateral Agent may assign or transfer its rights and obligations under this Agreement
in the manner permitted under the Indenture.
	 
	12.3	 	Successors and assigns
	 
	 	 	This Agreement shall be binding on and inure to the benefit of the respective successors and
permitted assigns of the Pledgor and the Collateral Agent.
	 
	13.	 	MISCELLANEOUS
	 
	13.1	 	Amendments and waivers
	 
	 	 	Any term of this Agreement may be amended or waived only by the written agreement of the
Pledgor and the Collateral Agent.
	 
	13.2	 	Waivers and remedies cumulative

	 	(a)	 	The rights and remedies of the Collateral Agent under this Agreement:

	 	(i)	 	may be exercised as often as necessary;
	 
	 	(ii)	 	are cumulative and not exclusive of its rights under applicable
law; and
	 
	 	(iii)	 	may be waived only in writing and specifically.

	 	(b)	 	Delay in exercising, or non-exercise, of any right or remedy under this
Agreement is not a waiver of that right or remedy.

	13.3	 	Counterparts
	 
	 	 	This Agreement may be executed in counterparts, and this has the same effect as if the
signatures on the counterparts were on a single copy of this Agreement.
	 
	14.	 	SEVERABILITY
	 
	 	 	If any term of this Agreement is or becomes illegal, invalid or unenforceable in any
jurisdiction, that will not affect:

18

 

	 	(a)	 	the legality, validity or enforceability in that jurisdiction of any other term
of this Agreement; or
	 
	 	(b)	 	the legality, validity or enforceability in any other jurisdiction of that or
any other term of this Agreement.

	15.	 	RELEASE
	 
	 	 	At the end of the Security Period, the Collateral Agent must, at the request and cost of the
Pledgor, take whatever action is necessary to release the Pledged Collateral from this
Security.
	 
	16.	 	NOTICES
	 
	16.1	 	Notices
	 
	 	 	Any communication in connection with this Agreement must be given in writing and, unless
otherwise stated, must be given in person or by fax.
	 
	16.2	 	Contact Details

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

	 	 	 	 	 
	 

	 	Address:
	 	100 S.E. Second Street, 32nd Floor

Miami, FL 33131
	 

	 	Fax:
	 	(305) 579-8016
	 

	 	Attention:
	 	Marc N. Bell

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

	 	 	 	 	 
	 

	 	Address:
	 	U.S. Bank National Association

60 Livingston Avenue

EP-MN-WS3C

St. Paul, MN 55107-2292

	 

	 	Fax:
	 	(651) 495-8097
	 

	 	Attention:
	 	Rick Prokosch

	 	(c)	 	Either party may change its contact details by giving five Business Days’
notice to the other party.
	 
	 	(d)	 	Where a party nominates a particular department or officer to receive a
communication, a communication will not be effective if it fails to specify that
department or officer.

	16.3	 	Effectiveness

	 	(a)	 	Except as provided below, any communication in connection with this Agreement
will be deemed to be given as follows:

	 	(i)	 	if delivered in person, at the time of delivery;

19

 

	 	(ii)	 	if by fax, when sent with confirmation of transmission.

	 	(b)	 	A communication given under this Clause but received on a non-working day or
after business hours on a working day in the place of receipt will only be deemed to be
given on the next working day in that place.

	17.	 	GOVERNING LAW
	 
	 	 	This Agreement, the relationship between the Pledgor, the Collateral Agent and the
Noteholders and any claim or dispute (whether sounding in contract, tort, statute or
otherwise) relating to this Agreement or that relationship shall be governed by and
construed in accordance with law of the State of New York including section 5-1401 of the
New York General Obligations Law but excluding any other conflict of law rules that would
lead to the application of the law of another jurisdiction. If the law of a jurisdiction
other than New York is, under section 1-105(2) of the UCC, mandatorily applicable to the
perfection, priority or enforcement of any security interest granted under this Agreement in
respect of any part of the Pledged Collateral, that other law shall apply solely to the
matters of perfection, priority or enforcement to which it is mandatorily applicable.
	 
	18.	 	ENFORCEMENT
	 
	18.1	 	Jurisdiction

	 	(a)	 	Each of the Parties agrees that any New York State court or Federal court
sitting in the City and County of New York has jurisdiction to settle any disputes and
any judgment, order or award in connection with this Agreement and accordingly submits
to the jurisdiction of those courts.
	 
	 	(b)	 	Each of the Parties:

	 	(i)	 	waives objection to the New York State and Federal courts on
grounds of personal jurisdiction, inconvenient forum or otherwise as regards
proceedings in connection with this Agreement; and
	 
	 	(ii)	 	agrees that a judgment or order of a New York State or Federal
court in connection with this Agreement is conclusive and binding on it and may
be enforced against it in the courts of any other jurisdiction.

	 	(c)	 	Nothing in this Clause limits the right of the Collateral Agent or any
Noteholder to bring proceedings against the Pledgor in connection with this Agreement:

	 	(i)	 	in any other court of competent jurisdiction; or
	 
	 	(ii)	 	concurrently in more than one jurisdiction.

	18.2	 	Service of process

20

 

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

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

21

 

SCHEDULE 1

PLEDGED EQUITY INTERESTS

	 	 	 	 	 	 	 
	 	 	 	 	 	 	No. of Shares/
	 	 	 	 	 	 	% of Membership
	Name	 	Certificate No.	 	Interests
	LIGGETT GROUP LLC

	 	 	1	 	 	100% of membership interests
	 
	VECTOR TOBACCO INC.

	 	 	1	 	 	100 shares

 

 

SIGNATORIES

     IN WITNESS WHEREOF, the Pledgor has cause this Pledge Agreement to be executed and delivered
by its duly authorized officer as of the day and year first above written.

Pledgor

VGR HOLDING LLC

	 	 	 	 	 
	By:

	 	/s/ Richard J. Lampen
 

	 	 
	 
	Name:

	 	
 

Richard J. Lampen
	 	 
	 
	Title:

	 	Manager	 	 

(Signature Page to Pledge Agreement)

 

 

Collateral Agent

U.S. BANK NATIONAL ASSOCIATION, as Collateral Agent

	 	 	 	 	 
	By:

	 	    /s/ Richard Prokosch
 

	 	 
	 
	
Name:

	 	
 

Richard Prokosch
	 	 
	 
	Title:

	 	Vice President	 	 

(Signature Page to Pledge Agreement)

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